SAFE Act

Draft of the SAFE Act which is currently being considered

Updated Saturday Oct 31, 2009

Secure and Fair Enforcement for Debt Collection of 2009

§ 101 Purposes and methods for establishing a debt collector licensing system and registry

In order to increase uniformity, reduce regulatory burden, enhance consumer protection, and improve the debt collection industry, the States, through the North American Collection Agency Regulatory Association and the Conference of State Bank Supervisors, are hereby encouraged to establish a Nationwide Debt Collector Licensing System and Registry for the debt collection industry that accomplishes all of the following objectives:

(1) Provides uniform license applications and reporting requirements for companies operating as State-licensed debt collectors.

(2) Provides uniform registration applications and reporting requirements for individual State-registered debt collectors.

(3) Provides a comprehensive licensing, registration and supervisory database.

(4) Aggregates and improves the flow of information to and between regulators.

(5) Provides increased accountability and tracking of debt collectors.

(6) Streamlines the licensing and registration process and reduces the regulatory burden.

(7) Enhances consumer protections and supports improvement of the debt collection industry.

(8) Provides consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, debt collectors.

(9) Facilitates responsible behavior in the debt collection industry and provides comprehensive training and examination requirements related to debt collection.

(10) Facilitates the collection, disbursement and resolution of consumer complaints on behalf of State and Federal debt collection regulators through a uniform, nationwide system of adjudication.

§ 102 Definitions

For purposes of this chapter, the following definitions apply:

(1) Agency

The term “Agency” means the Consumer Financial Protection Agency.

(2) Debt

The term “debt” has the same meaning as in section 1692a of Title 15.

(3) Debt collector

The term “debt collector” has the same meaning as in section 1692a of Title 15.

(4) State

The terms “State” means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, America Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the North Mariana Islands.

(5) State-licensed debt collector

The term “State-licensed debt collector” means a company licensed by a State as a debt collector as defined in section 1692a of Title 15.

(6) State-registered debt collector

The term “State-registered debt collector” means an individual registered by a State as a debt collector as defined in section 1692a of Title 15.

(7) Unique identifier

(A) In general

The term “unique identifier means a number or other identifier that--

(i) Permanently identifies a debt collector;

(ii) is assigned by protocols established by the Nationwide Debt Collector Licensing System and Registry and the Commission to facilitate electronic tracking of debt collectors and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against debt collectors; and

(iii) shall not be used for purposes other than those set forth under this chapter.

(B) Responsibility of States

To the greatest extent possible and to accomplish the purpose of this chapter, States shall use unique identifiers in lieu of Social Security numbers.

§ 103 License and registration required

(a) Licensing required

Subject to the existence of a licensing regime, as the case may be, a company may not engage in the business of debt collection without first--

(1) obtaining, and maintaining annually, a license as a State-licensed debt collector; and

(2) obtaining a unique identifier.

(b) Registration required

Subject to the existence of a registration regime, as the case may be, an individual may not engage in the activity of debt collection after ninety days of employment as a debt collector without --

(1) obtaining and maintaining annually, a registration as a State-registered debt collector; and

(2) obtaining a unique identifier.

An independent contractor may not engage in debt collection activities as a debt collector unless such independent contractor is a State-licensed debt collector.

§ 104 State license and registration application and issuance

(a) Background checks

In connection with an application to any State for licensing and registration as a State-licensed debt collector or State-registered debt collector, the applicant shall, at a minimum, furnish to the Nationwide Debt Collector Licensing System and Registry information concerning the applicant’s identity, including--

(1) fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and

(2) personal history and experience, including authorization for the System to obtain--

(A) an independent credit report obtained from a consumer reporting agency described in section 1681a(p) of Title 15; and

(B) information related to any administrative, civil or criminal findings by any governmental jurisdiction.

(b) Issuance of license or registration

The minimum standards for licensing and registration as a State-licensed debt collector and State-registered debt collector shall include the following:

(1) The applicant has never had a debt collector license or registration revoked in any governmental jurisdiction.

(2) The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court--

(A) during the 7-year period preceding the date of the application for licensing and registration; or

(B) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust.

(3) The applicant has demonstrated that the debt collector will operate honestly, fairly, and efficiently within the purpose of this chapter.

(4) The registration applicant has completed the pre-registration education requirement described in subsection (c).

(5) The registration applicant has passed a written test that meets the test requirement described in subsection (d).

(6) The license applicant has met a surety bond requirement, or paid into a State fund, as required by the State pursuant to section 1507(d)(6) of this title.

(1) In order to meet the pre-registration education requirement referred to in subsection (b)(4), a person shall complete at least 20 hours of education approved in accordance with paragraph (2), which shall include at least--

(A) 3 hours of Federal debt collection law and regulations;

(B) 2 hours of ethics, which shall include instruction on consumer protection and ethical debt collection issues; and

(2) Approved educational courses

For purposes of paragraph (1), pre-registration education courses shall be reviewed and approved by the Nationwide Debt Collector Licensing System and Registry and provided by ACA International.

(3) Limitation and standards

(A) Limitation

To maintain the independence of the approval process, the Nationwide Debt Collection Licensing System and Registry shall not directly or indirectly offer pre-registration educational courses for debt collectors. Such pre-registration educational courses shall be provided by ACA International.

(B) Standards

In approving courses under this section, the Nationwide Debt Collector Licensing System and Registry shall apply reasonable standards in the review and approval of courses provided by ACA International.

(d) Testing of debt collectors

(1) In general

In order to meet the written test requirement referred to in subsection (b)(5), an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the Nationwide Debt Collector Licensing System Registry and administered by an approved test provider.

(2) Qualified test

A written test shall not be treated as a qualified written test for purposes of paragraph (1) unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including--

(A) ethics;

(B) Federal law and regulation pertaining to debt collection; and

(3) Minimum competence

(A) Passing score

An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent correct answers to questions.

(B) Initial retests

An individual may retake a test 3 consecutive times with each consecutive taking occurring at least 30 days after the preceding test.

After failing 3 consecutive tests, an individual shall wait at least 6 months before taking the test again.

(D) Retest after lapse of registration

A State-registered debt collector who fails to maintain a valid registration for a period of 5 years or longer shall retake the test.

§ 105 Standards for State license and registration renewal

(a) In general

The minimum standards for license or registration renewal for State-licensed debt collectors shall include the following:

(1) The debt collector continues to meet the minimum standards for license or registration issuance.

(2) The State-registered debt collector has satisfied the annual continuing education requirements described in subsection (b).

(b) Continuing education for State-registered debt collectors

(1) In general

In order to meet the annual continuing education requirements referred to in subsection (a)(2), a State-registered debt collector shall complete at least 8 hours of education approved in accordance with paragraph (2), which shall include at least--

(A) 3 hours of Federal debt collection law and regulations;

(B) 2 hours of ethics; and

(2) Approved educational courses

For purposes of paragraph (1), continuing education courses shall be reviewed, and approved by the Nationwide Debt Collector Licensing System and Registry and provided by ACA International.

(3) Calculation of continuing education credits

A State-registered debt collector--

(A) may only receive credit for continuing education course in the year in which the course is taken; and

(B) may not take the same approved course in the same or successive years to meet the annual requirement for continuing education.

(4) Instructor credit

A State-registered debt collector who is approved as an instructor of an approved continuing education course may receive credit for the debt collector’s own annual continuing education requirement at the rate of 2 hours credit for every 1 hour taught.

(5) Limitation and standards

(A) Limitation

To maintain the independence of the approval process, the Nationwide Debt Collector Licensing System and Registry shall apply reasonable standards in the review and approval of courses.

§ 106 National debt collection dispute resolution program

(a) In general

In order to facilitate resolution of consumer complaints about State-licensed debt collectors and State-registered debt collectors, the Nationwide Debt Collector Licensing and Registry shall maintain and operate a uniform national debt collection dispute resolution program.

(b) Participation in program

(1) All State-licensed debt collectors and State-registered debt collectors shall participate in and be subject to the national debt collection dispute resolution program.

(2) All complaints about State-licensed debt collectors or State-registered debt collectors filed by consumers with government entities other than the Nationwide Debt Collector Licensing System and Registry shall be forwarded by the government entity to the Nationwide Debt Collector Licensing System and Registry for resolution.

(1) Mediation

Upon receipt of a complaint against a State-licensed debt collector or a State-registered debt collector, the Nationwide Debt Collector Licensing System and Registry shall first try to resolve the complaint by facilitating a mediation between the parties.

(2) Arbitration

Should mediation fail to lead to a resolution of the complaint, the Nationwide Debt Collector Licensing System and Registry may facilitate a binding arbitration between the parties to the complaint.

(d) Rules for national debt collection dispute resolution program

The Nationwide Debt Collector Licensing System and Registry shall implement rules regarding the resolution of complaints filed by consumers against State-licensed debt collectors or State-registered debt collectors. Such rules shall describe the process for mediating and arbitration disputes and the remedies available to the parties. Such rules shall be made available to the public.

(e) Public access to information

The results of a resolution of a complaint against a State-licensed debt collector or State-registered debt collector shall be accessible to the public.

§ 107 Consumer Financial Protection Agency backup authority to establish a debt collector licensing and registration system

(a) Backup licensing and registration system

If, by the end of the 1-year period, or the 2-year period in the case of a State whose legislature meets only biennially, beginning on June 30, 2010 or at any time thereafter, the Agency determines that a State does not have in place by law or regulation a system for licensing and registering debt collectors that meets the requirements of section 104 and 105 of this title and subsection (d) of this section, or does not participate in the Nationwide Debt Collector Licensing System and Registry, the Agency shall provide for the establishment and maintenance of a system for the licensing and registration by the Agency of debt collectors operating in such State as State-licensed debt collectors or State-registered debt collectors.

(b) Licensing and registration requirements

The system established by the Agency under subsection (a) for any State shall meet the requirements of sections 104 and 105 of this title for State-licensed debt collectors and State-registered debt collectors.

The Agency shall coordinate with the Nationwide Debt Collector Licensing System and Registry to establish protocols for assigning a unique identifier to each debt collector licensed by the Agency as a State-licensed debt collector or registered as a State-registered debt collector that will facilitate electronic tracking and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against debt collectors.

(d) State licensing law requirements

For purposes of this section, the law in effect in a State meets the requirements of this subsection if the Agency determines the law satisfies the following minimum requirements:

(1) A State debt collector supervisory authority is maintained to provide effective supervision and enforcement of such law, including the suspension, termination, or nonrenewal of a license or registration for a violation of State or Federal law.

(2) The State debt collector supervisory authority ensures that all State-licensed debt collectors or State-registered debt collectors operating in the State are registered with Nationwide Debt Collector Licensing System and Registry.

(3) The State debt collector supervisory authority is required to regularly report violations of such law, as well as enforcement actions and other relevant information, to the Nationwide Debt Collector Licensing System and Registry.

(4) The State debt collector supervisory authority has a process in place for challenging information contained in the Nationwide Debt Collector Licensing System and Registry.

(5) The State debt collector supervisory authority has established a mechanism to assess civil money penalties for individuals acting as debt collectors in their State without a valid license or registration.

(6) The State debt collector supervisory authority has established minimum surety bonding requirements that reflect the dollar amount of collections made by the State-licensed debt collector, or established a recovery funds paid into by the debt collectors.

(7) The State debt collector supervisory authority has, through the state legislature, enacted a state fair debt collection practices act that is consistent with the Federal Fair Debt Collection Practices Act and other state fair debt collection practices acts such that uniform standards, penalties and remedies are established for debt collectors.

(e) Temporary extension of period

The Agency may extend, by not more than 24 months, the 1-year or 2-year period, as the case may be, referred to in subsection (a) for the licensing and registration of debt collectors in any State under a State licensing and registration law that meets the requirements in section 104 and 105 of this title and subsection (d) if the Agency determines that such State is making a good faith effort to establish a State licensing and registration law that meets such requirements, license and register debt collectors under such law, and register such debt collectors with the Nationwide Debt Collector Licensing System and Registry.

§ 108 Backup authority to establish a Nationwide Debt Collector Licensing and Registry System

If at any time the Agency determines that the Nationwide Debt Collector Licensing System and Registry is failing to meet the requirements and purposes of this chapter for a comprehensive licensing, registration supervisory, and tracking system for debt collectors, the Agency shall establish and maintain such a system to carry out the purposes of this chapter and the effective registration and regulation of debt collectors.

§ 109 Fees

The Agency and the Nationwide Debt Collector Licensing System and Registry may charge reasonable fees to cover the costs of maintaining and providing access to information from the Nationwide Debt Collector Licensing System and Registry, to the extent that such fees are not charged to consumers for access to such system and registry.

§ 110 Background checks of debt collectors

(a) Access to records

Notwithstanding any other provision of law, in providing identification and processing functions, the Attorney General shall provide access to all criminal history information to the appropriate State officials responsible for regulating State-licensed debt collectors and State-regulated debt collectors to the extent criminal history background checks are required under the laws of the State for the licensing and registration of such debt collectors.

(b) Agent

For the purposes of this section and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of subsection (a), the North American Collection Agency Regulators Association or wholly owned subsidiary may be used as a channeling agent of the States for requesting and distributing information between the Department of Justice and the appropriate State agencies.

§ 111 Confidentiality of information

(a) System confidentiality

Except as otherwise provided in this section, any requirement under Federal or State law regarding the privacy or confidentiality of any information or material provided to the Nationwide Debt Collector Licensing System and Registry or a system established by the Agency under section 107 of this title, and any privilege arising under Federal or State law (including the rules of any Federal or State court) with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the system. Such information and material may be shared with all State and Federal regulatory officials with debt collection industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by Federal and State laws.

(b) Nonapplicability of certain requirements

Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to--

(1) disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or any agency of the Federal Government or the respective State; or

(2) subpoena or discovery, or admission into evidence, in any private civil action or administrative process unless with respect to such information or material, the person to whom such information or material pertain waives, in whole or in part, in the discretion of such person, that privilege.

Any State law, including any State open record law, relating to the disclosure of confidential supervisory information or any information or material described in subsection (a) that is inconsistent with subsection (a) shall be superseded by the requirements of such provision to the extent State law provides less confidentiality or weaker privilege.

(d) Public access to information

This section shall not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, debt collectors that is included in Nationwide Debt Collector Licensing System and Registry for access by the public.

§ 112 Liability provisions

The Agency, any State official or agency, or any organization serving as the administrator of the Nationwide Debt Collector Licensing System and Registry or a system established by the Agency under section 107 of this title, or any officer or employee of any such entity, shall not be subject to any civil action or proceeding for monetary damages by reason of the good faith action or omission of any officer or employee of any such entity, while acting within the scope of office or employment, relating to the collection, furnishing, or dissemination of information concerning persons who are debt collectors or are applying for licensing or registration as debt collectors.

§ 113 State examination authority

In addition to any authority allowed under State law, a State licensing and registration agency shall have the authority to conduct investigations and examinations as follows:

(1) For the purpose of investigating violations or complaints arising under this chapter, or for the purposes of examination, the State licensing and registration agency may review, investigate, or examine any debt collector licensed or registered or required to be licensed or registered under this chapter, as often as necessary in order to carry out the purposes of this chapter.

(2) Each such debt collector shall make available upon request to the State licensing and registration agency the books and records relating to the operations of such debt collector. The State licensing and registration agency may have access to such books and records and interview the officers, principals, debt collectors, employees, independent contractors, agents, and customers of the licensee concerning their business.

(3) The authority of this section shall remain in effect, whether such a debt collector acts or claims to act under any licensing or registration law of such State, or claims to act without such authority.

(4) No person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.

§ 114 Reports and recommendations to Congress

(a) Annual reports

Not later than 1 year after July 30, 2010, and annually thereafter, the Agency shall submit a report to Congress on the effectiveness of the provisions of this chapter, including but not limited to, an overview of the state of the collection industry, including the number of consumer contacts made each year by registered debt collectors and licensed debt collectors, the total number of debt collectors registered, and the total number of debt collectors licensed, the number of states in compliance with this Act, an overview of the national debt collection dispute resolution program and the level of consumer awareness and satisfaction with the national debt collection dispute resolution program, legislative recommendations, if any, for strengthening debt collection practices and consumer protections, enhancing examination standards, and streamlining communication between all stakeholders involved in debt collection.

(b) Legislative recommendations

No later than July 30, 2014, the Agency shall make recommendations to Congress on legislative reforms to the Fair Debt Collection Practices Act that the Agency deems appropriate to promote consumer protection, create uniform federal and state debt collection practice standards and improve the debt collection industry.

Add your content here

Missouri Collectors Association

A State Unit of ACA International