HAR Chapter 112 – Collection Agencies

HAWAII ADMINISTRATIVE RULES
TITLE 16
DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
CHAPTER 112
COLLECTION AGENCIES
Subchapter 1 General Provisions
§16-112-1 	Objective
§16-112-2 	Definitions
Subchapter 2 Registration Requirements
§16-112-6 	Registration
§16-112-7 	Conducting business
§16-112-8 	Notification of change
§16-112-9 	Fees
§16-112-10 	Principal collector
§16-112-11 	Regular active business office
§16-112-12 	Biennial renewal
Subchapter 3 Trust Accounts, Fiduciary Responsibility, 	Records, Audit
§16-112-15 	Maintenance of records of funds and chattels
§16-112-16 	Maintenance of records of accounts assigned to collection agency
of indebtedness to be kept by collection agency
Subchapter 4 Practice and Procedure
§16-112-21 	Administrative practice and procedure
112-1

§16-112-1
SUBCHAPTER 1
GENERAL PROVISIONS
§16-112-1 	Objective. 	This chapter is intended to clarify and implement
chapter 443B, Hawaii Revised Statutes, to the end that the provisions thereunder
may 	be 	best 	effectuated 	and 	the 	public 	interest 	most 	effectively 	served.
[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §443B-2)
§16-112-2 	Definitions. 	Definitions of terms found in section 443B-1,
HRS, are incorporated by reference and made a part of this chapter. In addition,
the following definitions shall be included:
"Acting under an order of court" means acting at the direction of the court
and not merely collecting or attempting to collect a court ordered judgment on
behalf of the prevailing party.
"Chattel" means an item of tangible movable or immovable property except
real estate and things which are part and parcel of it.
"Direct management and control" means the act by the principal collector
of personally conducting or supervising the operations and activities of the
collection agency business in this State.
"Immediate access" means retrievable within five business days.
"Indebtedness" means any obligation or alleged obligation of a consumer
to pay money or other forms of payment owed to another person.
"Judgment" includes, 	but 	is not 	limited to, 	damage amounts, 	liens,
garnishments, attachments, child support or alimony imposed by an order of court.
[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §443B-1)
SUBCHAPTER 2
REGISTRATION REQUIREMENTS
§16-112-6 	Registration. 	No collection agency shall collect or attempt to
collect any money or other forms of debt in this State without first registering
under this chapter. 	Registration requirements shall include:
(1) 	Filing with the director an application for registration on a form
prescribed by the director;
(2) 	Submitting 	a 	certificate 	of 	good 	standing 	or 	a 	certificate 	of
authority from the business registration division of the department
of commerce and consumer affairs;
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§16-112-10
(3) 	Filing a bond or bonds with the director in the amount prescribed
in section 443B-5, HRS; and
(4) 	Paying the appropriate fees. [Eff 4/22/94] (Auth: HRS §443B-2)
(Imp: 	HRS §§ 436B-15, 443B-3, 443B-4, 443B-5)
§16-112-7 	Conducting business. 	Each registrant conducting a collection
agency business in this State shall:
(1) 	Be registered with the director as prescribed in section 16-112-6;
(2) 	Maintain a regular active business office in this State as prescribed
in section 16-112-11;
(3) 	Designate a principal collector to assume responsibility for the
direct management and control of the daily operation of the
collection agency’s office in this State as prescribed in section
16-112-10; and
(4) 	Maintain a separate trust account for clients’ funds in a federally
insured financial institution as provided for in section 443B-8,
HRS. [Eff 4/22/94] (Auth: HRS §443B-2) (Imp: HRS §§443B-1,
443B-3, 443B-6, 443B-8)
§16-112-8 Notification of change. Each collection agency shall notify the
director in writing of any material change at any time during the application
process or the period of registration. 	Notification shall be made within ten days
of the change. 	[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §§443B-4.54)
§16-112-9 	Fees. 	Each agency shall pay the appropriate fees to the
department in the amount specified in section 16-53-16.3. 	Registration shall not
be deemed complete until all appropriate fees are paid. 	If a check is dishonored
by a financial institution, fees shall be paid by certified check, money order, cash,
or cashier’s check. 	The fees shall be considered unpaid and registration deemed
incomplete until one of these accepted forms of payment is received by the
department. 	[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §§436B-15,
443B-3)
§16-112-10 	Principal collector. 	(a) The principal collector shall be a
natural person as defined in section 16-112-11(2) to staff the collection agency
office in this State. 	The principal collector shall be responsible for the direct
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§16-112-10
management and control of the daily operation of the collection agency’s office
in this State and shall:
(1) 	Be an employee or agent of the collection agency;
(2) 	Have full knowledge of the collection agency’s operations;
(3) 	Have 	full 	knowledge 	of 	the 	collection 	agency’s 	accounting
practices which include the monies belonging to and in custody of
the agency in connection with its operation as a collection agency;
and
(4) 	Have full and immediate access to all books and records, or copies
thereof, as will disclose debts, payments, remittances, or other
transactions related to the daily operation of the collection agency’s
business.
(b) 	No collection agency shall conduct collection agency business until
the name, Hawaii address, and telephone number of the principal collector have
been provided to the director by the collection agency. [Eff 4/22/94] (Auth: HRS
§443B-2) (Imp: 	HRS §443B-6)
§16-112-11 	Regular active business office. 	A regular active business
office shall include the following:
(1) 	A physical place, other than a post office box, a drop box,
telephone, telephone answering service, or motor vehicle, where
business is conducted;
(2) 	A natural person to staff the office. The natural person shall be the
principal collector who may be either an employee or an agent of
the registrant;
(3) 	A business telephone number;
(4) 	A schedule of operation that states reasonable business hours
according to Hawaiian standard time as defined in chapter 1,
sections 30 and 31, HRS; and
(5) 	Immediate access to such books and records, or copies thereof, as
will disclose debts, payments, remittances, or other transactions
related to the daily operation of the collection agency’s business.
[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §443B-6)
§16-112-12 	Biennial renewal. 	Each agency shall pay the appropriate
renewal fee as specified in section 16-53-16.3, by June 30 of each even-numbered
year. 	License renewal shall not be deemed complete until the requirements of
section 443B-4.58, HRS, are met. 	A completed renewal application sent by
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§16-112-16
United States mail shall be considered timely filed if the envelope bears a
postmark on or before the deadline date of June 30 of the even-numbered year.
If a check is dishonored by a financial institution, fees shall be paid by certified
check, money order, cash, or cashier’s check. The fees shall be considered unpaid
and registration deemed incomplete until one of the accepted forms of payment
is received by the department. [Eff 4/22/94] (Auth: HRS §443B-2) (Imp: HRS
§443-4.58)
SUBCHAPTER 3
TRUST ACCOUNTS, FIDUCIARY RESPONSIBILITY, RECORDS, AUDIT
§16-112-15 Maintenance of records of funds and chattels. Each collection
agency shall maintain, at its regular active business office in this State, permanent
records or have immediate access to permanent records of all of its receipts and
disbursements of funds for each customer or copies thereof. 	Such records shall
be kept for a period of at least six years. 	The records shall clearly indicate the
following:
(1) 	Date of the receipt of the funds to be held in trust or chattels to be
held;
(2) 	A description of the type of funds held in trust or chattels held;
(3) 	The name of the debtor from whom the funds held in trust or
chattels were received;
(4) 	The name of the client for whose benefit the funds or chattels are
being held;
(5) 	The date and to whom the funds or chattels were or will be
delivered; and
(6) 	Other 	pertinent 	information 	concerning 	funds 	and 	chattels.
[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §443B-8)
§16-112-16 	Maintenance of records of accounts assigned to collection
agency of indebtedness to be kept by collection agency. 	(a) Each collection
agency shall maintain permanent legible records or have immediate access to
permanent legible records of all of the accounts assigned to the agency. 	The
records may be in the form of one or a combination of the following methods:
(1) 	A listing sheet;
(2) 	An acknowledgment-receipt slip; or
(3) 	A master contract or agreement.
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§16-112-16
(b) 	The records for each account shall contain but shall not be limited
to the following:
(1) 	Client’s name and address;
(2) 	Debtor’s name and address;
(3) 	Date of assignment;
(4) 	Amount owed by the debtor;
(5) 	Date and description of all collection agency transactions; and
(6) 	Fee to be charged the client for each account.
(c) 	The collection agency may dispose of the records of an account,
provided that no less than six years have passed since the date of the last
transaction. 	[Eff 4/22/94] (Auth: 	HRS §443B-2) (Imp: 	HRS §443B-8)
SUBCHAPTER 4
PRACTICE AND PROCEDURE
§16-112-21 Administrative practice and procedure. The rules of practice
and procedure for collection agencies shall be as provided in chapter 16-201, the
rules of practice and procedure of the department of commerce and consumer
affairs, which are incorporated by reference and made a part of this chapter.
[Eff 4/22/94] (Auth: 	HRS §§91-2, 443B-2) (Imp: 	HRS §§91-2, 443B-2)
112-6

The Department of Commerce and Consumer Affairs adopted Chapter
16-112, 	Hawaii 	Administrative 	Rules, 	relating 	to 	collection 	agencies, 	on
February 24, 1994, following a public hearing held on the same date, after public
notices were given in the Honolulu Advertiser, Kauai Times, Maui News, Hawaii
Tribune-Herald, and West-Hawaii Today on January 23, 1994.
These rules shall take effect ten days after filing with the Office of the
Lieutenant Governor.
/s/ Clifford K. Higa
CLIFFORD K. HIGA
Director of Commerce and Consumer Affairs
APPROVED AS TO FORM: 	Date 	3/18/94
/s/ Rodney J. Tam
Deputy Attorney General
APPROVED: 	Date 	4/12/94
/s/ John Waihee
JOHN WAIHEE
Governor of Hawaii
April 12, 1994
Filed

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Adoption of Chapter 16-112
Hawaii Administrative Rules
SUMMARY
Chapter 	16-112, 	Hawaii 	Administrative 	Rules, 	entitled 	"Collection
Agencies" is adopted.
Effective 4/22/94