HB 959

1	A bill to be entitled
2	An act relating to credit counseling services; amending s.
3	817.801, F.S.; defining and redefining terms; creating s.
4	817.8015, F.S.; requiring credit counseling organizations
5	to annually register with the Office of Financial
6	Regulation; providing registration requirements; providing
7	grounds for denying registration; providing for a
8	registration fee; authorizing the office to adopt rules;
9	amending s. 817.802, F.S.; prohibiting a credit counseling
10	organization from engaging in certain additional specified
11	acts; deleting a provision that allows the organization to
12	collect a fee for insufficient fund transactions; amending
13	s. 817.803, F.S.; revising provisions relating to an
14	exception provided to attorneys providing representation
15	to clients; amending s. 817.804, F.S.; requiring a credit
16	counseling organization to obtain a surety bond;
17	authorizing the office to adopt rules; creating s.
18	817.8045, F.S.; providing for service contracts; requiring
19	certain provisions to be included in such contracts;
20	requiring the credit counseling organization to provide
21	the consumer with copies of all signed documents; amending
22	ss. 817.805 and 817.806, F.S.; conforming terms to changes
23	made by the act; providing an effective date.
24
25	Be It Enacted by the Legislature of the State of Florida:
26
27	Section 1.  Section 817.801, Florida Statutes, is amended
28	to read:
29	817.801  Definitions.--As used in this part, the term:
30	(1)  "Control person" means any person who possesses the
31	power, directly or indirectly, to affect the management or
32	policies of a credit counseling organization, including, but not
33	limited to, the organization's owners if the organization is a
34	partnership or sole proprietorship, and the organization's
35	corporate officers, corporate directors, resident agents, and
36	trustees.
37	(2)(1)  "Credit counseling organization agency" means any
38	person organization providing debt management services or credit
39	counseling services.
40	(3)(2)  "Credit counseling services" means confidential
41	money management, debt reduction, and financial educational
42	services. The term does not include foreclosure-related rescue
43	services as defined in s. 501.1377.
44	(4)(3)  "Creditor contribution" means any sum that a
45	creditor agrees to contribute to a credit counseling
46	organization agency, whether directly or by setoff against
47	amounts otherwise payable to the creditor on behalf of a
48	consumer debtors.
49	(5)(4)  "Debt management services" means services provided
50	to a consumer debtor by a credit counseling organization for a
51	fee to:
52	(a)  Effect the adjustment, compromise, or discharge of any
53	unsecured account, note, or other indebtedness of the consumer,
54	except for residential mortgage loan obligations debtor; or
55	(b)  Receive from the consumer debtor and disburse to a
56	creditor any money or other thing of value.
57	(6)  "Office" means the Office of Financial Regulation.
58	(7)(5)  "Person" has the same meaning as in s. 1.01 means
59	any individual, corporation, partnership, trust, association, or
60	other legal entity.
61	Section 2.  Section 817.8015, Florida Statutes, is created
62	to read:
63	817.8015  Registration.--Each credit counseling
64	organization doing business in this state must register and
65	annually renew such registration with the office in accordance
66	with this section.
67	(1)  To register or renew registration, a credit counseling
68	organization shall provide the following to the office:
69	(a)  The organization's business or trade name and current
70	mailing address, the address of each location or branch at which
71	the organization conducts business and a designation of which
72	location constitutes its principal place of business, and a list
73	of each county in which the organization plans to do business
74	during the next calendar year.
75	(b)  The full names, current addresses, current telephone
76	numbers, social security numbers, and federal identification
77	numbers for each control person of the organization.
78	(c)  A statement as to whether the organization, if
79	incorporated, is a domestic or foreign corporation, the state
80	and date of incorporation, the charter number of the
81	corporation, and, if a foreign corporation, the date the
82	corporation first registered to do business in this state.
83	(d)  A statement indicating whether the organization or any
84	control person holds a current telemarketing license from the
85	Department of Agriculture and Consumer Services or, if not, an
86	explanation as to why a telemarketing license has not been
87	obtained.
88	(e)  A statement listing the names of any other businesses
89	or entities through which a control person is currently
90	operating or did business as a credit counseling organization
91	within the 5 calendar years immediately preceding registration
92	or registration renewal, and whether the control person was the
93	subject of any state action, including suspension or revocation.
94	(f)  A statement identifying and explaining any ongoing or
95	prior state or federal investigation or any civil, criminal, or
96	administrative action taken against the organization or control
97	persons, including a withholding of adjudication or conviction
98	of any crime involving fraud, moral turpitude, or dishonest
99	dealing.
100	(g)  A copy of all service contracts offered to consumers.
101	(h)  Pursuant to s. 817.804, a copy of the organization's
102	annual audit and insurance policy, and the surety bond and
103	related documentation required to be filed with the office.
104	(2)  A credit counseling organization changing its
105	registered name, location, or agent for service of process at
106	any time other than at the time of renewing its registration
107	must notify the office of such change. The office must be
108	notified in writing in advance of any change in the
109	organization's business location. A registration is not valid
110	for any organization that transacts business at a location other
111	than those designated in its registration.
112	(3)  A registration issued under this section is not
113	assignable or transferable.
114	(4)  The office may deny or refuse to renew the
115	registration of any credit counseling organization based upon a
116	determination that the organization or any of its control
117	persons has:
118	(a)  Failed to meet the requirements for initial
119	registration or renewal as provided in this section;
120	(b)  Been convicted of a crime involving fraud, moral
121	turpitude, or dishonest dealing;
122	(c)  Not satisfied any fine or penalty arising out of any
123	administrative or civil enforcement action brought by a
124	governmental agency or individual and based upon conduct
125	involving fraud, moral turpitude, dishonest dealing, or any
126	violation of this part; or
127	(d)  Had a judgment entered against the credit counseling
128	organization or the control persons in any action brought under
129	the Florida Deceptive and Unfair Trade Practices Act or any
130	action brought under this part.
131	(5)  The credit counseling organization shall pay a
132	registration fee of $500 per year to the office. All moneys
133	collected by the office shall be deposited into the office's
134	Regulatory Trust Fund and used to administer this part.
135	(6)  The office may adopt rules to administer this section.
136	Section 3.  Section 817.802, Florida Statutes, is amended
137	to read:
138	817.802  Prohibited acts Unlawful fees and costs.--A credit
139	counseling organization may not:
140	(1)  It is unlawful for any person, while engaging in debt
141	management services or credit counseling services, to Charge or
142	accept from a consumer debtor residing in this state, directly
143	or indirectly, any payment for services before the execution of
144	a written service contract, or charge or accept from a consumer
145	a fee or contribution greater than $50 for the initial setup or
146	initial consultation. Subsequently, the organization person may
147	not charge or accept a fee or contribution from a consumer
148	debtor residing in this state greater than $120 per year for
149	additional consultations; however or, alternatively, if debt
150	management services as defined in s. 817.801(4)(b) are provided,
151	the organization person may charge the greater of 7.5 percent of
152	the amount paid monthly by the consumer debtor to the
153	organization person or $35 per month, whichever is greater.
154	(2)  Advise any consumer, directly or indirectly, not to
155	contact or communicate with his or her creditors before or
156	during the service contract period.
157	(3)  Make or use any false or misleading representations or
158	omit any material fact in the offer or sale of services offered,
159	or engage, directly or indirectly, in any fraudulent, false,
160	misleading, unconscionable, unfair, or deceptive act or practice
161	in connection with the offer or sale of any of the services of a
162	credit counseling organization.
163	(4)  Provide services to a consumer without executing a
164	service contract that complies with s. 817.8045.
165	(5)  Fail to provide copies of all service contracts and
166	other documents the consumer is required to sign as provided
167	under s. 817.8045.
168	(6)  Fail to perform any of the terms, conditions, and
169	obligations provided in the service contract with the consumer.
170	(7)  Fail to obtain the annual audit, insurance coverage,
171	and surety bond or fail to make such audit and coverage
172	information available for public inspection as required by s.
173	817.804.
174	(2)  This section does not prohibit any person, while
175	engaging in debt management or credit counseling services, from
176	imposing upon and receiving from a debtor a reasonable and
177	separate charge or fee for insufficient funds transactions.
178	Section 4.  Section 817.803, Florida Statutes, is amended
179	to read:
180	817.803  Exceptions.--Nothing in This part does not apply
181	applies to:
182	(1)  A person licensed to practice law in this state who is
183	providing legal representation to a client with respect to
184	credit counseling services or debt management and who does not
185	engage in the business of providing credit counseling or debt
186	management services on a continuing basis. Any Debt management
187	or credit counseling services provided in the practice of law in
188	this state;
189	(2)  A Any person who engages in debt adjustment to adjust
190	the indebtedness owed to such person.; or
191	(3)  The following entities or their subsidiaries:
192	(a)  The Federal National Mortgage Association;
193	(b)  The Federal Home Loan Mortgage Corporation;
194	(c)  The Florida Housing Finance Corporation, a public
195	corporation created in s. 420.504;
196	(d)  A bank, bank holding company, trust company, savings
197	and loan association, credit union, credit card bank, or savings
198	bank that is regulated and supervised by the Office of the
199	Comptroller of the Currency, the Office of Thrift Supervision,
200	the Federal Reserve, the Federal Deposit Insurance Corporation,
201	the National Credit Union Administration, the Office of
202	Financial Regulation of the Department of Financial Services, or
203	any state banking regulator;
204	(e)  A consumer reporting agency as defined in the Federal
205	Fair Credit Reporting Act, 15 U.S.C. s. 1681a ss. 1681-1681y, as
206	it existed on April 5, 2004; or
207	(f)  Any subsidiary or affiliate of a bank holding company,
208	its employees and its exclusive agents acting under written
209	agreement.
210	Section 5.  Section 817.804, Florida Statutes, is amended
211	to read:
212	817.804  Financial requirements; disclosure and financial
213	reporting.--
214	(1)  A credit counseling organization must Any person
215	engaged in debt management services or credit counseling
216	services shall:
217	(a)  Obtain from a licensed certified public accountant an
218	annual audit that is conducted in accordance with generally
219	accepted auditing standards and that includes shall include all
220	of the organization's accounts of such person in which the funds
221	of consumers debtors are deposited and from which payments are
222	made to creditors on behalf of consumers debtors.
223	(b)  Obtain and maintain at all times insurance coverage
224	for employee dishonesty, depositor's forgery, and computer
225	fraud. The insurance coverage must be in an amount not less than
226	the greater of $100,000 or 10 percent of the monthly average of
227	the aggregate amount of all deposits made by consumers to the
228	organization for distribution to creditors with such person by
229	all debtors for the 6 months immediately preceding the date of
230	initial application for or renewal of the insurance. The
231	deductible on such coverage may shall not exceed 10 percent of
232	the face amount of the policy coverage.
233	(c)  Obtain and maintain a surety bond in the amount of
234	$100,000, valid upon registration, by a surety company
235	authorized to do business in this state. The bond must be filed
236	with the office and must designate the office as its sole
237	beneficiary. The bond shall be in favor of the state for the use
238	and benefit of any consumer who suffers or sustains any loss or
239	damage by reason of any violation of the provisions of this
240	part. The organization shall provide the office with
241	documentation that the premiums have been paid in full and that
242	the bond issued by the surety meets the requirements of this
243	part. The aggregate liability of the surety to all persons may
244	not exceed the amount of the bond.
245	(2)  A copy of the annual audit and insurance policies
246	required by this section must shall be available for public
247	inspection at each branch location of the organization. Copies
248	shall be provided, upon written request, to any party requesting
249	a copy for a charge that does not to exceed the cost of copying
250	the reproduction of documents.
251	(3)  The office may adopt rules to administer this section.
252	Section 6.  Section 817.8045, Florida Statutes, is created
253	to read:
254	817.8045  Service contracts.--
255	(1)  The service contract between the credit counseling
256	organization and the consumer must be signed and dated by the
257	consumer and include all of the following:
258	(a)  The following statement in at least 12-point uppercase
259	type at the top of the service contract:
260
261	IMPORTANT:  IT IS RECOMMENDED THAT YOU CONTACT YOUR
262	CREDITORS BEFORE SIGNING THIS CONTRACT. YOUR CREDITORS
263	MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN OR A
264	RESTRUCTURING OF YOUR DEBT FREE OF CHARGE.
265
266	YOUR FAILURE TO DIRECTLY CONTACT YOUR CREDITORS MAY
267	RESULT IN LATE FEES, ADDITIONAL DEBTS, AND AN ADVERSE
268	CREDIT RATING.
269
270	(b)  A full and detailed description of the services to be
271	performed by the credit counseling organization for the
272	consumer, including all guarantees and all promises of full or
273	partial refunds, and the estimated date or length of time by
274	which the services are to be performed.
275	(c)  All terms and conditions of payment, including the
276	total of all payments to be made by the consumer and the
277	specific amount of any payments to be made to the credit
278	counseling organization or to any other person.
279	(d)  The organization's principal business address and the
280	name and address of its agent in the state authorized to receive
281	service of process.
282	(e)  A clear and conspicuous statement in boldface type, in
283	the immediate proximity to the space reserved for the consumer's
284	signature, which states: "You, the consumer, may cancel this
285	service contract at any time prior to midnight of the 5th
286	business day after the date of the signing this contract. [See
287	the attached Notice of Right to Cancel for further explanation
288	of this right.]"
289	(f)  A Notice of Right to Cancel attached to the contract,
290	in duplicate and easily detachable, which contains the following
291	statement in at least 12-point uppercase type:
292
293	NOTICE OF RIGHT TO CANCEL
294
295	YOU MAY CANCEL ANY CONTRACT FOR DEBT MANAGEMENT OR
296	CREDIT COUNSELING SERVICES WITHIN 5 BUSINESS DAYS
297	AFTER THE DATE THE CONTRACT IS SIGNED BY YOU WITHOUT
298	INCURRING ANY PENALTY OR OBLIGATION.
299
300	YOUR PAYMENT MUST BE RETURNED TO YOU WITHIN 10
301	BUSINESS DAYS AFTER RECEIPT OF YOUR CANCELLATION
302	NOTICE.
303
304	TO CANCEL THIS CONTRACT, MAIL OR DELIVER A SIGNED AND
305	DATED COPY OF THIS CANCELATION NOTICE OR ANY OTHER
306	WRITTEN NOTICE CLEARLY INDICATING YOUR DESIRE TO
307	CANCEL YOUR CONTRACT.
308
309	TO:  ...(name of credit counseling organization)...
310	AT:  ...(address)................
311
312	BY SIGNING AND DATING THIS NOTICE, I HEREBY
313	CANCEL MY SERVICE CONTRACT, EXECUTED ON:  ...(date
314	service contract signed)...
315
316	...(Signature of Consumer)...
317	...(Date)....................
318	...(Address).................
319	...(Phone Number)............
320
321	(2)  The credit counseling organization must provide the
322	consumer, at the time the documents are signed, with a copy of
323	the completed service contract and all other documents the
324	credit counseling organization requires the consumer to sign.
325	Section 7.  Section 817.805, Florida Statutes, is amended
326	to read:
327	817.805  Disbursement of funds.--A credit counseling
328	organization must Any person engaged in debt management or
329	credit counseling services shall disburse to the appropriate
330	creditors all funds received from a consumer debtor, less any
331	fees permitted by s. 817.802 and any creditor contributions,
332	within 30 days after receipt of such funds. However, a creditor
333	contribution may not reduce any sums to be credited to the
334	account of a consumer debtor making a payment to the
335	organization credit counseling agency for further payment to the
336	creditor. Further, a credit counseling organization must any
337	person engaged in such services shall maintain a separate trust
338	account for the receipt of any funds from consumers debtors and
339	the disbursement of such funds on behalf of such consumers
340	debtors.
341	Section 8.  Section 817.806, Florida Statutes, is amended
342	to read:
343	817.806  Violations.--
344	(1)  Any person who violates any provision of this part
345	commits an unfair or deceptive trade practice as defined in part
346	II of chapter 501. Violators are shall be subject to the
347	penalties and remedies provided therein. Further, any consumer
348	injured by a violation of this part may bring an action for
349	recovery of damages. Judgment shall be entered for actual
350	damages, but in no case less than the amount paid by the
351	consumer to the credit counseling organization agency, plus
352	reasonable attorney's fees and costs.
353	(2)  Any person who violates any provision of this part
354	commits a felony of the third degree, punishable as provided in
355	s. 775.082 or s. 775.083.
356	Section 9.  This act shall take effect July 1, 2009.

CODING: Words stricken are deletions; words underlined are additions.