In Badeen v. PAR, Inc., et al., the Michigan Supreme Court expanded the definition of “collection agency” under Michigan’s Occupation Code to include forwarders and forwarding companies.

The plaintiff collection agency brought an action against a number of automobile lenders and forwarding companies alleging that the forwarders were operating as “collection agencies” under Michigan law and were therefore subject to the state’s licensing requirements because they are engaged in “soliciting a claim for collection.”  The Supreme Court agreed, concluding that when forwarders contact consumers concerning unpaid accounts subject to collection, the forwarders satisfied the Code’s solicitation requirement – a threshold requirement for collection agencies to register for a license with the Department of Licensing and Regulatory Affairs (“LRA”).  The Michigan Supreme Court remanded this case back to the trial court for a decision on whether the licensing requirements apply to forwarders conducting business in Michigan.

Forwarders collecting on Michigan-based accounts should review the LRA’s forms for collection agency licenses and give serious consideration to obtaining a license if they wish to continue operating in Michigan.