Nevada Administrative Code Chapter 649 - Collection Agencies
Overview of NAC Chapter 649
NAC 649 implements and details Nevada Revised Statutes (NRS) Chapter 649, which regulates collection agencies operating in Nevada. Key points include:
Licensing and registration requirements for collection agencies.
Requirements for conduct when attempting to collect debts.
Record-keeping and reporting obligations.
Restrictions on communication, harassment, and deceptive practices.
Penalties for violations, including fines, license suspension, or revocation.
Case Examples
Here are more than four examples illustrating the application of NAC 649:
Case 1: Unlicensed Collection Activity
Scenario:
A company operating in Las Vegas starts contacting Nevada residents to collect unpaid utility bills without obtaining a Nevada collection agency license.
Application of NAC 649:
NAC 649.020 requires all collection agencies to hold a valid license issued by the Nevada Financial Institutions Division (FID).
Operating without a license is a violation, even if the debt is legitimate.
Outcome:
The FID investigates, issues a cease-and-desist order, and fines the company. The agency may be prohibited from collecting further debts until licensed. This case demonstrates the importance of licensing compliance under NAC 649.
Case 2: Harassment of a Debtor
Scenario:
A debt collector repeatedly calls a debtor at work, threatens to have them arrested, and leaves messages implying legal action if the debt isn’t paid immediately.
Application of NAC 649:
NAC 649.340 prohibits harassment, threats, or abusive language.
Collectors must conduct business in a civil and professional manner.
Outcome:
The debtor files a complaint. The FID investigates, finds the collector in violation, and revokes their license temporarily and imposes fines. This illustrates how NAC 649 protects debtors from abusive practices.
Case 3: Failure to Provide Required Documentation
Scenario:
A collector attempts to collect a debt but fails to provide the debtor with the required written notice of debt, including the name of the creditor and amount owed.
Application of NAC 649:
NAC 649.370 mandates that a collector must provide accurate verification of the debt upon request.
Failure to do so can constitute a violation of the agency's obligations.
Outcome:
The FID orders the collection agency to suspend collection attempts until proper verification is provided, ensuring debtors are not pressured to pay unverified debts.
Case 4: Misrepresentation of Legal Authority
Scenario:
A collection agency in Reno sends letters claiming they are “attorneys authorized to file lawsuits” when they are not licensed attorneys.
Application of NAC 649:
NAC 649.340 explicitly prohibits false, deceptive, or misleading statements.
Misrepresenting legal authority to intimidate debtors is considered a serious violation.
Outcome:
The FID fines the agency and requires retraining of staff. The letters must be retracted and corrected. This case highlights NAC 649’s role in preventing deceptive collection practices.
Case 5: Improper Communication with Third Parties
Scenario:
A collector contacts the debtor’s employer repeatedly to discuss the debt, beyond what is necessary to obtain contact information.
Application of NAC 649:
NAC 649.360 limits communication with third parties. Collectors may only contact third parties to obtain location information, not to coerce payment.
Outcome:
The agency receives a warning, and if the behavior continues, may face fines or license suspension. This shows how NAC 649 regulates privacy and professional boundaries.
Case 6: Record-Keeping Violations
Scenario:
During an audit, the FID discovers that a collection agency has not maintained proper records of calls, notices, or amounts collected for several months.
Application of NAC 649:
NAC 649.400 requires collection agencies to maintain detailed records for a specified period to ensure accountability and traceability.
Outcome:
The FID fines the agency and requires immediate remediation. Future violations could risk license revocation. This emphasizes transparency and compliance.
Summary of Key Themes from Cases
Licensing compliance is mandatory before any collection activity.
Harassment and threats are strictly prohibited.
Verification of debts must be provided to debtors upon request.
Misrepresentation of legal authority or misleading statements is illegal.
Communication with third parties is strictly regulated.
Accurate record-keeping is essential for accountability.
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