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Senate Bill 1007 — Idaho Collection Agency Act

Senate Bill 1007 — Idaho Collection Agency Act

Phil Haunschild
January 25, 2019

Bill description: SB 1007 would create a new Collection Agency Recovery Fund which all collection agencies licensed in Idaho would be required to pay into. It also would  make other amendments to Idaho’s Collection Agency Act.

Rating: -2

Does it create, expand, or enlarge any agency, board, program, function, or activity of government? Conversely, does it eliminate or curtail the size or scope of government?

The Idaho Department of Finance oversees the businesses and individuals operating in the state as debt counselors, credit counselors, collection agencies and credit repair organizations. To operate in Idaho, these businesses must pay the required fees and obtain a license from the department, and abide by the regulations promulgated by the department in rule and statute.

SB 1007 would create a new Collection Agency Recovery Fund under the Department of Finance, which would be overseen, managed, and operated by public employees. Establishing the fund would mean removing the state requirement that license-holders purchase surety bonds or own certificates of deposit.  This fund would be established in lieu of the surety bonds or certificates of deposit that licensees must hold under state law. Currently, a customer who has been injured by a licensee can make a civil claim against the value of the licensee’s surety bond or certificate(s) of deposit. Licensees are required to hold between $15,000-$100,000, depending on their size.

With the new Collection Agency Recovery Fund, every licensee would be required to pay a sum of $250 for every home (headquarter) office and an additional $100 for each branch office. The fund would maintain a balance of $1.55 million. If the fund balance is higher or lower than this amount, the department could increase or decrease the fees to maintain the balance at $1.55 million.

While the fund would be used like surety bonds, customers seeking payment for damages could seek  a portion of the fund to compensate for any damages they faced. $50,000 from the fund each year could go toward:

  • Administrative expenses for the recovery fund
  • Funding research projects into the debt collection and credit counseling industries
  • Promoting consumer education for the aforementioned industries
  • Fund training for employees into the aforementioned industries


Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

Every collection agency, debt counselor, credit counselor, and credit repairer would be required to pay at least a $250 fee to the newly established fund each year.


However, this bill would eliminate the equally burdensome requirement for businesses to hold surety bonds or certificates of deposit that range from $15,000 to $100,000.


Does it transfer a function of the private sector to the government? Examples include government ownership or control of any providers of goods or services such as the Land Board's purchase of a self-storage facility, mandatory emissions testing, or pre-kindergarten. Conversely, does it eliminate a function of government or return a function of government to the private sector?

SB 1007 would allow the director to appoint and manage a volunteer advisory board for the industries regulated under this act. The specifics of this advisory board are not laid out in statute, and the director would have the authority to decide how its members would be selected and how much, if anything, they would be paid. The Department of Finance would pay the expenses of the advisory board.

But the government ought not finance or oversee an industry-wide advisory board. This is a service that ought to be managed and operated by private industry.


Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?

SB 1007 would allow all licensees under this act to receive their license up to 60 days after the renewal deadline has passed, if they simply failed to renew. A $50 reinstatement fee would be assessed and the licensee would still have to qualify. This is an improvement over the automatic expiration of the license without recourse for reinstatement.


Does it violate the principle of equal protection under the law? Examples include laws which discriminate or differentiate based on age, gender, or religion or which apply laws, regulations, rules, or penalties differently based on such characteristics. Conversely, does it restore or protect the principle of equal protection under the law?

SB 1007 would require all licensees to file their applications through the Nationwide Mortgage Licensing System and Registry. This registry is the product of two private organizations, the Conference of State Bank Supervisors and the American Association for Residential Mortgage Regulators.

By requiring every collection agency, debt counselor, credit counselor, or credit repair organization to submit their applications through this registry, SB 1007 would give preferential treatment to these two private organizations above others.


This analysis reflects the amendments made to the legislation.

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