Collection board limits ownership-reporting for existing licensees to direct transfers of 50% or more

The Tennessee Collection Service Board voted Wednesday, Jan. 8, 2025, to limit its ownership-reporting requirements for existing collection agency licensees to direct transfers that result in a different person or entity acquiring an aggregate of 50% or more.

The change was proposed during the directors report and adopted by motion. Executive Director Roxanna Gamusio presented staffs analysis of the boards current practice and described a recommended revision to the boards internal processing: staff will require a new application only when there is a direct ownership change of 50% or more, rather than requiring disclosure when ownership changes occur at indirect tiers beneath the licensee.

Why it matters: The board said the revision reduces administrative burden for licensees and staff while keeping the board focused on direct control of licensed entities. Board counsel noted the change interprets Tennessees reporting statute with a narrower focus on the licensee itself, rather than every change in an ownership chain that may exist above or below the licensee.

Board discussion centered on consumer-protection tradeoffs and administrative burden. Joseph Wharton, associate general counsel with the Department of Commerce and Insurance, told members the underlying statute (quoted in the meeting record as 6220108) requires the board be notified of a change in address, management, or ownership, but that the board may interpret whether any change in an ownership chain constitutes a change in the direct licensee. Wharton said the board could reasonably focus on whether an ownership change effectuates a change in the direct licensee rather than every indirect change in parent entities.

Chip Hellman moved the formal direction: I would make a motion that our requirements for existing changes to existing licensees not exceed our requirements for new licensees. Greg Zworski seconded the motion. The chair called the vote and members voted in favor; the motion passed.

Clarifying details discussed during the exchange included the boards existing 50% threshold language (described as part of the rules package discussed later in the meeting) and the boards May 2019 prior interpretation, which members said had led staff to seek more information from licensees after licensure than had been required at initial licensing.

The boards decision applies to how staff will process existing licensees ownership changes pending the formal rulemaking process. Later in the meeting the board held a rulemaking hearing that included a parallel, proposed rule definition of change of ownership; that rulemaking process will determine whether the narrower interpretation is codified in the boards administrative rules.