Minnesota Bill to Define Debt Buyers as Collectors for Regulatory Purposes

A bill introduced in the Minnesota Senate would explicitly add to the definition of “collection agency” and “collector” language that includes debt buyers. This would force debt buyers to get licensed as collectors in the state.

Senate Bill 227, introduced last Tuesday by two Senators, states its official purpose as “Expanding the definition of collection agency and collector to include debt buyers for regulatory purposes.”

To do this, the bill would modify current state law by adding the following language to the definitions of “collection agency” and “collector”:

The term also includes a person who (1) purchases an account, bill, or other indebtedness that was incurred by the debtor for personal, family, or household purposes; and (2) collects the purchased account, bill, or other indebtedness on its own behalf.

The Minnesota’s Senate Counsel, in its research of the bill, explicitly stated that the bill would “subject [debt buyers] to regulation as collection agencies under state law. Currently, to be defined as a collection agency the person must be engaged in the business of collection for others.”

Most significantly if adopted, the new language would force debt buyers to get licensed as collectors in Minnesota at a cost of $500. In order to get licensed, any collector in Minnesota is required to screen potential employees for criminal backgrounds.