Bill Text: CA SB1188 | 2009-2010 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Child custody: disabled parent.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2010-08-23 - Chaptered by Secretary of State. Chapter 179, Statutes of 2010. [SB1188 Detail]

Download: California-2009-SB1188-Introduced.html

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BILL NUMBER: SB 1188	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Wright

                        FEBRUARY 18, 2010

   An act to add Division 24 (commencing with Section 90000) to the
Financial Code, relating to debt negotiation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1188, as introduced, Wright. Debt negotiation organizations.
   Existing law, the Check Sellers, Bill Payers and Proraters Law,
provides for licensure and regulation by the Commissioner of
Corporations of persons engaged in, among other activities, the
business of receiving money as an agent of the obligor for the
purpose of paying bills, invoices, or accounts for the obligor.
   This bill would make it unlawful for a person to provide debt
negotiation services, as defined, unless it, among other things,
obtains and maintains insurance coverage, as specified, and files a
form establishing proof of this required insurance coverage with the
Commissioner of Financial Institutions along with a filing fee, to be
established by the commissioner. The bill would require a debt
negotiation organization, prior to providing debt negotiation
services, to enter into a specified written contract with an
individual, including, but not limited to, a full and detailed
description of the debt negotiation services to be performed by the
debt negotiation organization as well as the estimated date or length
of time by which the services are to be performed, and a notice of
the right to cancel. The bill would prohibit a debt negotiation
organization from, among other things, imposing any fees or charges
or receiving any money for debt negotiation services until the
individual agrees in writing to those fees or charges and the plan,
as defined. The bill would also specify how those fees or charges are
to be determined and when they may be collected. The bill would
exempt various entities from these provisions. The bill would specify
that a violation of these provisions would constitute unfair
competition and would authorize any injured individual to bring an
action to enjoin and restrain any violation of these provisions and
to recover damages. The bill would make these provisions operative on
January 1, 2012.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Division 24 (commencing with Section 90000) is added to
the Financial Code, to read:

      DIVISION 24.  Credit Card Debt Negotiation


      CHAPTER 1.  DEFINITIONS


   90000.  As used in this division, the following terms shall have
the following meanings:
   (a) "Concessions" means the assent to repayment of an unsecured
credit card debt in terms more favorable to an individual than the
terms of the contract between the individual and a creditor.
   (b) "Creditors" means persons to whom an individual owes unsecured
credit card debts.
   (c) "Debt negotiation organization" or "organization" means a
person that provides debt negotiation services.
   (d) "Debt negotiations services" or "services" means acting as an
intermediary between an individual and one or more of the individual'
s creditors in order to obtain concessions for that individual's
credit card debt, but without holding or disbursing funds to the
individual's creditors, for a fee to be paid by the individual.
   (e) "Debt principal" means the total amount of debt, including
unpaid interest and fees, owed by the individual to a creditor as of
the date of the initial enrollment by the individual in a plan.
   (f) "Individual" means a natural person.
   (g) "Multiple pay settlement" means a settlement paid in
installments.
   (h) "Person" shall have the same meaning as in Section 18.
   (i) "Plan" means a program or strategy of debt negotiation
services that contemplates that creditors will settle credit card
debts for less than the full amount owed by the individual.
   (j) "Settlement" means an arrangement where a creditor agrees to
accept concessions on an individual's account resulting from
negotiations conducted on the individual's behalf by the debt
negotiation organization and the funding of that arrangement is
provided by the payment of funds from the individual to the creditor.

      CHAPTER 2.  REQUIREMENTS


   90010.  It shall be unlawful for a person to provide debt
negotiation services unless it does all of the following:
   (a) Obtains and maintains at all times insurance coverage for
employee dishonesty, depositor's forgery, and computer fraud, in an
amount not less than one hundred thousand dollars ($100,000). The
deductible on this coverage shall not exceed 10 percent of the face
amount of the insurance policy coverage.
   (b) Is prepared to provide a copy of the insurance coverage
required by this section to any party requesting a copy for a fee
that does not exceed the cost of copying.
   (c) Files a form establishing proof of the required insurance
coverage with the Commissioner of Financial Institutions along with a
fee, to be established by the commissioner, in an amount not to
exceed the cost of filing the form. These fees shall be deposited in
the Financial Institutions Fund established in Section 265.
      CHAPTER 3.  CONTRACTS


   90020.  (a) Prior to providing debt negotiation services to an
individual, a debt negotiation organization shall enter into a
written contract with that individual that shall be signed and dated
by the individual and shall include all of the following:
   (1) A full and detailed description of the debt negotiation
services to be performed by the debt negotiation organization for the
individual and the estimated date by which or length of time in
which the services are to be performed.
   (2) All terms and conditions of payment, including the estimated
total of all payments to be made by the individual.
   (3) The organization's principal business address and the name and
address of its agent in the state authorized to receive service of
process.
   (4) A clear and conspicuous statement in boldface type, in the
immediate proximity to the space reserved for the individual's
signature, that states: "You may cancel this contract within 5
business days after the date the contract is signed."
   (5) A copy of the following "Notice of Right to Cancel" shall be
provided to the individual:
             NOTICE OF RIGHT TO CANCEL
YOU MAY CANCEL THIS CONTRACT FOR DEBT
NEGOTIATION SERVICES WITHIN 5 BUSINESS DAYS
AFTER THE DATE THE CONTRACT IS SIGNED BY YOU
WITHOUT INCURRING ANY PENALTY OR OBLIGATION. TO
CANCEL THIS CONTRACT, MAIL OR DELIVER A SIGNED
AND DATED COPY OF THIS CANCELLATION NOTICE OR
ANY       OTHER WRITTEN NOTICE CLEARLY
INDICATING YOUR DESIRE TO CANCEL YOUR CONTRACT.
To:_____________________________________________
       (Name of Debt Negotiation Organization)
At:_____________________________________________
                     (Address)


BY SIGNING AND DATING THIS NOTICE, I HEREBY
CANCEL
MY CONTRACT, EXECUTED ON:________________________
                          (Date Contract Signed)
                         (Signature of Individual)
                                  (Date)
                                 (Address)
                              (Phone Number)


   (b) The debt negotiation organization shall provide the
individual, at the time the documents are signed, a copy of the
completed written contract and all other documents the debt
negotiation organization requires the individual to sign.
      CHAPTER 4.  FEES


   90030.  (a) No debt negotiation organization shall impose directly
or indirectly a fee or other monetary charge on an individual or
receive money from or on behalf of an individual for debt negotiation
services until the individual agrees in writing to the fees or other
monetary charges and to the plan negotiated by the debt negotiation
organization.
   (b) The settlement fees and other monetary settlement charges
imposed by a debt negotiation organization shall not exceed one-half
of the difference between the debt principal and the concession
agreed upon with the individual's creditor.
   (c) In the event of a multiple pay settlement, a debt negotiation
organization shall only collect a fee that is based on the amount of
the multiple installment payment at the time that the multiple
installment payment is made.
   (d) A debt negotiation organization shall not collect any fees
other than those fees specified in this section and shall collect
those fees only after a settlement of an account with the individuals
creditor has been agreed upon and documentation memorializing the
funding of the settlement has been executed.
      CHAPTER 5.  PROHIBITIONS


   90040.  No debt negotiation organization shall do any of the
following:
   (a) Make or use any false or misleading representations or omit
any material fact in the offer or sale of services offered, or
engage, directly or indirectly, in any fraudulent, false, misleading,
unconscionable, unfair, or deceptive act or practice in connection
with the offer or sale of any of its services.
   (b) Provide services to an individual without executing a written
contract that complies with this division.
   (c) Fail to provide copies of all contracts and other documents
that the individual is required to sign.
   (d) Fail to obtain insurance coverage or fail to make that
coverage information available for public inspection.
      CHAPTER 6.  EXEMPTIONS


   90050.  This division shall not apply to any of the following:
   (a) A person who engages in debt adjustment to adjust the
indebtedness owed to that person.
   (b) The following entities or their subsidiaries:
   (1) The Federal National Mortgage Association.
   (2) The Federal Home Loan Mortgage Corporation.
   (3) A bank, bank holding company, trust company, savings and loan
association, credit union, credit card bank, or savings bank that is
regulated and supervised by the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, the Federal Reserve, the
Federal Deposit Insurance Corporation, the National Credit Union
Administration, or any state banking regulator.
   (c) A consumer reporting agency as defined in the Federal Fair
Credit Reporting Act (15 U.S.C. Sec. 1681(a)).
   (d) Any subsidiary or affiliate of a bank holding company, its
employees and its exclusive agents acting under written agreement.
      CHAPTER 7.  VIOLATIONS


   90060.  (a) A violation of this division is an act of unfair
competition within the meaning of Chapter 5 (commencing with Section
17200) of Part 2 of Division 7 of the Business and Professions Code.
   (b) In addition, any individual injured by a violation of this
division may bring an action to enjoin and restrain any violation of
this division and to recover damages. Judgment shall be entered for
actual damages. However, in no case shall the judgment be for less
than the amount paid by the individual to the debt negotiation
organization plus reasonable attorney's fees and costs.
      CHAPTER 8.  OPERATION


   90070.  This division shall become operative on January 1, 2012.