Topic: Arizona - Credit Agency NOT licensed as agency until after they filed suit

[debtfree2b]

I was doing some research for my upcoming trial and someone mentioned that in Arizona you have to be "licensed" as a collection agency so I started to do some checking.

My suit is by a local "Attorney at Law" representing a collection agency that bought alleged account from another JDC who got it from the OC.)

Said collection agency registered as an LLC on 8/19/11 but I just learned there is a separate database for licensing of collection agencies and that database shows the collection agency did not start until 3/19/2012.

I couldn't remember seeing anything from the collection agency but have received communications from the  Attorney's office. What is the best way to use this information? Do I request a complete listing of any and all communications and collection activity by the collection agency prior to them turning it over to the Attorney's office?

If I pull my credit report and there is an inquiry on there by them, could that be construed as collection activity?

Thanks for any insight or angles I should consider with this information.

[kickinanscreamin]

This may not be an effective issue for you.  You did not post the dates when the collection agency began collection efforts and the date the lawsuit was filed.  If the agency was in the process of getting licensed when they began collection efforts against you, they may have been quite legal.

Given that this is the second JDB in the chain, your best bet is to focus on chain of custody issues and invalidating any affidavits from affiants not directly associate with the OC.

[ladyhunter]

The licensiing dates, etc., however, is an additional thing that can be demanded in Discovery. When something is a possible defense (dates), and one doesn't know if they were "in the process of licensing," or simply hadn't even started, those are things to demand they provide during Discovery.

One cannot initiate a case on that alone, since it is an unknown. But if one has known violations otherwise, whether it be 1 or 100, an  unknown like this can be demanded in Discovery to clear it up. If it proves to be they were unlicensed and not even in the process of licensing, then you have cause for a MTD.

I threw licensing into my case, as I didn't know if they were licensed or not. I could have looked it up, but I wanted them to do the work. It turned out they were licensed. But what if they hadn't been? I would have overlooked a quick way to get the case dismissed.

[ladyhunter]

I went back and re-read your thread.

You said they "registered as an LLC." That has to do with incorporating. It sounds like they complied with the state to become a Limited Liability Company (LLC), which has to do with incorporation, not licensing as a collection agency.

I'd still investigate the licensing.

[ladyhunter]

I just sent you a PM.

[flacorps]

Licensing is different than registration. The former is more extensive, the latter is less extensive. A court is more likely to forgive a failure to register than a failure to be licensed.

If there really is a licensing statute, you may be able to make some headway, particularly if there is case law showing up in the annotated version of the licensing statute (or online) indicating that an unlicensed collection agency cannot maintain a lawsuit. If that is the case, it may be something that getting licensed during the suit may not cure. Standing is measured when the complaint is filed, and lack of standing cannot be rehabilitated by obtaining some token that would have conferred standing at any later point in time during the lawsuit.

[debtfree2b]

Here is what I can find on needing to be licensed as a COLLECTION AGENCY (not to be confused with their filing as a foreign LLC back in August 11).

Arizona Fair Debt Collection Practices Act § 32-1055. Unlawful acts

A. It is unlawful for a person to conduct a collection agency in this state without having first applied for and obtained a license under this chapter.
...

Arizona Fair Debt Collection Practices Act § 32-1056. Violation; classification

A. A person operating a collection agency without a license shall be guilty of a class 1 misdemeanor.

B. A licensee violating the provisions of § 32-1055 or the rules and regulations adopted pursuant to this chapter shall be subject to revocation of license and shall be guilty of a class 1 misdemeanor.

One of the things I'd like to understand is when a company like GE sells accounts, wouldn't they group them by state, etc and only sell them to those who could take them?  As I went back to look at this info, the second JDB's name isn't on the list either of licensed Collection Agencies.  Are they potentially violating any collection acts by buying accounts they cannot even collect on?

Interestingly, the Bill of Sale included in the documents for the supposed sale from JDB #1 to JDB #2 states that their agreement is dated as of June 20, 2011 between seller and buyer and the last line says "For the purpose of this Bill of Sale the Sale File date shall be September 8, 2011".

The BOS from OC to JDB #1 has a signature from the supposed VP of GE signed and hand dated 6/28/11, but "letter" from employee/custodian of records states the sale happened on or about 6/24/11.

A credit report shows that JDB #1 did an "account review inquiry" on 6/23/11, the day before the supposed sale from OC to JDB  or 5 days before the VP signed the agreement. (Did they even have a right at that point to pull the records? GE would really give out info on someone before legally having completed a sale?

JDB #1 also did the inquiry 3 days after they supposedly agreed to sell the account to JDB #2. How would they have even known back on 6/20 that they had the alleged account to sell? Pretty efficient group of people if you ask me :-)

JDB #1 also did a credit inquiry on 9/18/11 which would have been 10 days AFTER the supposed sale to JDB #2 so if they've really sold the account, they shouldn't be doing an inquiry on the account.

Thanks for any insight! I appreciate all of the helpful info.

[flacorps]

In some states, such as Michigan, JDBs are not viewed as "collectors" since they own the accounts and are not collecting as agent for another party.

Arizona may or may not view JDBs as collectors. I don't recall.

Generally in statutes that deny standing to litigants who have not licensed or registered, there will be a specific statement that unlicensed/unregistered collectors, real estate brokers, or what-have-you shall not be able to maintain a lawsuit. Although the denial of standing can creep in through judicial interpretation of a legislative statement that something is unlawful to do if unlicensed or unregistered. Or not.