Bill Text: FL S0706 | 2010 | Regular Session | Introduced

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Bill Title: Debt Negotiation Services [CPSC]

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2010-04-30 - Died in Committee on Banking and Insurance [S0706 Detail]

Download: Florida-2010-S0706-Introduced.html

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Florida Senate - 2010                                     SB 706 
 
By Senator Fasano 
11-00582B-10                                           2010706__ 
1                        A bill to be entitled 
2         An act relating to debt negotiation services; amending 
3         s. 817.801, F.S.; providing additional definitions 
4         relating to debt negotiation services; amending s. 
5         817.802, F.S., conforming a cross-reference; amending 
6         s. 817.803, F.S.; providing that an attorney providing 
7         legal representation is exempt from debt negotiation 
8         organization requirements; creating s. 817.8071, F.S.; 
9         specifying acts prohibited by a debt negotiation 
10         organization; creating s. 817.8072, F.S.; providing 
11         insurance requirements for a debt negotiation 
12         organization; creating s. 817.8073, F.S.; providing 
13         requirements for debt negotiation service contracts; 
14         providing an effective date. 
15 
16  Be It Enacted by the Legislature of the State of Florida: 
17 
18         Section 1. Section 817.801, Florida Statutes, is amended to 
19  read: 
20         817.801 Definitions.—As used in this part: 
21         (1) “Concession” means assent to repayment of an unsecured 
22  debt for terms more favorable to a debtor then the terms of the 
23  original contract between the debtor and a creditor. 
24         (2)(1) “Credit counseling agency” means any organization, 
25  other than a debt negotiation organization, providing debt 
26  management services or credit counseling services. 
27         (3)(2) “Credit counseling services” means confidential 
28  money management, debt reduction, and financial educational 
29  services provided to a debtor by a credit counseling agency. 
30         (4)(3) “Creditor contribution” means a any sum that a 
31  creditor agrees to contribute to a credit counseling agency, 
32  whether directly or by setoff against amounts otherwise payable 
33  to the creditor on behalf of debtors. 
34         (5)(4) “Debt management services” means services provided 
35  to a debtor by a credit counseling agency organization for a fee 
36  to: 
37         (a) Effect the adjustment, compromise, or discharge of any 
38  unsecured account, note, or other indebtedness of the debtor; or 
39         (b) Receive from the debtor and disburse to a creditor any 
40  money or other thing of value. 
41         (6) “Debt negotiation organization” means any person 
42  providing debt negotiation services in accordance with s. 
43  817.8071. 
44         (7) “Debt negotiation services” means intermediary services 
45  provided for a fee by a debt negotiation organization between a 
46  debtor and one or more of the debtor’s creditors for the purpose 
47  of obtaining concessions, but without the paid intermediary 
48  holding or disbursing funds to the individual creditors. 
49         (8) “Debt principal” means the total amount of original 
50  debt, including unpaid interest and fees, owed by the debtor as 
51  of the date of initial enrollment in a debt negotiation 
52  organization’s plan. 
53         (9)(5) “Person” means an any individual, corporation, 
54  partnership, trust, association, or other legal entity, but does 
55  not include a governmental organization or subdivision thereof. 
56         (10) “Plan” means a program or strategy in which a debt 
57  negotiation organization furnishes debt negotiation services to 
58  a debtor in contemplation that during the course of the plan the 
59  debtor’s creditors will settle debts for less than the full 
60  amount of the debts owed. 
61         Section 2. Subsection (1) of section 817.802, Florida 
62  Statutes, is amended to read: 
63         817.802 Unlawful fees and costs.— 
64         (1) It is unlawful for any person, while engaging in debt 
65  management services or credit counseling services, to charge or 
66  accept from a debtor residing in this state, directly or 
67  indirectly, a fee or contribution greater than $50 for the 
68  initial setup or initial consultation. Subsequently, the person 
69  may not charge or accept a fee or contribution from a debtor 
70  residing in this state greater than $120 per year for additional 
71  consultations or, alternatively, if debt management services as 
72  defined in s. 817.801(4)(b) are provided, the person may charge 
73  the greater of 7.5 percent of the amount paid monthly by the 
74  debtor to the person or $35 per month. 
75         Section 3. Section 817.803, Florida Statutes, is amended to 
76  read: 
77         817.803 Exceptions.—Nothing in This part does not apply 
78  applies to: 
79         (1) A person licensed to practice law in this state who is 
80  providing legal representation to a client with respect to Any 
81  debt management, or credit counseling, or debt negotiation 
82  services. provided in the practice of law in this state; 
83         (2) A Any person who engages in debt adjustment to adjust 
84  the indebtedness owed to such person.; or 
85         (3) The following entities or their subsidiaries: 
86         (a) The Federal National Mortgage Association.; 
87         (b) The Federal Home Loan Mortgage Corporation.; 
88         (c) The Florida Housing Finance Corporation., a public 
89  corporation created in s. 420.504; 
90         (d) A bank, bank holding company, trust company, savings 
91  and loan association, credit union, credit card bank, or savings 
92  bank that is regulated and supervised by the Office of the 
93  Comptroller of the Currency, the Office of Thrift Supervision, 
94  the Federal Reserve, the Federal Deposit Insurance Corporation, 
95  the National Credit Union Administration, the Office of 
96  Financial Regulation of the Department of Financial Services, or 
97  any state banking regulator.; 
98         (e) A consumer reporting agency as defined in the Federal 
99  Fair Credit Reporting Act, 15 U.S.C. ss. 1681-1681y, as it 
100  existed on April 5, 2004.; or 
101         (f) Any subsidiary or affiliate of a bank holding company, 
102  its employees and its exclusive agents acting under written 
103  agreement. 
104         Section 4. Section 817.8071, Florida Statutes, is created 
105  to read: 
106         817.8071 Debt negotiation organization.— 
107         (1) A debt negotiation organization may not: 
108         (a) Directly or indirectly, impose a fee or other charge on 
109  a debtor or receive money from, or on behalf of, a debtor for 
110  debt negotiation services except as provided under this section. 
111         (b) Impose charges or receive payment for debt negotiation 
112  services before the debt negotiation organization and the debtor 
113  have signed a service contract that complies with s. 817.8073. 
114         (c) Make or use any false or misleading representations or 
115  omit any material fact in the offer or sale of debt negotiation 
116  services offered, or engage, directly or indirectly, in any 
117  fraudulent, false, misleading, unconscionable, unfair, or 
118  deceptive act or practice in connection with the offer or sale 
119  of any of such services. 
120         (d) Provide services to a debtor without executing a 
121  service contract that complies with s. 817.8073. 
122         (e) Fail to provide to the debtor copies of all service 
123  contracts and other documents that the debtor is required to 
124  sign. 
125         (f) Fail to obtain insurance coverage or fail to make such 
126  coverage information available for public inspection. 
127         (2) If a debtor assents to a plan that contemplates that a 
128  creditor will settle debt for less than the principal amount of 
129  debt, the debt negotiation organization may charge as the total 
130  amount of settlement fees only an amount that does not exceed 
131  one-half of the difference between the debt principal and the 
132  concession agreed upon with the debtor’s creditor on a specific 
133  account. A debt negotiation organization may not collect any 
134  fees other than settlement fees, and may collect settlement fees 
135  only after a settlement of an account with the debtor’s creditor 
136  has been agreed upon and documentation memorializing such 
137  settlement has been executed. 
138         Section 5. Section 817.8072, Florida Statutes, is created 
139  to read: 
140         817.8072 Insurance requirements for debt negotiation 
141  service.— 
142         (1) A debt negotiation organization must obtain and 
143  maintain insurance coverage at all times for employee 
144  dishonesty, depositor’s forgery, and computer fraud in an amount 
145  not less than $100,000. The deductible on such coverage may not 
146  exceed 10 percent of the face amount of the policy coverage. 
147         (2) Upon written request, a debt negotiation organization 
148  must provide a copy of the insurance policies required under 
149  this section to any party requesting a copy for a charge that 
150  does not exceed the cost of copying. 
151         Section 6. Section 817.8073, Florida Statutes, is created 
152  to read: 
153         817.8073 Debt negotiation service contract.— 
154         (1) The service contract between the debt negotiation 
155  organization and the debtor must be signed and dated by the 
156  debtor and include all of the following: 
157         (a) A full and detailed description of the debt negotiation 
158  services to be performed for the debtor by the organization, and 
159  the estimated date or length of time for performing the 
160  services. 
161         (b) All terms and conditions of payment, including the 
162  estimated total of all payments to be made by the debtor. 
163         (c) The organization’s principal business address and the 
164  name and address of its agent authorized to receive service of 
165  process in this state. 
166         (d) A clear and conspicuous statement, in boldface type in 
167  the immediate proximity to the space reserved for the debtor’s 
168  signature, which states: “You, the debtor, may cancel this 
169  service contract at any time before midnight of the 5th business 
170  day after the date of signing this contract. [See the attached 
171  Notice of Right to Cancel for further explanation of this 
172  right.]” 
173         (e) A Notice of Right to Cancel, which must be 
174  substantially in the following form: 
175 
176                      NOTICE OF RIGHT TO CANCEL 
177 
178         YOU MAY CANCEL A CONTRACT FOR DEBT NEGOTIATION SERVICES 
179  WITHIN 5 BUSINESS DAYS AFTER THE DATE THE CONTRACT IS SIGNED BY 
180  YOU WITHOUT INCURRING A PENALTY OR OBLIGATION. TO CANCEL THIS 
181  CONTRACT, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS 
182  CANCELATION NOTICE OR ANY OTHER WRITTEN NOTICE CLEARLY 
183  INDICATING YOUR DESIRE TO CANCEL YOUR CONTRACT. 
184 
185         TO:...(name of debt negotiation organization)... 
186         AT:...(address of debt negotiation organization)... 
187 
188         BY SIGNING AND DATING THIS NOTICE, I HEREBY CANCEL MY 
189  SERVICE CONTRACT, EXECUTED ON:...(date service contract 
190  signed)... 
191 
192         ...(Signature of Debtor)... 
193         ...(Date Cancellation Signed)... 
194         ...(Address of Debtor)... 
195         ...(Phone Number of Debtor)... 
196         (2) At the time the documents are signed, the debt 
197  negotiation organization must provide the debtor with a copy of 
198  the completed service contract and all other documents that the 
199  organization requires the debtor to sign. 
200         Section 7. This act shall take effect July 1, 2010.