Date of Adoption: May 21, 2001.

Purpose: To amend existing rules for clarity and to simplify language and requirements and the adoption of new rules to enable the director to enforce his duties under this chapter. To add four new rules pertaining to brief adjudicative proceedings (WAC 308-29-090, 308-29-100, 308-29-110, and 308-29-120).

Citation of Existing Rules Affected by this Order: Amending WAC 308-29-010, 308-29-020, 308-29-030, 308-29-045, 308-29-050, 308-29-060, 308-29-070, and 308-29-080.

Adopted under notice filed as WSR 01-01-130 on January 23, 2001.

Changes Other than Editing from Proposed to Adopted Version: WAC 308-29-025 (2)(b), "Annotations of significant events or conversations with debtors."

     WAC 308-29-025 (2)(d), "Collection agreements authorizing the licensee to collect debts and or a schedule listing all fees or charges to be charged to the debtor or client."

     WAC 308-29-025 (3)(d), being deleted - it is a duplicate of subsection (2)(d).

     WAC 308-29-025 (4)(e), "...shall return all instruments and client property to the client within ten (10) thirty (30) business days after written demand from the client, or as specified in the client contract."

     WAC 308-29-030(1), "Each licensee shall notify the director in writing: (a) prior to within ten business days of any change in its ownership." (b) within ten business days of any change in officers, directors, or managing employees of each office location."

     WAC 308-29-050, beginnings of subsections (1) through (4) changed as follows, "Within twenty (20) thirty (30) business days after ..."

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 4, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 4, Amended 0, Repealed 0. Effective Date of Rule: Thirty-one days after filing.

May 21, 2001

Alan E. Rathbun

Assistant Director

OTS-4385.3

AMENDATORY SECTION(Amending Order PL-123, filed 5/17/72)

WAC 308-29-010   Definitions.   ((For the purpose of administering chapter 19.16 RCW, the following terms shall be considered in the following manner:))

     (1) Words and terms used in these rules have the same meaning as each has under chapter 19.16 RCW unless otherwise clearly provided in these rules, or the context in which they are used in these rules clearly indicates that they be given some other meaning.

     (2) "Branch office" ((shall mean)) is any location physically separated from the principal place of business of a licensee ((from which)) where the licensee ((or his employees)) conducts any activity meeting the criteria of a collection agency ((under the definition of that term)) or out-of-state collection agency as defined in RCW 19.16.100.

     (((2))) (3) "Repossession services" conducted by any person((, firm, partnership, trust, joint venture, association or corporation,)) shall not be ((considered within the definition of)) deemed a collection agency as defined in RCW 19.16.100, unless such person((, firm, partnership, trust, joint venture, association or corporation)) is repossessing or is attempting to repossess property for a third party and is authorized ((by such third party)) to accept cash or any other thing of value from the debtor in lieu of actual repossession.

     (4)"Managing employee" is an individual who has the general power to exercise judgment and discretion in acting on behalf of the licensee on an overall or partial basis and who does not act in an inferior capacity under close supervision or direction of a superior authority (as distinguished from a nonmanaging employee who is told what to do and has no discretion about what he or she can and cannot do and who is responsible to an immediate superior).

[Order PL-123, § 308-29-010, filed 5/17/72.]

     (2) That the trust account(s) have sufficient funds to pay all obligations to clients.

[Order PL-123, § 308-29-020, filed 5/17/72.]

     The collection agency must maintain the following records at the licensed location:

     (1) Bank trust records.

     (a) Duplicate receipt book or cash receipts journal recording all receipts showing date received and the customer who paid;

     (b) Sequentially numbered checks with check register or cash disbursement journal or check stubs showing the purpose of the disbursement and the client account it is debited to;

     (c) Bank deposit slips verifying the date deposited and reconciled with receipt book or cash receipts journal;

     (d) Client's accounting ledger or client remittance report summarizing all moneys received and all moneys disbursed for each client collection account; and

     (e) Reconciled bank statements and canceled checks for all trust bank accounts.

     (2) Other records.

     (a) Copies of all financial statements of licensee showing solvency;

     (b) Annotations of significant events or conversations with debtors;

     (c) Transactions folders containing all agreements, contracts, documents, statements and correspondence for each debtor and client (may be maintained electronically or on other retrievable medium); and

     (d) Collection agreements authorizing the licensee to collect debts or a schedule listing all fees or charges to be charged to the debtor or client.

     Accuracy, accessibility and retention of records:

     All required records shall be accurately posted, kept up-to-date and kept at the address where the collection agent is licensed to do business. Such records shall be retained and available for inspection by the director or the director's authorized representative during normal business hours. The collection agent shall provide copies of required records upon demand by the director or the director's authorized representative.

     (3) Licensee's responsibilities:

     (a) The licensee shall be responsible for the custody, safety and the accuracy of entries in all required records. The licensee retains this responsibility even though another person or persons assume the duties of preparation, custody or recording.

     (b) The licensee shall obtain copies of the Collection Agency Act (chapter 19.16 RCW) and the rules implementing the act (chapter 308-29 WAC) and be knowledgeable of these laws and rules in their most recent version.

     (c) The licensee must ensure accessibility of the licensed location and records to the director or the director's representative.

     (4) Administration of trust funds and client property:

     (a) A licensee who receives funds or moneys from any debtor, client or customer shall hold the funds or moneys in trust for the purposes of the agreement and shall not utilize such funds or moneys for the benefit of the licensee or any person not entitled to such benefit.

     (b) All funds or moneys received shall be deposited into a federally insured banking institution.

     (c) The trust bank account will be in the licensee's name and identified as a trust account.

     (d) Preauthorization of regular disbursements or deductions on an ongoing basis by financial institutions is not permitted for multiclient accounts.

     (e) When a contract between the licensee and client expires, terminates, or is no longer in existence, the licensee shall give a closing statement to the client summarizing all receipts and payments since the last statement and shall return all instruments and client property to the client within thirty days after written demand from the client, or as specified in the client contract.

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     (a) Within ten business days of any change in its ownership ((of a proprietorship or));

     (b) Within ten business days of any change in ((owners,)) officers, directors, or managing employees of each office location. ((Such))

     The notification shall consist of reporting the individual's name, position, ((home)) address and effective date of change.

     (2) If requested by the department, each licensee shall ((advise)) notify the department in writing of any additional information regarding the change or changes in subsection (1) of this section ((that the department may seek)) within ten days after the ((receipt of such a)) mailing of the request ((from the department)).

[Statutory Authority: RCW 19.16.410. 87-11-064 (Order PM 653), § 308-29-030, filed 5/20/87; Order PL-141, § 308-29-030, filed 12/18/72.]

Title of Fee	Fee
Collection agency -- Main office:
Original application	$650.00
Investigation (nonrefundable)	250.00
Renewal	600.00
Late renewal penalty	400.00
Reregistration fee after 30 days	1,650.00
Duplicate license	15.00
Branch office (with WA main office):
Original application	350.00
Renewal	350.00
Late renewal penalty	200.00
Reregistration fee after 30 days	900.00
Duplicate license	15.00

[Statutory Authority: RCW 43.24.086. 90-06-052, § 308-29-045, filed 3/2/90, effective 4/2/90; 87-10-028 (Order PM 650), § 308-29-045, filed 5/1/87. Statutory Authority: 1983 c 168 § 12. 83-22-060 (Order PL 446), § 308-29-045, filed 11/2/83; 83-17-031 (Order PL 442), § 308-29-045, filed 8/10/83. Formerly WAC 308-29-040.]

     (3))) Within thirty days after the entry of any judgment against the licensee or any owner, officer, director or managing employee of a nonindividual licensee, the licensee shall notify the director in writing of the judgment, if the judgment arises out of any of the practices prohibited in RCW 19.16.250 or of any of the grounds set forth in RCW 19.16.120.

     (2) Within thirty days after the filing, service or knowledge of a tax lien or warrant filed against the licensee or any owner, officer, director or managing employee of a nonindividual licensee, the licensee shall notify the director in writing of the lien or warrant.

     (3) Within thirty days after the filing, service or knowledge of any suit, complaint, counterclaim or cross claim served or filed in any court in which the licensee or any owner, officer, director or managing employee of a nonindividual licensee is named a defendant, the licensee shall notify the director in writing of such matter if it:

     (a) Involves alleged violations of RCW 19.16.210; or

     (b) Is or purports to be brought on behalf of the state of Washington or three or more persons.

     (4) Within thirty days after the licensee or any owner, officer, director or managing employee of a nonindividual licensee files a petition for bankruptcy, the licensee shall notify the director in writing of the filing of the petition.

     (5) The written notification ((in writing)) shall be sent by certified or registered mail and shall identify:

     • The ((name or)) names of all parties, plaintiff and defendant((,));

     • The court in which the action is commenced((,)); and

     • The cause number assigned to the action.

[Statutory Authority: RCW 19.16.410. 79-06-084 (Order PL-306), § 308-29-050, filed 6/1/79.]

     (5) The buyer (transferee) or seller (transferor) shall provide notice of the sale or transfer to the seller's or transferor's clients with open accounts. The sale or transfer document shall provide which party to the sale or transfer is responsible for providing said notice.)) (1) In order to transfer the licensee's interest in a collection agency or out-of-state collection agency, unless the transfer is due to the death of an individual licensee, the licensee shall notify all of its clients with open accounts, or cause such clients to be notified, of the transfer of the licensee's interest.

     (2) The instrument by which the interest is transferred shall be in writing, and shall indicate:

     (a) That the license or branch office certificate granted under chapter 19.16 RCW is not assignable or transferable, that the transfer of the licensee's interest in the business does not include such license or certificate, that the transferee of the interest must apply for a license and/or certificate in accordance with the law, and that the transferee of the interest may not act, assume to act, or advertise as a collection agency or out-of-state collection agency as defined in chapter 19.16 RCW, without first having applied for and obtained a license under that chapter;

     (b) Which party to the transaction bears responsibility for payment to clients of amounts due them between the date the instrument is executed and the effective date of the transfer;

     (c) Which party to the transaction bears responsibility for maintaining and preserving the records of the collection agency or out-of-state collection agency as prescribed by RCW 19.16.230 and these rules;

     (d) Whether the transfer of interest includes the right to use of the business name or trade name of the collection agency or out-of-state collection agency; and

     (e) Which party to the transaction bears responsibility for providing written notice of the transfer to the clients of the collection agency who have open accounts with the collection agency or out-of-state collection agency.

     (3) The licensee must provide the director a copy of the instrument transferring the licensee's interest signed by all parties to the transaction and shall indicate the effective date of the transfer.

[Statutory Authority: RCW 19.16.410. 87-11-064 (Order PM 653), § 308-29-060, filed 5/20/87; 86-14-051 (Order PM 602), § 308-29-060, filed 6/27/86; 79-06-084 (Order PL-306), § 308-29-060, filed 6/1/79.]

[Statutory Authority: RCW 19.16.410. 87-11-064 (Order PM 653), § 308-29-070, filed 5/20/87; 86-14-051 (Order PM 602), § 308-29-070, filed 6/27/86.]

[Statutory Authority: RCW 19.16.410. 87-11-064 (Order PM 653), § 308-29-080, filed 5/20/87; 86-14-051 (Order PM 602), § 308-29-080, filed 6/27/86.]

     (1) Whether an applicant for licensure meets the minimum criteria for a license to practice as a collection agency, out-of-state collection agency, or collection agency branch office in this state and the board proposes to deny the application;

     (2) Whether a person is in compliance with the terms and conditions of a final order or agreement previously issued by the board;

     (3) Whether a license holder requesting renewal has submitted all required information and meets minimum criteria for renewal; and

     (4) Whether a license holder meets the surety bond requirements to maintain their license and the board proposes to terminate the license.

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     (a) The application for the license, renewal, or reinstatement and all associated documents;

     (b) All documents relied upon by the department of licensing collection agency program in proposing to deny the license, renewal, or reinstatement; and

     (c) All correspondence between the applicant for license, renewal, or reinstatement and the program regarding the application.

     (2) The preliminary record with respect to determination of compliance with a previously issued final order or agreement shall consist of:

     (a) The previously issued final order or agreement;

     (b) All reports or other documents submitted by, or at the direction of, the license holder, in full or partial fulfillment of the terms of the final order or agreement;

     (c) All correspondence between the license holder and the program regarding compliance with the final order or agreement; and

     (d) All documents relied upon by the program showing that the license holder has failed to comply with the previously issued final order or agreement.

     (3) The preliminary record with respect to determination of compliance with the surety bond requirements shall consist of:

     (a) The surety bond cancellation notice from the insurance company;

     (b) All documents relied upon by the program in proposing to terminate the license; and

     (c) All correspondence between the license holder and the program regarding the surety bond cancellation.

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     (2) The parties or their representatives may present written documentation. The presiding officer for brief adjudicative proceedings shall designate the date by which written documents must be submitted by the parties.

     (3) The presiding officer for brief adjudicative proceedings may, in his or her discretion, entertain oral argument from the parties or their representatives.

     (4) No witnesses may appear to testify.

     (5) In addition to the record, the presiding officer for brief adjudicative proceedings may employ agency expertise as a basis for decision.

     (6) The presiding officer for brief adjudicative proceedings shall not issue an oral order. Within ten days of the final date for submission of materials or oral argument, if any, the presiding officer for brief adjudicative proceedings shall enter an initial order.

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