Recently, the Minnesota Court of Appeals affirmed a cease-and-desist order against a Utah-based company for allegedly conducting unlicensed debt collection in Minnesota. The court held Minnesota’s collection agency statutes apply broadly and require licensure for any entity that seeks to collect payment on behalf of others, even if the company is out-of-state collecting on Minnesota-based claims.

The case involved a Utah-based company that contracted with Minnesota vehicle rental businesses to recover rental-vehicle damage claims. The company received assignments of claims, contacted consumers, and attempted to collect amounts owed. The court found that these activities, including sending collection letters to consumers, constituted debt collection “for others” under Minnesota law, even if the claims were liquidated. The court emphasized that the statutory language, “any . . . other indebtedness,” covers any type of debt or financial obligation. It also noted that the company’s contracts, which required it to collect payments, keep funds in a trust account and send proceeds to its clients, demonstrated that it was acting as a collection agency.

The court rejected the company’s arguments that it was not a collection agency, was not operating in Minnesota, and that the statutes were unconstitutionally vague. Ultimately, the court held that collection activities tied to Minnesota businesses or transactions require licensure, even if the consumer resides elsewhere, and found the statutes clear in their application.