Illinois Updates Collection Agency/Debt Buyer Licensing Requirements, Exemptions

The new law preserves the existing licensing framework for collection agencies while revising key definitions and enforcement provisions.

Illinois has expanded licensing exemptions, among other licensing changes, in Senate Bill 2457, enacted on Aug. 7.

The law maintains the current licensing system for collection agencies and debt buyers while updating the act’s definitions, exemptions, and enforcement rules.

The amendments introduce several key changes:

• Updated Definitions and Exemptions: Key terms are updated, and it is now clearer which entities do not require a license, including student loan servicers.
• Strengthened Enforcement: The Illinois Department of Financial and Professional Regulation is granted greater authority to manage licensing, take disciplinary action, and combat unlicensed activity.
• New Child Support Rules: The regulations for agencies that collect court-ordered child support have been refined, establishing specific fee limitations and conduct requirements.

The law also clarifies licensing for out-of-state agencies. It allows unlicensed collections in Illinois if the agency is still licensed in its home state, collects only through interstate communications, and if Illinois issues reciprocal privileges.

Senate Bill 2457 amends the Illinois Collection Agency Act and removes its repeal date of Jan. 1, 2026, under the Regulatory Sunset Act.

For licensing questions, visit Collectors Insurance Agency’s webpage or contact Collectors Insurance Agency’s licensing team at (952) 926-6547 or licensing@acainternational.org.