Chicago Debt Collection Licensing Requirements Begin July 1

Effective July 1, 2013 the City of Chicago will require the licensing of debt collectors who collect on accounts held by city residents. In January, Chicago became the nation’s third municipality, after New York City and Buffalo, NY, to adopt a municipal licensing ordinance.

The City of Chicago’s Department of Business Activity & Consumer Affairs recently posted information and began accepting applications for licensing.

DBA encourages debt buying members to determine whether you own accounts that belong to Chicago residents and to take appropriate actions based on your findings. If you need to apply for a license, please do so immediately to avoid processing delays.

Click here for a copy of the ordinance. To summarize, the ordinance provides:

  • It will be the legal duty of a debt collector to comply with Fair Debt Collection Practices Act, the Illinois Collection Agency Act and the Illinois Consumer Fraud and Deceptive Practices Act;
  • Upon written request, collectors shall provide verification of the consumer debt that shall include: (1) the charge-off balance and itemized principal, interest, charges and fees; (2) itemized post charge-off interest, charges and fees; and (3) a description of the debtor’s obligation to pay;
  • Starting July 1, 2013, the city will require debt collectors to maintain separate electronic or physical files for each account that shall be searchable by the name and address of the debtor and the originating creditor. The files shall contain: (1) a record of all written communications; (2) a record of each payment received; (3) a copy of the consumer debt payment schedule or settlement agreement; and (4) if applicable, a record of the name and address of the entity from which the debt was purchased and the date and amount of the purchase;
  • If your license is revoked, you will not be able to reapply for four years; and
  • Fines can range from $250 to $5,000 for each offense.

Questions should be directed to Department of Business Affairs and Consumer Protection at (312) 74-GOBIZ (744-6249).

DBA is working with the City of Chicago to draft rules and regulations to interpret and implement this ordinance. We will share additional information when it becomes available.