Illinois has amended provisions of the Illinois Collection Agency Act, including removing language about debt collectors and raising the maximum civil penalty for unlicensed practices. The changes also extend the law for another 10 years through Jan. 1, 2016.

The changes tweak definitions, exemptions, restrictions and qualifications for license and are designed to help clarify language. The amendments are effective immediately.

All references to "debt collectors" are removed with the Act, which now simply refers to "collection agencies” - thus removing any doubt about whether commercial collection agencies must be licensed in Illinois.

Other changes include adding to the list of licensable activities - such as engaging in the business of collection of a check or other payment that's returned unpaid by the financial institution upon where it's drawn. The revisions clarify exemptions from licensing for "loan and finance companies" to specifically include entities licensed under the Residential Mortgage License Act.  

Provisions of the Act concerning the expiration, renewal and restoration of a collection agency’s license didn't change and the Act also doesn't significantly impact many of the state’s current prohibited practices or communication requirements. 

But validation notice, notably, was amended. Specifically, the section now requires collection agencies to provide the name and address of the original creditor, if different than that of the current creditor, in the initial notice sent to the consumer. Until the change, that section only required that additional information at the written request of the consumer, as is the requirement under the Fair Debt Collection Practices Act (FDCPA). 

The newly amended section reads as follows: [Debt collector, for example, represents deleted language]

Validation of Debts

(a) Within five days after the initial communication with a debtor in connection with the collection of any debt, a debt collector or collection agency shall, unless the following information is contained in the initial communication or the debtor has paid the debt, send the debtor a written notice with each of the following disclosures:

(1) The amount of the debt.

(2) The name of the creditor to whom the debt is owed.

(3) That, unless the debtor, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector or collection agency.

(4) That, if the debtor notifies the debt collector or collection agency in writing within the 30–day period that the debt, or any portion thereof, is disputed, the collection agency will obtain verification of the debt or a copy of a judgment against the debtor and a copy of the verification or judgment will be mailed to the debtor by the debt collector or collection agency.

(5) The That upon the debtor’s written request within the 30–day period, the debt collector or collection agency will provide the debtor with the name and address of the original creditor, if different from the current creditor. If the disclosures required under this subsection (a) are placed on the back of the notice, the front of the notice shall contain a statement notifying debtors of that fact.

(b) If the debtor notifies the debt collector or collection agency in writing within the 30–day period set forth in paragraph (3) of subsection (a) of this Section that the debt, or any portion thereof, is disputed or that the debtor requests the name and address of the original creditor, the debt collector or collection agency shall cease collection of the debt, or any disputed portion thereof, until the debt collector or collection agency obtains verification of the debt or a copy of a judgment or the name and address of the original creditor and mails a copy of the verification or judgment or name and address of the original creditor to the debtor.

(c) The failure of a debtor to dispute the validity of a debt under this Section shall not be construed by any court as an admission of liability by the debtor.

Additional Requirements

The civil penalty for acting as a collection agency without a license was increased from a maximum of $5,000 to a maximum of $10,000.

A collection agency with an expired license may reinstate it at any time within five years with a renewal application and fee payment. The Collection Agency Act includes additional flexibility for collection agency license holders if they or a business partner owning 50 percent or more of interest in the agency have a license that expires while they are on active duty.

The state added new requirements for unlicensed practices to cease and desist as well as license suspensions.

The Secretary Financial and Professional Regulation may suspend the license of a collection agency without a hearing if the continuation of the agency’s practice “would constitute an imminent danger to the public.”

However, a hearing must begin within 30 days after the suspension and completed as expeditiously as possible.

Additionally, the amended Act adds e-mail and Internet communication to the types of interstate communications that are exempt from the state’s licensing requirements, provided such communications are made by a collection agency located in another state which requires a license and extends these same privileges to agencies licensed and located in Illinois.  

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