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debts. “Debt” means money, property, or their equivalent which is due or owing (or alleged to be due or
owing) from a natural person to another person, and “consumer debt” means money, property, or their
equivalent, due or owing (or alleged to be due or owing) from a natural person by reason of a consumer
credit transaction. See § 2. “Consumer credit transaction” means a transaction between a natural person
and another person in which property, service or money is acquired on credit by the natural person
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primarily for personal, family or household purposes.

A person acts as a collection agency when he or it: (a) engages in the business of collection for others
of any account, bill or other indebtedness; (b) receives, by assignment or otherwise, accounts, bills or
other indebtedness from any person owning or controlling 20% or more of the
business receiving the assignment, with the purpose of collecting monies due
on such account, bill or indebtedness; (c) sells or attempts to sell, or gives
away or attempts to give away to a person (other than one registered under
the act) any system of collection, letters, demand forms, or other printed
matter where the name of a person, other than that of the creditor, appears in
such a manner as to indicate that a request or demand is being made by a
person other than the creditor for payment of the sums due or asserted to be
due; (d) buys accounts, bills or other indebtedness and engages in collecting same; or (e) uses a fictitious
name in collecting its own accounts, bills or debts with the intent of conveying to the debtor that a third
party has been employed to make such collection. See § 3.

Exemptions Listed: However, the act does not apply to persons whose collection activities are
confined to and are directly related to operation of a business other than that of a collection agency, and
specifically does not include banks, including trust departments, affiliates, and subsidiaries thereof,
fiduciaries, and financing and lending institutions (except those who own or operate collection agencies);
abstract companies doing an escrow business; real estate brokers; public officers and judicial officers
acting under order of court; licensed attorneys; insurance companies; credit unions, their affiliates and
subsidiaries; loan and finance companies; retail stores collecting their own accounts; condominium unit
owners associations and their agents, when collecting assessments from unit owners; and any person
under contract with a creditor to notify debtors using only the creditor’s name. § 2.03.

Registration Required: Under the act, collection agencies may not operate in Illinois, or engage
in the business of collecting, or solicit claims for others, have a sales office, a client, or solicit a client in
Illinois, exercise the right to collect, or receive payment for another of any account, bill or
other indebtedness, without registering with the Department of Financial & Professional
Regulation, except they are not required to be licensed if their activities in Illinois are
limited to collecting debts by means of interstate communication from a location in
another state, provided the agency is licensed in that state and these same privileges are
permitted in that state to agencies licensed in Illinois. § 4. To be duly registered, the
agency’s officers must “be of good moral character”; have no unsatisfied judgments, and
not have been officers with an agency whose registration is suspended or revoked. § 7.

In addition to requiring registration, the act prohibits a wide variety of misconduct by collection
agencies. We’ll discuss those prohibitions – and who may sue to enforce them – in coming issues of
Sharp Thinking.
John\SharpThinking\#65.doc

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Notwithstanding these definitions, the act also has special provisions giving it certain applications in collection of child support.
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THE SHARP LAW FIRM, P.C.

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