Senate Bill sb2682c1

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    Florida Senate - 2004                           CS for SB 2682

    By the Committee on Banking and Insurance; and Senators
    Aronberg, Atwater, Lynn and Campbell




    311-2322-04

  1                      A bill to be entitled

  2         An act relating to credit counseling services;

  3         creating pt. IV, ch. 817, F.S.; providing

  4         definitions; prohibiting certain persons from

  5         accepting certain fees or costs from debtors

  6         under certain circumstances; providing

  7         exceptions; providing disclosure and financial

  8         reporting requirements for debt management or

  9         credit counseling services; providing

10         disbursement of funds requirements; providing

11         civil penalties; providing for awards of

12         attorney's fees and costs; providing for

13         deposit of certain funds into the General

14         Revenue Fund; providing an effective date.

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16  Be It Enacted by the Legislature of the State of Florida:

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18         Section 1.  Part IV of chapter 817, Florida Statutes,

19  consisting of sections 817.801, 817.802, 817.803, 817.804, and

20  817.805, is created to read:

21                             PART IV

22                    CREDIT COUNSELING SERVICES

23         817.801  Definitions.--

24         (1)  "Credit counseling services" means confidential

25  money management, debt reduction, and financial educational

26  services.

27         (2)  "Debt management services" means services provided

28  to a debtor by a credit counseling organization for a fee to:

29         (a)  Effect the adjustment, compromise, or discharge of

30  any unsecured account, note, or other indebtedness of the

31  debtor; or

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    Florida Senate - 2004                           CS for SB 2682
    311-2322-04




 1         (b)  Receive from the debtor and disburse to a creditor

 2  any money or other thing of value.

 3         (3)  "Person" means any individual, corporation,

 4  partnership, trust, association, or other legal entity.

 5         (4)  "Credit counseling agency" means any organization

 6  providing credit counseling services.

 7         817.802  Unlawful fees and costs.--

 8         (1)  It is unlawful for any person, while engaging in

 9  debt management services or credit counseling services, to

10  charge or accept from a debtor, directly or indirectly, a fee

11  or contribution greater than $50 for the initial setup or

12  initial consultation. Subsequently, such person may not charge

13  or accept a fee or contribution from a debtor greater than

14  $120 per year for additional consultations or, alternatively,

15  if debt management services as defined in s. 817.801(2)(b) are

16  provided, such person may charge the greater of 7.5 percent of

17  the amount paid monthly by such debtor to such person or $35

18  per month.

19         (2)  No provision of this part prohibits any person,

20  while engaging in debt management or credit counseling

21  services, from imposing upon and receiving from a debtor a

22  reasonable and separate charge or fee for insufficient funds

23  transactions.

24         817.803  Exceptions.--Nothing in this part applies to

25  any debt management and credit counseling services provided in

26  the practice of law in this state. Nothing in this part

27  applies to any person or entity who engages in debt adjustment

28  to adjust the indebtedness owed to such person or entity.

29  Nothing in this part applies to the following entities or

30  their subsidiaries: the Federal National Mortgage Association;

31  the Federal Home Loan Mortgage Corporation; the Florida

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    Florida Senate - 2004                           CS for SB 2682
    311-2322-04




 1  Housing Finance Corporation, a public corporation created in

 2  s. 420.504, or a bank, bank holding company, trust company,

 3  savings and loan association, credit union, credit card bank,

 4  or savings bank that is regulated and supervised by the Office

 5  of the Comptroller of the Currency, the Office of Thrift

 6  Supervision, the Federal Reserve, the Federal Deposit

 7  Insurance Corporation, the National Credit Union

 8  Administration, or the Department of Financial Services.

 9         817.804  Requirements; disclosure and financial

10  reporting.--

11         (1)  Any person engaged in debt management or credit

12  counseling services for debtors residing in this state shall:

13         (a)  Obtain from a certified public accountant licensed

14  pursuant to s. 473.308 an annual audit of all accounts of such

15  person in which the funds of debtors are deposited and from

16  which payments are made to creditors on behalf of debtors.

17         (b)  Obtain and maintain at all times a fidelity bond

18  in an amount not less than the greater of $100,000 or 10

19  percent of the monthly average for the immediately preceding 6

20  months of the aggregate amount of all deposits made with such

21  person by all debtors provided that the amount of such bond is

22  not required to exceed $500,000.  The deductible on such

23  coverage shall not exceed 10 percent of the face amount of the

24  policy coverage. Such policy shall be issued by a company

25  rated at least "A-" or its equivalent by a nationally

26  recognized rating organization, and such policy shall provide

27  for 30 days' advance written notice of termination of the

28  policy.

29         (2)  A copy of the annual audit and insurance policies

30  required by this section shall be available for public

31  inspection at each branch location. Copies shall be made upon

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    Florida Senate - 2004                           CS for SB 2682
    311-2322-04




 1  written request to any party requesting a copy for a charge

 2  not to exceed the cost of the reproduction of documents.

 3         817.805  Disbursement of funds.--

 4         (1)  Any person engaged in debt management or credit

 5  counseling services shall disburse to the appropriate

 6  creditors all funds received from a debtor, less any fees

 7  permitted by s. 817.802, within 30 days after receipt of such

 8  funds. Further, any person engaged in such services shall

 9  maintain a separate trust account for the receipt of any funds

10  from each debtor and the disbursement of such funds on behalf

11  of such debtor.

12         (2)  Any violation of this chapter by a person, agent,

13  or employee of a person is an unfair or deceptive trade

14  practice as defined in part II of chapter 501. Violators shall

15  be subject to the penalties and remedies provided therein.

16  Further, any consumer injured by a violation of this part may

17  bring an action for recovery of damages. Judgment shall be

18  entered for actual damages, but in no case less than the

19  amount paid by the buyer to the credit counseling

20  organization, plus reasonable attorney's fees and costs.

21         (3)  Any person convicted of violating any provision of

22  this section commits a felony of the third degree, punishable

23  as provided in s. 775.082 or s. 775.083.

24         Section 2.  This act shall take effect upon becoming a

25  law.

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    Florida Senate - 2004                           CS for SB 2682
    311-2322-04




 1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 2                         Senate Bill 2682

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 4  Makes it unlawful for a debt manager or credit counselor to
    collect a fee greater than $50 for an initial setup or
 5  consultation. Subsequently, fees cannot exceed more than $120
    per year for additional consultations or, alternatively, for
 6  debt management services, the greater of 7.5 of the amount
    paid monthly by the debtor or $35 per month. Requires credit
 7  counselors and debt managers to maintain a fidelity bond not
    to exceed $500,000. A violation of the bill is an unfair or
 8  deceptive trade practice. Allows consumers to bring actions
    for damages. Makes violations of the bill's provisions a
 9  third-degree felony. Deletes provisions requiring audit
    reports and proof of insurance to be filed with the Office of
10  Financial Regulation.

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