Download This Bill in Microsoft Word format
Indicates Matter Stricken
Indicates New Matter
S. 562
STATUS INFORMATION
General Bill
Sponsors: Senator Fair
Document Path: l:\council\bills\nbd\11323ab07.doc
Introduced in the Senate on March 13, 2007
Currently residing in the Senate Committee on Banking and Insurance
Summary: Debt Collection and Personal Property Recovery Act
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 3/13/2007 Senate Introduced and read first time SJ-8 3/13/2007 Senate Referred to Committee on Banking and Insurance SJ-8
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 12 TO TITLE 37 SO AS TO ENACT THE "DEBT COLLECTION AND PERSONAL PROPERTY RECOVERY ACT" TO REGULATE DEBT COLLECTORS AND RECOVERY AGENCIES BY THE DEPARTMENT OF CONSUMER AFFAIRS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This chapter may be cited as the "Debt Collection and Personal Property Recovery Act".
SECTION 2. Title 37 of the 1976 Code is amended by adding:
Section 37-12-100. As used in this chapter:
(1) 'Advertising' means the submission of bids, contracting, or making known by any public notice or solicitation of business, directly or indirectly, that services regulated under this chapter are available for consideration.
(2) 'Applicant' means a person seeking licensure or the renewal of a license under this chapter.
(3) 'Branch office' means an additional location where a licensee actively conducts business authorized by the license and advertises that he engages in the business authorized by the license.
(4) 'Collection agency' means a:
(a) person who regularly collects or attempts to collect a debt owed or asserted to be owed another;
(b) person who furnishes a collection system carrying a name that simulates the name of a debt collector and who supplies forms for use by a creditor even though the forms direct the debtor to make payments directly to the creditor;
(c) creditor who, in the process of collecting a debt owed to him, uses a name other than his own to indicate a third person is collecting or attempting to collect the debt;
(d) person regularly engaged in the enforcement of security interests securing debts; or
(e) person who regularly collects or attempts to collect, directly or indirectly, a debt owed for his 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.
(5) The business of debt collection is conducted in this State if a collection agency, its employees, or its agents are located in this State or attempt to collect a debt from a consumer located in this State.
(6) Collection agency does not mean a person:
(a) engaged in soliciting claims for collection, or collecting or attempting to collect claims on behalf of a licensee under this chapter if employed by a collection agency;
(b) collecting or attempting to collect claims for one employer if all the collection efforts are carried on in the employer's name and if the individual is employed by the employer;
(c) conducting collection activities in his true name and that are confined and directly related to the operation of a business other than a collection agency, including trust companies, savings and loan associations, building and loan associations, insurance companies, credit unions, loan or finance companies, mortgage banks, public officers acting in their official capacities, persons acting under court order, lawyers, abstract companies conducting an escrow business, real estate brokers, associations of apartment owners, homeowners' associations, or property management companies collecting assessments, charges, or fines on behalf of condominium unit owners associations;
(d) acting on behalf of another only by preparing or mailing periodic billing statements; or
(e) acting as a debt collector for another person with whom it is related by common ownership or corporate control, if the debt collector does so only for a person to whom it is so related or affiliated and if the principal business of the person is not debt collection.
(7) 'Communication' means conveying information regarding a debt to another person.
(8) 'Consumer' means:
(a) a natural person obligated or allegedly obligated to pay a debt incurred primarily for a personal, family or household purpose;
(b) a consumer as defined in Section 37-1-301(10);
(c) a consumer's spouse, guardian, executor, or administrator; and
(d) the parent of a minor where the consumer is a minor.
(9) 'Conviction' means an adjudication of guilt by a court resulting from a trial or plea.
(10) 'Creditor' means a creditor as defined in Section 37-1-301(13).
(11) 'Debt' means an obligation of a consumer to pay money arising out of a transaction primarily for personal, family, or household purposes.
(12) 'Debt collector' means a debt collector as defined in Section 37-1-301(28).
(13) 'Department' means the South Carolina Department of Consumer Affairs.
(14) 'Good moral character' means a personal history of honesty, fairness, and respect for individual rights and the laws of this State and nation.
(15) 'Licensee' means a person licensed under this chapter.
(16) 'Location information' means a consumer's place of abode and his telephone number at his place of abode or place of employment.
(17) 'Person' means a person as defined in Section 37-1-301(20).
(18) 'Principal officer' means an individual holding the office of president, vice president, secretary, or treasurer in a corporation or association.
(19) 'Principal place of business' means the primary executive office of a business entity.
(20) 'Recovery agent' means any person who, for consideration, works in the business of performing repossessions. A recover agent must be employed by a licensed recovery agency.
(21) 'Recovery agency' means any person who, for consideration, advises as performing or is engaged in the business of performing repossession.
(22) 'Repossession' means the recovery of a motor vehicle, manufactured home, motorboat, or other personal property by an individual who is authorized by the legal owner, lien holder, or lessor to recover, or to collect money payment in lieu of recovery of property that has been sold or leased under a security agreement that contains a repossession clause. A repossession under this chapter does not include the towing of a vehicle at the request of the legal owner or under a different provision of law. A repossession is complete when a licensed recovery agent is in control, custody, and possession of such motor vehicle, manufactured home, motorboat, or other personal property and, when repossessing at the debtor's premises, has removed it from the premises of the debtor.
(23) 'Revocation' means to withdraw or terminate a license to act as a collection agency to prohibit the renewal of the license on a permanent or temporary basis.
(24) 'Suspension' means to withdraw or terminate a license to a collection agency for less than one year.
(25) 'Verification' means to provide information to a consumer in response to his dispute or request. The response must be transmitted in a manner accessible to the consumer and capable of being maintained by the consumer.
Section 37-12-105. Notwithstanding other provisions in this chapter, the department may, upon finding that the licensee has engaged intentionally or repeatedly in a course of conduct in violation of this chapter, increase the required bond.
Section 37-12-110. The department has the powers and duties granted to the Administrator in Part 1 of Chapter 6 of this title to administer and enforce the provisions of this chapter and may promulgate regulations necessary to effectuate the purposes of this chapter.
Section 37-12-115. The department may use a fee collected under this chapter to administer the provisions of this chapter.
Section 37-12-120. An investigation conducted by the department pursuant to this chapter is exempt from disclosure under the South Carolina Freedom of Information Act, Chapter 4, Title 30 until:
(1) the department concludes its investigation and makes a determination about the existence of probable cause;
(2) the case is closed prior to the department's determination about the existence of probable cause; and
(3) the subject of the investigation waives his privilege of confidentiality.
Section 37-12-125. Within thirty days after the final decision of the department an aggrieved party may file a request for a contested case hearing in accordance with the Administrative Procedures Act and the rules and procedures of the Administrative Law Court.
Section 37-12-200. (A) A person may not engage in collection agency activities without a license issued by the department pursuant to this chapter.
(B) A person acting as a collection agency on the effective date of this chapter may continue to engage in the business without a license until the department has acted upon the application for a license if he files an application within sixty days of the effective date of this chapter.
(C) A person acting as a collection agency without a license as provided by this chapter is guilty of a misdemeanor.
Section 37-12-205. (A) A person seeking to obtain a license must apply to the department on forms prescribed by the department. An application must be made in writing, under oath, and include:
(1) the name and address of each owner, partner, member, officer, or director of the applicant;
(2) a description of the ownership interest of each owner, partner, member, officer director, and employee;
(3) an audited financial statement for the applicant from the preceding fiscal year;
(4) a surety bond as required in Section 37-12-220;
(5) written consent to a criminal records check. A criminal history record check must be requested by each owner, partner, member, officer and director of the applicant from the State Police in the place of residence. The record check must be provided to the department directly from the State Police, unless otherwise prohibited;
(6) the proposed name under which the licensee intends to operate;
(7) the street address, mailing address, and telephone numbers of the principal location at which the business is to be conducted;
(8) the street address, mailing address, and telephone numbers of all branch offices; and
(9) a Personal Composite Credit Report that is less than ninety days old for each owner, partner, member, officer, or director.
(B) An application must be accompanied by a nonrefundable investigation fee of one hundred dollars, a nonrefundable annual license fee of five hundred dollars and a nonrefundable branch license fee of two hundred fifty dollars for each location where collection activities concerning South Carolina consumers occur. An applicant must also bear the cost of obtaining the criminal record check.
(C) Upon the filing of a complete application for a license and payment of required fees, the department shall determine if licensure requirements are satisfied. If the department finds that the financial responsibility and condition, character, qualifications, and general fitness of the applicant, and of the members if the applicant is a co-partnership, association, or limited liability company, and of the officers and directors if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business may be operated honestly, fairly, and in accordance with all applicable state and federal laws, it must issue the applicant a license. Otherwise, the department shall deny an application for licensure and notify the applicant of the denial.
(D) The department shall reject an application not sufficient in form or substance and provide written notification to an applicant explaining the reasons for its refusal. The refusal must be without prejudice to the filing of a new application.
(E) The department's evaluation of an application must consider the criminal record of an individual applicant or partner, officer, director, or member of an applicant. The department shall not grant a license to an attorney who is not in good standing with a state bar or who is unlicensed.
Section 37-12-210. (A) A license remains valid for one year and expires on the thirty-first of May or at such other times as the administrator designates. An application must be submitted no later than thirty days prior to the expiration date and must be accompanied by a nonrefundable annual license fee of five hundred dollars for a licensee's principal place of business and a nonrefundable branch office fee of two hundred fifty dollars for each location where collection activities concerning South Carolina consumers occur. The department shall assess a delinquency fee of one hundred dollars if a license is not renewed within thirty days following the renewal date.
(B) A license must plainly state the name and business address of the licensee. A licensee shall post the license in a conspicuous place in the office where the business is transacted. In the event of the loss or destruction of a license, a licensee may obtain a duplicate license from the department by filing an affidavit explaining its loss or destruction and paying a fee of twenty dollars. A duplicate license must bear the date and number of the license it replaced.
(C) The department may refuse to issue or renew a license, or may revoke or suspend a license if:
(1) an applicant or licensee is not authorized to do business in this State;
(2) an applicant owner, partner, member, officer or director has not reached the age of eighteen;
(3) an applicant owner, partner, member, officer or director of an applicant or licensee:
(a) knowingly makes a false statement of a material fact in its application or renewal application;
(b) has a license to conduct a collection agency denied, not renewed, suspended or revoked for a reason other than the nonpayment of a licensing fee or failure to meet a bonding requirement;
(c) has a conviction for a felony, crime of moral turpitude, or crime of dishonesty within the past ten years;
(d) has a judgment entered against him in a civil action involving forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, fraud or conspiracy to commit fraud within the past ten years;
(e) fails to pay or satisfy a judgment debt or penalty imposed by a court; or
(f) violates a provision of this chapter or a reasonable rule or regulation made by the department pursuant to this chapter.
Section 37-12-215. (A) A licensee must complete twenty-four hours of continuing professional education each year and must earn twelve of the twenty-four hours in a live instructional setting. The continuing education requirements must be met by:
(1) the owner of a sole proprietorship that holds a license;
(2) all partners in a partnership that holds a license; and
(3) a person with a twenty-five percent or greater ownership interest in a limited liability company or a corporation that holds a license and actively participates in the organization's management.
(B) A licensee must report the continuing professional education he completes to the department annually on a form approved by the department. The form must indicate the date, title, instructor, sponsor, and credit hours claimed for coursework completed. A course taught in a live classroom setting may provide one hour of continuing professional education credit for every fifty minutes of classroom instruction. A course sponsor shall maintain attendance records for two years following the date on which it provided the course.
(C) A licensee shall maintain documentation of coursework that an owner, partner, member, or officer of the licensee completed to satisfy the requirements of this section for a period of two years from the date on which the owner, partner, member, or officer completed the coursework. The documentation must consist of certification by the teacher or sponsor of the course indicating the recommended number of credit hours awarded. The department may inspect this documentation during the period the documentation is maintained by the licensee.
(D) The department shall:
(1) offer continuing professional education courses to assist licensees in satisfying the requirements of this chapter; and
(2) appoint a panel comprised of one representative of the department and two licensed members of the collection agency industry to approve courses offered by sponsors other than the department. The panel may conduct its meetings by way of a conference call. The department shall develop a questionnaire to ascertain the interest and background of potential members of this panel.
(E) The department shall immediately suspend the license of a licensee who fails to complete his continuing professional education in a timely manner, and shall not renew the license until the licensee demonstrates compliance with the continuing professional education requirements and, if more than thirty days have lapsed since the license expired, pays a penalty of no more than one hundred dollars. If more than sixty days have lapsed since the license expired, the collection agency must apply under Section 37-12-205.
(F) A licensee may request an administrative hearing to appeal the expiration of his license for failure to satisfy continuing professional education requirements.
Section 37-12-220. (A) A collection agency shall file a surety bond with the department before conducting business. The bond must be:
(1) executed for the following amounts based on the total value of South Carolina accounts in possession of the licensee in the previous year:
Annual South Carolina Accounts Amount of Bond
$0 - 99,999 $15,000
$100,000 - $250,000 $30,000
$250,001 - $500,000 $45,000
$500,001 - $1,000,000 $60,000
More than $1,000,000 $150,000
(2) approved by the department;
(3) executed by a surety company authorized by the laws of this State to transact business within this State;
(4) executed to this State;
(5) for the use of the State and a consumer with a cause of action against the collection agency;
(6) maintained for three years after revocation, denial, or failure to renew license; and
(7) continuous in form and remain in full force and effect concurrently with the license unless terminated or canceled by action of the surety as provided in subsection (B).
(B) Upon learning that a surety company intends to withdraw as surety of a licensee, the department shall notify the licensee of the surety company's intention. The department shall provide the licensee with this notice within forty-five days of receipt of notice from the surety company. A licensee's license becomes void upon the termination of the bond by the surety company unless, prior to termination, the licensee files a new bond with the department.
Section 37-12-225. (A) Within ten business days after the occurrence of one of the following events, a licensee shall file a written report with the department describing the event and its expected impact on the licensee's business:
(1) a filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;
(2) an institution of a revocation, suspension, or other proceeding against the licensee by a governmental authority that is related to the licensee's collection activities;
(3) a felony indictment or conviction of a licensee or its owner, partner, member, officer, director, trustee, beneficiary, or principal;
(4) an opening a new branch office;
(5) a transfer, issuance, cancellation, or redemption of stock voting rights or membership amounting to ten percent or more of the total voting stock or memberships outstanding; or
(6) other events the department may prescribe by regulation.
(B) A licensee shall provide written notice to the department within thirty days of obtaining a court approved settlement or entry by a court of a judgment in a civil action relating to a collection agency activity.
(C) The department may require a licensee who fails to comply with this section to pay a late penalty of fifty dollars for each day a report is overdue.
(D) A licensee shall, within ten days of changing the street address or business name stated in his license, deliver the license to the department and provide written notice of the change and a duplicate license fee of twenty dollars to the department. The department shall enter the change or changes in its records, retain and file the surrendered license, and issue a duplicate license with the new information and the date and number of the surrendered license. The department shall suspend a license on the tenth day following the expiration of the time prescribed in this section if the license has not been delivered to the department.
(E) A licensee shall file a new application under this section upon a change of:
(1) twenty-five percent or more in the ownership or management of a limited liability company or corporation holding a license; or
(2) the composition of a partnership holding a license.
(F) A licensee shall report annually to the department a summary of collection activities conducted by the licensee during the previous year. The report must be:
(1) filed with the department before April 15;
(2) made on a form provided by the department; and
(3) made under oath.
Section 37-12-230. (A) A licensee shall:
(1) maintain in his office complete and accurate books, accounts, and records for the department to determine if the licensee is complying with the provisions of this chapter;
(2) maintain books, accounts, and records from other businesses in which the organization is involved separate from those required in item (1); and
(3) retain its books, accounts, and records for three years at its principal place of business or another appropriate location if a licensee's license is terminated, canceled or revoked.
(B) A licensee shall maintain records containing all consumer information including an account allegedly owed by the consumer, payments made on the account, charges made to the account, and relevant correspondence.
(C) A licensee shall retain a record of each employee's first name, last name, and no more than one alias that must consist of a first and last name. An employee may not use the alias of another employee. A licensee must retain these records for three years after the termination of an employee.
Section 37-12-235. (A) The department may enforce the provisions of this chapter and investigate a suspected violation.
(B) The department's investigation may require a licensed person, unlicensed person, or an applicant to:
(1) respond to questions concerning activities regulated under this chapter; and
(2) provide relevant records. The records must be made available to the department within three business days of a request unless the department grants an extension. The department may inspect records on-site. A licensee shall pay reasonable and necessary expenses for the department to examine records located outside of this State.
(C) The department may investigate a person who advertises that he performs a service requiring a license or when a licensee engages in an activity prohibited by this chapter. The department may seek an injunction of such an activity or take other appropriate action pursuant to this chapter.
Section 37-12-240. A licensee is subject to the provisions of Section 37-5-108.
Section 37-12-245. (A) A collection agency may not:
(1) violate a provision of this chapter;
(2) fail to report to the department a violation of this chapter;
(3) commit fraud or make a wilful misrepresentation in its application;
(4) transfer or attempt to transfer a license except as permitted in Section 37-12-365;
(5) fail or refuse to cooperate with an investigation by the department pursuant to this chapter;
(6) report solely in its own name credit or debt information to a consumer-reporting agency;
(7) share or have a common waiting room with a practicing attorney or lending institution;
(8) operate from a private residence unless the area in which it conducts business is used solely for business purposes, has an outside entrance, and is isolated from the remainder of the residence.
Section 37-12-250. A licensee must provide written notice to a consumer and his creditor when the consumer satisfies his debt. The notice must be provided within twenty days of the satisfaction and must include:
(1) the names of the original creditor and the current creditor, if different;
(2) the amount of the original debt;
(3) the amount satisfied; and
(4) a statement that the debt is satisfied.
Section 37-12-255. A licensee whose license has been terminated shall return all documents it possesses that are related to a collection request to the person who made the request. The documents must be returned within five days of the license's termination unless the licensee requests an extension from the department in writing and the department grants an extension. The department must consider all agreements between the collection agency and creditor or forwarder canceled from the date that a permit terminates. A licensee shall promptly notify a third party that possesses an account placed for collection with the licensee that the third party must correspond and be solely responsible to the creditor that placed the account with the agency for collection unless the creditor authorizes a successor to collect the account. A licensee that dissolves must return an account within sixty days of the dissolution.
Section 37-12-260. (A) A licensee shall send a consumer written notice within five days of an initial communication with a consumer regarding the collection of a debt. The written notification must include:
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) the name of the original creditor;
(4) a statement informing the consumer:
(a) he must dispute the validity of the debt, or any part of the debt, within thirty days of receiving notice of the debt or it will be considered valid by the licensee;
(b) if he notifies the licensee in writing within thirty days after receiving notice that he disputes the debt the licensee must obtain verification of the debt or a copy of the judgment against the consumer and the collection agency shall mail a copy of the verification or judgment to the consumer; and
(c) the licensee shall provide him with the name and address of the original creditor if the consumer requests the information in writing during the thirty-day period.
(5) the licensee's license number; and
(6) a conspicuous statement in boldface type located in immediate proximity to the space where the validation of the alleged debt appears, that states: 'You may contact the South Carolina Department of Consumer Affairs if you have complaints concerning a collection agency'. The department's current phone number, mailing address and Internet website address must be included.
(B) A licensee shall suspend collection of a debt if a consumer notifies the licensee within the thirty-day period that the consumer either disputes the debt or requests the name and address of the original creditor. The licensee may not resume collection until it:
(1) obtains verification of the debt or a copy of the judgment, if collection was suspended due to a dispute of the debt; or
(2) mails the name and address of the original creditor to the consumer, where collection is suspended because the consumer requests that information.
(C) A court may not construe a consumer's failure to dispute the validity of a debt under this section as the consumer's admission of liability for the debt.
(D) A licensee may not communicate credit information to a consumer-reporting agency within thirty days after it mails the initial notice to a consumer unless the consumer's last known address is invalid. This provision does not apply to checks, bank drafts, or credit card drafts.
Section 37-12-265. A licensee receiving payment from a consumer owing multiple debts shall apply the payment as the consumer instructs and may not apply the payment to a debt disputed by the consumer.
Section 37-12-270. (A) A licensee receiving payment from a consumer must furnish either an original receipt or a duplicate of the original receipt to the consumer. The licensee must retain a copy of the receipt in its office for a period of three years after the receipt is issued. A receipt must:
(1) be prenumbered by the printer, used, and filed in consecutive numerical order;
(2) include the name, street address, and license number of the licensee;
(3) include the name of the creditor for whom collected;
(4) include the amount and date of the payments made to the account; and
(5) include the last name of the person accepting payment.
(B) A licensee who orally receives a consumer's authorization for payment of a debt must also:
(1) obtain the consumer's written authorization for the payment prior to the payment date;
(2) record by audio tape or digital means the consumer's verbal authorization and retain the recording for a period of three years; or
(3) send the consumer to another employee of the licensee to verify the amount of the payment, the means by which the payment is made, and the consumer's verbal authorization for payment. The licensee must maintain a detailed record of the authorization and verification for a period of three years.
(C) A licensee shall refund a consumer's payment within five days of a dispute if:
(1) a licensee does not comply with section (B); and
(2) the consumer disputes the purported authorization within sixty days of the payment.
(D) A licensee shall provide a written account statement to the consumer within ten days of his written request that includes the:
(1) consumer's name;
(2) creditor's name;
(3) amounts paid by the consumer;
(4) dates on which the creditor received the payments;
(5) allocation of money to principal, interest, court costs, attorney fees, and other costs as applicable; and
(6) the total outstanding balance at the end of the period covered by the statement.
(E) A licensee shall provide the consumer one account statement annually at no charge, and additional statements upon the consumer's request and payment of a fee not to exceed two dollars per statement.
Section 37-12-275. (A) A person who violates this chapter is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars, imprisoned not more than twelve months, or both. A court of competent jurisdiction that determines a violation is wilful may impose a fine of not less than five hundred and fifty dollars for each violation.
(B) A consumer injured or damaged by a violation of this chapter may maintain a civil action to recover actual damages, punitive damages, reasonable attorney fees and other costs associated with the action.
(C) A person must commence an action pursuant to this section within three years from the date on which he discovered or reasonably should have discovered the facts giving rise to his claim.
(D) The department may impose a civil penalty of no more than two thousand five hundred dollars for a violation but not more than ten thousand dollars for multiple violations arising from the same set of transactions or occurrences.
Section 37-12-280. A collection agency shall comply with the provisions of the federal Gramm-Leach-Bliley Act, 15 U.S.C. Section 6801 et seq. (1999) and the applicable implementing federal Privacy of Consumer Information regulations, as adopted by the Office of the comptroller of the Currency, 12 C.F.R. Part 40 (2001); the Board of Governors of the Federal Reserve System, 12 C.F. R. Part 332 (2001); the Office of Thrift Supervisions, 12 C.F.R., Part 573 (2001); the Federal Trade Commission, 16 C.F.R., Part 313 (2001); or the Securities and Exchange Commission, 17 C.F. R., Part 248 (2001), if the collection agency or repossession company is a financial institution as defined in those regulations.
Section 37-12-300. (A) A person may not engage in the business of repossessing personal property without first obtaining a license pursuant to this chapter.
(B) A person engaged in the business of repossessing personal property on the effective date of this chapter may continue to engage in the business without a license until the department has acted upon his application for a license if the application is filed within sixty days of the effective date of this chapter.
(C) A person may not engage the services of an unlicensed person to conduct an activity regulated under this chapter.
(D) A person may not employ or contract with more than one licensed person or recovery agent to repossess the same vehicle during the same time period and in the same geographical region.
Section 37-12-305. Exempt from the provisions of this chapter are:
(1) an individual solely, exclusively, and regularly employed as a recovery agent of a lien holder or lessor;
(2) an attorney in the regular practice of his profession; and
(3) a bank or bank holding company, credit union, restricted lender, supervised lender or any collection agency not engaged in repossessions.
Section 37-12-310. (A) A person seeking licensure as a recovery agency must submit to the department an application on a form provided by the department. An application must be made in writing and under oath. An application must provide:
(1) the proposed name under which the licensee intends to conduct business;
(2) the street address, mailing address, and telephone number of the principal place of business and each branch office in this State;
(3) the name and address of each owner, partner, member, officer, or director of the applicant;
(4) a description of the ownership interest of each owner, partner, member, officer, director, or employee of the applicant;
(5) an audited financial statement for the applicant for the most recent fiscal year;
(6) a surety bond required in Section 37-12-325;
(7) a list of all employees engaged in personal property recovery activities.
(B) An application for a license as a recovery agency must be accompanied by a nonrefundable licensing fee of five hundred dollars for the applicant's primary office, an investigation fee of two hundred dollars, the actual cost of obtaining criminal history record checks, and a nonrefundable branch office license fee of one hundred dollars for each branch office in this State.
(C) The application also must include the following for each owner, partner, member, officer, or director:
(1) consent to a criminal record check;
(2) a full set of fingerprints that the department shall submit to the South Carolina Law Enforcement Division (SLED), the Federal Bureau of Investigation (FBI), or another appropriate law enforcement agency to verify the identity of an applicant and obtain records of an applicant's criminal arrests and convictions; and
(3) a Personal Composite Credit Report that is less than ninety days old.
(D) Upon receipt of an application on the forms prescribed by the department and accompanied by the required fee the department shall investigate whether the applicant's qualifications for a license are satisfied.
Section 37-12-315. A recovery agency must maintain at least one physical location in this State from which it conducts the normal business of repossession. This location shall be considered the licensee's primary office. If more than one location is maintained in this State, the licensee shall designate the primary office.
Section 37-12-320. A recovery agency must apply for a branch office license for each location within this State, other than the primary office, where it conducts repossession activities. The application must state the location and address of the branch office, and the name and address of the person who will actively manage the branch office. An applicant must include with the application a rider or endorsement to the licensee's surety bond that increases the penal sum of the bond by ten thousand dollars for each branch office and a nonrefundable branch office license fee in the amount of one hundred dollars for each branch.
Section 37-12-325. (A) The department may not issue a license until an applicant provides a bond:
(1) executed by the applicant and two responsible sureties or a surety company licensed to do business in this State;
(2) executed in favor of the department in the penal sum of at least one hundred fifty thousand dollars;
(3) conditioned for the faithful performance of the duties and obligations of the business;
(4) for the department's use on behalf of the State or a consumer with a cause of action against a licensee arising from a violation of this chapter; and
(5) continuous in form and designed to remain in full force and effect concurrently with the license unless terminated by the surety.
(B) A person must commence an action pursuant to this section within three years from the date on which the consumer discovered or reasonably should have discovered the facts giving rise to the consumer's claim.
(C) The department shall notify a recovery agency when it receives notice from a surety company that the surety company intends to withdrawal as the surety of the licensee. The department shall provide the recovery agent with this notice within forty-five days of receipt of notice from the surety company. A recovery agency's license becomes void upon the termination of the bond by the surety company unless, prior to termination, the licensee files a new bond with the department.
Section 37-12-330. (A) The department may not issue a license unless the recovery agency files with the department a certification of insurance evidencing coverage:
(1) written by an insurance company licensed to do business in this State;
(2) providing the department as an additional insured for the purpose of receiving all notices of modification or cancellation of such insurance;
(3) providing for a combined single-limit policy in the amount of at least three hundred thousand dollars;
(4) including comprehensive general liability coverage for death, bodily injury, property damage, and personal injury coverage including breach of the peace, wrongful repossession, false arrest, detention or imprisonment, malicious prosecution, libel, slander, defamation of character, and violation of the right of privacy; and
(5) insuring for the liability of all employees acting in the course of their employment.
(B) A licensee shall immediately notify the department of a claim made against its coverage.
(C) A licensee shall immediately notify the department of the policy's cancellation, regardless whether the cancellation was initiated by the insurance company or the insured licensee.
(D) The department shall automatically suspend a license on the date of cancellation of licensee's coverage unless evidence of insurance is provided to the department prior to the effective date of cancellation.
Section 37-12-335. (A) A recovery agent shall submit to the department an application for a license on forms prescribed by the department, in writing, under oath, that provides:
(1) his name and any aliases;
(2) his age and date of birth;
(3) his place of birth;
(4) his social security number or alien registration number, as applicable;
(5) his present residence address and his residential addresses for the five years immediately preceding the submission of the application;
(6) his present occupation and all occupations he held within the five years immediately preceding the submission of the application;
(7) a statement of all convictions other than misdemeanor traffic violations;
(8) a statement of whether he has ever been adjudicated incompetent;
(9) a statement of whether he has ever been committed to a mental institution;
(10) consent to a criminal records check and a full set of fingerprints that the department shall submit to SLED, the FBI, or other appropriate law enforcement agencies to verify the identity of an applicant and obtain records of an applicant's criminal arrests and convictions;
(11) a personal inquiry waiver that allows the department to conduct the necessary investigations, including a credit investigation, to satisfy the requirements of this chapter;
(12) the name of the recovery agency for whom the recovery agent intends to work; and
(13) such additional information required to demonstrate that the applicant possesses good moral character, experience and training and otherwise satisfies this chapter's requirements.
(B) The department shall investigate whether the qualifications for a license are satisfied upon receipt of an application on the forms prescribed by the department and accompanied by a nonrefundable license fee of fifty dollars and payment of the actual cost of obtaining criminal history checks.
(C) The department shall issue an identification card to each recovery agent that he must carry while engaging in repossessions. An identification card must include:
(1) the recovery agent's name;
(2) the recovery agency's name, address, and telephone number;
(3) a color photograph of the recovery agent. The photograph must be:
(a) provided by the repossession agent at the time of application;
(b) two inches wide by three inches high; and
(c) taken within twelve months before the recovery agent's application.
Section 37-12-340. (A) The department may refuse to issue or renew a license, or may revoke or suspend a license if:
(1) the recovery agency employing the recovery agent applying for a license is not authorized to do business in this State; or
(2) an applicant:
(a) makes a false statement of a material fact in his application;
(b) has been denied a license to work as a recovery agent or had a license not renewed, suspended, or revoked for a reason other than the nonpayment of licensing fees;
(c) has been convicted of a felony, crime of moral turpitude, or crime of dishonesty within the last ten years;
(d) has had a judgment entered against him in a civil action for forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, fraud, or conspiracy to commit fraud within the past ten years;
(e) fails to pay or satisfy any judgment debt or penalty imposed by a court;
(f) violates a provision of this chapter or regulation promulgated pursuant to this chapter;
(g) refuses to permit investigation by the department as authorized by this chapter;
(h) fails to comply with an order of the department; or
(i) demonstrates incompetence or untrustworthiness to engage in the business of repossessing personal property.
(B) The department may not suspend or revoke a license issued pursuant to this chapter unless it gives the licensee notice and an opportunity for hearing in accordance with the Administrative Procedures Act and the rules of the Administrative Law Court.
Section 37-12-345. (A) A licensee must be either:
(1) an individual who:
(a) is a citizen of the United States;
(b) is eighteen years of age or older; and
(c) possesses good moral character; or
(2) a corporation or association:
(a) organized and existing under the laws of the United States or any state;
(b) only controlled and directed by persons of good moral character; and
(c) only controlled and directed by persons who are eighteen years of age or older.
(B) In addition to the requirements in subsection (A), a person may not be an owner, partner, member, officer, or director of a recovery agency or a recovery agent if:
(1) adjudicated incompetent under the law of any state, unless his capacity has been judicially restored;
(2) involuntarily placed in a treatment facility for the mentally ill under the law of any state, unless his competency has been judicially restored;
(3) diagnosed as having an incapacitating mental illness, unless a psychologist or psychiatrist licensed in this State certifies that he does not currently suffer from the mental illness;
(4) found to be a chronic and habitual user of alcoholic beverages to the extent that his normal faculties are impaired; or
(5) committed for controlled substance abuse or found guilty of a crime under Chapter 53, Title 44 or a similar law relating to controlled substances in any other state within a three-year period immediately preceding the date the application was filed, unless the individual establishes that he is not currently abusing any controlled substance and has successfully completed a rehabilitation course.
Section 37-12-350. The department may deny an application upon a finding by clear and convincing evidence that an applicant lacks good moral character. It must furnish the applicant a statement containing the findings, a complete record of the evidence upon which it based the determination, and a notice of the applicant's right to an administrative hearing and appeal.
Section 37-12-355. (A) A licensee must complete twenty-four hours of continuing professional education each year. Twelve of the twenty-four hours must be earned in a live instructional setting. The continuing education requirements must be met by:
(1) the owner of a sole proprietorship that holds a license;
(2) all partners in a partnership that holds a license;
(3) a person with a twenty-five percent or greater ownership interest in a limited liability company or corporation that holds a license, and actively participates in the organization's management; and
(4) a recovery agent.
(B) The continuing professional education completed must be reported to the department annually on a form approved by the department. The form must indicate the date, title, instructor, sponsor, and credit hours claimed for coursework completed. Courses taught in a classroom setting may provide one hour of continuing professional education credit for every fifty minutes of classroom instruction. Course sponsors must maintain an attendance record for two years following the date on which the course was taught.
(C) A licensee must maintain documentation of coursework that an owner, partner, member, officer, or agent completes for a period of two years from the date on which the owner, partner, member, officer, or agent completed the coursework. The documentation must consist of certification by the teacher or sponsor of the course indicating number of hours of continuing professional education awarded. The department may inspect this documentation for two years after the date of the course.
(D) The department shall provide continuing professional education by:
(1) offering continuing professional education courses to assist licensees in obtaining the continuing professional education required by this chapter; and
(2) appointing a panel comprised of one representative of the department and two licensed members of the recovery industry to approve courses offered by sponsors other than the department as to their qualifications as continuing professional education. The panel may conduct its meetings by way of a conference call. The department shall develop a questionnaire to ascertain the interest and background of potential members of this panel.
(E) The department shall enforce the continuing professional education requirement by:
(1) immediately suspending the license of licensee who fails to complete his continuing professional education in a timely manner; and
(2) denying the renewal of a license until the licensee demonstrates compliance with the continuing professional education requirements, and if thirty days lapse after the license expires, pays a penalty of no more than one hundred dollars. If more than sixty days have lapsed since the license expired, the recovery agency shall apply under Section 37-7-310 and recovery agent shall apply under Section 37-7-335.
(F) A licensee may request an administrative hearing to appeal the expiration of its license for failure to complete the continuing professional education requirements.
Section 37-12-360. (A) A license is valid for one year and expires on the thirty-first of May or as the administrator otherwise designates. A licensee may renew a license upon the submission of a renewal application and payment of a nonrefundable recovery agency license fee of five hundred dollars for the applicant's primary office, a nonrefundable license fee of one hundred dollars for each branch location, or a nonrefundable recovery agent license fee of fifty dollars, as applicable, no later than thirty days prior to the license expiration date. A licensee must pay a delinquency fee of one hundred dollars if a license is not renewed within thirty days of the renewal date.
(B) In the event of the loss or destruction of a license, the licensee may file an affidavit explaining the loss or destruction and pay a fee of twenty dollars. The department shall then issue a duplicate license bearing the date and number of the replaced license.
(C) A licensee must make the public aware of its licensure by conspicuously and prominently displaying:
(1) its license number on a vehicle used for the purpose of repossession; and
(2) its license at the place of business stated in the license.
Section 37-12-365. (A) Within ten business days after the occurrence of one of the following events, a licensee shall file a written report with the department describing the event and its expected impact on the licensee's business:
(1) a filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;
(2) an institution of a revocation, suspension, or other proceeding against the licensee related to a licensee's debt collection activity;
(3) a felony indictment or conviction of a licensee or its owner, partner, member, officer, director, trustee, beneficiaries, or principal;
(4) an opening of a new branch office;
(5) a transfer, issuance, cancellation or redemption of stock voting rights or membership amounting to ten percent or more of the total voting stock or memberships outstanding; or
(6) other events the department may prescribe by regulation.
(B) A recovery agent shall file a report with the department within ten days of the occurrence of:
(1) an indictment on felony charges;
(2) a conviction for breach of trust, moral turpitude, fraud, or dishonest dealing; or
(3) another event as the department may prescribe by regulation.
(C) A licensee shall provide written notice to the department within thirty days of obtaining a court-approved settlement or entry by a court of a judgment in a civil action relating to repossession activities regarding a consumer.
(D) The department may require a licensee who fails to make a report required by this section to pay a late penalty of fifty dollars for each day the report is overdue.
(E) A licensee shall, within ten days of changing the street address or business name stated in his license, deliver the license to the department and provide written notification of the change or changes and submit a duplicate license fee of twenty dollars to the department. The department shall:
(1) enter the change or changes in its records, retain and file the surrendered license, and issue a duplicate license with the new information and the date and number of the surrendered license; and
(2) suspend a license on the tenth day following the expiration of the time prescribed in this section if the license has not been delivered to the department.
(F) A licensee shall file a new application under this section upon a change of:
(1) twenty-five percent or more in the ownership or management of a limited liability company or corporation holding a license; or
(2) the composition of a partnership holding a license.
(G) A recovery agency shall report annually to the department a summary of repossession activities conducted by the agency during the previous year. The report must be:
(1) filed with the department by April 15;
(2) made on a form provided by the department; and
(3) made under oath.
Section 37-12-370. (A) A recovery agency shall:
(1) maintain and preserve in its primary office, or another appropriate location if a licensee's license is terminated, canceled or revoked, complete and accurate books, accounts, and records regarding recovery activities in this State so the department may determine if the licensee is complying with the provisions of this chapter;
(2) maintain its books, accounts, and records from other businesses in which the organization is involved separate from those required in subsection (1); and
(3) retain its books, accounts, and records for three years.
(B) The department may examine the books, accounts, and records to determine compliance with this chapter.
(C) The department may enforce the provisions of this chapter and investigate a suspected violation.
(D) The department's investigation may require a licensed person, unlicensed person, or an applicant to:
(1) respond to questions concerning activities regulated under this chapter;
(2) provide relevant records. The records must be made available to the department immediately upon the department's request unless the department grants an extension; and
(3) pay reasonable and necessary expenses for the department to examine records located outside of this State.
(E) The department may investigate a person advertising that he performs a service requiring a license or when a licensee engages in an activity prohibited by this chapter. The department may seek an injunction of such an activity, or take another appropriate action pursuant to this chapter.
Section 37-12-375. A licensee must store a repossessed vehicle and other property in a secure facility separate from vehicles towed at the request of the vehicles legal owner or under another provision of law.
Section 37-12-380. (A) A recovery agency must maintain a complete and accurate inventory of personal property not covered by a security or rental agreement contained in a recovered vehicle, manufactured home, or motorboat.
(B) A recovery agency shall within five working days after the date of repossession give written notice to the debtor of the location of personal property inventoried pursuant to this section. Written notice required must include a conspicuous statement in boldface type in immediate proximity to the information regarding the location of the personal property inventoried that reads: 'You may contact the South Carolina Department of Consumer Affairs if you have complaints concerning a personal property recovery agent or agency.' The current phone number, mailing address and Internet website of the department must be included.
(C) The personal property not covered by a security interest must be held not less than thirty days after sending the required notice and must be made available to the debtor in the same county where the repossession occurred. A licensee may dispose of the property as provided in Section 29-15-10 if the debtor fails to seek recovery of the personal property within thirty days after the licensee sent notice.
Section 37-12-385. (A) A recovery agency:
(1) may not use a name not included on his application for a license;
(2) may not have a conviction, enter a plea of guilty or nolo contender regardless of the disposition for a felony or a crime of dishonesty or that directly relates to the business for which the license is held or sought;
(3) may not make a false statement about a current or past employee of the licensee;
(4) may not commit an act of fraud, deceit, negligence, incompetence, or misconduct while engaged in an activity regulated under this chapter;
(5) must maintain the general liability insurance coverage required by Section 37-12-330; and
(6) may not solicit business from an attorney in return for compensation.
(B) A recovery agency or agent:
(1) may not commit fraud or make a wilful misrepresentation in an application for a license;
(2) may not recover a motor vehicle, manufactured home, motorboat, or other personal property that has been sold under a conditional sales agreement or under the terms of a chattel mortgage before authorization has been received from the legal owner or mortgagee;
(3) may not charge for an expense not incurred in connection with the recovery, transportation, storage, or disposal of a motor vehicle, manufactured home, motor home, or other personal property;
(4) may not transfer or attempt to transfer a license issued under this chapter, except as permitted in Section 37-12-365;
(5) may not use any property obtained in a repossession for personal benefit;
(6) may not sell repossessed property without written authorization from its legal owner or mortgagee;
(7) must notify the appropriate law enforcement agency of the jurisdiction in which the repossessed property is recovered within four hours after recovery sufficient information to identify the vehicle recovered, the recovery company name and license number, and the lien holder;
(8) must remit money, collected instead of the recovery of a motor vehicle, manufactured home, motorboat, or other personal property within ten working days;
(9) must deliver to the client a negotiable instrument that is payable to the client within ten working days after receipt of such an instrument;
(10) may not falsify, alter, or fail to maintain a required inventory or record regarding disposal of personal property contained in or on a recovered motor vehicle, manufactured home, motorboat, or other personal property pursuant to Section 37-12-370;
(11) may not carry a firearm or weapon, as defined in Section 16-23-405, when he is performing duties under his license whether or not he is permitted to carry a firearm as provided in Article 4, Chapter 31 of Title 23;
(12) may not solicit from the legal owner or mortgagee the recovery of property subject to repossession after such property has been seen or located on public or private property if the amount charged or requested for such recovery is more than the amount normally charged for such a recovery;
(13) may not wear, present, or display a badge in the course of repossessing a motor vehicle, manufactured home, motorboat, or other personal property;
(14) must cooperate with an authorized representative of the department engaged in an official investigation pursuant to this chapter;
(15) must report to the department a violation of this chapter; or
(16) must comply with all provisions of this chapter.
Section 37-12-390. The department may handle a violation of this chapter by:
(1) imposing a civil penalty of no more than two thousand five hundred dollars for a violation;
(2) imposing a civil penalty of no more than ten thousand dollars for multiple violations of this chapter;
(3) ordering a refund of an unlawful or excessive fee charged to a consumer; and
(4) ordering compensation to a consumer for personal property damaged or not returned as required by this chapter.
Section 37-12-395. A licensee is subject to the provisions of Sections 37-5-108 and 37-5-112."
SECTION 3. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this chapter, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 4. This act takes effect January 1, 2008.
This web page was last updated on Monday, October 10, 2011 at 1:28 P.M.