Illinois Public Act No. 227 was quietly signed into law earlier this month, containing several substantive updates to the Illinois Collection Agency Act (ICAA). It is important to note that there is no implementation period on these changes; they took effect upon signing of the law on August 3, 2015.
Commercial collectors are now treated like consumer agencies
On page 53 of the Act, the words “consumer” and “natural” [person] were removed, causing the Law to apply to commercial collection activities in addition to consumer collections. This includes the requirement to be licensed, with limited exceptions (see page 60).
Validation of Debts
On page 81, the Act strikes “That upon the debtor’s written request within the 30 day period…” and states “The collection agency will provide the debtor with the name and address of the original creditor, if different from the current creditor.”
Disclosure of Company Name When Seeking to Obtain Location Information
At the bottom of page 76, Sec. 9.1 (1) the Act strikes “only if expressly requested,” in the paragraph related to identifying the name of the collector’s employer. This suggests that collectors must now always state the name of their employer, whether requested to or not.
Language that has remained intact specifically calls out entities (see page 55) that are not subject to the Law, notably banks, credit unions, retailers, and others collecting on their own behalf, or in a first party capacity. As we reported last week in the context of Davidson v. Capital One Bank (USA), N.A., the CFPB’s recent activities seem to point to its intention to treat first party collectors more like third party collectors.
In some cases (i.e. the State of New York), we are starting to see states acting as bellwethers for new debt collection rules, with federal regulators watching. In other cases, we may see the opposite, for instance in the case of the CFPB’s use of its UDAAP authority to address the treatment of first party collectors.
Regarding the Illinois changes, the Law raises potential for confusion:
- Although the name of the original creditor shouldn’t cause issue, the address of the original creditor might. For example, the original creditor may no longer be in existence. Previously, if this was disputed, the agency could return the account to the creditor if the original creditor’s address could not be identified. Does the collection agency now have an affirmative duty to confirm the original creditor’s address is available (and completely correct)?
- If the name and address of the original creditor is already provided, should the agency remove the standard validation of debt language that states, “If you request….this office will provide you with the name and address of the original creditor if different than the original creditor,” which is straight from 809 (b)?
- A statement stating collection efforts will cease until validation of debt is provided. Although this is standard practice, it has not been part of a disclosure on the first notice.
- Failure to dispute does not constitute an admission of liability. Does this not potentially contradict the statement that unless you notify this office within 30 days the agency will assume the debt is valid?
- The (now) required disclosure of company name without being asked when seeking to obtain location information is in direct opposition to the FDCPA, which requires it “only if expressly requested.”