The Maryland Department of Labor issued a bulletin on May 11 that discusses what collection agencies should do in case they are voluntarily closing—either temporarily or permanently—due to COVID-19. The goal of the bulletin is to instruct such agencies to conduct their winding down process in a way that keeps consumers from experiencing adverse effects:

[T]he State Collection Agency Licensing Board (“the Board”) expects collection agencies to manage such disruptions in compliance with their respective business continuity plans and otherwise wind down operations in an orderly manner so as to protect consumers from unnecessary harm, especially when transferring consumer claims to other parties.

The bulletin enumerates certain minimum standards for collection agencies that fall into this category. These items are listed below verbatim from the bulletin:

  • Promptly notify the owner(s) of consumer claims assigned to the collection agency if the collection agency will cease collection on those consumer claims;
  • Remit any and all consumer payments held in custodial accounts, with proper accounting, to the owners of the consumer claims at the time the collection agency ceases collecting on those claims; NOTE:  At no time should a licensed collection agency use custodial funds to support business operations, even during periods of strained liquidity.
  • Maintain, and provide to the owners of any consumer claims, to the owners’ designees, or to the purchasers of any consumer claims owned and sold by the collection agency:
    • Current, accurate, and complete payment and accounting histories, including all payments received from consumers towards their respective consumer claims;
    • Current, accurate, and complete records of any loss mitigation activity, including arrangements made with consumers and those being processed;
    • Current, accurate, and complete records of any consumer complaints being processed regarding the consumer claims, including status;
    • Any correspondence with consumers regarding their respective consumer claims.

The Department expects agencies to provide documentation of their plans through NMLS.

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