If you want to start your profitable credit repair business in [STATE], you need to understand [STATE] state credit repair laws, bond requirements, licensing, and statute of limitations. Read this book to understand the basics of credit repair and then scroll down below for important details on [STATE] state credit repair laws and regulations.
$0 - A bond is not required in this state
There are federal and state laws for Idaho. You should be aware of both.
The Credit Repair Organizations Act (CROA) is a federal law passed in September 1996 that regulates organizations whose purpose is increasing consumer’s credit score through credit repair. One of the most important things the CROA did is make it illegal for credit repair organizations to make false claims. Don’t worry though, staying compliant is pretty easy after you get familiar with the law! This law is moderated and enforced by the Federal Trade Commission (FTC), so the FTC has the authority to close down any credit repair organizations that are operating outside the parameters of these laws (like fraudulent or illegal activities).
The main sections include mandates that:
Simply put, these laws were put in place to protect people from credit repair companies using scammy business practices. As long as you’re not trying to be sketchy and scam people, you should be able to stay compliant easily!
To read the Credit Repair Organizations Act in full, visit the United States House of Representatives’ record of the act here.
Idaho has laws that govern how to start (and run!) a credit repair business in Idaho. Here are the relevant regulations and Idaho laws governing credit repair businesses that you need to be aware of:
§ 26-2221. Short title
This act shall be known as the "Idaho Collection Agency Act."
§ 26-2222. Definitions
As used in this chapter:
(1) "Agent" means any person who is compensated on a commission basis or by salary, or both, by any permittee and who either contacts debtors or creditors in connection with the collection agency business of the permittee.
(2) "Business funds" means all
(3) "Collection agency," "collection bureau" or "collection office" shall be a person who engages in any of the activities enumerated in section 26-2223, Idaho Code.
(4) "Director" means the director of the department of finance.
(5) "Creditor" means any person who transfers to a permittee accounts due and owing for collection purposes.
(6) "Creditors' account" means all funds due and owing a creditor within the definition of this chapter.
(7) "Net collections" means all funds that are due to creditors from the permittee pursuant to the contract between the permittee and creditor, or permittee and debtor without taking into account any offset or funds due from the creditor to the permittee, because of the creditor having collected any part of the account due, plus all funds that the permittee agreed to return to debtors or that were not to be applied to debts.
(8) "Permittee" means a person who has a permit to do business as a collection agency, or debt counselor, or credit counselor in
(9) "Person" means any permittee, agent, solicitor, individual, corporation, association, copartnership, trust, company or unincorporated organization.
(10) "Debt counselor" means any person engaged in any of the activities enumerated in subsection (6) of section 26-2223, Idaho Code.
(11) "Credit counselor" means any person engaged in any of the activities enumerated in subsection (6) or (7) of section 26-2223, Idaho Code. No credit counselor shall be granted a permit pursuant to this chapter unless qualified as an exempt organization under section 501(c)(3) of the Internal Revenue Code [FN1].
[FN1] 26 U.S.C.A. § 501.
§ 26-2223. Collection agency, debt counselor, or credit counselor permits
No person shall without complying with the terms of this chapter and obtaining a permit from the director:
(1) Operate as a collection agency, collection bureau, collection office, debt counselor, or credit counselor in this state.
(2) Engage, either directly or indirectly in this state in the business of collecting or receiving payment for others of any account, bill, claim or other indebtedness.
(4) Sell or otherwise distribute any system or systems of collection letters and similar printed matter where the name of any person other than the particular creditor to whom the debt is owed appears.
(5) Engage in any activity which indicates, directly or indirectly, that a third party may be involved in effecting any collections.
(6) Engage or offer to engage in the business of receiving money from debtors for application to or payment of or prorating of any creditor or creditors of such debtor.
(7) Engage or offer to engage in the business of providing counseling or other services to debtors in the management of their debts, and contracting with the debtor to effect the adjustment, compromise, or discharge of any account, note or other indebtedness of the debtor.
(8) Engage or offer to engage in the business of credit repair which includes obtaining, for others, improvements in credit records, extensions of credit for clients, or causing the removal of documents from the credit records of a client maintained by a credit reporting agency.
(9) Engage or offer to engage in this state, directly or indirectly, in the business of collecting any form of indebtedness for that person's own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired.
§ 26-2223A. Office to be maintained in state--Designation of responsible person
Every permittee under this chapter must maintain an office in the state of Idaho, staffed with at least one (1) natural person who passed the examination required in section 26-2229, Idaho Code, or is exempt from the provisions of this chapter pursuant to section 26-2239(1), Idaho Code, at each branch or facility. Each permittee must have a listed Idaho telephone number and must be open to the public during normal business hours on each business day, provided, however, that the director may in his discretion approve a request for opening at hours other than normal business hours or a portion of a business day. A business day within the meaning of this section does not include Saturdays, Sundays, or legal holidays. Each permittee under this chapter must designate a natural person, who need not be a resident of the state of Idaho , to be responsible for the business carried on at the office and who has passed the examination for a permit required by section 26-2229, Idaho Code. If the person designated by the permittee to be responsible for business carried on at the office is not normally available in the Idaho office, then the permittee's collection activities with debtors must begin with a written notice to each debtor setting forth a mailing address and a toll-free telephone number whereby a debtor may contact the designated responsible person during normal business hours.
§ 26-2224. Form of application
Every applicant for such permit shall file in the department of finance an application in form to be prescribed by the director setting forth:
(1) The name of the applicant if an individual; if the applicant is a corporation a list of its officers and directors and their addresses; if the applicant is a partnership a list of the partners and their addresses; or if the applicant is a limited liability company a list of its members or managers and their addresses. Every corporation shall designate and appoint one (1) or more of its officers or employees, every partnership shall designate and appoint one (1) or more of its partners, and every limited liability company shall designate and appoint one (1) or more of its members or managers who shall submit to the examination hereinafter required. No permit shall be issued to any corporation, partnership or limited liability company unless and until the persons so designated shall submit to and pass the examination required by this chapter.
(2) The location of the principal office or place of business of the applicant.
(3) Other names, if any, by which the applicant conducts, engages in or solicits business.
(4) The names of all persons and organizations with which the applicant is affiliated in such business, and the location of the principal office or place of business of each such affiliation.
(5) A complete description of the business to be conducted, or plan of operation contemplated, by the applicant in this state.
(6) A list of all papers and filings used by the applicant which must accompany the application and be identified as exhibits by number.
(7) A financial statement showing the applicant to have a financial net worth of not less than two thousand five hundred dollars ($2,500), which statement shall be subject to disclosure according to chapter 3, title 9, Idaho Code. The financial statement shall specify assets and liabilities, providing detailed reference to each item listed to inform the director of the nature and extent of such assets and liabilities. This financial statement shall be signed by the applicant or its proper agent. The net worth shall not include any notes, accounts, bills, and judgments held for collection by the applicant nor shall it include
(8) Such other information concerning the applicant's business as the director may reasonably require. Such application shall be executed and verified by the applicant or applicants personally, or by an individual associated with the applicant as designated by the director.
§ 26-2225. Information and materials required with application--Examination fee--Consent to service
Such application shall be accompanied by:
(1) Complete copies of all literature and circulars issued or circulated by or on behalf of the applicant in soliciting or advertising for business including circular and form letters.
(2) Complete forms of all contracts designed for execution by persons placing any account, bill, claim or other indebtedness in the hands of the applicant for collection.
(3) Complete forms of all contracts and assignments designed for execution by debtors making any assignments to or placing any property with the applicant for the purpose of paying the creditors of such debtors.
(4) Complete forms of all contracts and releases designed for execution by creditors to whom payments are made or are to be made by the applicant.
(5) If the applicant is a corporation or association, a copy of its articles of incorporation or association, duly authenticated.
(6) A list of the names and addresses of all agents who will contact debtors or creditors or solicit business for the applicant in this state.
(7) The names and addresses of all directors and officers, if the applicant is a corporation or association; and the names of the members, if the applicant is an unincorporated company, a firm or copartnership.
(8) An agreement executed by the applicant stipulating that no literature or form of contract not submitted with the application will be issued, circulated or used by the applicant prior to the filing thereof with the director.
(9) An initial examination fee as fixed by the director, but not to exceed one hundred dollars ($100), except that no examination fee need be paid by a nonprofit corporation or association conducting credit counseling or debt prorating activities.
(10) Complete copies of all literature, circulars, contracts, and/or other related material to be circulated or distributed by the permit holder to a debtor.
(11) An irrevocable consent to service executed by the applicant appointing the director and his successors in office to be attorney of the applicant to receive service of any lawful process in any civil suit, action, or proceeding against the applicant which arises under this act or any rule or order hereunder. After the consent has been filed, any service hereunder shall have the same force and validity as if personally served on a person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. Service may be made by leaving a copy of the process in the office of the director.
§ 26-2226. False or fraudulent debt reduction and elimination practices
(1) No person shall obtain or attempt to obtain a fee, compensation or consideration from a person through a false or fraudulent representation or statement that a debt, loan, or extension of credit could or would be eliminated, reduced or substituted, if the representation or statement is false or misleading or has the tendency or capacity to be misleading, or if the person making the representation or statement does not have sufficient information upon which a reasonable belief in the truth of the representation or statement could be based.
(2)(a) Whenever it appears to the director that a person has violated subsection (1) of this section, the director shall have the powers and remedies set forth in sections 67-2754 and 67-2755, Idaho Code, as well as the powers and remedies found in this chapter, as to any such violation.
(b) Any person who violates subsection (1) of this section shall be subject to the criminal proceedings and penalties set forth in sections 67-2757, 67- 2758 and 67-2759, Idaho Code, as well as the criminal proceedings and penalties provided in this chapter.
§ 26-2227. Repealed
§ 26-2228. Powers of the director
The director shall have the power to provide the manner and method for conducting examinations. Applications for examination shall be filed with the director at least ten (10) days prior to the examination date.
The examination shall be uniformly given, may be written or oral or a combination of both and shall be practical in nature. The examination may include questions on bookkeeping, credit adjusting, business law, collection procedure, business ethics, agency, debtor and creditor relationship, trust funds, creditors' funds, business funds, fiduciary relationships, and the provisions of this act and the rules duly issued by the director pursuant to this act, and such other subject matter as the director by rule may specify. The examination shall be given twice each year or at such more frequent intervals as the director may direct.
§ 26-2229. Examination--Permit
(1) The director shall examine each application for a permit and accompanying papers and investigate the qualifications of the applicant and if he finds therefrom that the same
(2) If the director finds that the applicant does not qualify under the provisions of this act, the application shall be denied. If he finds the applicant is qualified he must issue a permit upon the filing of the bonds required by this act and the payment of an annual permit fee as fixed by the director, but not to exceed fifty dollars ($50), except that no permit fee need be paid by a nonprofit corporation or association conducting credit counseling or debt prorating activities.
(3) Contracts between collection agencies and clients shall be in writing. No collection contract shall be deemed equitable, fair or reasonable within the meaning of this section which in substance either:
(a) Permits the applicant to retain any sums due the creditor on any account, bill, claim or other indebtedness collected for him by the applicant on account of, or as a setoff against, any fee, commission, charge, expense or compensation claimed, other than the regular collection fees or commissions, to be due from such creditor on any other account whatever.
(b) Penalizes the creditor for failure to produce evidence in support of any account, bill, claim or item of indebtedness placed with the applicant for collection in addition to that delivered upon the execution of such contract.
(c) Penalizes such creditor for any unintentional error, mistake or omission in furnishing to the applicant the correct name or address of any debtor.
(d) Stipulates, directly or indirectly, for the payment of any fee, commission or compensation in excess of fifty per cent (50%) of the amount actually collected on any account, bill, claim or other indebtedness entrusted to the applicant for collection, provided, however, that in the case of interest collected by a permittee, the creditor and the permittee by agreement between them may provide for division of such interest between them without such percentage limitation; and provided further that in the case of collection of checks dishonored by nonacceptance or nonpayment the creditor and the permittee by written agreement between them may provide, in place of a percentage fee, for the payment of a set dollar amount collection fee not to exceed the amount provided in section 28-22-105, Idaho Code, which shall not be subject to the fifty per cent (50%) limitation. Collection agreements to proceed under section 1-2301A, Idaho Code, shall be subject to the fifty percent (50%) limitation.
(4) A permit holder, engaging in the business of receiving money from debtors for application to or payment or prorating the account or accounts of any creditor or creditors of such debtor, for compensation or otherwise, or in the business of acting as the assignee for the benefit of creditors as a primary or secondary object, shall not take or receive for services performed by such permit holder for any one (1) person more than fifteen per cent (15%) of the amount received by it at any one (1) time from or on behalf of that person for payment or prorating to creditors and no other charges shall be made or received for any such service.
§ 26-2229A. Requirement of fair, open and honest dealing
(1) Every permittee, foreign
(2) In any and every instance where the permittee has a managerial or financial interest in the creditor, or where the creditor has a managerial or financial interest in the permittee, disclosure of such interest must be made on each and every contact with a debtor in seeking to make a collection of any account, claim, or other indebtedness where such interest or relationship exists between creditor and permittee.
(3) No permittee, foreign permittee, or agent shall collect or attempt to collect any interest or other charges, fees, or expenses incidental to the principal obligation unless such interest or incidental fees, charges, or expenses are:
(a) Expressly authorized by statute;
(b) Allowed by court rule against the debtor;
(c) Have been judicially determined; or
(d) Are provided for in a written form agreement, to be signed by both the debtor and the permittee, and which has the prior approval of the director with respect to the terms of the agreement and amounts of the fees, interest, charges and expenses.
(4) No person shall sell, distribute or make use of collection letters, demand forms or other printed matter which are made similar to or resemble governmental forms or documents, or legal forms used in civil or criminal proceedings.
(5) No person shall use any trade name, address, insignia, picture, emblem or any other means which creates
§ 26-2230. Branch offices
(1) The director may authorize a permittee, upon request, to conduct collection activities authorized in this chapter at additional locations. The additional locations shall be considered branches of the permittee. The director shall be informed of the opening and closing of all branch locations operated by permittees.
(2) The director may authorize a permittee, upon written request, to conduct limited collection activities at locations other than the principal location of the permittee or branches. The facilities may be at the domiciles of the agents employed by the permit holder. Collection activities at facilities shall be limited to telecommunications with creditors, clients, debtors, and the permittee's offices and branches. The director shall be informed of the opening and closing of all facility locations operated by permittees.
§ 26-2231. Renewal of permit
Upon application postmarked on or before the fifteenth day of March of each year, the holder of any permit issued under the provisions of this chapter shall be entitled to have such permit renewed for the succeeding calendar year upon payment of the annual permit fee as fixed by the director, but not to exceed fifty dollars ($50.00), compliance with the bond requirements of this chapter, the filing of a financial statement in the form required by section 26-2224(7), Idaho Code, showing a net worth of at least two thousand five hundred dollars ($2,500) for each place of business for which a permit is sought, filing of all other documents required by section 26-2224, Idaho Code, and approval by the director of all literature to be employed by the permittee during the course of the business year, except no annual permit renewal fee need be paid by a nonprofit corporation or association conducting credit counseling or debt prorating activities.
§ 26-2232. Bonds
Upon approval of the application and prior to the issuance of the permit the applicant must file in the department of finance two (2) bonds. Both bonds shall be in a form provided by the attorney general of this state, and shall be executed by the applicant as principal and by some surety company authorized to do business in this state as surety, and shall be for the term of any permit issued to the applicant. Each permittee shall be required to have the two (2) bonds for each permit as hereinafter provided. In lieu of the bonds required by this section, a certificate of deposit issued by an Idaho bank and made payable to the director may be provided to the director in the same principal amount as required for bonds. The interest on the certificate of deposit shall be payable to the permittee. The certificate of deposit shall be maintained at all times during which the permittee is authorized to do business under Idaho law, and must provide that it will remain in effect for at least three (3) years following discontinuance of operations, unless released earlier by the director when all statutory requirements have been met.
(a) A bond shall be executed to the state of Idaho in the sum of fifteen thousand dollars ($15,000) or upon renewal in such larger sum as hereinafter provided. In any case where a permittee or its representatives has failed to account for and pay over the proceeds of any collection made or money received for payment or prorating to creditors, or has failed to return to a debtor any sum received that was not to be applied to his debts, the creditor or debtor shall have in addition to all other legal remedies a right of action in his own name on such bond without the necessity of joining the permittee in such action. The bond shall be continuous in form and shall remain in full force and effect for the permit period. The surety may cancel the bond provided that the surety shall in such event provide the permittee and the director with notice thirty (30) days prior to
Upon renewal of any permit, the permittee shall supply the director with a statement of the preceding year's net collections. The amount of the bond upon renewal shall be in the amount of fifteen thousand dollars ($15,000), or two (2) times the average monthly net collections for the preceding year computed to the next highest one thousand dollars ($1,000), whichever sum is greater, up to a maximum of one hundred thousand dollars ($100,000).
(b) A bond shall be executed to the state of Idaho in the sum of two thousand dollars ($2,000), which shall be limited to the indemnification of the department of finance for any and all expenses incurred as a result of investigations, administrative proceedings, and prosecutions which shall be instituted by the director against a permittee or licensee pursuant to this act. The bond shall be continuous in form and remain in full force and effect and run concurrently with the permit period and any renewal thereof. The surety may cancel the bond provided that the surety shall in such event provide the permittee and the director with notice thirty (30) days prior to
§ 26-2232A. Alternate Bonding
(1) A debt counselor or credit counselor which holds a valid permit under this chapter and is engaged in the activities described in section 26-2223(6) or 26-2223(7), Idaho Code, may, upon approval of the director of the department of finance, supply the director, upon renewal of its permit, in lieu of the bond required in section 26-2232(a), Idaho Code, a bond in the minimum amount of ten thousand dollars ($10,000) or two (2) times the average monthly net of unremitted funds received from debtors for the preceding year, computed to the next highest one thousand dollars ($1,000), whichever is greater.
(2) Such bonds shall be subject to the same conditions and requirements as the bond set forth in section 26-2232(a), Idaho Code, and shall be in addition to the bond required by section 26-2232(b), Idaho Code.
(3) Application for approval by the director of the department of finance shall be on a form provided by the director and shall include such information as the director shall require.
(4) A credit counselor applicant shall furnish with the application a certified copy of applicant's determination as an exempt corporation under section 501(c)(3) of the Internal Revenue Code, made by the district director of internal revenue, or in the subsequent renewal of its permit and bond, evidence of continuance of its exempt determination by the district director of internal revenue.
(5) Upon approval by the director of the department of finance of the alternate bond and so long thereafter as the credit counselor or debt counselor service shall continue operations under the alternate bond herein provided for, it shall furnish to the director of the department of finance, not later than the fifteenth day of March of each year, a statement containing the following information:
(b) The amount of money received during each calendar month from debtors.
(c) The amount of money remitted to creditors or returned to debtors during each calendar month.
(e) The amount of net unremitted funds due creditors or debtors at the end of each calendar month.
(6) For the purposes of this section money or moneys remitted shall mean money which has actually been conveyed or transferred to the creditor or debtor or his designated agent by physical transfer of cash or by certified or cashier's check or other means so that actual ownership of such funds shall have passed to the creditor or debtor or his agent and no right or interest shall remain in the credit counseling service. A check or bank draft issued but not actually paid, without recourse shall not constitute a remittance.
(7) At any time that the director of the department of finance shall deem that the alternate bond provided for in this section shall be inadequate he may withdraw and cancel approval for the "in lieu" bond and require the bond provided in section 26-2232(a), Idaho Code, or cancel or suspend the permit of the consumer credit counseling service as provided in section 26-2236, Idaho Code.
§ 26-2233. Permittee accounts required
A permittee shall in its own name:
(1) Establish and maintain a separate trust account for deposit and remittance of creditors' funds in a financial institution, the deposits of which are insured by the federal deposit insurance corporation.
(2) Establish and maintain a separate business account for the business funds and
§ 26-2234. Investigations, records and payment of funds
(1) The director or his duly authorized representatives may make an annual examination, or more frequently in the director's discretion, of the place of business of each permittee and foreign permittee and for that purpose the director shall have free access to the offices and places of business, books, creditors' accounts, trust accounts, business accounts, records, papers, files, safes and vaults of all such permittees.
(2) The director may, upon his own motion, and shall, upon the sworn complaint in writing of any person, investigate the action of any person or persons claimed to have violated the provisions of this chapter, and for that purpose the director shall have free access to the offices and places of business, books, creditors' accounts, trust accounts, business accounts, records, papers, files, safes and vaults of all such persons.
(3) Every permittee and foreign permittee shall execute to the director an agreement of consent to examination of any and all bank accounts of the permittee providing the director with authority to make such examination at any time the director, in his discretion, deems it to be in the public interest.
(4) The cost of examination for the first annual examination each year and any investigation shall be paid to the director by each permittee so examined or investigated and the director may maintain an action for the recovery of such costs against the permittee or against the surety providing the bond to indemnify the state for such expenditures as required by this chapter. The cost shall be fixed annually by the director, but shall not exceed twenty-five dollars ($25.00) per examination hour.
(5) Each permittee shall acknowledge in writing each account received for collection and shall maintain a record of such account, make a permanent record of all sums collected by him and of all disbursements made by him. Every permittee shall keep and preserve all records relating to accounts received for collection, collections, receipts, and disposal or disbursement of all creditors' funds for a period of five (5) years after the final disposition of any account. It shall be unlawful for any person to intentionally make any false entry, omit to make a necessary entry, mutilate, secrete away, destroy or otherwise dispose of any record mentioned in this subsection, provided a record may be disposed of after the five (5) year period heretofore provided.
(6) Every permittee shall, within thirty (30) days after the close of each calendar month, pay to his creditors the net proceeds of all collections made by the permittee during said calendar month. Each permittee shall report to the creditor all collections made by him and/or any payments made to the creditor within thirty (30) days after the close of each calendar month.
(7) Every permittee shall maintain his books and records in accordance with generally accepted accounting practices subject to such rules and regulations as adopted by the director.
(8) The director, may impound the creditors' accounts, or trust accounts of any permittee if it shall be deemed in the general public interest.
§ 26-2235. Denial, suspension, revocation of permit
(1) An application for a permit may be denied and, after notice and hearing, a permit may be suspended or revoked, by the director if he finds that the holder of or the applicant for, or any member or manager of an applicant or holder, or any officer or manager of an applicant or holder of such permit:
(a) has violated any provision of this chapter or any rule or order of the director authorized under this chapter; or
(b) is not legally qualified to do business in this state; or
(c) has violated any contract or agreement of a type mentioned in this chapter; or
(d) has failed, refused, neglected, on demand, to pay or remit to any client the agreed portion of any sum collected by the permittee on any bill, claim, account or other indebtedness entrusted to such permittee for collection; or
(e) has failed to return to a debtor an amount that was not to be paid on his debts; or
(f) has made a material misstatement in the application for such permit or renewal; or
(g) has obtained or attempted to obtain a permit or renewal by fraud or misrepresentation; or
(h) has misappropriated or converted to his own use or illegally withheld moneys collected or held for any other person; or
(i) has without properly qualifying as herein provided represented himself as a permittee for the purpose of soliciting for or representing any business covered in this chapter; or
(j) has been convicted of, found guilty of, pled guilty to, or has received a withheld judgment by a court of competent jurisdiction for forgery, embezzlement, fraud, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud or other like offense, any theft offense, a crime involving moral turpitude, or violating any provision of this chapter or is currently disbarred from the practice of law in any state; provided, the director may, in his discretion, issue a permit to any person convicted of any of the above enumerated crimes providing a period of five (5) years has elapsed from the date of his conviction, finding of guilty, plea of guilty, or withheld judgment; or
(k) has had a permit revoked, canceled, or denied; or
(l) owes outstanding, unpaid, delinquent and undisputed accounts or judgments.
(2) The director, after notice and hearing, may impose a civil penalty of not more than one thousand dollars ($1,000) for each violation upon any permittee found to have violated any provision of this chapter.
(3) Permits shall be issued hereunder only to persons who are, and to partnerships, firms, companies, and associations whose members and managers are, and to corporations whose managers are over twenty-one (21) years of age.
(4) The director may, after notice and hearing, impose any sanction authorized by this section on a permit holder if the director finds that an agent of the permit holder has violated any provision of section 26-2229A, Idaho Code.
(5) The director may, in his discretion, and by an order issued in accordance with chapter 52, title 67, Idaho Code, prohibit permit holders from utilizing an individual as an agent if the individual has participated in a violation of this act, or any similar statute of another state.
§ 26-2236. Subpoenas
The director shall have the power to issue subpoenas and bring before him any person, book, or writing in this state, to swear witnesses and to take the testimony of any person by deposition, with the same fees and mileage and in the same manner as prescribed by law in judicial procedure in district courts of this state in civil cases. Any party to a proposed revocation or suspension of a permit shall have the right of subpoena to compel the attendance of witnesses and produce all books and writing on his behalf. In case any witness shall fail or refuse to comply with a subpoena to appear before the director, the clerk of the district court of the county in which the administrative proceedings are held shall, upon demand of the director, issue a subpoena reciting the demand therefor and summoning the witness to appear and testify at a time and place fixed; and violation of such subpoena or disobedience thereto shall be deemed and punished as a violation of any other subpoena issued from the district court. Any revocation or suspension of any permit or license provided for by this chapter shall be governed by chapter 52, title 67, Idaho Code.
§ 26-2237. Fees--Disposition of funds
All fees provided for in this chapter shall be paid to the director and by him remitted to the state treasurer pursuant to section 59-1014, Idaho Code, and all such funds shall be deposited to the credit of the finance administrative account in the state dedicated fund.
§ 26-2238. Violations--Penalties
Any person who shall do business within the state of Idaho as defined in this act, without a permit, or any permit holder who fails to establish and maintain a separate trust account for such creditors' funds for each permit which he holds, or fails to make and keep the records required by this act, shall be guilty of a felony and punishable by a fine not exceeding five thousand dollars ($5,000) or by imprisonment in the state penitentiary for not more than five (5) years, or both, and any person who shall fail to comply with any of the other provisions of this act shall be guilty of a misdemeanor.
§ 26-2239. Exemptions
The provisions of this chapter shall not apply to the following:
(1) Any attorney-at-law duly authorized to practice in this state;
(2) Any regulated lender as defined in section 28-41-301(37), Idaho Code, nor any subsidiary, affiliate or agent of such a regulated lender to the extent that the subsidiary, affiliate or agent collects for the regulated lender;
(3) Any trust company authorized to do business in this state;
(4) Any federal, state or local governmental agency or instrumentality;
(5) Any real estate broker or real estate salesman licensed under the laws of and residing within this state when engaged in the regular practice of a real estate business;
(6) Any abstract and title companies doing an escrow business;
(7) Any mortgage company to the extent that such mortgage company is engaged in the regular business of a mortgage company as defined in section 26-2802, Idaho Code;
(8) Any court appointed trustee, receiver or conservator;
(9) Any telephone corporation, as defined in subsection (10) of section 62- 603, Idaho Code, whose initial request for payment on behalf of such telephone corporation or on behalf of another person is made by the telephone corporation as a part of regular telecommunications billings to its customers and at a time before the account, bill, claim or other indebtedness becomes past due or delinquent;
(10) A person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom he is so related or affiliated and if the principal business of such person is not the collection of debts.
§ 26-2240. Agent identification--Quarterly notice--Fee
Each permit holder shall, with its initial application and each annual renewal, file with the director a list of all agents including the name of the agent and any other identifying information the director may require. A fee of twenty dollars ($20.00) for each listed agent shall accompany the list. The director shall be notified in writing of any additions to the agent list no less often than every calendar quarter. A fee of twenty dollars ($20.00) shall be filed with the director for each additionally identified agent in the quarterly notification of additions to a permit holder's agent list. An agent is not required to be listed, nor the fee paid therefor, unless the agent acted for the permit holder for more than five (5) business days.
§§ 26-2241, 26-2242. Repealed by S.L. 1997, ch. 370, § 9
§§ 26-2241, 26-2242. Repealed by S.L. 1997, ch. 370, § 9
§ 26-2243. Property right in accounts--Practice of law prohibited
A permit holder shall have a property right in any account assigned to it for collection; provided, however, no right herein granted shall authorize such permit holder to engage in the practice of law.
§ 26-2244. Cease and desist orders, penalty
(1) Whenever it appears to the director that it is in the public interest, he may order any person to cease and desist from acts, practices, or omissions which constitute a violation of this chapter.
(2) Whenever, after notice and a hearing, the director finds that any person has violated any provision of this chapter, the director may order the person to cease and desist from acts, practices or omissions which constitute a violation of this chapter and:
(a) Impose a civil penalty of not more than two thousand five hundred dollars ($2,500) for each violation upon any person found to have violated any provision of this chapter;
(b) Issue an order restoring to any person in interest any consideration that may have been acquired or transferred in violation of this chapter; or
(c) Issue an order that the person violating this chapter pay costs, which in the discretion of the director may include an amount representing reasonable attorney's fees and reimbursement for investigative efforts.
§ 26-2245. Director's power to enjoin violations
(1) Whenever it appears to the director that any person, or employee or agent thereof, has engaged in or is about to engage in any act or practice or omission constituting a violation of any provision of this chapter, or any rule or order hereunder, he may in his discretion bring an action in any court of competent jurisdiction to enjoin any such acts or practices and to enforce compliance with this chapter or any rules hereunder. Upon a showing that a person, or employee or agent of any person, has engaged in or is about to engage in an act or practice constituting a violation of this chapter or any rule or order hereunder, a permanent or temporary injunction, or restraining order shall be granted and a receiver or conservator may be appointed for the defendant's assets. The director shall not be required to furnish bond.
(2) In addition to the foregoing, the director, in his discretion and upon a showing in any court of competent jurisdiction that a person has violated the provisions of this chapter or rule or order hereunder, may be granted the following additional remedies:
(a) An order restoring to any person in interest any consideration that may have been acquired or transferred in violation of this chapter;
(b) An order that the person violating this chapter, rule or order hereunder, pay a civil penalty to the department in an amount not to exceed two thousand five hundred dollars ($2,500) for each violation;
(c) An order allowing the director to recover costs, which in the discretion of the court may include an amount representing reasonable attorney's fees and reimbursement for investigative efforts;
(d) An order granting other appropriate remedies upon a proper showing.
§ 26-2246. Discontinuance of operations--Requirements
(1) Before discontinuance of operations as a collection agency under the terms of this act, every permittee shall furnish the director with proof in a form to be determined by the director that:
(a) Proper remittance has been made to all creditors or claimants of money collected.
(b) All accounts have been returned to the creditors and certification to that effect has been provided to the director.
(c) All valuable papers and assignments of judgment given to the permittee by the creditor [creditors] in connection with claims have been returned to the creditor [creditors].
(d) All judgments obtained by the collection agency against debtors, in the agency's name, have been returned and assigned to the creditors.
(2) Any permittee discontinuing doing business as a collection agency shall maintain the bonds required of such permittee to conduct a collection agency business until a final accounting has been made to the director and approved by him.
§ 26-2247. Institution of criminal proceedings
The director may refer such evidence as may be available concerning violations of this act or of any rule or order hereunder to the attorney general or the proper prosecuting attorney, either of whom may in his discretion, with or without such a reference, institute appropriate criminal proceedings under this act.
§ 26-2248. Administration of act
The administration of the provisions of this act shall be under the general supervision and control of the director, subject to chapter 52, title 67, Idaho Code. The director may from time to time make, amend, and rescind such rules, regulations and forms necessary to carry out the provisions of this act. No rule, regulation or form may be made unless the director finds that the action is necessary or appropriate for the public interest or for the protection of creditors and debtors consistent with the purpose of this act.
§ 26-2249. Judicial review of final orders of director
Any person aggrieved by a final order of the director may obtain judicial review of that order pursuant to the provisions of chapter 52, title 67, Idaho Code.
§ 26-2250. Foreign permittees
(1) Notwithstanding any other provision of this chapter, if a permittee meets the conditions of subsection (2) of this section, it shall be exempt, as a foreign permittee, from the requirements that it maintain an agent or office in this state.
(2) To be a foreign permittee, a collection agency must:
(a) Be qualified to do business in the state of Idaho ;
(b) Be the holder of a valid permit or license to do business as a collection agency in the state where it has its principal place of business, or holds a license in another state if the state where its principal place of business is located does not require licenses to operate collection agencies;
(c) Certify in its application for a permit and each annual renewal that it will not solicit any creditor client which has its principal place of business in this state;
(d) Maintain a bond substantially similar, as determined by the director, to the bond required by subsection (b) of section 26-2232, Idaho Code;
(e) Maintain no agent or place of business in this state;
(f) Conduct its business in this state exclusively by mail or telecommunications; and
(g) Maintain its books and records in accordance with generally accepted accounting practices. The director or his duly authorized representatives may make an annual examination, or more frequent in the director's discretion, of the principal place of business of a foreign permittee outside the state of Idaho, and for that purpose the director shall have free access to the offices and places of business, books, creditors' accounts, trust accounts, business accounts, records, papers, files, safes and vaults of all such permittees. The actual cost of examination for the first annual examination each year and any investigation shall be paid to the director by each permittee so examined or investigated. The director may maintain an action for the recovery of such costs against the foreign permittee.
(3) The director shall examine each application for a foreign permit hereunder in the manner provided in section 26-2229, Idaho Code, and if the applicant is found to be qualified under the provisions of this chapter, shall cause a permit to be issued authorizing the applicant to conduct a business in this state as a foreign permittee. An applicant who has been issued a foreign permit pursuant to this chapter shall be known as a "foreign permittee." If the director finds that the applicant does not qualify under the provisions of this chapter, the application shall be denied.
(4) The failure of a permittee to comply with the provisions of this section shall constitute grounds for denial, revocation or suspension of a foreign permit pursuant to section 26-2235, Idaho Code.
§ 26-2251. Cancellation of permit
Any permittee or foreign permittee failing to apply in a timely manner for renewal of a permit shall have said permit canceled effective the day following the last day for renewal applications to be filed. Engaging in collection agency business with a canceled permit shall be a violation of the provisions of this chapter. To restore a canceled permit the fee shall be two hundred dollars ($200). A canceled permit may be restored only before the expiration of six (6) months following the date of annual renewal.
§ 26-2252. Repealed
Current through all 2007 laws of the First Regular Session of the 59th Legislature, Chs. 1-358 that are effective on or before Apr. 11, 2007.
END OF DOCUMENT
(C) 2007 Thomson
I identified only one significant case construing the Act. In Dun & Bradstreet, Inc. v. McEldowney, 564 F. Supp. 257 (D. Idaho 1983). Dunn addressed application of the Act, and a regulatory application of the Act, to a debt collection agency. Although the facts do not involve a credit repair business, the legal requirements addressed in the case apply with equal force to debt collection and credit
Dun & Bradstreet, Inc. v. McEldowney, 564 F. Supp. 257 (D. Idaho 1983)
DUN & BRADSTREET, INC., a Delaware corporation, Plaintiff v. TOM D. McELDOWNEY, Director of the Department of Finance of the State of Idaho, Defendant
Civil No. 82-1080
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO
564 F. Supp. 257; 1983 U.S. Dist. LEXIS 16950
May 13, 1983
PROCEDURAL POSTURE: Plaintiff debt collector brought
OVERVIEW: Plaintiff debt collector was incorporated in Delaware . It operated an office, as required by Idaho law, within the State of Idaho . It sought a declaratory judgment that certain Idaho statutes that governed debt collection within the state were unconstitutional because they violated the U.S. Constitution's Commerce Clause. The court examined the statutes and their
OUTCOME: The court denied plaintiff debt collector's motion for a declaratory judgment as to certain statutes and granted the motion concerning the statute that required intrastate communications and excluded interstate communications, holding that it was constitutionally impermissible.
CORE TERMS: collection agency, collection, permittee, consumer, interstate commerce, finance, license, licensee, in-state, per se, residency requirement, personally, incidental, putative, interstate, soliciting, commerce, actively, impermissible, telephone, resident, unfair, mail, declaratory judgment, business carried, evenhandedly, declaring, balancing, collectors, abusive
COUNSEL: [**1] Dale G. Higer of Eberle, Berlin, Kading, Turnbow & Gillespie, Boise, Idaho, for Plaintiff.
Patric V. Collins, Deputy Attorney General, Department of Finance, Boise , Idaho , for Defendant.
JUDGES: Ryan, J.
OPINION BY: RYAN
[*258] MEMORANDUM OPINION AND ORDER
This action is brought by the plaintiff, Dun & Bradstreet, to restrain and enjoin Tom D. McEldowney, Director of the Department of Finance of the State of Idaho, from enforcing the provisions of Chapter 22, Title 26, Idaho Code, and more particularly, Section 26-2223A, Section 26-2229, Section 26-2233, and Section 26-2242(8), [*259] Idaho Code, and the rules and regulations adopted thereunder. Dun & Bradstreet asks this court to enter a declaratory judgment in accordance with the provisions of 28 U.S.C. §§ 2201 and 2202 declaring that the provisions of said statutes of the State of Idaho and the rules and regulations adopted thereunder are null and void and have no effect as being a contravention of the commerce clause, Article I, Section 8, of the Constitution of the United States.
The parties have caused to be filed a Stipulation and Order Concerning Issues Presented and Conduct of the Case, and providing that depositions [**2] be taken of one witness for each party, after which the parties fully briefed the matter to the court. The court heard oral argument of counsel, and being fully advised in the premises, sets forth the following opinion.
Admitted facts requiring no proof filed by the parties are as follows:
(a) Dun & Bradstreet, Inc., is a corporation organized and existing under the laws of the State of Delaware , and has its principal place of business in New York City , New York .
(b) Tom D. McEldowney is the Director of the Department of Finance of the State of Idaho .
(c) Dun & Bradstreet, Inc., is a collection agency and as such engages in the activities enumerated in Section 26-2223, Idaho Code, and is a permittee authorized to engage in such activities within the State of Idaho.
(d) As an entity which has a nationwide collection agency practice, Dun & Bradstreet is engaged in interstate commerce.
(e) As a permittee, Dun & Bradstreet, Inc., is required under the provisions of Section 26-2223A, Idaho Code, to maintain an office within the State of Idaho. This office is maintained in Boise , Idaho , and must be open to the public during normal business hours on each business day under the provisions [**3] of this section of the Idaho Code. Dun & Bradstreet is required to employ a resident of the State of Idaho who has passed the examination for a permit required by Section 26-2229, Idaho Code, to be personally and actively in charge of the business of Dun & Bradstreet, Inc., carried on at their office. In addition, the resident employee must have a license as required by Section 26-2240, Idaho Code.
(f) Tom D. McEldowney and employees of the Department of Finance of the State of Idaho have interpreted the provisions of Chapter 22, Title 26, Idaho Code, to prohibit Dun & Bradstreet, Inc., and other collection agencies from soliciting for collection the accounts of creditors within the State of Idaho through the use of the mails of the United States or telephone from outside the State of Idaho, or effecting the collection of creditors' accounts assigned to Dun & Bradstreet, Inc., or other collection agencies for collection (except by forwarding such accounts to collection agencies licensed and located in the State of Idaho) through the use of the mails of the United States or telephone from outside the State of Idaho.
The following issues of
(a) Whether the provisions of Section 26-2223A, Idaho Code, impose an unreasonable restriction on interstate commerce in violation of the commerce clause, Article I, Section 8, of the Constitution of the United States.
(b) Whether the provisions of Section 26-2242(8), Idaho Code, impose an unreasonable restriction on interstate commerce in violation of the commerce clause, Article I, Section 8, of the Constitution of the United
(c) Whether the interpretation of Chapter 22, Title 26, Idaho Code, made by Tom D. McEldowney and employees of the Department of Finance of the State of Idaho, that a collection agency permittee and its employees are prohibited from soliciting for collection the accounts of creditors within the State of Idaho through the use of the mails of the United States or telephone from outside the State of Idaho, and that a collection agency permittee and its employees are prohibited from effecting the collection [*260] of creditors' accounts assigned to such permittee for collection (except by forwarding the account to a collection agency licensed and located in the State of Idaho) through the use of the mails of the United [**5] States or telephone from outside the State of Idaho, imposes an unreasonable restriction on interstate commerce in violation of the commerce clause, Article I, Section 8, of the Constitution of the United States.
IDAHO CODE SECTIONS AND INTERPRETATIONS CHALLENGED
HN1 Idaho Code, Section 26-2223A, reads as follows:
26-2223A. Office to be maintained in state. -- Every permittee under this act must maintain an office in the state of Idaho at each location for which a permit is issued. Each office must be open to the public during normal business hours on each business day, provided, however, that the director may in his discretion approve a request for opening at hours other than normal business hours or a portion of a business day. A business day within the meaning of this section does not include Saturdays, Sundays, or legal holidays. Each permittee under this act must designate a person to be personally and actively in charge of the business carried on at any office for which a permit is held. No office may be operated by a permittee under this act unless the person who is personally and actively in charge of the operation of an office doing business under this act passes [**6] the examination for a permit required by section 26-2229, Idaho Code, provided that persons operating under a valid collection agency permit on July 1, 1974 shall not be required to comply with this requirement until July 1, 1976.
HN2 Section 26-2223A requires every permittee to maintain an office in the State of Idaho at each location for which a permit is issued, and requires each permittee to designate a person to be personally and actively in charge of the business carried on at such office. The Department of Finance has interpreted this section to require that a collection agency permittee conduct its business from its designated Idaho (offices). This interpretation prohibits any collection agency from either soliciting accounts from Idaho creditors or attempting to effect collections from Idaho debtors from any location outside the State of Idaho , since business must be conducted from the location for which a permit has been issued, and no permit will be issued for a location outside the State of Idaho . This interpretation also prohibits any collection agency from conducting its business from any location within the State of Idaho for which no permit has been issued.
[**7] The plaintiff also challenges the constitutionality of HN3 Section 26-2242(8), Idaho Code, which reads as follows:
26-2242. Grounds for refusal to issue license. -- A license may be refused and, after notice and hearing, be denied, revoked or the renewal thereof refused by the director if he finds that the holder of or the applicant for such license:
. . .
(8) Is not a bona fide resident of this state; . . .
A "licensee" is:
any person licensed by the director who is employed by a collection agency and whose primary function is as a solicitor engaged in collection or receiving payment or soliciting the receiving or collection of payment for others of any account, bill or other indebtedness for the collection agency.
Idaho Code, § 26-2222(7).
The license requirement is contained in Section 26-2240, Idaho Code, which provides in part:
(1) No person shall act as a licensee of any firm, company or person holding a permit under this act without first obtaining a license to do so.
HN4 Article I, Section 8, of the United States Constitution reads in pertinent part: "The Congress shall have Power . . . To regulate commerce . . . among the several [**8] States . . ."
HN5 The commerce clause of the United States Constitution can erect a barrier to state action where Congress has exercised its constitutional power to regulate commerce among several states, and has indicated its policy to which contrary or inconsistent state action must give way by reason of the commerce clause and also by reason of the supremacy clause. The commerce clause can also erect a barrier when Congress by inaction has remained silent or has taken no action setting forth its policy on a given subject matter. In these latter situations a challenge or objection to state authority would rest entirely on the "dormant" commerce clause of Article I, Section 8, or on the unexercised commerce power itself. The plaintiff points out that the accepted "modern test" is stated in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970):
HN6 Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. [**9] (citations omitted) If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.
The defendant submits that the challenged statutes and the interpretation thereof by the Department of Finance, will pass constitutional muster under the "Pike balancing test."
The defendant argues that the instant case falls within a third category wherein Congress enacted the Fair Debt Collection Practices Act (hereinafter "FDCPA"), 15 U.S.C. §§ 1692-1692o, which legislates in the same area regulated by the Idaho Collection Agency Law.
HN7 The FDCPA, in Section 1692n of 15 U.S.C., contains the following provision:
This title does not annul, alter, or affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of [**10] this section, a State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection provided by this title.
The defendant states that an express congressional recognition of rights of states to legislate in a particular area would be dispositive in that Congress has expressly approved of stricter state laws in the field of collection agency regulation; therefore, ordinary "dormant" commerce clause analysis does not apply to such regulation and the statutes and interpretation which are the subject of the instant case do not contravene the commerce clause of the United States Constitution.
However, plaintiff argues that it is a commercial collection agency and that the FDCPA has application only to consumer collection agencies. An analysis of the challenged statutes and the interpretation thereof, varies depending upon whether the FDCPA is applicable to commercial collection agencies.
At oral argument, neither party could point to a judicial determination of the applicable difference as between consumer collection agency and commercial collection agency. Thus, this issue appears to be one of first impression. Defendant [**11] maintains that since FDCPA refers to debt collection agencies and debt collectors, the Act applies to the Idaho legislation in question and thus provides the state a greater flexibility in dealing with the regulation of debt collections than if Congress had been wholly silent on the matter. Dun & Bradstreet counters that the legislative history of the Act explicitly limits the application of the Act to consumer collection agencies as opposed to commercial collection agencies.
[*262] In reviewing the legislative history of the FDCPA, it is apparent that the bill was intended to apply only to consumer collection agencies:
NATURE AND PURPOSE OF THE BILL
This legislation would add a new title to the Consumer Credit Protection Act entitled the Fair Debt Collection Practices Act. Its purpose is to protect consumers from a host of unfair, harassing, and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors. . . . (emphasis added)
S. Rep. No. 382, 95th Cong., 1st Sess. 1-2, reprinted in 1977 U.S. Code Cong. & Ad. News 1696.
Later, in the same Senate Report under "Explanation of the Legislation," the report [**12] reads: "This bill applies only to debts contracted by consumers for personal, family, or household purposes; it has no application to the collection of commercial accounts." Id. at 3, and 1697. The legislative history clearly indicates that the statute was intended to apply only to consumer debts. While this construction of the statute may lead to some ambiguity in that consumer and commercial debts are difficult to separate from a legislative standpoint, the only interpretation available to this court is that presented by Plaintiff Dun & Bradstreet. Therefore, this court finds that the FDCPA applies only to consumer debt collection agencies and is therefore inapplicable to this action. The analysis of the challenged legislation will thus proceed on the basis that Congress has not addressed the question of commercial collection agencies.
THE IN-STATE OFFICE REQUIREMENTS
The defendant argues that the office requirement as provided for in Section 26-2223A and the communications requirement set forth in the finance director's interpretation and requirements cannot be discussed separately for if the statute falls, the interpretation must therefore fall, and conversely, if the [**13] in-state office requirement is constitutionally valid, the interpretation is likewise valid. Because two distinct questions are presented by the in-state office requirement and the interpretation thereof, the court will consider each question separately.
The plaintiff contends that the requirement of an in-state office is an impermissible burden on interstate commerce and should be declared unconstitutional. Plaintiff asserts that the statute would be a restraint on interstate commerce as applied and is thus per se unconstitutional. In support of the per se unconstitutional argument, plaintiff cites Philadelphia v. New Jersey, 437 U.S. 617, 57 L. Ed. 2d 475, 98 S. Ct. 2531 (1978), and Lewis v. BT Invest. Managers, Inc., 447 U.S. 27, 64 L. Ed. 2d 702, 100 S. Ct. 2009 (1980). In the alternative, plaintiff argues that if the statute passes the constitutional per se challenge, the in-state office requirement should be analyzed under the balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970), and thus declared constitutionally impermissible.
From a study of the statute, it appears that the requirement applies evenhandedly [**14] both to Dun & Bradstreet and each and every other collection agency that may be operating in the State of Idaho . It is evident that the statute requires Dun & Bradstreet (or any other collection agency) to maintain an office within the State of Idaho , and that its manager must be personally familiar with correspondence and communications that would involve Idaho debtors. However, in Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 57 L. Ed. 2d 91, 98 S. Ct. 2207 (1978), the United States Supreme Court stated that, HN8 "the commerce clause protects the interstate market, not particular interstate firms, from prohibitive or burdensome regulation." Id. at 127-28. Thus, the Court does not view the statutory requirements to be per se unconstitutional.
Since the statute is not per se unconstitutional, the applicable test is that laid out in Pike v. Bruce Church, Inc., 397 U.S. 137, [*263] 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970). In Pike, the Court held that:
HN9 Where the [state] statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed [**15] on such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found, then the question becomes one of degree.
Id. at 142 (citations omitted). Pike thus requires a balancing between the state's interest in the regulation and the burden it imposes on interstate commerce.
Plaintiff asserts that Pike is indistinguishable from the case at bar. In Pike, Arizona cantaloupe growers challenged an Arizona law which required that all fruit grown in the state be processed there too. In striking down the legislation, the Supreme Court found that they "viewed with particular suspicion state statutes requiring business operations to be performed in the home State that could more efficiently be performed elsewhere. Even where the State is pursuing a clearly legitimate local interest, this particular burden on commerce has been declared to be virtually per se illegal." 397 U.S. at 145 (citations omitted). Plaintiff contends that Pike is directly on point and that it therefore controls. However, it must be noted that the Court did not find in-state office requirements per se illegal. It is critical to the analysis [**16] of Pike to understand what the putative benefit of the legislation is. The Court in Pike found that, "the impetus for the Act was the fear that some growers were shipping inferior or deceptively packaged produce, with the result that the reputation of Arizona growers generally was being tarnished and their financial return concomitantly reduced." Id. at 143. The Court in striking down the legislation held that, "such an incidental consequence of a regulatory scheme could perhaps be tolerated if a more compelling state interest were involved." Id. at 146 (emphasis added). The question thus before the court is whether Idaho 's interest in regulating collection agencies is compelling enough to require the incidental consequences of its regulatory scheme.
In this situation the court finds that the putative benefit of Idaho's regulatory scheme outweighs the incidental consequences incurred by collection agencies and upholds Idaho Code § 26-2223A (1977). In Pike, the putative rationale was to protect the reputation of Arizona cantaloupe growers. In the case at bar, the putative rationale is to regulate collection agencies. To this end, the policy adopted by [**17] the Idaho Legislature in enacting Chapter 26, Title 22, Idaho Code, is to protect Idaho debtors, be they consumer or commercial, from abusive, unethical, and unfair practices by collection agencies.
Regulation of consumer collection agencies was deemed important enough for the United States Congress to intervene and pass legislation regulating consumer collection agencies. Even though this court is unpersuaded that the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692o (Supp. IV 1980), is applicable in this instance, the court finds that much of the rationale for the FDCPA is germane to the discussion of the putative need for such legislation. As Congress has declared:
There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
15 U.S.C. § 1692(a) (Supp.IV 1980).
The court is of the opinion that the rationale contained in FDCPA enacted by Congress applies in a commercial debt collection setting as well. Although Congress [**18] did limit the FDCPA to consumer debt collection, certainly abusive, unfair, or unethical practices are not limited just to consumer collection agencies. Regulation of commercial debt collection practices is a sufficiently compelling state interest to meet the [*264] Pike balancing test, and consequently, justifies the state's adopted policy. The court finds that the challenged statute is constitutionally permissible.
LIMITATION ON INTERSTATE COMMUNICATION: THE INTERPRETATION BY THE DIRECTOR OF THE DEPARTMENT OF FINANCE
The defendant argues that the director's interpretation of Idaho Code § 26-2223A is a correct statutory construction. The director's interpretation requires that all communications from Dun & Bradstreet to Idaho debtors, whether by mail or telephone, must emanate from within Idaho . The department relies on a portion of Section 26-2223A which requires: "Each permittee under this act must designate a person to be personally and actively in charge of the business carried on at any office for which a permit is held." The department argues that by reason of the above a significant part of the business of a collection agency permittee is the solicitation [**19] of accounts and collection of debts. Both of these functions involve sending letters or making phone calls, and that if a person is to be personally and actively in charge of the business carried on at the office, that must mean that he is in charge of the very important business of communicating with creditors and debtors.
With this, the court does not agree, as this interpretation certainly stretches a new meaning and a new concept into what the statute actually says. By restricting the plaintiff to initiating all communication either by letter or by phone intrastate and thus forbidding the permittee company any interstate communications in soliciting creditors' accounts at least, certainly interferes with interstate commerce. Such a statutory construction is constitutionally impermissible as a regulation or restriction. It is not a proper rationale, from a common sense standpoint or from a regulatory standpoint, to so restrict the plaintiff's communication network and coordination of its business affairs in soliciting creditors' accounts or, for that matter, in communicating with debtors.
RESIDENCY REQUIREMENT OF LICENSEE
Dun & Bradstreet also challenges the constitutionality [**20] of Idaho Code § 26-2242(8) (1977). In order to understand plaintiff's challenge of this statute, it is necessary to read various portions of Title 26, Idaho Code. The pertinent portions of these statutes read as follows:
HN10 26-2242. Grounds for refusal to issue license. -- A license may be refused and, after notice and hearing, be denied, revoked or the renewal thereof refused by the director if he finds that the holder of or the applicant for such license:
. . .
(8) Is not a bona fide resident of this state; . . .
The crux of plaintiff's challenge is that this statute in requiring residency in the State of Idaho as a prerequisite to operating a collection agency in this state imposes an impermissible burden on interstate commerce. Plaintiff argues that a residency requirement such as that in Idaho Code § 26-2242(8) discriminates on its face and thus is presumed to be unconstitutional. In support of that argument, plaintiff cites Philadelphia v. New Jersey, 437 U.S. 617, 57 L. Ed. 2d 475, 98 S. Ct. 2531 (1978); Service Machine & Shipbuilding Corp. v. Edwards, 617 F.2d 70 (5th Cir.),
However, in a close reading of Idaho Code § 26-2242(8), it is noted that HN11 the requirement of residency of a licensee is discretionary with the Director of the Department of Finance. The plaintiff does not actually make any showing that the residency requirement has in fact had an impact or burden on either interstate commerce or upon the plaintiff. Just as an in-state office requirement applies evenhandedly [*265] to a permittee, so too does a requirement of residency as a condition for the license of a licensee, even though such residency requirement is discretionary with the Director of the State Department of Finance. The court is of the opinion, therefore, that the impact of a residency requirement on the licensee is incidental. The court makes no finding that the statute is constitutional or unconstitutional as it applies to an individual licensee applicant who may challenge the residency requirement. The residency requirement is merely incidental as it applies to Dun & Bradstreet. [**22] In viewing the legislative scheme as a whole, the court is of the opinion that an in-state office requirement required of the permittee, along with a requirement that a representative licensee be a resident of Idaho, serves a legitimate state purpose wherein it serves to protect Idaho debtors from unfair debt collectors and also presents a means by which the director of finance may properly regulate collection agencies as permittees and the representative licensee.
IT IS THEREFORE ORDERED that plaintiff's motion for a declaratory judgment declaring Idaho Code § 26-2223A as unconstitutional, should be, and the same is hereby, DENIED.
IT IS FURTHER ORDERED that plaintiff's motion for a declaratory judgment declaring that the interpretation of the statute requiring intrastate communications and excluding interstate communications is constitutionally impermissible, should be, and the same is hereby, GRANTED.
IT IS FURTHER ORDERED that plaintiff's motion for declaratory judgment declaring Idaho Code § 26-2242(8) unconstitutional should be, and the same is hereby, DENIED.
For additional information about starting a credit repair company in [STATE] contact your state or an attorney.
A BOND IS NOT REQUIRED IN STATE.
Idaho credit repair businesses must be knowledgeable about the statute of limitation governing debt in Idaho because this will guide your business decisions and enable you to best help your clients. The statue of limitations essentially limits the time that a creditor can legally sue a consumer for payments for a debt. Statutes of Limitation (SOL) do vary by state and debt type. In general, it is usually between 3 to 6 years, but sometimes longer.
To learn more about the statute of limitation laws for your state, click here.
Learn more about the statute of limitation laws for your state
We’re not aware of a state requirement for a “credit repair license” to operate a credit repair business in Idaho. However, many find getting training and a certification useful because it:
The American Credit Repair Academy http://try.creditrepaircloud.com/academy/; offers training, resources, and credit repair certification
Use software to automate the tasks of a credit repair business in Idaho:
All of this is available with Credit Repair Cloud
You can register your Idaho credit repair company by using the Idaho Business Wizard and clicking through to
Independent Contractor, Both, or Neither. A false classification (even accidental!) can cause regulating bodies to impose fines and penalties on your credit repair business, so be sure to consult with legal experts to make certain of your business type before completing this section.
After this, you will follow the rest of the steps in the Business Wizard to register your credit repair company.
We have a tax preparation business. My partner and I decided to branch out into credit repair. Credit Repair Cloud now helps us to build our customer base for the tax business. It is a wonderful tool for lead generation. Credit-Aid provides superior customer service. You have gained a customer for life!
I love your system! This was the best investment ever and the customer service with Credit Repair Cloud is excellent. You have a very good team. I wish companies were just like you. I've tried everybody out there and your system is very powerful. Thank you for helping me. God bless you!
How Credit Repair is the LOWEST COST & MOST PROFITABLE business you can launch. . .
How our step-by-step “Dispute Process Blueprint” gives you EASY Credit Repair Results without being a credit expert. . .
How our easy method gets you UNLIMITED Clients without paying for advertising. . .
Legal disclaimer: Our software products and resources offer credit information, not legal advice. We make every effort to ensure the accuracy of the information and to clearly explain your options. However, we do not provide legal advice (i.e.; the application of the law to your individual circumstances). For legal advice, please consult an attorney, your city or your state.