Rules & Regulations of the State of Tennessee Title 0320 - Collection Service Board
Rules & Regulations of Tennessee – Title 0320: Collection Service Board
1. Overview
Title 0320 contains rules set by the Tennessee Collection Service Board (TCSB). These rules govern:
Licensing of collection agencies and debt collectors in Tennessee.
Standards of professional and ethical conduct.
Procedures for complaints, investigations, and disciplinary action.
Civil penalties and enforcement powers.
Debt collection practices within Tennessee.
The purpose is to protect consumers from unfair or deceptive collection practices while ensuring that collection agencies operate professionally and legally.
The authority for these rules comes from the Tennessee Collection Service Act (TCSA), Title 62, Chapter 20 of the Tennessee Code, which allows the Board to regulate and license debt collectors in Tennessee.
2. Licensing Requirements (Chapter 0320‑01)
Key points:
Collection agencies must be licensed to operate in Tennessee.
Applicants are evaluated for:
Financial stability
Moral character and professional reputation
Background checks on owners, officers, and controlling persons
Temporary licenses may be issued for out-of-state collectors if they meet substantially similar requirements.
Legal implication: Operating without a license in Tennessee is a violation of state law, and the Board can fine or shut down unlicensed collectors.
Case law context: In Smith v. LVNV Funding, LLC, the federal court considered whether a company that was not licensed in Tennessee could enforce debts in court. The court recognized licensing under Tennessee law as a factor for consumer protection, showing that the licensing requirement is more than procedural—it impacts legal collection authority.
3. Standards of Conduct (Chapter 0320‑02)
Collection agencies must follow strict rules for how they interact with consumers. Key prohibitions include:
Misrepresentation: Agencies cannot misstate the debt amount, the collector’s authority, or the consequences of nonpayment.
Deceptive practices: Collectors cannot use false forms or documents that suggest they are government or court entities.
Abuse and harassment: Collectors cannot threaten violence, use obscene language, or make repeated calls meant to harass or intimidate.
Legal implication: Violation of these rules can lead to disciplinary action by the Board, even if the collector does not violate federal law.
Example from practice: The Board has disciplined collectors who sent letters implying that a medical debt would be immediately reported to credit bureaus, when reporting thresholds or timelines had not been met.
4. Standards of Practice (Chapter 0320‑05)
These rules define specific rules for daily operations:
a. Debt Validation
Within 5 days of first contact, the collector must provide written notice including:
The amount owed
Creditor’s name
The consumer’s right to dispute the debt within 30 days
Statement that verification will be provided if requested
If the consumer disputes the debt in writing, collection must stop until verification is provided.
b. Harassment or Abuse
Repeated calls or communications intended to harass are prohibited.
Collectors must properly identify themselves on calls.
Threats of violence or legal action not allowed.
c. False or Misleading Representation
Collectors cannot misrepresent their authority, the consequences of nonpayment, or legal processes.
Threatening legal action that the collector cannot lawfully take is prohibited.
d. Unfair Practices
Collecting unauthorized fees or misusing post-dated checks is prohibited.
Communicating via postcards or public notices that disclose debt is prohibited.
Nonjudicial actions (like taking property without a court order) are not allowed.
Case law context: Tennessee courts have referenced similar rules when determining if a collector violated consumer protection standards. For example, threatening legal action without proper licensing or misrepresenting the debt can support claims under the Tennessee Consumer Protection Act.
5. Enforcement and Penalties (Chapter 0320‑04)
The Board has the authority to investigate complaints and discipline licensees.
Possible sanctions include:
Suspension or revocation of license
Civil penalties and fines
Reprimands or corrective action requirements
Violations of Title 0320 rules are considered unfair or deceptive acts under state law.
Practical note: Even if no court case is involved, the Board can act independently to enforce compliance.
6. Interaction With Federal Law
Tennessee rules generally mirror federal FDCPA (Fair Debt Collection Practices Act) protections, including:
| Tennessee Rule | Federal FDCPA Counterpart |
|---|---|
| Harassment/abuse prohibited | FDCPA §1692d |
| False/misleading representations | FDCPA §1692e |
| Debt validation/verification | FDCPA §1692g |
| Unfair practices (fees, unauthorized actions) | FDCPA §1692f |
Important distinction: Tennessee law adds state licensing requirements, which FDCPA does not regulate. This means a collector could be compliant federally but still violate Tennessee law if not licensed or failing Board rules.
7. Case Law Examples
Smith v. LVNV Funding, LLC
Federal court considered whether unlicensed collectors could threaten judicial action.
Highlighted the relevance of Tennessee licensing requirements in consumer claims.
Board disciplinary cases (example from Board meeting minutes)
Collector sent misleading credit reporting letters.
Board imposed sanctions even without court litigation.
Shows Tennessee enforcement is proactive and independent of federal lawsuits.
8. Summary
Title 0320 regulates debt collection in Tennessee, setting licensing standards, conduct rules, and enforcement powers.
Key protections include:
Harassment prohibition
Debt validation requirements
Truthful representation
Fair collection practices
Tennessee rules supplement federal protections and allow the Board to discipline collectors for violations.
Licensing and rule violations can influence legal disputes under Tennessee law and federal consumer protection laws.
Takeaway: Debt collectors in Tennessee must comply with state licensing, communication, and conduct rules in addition to federal regulations. Violations can result in Board action, fines, and impact legal enforcement of debts.
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