Member Alert: Nevada Legislature Passes RMAI Bill

On Monday, the Nevada Legislature passed legislation that RMAI has promoted over the past two years which modernizes the collection agency licensing act. Senate Bill 276 passed both houses of the Nevada Legislature by a unanimous vote and without any organizations in opposition.

The Nevada Collection Agencies Licensing Act was first adopted in 1969 when it was sponsored by then Assemblyman Harry Reid (who would later become the U.S. Senate Majority Leader); eight years before the Fair Debt Collection Practices Act and decades before the modern telecommunications and technologies which exist today. This new bill notably takes a proactive stand in requiring debt buying companies to be licensed as collection agencies rather than run the risk of another judicial or administrative interpretation like what has occurred in several states. All future references to “collection agencies” in this Member Alert will also pertain to debt buyers. The Governor has until June 16th to sign or veto the bill. If he takes no action, the bill will become law without his signature.

Among the changes to the Nevada code that will take effect October 1, 2023, if signed into law by Governor Lombardo:

• Debt Buyers – Debt buyers will be required to be licensed by the State as a collection agency by January 1, 2024. Debt buyers are defined as “a person who is regularly engaged in the business of purchasing claims that have been charged off for the purpose of collecting such claims, including, without limitation, by personally collecting claims, hiring a third party to collect claims or hiring an attorney to engage in litigation for the purpose of collecting claims.” However, if the debt buyer applies for such a license on or before January 1, 2024, the debt buyer may continue such operation in this State without holding such a license until the license is issued or the application is denied.

• Compliance Manager – The requirement that each facility of a collection agency have a Qualified Manager has been eliminated. In place of a Qualified Manager, each collection agency shall have a single Compliance Manager. While an exam may still be required, it will be waived if the Compliance Manager and collection agency are both certified by a national nonprofit association with expertise in the business of collections which the Commissioner determines proves the competence of the applicant. Individuals currently holding a Qualified Manager certificate will be deemed qualified to be a Compliance Manager.

• Remote Work – Permits collection agencies to allow employees to work from home provided that they comply with the bill’s requirements. Currently, remote work is not permitted in Nevada.

• Branch Office Requirements – Streamlines the licensing process by only requiring a single corporate license rather than multiple licenses for each branch facility.

• License Display Requirements – Eliminates an out-of-date requirement that a license be framed and displayed in a conspicuous place and replaces it with a requirement that the license number be displayed on the collection agency website.

• Foreign Collection Agencies – Deletes antiquated language related to out-of-state and foreign collection agencies. Under the revised language, all collection agencies will be treated the same regardless of location, and the Commissioner’s power would be the same for all collection agencies. Specifically, a collection agency license will be required to be licensed in Nevada if: (i) it is located in Nevada and is seeking to collect a claim, regardless of whether the debtor resided or currently resides in Nevada or another state; (ii) it is located in another state and is seeking to collect a claim from a debtor that resides in Nevada; or (iii) it is located in another state and is seeking to collect a claim on behalf of a person or entity that resides in Nevada.

• Affiliated Businesses – Permits affiliated debt buying companies to share a single license in certain circumstances.

• Trust Account Exemption – Exempts debt buying companies from the trust account provisions provided they are also not acting as a third-party collection agency.

• Prohibitions – Prohibits collection agencies from: (i) filing a civil action to collect a debt when the collection agency, Compliance Manager, agent or employee knows or should know that the applicable limitation period for filing such an action has expired and (ii) selling an interest in a resolved claim or any personal or financial information related to the resolved claim.

• Prohibits Reviving Statute of Limitations – Any payment on a debt, affirmation of a debt or other activity taken relating to a debt by a debtor after the statute of limitations has expired does not revive the applicable limitation.

• Clarification on Existing Judgments – Given the number of amendments contained in the bill and the licensing of debt buyers, there is text in the bill that states, “The amendatory provisions of this act do not apply to an action or arbitration commenced or a judgment entered before October 1, 2023.”

RMAI consulted with the Nevada Financial Institutions Division, which administers the collection agency license; state-based collection agency and creditors bar interests; and Nevada Justice Association while developing the bill and the subsequent amendments.

RMAI will report whether this bill is signed by the Nevada Governor. In the meantime, RMAI would strongly recommend that its members share this Member Alert with those in their organization who are responsible for their Nevada legal, compliance, and licensing matters.