NORTH CAROLINA STATUTORY REQUIREMENTS:
A. For all North Carolina Creditors which utilize collection agencies.
B. For all agencies accepting placements from North Carolina creditors.
Chapter 58, Article 70, Sections 1-130, defines applicable requirements of all agency activity in the State of North Carolina. All North Carolina “creditors” must utilize an agency that is licensed by permit. Licensing is verified by the permit number, which is required on all agency correspondence. The penalty for a North Carolina creditor utilizing a non-licensed agency is a misdemeanor. An agency operating without a permit can be pursued by the North Carolina authorities for a Class I felony offense.
There are 28 sections within Article 70 that comprise the toughest regulatory requirements in the world. Agencies are subject to at least one mandatory routine audit, which Williams & Williams, Inc. passed with flying colors. Audits can be performed at any time by the North Carolina Department of Insurance, “without cause.”
Chapter 58, Article 70, Section 1 (§58-70-1) explains the penalties applicable to both creditor and agency if accounts are placed with an agency not having a permit. Chapter 58, Article 70, Section 5 (§58-70-5) details the elaborate procedure for obtaining the required permit.
Other Important Sections of Article 70:
§58-70-20 requires that Williams & Williams, Inc., provide a $75,000.00 surety bond and a $10,000.00 non-resident surety bond to protect North Carolina companies from fraudulent acts.
§58-70-50 specifies that all agencies identify themselves according to permit number, which must be displayed on all types of correspondence.
§58-70-65 mandates a separate remittance trust account, “designated only for North Carolina creditors.”
A complete up-to-date version of Article 70 can be obtained on the Internet through the North Carolina General Assembly website at www.nega.state.nc.us/statutes.
Part 1. Permit Procedures.
§ 58-70-1. Permit from Commissioner of Insurance; penalty for violation; exception.
No person, firm, corporation, or association shall conduct or operate a collection agency or do a collection agency business, as the same is hereinafter defined in this Article, until he or it shall have secured a permit therefore as provided in this Article. Any person, firm, corporation or association conducting or operating a collection agency or doing a collection agency business without the permit shall be guilty of a Class I felony. Any officer or agent of any person, firm, corporation or association, who shall personally and knowingly participate in any violation of the remaining provisions of this Part shall be guilty of a Class 1 misdemeanor. Provided, however, that nothing in this section shall be construed to require a regular employee of a duly licensed collection agency in this State to procure a collection agency permit. (1931, c. 217, s. 1; 1943, c. 170; 1959, c. 1194, s. 1; 1969, c. 906, s. 1; 1979, c. 835; 1989, c. 441, s. 1; 1993, c. 539, ss. 472, 1275; 1994, Ex. Sess., c. 24, s. 14(c).)
§ 58-70-5. Application to Commissioner for permit.
Any person, firm, corporation or association desiring to secure a permit as provided by G.S. 58-70-1, shall make application to the Commissioner of Insurance for each location at which such person, firm, corporation or association desires to carry on the collection agency business as hereinafter defined. Such applicant shall be entitled to a permit upon submission to the Commissioner of Insurance of the following:
(a) The name, trade name if any, street address, and telephone number of the applicant, including any home office address and telephone number, if different;
(b) If the applicant is a corporation,
(1) A certified copy of the board of director's resolution authorizing the submission of the application;
(2) An authenticated copy of the Articles of Incorporation and all amendments thereto;
(3) An authenticated copy of the bylaws or other governing instruments;
(4) If the applicant is a foreign corporation, a copy of the certificate of authority to transact business in this State issued by the North Carolina Secretary of State;
(c) If the applicant is a partnership, an authenticated copy of the then current partnership agreement;
(d) If the trade name is used, certificates showing that the trade name has been filed as required by G.S. 66-68;
(e) A surety bond as required by G.S. 58-70-20;
(f) A completed statement by each stockholder owning ten percent (10%) or more of the applicant's outstanding voting stock and each partner, director, officer, office manager, sales representative or other collector actively engaged in the collection agency business, containing: the name of the collection agency, the name and address of the individual completing the form, the positions held by such individual, each conviction of any criminal offense and any criminal charges pending other than minor traffic violations of such individual, and the name and address of three people not related to the individual who can attest to the individual's reputation for honesty and fair dealings;
(g) A statement sworn to by an appropriate corporate officer, partner, or individual proprietor giving a description of the collection method to be employed in North Carolina;
(h) A statement certifying that there are no unsatisfied judgments against the applicant;
(i) A list of all telephone numbers assigned to, or to be used by the applicant in the operation of the collection agency;
(j) The appropriate permit fee as required by G.S. 58-70-35;
(k) A balance sheet as of the last day of the month prior to the date of submission of the application, certified true and correct by a corporate officer, partner, or proprietor, setting forth the current assets, fixed assets, current liabilities and positive net worth of the applicant;
(l) The address of the location at which the applicant will make those records of its collection agency business described in G.S. 58-70-25 available for inspection by the Commissioner of Insurance.
(m) A statement certifying that no officer, individual proprietor or partner of the applicant has been convicted of a felony involving moral turpitude, or any violation of any State or federal debt collection law.
(n) If the collection agency's office or records, as described in G.S. 58-70-25, are located outside of North Carolina, a statement sworn to by an appropriate corporate officer, partner, or individual proprietor consenting to and authorizing the reimbursement, to the Commissioner by the collection agency, of expenses incurred by the Commissioner in conducting routine examinations, audits, and in investigating written complaints against the collection agency or its employees. All reimbursements shall be paid to the Commissioner no more than 30 days after the date of billing.
(o) If the applicant is a foreign corporation, a statement authorizing the Commissioner to be its agent for service of process, which shall be administered pursuant to the provisions of G.S. 58-16-30. (1931, c. 217, s. 2; 1943, c. 170; 1959, c. 1194, s. 2; 1969, c. 906, s. 2; 1979, c. 835; 1989, c. 441, ss. 2, 3.)
This document includes only 2 of the 28 sections that comprise 50-plus pages of Article 70. The complete version of Article 70 can be obtained through the NC Department of Insurance or at www.nega.state.nc.us/statutes.