HB 24-1380

House Bill 24-1380, which has been signed into law in Colorado, aims to regulate debt-related services by setting stricter rules for debt collectors and collection agencies. It requires these entities to clearly identify the original creditor when taking legal action against consumers and ensures they have a valid assignment of the debt. Additionally, it mandates credit service organizations to register with the state and pay an annual fee, and it sets penalties for violations. The law also clarifies requirements for debt management services providers regarding electronic communications and fees. Parts of this bill will start affecting businesses on August 7, 2024, while other parts won't take effect until March 1, 2025. This means that from August onwards, certain aspects of the bill will begin to regulate how these companies operate in Colorado.

Official Summary

The act prohibits a debt collector or collection agency that is not a creditor or debt buyer from being the named plaintiff in a legal action or taking any legal action on a debt against a consumer unless the debt collector or collection agency: Ensures that the name of the original creditor or assignor and the name of the debt collector or collection agency are included in the case of the caption of the complaint, in that order; and Has a complete and effective assignment, including complete settlement authority and authority to resolve the litigation. The act requires credit services organizations to file notification with and pay an annual notification fee to the administrator of the uniform consumer credit code (administrator) within 30 days after commencing business in Colorado and, thereafter, on or before July 1 of each year. The state treasurer shall credit the annual notification fee to the consumer credit unit cash fund. The administrator may order a person to cease and desist from engaging in violations of the "Colorado Credit Services Organization Act" (CCSOA). An order issued by the administrator may require the person to pay to a buyer a refund of any unlawful charges that have been charged to the buyer and to pay an administrative penalty of up to $1,500 per violation. A person aggrieved by an order of the administrator may seek judicial review of the order in the Colorado court of appeals. The act clarifies that a plan that a debt management services provider prepares for an individual that requires the individual to make regular, periodic payments must meet the definition of "plan" in the "Uniform Debt-Management Services Act". The act also clarifies that if a debt management services provider utilizes the internet or other electronic means to meet specific compliance requirements, including disclosures, reporting requirements, and record-keeping requirements, the provider must obtain a consumer's consent at the time of satisfying the requirements. The act repeals provisions outlining the fees a debt management services provider may charge and requires the administrator to adopt rules specifying the nature and amount of permitted fees. The rules must not unduly limit consumer access to debt management services programs based on available state and national data. APPROVED by Governor June 6, 2024 PORTIONS EFFECTIVE August 7, 2024 PORTIONS EFFECTIVE March 1, 2025(Note: This summary applies to this bill as enacted.)

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