[Updated 6/25/2020: Clarifies the difference between the emergency rule and the proposed permanent rule.]

The Washington State Collection Agency Board held an emergency rulemaking meeting last week where it decided to do away with branch office licensing requirements for collection agency employees working from home during the COVID-19 pandemic. As an emergency rule, it will remain active for 120 days, and can be extended for another 120 days "if the board is actively engaging in rulemaking."

According to the agenda for the meeting (which includes the text of the rule as amended):

The purpose of the rule change is to offer licensees and their staff the ability to take precautions deemed necessary to avoid the risk of exposure to communicable illnesses and support the return of commerce in all business sectors. This rule change will provide remote working options to employees of Collection Agencies.

The emergency rule excludes remote agents from the branch office licensing requirement. 

Audio of the meeting (27 minutes long) is available here. The discussion begins at around the 6-minute mark. One member of the board presented opposition to the emergency rule. He mentioned that the board has not had a chance to consider the long-term consequences of the rule, such as:

  • There is no location restriction for where the employee can be location, which raises concerns of hiring call center employees from outside the United States.
  • The proposed rule doesn't go far enough in regards to protecting consumer privacy. Specifically, it contemplates that collectors would be using their home computers to access collection agency systems.
  • The rule should think through ideas for monitoring remote employees before enacting the emergency rules.
  • The Washington State Collection Agnecies Act was passed by the legislature, and he is not sure if the board has the authority to amend it.

Another member presented a different view. He mentioned that remote work like this is permitted in many other jurisdictions, and Washington State is behind the curve. He also mentioned that debt collectors are one of the primary sources of information for consumers about their accounts, so consumers would be losing an important resource if collection agencies cannot function during the COVID-19 pandemic.

In the meantime, a proposed permanent rule, which is not yet in effect, is being considered by the board. Itcomes with several requirements for the remote workforce of a collection agency. The rules include:

  1. Keeping records of which employees are working remotely.
  2. Remote employees must comply with all applicable laws and regulations.
  3. Written IT security policies must be in place. They must outline "security protocols in place safeguarding the company and consumer data."
  4. Physical records may not be stored at remote work location.
  5. Requirement of IT security policies that allow access to the company's systems for the remote employees through a VPN or some other system that includes frequent password changes, multi-factor authentication, data encryings, and/or lockout implementation.
  6. All calls made and received by remote employees must be recorded and monitored. Recordings must be maintained and made available for inspection upon request.
  7. Neither the remote employee nor the company can conduct activity that implies the remote employee's location is a licensed branch. E.g., advertising or having business cards that list the unlicensed address.



insideARM Perspective

What to do with branch licensing requirements for residences of remote employees has been a hot topic lately in states that have such requirements. The pandemic—and the ensuing stay-at-home orders that dropped one after the other in March and April—forced many agencies to move their agents to remote work. Some of the concerns raised are already put in place, at least at the larger agencies. For example, most large agencies purchased and sent their agents home with company equiment to prevent them from working on personal equipment. 

One big concern raised for the industry about branch office licensing of remote workers' reisdences is safety. Unless there is certainty that the agents' addresses will remain confidential (including safe from public access requests), it could put them at risk of harm. I think many lawmakers and regulators would be astounded at the types of threats that collectors receive from consumers. 

Washington now joins other states, like Connecticut, in waiving—at least temporarily—branch office licensing requirements. Other states, like Illinois, continue to require at least the addresses of their agents to be sent in.

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