Specific State Laws

1. The laws or regulations of the following states are silent in addressing whether collection agencies may add interest, fees or collection charges

• Alabama
• Alaska
• Florida
• Indiana
• Kentucky
• Maryland
• Montana
• Ohio
• Oklahoma
• South Dakota
• Utah

1. Specific State Laws

• ARIZONA

An individual, firm, partnership, association or corporation to whom a license is to be issued shall, except for attorneys licensed to practice law, not attempt to collect any collection fee, attorney’s fee court cost or expenses unless the fees, charges or expenses are justly due from and legally chargeable against the debtor, or have been judicially determined. Ariz. Rev. Stat. Ann. § 32-1051(4)

A collection agency shall not threaten or attempt to collect any attorney fees, collection cost, or other fee not provided in the contract which established the debt. Ariz. Admin. Code R20-4-1509

A licensee shall not give or send to any debtor, or cause to be given or sent to any debtor, any notice, letter, message or form which represents or infers that the existing obligation of the debtor may be increased by the addition of attorney’s fees, investigation fees, service fees, or any other fees or charges when in fact these fees or charges may not legally be added to the existing obligation of the debtor. Ariz. Rev. Stat. Ann. § 32-1051(5)(c)

• CALIFORNIA

A debt collector cannot falsely represent that a debt may be increased by the addition of attorney fees, investigation fees, service fees, finance charges, or other charges if, in fact, such fees or charges may not legally be added to the existing obligation. Cal. Civ. Code § 1788.13(e)

A debt collector cannot collect or attempt to collect the whole or any part of the debt  collector’s fee, or charge for services rendered, or other expense incurred by the debt collector in the collection of the consumer debt, except as permitted by law. Cal. Civ. Code § 1788.14(b)

Any legal rate of interest stipulated by a contract remains chargeable after a breach thereof, as before, until the contract is superseded by a verdict or other new obligation. Cal. Civ. Code § 3289

• COLORADO

A debt collector or collection cannot not use unfair or unconscionable means to collect or attempt to collect any debt, including, but not limited to, the following conduct: The collection of any amount, including any interest, fee, charge, or expense incidental to the principal obligation, unless such amount is expressly authorized by the agreement that created the debt or permitted by law. Colo. Rev. Stat. Ann. § 12-14-108(1)(a)

A collection agency cannot add, collect, or attempt to collect a charge for costs of collection unless such costs are specifically authorized by statute or by the contract, agreement, note, or other instrument creating the debt and are not otherwise prohibited by law. 4 Colo. Code Regs. § 903-1 Rule 2.03

No licensee shall advise, suggest, or request that a client add collection costs to any existing debt unless such costs are specifically authorized by statute. 4 Colo. Code Regs. § 903-1 Rule 2.03

If a statute, contract, agreement, note, or other instrument specifically authorizes the addition of collection costs and such costs are collected, the licensee may retain only those collection costs exclusive of attorney fees and court costs as its fee or commission for the collection of the debt, unless otherwise agreed to in writing with the assignor. 4 Colo. Code Regs. § 903-1 Rule 2.03

No collection agency shall add, collect, or attempt to collect costs of collection pursuant to § 13-21-109(1)(b) (II), C.R.S. on any dishonored check, draft, or payment order payable to it unless the check is assigned for collection to another collection agency not owned in whole or in part by the payee collection agency. 4 Colo. Code Regs. § 903-1 Rule 2.03

With respect to a consumer credit transaction, the agreement may provide for the payment by the consumer of reasonable attorney fees not in excess of fifteen percent of the unpaid debt after default and referral to an attorney not a salaried employee of the creditor or such additional fee as may be directed by the court. A provision in violation of this section is unenforceable. Colo. Rev. Stat. Ann. § 5-5-112(1)

• CONNECTICUT

A consumer collection agency cannot add any charge or fee to the amount of any claim which it receives for collection, or knowingly accept for collection any claim to which any charge or fee has already been added to the amount of the claim, unless the consumer debtor is legally liable, in which case, the charge or collection fee may not be in excess of 15% of the amount actually collected on the debt. Conn. Gen. Stat. Ann. § 36a 805(a)(13)

The collection of any amount, including any interest, fee, charge or expense incidental to the principal obligation, that is not expressly authorized by the agreement creating the debt or permitted by law, is an unfair or unconscionable means to collect or attempt to collect a debt. Conn. Agencies Regs. § 36a-809-3(g)(1)

• DISTRICT OF COLUMBIA

A debt collector cannot represent that an existing obligation of the consumer may be increased by the addition of attorney’s fees, investigation fees, service fees, or any other fees or charges when in fact such fees or charges may not legally be added to the existing obligation. D.C. Code Ann. § 28-3814(f)(8)

A debt collector cannot collect or attempt to collect from the consumer all or any part of the debt collector’s fee or charge for services rendered;  the collection of or the attempt to collect any interest or other charge, fee, or expense incidental to the principal obligation unless such interest or incidental fee, charge or expense is expressly authorized by the agreement creating the obligation and legally chargeable to the consumer or unless such interest or incidental fee, charge, or expense is expressly authorized by law. D.C. Code Ann. §§ 28-3814(g)(3),(4)

• GEORGIA

A debt collector may not represent to a consumer that an existing obligation of the consumer may be increased by the addition of attorney’s fees, investigative fees, service fees or any other charges when, in fact, such fees or charges may not legally be added to the existing obligation. Ga. Comp. R. & Regs. r. 120-1-14-.23(h)

A debt collector cannot attempt to collect any interest or other charge, fee, or expense incidental to the principal obligation unless such interest or incidental fee, charge or expense incidental to the principal obligation is expressly authorized by the agreement creating the obligation and legally chargeable to the consumer. Ga. Comp. R. & Regs. r. 120-1-14-.24(c)

• ILLINOIS

A collection agency commits a deceptive collection practice when, with the intent to collect a debt owed to a person, corporation, or other entity, he, while attempting to collect an alleged debt, adds to the debt any service charge, interest or penalty which he is not entitled by law to add.  Ill. Admin. Code tit. 68, § 1210.60(c)

It is an unlawful practice for a debt collector to collect or attempt to collect any interest or other charge or fee in excess of the actual debt or claim, unless such interest or other charge or fee is expressly authorized by the agreement creating the debt or claim, expressly authorized by law or, in a commercial transaction such interest or other charge or fee is expressly authorized in a subsequent agreement. If a contingency or hourly fee arrangement (i) is established under an agreement between a collection agency and a creditor to collect a debt and (ii) is paid by a debtor pursuant to a contract between the debtor and the creditor, then that fee arrangement does not violate this Section unless the fee is unreasonable. The Department shall determine what constitutes a reasonable collection fee. 225 Ill. Comp. Stat.425/9(a)(29)

Creditors shall be allowed to receive the rate of five (5) percent per annum for all moneys after they become due on any bond, bill, promissory note, or other instrument of writing; on money lent or advanced for the use of another; on money due on the settlement of account from the day of liquidating accounts between the parties and ascertaining the balance; on money received to the use of another and retained without the owner’s knowledge; and on money withheld by an unreasonable and vexatious delay of payment. In the absence of an agreement between the creditor and debtor governing interest charges, upon 30 days’ written notice to the debtor, an assignee or agent of the creditor may charge and collect interest as provided in this Section on behalf of a creditor. 815 Ill. Comp. Stat. 205/2

• MAINE

A debt collector cannot falsely represent any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt. Me. Rev. Stat. Ann. tit. 32, § 11013(2)(B)(2)

The collection of any amount, including any interest, fee, charge or expense incidental to the principal obligation, unless the amount is expressly authorized by the agreement creating the debt or permitted by law. Me. Rev. Stat. Ann. tit. 32, § 11013(3)(A)

• MASSACHUSETTS

It is an unfair practice for a debt collector to collect or attempt to collect any amount, including any interest, fee, charge or expense incidental to the principal obligation, unless such amount is expressly authorized by the agreement creating the debt or permitted by law.  Mass. Regs. Code tit. 209, § 18.17(1)

It is an unfair practice for a debt collector to represent that an existing obligation of a consumer may be increased by the addition of attorney’s fees, investigation fees, service fees, or any other fees or charges, if in fact such fees or charges may not legally be added to the existing obligation. Mass. Regs. Code tit. 209 § 18.17(9)

• MICHIGAN

A licensee cannot commit any of the following acts: demanding or obtaining a share of the compensation for service performed by an attorney in collecting a claim or demand or collecting or receiving a fee or other compensation from a consumer for collecting a claim, other than a claim owing the creditor pursuant to the provisions of the original agreement between the creditor and debtor. Mich. Comp. Laws Ann. § 339.915a(e)

• MISSOURI

No person, firm or corporation shall receive or impose any fee or charge, other than one expressly provided for by statute, for arranging credit in the amount of one thousand dollars or less, the proceeds of which are intended to be used by the borrower primarily for personal, family or household purposes. Any contract evidencing such excess fee or charge and any note evidencing credit so arranged is void. Any person, firm or corporation who receives or imposes a fee or charge prohibited by this section is guilty of a class B misdemeanor. Mo. Ann. Stat. § 408.096

Notwithstanding any other provision of law to the contrary, attorney’s fees are permitted to enforce a credit agreement provided the enforcing attorney is a licensed member of the Missouri bar or is authorized to practice law in Missouri, and such fees meet one of the following requirements:

1. Such fees are included in the written credit agreement, and are not otherwise prohibited by law; or
2. Such fees do not exceed fifteen percent of the outstanding credit balance in default, provided such credit was extended by a for-profit business or credit union.

At the court’s discretion, additional fees may be awarded to the attorney for the prevailing party. Mo. Ann. Stat. § 408.092

No provision of this section shall be construed to authorize or limit attorney’s fees permitted parties and transactions not covered by this section.  Mo. Ann. Stat. § 408.092

• NEVADA

A collection agency cannot collect or attempt to collect any interest, charge, fee, or expense incidental to the principal obligation unless:

1. Any such interest, charge, fee or expense as authorized by law or as agreed to by the parties has been added to the principal of the debt by the creditor before receipt of the item of collection;
2. Any such interest, charge, fee or expense as authorized by law or as agreed to by the parties has been added to the principal of the debt by the collection agency and described as such in the first written communication with the debtor; or
3. The interest, charge, fee or expense has been judicially determined as proper and legally due from and chargeable against the debtor. Rev. Stat. 649.375(2)

• NEW HAMPSHIRE

Any debt collection or attempt to collect a debt shall be deemed unfair, deceptive or unreasonable if the debt collector:

1. Makes any representation that an existing obligation may be increased by the addition of attorney’s fees, investigation fees, service fees or any other fees or charges when in fact such fees or charges may not be legally added to the existing obligation; or
2. Makes any representation that an existing obligation will definitely be increased by the addition of attorney’s fees, investigation fees, service fees or any other fees or charges when the award of such fee or charge is discretionary by a court of law; or
3. Collects or attempts to collect any interest or other charge, fee or expense incidental to the principal obligation unless such interest or incidental fee, charge or expense is expressly authorized by the agreement creating the obligation and legally chargeable to the debtor; provided that the foregoing shall not prohibit a debt collector from attempting to collect court costs in a judicial proceeding. N. H. Rev. Stat. Ann. § 358-C:3 (VIII)-(X)

• NEW JERSEY

If a borrower defaults under the terms of a plan and the bank refers the borrower’s account for collection to an attorney or collection agency, for collection, the bank may, if the agreement governing the revolving credit plan so provides, charge and collect from the borrower a reasonable attorney’s or collection agency’s fee and, in addition, if the agreement governing the plan so provides, the bank may recover from the borrower all court or other collection costs actually incurred by the bank. N.J. Stat. Ann. § 17:3B-40

• NEW YORK

New York State: No principal creditor or his agent may knowingly collect, attempt to collect, or assert a right to any collection fee, attorney’s fee, court cost or expense unless such charges are justly due and legally chargeable against the debtor. N.Y. Gen. Bus. Law § 601(2). “Principal creditor” means any person, firm, corporation or organization to whom a consumer claim is owed, due or asserted to be due or owed, or any assignee for value of said person, firm, corporation or organization. N.Y. Gen. Bus. Law § 600(3)

New York City: A collector may not collect any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law. New York City, N.Y., Rules, Tit. 6, § 5-77(e)(1)

• NORTH CAROLINA

A collection agency cannot collect or attempt to collect a debt or obtain information concerning a consumer by any fraudulent, deceptive or misleading representation. Such representations include, but are not limited to, the following: Falsely representing that an existing obligation of the consumer may be  increased by the addition of attorney’s fees, investigation fees, service fees, or any other fees or charges; N.C. Gen. Stat. § 58-70-110(6)

A collection agency cannot collect or attempt to collect any debt by use of any unconscionable means. Such means include, but are not limited to, the following: Collecting or attempting to collect from the consumer all or any part of the collection agency’s fee or charge for services rendered, collecting or attempting to collect any interest or other charge, fee or expense incidental to the principal debt unless legally entitled to such fee or charge; N.C. Gen. Stat. § 58-70-115(2)

• OREGON

It is an unlawful collection practice for a debt collector, while collecting or attempting to collect a debt to do any of the following: Represent that an existing debt may be increased by the addition of attorney fees, investigation fees or any other fees or charges when such fees or charges may not legally be added to the existing debt. Or. Rev. Stat. § 646.639(2)(m)

It is an unlawful collection practice for a debt collector, while collecting or attempting to collect a debt to do any of the following: Collect or attempt to collect any interest or any other charges or fees in excess of the actual debt unless they are expressly authorized by the agreement creating the debt or expressly allowed by law. Or. Rev. Stat. § 646.639(2)(n)

• PENNSYLVANIA

It is unlawful for a collection agency to collect any amount, including any interest, fee, charge or expense incidental to the principal obligation, unless such amount is expressly provided in the agreement creating the debt or is permitted by law. 18 Pa. Cons. Stat. Ann. § 7311(b.1)

• TEXAS

A debt collector may not use unfair or unconscionable means that employ the following practices: collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer. Tex. Fin. Code Ann. § 392.303(a)(2)