The governor of Minnesota has signed a number of omnibus bills into law, one of which contains provisions that expand the regulation of the accounts receivable management industry to include debt buyers, a new term that the state is defining for the first time.
Gov. Tim Walz signed the bills into law this past Saturday. Many of the laws deal with the state’s budget and recovery from the COVID-19 pandemic and the state legislature was working overtime to get the provisions of the bills completed and approved and to the governor prior to the end of the legislature’s current session on June 30. The laws go into effect August 1.
HF6, among other provisions, seeks to define the term “debt buyer” and make sure that those entities which meet the definition are included in regulations aimed at governing the accounts receivable management industry. The state now defines a debt buyer as a “business engaged in the purchase of any charged-off account, bill, or other indebtedness for collection purposes, whether the business collects the account, bill, or other indebtedness, hires a third party for collection, or hires an attorney for litigation related to the collection.” The law also created a new definition for “affiliated company,” which is defined as “a company that: (1) directly or indirectly controls, is controlled by, or is under common control with another company or companies; (2) has the same executive management team or owner that exerts control over the business operations of the company; (3) maintains a uniform network of corporate and compliance policies and procedures; and (4) does not engage in active collection of debts.”
Under the law, debt buyers will also have to be licensed, starting Jan. 1, 2022.
While much of the legislation surrounding debt buyers deals with housekeeping items that update existing provisions to make sure debt buyers are included in them, there are a few wrinkles that companies in the industry should be aware of. This includes prohibiting collectors and debt buyers from communicating with consumers via a recorded message utilizing an automatic dialing device if the consumer has revoked consent to be contacted using the automatic dialing device. Collectors and debt buyers are also prohibited from collecting any interest, fee, charge, or expense unless it is expressly authorized by the agreement creating the debt or is otherwise permitted by law.
