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Introduced Version House Bill 2346 History

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hb2346 intr
H. B. 2346


          (By Delegates Moore, Reynolds and Azinger)
          [Introduced February 13, 2013; referred to the
          Committee on Banking and Insurance then the Judiciary.]




A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated as §47-26-1, §47-26-2, §47-26-3, §47-26-4, §47-26-5, §47-26-6, §47-26-7, §47-26-8, §47-26-9, §47-26-10, §47-26-11, §47-26-12, §47-26-13, §47-26-14, §47-26-15, §47-26-16, §47-26-17, §47-26-18, §47-26-19, §47-26-20, §47-26-21, §47-26-22, §47-26-23, §47-26-24, §47-26-25, §47-26-26, §47-26-27, §47-26-28, §47-26-29, §47-26-30, §47-26-31, §47-26-32, §47-26-33, §47-26-34, §47-26-35, §47-26-36, §47-26-37, §47-26-38 and §47-26-39, all relating to creating "The Uniform Debt Management Services Act;" regulating debt management services providers; providing for the registration of debt management service providers with the Division of Banking; defining terms; providing exemptions for certain agreements and persons; establishing the application information and fees required for registration; requiring applicants and registrants to provide the Commissioner of Banking with certain updated information provided as part of the application; establishing the grounds under which the commissioner may deny a registration; requiring the commissioner to act on a registration application within one hundred twenty days of receipt of the complete application; requiring an annual renewal of all registrations; requiring periodic reporting by providers; requiring a surety bond for registered providers; requiring providers of debt management services to act in good faith and maintain customer service access during ordinary business hours; establishing the prerequisites for providing debt management services; requiring certain provisions in all contracts to provide debt management services; providing for the ability to terminate a debt management services agreement upon notice; providing that all money paid to a debt management services provider shall be held in trust in an insured bank account; prohibiting the imposition of a fee or other charge for debt management services until the provider and customer have signed an agreement; providing that an individual may void an agreement and recover a refund of any moneys paid; providing a five-year period for retention of records; establishing prohibited acts and practices of a debt management service provider; requiring a provider to provide the commissioner with notice of any civil litigation against it relating to violation of this article; requiring certain disclosures in advertising by debt management services providers; authorizing the Division of Banking to examine providers for compliance; requiring background investigation of principals of providers; authorizing the Division of Banking and the Office of the Attorney General to enforce the act; providing for private enforcement remedies; and establishing statutes of limitations.
     Be it enacted by the Legislature of West Virginia:
     That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §47-26-1, §47-26-2, §47-26-3, §47-26-4, §47-26-5, §47-26-6, §47-26-7, §47-26-8, §47-26-9, §47-26-10, §47-26-11, §47-26-12, §47-26-13, §47-26-14, §47-26-15, §47-26-16, §47-26-17, §47-26-18, §47-26-19, §47-26-20, §47-26-21, §47-26-22, §47-26-23, §47-26-24, §47-26-25, §47-26-26, §47-26-27, §47-26-28, §47-26-29, §47-26-30, §47-26-31, §47-26-32, §47-26-33, §47-26-34, §47-26-35, §47-26-36, §47-26-37, §47-26-38 and §47-26-39, all to read as follows:
ARTICLE 26. THE UNIFORM DEBT MANAGEMENT SERVICES ACT.
§47-26-1. Short title.

_____This article may be cited as "The Uniform Debt Management Services Act."
§47-26-2. Definitions.
_____For the purposes of this article, the words or terms defined in this article, and any variation of those words or terms required by the context, have the meanings ascribed to them in this article. These definitions are applicable unless a different meaning clearly appears from the context:
_____(1) "Commissioner" means the Commissioner of the West Virginia Division of Banking;
_____(2) "Affiliate":
_____(A) With respect to an individual, means:
_____(i) The spouse of the individual;
_____(ii) A sibling of the individual or the spouse of a sibling;
_____(iii) An individual or the spouse of an individual who is a lineal ancestor or lineal descendant of the individual or the individual's spouse;
_____(iv) An aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, or grandnephew, whether related by the whole or the half blood or adoption, or the spouse of any of them; or
_____(v) Any other individual occupying the residence of the individual.
_____(B) With respect to an entity, means:
_____(i) A person that directly or indirectly controls, is controlled by, or is under common control with the entity;
_____(ii) An officer of, or an individual performing similar functions with respect to, the entity;
_____(iii) A director of, or an individual performing similar functions with respect to, the entity;
_____(iv) Subject to an appropriate adjustment of the dollar amount pursuant to this article, a person that receives or received more than $25,000 from the entity in either the current year or the preceding year or a person that owns more than ten percent of, or an individual who is employed by or is a director of, a person that receives or received more than $25,000 from the entity in either the current year or the preceding year;
_____(v) An officer or director of, or an individual performing similar functions with respect to, a person described in subparagraph (i) of this paragraph;
_____(vi) The spouse of, or an individual occupying the residence of, an individual described in subparagraphs (i) through (iv) of this paragraph; or
_____(vii) An individual who has the relationship specified in subparagraph (iv), paragraph (A) of this subdivision to an individual or the spouse of an individual described in subparagraphs (i) through (v) of that paragraph;
_____(3) "Agreement" means an agreement between a provider and an individual for the performance of debt management services;
_____(4) "Bank" means a financial institution, including a commercial bank, savings bank, savings and loan association, credit union, and trust company, engaged in the business of banking, chartered under federal or state law, and regulated by a federal or state banking regulatory authority;
_____(5) "Business address" means the physical location of a business, including the name and number of a street;
_____(6) "Concessions" means assent to repayment of a debt on terms more favorable to an individual than the terms of the contract between the individual and a creditor;
_____(7) "Day" means calendar day;
_____(8) "Debt management services" means services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions, but does not include:
_____(A) Legal services provided in an attorney-client relationship, if:
_____(i) The services are provided by an attorney who:
_____(I) Is licensed to practice law in this state; and
_____(II) Provides legal services in representing the individual in the individual's relationship with a creditor; and
_____(ii) There is no intermediary between the individual and the creditor other than the attorney or an individual under the direct supervision of the attorney;
_____(B) Accounting services provided in an accountant-client relationship, if:
_____(i) The services are provided by a certified public accountant who:
_____(I) Is licensed to provide accounting services in this state; and
_____(II) Provides accounting services in representing the individual in the individual's relationship with a creditor.
_____(ii) There is no intermediary between the individual and the creditor other than the accountant or an individual under the direct supervision of the accountant;
_____(9) "Entity" means a person other than an individual;
_____(10) "Good faith" means honesty in fact and the observance of reasonable standards of fair dealing;
_____(11) "Lead generator" means a person that, in the regular course of business, supplies a provider with the name of a potential customer, directs a communication of an individual to a provider, or otherwise refers a customer to a provider;
_____(12) "Nationwide Mortgage Licensing System and Registry" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage brokers, lenders, loan originators and other entities subject to licensing or registration by financial supervisors;
_____(13) "Person" means an individual, corporation, estate, trust, statutory trust, business trust, partnership, limited liability company, association, joint venture, or any other legal or commercial entity. The term does not include a public corporation, government, or governmental subdivision, agency or instrumentality;
_____(14) "Plan" means a program or strategy in which a provider furnishes debt management services to an individual and which includes a schedule of payments to be made by or on behalf of the individual and used to pay debts owed by the individual;
_____(15) "Principal amount of the debt" means the amount of a debt at the time of an agreement;
_____(16) "Provider" means a person that provides, offers to provide, or agrees to provide debt management services directly or through others;
_____(17) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;
_____(18) "Settlement fee" means a charge imposed on or paid by an individual in connection with a creditor's assent to accept in full satisfaction of a debt an amount less than the principal amount of the debt;
_____(19) "Sign" means with present intent to authenticate or adopt a record:
_____(A) To execute or adopt a tangible symbol; or
_____(B) To attach to or logically associate with the record an electronic sound, symbol or process;
_____(20) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States; and
_____(21) "Trust account" means an account held by a provider which is:
_____(A) Established in a bank in which deposit accounts are insured;
_____(B) Separate from other accounts of the provider or its designee;
_____(C) Designated as a trust account or other account designated to indicate that the money in the account is not the money of the provider; and
_____(D) Used to hold money of one or more individuals for disbursement to creditors of the individuals.
§47-26-3. Exempt agreements and persons.
_____(a) This article does not apply to an agreement with an individual who is not a legal resident of this state at the time of the agreement.
_____(b) This article does not apply to a provider to the extent that the provider:
_____(1) Provides or agrees to provide debt management, educational, or counseling services to an individual who is not a legal resident of this state at the time the provider agrees to provide the services; or
_____(2) Receives no compensation for debt management services from or on behalf of the individuals to whom it provides the services or from their creditors.
_____(c) This article does not apply to the following persons or their employees when the person or the employee is engaged in the regular course of the person's business or profession:
_____(1) A judicial officer, a person acting under an order of a court or an administrative agency, or an assignee for the benefit of creditors;
_____(2) A bank;
_____(3) An affiliate, as defined in subparagraph (i), paragraph (B), subdivision (2), section two of this article, of a bank if the affiliate is regulated for debt management services by a federal or state banking regulatory authority; or
_____(4) A title insurer, escrow company, or other person that provides bill-paying services if the provision of debt management services is incidental to the bill-paying services.
§47-26-4. Registration required.
_____(a) Except as otherwise provided in subsection (b) of this section, a provider may not provide debt management services to an individual who it reasonably should know resides in this state at the time it agrees to provide the services, unless the provider is registered under this article
.
_____(b) If a provider is registered under this article, subsection (a) of this section does not apply to an employee or agent of the provider.
_____(c) The commissioner shall maintain and publish annually a list of the names of all registered providers.
§47-26-5. Application for registration: form, fee, and accompanying documents.
_____(a) An application for registration as a provider must be in a form prescribed by the commissioner, and if so directed by the commissioner, be provided to the Nationwide Mortgage Licensing System and Registry.
_____(b) An application for registration as a provider must be accompanied by:
_____(1) A fee of $1,000 plus an additional $300 for each branch office engaging in debt management services for individuals residing in this state, plus any maintenance fees prescribed by the Nationwide Mortgage Licensing System and Registry;
_____(2) The bond required by section thirteen of this article;
_____(3) Identification of all trust accounts subject to section twenty-two of this article and an irrevocable consent authorizing the commissioner to review and examine the trust accounts;
_____(4) A certificate from the Secretary of State certifying that the applicant is authorized by the Secretary of State to transact business in this state; and
_____(5) If the applicant is organized as a not-for-profit entity or has obtained tax-exempt status under the Internal Revenue Code, 26 U.S.C. §501, as amended, evidence of not-for-profit status or tax-exempt status, or both.
§47-26-6. Application for registration: required information.
_____An application for registration as a provider must be signed under oath and include:
_____(1) The applicant's name, principal business address and telephone number, and all other business addresses in this state, electronic-mail addresses, and Internet website addresses;
_____(2) All names under which the applicant conducts business;
_____(3) The address of each location in this state at which the applicant will provide debt-management services or a statement that the applicant will have no such location;
_____(4) The name and home address of each officer, director and principal, as defined by subdivision (4) of subsection (b), section four, article two of chapter thirty-one-a of this code, of the applicant;
_____(5) Identification of every jurisdiction in which, during the five years immediately preceding the application:
_____(A) The applicant or any of its officers or directors has been licensed or registered to provide debt-management services; or
_____(B) Individuals have resided when they received debt-management services from the applicant;
_____(6) A statement describing, to the extent it is known or should be known by the applicant, any material civil or criminal judgment or litigation and any material administrative or enforcement action by a governmental agency in any jurisdiction against the applicant, any of its officers, directors, owners, or agents, or any person that is authorized to have access to the trust account required by section twenty-one of this article;
_____(7) The applicant's financial statements, audited by an accountant licensed to conduct audits, for each of the two years immediately preceding the application or, if it has not been in operation for the two years preceding the application, for the period of its existence;
_____(8) A description of the three most commonly used educational programs that the applicant provides or intends to provide to individuals who reside in this state and a copy of any materials used or to be used in those programs;
_____(9) A description of the applicant's financial analysis and initial budget plan, including any form or electronic model, used to evaluate the financial condition of individuals;
_____(10) A copy of each form of agreement that the applicant will use with individuals who reside in this state;
_____(11) The schedule of fees and charges that the applicant will use with individuals who reside in this state;
_____(12) At the applicant's expense, submit the required forms and authorizations for the commissioner, the Nationwide Mortgage Licensing and Registry Service, or its designated vendor, to perform a criminal background investigation and credit investigation covering every principal officer of the applicant and every employee or agent of the applicant who is authorized to have access to the trust account required by section twenty-one of this article;
_____(13) The names and addresses of all employers of each director during the ten years immediately preceding the application;
_____(14) A description of any ownership interest of at least ten percent by a director, owner, or employee of the applicant in:
_____(A) Any affiliate of the applicant; or
_____(B) Any entity that provides a product or service to the applicant or any individual relating to the applicant's debt-management services;
_____(15) A statement of the amount of compensation of the applicant's five most highly compensated employees for each of the three years immediately preceding the application or, if it has not been in operation for the three years preceding the application, for the period of its existence;
_____(16) The identity of each director who is an affiliate of the applicant, as defined in paragraph (A), subdivision (2), section two of this article or subparagraph (i), (ii), (iv), (v), (vi) or (vii), paragraph (B), subdivision (2), section two of this article; and
_____(17) Any other information that the commissioner reasonably requires to perform the commissioner's duties under section nine of this article.
§47-26-7. Application for registration: obligation to update information.
_____An applicant or registered provider shall notify the commissioner no later than ten days after a change in the information specified in subdivision (5), subsection (b), section five of this article or subdivision (1), (3), (6), (10) or (11), section six of this article.
§47-26-8. Application for registration: public information.
_____Except for the information required by section subdivisions (7), (14) and (17), section six of this article and the addresses required by subdivision (4), section six of this article, the commissioner shall make the information in an application for registration as a provider available to the public.
§47-26-9. Certificate of registration: issuance of denial.
_____(a) Except as otherwise provided in subsections (c) and (d) of this section, the commissioner shall issue a certificate of registration as a provider to a person that complies with sections five and six of this article.
_____(b) The commissioner may deny registration if:
_____(1) The application contains information that is materially erroneous or incomplete;
_____(2) An officer, director, or owner of the applicant has been convicted of a crime, or suffered a civil judgment, involving dishonesty or the violation of state or federal securities laws;
_____(3) The applicant or any of its officers, directors, or owners has defaulted in the payment of money collected for others; or
_____(4) The commissioner finds that the financial responsibility, experience, character, or general fitness of the applicant or its owners, directors, employees, or agents does not warrant belief that the business will be operated in compliance with this article.
_____(c) The commissioner shall deny registration if, with respect to an applicant that is organized as a not-for-profit entity or has obtained tax-exempt status under the Internal Revenue Code, 26 U.S.C. §501, as amended, the applicant's board of directors is not independent of the applicant's employees and agents.
_____(d) A board of directors is not independent for purposes of subsection (d) if more than one fourth of its members:
_____(1) Are affiliates of the applicant, as defined in paragraph (A), subdivision (2), section two of this article or subparagraph (i), (ii), (iv), (v), (vi) or (vii), paragraph (B), subdivision (2), section two of this article; or
_____(2) After the date ten years before first becoming a director of the applicant, were employed by or directors of a person that received from the applicant more than $25,000 in either the current year or the preceding year.
§47-26-10. Certificate of registration: timing.
_____(a) The commissioner shall approve or deny an initial registration as a provider no later than one hundred twenty days after a complete application is filed. The commissioner, by written order, shall inform the applicant of the reasons for the denial. In connection with a request pursuant to subdivision (17), section six of this article for additional information, the commissioner may extend the one hundred twenty day period for not more than sixty days.
_____(b) If the commissioner denies an application for registration as a provider or does not act on an application within the time prescribed in subsection (a) of this section, the applicant may appeal and request a hearing pursuant to article five, chapter twenty-nine-a of this code.
_____(c) Subject to subsection (d), section eleven and section thirty-three of this article, a registration as a provider is valid for one year.
§47-26-11. Renewal of Registration.
_____(a) All registrations under this article expire at the end of the calendar year.
_____(b) An application for renewal of registration as a provider must be in a form prescribed by the commissioner, signed under oath, and:
_____(1) Be filed no fewer than thirty and no more than sixty days before the registration expires;
_____(2) Be accompanied by the fee established by the commissioner and the bond required by section thirteen of this article;
_____(3) Contain a financial statement, audited by an accountant licensed to conduct audits, for the applicant's fiscal year immediately preceding the application;
_____(4) Disclose any changes in the information contained in the applicant's application for registration or its immediately previous application for renewal, as applicable;
_____(5) Disclose the total amount of money received by the applicant pursuant to plans during the preceding twelve months from or on behalf of individuals who reside in this state and the total amount of money distributed to creditors of those individuals during that period;
_____(6) Disclose, to the best of the applicant's knowledge, the gross amount of money accumulated during the preceding twelve months pursuant to plans by or on behalf of individuals who reside in this state and with whom the applicant has agreements; and
_____(7) Provide any other information that the commissioner reasonably requires to perform the commissioner's duties under this section.
_____(c) Except for the information required by subdivisions (7), (12) and (15), section six of this article and the addresses required by subdivision (4) of that section, the commissioner shall make the information in an application for renewal of registration as a provider available to the public.
_____(d) If a registered provider files a timely and complete application for renewal of registration, the registration remains effective until the commissioner, in a record, notifies the applicant of a denial and states the reasons for the denial.
_____(e) If the commissioner denies an application for renewal of registration as a provider, the applicant, no later than thirty days after receiving notice of the denial, may appeal and request a hearing pursuant to article five, chapter twenty-nine-a of this code. Subject to section thirty-three of this article, while the appeal is pending the applicant shall continue to provide debt management services to individuals with whom it has agreements that were established prior to receipt of the denial. If the denial is affirmed, subject to the commissioner's order and section thirty-three of this article, the applicant shall continue to provide debt-management services to individuals with whom it has agreements for up to sixty days until, with the approval of the commissioner, it transfers the agreements to another registered provider or returns to the individuals all unexpended money that is under the applicant's control.
§47-26-12. Provider reporting requirements.
_____Providers registered under this article shall provide periodic reports of their activities as required by the commissioner.
§47-26-13. Bond Required.
_____(a) A provider that is required to be registered under this article shall file a surety bond on a form prescribed by the commissioner, which must:
_____(1) Be in effect during the period of registration and for two years after the provider ceases providing debt-management services to individuals in this state; and
_____(2) Be in favor of this state for the benefit of the commissioner and of individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear and for the benefit of the commissioner to cover any unpaid civil penalties or examination fees and expenses.
_____(b) A surety bond filed pursuant to subsection (a) of this section must:
_____(1) Be in the amount of $50,000 or other larger or smaller amount that the commissioner determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals, and any other factor the commissioner considers appropriate;
_____(2) Be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least A- by a nationally recognized rating organization; and
_____(3) Have payment conditioned on noncompliance of the provider or its agent with this article.
_____(c) If the principal amount of a surety bond is reduced by payment of a claim or a judgment, the provider shall immediately notify the commissioner and, no later than thirty days after notice by the commissioner, file a new or additional surety bond in an amount set by the commissioner. The amount of the new or additional bond must be at least the amount of the bond immediately before payment of the claim or judgment. If for any reason a surety terminates a bond, the provider shall immediately file a new surety bond in the amount of $50,000 or other amount determined pursuant to subsection (b) of this section.
_____(d) The commissioner or an individual may obtain satisfaction out of the surety bond procured pursuant to this section if:
_____(1) The commissioner assesses expenses under subdivision(1), subsection(b), section thirty-one of this article, issues a final order under subdivision (2), subsection (a), section thirty-two of this article, or recovers a final judgment under subdivision (4) or (5), subsection (a), section thirty-two or subsection (d), section thirty-two of this article; or
_____(2) An individual recovers a final judgment pursuant to subsection (a) or (b), section thirty-four of this article or subdivision (1), (2) or (4), subsection (c), section thirty-four of this article.
_____(e) If claims against a surety bond exceed or are reasonably expected to exceed the amount of the bond, the commissioner, on the initiative of the commissioner or on petition of the surety, shall, unless the proceeds are adequate to pay all costs, judgments, and claims, distribute the proceeds in the following order:
_____(1) To satisfaction of a final order or judgment under subdivision (2), (4) or (5), subsection (a), section thirty-two of this article or subsection (d), section (d), section thirty-two of this article;
_____(2) To final judgments recovered by individuals pursuant to subsection (a) or (b), section thirty-four of this article or subdivision (1), (2) or (4), subsection (c), section thirty-four of this article, pro rata;
_____(3) To claims of individuals established to the satisfaction of the commissioner, pro rata; and
_____(4) If a final order or judgment is issued under subsection (a), section thirty-two of this article, to the expenses charged pursuant to subdivision (1), subsection (b), section thirty-one of this article.
_____
§47-26-14. Requirement of good faith.
_____A provider shall act in good faith in all matters under this article.
_____
§47-26-15. Customer service.
_____A provider that is required to be registered under this article shall maintain a toll-free communication system, staffed at a level that reasonably permits an individual to speak to a certified counselor, certified debt specialist, or customer-service representative, as appropriate, during ordinary business hours.
_____
§47-26-16. Prerequisites for providing debt-management services.
_____
(a) Before providing or contracting to provide debt management services, a provider shall give the individual an itemized list of goods and services and the charges for each. The list must be clear and conspicuous, be in a record the individual may keep whether or not the individual assents to an agreement, and describe the goods and services the provider offers:
_____(1) Free of additional charge if the individual enters into an agreement;
_____(2) For a charge if the individual does not enter into an agreement; and
_____(3) For a charge if the individual enters into an agreement, using the following terminology, as applicable, and format:
Set-up fee______________________________Dollar amount of fee
Monthly service fee______________________________________________
Dollar amount of fee or method of determining amount of
settlement fee___________________________________________
Dollar amount of fee or method of determining amount of goods and services in addition to those provided in connection with a plan:
__________________________________________________________
_____Item _____Dollar amount or method of determining amount
_______________________________________________________________
_____(b) A provider may not furnish or contract to furnish debt management services unless the provider, through the services of a certified counselor or certified debt specialist:
_____(1) Provides the individual with reasonable education about the management of personal finance;
_____(2) Has prepared and documented a financial analysis including at least the following matters affecting the individual's financial condition:
_____(A) Assets;
_____(B) Income;
_____(C) Debt, including secured debt; and
_____(D) Other liabilities.
_____(3) If the individual is to make regular, periodic payments:
_____(A) Has prepared a plan for the individual;
_____(B) Has made a determination, based on the provider's analysis of the information provided by the individual and otherwise available to it, that the plan is suitable for the individual and the individual will be able to meet the payment obligations under the plan; and
_____(C) Believes that each creditor of the individual listed as a participating creditor in the plan will accept payment of the individual's debts as provided in the plan.
_____(c) Before an individual assents to an agreement to engage in a plan, a provider shall:
_____(1) Provide the individual with a copy of the analysis and plan required by subsection (b) of this section in a record that identifies the provider and that the individual may keep whether or not the individual assents to the agreement;
_____(2) Inform the individual of the availability, at the individual's option, of assistance by a toll-free communication system or in person to discuss the financial analysis and plan required by subsection (b) of this section; and
_____(3) With respect to all creditors identified by the individual or otherwise known by the provider to be creditors of the individual, provide the individual with a list of:
_____(A) Creditors that the provider expects to participate in the plan and grant concessions;
_____(B) Creditors that the provider expects to participate in the plan but not grant concessions;
_____(C) Creditors that the provider expects not to participate in the plan; and
_____(D) All other creditors.
_____(d) Before an individual assents to an agreement, the provider shall inform the individual in a separate record that the individual may keep whether or not the individual assents to the agreement:
_____(1) Of the name and business address of the provider;
_____(2) That plans are not suitable for all individuals and the individual may ask the provider about other ways, including bankruptcy, to deal with indebtedness;
_____(3) That establishment of a plan may adversely affect the individual's credit rating or credit scores;
_____(4) That nonpayment of debt may lead creditors to increase finance and other charges or undertake collection activity, including litigation;
_____(5) Unless it is not true, that the provider may receive compensation from the creditors of the individual; and
_____(6) That, unless the individual is insolvent, if a creditor settles for less than the full amount of the debt, the plan may result in the creation of taxable income to the individual, even though the individual does not receive any money.
_____(e) If a provider may receive payments from an individual's creditors and the plan contemplates that the individual's creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may comply with subsection (d) of this section by providing the following disclosure in at least twelve point font, surrounded by black lines:
_____IMPORTANT INFORMATION FOR YOU TO CONSIDER
_____(1) Debt management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.
_____(2) Using a debt management plan may make it harder for you to obtain credit.
_____(3) We may receive compensation for our services from your creditors.
__________________________________________
Name and business address of provider
_____(f) If a provider will not receive payments from an individual's creditors and the plan contemplates that the individual's creditors will reduce finance charges or fees for late payment, default, or delinquency, a provider may comply with subsection (d) by providing the following disclosure in at least twelve point font, surrounded by black lines:
_____IMPORTANT INFORMATION FOR YOU TO CONSIDER
_____(1) Debt management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.
_____(2) Using a debt management plan may make it harder for you to obtain credit.
__________________________________________
_____Name and business address of provider
_____(g) If an agreement contemplates that creditors will settle debts for less than the full principal amount of debt owed, a provider may comply with subsection (d) by providing the following disclosure in at least twelve point font, surrounded by black lines:
_____IMPORTANT INFORMATION FOR YOU TO CONSIDER
_____(1) Our program is not right for all individuals, and you may ask us to provide information about bankruptcy and other ways to deal with your debts.
_____(2) Nonpayment of your debts under our program may:
_____(A) Hurt your credit rating or credit scores;
_____(B) Lead your creditors to increase finance and other charges; and
_____(C) Lead your creditors to undertake activity, including lawsuits, to collect the debts.
_____(3) Reduction of debt under our program may result in taxable income to you, even though you will not actually receive any money.
__________________________________________
_____Name and business address of provider
§47-26-17. Communication by electronic or other means.
_____(a) In this section:
_____(1) "Consumer" means an individual who seeks or obtains goods or services that are used primarily for personal, family, or household purposes.
_____(2) "Federal act" means the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §7001, et seq., as amended.
_____(b) A provider may satisfy the requirements of section sixteen, eighteen or twenty-six of this article by means of the Internet or other electronic means if the provider obtains a consumer's consent in the manner provided by section 101(c)(1) of the federal act.
_____(c) The disclosures and materials required by sections sixteen, eighteen and twenty-six of this article shall be presented in a form that is capable of being accurately reproduced for later reference.
_____(d) With respect to disclosure by means of an Internet website, the disclosure of the information required by subsection (d), section sixteen of this article must appear on one or more screens that:
_____(1) Contain no other information; and
_____(2) The individual must see before proceeding to assent to formation of an agreement.
_____(e) At the time of providing the materials and agreement required by subsections (c) and (d), section sixteen, section eighteen and section twenty-six of this article, a provider shall inform the individual that on electronic, telephonic, or written request, it will send the individual a written copy of the materials, and shall comply with a request as provided in subsection (f) of this section.
_____(f) If a provider is requested, before the expiration of ninety days after an agreement is completed or terminated, to send a written copy of the materials required by subsections (c) and (d), section sixteen, section eighteen and section twenty-six of this article, the provider shall send them at no charge no later than three business days after the request is received, but the provider need not comply with a request more than once per calendar month or if it reasonably believes the request is made for purposes of harassment. If a request is made more than ninety days after an agreement is completed or terminated, the provider shall send within a reasonable time a written copy of the materials requested.
_____(g) A provider that maintains an Internet website shall disclose on the home page of its website or on a page that is clearly and conspicuously connected to the home page by a link that clearly reveals its contents:
_____(1) Its name and all names under which it does business;
_____(2) Its principal business address, telephone number, and electronic-mail address, if any; and
_____(3) The names of its principal officers.
_____(h) Subject to subsection (i) of this section, if a consumer who has consented to electronic communication in the manner provided by section 101 of the federal act withdraws consent as provided in the federal act, a provider may terminate its agreement with the consumer.
_____(i) If a provider wishes to terminate an agreement with a consumer pursuant to subsection (h) of this section, it shall notify the consumer that it will terminate the agreement unless the consumer, no later than thirty days after receiving the notification, consents to electronic communication in the manner provided in section 101(c) of the federal act. If the consumer consents, the provider may terminate the agreement only as permitted by paragraph (G), subdivision (6), subsection (a), section eighteen of this article.
§47-26-18. Form and contents of agreement.
_____(a) An agreement must:
_____(1) Be in a record;
_____(2) Be dated and signed by the provider and the individual;
_____(3) Include the name of the individual and the address where the individual resides;
_____(4) Include the name, business address, and telephone number of the provider;
_____(5) Be delivered to the individual immediately on formation of the agreement; and
_____(6) Disclose:
_____(A) The services to be provided;
_____(B) In a clear and conspicuous manner the amount, or method of determining the amount of all fees, individually itemized, to be paid by the individual using only the terminology contained in section twenty-two of this article;
_____(C) The schedule of payments to be made by or on behalf of the individual, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment and an estimate of the total of all payments to be made under the plan;
_____(D) If a plan provides for regular periodic payments to creditors:
_____(i) Each creditor of the individual to which payment will be made, the amount owed to each creditor, and any concessions the provider reasonably believes each creditor will offer;
_____(ii) The schedule of expected payments to each creditor, including the amount of each payment and the date on which it will be made; and
_____(iii) Each creditor that the provider believes will not participate in the plan and to which the provider will not direct payment;
_____(E) If a plan contemplates the settlement of the individual's debt for less than the principal amount of the debt, an estimate of:
_____(i) The duration of the plan based on all enrolled debts;
_____(ii) The length of time before the individual may reasonably expect a settlement offer and;
_____(iii) The amount of savings needed to accrue before the individual may reasonably expect a settlement offer, expressed as both a dollar amount and percentage, for each enrolled debt;
_____(F) State how the provider will comply with its obligations under subsection (a), section twenty-six of this article and that the provider may terminate the agreement for good cause, on return of unexpended money of the individual;
_____(G) That the individual may terminate the agreement at any time by giving written or electronic notice, and that, if notice of termination is given, the individual will receive all unexpended money that the provider or its designee has received from or on behalf of the individual for payment of a creditor and, except to the extent they have been earned, the provider's fees;
_____(H) That the individual may contact the commissioner with any questions or complaints regarding the provider; and
_____(I) The address, telephone number, and Internet address or website of the commissioner.
_____(b) For purposes of subdivision (5), subsection (a) of this section, delivery of an electronic record occurs when it is made available in a format in which the individual may retrieve, save, and print it and the individual is notified that it is available.
_____(c) If the commissioner supplies the provider with any information required under paragraph (I), subdivision (6) subsection (a) of this section, the provider may comply with that requirement only by disclosing the information supplied by the commissioner.
_____(d) An agreement must provide that:
_____(1) The individual authorizes any bank in which the provider or its agent has established a trust account to disclose to the commissioner any financial records relating to the trust account; and
_____(2) The provider will notify the individual no later than five days after learning of a creditor's final decision to reject or withdraw from a plan and that this notice will include:
_____(A) The identity of the creditor; and
_____(B) The right of the individual to modify or terminate the agreement.
_____(e) An agreement may not:
_____(1) Provide for application of the law of any jurisdiction other than the United States and this state;
_____(2) Except as permitted by Section 2 of the Federal Arbitration Act, 9 U.S.C. §2, as amended, contain a provision that modifies or limits otherwise available forums or procedural rights, including the right to trial by jury, that are generally available to the individual under law other than this article;
_____(3) Contain a provision that restricts the individual's remedies under this article or law other than this article; or
_____(4) Contain a provision that:
_____(A) Limits or releases the liability of any person for not performing the agreement or for violating this article or indemnifies any person for liability arising under the agreement or this article.
_____(f) A provision in an agreement which violates this section is void.
§47-26-19. Termination of agreement.
_____(a) An individual who is a party to an agreement may terminate the agreement at any time, without penalty or obligation, by giving the provider notice in a record.
_____(b) A provider may terminate an agreement if an individual who is a party to the agreement fails for sixty days to make a payment or deposit required by the agreement or if other good cause exists.
_____(c) If an agreement is terminated:
_____(1) The provider, no later than seven business days after the termination, shall pay the individual who is a party to the agreement all money the provider or its designee received from or on behalf of the individual, other than:
_____(A) An amount properly disbursed to a creditor; and
_____(B) Fees earned pursuant to section twenty-two of this article; and
_____(2) Any power of attorney granted by the individual to the provider is revoked.
§47-26-20. Required language.
_____Unless the commissioner, by rule, provides otherwise, the disclosures and documents required by this article must be in English. If a provider communicates with an individual primarily in a language other than English, the provider must furnish a translation in the other language of the disclosures and documents required by this article.
§47-26-21. Trust account and independently administered account.
_____(a) All money paid to a provider by or on behalf of an individual for distribution to creditors pursuant to a plan is held in trust. No later than two business days after receipt, the provider shall deposit the money in a trust account established for the benefit of individuals to whom the provider is furnishing debt management services.
_____(b) A provider whose agreement contemplates the settlement of an individual's debt for less than the principal amount of the debt may request or require the individual to place money in an account to be used to pay a creditor or the provider's fees, or both, if:
_____(1) The money is held in an insured account at a bank;
_____(2) The individual owns the money held in the account and is paid any interest accrued on the account;
_____(3) The entity administering the account is not the provider or an affiliate of the provider, unless the affiliate is described in subparagraph (iv), paragraph (B), subdivision (2), section two of this article;
_____(4) The entity administering the account does not give or accept any money or other compensation in exchange for a referral of business involving debt-management services; and
_____(5) The individual may terminate the agreement at any time without penalty and on termination must receive all money in the account, other than money earned by the provider in compliance with this section;
_____(c) If an agreement contemplates the reduction of finance charges or fees for late payment, default, or delinquency and the provider complies with subsection (a) of this section, the provider may request or require the individual to make payment to be used for both distribution to creditors and payment of the provider's fees.
_____(d) Money held in trust by a provider is not property of the provider or its designee. The money is not available to creditors of the provider or designee, except an individual from whom or on whose behalf the provider received money, to the extent that the money has not been disbursed to creditors of the individual.
_____(e) A provider shall:
_____(1) Maintain separate records of account for each individual to whom the provider is furnishing debt-management services;
_____(2) Disburse money paid by or on behalf of the individual to creditors of the individual as disclosed in the agreement, except that:
_____(A) The provider may delay payment to the extent that a payment by the individual is not final; and
_____(B) If a plan provides for regular periodic payments to creditors, the disbursement must comply with the due dates established by each creditor; and
_____(3) Promptly correct any payments that are not made or that are misdirected as a result of an error by the provider or other person in control of the trust account and reimburse the individual for any costs or fees imposed by a creditor as a result of the failure to pay or misdirection.
_____(f) A provider may not commingle money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services with money of other persons.
_____(g) A trust account must at all times have a cash balance equal to the sum of the balances of each individual's account.
_____(h) If a provider has established a trust account pursuant to subsection (a) of this section, the provider shall reconcile the trust account at least once a month. The reconciliation must compare the cash balance in the trust account with the sum of the balances in each individual's account. If the provider or its designee has more than one trust account, each trust account must be individually reconciled.
_____(i) If a provider discovers, or has a reasonable suspicion of, embezzlement or other unlawful appropriation of money held in trust, the provider immediately shall notify the commissioner by a method approved by the commissioner. Unless the commissioner by rule provides otherwise, no later than five days thereafter, the provider shall give notice to the commissioner describing the remedial action taken or to be taken.
_____(j) If an individual terminates an agreement or it becomes reasonably apparent to a provider that a plan has failed, the provider shall refund promptly to the individual all money paid by or on behalf of the individual which has not been paid to creditors, less fees that are payable to the provider under section twenty-two of this article.
_____(k) Before relocating a trust account from one bank to another, a provider shall inform the commissioner of the name, business address, and telephone number of the new bank. As soon as practicable, the provider shall inform the commissioner of the account number of the trust account at the new bank.
§47-26-22. Fees and other charges.
_____(a) A provider may not impose directly or indirectly a fee or other charge on an individual or receive money from or on behalf of an individual for debt-management services except as permitted by this section.
_____(b) A provider may not impose charges or receive payment for debt-management services until the provider and the individual have signed an agreement that complies with sections eighteen and twenty-seven of this article.
_____(c) If an individual assents to an agreement, a provider may not impose a fee or other charge for educational, counseling, or similar services, except as otherwise provided in this section and subsection (d), section twenty-seven of this article. The commissioner may authorize a provider to charge a fee based on the nature and extent of the services furnished by the provider.
_____(d) The following rules apply:
_____(1) If an individual assents to a plan that contemplates that creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may charge: (A) A fee not exceeding $50 for consultation, obtaining a credit report, and setting up an account: and (B) a monthly service fee, not to exceed $10 times the number of creditors remaining in a plan at the time the fee is assessed, but not more than $50 in any month.
_____(2) If an individual assents to a plan that contemplates that creditors or debt collectors will settle debts for less than the principal amount of the debt:
_____(A) A provider may not request or receive payment of any fee or consideration until and unless:
_____(i) The provider has settled the terms of at least one debt pursuant to a settlement agreement or other valid contractual agreement executed by the individual;
_____(ii) The individual has made at least one payment pursuant to that settlement agreement or other valid contractual agreement between the individual and the creditor or debt collector; and
_____(iii) The fee or consideration either bears the same proportional relationship to the total fee for settling the terms of the entire debt balance as the individual debt amount bears to the entire debt amount, in which case the individual debt amount and the entire debt amount are those owed at the time the debt was enrolled in the service; or is a percentage of the amount saved as a result of the settlement. The percentage charged cannot change from one individual debt to another. The amount saved is the difference between the amount owed at the time the debt was enrolled in the plan and the amount actually paid to satisfy the debt.
_____(3) No individual who completes all of his or her obligations under the agreement may be charged fees such that those fees, when added to the aggregate of offers of settlement obtained by the provider for the debtor, exceeds the principal amount of the debt.
_____(4) A provider may not impose or receive fees under both subdivisions (1) and (2) of this subsection.
_____(5) Except as otherwise provided in subsection (d), section twenty-eight of this article, if an individual does not assent to an agreement, a provider may receive for educational and counseling services it provides to the individual a fee not exceeding $100 or, with the approval of the commissioner, a larger fee. The commissioner may approve a fee larger than $100 if the nature and extent of the educational and counseling services warrant the larger fee.
_____(e) If, before the expiration of ninety days after the completion or termination of educational or counseling services, an individual assents to an agreement, the provider shall refund to the individual any fee paid pursuant to subdivision (6), subsection (d) of this section.
_____(f) If a payment to a provider by an individual under this article is dishonored, a provider may impose a reasonable charge on the individual, not to exceed the lesser of $25 and the amount permitted by another provision of this code.
§47-26-23. Voluntary contributions.
_____A provider may not solicit a voluntary contribution from an individual or an affiliate of the individual for any service provided to the individual. A provider may accept voluntary contributions from an individual but, until thirty days after completion or termination of a plan, the aggregate amount of money received from or on behalf of the individual may not exceed the total amount the provider may charge the individual under section twenty-two of this article.
§47-26-24. Voidable agreements.
_____(a) If a provider imposes a fee or other charge or receives money or other payments not authorized by section twenty-two or twenty-three of this article, the individual may void the agreement and recover as provided in section thirty-four of this article.
_____(b) If a provider is not registered as required by this article when an individual assents to an agreement, the agreement is voidable by the individual.
_____(c) If an individual voids an agreement under subsection (b) of this section, the provider does not have a claim against the individual for breach of contract or for restitution.
§47-26-25. Retention of records.
_____For each individual for whom a provider provides debt-management services, the provider shall maintain records for five years after the final payment made by the individual. The provider shall produce a copy of the records to the individual within a reasonable time after a request for the records. The provider may use electronic or other means of storage of the records if they are readily convertible into legible, tangible documents as required by the commissioner for examination.
§47-26-26. Periodic reports.
_____(a) A provider shall provide the accounting required by subsection (b) of this section:
_____(1) On cancellation or termination of an agreement; and
_____(2) Before cancellation or termination of any agreement:
_____(A) At least once each month; and
_____(B) No later than five business days after a request by an individual, but the provider need not comply with more than one request in any calendar month.
_____(b) A provider, in a record, shall provide each individual for whom it has established a plan an accounting of the following information:
_____(1) The amount in an account containing money paid by or on behalf of the individual for fees or distribution to a creditor, or both, as of the date one month before the date of the accounting;
_____(2) The amount paid into the account since the last report;
_____(3) The amounts and dates of disbursement made on the individual's behalf, or by the individual on the direction of the provider, since the last report, to each creditor listed in the plan;
_____(4) The amounts deducted, as fees or otherwise, from the amount paid into the account since the last report;
_____(5) If, since the last report, a creditor has agreed to accept as payment in full an amount less than the principal amount of the debt owed by the individual:
_____(A) The total amount and terms of the settlement;
_____(B) The amount of the debt when the individual assented to the plan;
_____(C) The amount of the debt when the creditor agreed to the settlement; and
_____(D) The calculation of a settlement fee.
_____(6) The amount in the account as of the date of the accounting.
_____(c) If an agreement contemplates that a creditor will settle a debt for less than the principal amount of the debt and the provider delegates performance of its duties under this section to another person, the provider may provide the information required by subdivision (5), subsection (b) of this section in a record separate from the record containing the other information required by subsection (b) of this section.
§47-26-27. Prohibited acts and practices.
_____(a) A provider may not, directly or indirectly:
_____(1) Include a secured debt in a plan, except as authorized by law other than this article;
_____(2) Misappropriate or misapply money held in trust;
_____(3) Settle a debt on behalf of an individual without the individual's agreement to the settlement terms pursuant to a settlement agreement or other valid contractual agreement executed by the individual.
_____(4) Exercise or attempt to exercise a power of attorney after an individual has terminated an agreement;
_____(5) Initiate a transfer from an individual's account at a bank or with another person unless the transfer is:
_____(A) A return of money to the individual; or
_____(B) Before termination of an agreement, properly authorized by the agreement and this article, and for:
_____(i) Payment to one or more creditors pursuant to an agreement; or
_____(ii) Payment of a fee;
_____(6) Offer a gift or bonus, premium, reward, or other compensation to an individual for executing an agreement;
_____(7) Offer, pay, or give a gift or bonus, premium, reward, or other compensation to a lead generator or other person for referring a prospective customer, if the person making the referral:
_____(A) Has a financial interest in the outcome of debt-management services provided to the customer, unless neither the provider nor the person making the referral communicates to the prospective customer the identity of the source of the referral; or
_____(B) Compensates its employees on the basis of a formula that incorporates the number of individuals the employee refers to the provider;
_____(8) Receive a bonus, commission, or other benefit for referring an individual to a person;
_____(9) Structure a plan in a manner that would result in a negative amortization of any of an individual's debts, unless a creditor that is owed a negatively amortizing debt agrees to refund or waive the finance charge on payment of the principal amount of the debt;
_____(10) Compensate its employees on the basis of a formula that incorporates the number of individuals the employee induces to enter into agreements;
_____(11) Settle a debt or lead an individual to believe that a payment to a creditor is in settlement of a debt to the creditor unless, at the time of settlement, the individual receives a certification by the creditor that the payment is in full settlement of the debt or is part of a settlement plan, the terms of which are included in the certification, that, if completed according to its terms, will satisfy the debt;
_____(12) Make a representation that:
_____(A) The provider will furnish money to pay bills or prevent attachments;
_____(B) Payment of a certain amount will permit satisfaction of a certain amount or range of indebtedness; or
_____(C) Participation in a plan will or may prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment;
_____(13) Misrepresent that it is authorized or competent to furnish legal advice or perform legal services;
_____(14) Represent in its agreements, disclosures required by this article, advertisements, or Internet web site that it is:
_____(A) A not-for-profit entity unless it is organized and properly operating as a not-for-profit entity under the law of the state in which it was formed; or
_____(B) A tax-exempt entity unless it has received certification of tax-exempt status from the Internal Revenue Service and is properly operating as a not-for-profit entity under the law of the state in which it was formed;
_____(15) Take a confession of judgment or power of attorney to confess judgment against an individual; or
_____(16) Employ an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information.
_____(b) If a provider furnishes debt-management services to an individual, the provider may not, directly or indirectly:
_____(1) Purchase a debt or obligation of the individual;
_____(2) Receive from or on behalf of the individual:
_____(A) A promissory note or other negotiable instrument other than a check or a demand draft; or
_____(B) A post-dated check or demand draft;
_____(3) Lend money or provide credit to the individual, except as a deferral of a settlement fee at no additional expense to the individual;
_____(4) Obtain a mortgage or other security interest from any person in connection with the services provided to the individual;
_____(5) Except as permitted by federal law, disclose the identity or identifying information of the individual or the identity of the individual's creditors, except to:
_____(A) The commissioner, on proper demand;
_____(B) A creditor of the individual, to the extent necessary to secure the cooperation of the creditor in a plan; or
_____(C) The extent necessary to administer the plan;
_____(6) Except as otherwise provided in section subdivision (3), subsection (d), section twenty-two of this article, provide the individual less than the full benefit of a compromise of a debt arranged by the provider;
_____(7) Charge the individual for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the Internet, or any other matter not directly related to debt-management services or educational services concerning personal finance; or
_____(8) Furnish legal advice or perform legal services, unless the person furnishing that advice to or performing those services for the individual is licensed to practice law.
_____(c) This article does not authorize any person to engage in the practice of law.
_____(d) A provider may not receive a gift or bonus, premium, reward, or other compensation, directly or indirectly, for advising, arranging, or assisting an individual in connection with obtaining, an extension of credit or other service from a lender or service provider, except for educational or counseling services required in connection with a government-sponsored program or authorized under subdivision (5), subsection (d), section twenty-two of this article.
_____(e) Unless a person supplies goods, services, or facilities generally and supplies them to the provider at a cost no greater than the cost the person generally charges to others, a provider may not purchase goods, services, or facilities from the person if an employee or a person that the provider should reasonably know is an affiliate of the provider:
_____(1) Owns more than ten percent of the person; or
_____(2) Is an employee or affiliate of the person.
§47-26-28. Notice of litigation.
_____No later than thirty days after a provider has been served with notice of a civil action for violation of this article by or on behalf of an individual who resides in this state at either the time of an agreement or the time the notice is served, the provider shall notify the commissioner in a record that it has been sued.
§47-26-29. Advertising.
_____(a) If the agreements of a provider contemplate that creditors will reduce finance charges or fees for late payment, default, or delinquency and the provider advertises debt-management services, it shall disclose, in an easily comprehensible manner, that using a debt-management plan may make it harder for the individual to obtain credit.
_____(b) If the agreements of a provider contemplate that creditors will settle for less than the full principal amount of debt and the provider advertises debt-management services, it shall disclose, in an easily comprehensible manner, the information specified in subdivisions (3) and (4), subsection (d), section sixteen of this article.
_____(c) A provider must disclose its registration number on all solicitations or advertisements intended to reach citizens of this state.
§47-26-30. Liability of a provider for conduct of another person; unlawful conduct by another person.
_____(a) If a provider delegates any of its duties or obligations under an agreement or this article to another person, including an independent contractor, the provider is liable for conduct of the person which, if done by the provider, would violate the agreement or this article.
_____(b) A lead generator or other person that provides services to or for a provider may not engage in an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information, with respect to an individual who the lead generator or other person has reason to believe is or may become a customer of the provider.
§47-26-31. Powers of commissioner.
_____(a) The commissioner may act on his or her own initiative or in response to complaints and may receive complaints, take action to obtain voluntary compliance with this article, refer cases to the office of the Attorney General, and seek or provide remedies as provided in this article.
_____(b) The commissioner may investigate and examine, in this state or elsewhere, by subpoena or otherwise, the activities, books, accounts, and records of a person that provides or offers to provide debt-management services, or a person to which a provider has delegated its obligations under an agreement or this article, to determine compliance with this article. Information that identifies individuals who have agreements with the provider shall not be disclosed to the public. In connection with the investigation, the commissioner may:
_____(1) Charge the person the reasonable expenses necessarily incurred to conduct the examination;
_____(2) Require or permit a person to file a statement under oath as to all the facts and circumstances of a matter to be investigated; and
_____(3) Seek a court order authorizing seizure from a bank at which the person maintains an account contemplated by section twenty-two of this article, any or all money, books, records, accounts, and other property of the provider that is in the control of the bank and relates to individuals who reside in this state.
_____(c) The commissioner is authorized and empowered to promulgate reasonable rules in accordance with the provisions of article three, chapter twenty-nine-a of this code to implement the provisions of this article.
_____(d) The commissioner may enter into cooperative arrangements with any other federal or state agency having authority over providers and may exchange with any of those agencies information about a provider, including information obtained during an examination of the provider.
_____(e) The commissioner may participate in the Nationwide Mortgage Licensing System and Registry and permit such system to process applications for registration under this article and receive and maintain records related to such registrations that are allowed or required to be maintained by the commissioner.
§47-26-32. Administrative remedies.
_____(a) The commissioner may enforce this article and rules adopted under this article by taking one or more of the following actions:
_____(1) Ordering a provider, lead generator, person administering an account pursuant to subsection (b), section twenty-one of this article, or director, employee, or other agent of a provider to cease and desist from any violation;
_____(2) Ordering a provider, lead generator, person administering an account pursuant to subsection (b), section twenty-one of this article, or person that has caused a violation to correct the violation, including making restitution of money or property to a person aggrieved by a violation;
_____(3) Imposing on a provider, lead generator, person administering an account pursuant to subsection (b), section twenty-one, or other person that violates or causes a violation of a civil penalty not exceeding $10,000 for each violation;
_____(4) Prosecuting a civil action to:
_____(A) Enforce an order; or
_____(B) Obtain restitution or equitable relief, or both.
_____(5) Intervening in an action brought under section thirty-four of this article.
_____(b) If a person violates or knowingly authorizes, directs, or aids in the violation of a final order issued under subdivision (1) or (2), subsection (a) of this section, the commissioner or circuit court may impose a civil penalty not exceeding $20,000 for each violation.
_____(c) The commissioner or Attorney General may maintain an action to enforce this article in the circuit court of the county in which the violations or violations, or any part thereof, has occurred, is occurring, or is about to occur.
_____(d) The commissioner or Attorney General may recover the reasonable costs of enforcing this article under subsections (a) through (c) of this section, including attorney's fees.
_____(e) In determining the amount of a civil penalty to impose under subsection (a) or (b) of this section, the commissioner or circuit court shall consider the seriousness of the violation, the good faith of the violator, any previous violations by the violator, the deleterious effect of the violation on the public, the net worth of the violator, and any other factor the commissioner or circuit court considers relevant to the determination of the civil penalty.
§47-26-33. Suspension, revocation, or nonrenewable of registration.
_____(a) In this section, "insolvent" means:
_____(1) Having generally ceased to pay debts in the ordinary course of business other than as a result of good-faith dispute;
_____(2) Being unable to pay debts as they become due; or
_____(3) Being insolvent within the meaning of the federal bankruptcy law, 11 U.S.C. §101, et seq., as amended.
_____(b) In addition to the remedies otherwise available under this article, the commissioner may suspend, revoke, or deny renewal of a provider's registration if:
_____(1) A fact or condition exists that, if it had existed when the registrant applied for registration as a provider, would have been a reason for denying registration;
_____(2) The provider has committed a material violation of this article or a rule or order of the commissioner under this article;
_____(3) The provider is insolvent;
_____(4) The provider, an employee or affiliate of the provider, a lead generator for the provider, a person administering an account for the provider pursuant to subsection (b), section twenty-one of this article, or a person to which the provider has delegated its obligations under an agreement or this article has refused to permit the commissioner to make an examination authorized by this article, failed to comply with subdivision (2), subsection (b), section thirty-one of this article no later than fifteen days after request, or made a material misrepresentation or omission in complying with subdivision (2), subsection (b), section thirty-one of this article; or
_____(5) The provider has not responded within a reasonable time and in an appropriate manner to communications from the commissioner.
_____(c) If a provider does not comply with subsection (h), section twenty-two of this article or if the commissioner otherwise finds that the public health or safety or general welfare requires emergency action, the commissioner may order a summary suspension of the provider's registration, effective on the date specified in the order.
_____(d) If the commissioner suspends, revokes, or denies renewal of the registration of a provider, the commissioner may seek a court order authorizing seizure of any or all of the money in a trust account required by section twenty-one of this article, books, records, accounts, and other property of the provider which are located in this state.
_____(e) If the commissioner suspends or revokes a provider's registration, the provider may appeal and request a hearing pursuant to article five, chapter twenty-nine-a of this code.
§47-26-34. Private enforcement.
_____(a) If an individual voids an agreement pursuant to subsection (b), section twenty-four of this article, the individual may recover in a civil action all money paid or deposited by or on behalf of the individual pursuant to the agreement, except amounts paid to creditors, in addition to the recovery under subdivisions (3) and (4), subsection (c) of this section.
_____(b) If an individual voids an agreement pursuant to subsection (a), section twenty-four of this article, the individual may recover in a civil action three times the total amount of the fees, charges, money, and payments made by the individual to the provider, in addition to the recovery under subdivision (4), subsection (c) of this section.
_____(c) Subject to subsection (d) of this section, an individual with respect to whom a provider or other person violates this article may recover in a civil action from the provider, the person, and any person that caused the violation:
_____(1) Compensatory damages for injury, including noneconomic injury, caused by the violation;
_____(2) Except as otherwise provided in subsection (d) of this section, with respect to a violation of sections sixteen, eighteen, nineteen, twenty, twenty-one, twenty-two, twenty-three, twenty-six and subsection (a), (b) or (d), section twenty-seven of this article the greater of the amount recoverable under subdivision (1) of this subsection or $5,000;
_____(3) Punitive damages; and
_____(4) Reasonable attorney's fees and costs.
_____(d) In a class action, except for a violation of subdivision (5), subsection (a), section twenty-seven of this article, the minimum damages provided in subdivision (2), subsection (c) of this section do not apply.
_____(e) A provider is not liable under this section for a violation of this article if the provider proves that the violation was not intentional and resulted from a good-faith error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. An error of legal judgment with respect to a provider's obligations under this article is not a good-faith error. If, in connection with a violation, the provider has received more money than authorized by an agreement or this article, the defense provided by this subsection is not available unless the provider refunds the excess no later than two business days of learning of the violation.
§47-26-35. Violation of West Virginia Consumer Credit and Protection Act.
_____If an act or practice of a provider violates both this article and section one hundred four, article six, chapter forty-six-a of this code, an individual may not recover under both for the same act or practice.
§47-26-36. Statute of limitations.
_____(a) An action or proceeding brought pursuant to subsection (a), (b) or (c), section thirty-two of this article must be commenced no later than four years after the conduct that is the basis of the commissioner's complaint.
_____(b) An action brought pursuant to section thirty-four of this article must be commenced no later than two years after the latest of:
_____(1) The individual's last transmission of money to a provider;
_____(2) The individual's last transmission of money to a creditor at the direction of the provider;
_____(3) The provider's last disbursement to a creditor of the individual;
_____(4) The provider's last accounting to the individual pursuant to subsection (a), section twenty-six of this article;
_____(5) The date on which the individual discovered or reasonably should have discovered the facts giving rise to the individual's claim; or
_____(6) Termination of actions or proceedings by the commissioner with respect to a violation of the article.
_____(c) The period prescribed in subdivision (5), subsection (b) of this section is tolled during any period during which the provider or, if different, the defendant has materially and willfully misrepresented information required by this article to be disclosed to the individual, if the information so misrepresented is material to the establishment of the liability of the defendant under this article.
§47-26-37. Uniformity of application and construction.
_____
In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.
§47-26-38. Relation to Electronic Signatures in Global and National Commerce Act.
_____This article modifies, limits, and supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §7001, et seq., but does not modify, limit, or supersede section 101(c) of that act, 15 U.S.C. §7001(c), or authorize electronic delivery of any of the notices described in section 103(b) of that act, 15 U.S.C. §7003(b).
§47-26-39. Severability.
_____If any provision of this article or its application to any person or circumstance is held unconstitutional or invalid, such unconstitutionality or invalidity shall not affect other provisions or applications of the article, and to this end the provisions of this article are hereby declared to be severable.
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NOTE: This bill
creates "The Uniform Debt Management Services Act." The bill regulates debt management services providers. The bill provides for the registration of debt management service providers with the Division of Banking. The bill defines terms. The bill provides exemptions for certain agreements and persons. The bill establishes the application information and fees required for registration. The bill requires applicants and registrants to provide the Commissioner of Banking with certain updated information provided as part of the application. The bill establishes the grounds under which the commissioner may deny a registration. The bill requires the commissioner to act on a registration application within one hundred-twenty days of receipt of the complete application. The bill requires an annual renewal of all registrations. The bill requires periodic report by providers. The bill requires a surety bond for registered providers. The bill requires providers of debt management services to act in good faith and maintain customer service access during ordinary business hours. The bill establishes the prerequisites for providing debt management services. The bill requires certain provisions in all contracts to provide debt management services. The bill provides for the ability to terminate a debt management services agreement upon notice. The bill provides that all money paid to a debt management services provider shall be held in trust in an insured bank account. The bill prohibits the imposition of a fee or other charge for debt management services until the provider and customer have signed an agreement. The bill provides that an individual may void an agreement and recover a refund of any moneys paid. The bill provides a five-year period for retention of records. The bill establishes prohibited acts and practices of a debt management service provider. The bill requires a provider to provide the commissioner with notice of any civil litigation against it relating to violation of this article. The bill requires certain disclosures in advertising by debt management services providers. The bill authorizes the Division of Banking to examine providers for compliance. The bill requires background investigation of principals of providers. The bill authorizes the Division of Banking and the office of the Attorney General to enforce the act. The bill provides for private enforcement remedies. The bill establishes statutes of limitations.

     This article is new; therefore, it has been completely underscored.
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