Minnesota Governor Tim Walz signed the Commerce and Energy Omnibus Act on June 26th, which contains several provisions that affect the accounts receivable management industry, largely thanks to the hard work of the leaders of the Great Lakes Credit and Collection Association and the lobbyist Judy Cook. The bill will come into force on August 1st.

The omnibus bill is part of the two-year state budget that will propel Minnesota’s economic recovery according to a statement released by the governor and was signed during a special session of the legislature.

ACA International and GLCCA’s work on the bills dates back to 2019 when the Minnesota Department of Commerce (DOC) reached out to GLCCA President Michael Klutho, a shareholder in ACA member firm Bassford Remele, and invited the unit to adopt the plan of the DOC to examine debt buyers under its licensing law and jurisdiction. GLCCA saw this as an opportunity to develop some additional helpful changes for the industry.

“Fortunately, our efforts have paid off,” said Klutho. “Minnesota Licensing Act is now being updated in a number of ways to facilitate consumer communication during collection.”

For example, the Minnesota Licensing Act previously prohibited leaving recorded messages using an automatic dialer. Instead of the previous blanket ban, such a notification can now take place, but must stop if a consumer expressly requests the authority / collector to stop these notifications

GLCCA’s efforts to improve Minnesota collections didn’t stop there – members also worked to modernize the state’s view of remote labor.

“While we began working with the Department of Commerce on legislative changes prior to COVID-19, the pandemic created an opportunity to advocate for collectors who work from home,” Klutho said. “Starting with negotiation and ultimately working with the department, an agreement was reached to amend the Minnesota licensing statute to allow collectors to work from home (WFH) under the supervision of their collection agencies. Then we were able to work with our lobbyist to work out separate House and Senate bills that allowed WFH. In the end, over a year of focused negotiations with all interested stakeholders, coupled with the insights and efforts of our lobbyist, paid off. ”

The final invoices produced positive results on the following priority issues:

Employees of the debt collection agency working from home are allowed until May 31, 2022

  • An employee of a debt collection company licensed under the Minnesota Bylaws, Chapter 332, may operate from a location other than the licensee’s business location if the licensee and employee meet all of the requirements of the Minnesota Bylaws section 332.33 that would apply if the employee would work at the business location. The fee for a collector registration or renewal under the Minnesota Bylaws, Section 332.33, Subsection 3, entitles the individual collector to work at a Licensee’s business location or any other location otherwise acceptable under this Section. No additional branch license is required for any location used in this section. This section ends on May 31, 2022.

Debt Buyer Regulations

  • Debt buyers must now be licensed and regulated by the Department of Commerce, much like debt collection agencies, and debt buyers are subject to the Prohibited Practices section of the Debt Collection Licensing Act.
  • Debt buyers must submit initial license applications by January 1, 2022.
  • You can find the language of the Debt Buyer Regulation here, on pages 54.27-64.7.

Other debt collection law changes negotiated by the GLCCA with the Dept of Commerce (DOC)

  • The Minnesota Collection Agency Licensing Act no longer prohibits leaving a “recorded” message or using an “automatic dialer” when making collection calls. This is a major change. However, if a consumer notifies the licensee to end communication through an automatic dial announcement device, the licensee must stop. You can find the language here, pages 61.19- 61.24
    • Attention: Consult your attorney regarding the application of the Minnesota – Minn separate / general ADAD statute. Stat. § 325E.26 ff. (ADAD law).
  • Licensees can now use a “registered” d / b / a once it is listed in the DOC – another major change. You can find the language here, pages 62.1-62.3
    • For agencies whose name basically indicates that they are active in the debt collection business, this enables the use of ad / b / a after registration.
    • This will help ensure that the “Limited Content Message” is carried over by Regulation F of the Consumer Financial Protection Bureau.
    • Remember to also register your d / b / a with the Secretary of State and your insurance company.
  • “Affiliates” can operate under a single license. You can find the language here, pages 55.18-55.25 and 59.5-59.9.
  • Allows you to collect fees when the amount is expressly approved by the collection agreement or permitted by law. You can find the language here, pages 62.9-62.11
    • This change represents the first step in obtaining legal approval for convenience fees.
    • In the negotiations with the DOC that resulted in this language, the DOC stated that they are generally not against convenience fees (after all, the DOC collects convenience fees from licensees when registering collectors) but requested that they do so for the time being to be used as a wildcard to allow for further discussion on this topic that needs to involve other stakeholders.

“Proactively changing a law that affects collections is far from easy and not for the faint of heart,” said Klutho. “It’s a roller coaster ride that feels like an eternity. If you can make it to the end it’s all worth it. Fortunately, we survived the drive, which means the debt collection industry can now take advantage of GLCCA’s efforts for years to come. “