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This week, an RA member inquired about Nevada licensing rules. Getting licensed in Nevada and meeting the ongoing requirements for collection agencies has always been a tedious process. Nevada’s Department of Business & Industry Financial Institutions has made an improvement to the process by joining the Nationwide Multistate Licensing System and Registry (NMLS).
Once an agency has registered on NMLS they will submit Nevada form MU-1 for their principal office and the MU-3 form for each additional branch office that will collect on Nevada accounts. Nevada requires several documents to be uploaded into NMLS along with the application. Some of the documents required are agency financial statements, a business plan, organizational chart, etc. A new application checklist is provided by the state on their website that includes a listing of all the required documents and information.
In addition to documents, an agency is required to have a surety bond, credit reports are obtained by the state for all persons of control and are paid for by the collection agency, FBI background checks are required for direct owners and executive officers and those are also at the expense of the collection agency. There are several fees and they are all outlined on the website.
Agencies are also required to have a Qualified Manager who is individually licensed in Nevada. Unless an agency already employs a manager that is licensed as a Qualified Manager, Nevada requires that the Collection Agency application is submitted concurrently with the Qualified Manager application. Renewal and initial application forms (MU-4) for the Qualified Manager are submitted through the NMLS. Once the application is approved, the applicant is sent an email with a web form allowing the applicant to reserve a seat for an online test. This is also an improvement to the Nevada licensing process. They previously required all applicants to take the test in-person.
Once you are licensed to collect in Nevada, get ready for your annual audit. These are almost always time intensive and require a lot of document gathering. How difficult the audit is will almost always be dependent on the auditor you’re assigned. They will want to listen to calls and will request copies of letters sent to specific consumers, among other things.
Nevada has some additional requirements that you need to be aware of.
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Nevada will ask for copies of all form letters that are sent to Nevada residents and they can require you to make changes to them if they do not meet their requirements.
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If you collect medical debt, you have 60 days to send an initial letter before you can conduct any collection activity. This letter has to specify that it is “not a demand for payment” and must be in all capital letters and in at least 12-point bold type. More information on this can be found by Googling NV Senate Bill 248 and/or Nevada Admin Code R.55-21. ACA International’s State Guide also includes a plethora of information on collecting medical debt in Nevada.
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If your collectors use an alias, that must be filed with the state.
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Nevada requires record retention of 6 years from the last transaction.
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You are required to send annual reports to the Commissioner.
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A licensed agency is required to have a branch office in the state of Nevada. This can be accomplished with the use of a Registered Agent. Note: There is some debate whether this has changed. The language is a bit confusing so we recommend that you address this directly with Nevada’s Department of Business & Industry Financial Institutions or your licensing partner.
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Agencies must maintain a Trust account specifically for Nevada resident payments.
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Nevada does not allow the offshoring or nearshoring of their residents’ accounts. If you do any offshoring or near-shoring, Nevada may require you to provide a statement that your agency segregates Nevada accounts from those worked by offshore/nearshore agents.
In short, being licensed in Nevada is not easy. Nothing worthwhile in life ever is. It’s up to you to decide if collecting in Nevada is.
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Reminder: Send any topics or questions that you want to discuss to sara@insidearm.com by Thursday to ensure it makes it on our agenda!
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