If you collect debts from Chicago consumers, effective July 1, 2013, you will need an additional license and may need to alter your collection practices to comply with City of Chicago ordinance amendments governing debt collection.

The Chicago ordinance will require agencies collecting consumer debts from Chicago residents to secure a license for each "location at which a business operates." Businesses that are exempt from obtaining a debt collection license pursuant to the Illinois Collection Agency Act are also exempt under the new ordinance (e.g., banks, lending institutions, licensed attorneys, credit unions, and loan and finance companies).

The ordinance imposes new verification and record keeping requirements that are more restrictive than the FDCPA. When a collector responds to a written verification/validation request, the collector must provide the following information:

  1. an itemized list of the interest, charges, and fees owed before the account charged-off;
  2. itemized list of interest, charges, and fees that the consumer owed after the account charged-off; and
  3. a description of the basis for a consumer's alleged obligation to pay an account.

The collector must also comply with the following record keeping requirements:

  1. maintaining records of each written communication with a debtor;
  2. a record of each payment made (including the date of receipt, method of payment, and the debt to which the payment is applied);
  3. a copy of a debtor's repayment schedule;
  4. for purchased debts, the name and address of the entity who last owned the debt, the date the debt was purchased, and the amount of the debt when it was purchased.

Fines for violations range from $250 to $2,500 for the first offense and $500 to $5,000 for a second or any subsequent offense during any 12 month period, as well as license revocation.

The ordinance does not provide a private cause of action for consumers.

Collectors are complaining: providing an itemized statement to consumers?

The licensing application and instructions are now available at City Hall and online at http://www.cityofchicago.org/city/en/depts/bacp.html. The license fee is $250 per location and covers a two-year term.

Please call us with any questions.

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