On April 3, Nevada released new debt collection guidance that clarified existing emergency regulations implemented in response to the coronavirus (“COVID-19”) outbreak. The Deputy Commissioner of the Nevada Department of Business & Industry recently provided some clarification concerning the Department’s March 20 notice to the collection industry.
The Department’s prior notice deemed collection agencies non-essential businesses in accordance with the Governor’s mandatory emergency directive, subject to which all collection agencies licensed under Nevada Revised Statutes Chapter 649 and located in the State were ordered to close until April 16, 2020. The directive further ordered that licensed collection agencies located outside Nevada “must cease collection efforts” with Nevada consumers/residents until April 16, 2020.
In response, the Department was asked whether the phrase “must cease collection efforts” applied to:
- Receiving and depositing payments from consumers who had established payment plans prior to Nevada Gov. Steve Sisolak’s emergency directive that all non-essential businesses close; and
- Receiving and depositing voluntary payments from consumers who have not established a payment plan but have sought out the collection agencies because they want to pay their debt.
The Deputy Commissioner provided the following clarification:
Collection agencies should be mindful of the hardship this causes for everyone adversely affected by COVID-19 and take that into consideration before letting safety measures negatively impact a consumer’s account. If a consumer initiates the communication/payment and they want to pay and have the ability to do so, you may accept the payment. A consumer should have the choice to proceed with their pre-arranged payment(s) or to pause the collections. No fees should be charged for late or missed payments.
While the Deputy Commissioner’s clarification offers a welcome approach to existing collection efforts with Nevada consumers, the guidance itself leaves many practical considerations open for interpretation. For instance, while collection entities licensed in Nevada may accept consumer-initiated correspondence and payments, to what extent can collectors respond to consumers who make the “choice to proceed with their pre-arranged payments”? Also, what actions can collectors take to ascertain whether a consumer has “the ability [to pay]” or intends to proceed with an established payment plan?
Also unanswered is the extent to which the Deputy Commissioner’s guidance conflicts with the Governor’s prior mandate closing non-essential businesses. The Deputy Commissioner’s correspondence specifically reiterated that the Governor had closed all non-essential businesses until April 30, 2020, which extends the initial April 16 moratorium by two weeks. Collection agencies holding a license under Nevada Revised Statutes Chapter 649 were specifically included among the businesses deemed non-essential by the Governor.
Are collection agencies now exempt from the Governor’s order closing non-essential businesses? The Deputy Commissioner’s correspondence appears to permit collection agencies to be “open” for the limited purpose of accepting consumer-initiated payments; however, whether or not they must remain “closed” in all other respects is unclear.
Though well-intended, the Nevada Department of Business & Industry’s most-recent guidance does little to clarify the scope of permissible debt collection in the wake of COVID-19, leaving the state’s consumers and licensed collection agencies with more questions than answers.