WSR 13-15-009
[Filed July 8, 2013, 7:57 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 12-20-055.
Title of Rule and Other Identifying Information: Collection agencies, chapter 308-29 WAC, Collection agency board's practices for audits and investigations.
Hearing Location(s): Department of Licensing, 405 Black Lake Boulevard S.W., Room 2105, Olympia, WA 98502, on August 27, 2013, at 1:00 p.m.
Date of Intended Adoption: August 30, 2013.
Submit Written Comments to: Margaret Vogeli, P.O. Box 1098, Olympia, WA 98507-1098, e-mail, fax (360) 570-7053, by August 23, 2013.
Assistance for Persons with Disabilities: Contact Margaret Vogeli by August 19, 2013, TTY (360) 664-0116, or (360) 664-1389.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose is to clarify and put into rule the collection agency board's current policies and procedures on conducting investigations and audits.
Reasons Supporting Proposal: These rules are designed to promote efficiency in conducting investigations and audits; to give licensees notice of what is required of them during an investigation or audit; and to explain licensees' responsibilities.
Statutory Authority for Adoption: RCW 19.16.410.
Statute Being Implemented: Chapters 19.16, 18.235 RCW.
Rule is necessary because of state court decision, 09-2-41204-9 SEA.
Name of Proponent: Department of licensing, governmental.
Name of Agency Personnel Responsible for Drafting: Nancy Skewis, Olympia, Washington, (360) 664-1446; Implementation: David Browne, Olympia, Washington, (360) 664-6581; and Enforcement: Robert Fuller, Olympia, Washington, (360) 664-1572.
No small business economic impact statement has been prepared under chapter 19.85 RCW. These rules impose no new costs for business.
A cost-benefit analysis is not required under RCW 34.05.328. RCW 34.05.328 does not apply to this proposed rule under the provisions of RCW 34.05.328 (5)(a)(i).
July 8, 2013
Damon Monroe
Rules Coordinator
AMENDATORY SECTION (Amending WSR 01-11-132, filed 5/22/01, effective 6/22/01)
WAC 308-29-025 What records must a licensee maintain at the licensed location?
Required records:
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.
WAC 308-29-150 Purpose.
(1) The board regulates the practice of collection agencies for the safety and well-being of the residents of this state.
(2) When used in this chapter "license" includes any license, certificate, permit or registration issued by the board under this chapter and chapter 19.16 RCW, and "licensee" or "registrant" refers to a possessor of, or an entity required to possess, any such license, certificate, permit, or registration.
(3) A license is a privilege granted by the state to those persons meeting licensing or registration requirements, maintaining required records, and complying with all laws governing the practices of collection agencies, including cooperation with any audit or investigation of the person's activities that are subject to licensing or registration requirements.
(4) The board utilizes three primary methods of enforcement of licensed activities:
(a) Records reviews;
(b) Audits; and
(c) Investigations.
(5) These rules are designed to promote efficiency in conducting these activities; to give licensees notice of what is required of them; and to explain licensees' responsibilities to the board.
(6) When used in this chapter the term investigator includes any board employee who is authorized to perform the duties of an audit or investigation.
(7) The terms "investigation" or "audit" may be interchangeable unless the context clearly indicates otherwise.
WAC 308-29-160 Review of complaints—Determination of merit.
(1) Complaints are reviewed to determine if the allegations in the complaint describe an apparent violation of the laws and rules the board administers. Staff may perform some fact-finding for the purposes of determining whether the complaint likely has merit. Even if the complaint is deemed to have merit, the board may decide not to investigate it for reasons such as the gravity of the alleged violation or the resources and priorities of the board. On whether to pursue an audit or investigation or render a decision about the audit or investigation, the board's decision is considered final.
(2) The board may initiate complaints through its own discretion. Each complaint will be reviewed to determine if merit exists for an investigation.
(3) During the course of an investigation or audit, if evidence of additional violations outside the allegations of the complaint is found, the board may investigate and request records and detailed explanations from the licensee regarding those additional violations.
(4) A complaint will not be deemed to have merit unless it includes at least one apparent violation of the laws and rules administered by the board.
WAC 308-29-170 Licensee statements and explanations.
(1) During the course of an investigation or audit, licensees may be required to provide written statements, explanations, or both.
(2) A request for a written statement or explanation can only be issued by an authorized representative of the board, such as an investigator, program staff, or other designee.
(3) Licensees must respond to requests for written statements, explanations, or both within the timelines specified by the board.
(4) Refusal to provide written statement, explanation, or both may result in disciplinary action under chapters 19.16 and 18.235 RCW or Title 308 WAC.
WAC 308-29-180 Recordkeeping.
(1) When a statute requires that the licensee must maintain records and make them available to the board, the board may request such records within the retention period specified by statute or rule.
(2) Licensees have no privacy interest in the records they are required to maintain by statute or rule.
(3) Licensees must respond to requests for records described in subsection (1) of this section within the timelines specified by the board.
WAC 308-29-190 Requests for records.
(1) All requests for records maintained by a licensee will be issued by an authorized representative of the board, such as investigator, auditor, program staff, or other designee.
(2) Requests for records, documents, or detailed explanations will be in person, by telephone, or in writing via United States mail, facsimile, or electronic mail.
(3) In the case of a request for records or documents, a licensee will not be considered in violation for failure to cooperate with the board unless the board has made a written request for records or documents that the licensee is required to maintain, and has described the records or documents with sufficient specificity to notify the licensee of what records or documents are being sought.
(4) A licensee must provide all records to the investigator or auditor upon lawful request by the board.
(5) Refusal to permit access to the records may result in disciplinary action under chapters 19.16 and 18.235 RCW or Title 308 WAC.
WAC 308-29-200 Investigation and audit.
In all situations in which the board is authorized by law to conduct investigations or audits or otherwise review practices, the following rules will apply:
(1) Investigations or audits will be conducted at the business location of the licensee or other location determined by the board. A licensee's home address may be deemed the licensed business location when it is the address provided by the licensee to the board in the license application, renewal, or on a submitted change of address related to the license.
(2) An investigator may inspect a licensed business location and records without a warrant when the investigation or audit is approved or assigned by the board.
(3) An investigation or audit can be initiated at any time based upon the results of a previous investigation, audit, or a complaint.
(4) All investigations or audits shall be performed during posted or normal operating hours of the business, Monday through Friday, excluding state holidays. When no business hours are posted the board will assume normal business hours are between 8:00 a.m. and 5:00 p.m., Monday through Friday. The board is not required to give advance notice of an investigation or audit.
(5) An investigator or auditor and the licensee may mutually agree to conduct an investigation or audit outside the time, date, and location limitations.
(6) An investigator or auditor may enter any public portion of the premises of a licensee. Nonpublic portions of a licensed business location may not be entered if the business owner refuses consent. The public portion or area is considered to be any part of the business where the public are allowed to enter or occupy in order to access the services of the licensee.
(7) Refusal to permit the board lawful access to the business premises may result in disciplinary action under chapters 19.16 and 18.235 RCW or Title 308 WAC.
(8) Unless otherwise specified in statute, the board may not charge the licensee for the cost of routine investigations or audits.
(9) Investigation or audit costs may be charged to the licensee as authorized by RCW 18.235.110(2) when the board has investigated or audited pursuant to a complaint, violations have been found, and the board has issued an order imposing any of the sanctions described in chapter 19.16 RCW, RCW 18.235.110(1), or Title 308 WAC.