Two recently-signed laws change the licensing picture for ARM companies operating in those states. One is seen as a victory for passive debt buyers, with the other being mostly neutral but potentially impacting the clients of debt collection agencies and debt buyers.

On May 22, 2014, Tennessee’s Governor, Bill Haslam, signed into law SB 2133 which exempts certain entities from the Tennessee Collection Service Act licensing provisions and which amends TCA Title 62, Chapter 20. The language exempts passive debt buyers from collection agency licensing requirements.

Specifically the amendment exempts “Any person that holds or acquires accounts, bills or other forms of indebtedness through purchase, assignment, or otherwise; and only engages in collection activity through the use of a licensed collection agency or an attorney authorized to practice law in this state.”

DBA International supported the passage of the bill. The group noted that there had been a series of suits and conflicting decisions in Tennessee necessitating clarifying legislation.

The change is reflected on insideARM’s State Licensing resources page.

On May 28, 2014, Louisiana Governor Bobby Jindal was sent HB 766 for signature. HB 766 states that a consumer credit transaction be null, void, unenforceable and uncollectible as being contrary to the policy of this state if the creditor has not obtained a license from the Office of Financial Institutions, if required to do so, at the time the transaction is made.

This new rule could impact ARM firms working with clients that are unlicensed in the state. While most large financial institutions would already be licensed, smaller credit grantors – like payday lenders – could slip through the cracks and present liability issues for servicers.

DBA International, in an alert to its members, recommended that debt buyers consult their counsel in purchasing Louisiana debt to request a representation and warrantee contract clause that the creditor is properly licensed in Louisiana for consumer credit transactions.


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