Bill Text: MI SB0946 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Occupations; collection practices; regulation of certain debt collectors and debt buyers; revise. Amends secs. 1, 2, 3, 4, 5, 6 & 7 of 1981 PA 70 (MCL 445.251 et seq.) & adds secs. 3a & 7a.

Spectrum: Slight Partisan Bill (Republican 2-1)

Status: (Introduced - Dead) 2014-05-20 - Referred To Committee On Regulatory Reform [SB0946 Detail]

Download: Michigan-2013-SB0946-Introduced.html

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SENATE BILL No. 946

 

 

May 20, 2014, Introduced by Senators JONES, BIEDA and PAPPAGEORGE and referred to the Committee on Regulatory Reform.

 

 

 

     A bill to amend 1981 PA 70, entitled

 

"An act to regulate the collection practices of certain persons; to

provide for the powers and duties of certain state agencies; and to

provide penalties and civil fines,"

 

by amending sections 1, 2, 3, 4, 5, 6, and 7 (MCL 445.251, 445.252,

 

445.253, 445.254, 445.255, 445.256, and 445.257) and by adding

 

sections 3a and 7a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. As used in this act:

 

     (a) "Claim" or "debt" means an obligation or alleged

 

obligation for the payment of money or thing of value arising out

 

of an expressed or implied agreement or contract for a purchase

 

made primarily for personal, family, or household purposes.

 

     (b) "Collection agency" means a person that is directly or

 

indirectly engaged in soliciting a claim for collection or

 

collecting or attempting to collect a claim owed or due or asserted

 

to be owed or due another, or repossessing or attempting to

 

repossess a thing of value owed or due or asserted to be owed or

 

due another person, arising out of an expressed or implied

 

agreement. Collection agency includes a person an individual who is

 

representing himself or herself as a collection or repossession

 

agency, or a person an individual who is performing the activities

 

of a collection agency , on behalf of another, which and those

 

activities are regulated by Act No. 299 of the Public Acts of 1980,

 

as amended, being sections 339.101 to 339.2601 of the Michigan

 

Compiled Laws. under the occupational code, 1980 PA 299, MCL

 

339.101 to 339.2919. Collection agency includes a person who that

 

furnishes or attempts to furnish a form or a written demand service

 

that is represented to be a collection or repossession technique,

 

device, or system to be used t o to collect or repossess claims, if

 

the form contains the name of a person other than the creditor in a

 

manner indicating that indicates that a request or demand for

 

payment is being made by a person other than the creditor even

 

though the form directs the debtor to make payment directly to the

 

creditor rather than to the other person whose name appears on the

 

form. Collection agency includes a person who that uses a

 

fictitious name or the name of another in the collection or

 

repossession of claims to convey to the debtor that a third person

 

is collecting or repossessing or has been employed to collect or

 

repossess the claim.

 

     (c) "Communicate" means the conveying of to convey information

 

regarding a debt directly or indirectly to a person through any

 

medium.

 

     (d) "Consumer" or "debtor" means a natural person an

 

individual who is obligated or allegedly obligated to pay a debt.

 

     (e) "Creditor" or "principal" means a person who that offers

 

or extends credit creating a debt or a person to whom which a debt

 

is owed or due or asserted to be owed or due. Creditor or principal

 

does not include a person who that receives an assignment or

 

transfer or a debt solely for the purpose of facilitating

 

collection of the debt for the assignor or transferor. In those

 

instances, the assignor or transferor of the debt shall continue to

 

be considered continues to be the creditor or the principal for

 

purposes of this act.

 

     (f) "Debt buyer" means a person that is engaged in the

 

business of purchasing delinquent or charged-off consumer loans or

 

consumer credit accounts or other delinquent consumer debt for

 

collection purposes, whether it collects the debt itself or through

 

any affiliate or subsidiary, or engages an attorney to collect or

 

pursue litigation to collect the debt or engages another third

 

party to collect the debt.

 

     (g) "Original creditor" means the last person to extend credit

 

to a consumer for the purchase of goods or services, for the lease

 

of goods, or as a loan of money, identified by the name that it

 

used in its dealings with the consumer.

 

     (h) (f) "Person" means an individual, sole proprietorship,

 

partnership, association, or corporation, limited liability

 

company, or other legal entity.

 

     (i) (g) "Regulated person" means a person whose collection

 

activities are confined and are directly related to the operation

 

of a business other than that of a collection agency including any

 

of the following:

 

     (i) A regular employee when that is collecting accounts for 1

 

employer if the collection efforts are carried on in the name of

 

the employer.

 

     (ii) A state or federally chartered bank when that is

 

collecting its own claim.

 

     (iii) A trust company when that is collecting its own claim.

 

     (iv) A state or federally chartered savings and loan

 

association when that is collecting its own claim.

 

     (v) A state or federally chartered credit union when that is

 

collecting its own claim.

 

     (vi) A licensee under Act No. 21 of the Public Acts of 1939, as

 

amended, being sections 493.1 to 493.26 of the Michigan Compiled

 

Laws.the regulatory loan act, 1939 PA 21, MCL 493.1 to 493.24.

 

     (vii) A business that is licensed by the this state under a

 

regulatory act by which that regulates collection activity. is

 

regulated.

 

     (viii) An abstract company doing engaged in an escrow business.

 

     (ix) A licensed real estate broker or salesperson if the claim

 

being handled by the broker or salesperson is collecting is related

 

to or in connection with the broker or salesperson's real estate

 

business.

 

     (x) A public officer or a person that is acting under court

 

order.

 

     (xi) An attorney who is handling claims and collections a claim

 

or collection on behalf of a client and in the attorney's own name.

 

     (xii) A debt buyer.

 

     Sec. 2. A regulated person shall not commit 1 or more do any

 

of the following: acts:

 

     (a) Communicating Communicate with a debtor in a misleading or

 

deceptive manner, such as using the stationery of an attorney or

 

credit bureau unless the regulated person is an attorney or is a

 

credit bureau and it is disclosed that it is the collection

 

department of the credit bureau.

 

     (b) Using forms or instruments which simulate Use a form or

 

instrument that simulates the appearance of judicial process.

 

     (c) Using seals or printed forms Use a seal or printed form of

 

a government agency or instrumentality.

 

     (d) Using forms Use a form that may otherwise induce the

 

belief that they have the form has judicial or official sanction.

 

     (e) Making Make an inaccurate, misleading, untrue, or

 

deceptive statement or claim in a communication to collect a debt

 

or concealing conceal or not revealing reveal the purpose of a

 

communication when if it is made in connection with collecting a

 

debt.

 

     (f) Misrepresenting Misrepresent in a communication with a

 

debtor 1 or more of the following:

 

     (i) The legal status of a legal action being taken or

 

threatened.

 

     (ii) The legal rights of the creditor or debtor.

 

     (iii) That the nonpayment of a debt will result in the debtor's

 

arrest or imprisonment, or the seizure, garnishment, attachment, or

 

sale of the debtor's property.

 

     (iv) That accounts have an account has been turned over to an

 

innocent purchasers purchaser for value.

 

     (g) Communicating Communicate with a debtor without accurately

 

disclosing the caller's identity or cause expenses to the debtor

 

for a long distance telephone call, telegram, or other charge.

 

     (h) Communicating Communicate with a debtor, except through a

 

billing procedure when if the debtor is actively represented by an

 

attorney, the attorney's name and address are known, and the

 

attorney has been contacted in writing by the credit grantor or the

 

credit grantor's representative or agent, unless the attorney

 

representing the debtor fails to answer written communication or

 

fails to discuss the claim on its merits within 30 days after

 

receipt of receiving the written communication.

 

     (i) Communicating Communicate information relating to a

 

debtor's indebtedness to an employer or an employer's agent unless

 

the communication is specifically authorized in writing by t he the

 

debtor subsequent to the forwarding of the claim for collection,

 

the communication is in response to an inquiry initiated by the

 

debtor's employer or the employer's agent, or the communication is

 

for the purpose of acquiring location information about the debtor.

 

     (j) Using or employing, in In connection with collection of a

 

claim, a person use or employ an individual who is acting as a

 

peace or law enforcement officer or any other officer who is

 

authorized to serve legal papers.

 

     (k) Using or threatening Use or threaten to use physical

 

violence in connection with collection of a claim.

 

     (l) Publishing, causing Publish, cause to be published, or

 

threatening threaten to publish lists a list of debtors, except for

 

credit reporting purposes, when in response to a specific inquiry

 

from a prospective credit grantor about a debtor.

 

     (m) Using Use a shame card , or shame automobile , or

 

otherwise bring to public notice that the a consumer is a debtor,

 

except with respect to instituting a legal proceeding. which is

 

instituted.

 

     (n) Using Use a harassing, oppressive, or abusive method to

 

collect a debt, including causing a telephone to ring or engaging a

 

person an individual in telephone conversation repeatedly,

 

continuously, or at unusual times or places which that are known to

 

be inconvenient to the debtor. All communications shall be made

 

from 8 a.m. to 9 p.m. unless the debtor expressly agrees in writing

 

to communications at another time. All telephone communications

 

made from 9 p.m. to 8 a.m. shall be are presumed to be made at an

 

inconvenient time in the absence of facts to the contrary.

 

     (o) Using Use profane or obscene language.

 

     (p) Using Use a method that is contrary to a postal law or

 

regulation to collect an account.

 

     (q) Violate any federal or state law relating to debt

 

collection.

 

     (r) (q) Failing Fail to implement a procedure designed to

 

prevent a violation by an employee.

 

     (s) (r) Communicating Communicate with a consumer regarding a

 

debt by post card.postcard.

 

     (t) In connection with the collection of a debt, communicate

 

with any person other than the consumer, his or her attorney, a

 

consumer reporting agency if otherwise permitted by law, or the

 

original creditor, except as permitted under applicable federal and

 

state law.

 

     (u) (s) Employing a person Employ an individual who is

 

required to be licensed hold a license under article 9 of Act No.

 

299 of the Public Acts of 1980, being sections 339.901 to 339.916

 

of the Michigan Compiled Laws, the occupational code, 1980 PA 299,

 

MCL 339.901 to 339.920, to collect a claim unless that person he or

 

she is licensed under that article 9. of Act No. 299 of the Public

 

Acts of 1980.

 

     (v) If the regulated person is a debt buyer or acting on

 

behalf of a debt buyer, attempt to collect a debt without valid

 

documentation that the debt buyer is the owner of the specific debt

 

instrument or account at issue and reasonable verification that the

 

debtor owes the debt in the amount claimed. As used in this

 

subdivision, "reasonable verification" means obtaining at least the

 

following information:

 

     (i) Documentation of the name of the original creditor.

 

     (ii) The name, address, and last 4 digits of the social

 

security number of the debtor as stated in the original creditor's

 

records.

 

     (iii) The original consumer account number.

 

     (iv) A copy of the signed contract, signed application, or

 

other documents that evidence the debt and terms of the debt.

 

     (v) An itemized accounting of the amount the debt buyer claims

 

is owed, including the amount of the principal, the amount of any

 

interest, fees, or charges, and whether the charges were imposed by

 

the original creditor, a debt collector, or a subsequent owner of

 

the debt.

 

     (w) If the regulated person is a debt buyer or acting on

 

behalf of a debt buyer, fail to provide copies of actual business

 

records that contain the information described in subdivision (v)(i)

 

to (iv) to the consumer within 20 days after receiving a request

 

from the consumer for copies of those records. Providing an

 

affidavit or other sworn statement that refers to 1 or more

 

documents that are not attached or included as part of that

 

statement is not sufficient to meet this subdivision.

 

     Sec. 3. (1) The attorney general may order a regulated person

 

to cease and desist from violating this act.

 

     (2) A regulated person that is ordered to cease and desist

 

under subsection (1) is entitled to a hearing before the an

 

appropriate officer as determined by the attorney general if he or

 

she files a written request for a hearing within 30 days after the

 

effective date of the order.

 

     (3) If a regulated person fails to comply with a cease and

 

desist order issued pursuant to this act, under this section, the

 

attorney general may commence an action in the circuit court for

 

Ingham county or in a circuit court for a county where the person

 

is doing business, to enjoin violations of the cease and desist

 

order or to seek enforcement of a previously issued order. The

 

court may impose a fine or of not more than $500.00 for each

 

violation of the cease and desist order.

 

     Sec. 3a. (1) If the attorney general has reason to believe

 

that a person has information or is in possession, custody, or

 

control of any document or other tangible object that is relevant

 

to an investigation of a violation of this act, the attorney

 

general may serve on the person, before bringing any action in the

 

circuit court, a written demand to appear and be examined under

 

oath, and to produce the document or object for inspection and

 

copying. The demand shall meet all of the following:

 

     (a) Be served upon the person in the manner required for

 

service of process in this state.

 

     (b) Describe the nature of the conduct that constitutes the

 

violation under investigation.

 

     (c) Describe the document or object with sufficient

 

definiteness to permit it to be fairly identified.

 

     (d) If demanded, contain a copy of written interrogatories.

 

     (e) Prescribe a reasonable time at which the person must

 

appear to testify, within which to answer any written

 

interrogatories, and within which the document or object must be

 

produced.

 

     (f) Advise the person that objections to or reasons for not

 

complying with the demand may be filed with the attorney general on

 

or before the applicable time or time period under subdivision (e).

 

     (g) Specify a place for the taking of testimony or for the

 

production of the document or object and designate the person who

 

is the custodian of the document or object.

 

     (2) At any time before a return date specified in a demand for

 

information under subsection (1), or within 10 days after the

 

demand is served, whichever is shorter, a person from which

 

information is demanded may petition the Ingham county circuit

 

court, stating good cause for a protective order to extend the

 

return date for a reasonable time, or to modify or set aside the

 

demand. The attorney general shall receive notice of the filing of

 

a petition under this subsection from the person at least 10 days

 

before any proceedings on the petition and shall be given an

 

opportunity to respond.

 

     (3) If the court does not issue a protective order under

 

subsection (2) to a person that was served with a demand under

 

subsection (1), and the person does not comply with the demand by

 

its return date, the attorney general may apply to the court for an

 

order compelling the person to comply with the demand. The attorney

 

general must give notice of an application under this subsection to

 

the person before any proceedings on the application.

 

     (4) Any court of competent jurisdiction in this state may

 

order a person to comply with a demand made under subsection (1) if

 

the attorney general establishes that there are reasonable grounds

 

to believe that 1 or more persons committed, are committing, or are

 

about to commit an act or practice that violates this act; that

 

those persons, or any person that possesses relevant documentary

 

material about the violation, have left the state or are about to

 

leave the state; and that an order under this subsection is

 

necessary to enforce this act. The court may also, immediately and

 

without notice, forbid the removal from any place, concealment,

 

withholding, destruction, mutilation, falsification, or alteration

 

by any other means of any documentary material in the possession,

 

custody, or control of any person that the court finds may be

 

connected with acts or practices that violate this act.

 

     (5) Any person that has received notice of a demand for

 

information under subsection (1), or notice of an order under

 

subsection (3) or (4), and with intent to avoid, evade, or prevent

 

compliance, in whole or in part, with any civil investigation or

 

order under this section, removes from any place, conceals,

 

withholds, destroys, mutilates, falsifies, or by any other means

 

alters any documentary material in the possession, custody, or

 

control of any person subject to that notice, is subject to a civil

 

fine of not more than $10,000.00 per violation, recoverable by the

 

state in addition to any other appropriate penalty or sanction.

 

     (6) The attorney general shall keep confidential any

 

proceeding, testimony taken, or material produced before he or she

 

brings an action against a person under this act for the violation

 

under investigation, unless the person being investigated, and the

 

person that testified, answered interrogatories, or produced

 

material, waives confidentiality.

 

     Sec. 4. (1) The If the attorney general has probable cause to

 

believe that a person has engaged, is engaging, or is about to

 

engage in an act or practice that violates this act, and gives

 

notice as required under this section, the attorney general may

 

bring an action to restrain, by temporary or permanent injunction,

 

an the person from engaging in that act or practice. in violation

 

of this act. The attorney general may bring the action may be

 

brought in the circuit court for the county where the defendant

 

resides or conducts business or, if the defendant is not

 

established in this state, in the circuit court of Ingham county.

 

The court may issue a temporary or permanent injunction and make

 

other equitable orders or judgments, including restitution to

 

consumers or a civil fine under section 6(1). The court may also

 

award costs to the prevailing party.

 

     (2) Unless waived by the court based on a showing of good

 

cause, at least 10 days before the commencement of an action under

 

this section, the attorney general shall notify the person of his

 

or her intended action and give the person an opportunity to cease

 

and desist from the act or practice that is the alleged violation

 

of this act, or to confer with the attorney general in person, by

 

counsel, or by another representative about the proposed action

 

before the action is commenced. Unless the person is a corporation,

 

the attorney general may give the notice to the person by mail,

 

postage prepaid, to the person's usual place of business or, if the

 

person does not have a usual place of business, to the person's

 

last known address. If the person is a corporation, the attorney

 

general may only give the notice to a resident agent that is

 

designated to receive service of process or to an officer of the

 

corporation.

 

     Sec. 5. (1) When If the attorney general has authority to

 

institute an action pursuant to under section 4, the attorney

 

general may accept an assurance of discontinuance of any method,

 

act, or practice from the person alleged to be engaged in or to

 

have been engaged in a violation of this act. The assurance may

 

include the a stipulation for the voluntary payment , by the person

 

, of the costs of investigation, an amount for restitution to

 

aggrieved persons, or both. An assurance of discontinuance shall be

 

in writing and filed with the circuit court of Ingham county. The

 

clerk of the court shall maintain a record of the filings. A matter

 

closed pursuant to this section may be opened by the attorney

 

general for further proceedings.assurances of discontinuance filed

 

with the court.

 

     (2) Unless rescinded by the parties or voided by the court for

 

good cause, an assurance of discontinuance filed under subsection

 

(1) may be enforced in the circuit court of Ingham county by any

 

party to the assurance. An assurance of discontinuance may be

 

modified by the parties or by the circuit court of Ingham county

 

for good cause.

 

     Sec. 6. (1) In an action brought under this act, if the court

 

finds that a regulated person has wilfully violated this act, the

 

attorney general , upon may petition to the court for, and may

 

recover , on behalf of the state, a civil fine not exceeding

 

$500.00 in an amount that does not exceed $1,000.00 per violation.

 

     (2) A regulated person engaging that engages in a recurring

 

course of wilful willful conduct in violation of this act shall be

 

fined is guilty of a misdemeanor punishable by a fine of not more

 

than $5,000.00 for the first offense, and or a fine of not more

 

than $10,000.00, or imprisoned imprisonment for not more than 1

 

year, or both, for a second or subsequent offense.

 

     Sec. 7. (1) A person who that suffers injury, loss, or damage,

 

or from whom which money was collected by the use of a method, act,

 

or practice in violation of that violates this act, may bring an

 

action for damages or other equitable relief.

 

     (2) In an action brought pursuant to under subsection (1), if

 

the court finds for the petitioner, recovery shall be in the

 

petitioner shall recover the amount of actual damages or $50.00,

 

$250.00, whichever is greater, together with reasonable attorney

 

fees and court costs incurred in connection with the action. If the

 

court finds that the method, act, or practice was a wilful willful

 

violation, the court may assess a civil fine of not less than at

 

least 3 times the actual damages, or $150.00, $1,000.00, whichever

 

is greater, and shall award reasonable attorney's attorney fees and

 

court costs incurred in connection with the action.

 

     Sec. 7a. (1) Within 5 days after the initial communication

 

with a consumer in connection with a collection of a debt, unless

 

all of the information is contained in the initial communication or

 

the consumer has paid the debt, a regulated person shall send the

 

consumer a written notice that contains all of the following

 

information:

 

     (a) The amount of the debt owed.

 

     (b) The date the initial communication was sent to the debtor.

 

     (c) The name of the creditor to which the debt is owed, and

 

the name and address of the original creditor if different from the

 

current creditor.

 

     (d) A statement specifying that unless the consumer disputes

 

the validity of the debt, or a portion of the debt, within 30 days

 

after he or she receives the notice, the regulated person will

 

assume that the debt is valid.

 

     (e) A statement specifying that if the consumer notifies the

 

regulated person in writing within 30 days after he or she receives

 

the notice that the debt, or any portion of the debt, is disputed,

 

the regulated person shall obtain verification of the debt or a

 

copy of a judgment against the consumer and that the regulated

 

person will mail a copy of the verification or judgment to the

 

consumer.

 

     (2) If a consumer notifies a regulated person within 30 days

 

after receiving a written notice under subsection (1) that the

 

debt, or any portion of the debt, is disputed, the regulated person

 

shall cease collection of the debt or any disputed portion of the

 

debt until the regulated person obtains verification of the debt

 

and mails a copy of the verification or judgment to the consumer.

 

As used in this subsection, "verification" includes a copy of the

 

contract or other documents evidencing a debt and an itemized

 

accounting of the amount claimed to be owed, including the number

 

and amount of previously made payments, fees, interest, and

 

charges. If the regulated person is a debt buyer, verification

 

includes the documents described in section 2(v)(i) to (v). An

 

affidavit or other sworn statement that refers to 1 or more

 

documents that are not attached or included as part of that

 

statement is not sufficient as verification under this subsection.

 

     (3) The failure of a consumer to dispute the validity of a

 

debt under this section shall not be construed as an admission of

 

liability by the consumer.