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OK.. Indiana law says a CA has to be licensed in the state to do collections.

If they are not the only thing they may do is call by phone or mail letters.

Now this being said...

Can they report to a CRA? Is that a legal activity?

Just wondering.. thanks

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Can you post the relevant law from Indiana?

If you sort of combine Indiana law with the FDCPA, the answer would be, "No, they can't." The FTC considers reporting to the CRAs to be a collection activity. The only thing is, I don't know if you can mix and match Federal and state law like that.

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Here is what I found in good ole Indiana Code:

IC 25-11-1-3

Application; contents; bonds; agent for service of process

Sec. 3. (a) Any person desiring to conduct a collection agency shall make an application to the secretary of state upon such forms as may be prescribed by the secretary of state. Such application shall include the following:

(1) If the applicant is an individual:

(A) the individual's name;

(B) the individual's residence address;

© the address of each location from which the individual carries out the activities of the collection agency; and

(D) a statement that the individual satisfies the qualifications set forth in section 4 of this chapter.

(2) If the applicant is a partnership:

(A) the name of each partner;

(B) the business address of the partnership;

© the residence address of at least one (1) of the partners;

(D) the address of each location from which the partnership carries out the activities of the collection agency; and

(E) a statement that each partner in the partnership satisfies the qualifications set forth in section 4 of this chapter.

(3) If the applicant is a limited liability company:

(A) the date and place of organization;

(B) the name of the limited liability company;

© the business address of the limited liability company;

(D) the residence address of at least one (1) of the managers or members of the limited liability company; and

(E) a statement that each of the managers and members in the limited liability company satisfies the qualifications set

forth in section 4 of this chapter.

(4) If the applicant is a corporation:

(A) the date and place of incorporation;

(B) the name of the corporation;

© the business address of the corporation;

(D) the residence address of at least one (1) of the officers of the corporation; and

(E) a statement that each of the officers of the corporation satisfies the qualifications set forth in section 4 of this chapter.

The application shall be duly sworn to before an officer qualified to administer oaths. The application shall set forth therein any other verified information which will assist the secretary of state in determining the qualifications of the applicant to meet the requirements of a collection agency as hereinunder set forth.

(B) Every original and renewal application of any person desiring to conduct a collection agency shall be accompanied by a fee of one hundred dollars ($100) plus an additional fee of thirty dollars ($30) for each branch office operated by the applicant whether as sole owner, partnership, limited liability company, or corporation.

© Any person desiring to secure a renewal of a collection agency license shall make a renewal application to the secretary of state not later than January 1 of the year following the year in which the person's license expires under section 5 of this chapter. The application shall be made on such forms as the secretary of state may prescribe. Such application shall contain therein verified information that will assist the secretary of state in determining whether or not the applicant is in default, or is in violation of any of the provisions of this chapter, and whether or not the applicant has at all times complied with the requirements of this chapter in the operation of the applicant's collection agency.

(d) Each renewal application shall be accompanied by the renewal fee and an additional fee of thirty dollars ($30) for each branch office maintained and operated by the applicant.

(e) Every original and renewal application shall be accompanied by the following:

(1) A corporate surety bond in the sum of five thousand dollars ($5,000) for each office the applicant operates in the state of Indiana. All bonds shall run to the people of the state of Indiana and shall be furnished by a surety company authorized to do business in this state. All bonds shall be conditioned upon the faithful accounting of all money collected upon accounts entrusted to such person and shall be continuous in form and shall remain in full force and effect and run continuously with the license period and any renewal thereof. All bonds shall further be conditioned upon the provision that the applicant shall, within sixty (60) days from the date of the collection of any claim, render an account of and pay to the client, for whom collection has been made, the proceeds of such collection less the charges for collection agreed upon by and between the

applicant and the client. All bonds shall be filed in the office of the secretary of state and shall be approved by the secretary of state before being filed. All bonds filed and approved shall be for the use and benefit of all persons damaged by the wrongful conversion of any money by such person, and any individual so injured or aggrieved may bring an action upon such bond. The surety company may notify the secretary of state and principal of its desire to terminate its liability under any bond furnished. Thirty (30) days after receipt of such notice by the secretary of state, the secretary of state shall thereupon require the principal to file a new bond or discontinue all operations. If a new bond is filed by the principal all liability under any previous bond shall thereupon cease and terminate. If a new bond shall not be filed within the thirty (30) day period above specified the secretary of state shall, after expiration of the period, revoke the principal's license.

(2) Any applicant who is a nonresident of the state of Indiana shall also submit a statement appointing an agent or attorney resident herein, upon whom all legal process against the applicant may be served. The statement shall contain a stipulation that the applicant agrees that service of legal process upon such agent or attorney shall be valid service upon the applicant.

(Formerly: Acts 1937, c.92, s.3; Acts 1955, c.304, s.3.) As amended by Acts 1978, P.L.12, SEC.8; P.L.8-1993, SEC.377; P.L.178-1996, SEC.2.

IC 25-11-1-4

Qualifications of applicants

Sec. 4. The following qualifications apply to all individual applicants and any individual who is an officer of any corporation or a member of any partnership, limited liability company, or firm and actively manages the collection of or solicits accounts for collection for any firm, partnership, limited liability company, or corporation which makes an application for a collection agency license:

(1) The applicant must be a citizen of the United States, of good moral character, and not less than eighteen (18) years of age.

(2) The applicant must not have a record as a defaulter in the payment of money collected or received for another.

(3) The applicant must not be a former licensee under this chapter whose license has been suspended or revoked and not subsequently reinstated under this chapter.

An applicant to whom a license is to be issued must meet the bonding requirements of section 3(e) of this chapter.

(Formerly: Acts 1937, c.92, s.4; Acts 1955, c.304, s.4; Acts 1973, P.L.252, SEC.7.) As amended by Acts 1978, P.L.2, SEC.2525; P.L.8-1993, SEC.378; P.L.178-1996, SEC.3.

IC 25-11-1-5

Issuance of license by secretary of state; provisional license

--------------------------------------------------------------------------------

Sec. 5. (a) The secretary of state shall investigate the qualifications of the applicant and if the applicant meets the qualifications of this chapter the secretary of state shall approve the application. If the application is approved the license shall be issued forthwith to the applicant. All licenses are valid for two (2) years and shall expire on the thirty-first day of December of the year following the year in which the license was issued. If the application for a license is denied, the application fees shall be retained by the secretary of state.

(B) The secretary of state shall issue a license to any person who holds and presents with the application a valid and subsisting license to operate a collection agency issued by another state or state agency if:

(1) the requirements for the securing of such license were, at the time of issuance, substantially the same or equal to the requirements imposed by this chapter;

(2) the state concerned extends reciprocity under similar circumstances to licensed collection agencies of this state; and

(3) the application is accompanied by the fees and financial bonding requirements as provided in this chapter.

© In the event of the death of an individual licensee, the dissolution of a licensee partnership by death or operation of law, or the termination of employment of the active manager if the licensee is a firm, partnership, limited liability company, or corporation, upon a showing that the bonding requirements provided for in this chapter are complied with, the secretary of state shall issue, without a fee, a provisional license to the personal representative of the deceased, the personal representative's appointee, the surviving partner, the firm, the limited liability company, or the corporation, as the case may be, which shall be for the following purposes only and shall expire at the following times:

(1) A provisional license issued to a personal representative or a personal representative's appointee expires one (1) year from the date of the issuance and shall not be subject to renewal. The authority of the provisional license so issued shall be limited to such activities as may be necessary to terminate the business of the former licensee.

(2) All other provisional licenses expire three (3) months from the date of issuance unless the provisional licensee, within this period, can meet the requirements for a full license as provided in this chapter.

(d) A nonresident collection agency that has only incidental contact with a debtor is not required to be licensed under this chapter. As used in this subsection, "incidental contact" means contact on behalf of nonresident creditors using interstate communications, including telephone, mail service, or facsimile transmissions.

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This is an interesting question. Is there a section of the Indiana code that gives definitions and rules of construction? The FDCPA defines "communication" as "the conveying of information regarding a debt directly or indirectly to any person through any medium," which I would construe as including reporting it to a CRA.

If we could make the case that reporting the collection account to the CRAs constitutes contact with the debtor (however indirect that contact might be), then I would say that they are in violation of Indiana law.

I think we need a few actual lawyers to chime in; although I love to try to figure out this kind of stuff, I don't actually know what the hell I am talking about.

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