Licensing Requirements For Collection Agencies - Q2 1999By the Division of Banks
Mass. Gen. Laws chapter 93, section 24, and its implementing regulation 209 CMR 18.00 et seq. govern the licensing of collection agencies in the Commonwealth. Said section 24 requires that a person or entity engaged in the Commonwealth in the business of collecting or receiving payment for others of any account, bill or other indebtedness, or engaged in soliciting the right to collect or receive payment for another of any such indebtedness shall obtain a license as a collection agency from the Division. The Division's regulation at 209 CMR 18.03 defines a "debt" to be "money or its equivalent which is, or is alleged to be, more than 30 days past due and owing, unless a different period is agreed to by the debtor, under a single account as a result of a purchase, lease, or loan of goods, services, or real or personal property." An entity which enters into a contract with an insurance company to perform on-site audits of hospitals on a contingency fee basis to identify overpayments from the insurance company, receive payment from the hospital, and transmit a net check to the insurance company does not require a collection agency license. A license would be required to engage in the collection of such overpayment which becomes more than 30 days past due.