Bill Title: To require the licensure of, and otherwise regulate, providers of debt settlement services.
Spectrum: Moderate Partisan Bill (Republican 7-1)
Status: (Introduced - Dead) 2011-05-05 - To Financial Institutions, Housing & Urban Development
[HB222 Detail]Download: Ohio-2011-HB222-Introduced.html
As Introduced
| 129th General Assembly | | Regular Session | | 2011-2012 |
| |
Representative Mecklenborg
Cosponsors:
Representatives McKenney, Grossman, Stebelton, Blessing, Letson, Balderson, McClain
A BILL
| To amend section 4710.01 and to enact sections | 1 |
|
4710.20 to 4710.41 of the Revised Code to require | 2 |
|
the licensure of, and otherwise regulate, | 3 |
|
providers of debt settlement services. | 4 |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
| Section 1. That section 4710.01 be amended and sections | 5 |
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4710.20, 4710.21, 4710.22, 4710.23, 4710.24, 4710.25, 4710.26, | 6 |
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4710.27, 4710.28, 4710.29, 4710.30, 4710.31, 4710.32, 4710.33, | 7 |
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4710.34, 4710.35, 4710.36, 4710.37, 4710.38, 4710.39, 4710.40, and | 8 |
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4710.41 of the Revised Code be enacted to read as follows: | 9 |
| Sec. 4710.01. As used in this chapter: | 10 |
| (A) "Person" includes individuals, partnerships, | 11 |
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associations, corporations, trusts, and other legal entities. | 12 |
| (B)(1) "Debt adjusting" means doing business in debt | 13 |
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adjusting, budget counseling, debt management, or debt pooling | 14 |
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service, or holding oneself out, by words of similar import, as | 15 |
|
providing services to debtors in the management of their debts, to | 16 |
|
do either of the following: | 17 |
(1)(a) To effect the adjustment, compromise, or discharge of | 18 |
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any account, note, or other indebtedness of the debtor; | 19 |
(2)(b) To receive from the debtor and disburse to the | 20 |
|
debtor's creditors any money or other thing of value. | 21 |
| (2) "Debt adjusting" does not include debt settlement | 22 |
|
services as defined in section 4710.20 of the Revised Code. | 23 |
| (C) "Resides" means to live in a particular place on a | 24 |
|
temporary or a permanent basis. | 25 |
| Sec. 4710.20. As used in sections 4710.20 to 4710.41 of the | 26 |
|
Revised Code: | 27 |
| (A) "Affiliate" means a person that controls, is controlled | 28 |
|
by, or is under common control with the licensee. | 29 |
| (B) "Agreement" means an agreement between a licensee and an | 30 |
|
individual for the provision of debt settlement services. | 31 |
| (C) "Business address" means the physical location of a | 32 |
|
business, including the name and number of a street. | 33 |
| (D) "Concessions" means assent to repayment of a debt on | 34 |
|
terms more favorable to an individual than the terms of the | 35 |
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contract between the individual and a creditor. | 36 |
| (E) "Day" means a calendar day. | 37 |
| (F) "Debt settlement services" means the services as an | 38 |
|
intermediary between an individual and one or more unsecured | 39 |
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creditors of the individual for the purpose of obtaining | 40 |
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concessions under which a creditor accepts less than the balance | 41 |
|
owed as payment in full of the debt, and without receiving money | 42 |
|
from the individual for distribution of that money to the | 43 |
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individual's creditor. The term does not include any of the | 44 |
|
following: | 45 |
| (1) Legal services provided in an attorney-client | 46 |
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relationship by an attorney licensed or otherwise authorized to | 47 |
|
practice law in this state; | 48 |
| (2) Accounting services provided in an accountant–client | 49 |
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relationship by a certified public accountant licensed to provide | 50 |
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accounting services in this state; | 51 |
| (3) Financial planning services provided in a financial | 52 |
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planner-client relationship by a member of a financial planning | 53 |
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profession who holds current certification by the certified | 54 |
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financial planner board of standards, inc. | 55 |
| (G) "Financial institution" means any national bank, any bank | 56 |
|
doing business under authority granted by the superintendent of | 57 |
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financial institutions or the regulatory authority of another | 58 |
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state of the United States, any federal savings association, any | 59 |
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savings and loan association or savings bank doing business under | 60 |
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authority granted by the superintendent or the regulatory | 61 |
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authority of another state of the United States, or any credit | 62 |
|
union regulated by a state or federal regulatory authority. | 63 |
| (H) "Good faith" means honesty in fact and the observance of | 64 |
|
reasonable standards of fair dealing. | 65 |
| (I) "Licensee" means a person that has been issued a license | 66 |
|
to provide debt settlement services under sections 4710.20 to | 67 |
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4710.41 of the Revised Code. | 68 |
| (J) "Person" means an individual, corporation, business | 69 |
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trust, estate, trust, partnership, limited liability company, | 70 |
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association, joint venture, or any other legal or commercial | 71 |
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entity. The term does not include a public corporation, | 72 |
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government, or governmental subdivision, agency, or | 73 |
|
instrumentality. | 74 |
| (K) "Program" means a program or strategy in which a provider | 75 |
|
furnishes debt settlement services in contemplation that creditors | 76 |
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will settle debts for less than the full amount of debt owed by an | 77 |
|
individual. | 78 |
| (L) "Record" means information that is inscribed on a | 79 |
|
tangible medium or that is stored in an electronic or other medium | 80 |
|
and is retrievable in a perceivable form. | 81 |
| (M) "Sign" means, with present intent to authenticate or | 82 |
|
adopt a record, to do either of the following: | 83 |
| (1) Execute or adopt a tangible symbol; | 84 |
| (2) Attach to or logically associate with the record an | 85 |
|
electronic sound, symbol, or process. | 86 |
| (N) "State" means, except when the context indicates the term | 87 |
|
is referring to the state of Ohio, a state of the United States, | 88 |
|
the District of Columbia, Puerto Rico, the United States Virgin | 89 |
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Islands, or any territory or insular possession subject to the | 90 |
|
jurisdiction of the United States. | 91 |
| (O) "Settlement" means an arrangement under which a creditor | 92 |
|
accepts concessions on an individual's account through a debt | 93 |
|
settlement services program and money is paid to the creditor. | 94 |
| Sec. 4710.21. (A) No person shall provide debt settlement | 95 |
|
services for compensation without first having obtained a license | 96 |
|
from the director of commerce under sections 4710.20 to 4710.41 of | 97 |
|
the Revised Code. | 98 |
| (B) Sections 4710.20 to 4710.41 of the Revised Code do not | 99 |
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apply to the following persons or their employees when the person | 100 |
|
or the employee is engaged in the regular course of the person's | 101 |
|
business or profession: | 102 |
| (1) A judicial officer, a person acting under an order of a | 103 |
|
court or an administrative agency, or an assignee for the benefit | 104 |
|
of creditors; | 105 |
| (2) A financial institution, bank holding company, or the | 106 |
|
subsidiary, agent, or affiliate of either; | 107 |
| (3) A title insurer, escrow company, or other person that | 108 |
|
provides bill-paying services if the provision of debt settlement | 109 |
|
services is incidental to the bill-paying services; | 110 |
| (4) An agent or employee of a licensee. | 111 |
| Sec. 4710.22. (A) Application for an original or renewal | 112 |
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license to provide debt settlement services shall be in writing, | 113 |
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signed under oath, and in the form prescribed by the director of | 114 |
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commerce. The application form shall contain a statement informing | 115 |
|
the applicant that a false or dishonest answer to a question may | 116 |
|
be grounds for denial or subsequent suspension or revocation of | 117 |
|
the applicant's license. The application for an original or | 118 |
|
renewal license shall be accompanied by a license fee as | 119 |
|
determined by the director by rule, and shall contain all of the | 120 |
|
following: | 121 |
| (1) The applicant's name, principal business address and | 122 |
|
telephone number, and all of the applicant's other business | 123 |
|
addresses in this state, electronic mail addresses, and internet | 124 |
|
web site addresses; | 125 |
| (2) All names under which the applicant conducts business; | 126 |
| (3) The address of each location in this state at which the | 127 |
|
applicant will provide debt settlement services or a statement | 128 |
|
that the applicant does not maintain a physical location in the | 129 |
|
state; | 130 |
| (4) The name and home address of each officer and director of | 131 |
|
the applicant and each person that owns at least ten per cent of | 132 |
|
the applicant's business; | 133 |
| (5) A statement describing, to the extent it is known or | 134 |
|
should be known by the applicant, any material civil or criminal | 135 |
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judgment relating to financial fraud or misuse, any material | 136 |
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violation of state or federal securities laws, and any material | 137 |
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administrative or enforcement action relating to financial fraud | 138 |
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or misuse by a governmental agency in any jurisdiction against the | 139 |
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applicant, any of its officers, directors, owners, or agents; | 140 |
| (6) A copy of each form of agreement that the applicant will | 141 |
|
use with individuals who reside in this state; | 142 |
| (7) The schedule of fees and charges that the applicant will | 143 |
|
use with individuals who reside in this state; | 144 |
| (8) A copy or description of any ownership interest of at | 145 |
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least ten per cent by a director, owner, or employee of the | 146 |
|
applicant in the applicant's debt settlement services business; | 147 |
| (9) A description of any ownership interest of at least ten | 148 |
|
per cent by a director, owner, or employee of the applicant in: | 149 |
| (a) Any affiliate of the applicant; or | 150 |
| (b) Any entity that provides products or services to the | 151 |
|
applicant or any individual relating to the applicant's debt | 152 |
|
settlement services business. | 153 |
| (10) The identity of each director who is an affiliate of the | 154 |
|
applicant; | 155 |
| (11) Evidence that the applicant has a resident agent in the | 156 |
|
state recorded with the secretary of state; | 157 |
| (12) Any other information that the director reasonably | 158 |
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requires to perform the director's duties, which the director may | 159 |
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require by rule. | 160 |
| (B) The director may, upon receipt and review of an | 161 |
|
application, request additional information that the director | 162 |
|
reasonably requires to perform the director's duties. | 163 |
| (C) The term of any license issued pursuant to sections | 164 |
|
4710.20 to 4710.41 of the Revised Code shall not be more than one | 165 |
|
year. Licensees who wish to renew their license must submit an | 166 |
|
application for renewal at least thirty days, but not more than | 167 |
|
sixty days, before the license expiration date. | 168 |
| (D) If a person who provides debt settlement services holds a | 169 |
|
license or certificate of registration in another state | 170 |
|
authorizing it to provide debt settlement services, the person may | 171 |
|
submit a copy of that license or certificate and the application | 172 |
|
for it instead of the application described in division (A) of | 173 |
|
this section if all of the following apply: | 174 |
| (1) The application in the other state contains information | 175 |
|
substantially similar to or more comprehensive than that required | 176 |
|
by division (A) of this section. | 177 |
| (2) The applicant provides the information required by | 178 |
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divisions (A)(1), (3), (6), and (7) of this section. | 179 |
| (3) The applicant certifies that the information contained in | 180 |
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the application is current, and to the extent it is not current, | 181 |
|
supplements the application to make the information current. | 182 |
| Sec. 4710.23. (A) The director of commerce shall issue an | 183 |
|
original or renewal license to the applicant unless the director | 184 |
|
finds any of the following: | 185 |
| (1) The applicant has not complied with the requirements of | 186 |
|
section 4710.22 of the Revised Code. | 187 |
| (2) The application contains information that is materially | 188 |
|
erroneous or incomplete. | 189 |
| (3) An officer, director, or owner of the applicant has been | 190 |
|
convicted of a crime, or suffered a civil judgment, involving | 191 |
|
dishonesty or the violation of state or federal securities laws. | 192 |
| (4) The application is not accompanied by the fee established | 193 |
|
by the director. | 194 |
| (5) There is reasonable evidence to support the director's | 195 |
|
opinion that the applicant will not provide debt settlement | 196 |
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services in a lawful, honest, and fair manner. | 197 |
| (B) The director shall approve or deny an initial license | 198 |
|
within sixty days after an application is filed. If a request for | 199 |
|
additional information is made pursuant to division (B) of section | 200 |
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4710.22 of the Revised Code, the director may extend the sixty-day | 201 |
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period for not more than forty-five days. | 202 |
| (C) If a licensee has filed a timely and complete application | 203 |
|
for license renewal, the license remains in effect until the | 204 |
|
director notifies the applicant of a denial. | 205 |
| (D) Within seven days after issuing an order denying an | 206 |
|
application, the director shall notify the applicant of the | 207 |
|
denial, the grounds for the denial, and the applicant's | 208 |
|
opportunity for a hearing pursuant to Chapter 119. of the Revised | 209 |
|
Code. If the application is denied, the director shall return the | 210 |
|
annual license fee. | 211 |
| (E) If the director has denied an application for a renewal | 212 |
|
license, the licensee, within thirty days after receiving notice | 213 |
|
of the denial, may appeal and request a hearing in accordance with | 214 |
|
Chapter 119. of the Revised Code. While an appeal is pending, the | 215 |
|
licensee may continue to provide debt settlement services to | 216 |
|
individuals with whom the licensee has agreements. If the | 217 |
|
licensee's appeal fails, the licensee may, with the approval of | 218 |
|
the director, continue to provide debt settlement services to | 219 |
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individuals with whom it has agreements until the licensee | 220 |
|
transfers the agreements to another licensee. | 221 |
| Sec. 4710.24. No person licensed under sections 4710.20 to | 222 |
|
4710.41 of the Revised Code shall conduct business in this state | 223 |
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unless the licensee has obtained and maintains in effect at all | 224 |
|
times a corporate surety bond issued by a bonding company or | 225 |
|
insurance company authorized to do business in this state. The | 226 |
|
bond shall be in favor of the director of commerce and in a penal | 227 |
|
sum the director determines is warranted by the financial | 228 |
|
condition and business experience of the licensee, the history of | 229 |
|
the licensee in providing debt settlement services, the risk to | 230 |
|
individuals, and any other factor the director considers | 231 |
|
appropriate. The penal sum shall be at least ten thousand dollars | 232 |
|
and not more than fifty thousand dollars. | 233 |
| The term of the bond shall coincide with the term of the | 234 |
|
license. The licensee shall file a copy of the bond with the | 235 |
|
director. The bond shall be for the exclusive benefit of any | 236 |
|
individual injured by a violation of or failure to comply with any | 237 |
|
provision of sections 4710.20 to 4710.41 of the Revised Code by a | 238 |
|
licensee or an employee of a licensee. | 239 |
| Sec. 4710.25. A licensee shall do all of the following: | 240 |
| (A) Act in good faith when engaging in the business of debt | 241 |
|
settlement services; | 242 |
| (B) Maintain a toll-free communication system, staffed at a | 243 |
|
level that reasonably permits an individual to speak to a customer | 244 |
|
service representative, as appropriate, during ordinary business | 245 |
|
hours; | 246 |
| (C) Provide all disclosures and documents required by | 247 |
|
sections 4710.20 to 4710.41 of the Revised Code in English and in | 248 |
|
any other language the licensee has or will use primarily to | 249 |
|
communicate with the individual. | 250 |
| Sec. 4710.26. (A) Before providing debt settlement services, | 251 |
|
a licensee shall give the individual an itemized list of goods and | 252 |
|
services and the charges for each. The information shall be | 253 |
|
presented in a clear and conspicuous manner. | 254 |
| (B) A licensee shall not provide debt settlement services | 255 |
|
unless the licensee has prepared a financial analysis with respect | 256 |
|
to the income and debts of the individual seeking the services. | 257 |
| (C) Before an individual assents to an agreement to engage in | 258 |
|
a program, a licensee shall do both of the following: | 259 |
| (1) Provide the individual with a copy of the financial | 260 |
|
analysis required by division (B) of this section in a record that | 261 |
|
identifies the licensee and that the individual may keep whether | 262 |
|
or not the individual assents to the agreement; | 263 |
| (2) Inform the individual of the availability, at the | 264 |
|
individual's option, of assistance by a toll-free communication | 265 |
|
system or in person to discuss the financial analysis required by | 266 |
|
division (B) of this section. | 267 |
| (D) Before an individual assents to an agreement to engage in | 268 |
|
a program, the licensee shall inform the individual of all of the | 269 |
|
following: | 270 |
| (1) Programs are not suitable for all individuals. | 271 |
| (2) Participation in a program may adversely affect the | 272 |
|
individual's credit rating or credit scores. | 273 |
| (3) Nonpayment of debt may lead creditors to increase finance | 274 |
|
and other charges or undertake collection activity, including | 275 |
|
litigation. | 276 |
| (4) If a creditor settles for less than the full amount of | 277 |
|
the debt, the program may result in the creation of taxable income | 278 |
|
to the individual, even if the individual does not receive any | 279 |
|
money. | 280 |
| (5) Specific results cannot be predicted or guaranteed and | 281 |
|
the licensee cannot force negotiations or settlements with | 282 |
|
creditors but will advocate solely on behalf of the individual. | 283 |
| (6) Programs require that individuals meet a certain savings | 284 |
|
goal in order to maximize settlement results. | 285 |
| (7) The licensee does not provide accounting or legal advice | 286 |
|
to individuals, unless the licensee is professionally licensed to | 287 |
|
provide such advice. | 288 |
| (8) The licensee does not make payments to the individual's | 289 |
|
creditors. | 290 |
| (9) The name and business address of the licensee. | 291 |
| Sec. 4710.27. (A) As used in this section: | 292 |
| (1) "Federal act" means the "Electronic Signatures in Global | 293 |
|
and National Commerce Act," 114 Stat. 464, 15 U.S.C. 7001 et seq., | 294 |
|
as amended. | 295 |
| (2) "Consumer" means an individual who seeks or obtains goods | 296 |
|
or services that are used primarily for personal, family, or | 297 |
|
household purposes. | 298 |
| (B) A licensee may satisfy the requirements of sections | 299 |
|
4710.26, 4710.28, and 4710.33 of the Revised Code by utilizing the | 300 |
|
internet or other electronic means if the licensee obtains a | 301 |
|
consumer's consent in the manner provided for in the federal act. | 302 |
| (C) The disclosures and materials required by sections | 303 |
|
4710.26, 4710.28, and 4710.33 of the Revised Code shall be | 304 |
|
presented in a form that is capable of being accurately reproduced | 305 |
|
for later reference. | 306 |
| (D) With respect to disclosure by means of an internet web | 307 |
|
site, the disclosure of the information required by division (D) | 308 |
|
of section 4710.26 of the Revised Code must appear on one or more | 309 |
|
screens that contain no other information, and the individual must | 310 |
|
indicate that the individual has seen the information before | 311 |
|
proceeding to assent to the formation of a program. | 312 |
| (E) At the time of providing the materials and agreement | 313 |
|
required by divisions (C) and (D) of section 4710.26 and sections | 314 |
|
4710.28 and 4710.33 of the Revised Code, a licensee shall inform | 315 |
|
the individual that upon electronic, telephonic, or written | 316 |
|
request, it will send the individual a written copy of the | 317 |
|
materials and will comply with a request as provided in division | 318 |
|
(F) of this section. | 319 |
| (F) If a licensee is requested, before the expiration of | 320 |
|
ninety days after a program is completed or terminated, to send a | 321 |
|
written copy of the materials required by divisions (C) and (D) of | 322 |
|
section 4710.26 and sections 4710.28 and 4710.33 of the Revised | 323 |
|
Code, the licensee shall send them at no charge within three | 324 |
|
business days after the request is made, but the licensee need not | 325 |
|
comply with a request more than once per calendar month or if it | 326 |
|
reasonably believes the request is made for purposes of | 327 |
|
harassment. If a request is made more than ninety days after a | 328 |
|
program is completed or terminated, the licensee shall send within | 329 |
|
a reasonable time a written copy of the materials requested. | 330 |
| (G) A licensee that maintains an internet web site shall | 331 |
|
disclose on the home page of its web site or on a page that is | 332 |
|
clearly and conspicuously connected to the home page by a link | 333 |
|
that clearly reveals its contents, all of the following: | 334 |
| (1) Its name and all names under which it does business; | 335 |
| (2) Its principal business address, telephone number, and | 336 |
|
electronic mail address, if any. | 337 |
| (H) Subject to division (I) of this section, if a consumer | 338 |
|
who has consented to electronic communication in the manner | 339 |
|
provided by section 101 of the federal act withdraws consent as | 340 |
|
provided in the federal act, a licensee may terminate its | 341 |
|
agreement with the consumer. | 342 |
| (I) If a licensee wishes to terminate an agreement with a | 343 |
|
consumer pursuant to division (H) of this section, it shall notify | 344 |
|
the consumer that it will terminate the agreement unless the | 345 |
|
consumer, within thirty days after receiving the notification, | 346 |
|
consents to electronic communication in the manner provided in | 347 |
|
section 101(c) of the federal act. | 348 |
| (J) This section modifies, limits, and supersedes the federal | 349 |
|
act, but does not modify, limit, or supersede section 101(c) of | 350 |
|
that act or authorize electronic delivery of any of the notices | 351 |
|
described in section 103(b) of that act. | 352 |
| Sec. 4710.28. (A) An agreement shall meet the following | 353 |
|
requirements: | 354 |
| (2) Be dated and signed by the individual; | 356 |
| (3) Include the name of the individual and the address where | 357 |
|
the individual resides; | 358 |
| (4) Include the name, business address, and telephone number | 359 |
|
of the licensee; | 360 |
| (5) Be delivered to the individual immediately upon formation | 361 |
|
of the agreement; | 362 |
| (6) Disclose all of the following: | 363 |
| (a) The services to be provided; | 364 |
| (b) The amount or method of determining the amount of all | 365 |
|
fees, individually itemized, to be paid by the individual; | 366 |
| (c) How the licensee will comply with its obligations under | 367 |
|
section 4710.33 of the Revised Code; | 368 |
| (d) That the individual may contact the director of commerce | 369 |
|
with any questions or complaints regarding the licensee; | 370 |
| (e) The address, telephone number, and internet address or | 371 |
|
web site of the director. | 372 |
| (B) For purposes of division (A)(5) of this section, delivery | 373 |
|
of an electronic record occurs when it is made available in a | 374 |
|
format in which the individual may retrieve, save, and print the | 375 |
|
record, and the individual is notified that it is available. | 376 |
| (C) If the director supplies the licensee with any | 377 |
|
information required under division (A)(6)(e) of this section, the | 378 |
|
licensee may comply with that requirement only by disclosing the | 379 |
|
information supplied by the director. | 380 |
| (D) An agreement shall provide that the individual has a | 381 |
|
right to terminate the agreement at any time by giving the | 382 |
|
licensee written or electronic notice, in which event all powers | 383 |
|
of attorney granted by the individual to the licensee are revoked | 384 |
|
and ineffective. | 385 |
| (E) An agreement may not do any of the following: | 386 |
| (1) Provide for application of the law of any jurisdiction | 387 |
|
other than the United States and this state; | 388 |
| (2) Except as permitted by Section 2 of the "Federal | 389 |
|
Arbitration Act," 61 Stat. 669, 9 U.S.C. 1, et seq., as amended, | 390 |
|
contain a provision that modifies or limits otherwise available | 391 |
|
forums or procedural rights, including the right to trial by jury, | 392 |
|
that are generally available to the individual under law; | 393 |
| (3) Contain a provision that restricts the individual's | 394 |
|
remedies under sections 4710.20 to 4710.41 of the Revised Code, or | 395 |
|
other law; | 396 |
| (4) Contain a provision that does the following: | 397 |
| (a) Limits or releases the liability of any person for not | 398 |
|
performing the agreement or for violating any provision of | 399 |
|
sections 4710.20 to 4710.41 of the Revised Code; | 400 |
| (b) Indemnifies any person for liability arising under the | 401 |
|
agreement or under sections 4710.20 to 4710.41 of the Revised | 402 |
|
Code. | 403 |
| Sec. 4710.29. (A) A licensee shall not impose, directly or | 404 |
|
indirectly, a fee or other charge on an individual or receive | 405 |
|
money from or on behalf of an individual for debt settlement | 406 |
|
services, except as permitted by this section. | 407 |
| (B) A licensee shall not impose fees or other charges or | 408 |
|
receive payment for debt settlement services unless both of the | 409 |
|
following conditions are met: | 410 |
| (1) The licensee and the individual have signed an agreement | 411 |
|
that complies with sections 4710.28 and 4710.32 of the Revised | 412 |
|
Code. | 413 |
| (2) A settlement has been executed in the form required under | 414 |
|
division (C) of section 4710.33 of the Revised Code and at least | 415 |
|
one payment has been made by the individual pursuant to that | 416 |
|
settlement. | 417 |
| (C) The total amount of fees or other charges for debt | 418 |
|
settlement services shall be reasonable. A fee or other charge | 419 |
|
shall: | 420 |
| (1) Bear the same proportional relationship to the total fees | 421 |
|
or other charges for renegotiating, settling, reducing, or | 422 |
|
altering the terms of the entire debt balance as the individual | 423 |
|
debt amount bears to the entire debt balance at the time the | 424 |
|
licensee and the individual signed the agreement; or | 425 |
| (2) Represent a percentage of the difference between the debt | 426 |
|
owed the creditor and the amount the creditor has agreed to accept | 427 |
|
as payment in full of the debt. If the fee or other charge for an | 428 |
|
individual debt is determined in this manner, the same percentage | 429 |
|
shall be used for all of the other individual debts. | 430 |
| (D) A licensee may impose a reasonable charge to the | 431 |
|
individual, plus any amount passed on from a financial institution | 432 |
|
for each check, negotiable order of withdrawal, share draft, or | 433 |
|
other negotiable instrument returned or dishonored for any reason, | 434 |
|
provided that the terms and conditions upon which such | 435 |
|
insufficient funds charges will be charged to the individual are | 436 |
|
set forth in the agreement. | 437 |
| (E) A licensee shall not solicit or accept a voluntary | 438 |
|
contribution from an individual or on behalf of an individual. | 439 |
| Sec. 4710.30. (A) If a licensee imposes a fee or other | 440 |
|
charge or receives money or other payments not authorized by | 441 |
|
section 4710.29 of the Revised Code, the individual may void the | 442 |
|
agreement and recover as provided for in section 4710.39 of the | 443 |
|
Revised Code. | 444 |
| (B) If a person providing debt settlement services is not | 445 |
|
licensed as required by section 4710.21 of the Revised Code when | 446 |
|
an individual assents to an agreement, the agreement is voidable | 447 |
|
by the individual. | 448 |
| (C) If an individual voids an agreement under this section, | 449 |
|
the licensee or person providing debt settlement services without | 450 |
|
a license does not have a claim against the individual for breach | 451 |
|
of contract or for restitution. | 452 |
| Sec. 4710.31. If an individual who has entered into an | 453 |
|
agreement fails for sixty days to set aside the savings required | 454 |
|
by the agreement, a licensee may terminate the agreement. | 455 |
| Sec. 4710.32. A licensee shall not do any of the following: | 456 |
| (A) Exercise or attempt to exercise a power of attorney after | 457 |
|
an individual has terminated an agreement; | 458 |
| (B) Initiate a transfer of money from an individual's account | 459 |
|
at a financial institution or with another person, unless the | 460 |
|
transfer is one of the following: | 461 |
| (1) A return of money to the individual; | 462 |
| (2) Before termination of an agreement, properly authorized | 463 |
|
by the agreement for payment of a fee; | 464 |
| (3) In payment of a creditor to fund a negotiated settlement | 465 |
|
authorized by an individual. | 466 |
| (C) Structure a settlement in a manner that would result in a | 467 |
|
negative amortization of any of an individual's debts; | 468 |
| (D) Settle a debt or lead an individual to believe that a | 469 |
|
payment to a creditor is in settlement of a debt to the creditor | 470 |
|
unless, at the time of settlement, the individual receives a | 471 |
|
certification or confirmation by the creditor that the payment is | 472 |
|
in full settlement of the debt, or is part of a payment plan that | 473 |
|
is in full settlement of the debt; | 474 |
| (1) The licensee will furnish money to pay bills or prevent | 476 |
|
attachments; | 477 |
| (2) Payment of a certain amount will guarantee satisfaction | 478 |
|
of a certain amount or range of indebtedness; or | 479 |
| (3) Participation in a program will or may prevent | 480 |
|
litigation, garnishment, attachment, repossession, foreclosure, | 481 |
|
eviction, or loss of employment. | 482 |
| (F) Represent that the licensee is authorized or competent to | 483 |
|
furnish legal advice or perform legal services, unless such advice | 484 |
|
or services is provided by a licensed attorney working with the | 485 |
|
licensee; | 486 |
| (G) Represent that it is one of the following: | 487 |
| (1) A not-for-profit entity, unless it is organized and | 488 |
|
properly operating as a not-for-profit entity under the laws of | 489 |
|
this state; | 490 |
| (2) A tax-exempt entity, unless it has received certification | 491 |
|
of tax-exempt status from the federal internal revenue service. | 492 |
| (H) Take a confession of judgment or power of attorney to | 493 |
|
confess judgment against an individual; | 494 |
| (I) Employ an unfair, unconscionable, or deceptive act or | 495 |
|
practice, including the knowing omission of any material | 496 |
|
information; | 497 |
| (J) Purchase a debt or obligation of the individual; | 498 |
| (K) Obtain a mortgage or other security interest from any | 499 |
|
person in connection with the services provided to the individual; | 500 |
| (L) Make statements that are misleading or deceptive. | 501 |
| Sec. 4710.33. (A) A licensee shall provide the accounting | 502 |
|
required by division (B) of this section upon request. | 503 |
| (B) For each settlement, the licensee shall document in a | 504 |
|
record an accounting of all of the following: | 505 |
| (1) The amount the creditor accepts as settlement in full of | 506 |
|
the debt and any other terms of the settlement; | 507 |
| (2) The amount of the debt when the creditor agreed to the | 508 |
|
settlement; | 509 |
| (3) For licensees using fee agreements that calculate any | 510 |
|
portion of the fee based on a percentage of savings the individual | 511 |
|
realizes from a settled debt, the calculation of that fee. | 512 |
| (C) A settlement shall be in writing, indicate the assent of | 513 |
|
the creditor through endorsement, and clearly set forth the amount | 514 |
|
of the debt, the amount the creditor has agreed to accept as | 515 |
|
payment in full of the debt, and any other material terms of the | 516 |
|
settlement. The debtor's authorization of the settlement shall be | 517 |
|
documented in a record. | 518 |
| (D) A licensee shall maintain records for each individual for | 519 |
|
whom it provides debt settlement services for four years after the | 520 |
|
final payment made by the individual and produce a copy of them to | 521 |
|
the individual within a reasonable time after a request is made | 522 |
|
for them. The licensee may use electronic or other means of | 523 |
|
storage of the records. | 524 |
| Sec. 4710.34. (A) The director of commerce may do the | 525 |
|
following: | 526 |
| (1) Act on the director's own initiative or in response to | 527 |
|
complaints and may receive complaints regarding, or take action to | 528 |
|
obtain voluntary compliance with, sections 4710.20 to 4710.41 of | 529 |
|
the Revised Code; | 530 |
| (2) Seek or provide remedies as provided for in section | 531 |
|
4710.36 of the Revised Code. | 532 |
| (B) The director may investigate and examine, by subpoena or | 533 |
|
otherwise, the activities, books, accounts, and records of a | 534 |
|
licensee, or a person to which a licensee has delegated its | 535 |
|
obligations under an agreement, to determine compliance with | 536 |
|
sections 4710.20 to 4710.41 of the Revised Code. Information that | 537 |
|
identifies individuals who have agreements with the licensee shall | 538 |
|
not be disclosed to the public. In connection with the | 539 |
|
investigation, the director may do the following: | 540 |
| (1) Charge the person the reasonable expenses necessarily | 541 |
|
incurred to conduct the examination; | 542 |
| (2) Require or permit a person to file a statement under oath | 543 |
|
as to all the facts and circumstances of a matter to be | 544 |
|
investigated. | 545 |
| (C) The director may adopt rules in accordance with Chapter | 546 |
|
119. of the Revised Code to implement the provisions of sections | 547 |
|
4710.20 to 4710.41 of the Revised Code. | 548 |
| (D) The director may enter into cooperative arrangements with | 549 |
|
any other federal or state agency having authority over licensees | 550 |
|
and may exchange with any of those agencies information about a | 551 |
|
licensee, including information obtained during an examination of | 552 |
|
the licensee. | 553 |
| Sec. 4710.35. (A) As used in this section, "consumer price | 554 |
|
index" means the consumer price index prepared by the United | 555 |
|
States bureau of labor statistics (U.S. city average for urban | 556 |
|
wage earners and clerical workers: all items, 1982-1984=100) or, | 557 |
|
if that index is no longer published, a generally available | 558 |
|
comparable index. | 559 |
| (B) The director of commerce, by rule adopted in accordance | 560 |
|
with Chapter 119. of the Revised Code, shall establish reasonable | 561 |
|
fees to be paid by licensees for the expense of administering | 562 |
|
sections 4710.20 to 4710.41 of the Revised Code. All fees, | 563 |
|
charges, and penalties collected under sections 4710.20 to 4710.41 | 564 |
|
of the Revised Code shall be paid to the director and shall be | 565 |
|
deposited by the director into the state treasury to the credit of | 566 |
|
the debt settlement services fund, which is hereby created. Funds | 567 |
|
in the debt settlement services fund shall be used for | 568 |
|
administering sections 4710.20 to 4710.41 of the Revised Code. | 569 |
| (C) The director, by rule adopted in accordance with Chapter | 570 |
|
119. of the Revised Code, shall establish the dollar amounts for | 571 |
|
the license fees under section 4710.22 of the Revised Code. Those | 572 |
|
license fees, and the penalties collected under section 4710.36 of | 573 |
|
the Revised Code, shall be adjusted to reflect inflation, as | 574 |
|
measured by the consumer price index. The director shall adopt a | 575 |
|
base year and adjust the dollar amounts, effective on July 1 of | 576 |
|
each year, if the change in the index from the base year, as of | 577 |
|
December 31 of the preceding year, is at least ten per cent. The | 578 |
|
dollar amount shall be rounded to the nearest ten dollars. | 579 |
| (D) The director shall notify licensees of any change in | 580 |
|
dollar amounts made pursuant to division (C) of this section and | 581 |
|
make that information available to the public. | 582 |
| Sec. 4710.36. (A) The director of commerce shall enforce | 583 |
|
sections 4710.20 to 4710.41 of the Revised Code, and any rule | 584 |
|
adopted thereunder, by taking one or more of the following | 585 |
|
actions: | 586 |
| (1) Ordering a licensee or a director, employee, or other | 587 |
|
agent of a licensee to cease and desist from any violations; | 588 |
| (2) Ordering a licensee or another person that has caused a | 589 |
|
violation to correct the violation, or a licensee or another | 590 |
|
person that has failed to comply with those sections to correct | 591 |
|
the failure, including making restitution of money or property to | 592 |
|
a person aggrieved by a violation or failure to comply; | 593 |
| (3) Imposing on such a licensee or person a civil penalty not | 594 |
|
exceeding one thousand dollars for each violation or failure to | 595 |
|
comply; | 596 |
| (4) Prosecuting a civil action to do either of the following: | 597 |
| (b) Obtain restitution or an injunction or other equitable | 599 |
|
relief, or both. | 600 |
| (5) Intervening in an action brought under section 4710.37 of | 601 |
|
the Revised Code. | 602 |
| (B) If a person violates or fails to comply with, or | 603 |
|
knowingly authorizes, directs, or aids in the violation of or | 604 |
|
failure to comply with, a final order issued under division (A)(1) | 605 |
|
or (2) of this section, the director may impose an additional | 606 |
|
civil penalty not exceeding one thousand dollars for each | 607 |
|
violation or failure. | 608 |
| (C) The director may maintain an action to enforce sections | 609 |
|
4710.20 to 4710.41 of the Revised Code in any county. | 610 |
| (D) The director may recover the reasonable costs of actions | 611 |
|
or proceedings brought pursuant to divisions (A) and (B) of this | 612 |
|
section, including attorney's fees based on the hours reasonably | 613 |
|
expended and the hourly rates for attorneys of comparable | 614 |
|
experience in the community. | 615 |
| (E) In determining the amount of a civil penalty to impose | 616 |
|
under division (A) or (B) of this section, the director shall | 617 |
|
consider the seriousness of the violation or failure, the good | 618 |
|
faith of the person committing the violation or failure, any | 619 |
|
previous violations or failures by the person, the deleterious | 620 |
|
effect of the violation or failure on the public, and any other | 621 |
|
factor the director considers relevant to the determination of the | 622 |
|
civil penalty. | 623 |
| (F) No enforcement action or adjudication order made by the | 624 |
|
director under this section shall be valid unless an opportunity | 625 |
|
for a hearing is afforded in accordance with Chapter 119. of the | 626 |
|
Revised Code. Such opportunity for a hearing shall be given before | 627 |
|
taking the enforcement action or making the adjudication order | 628 |
|
except in those situations where section 119.06 of the Revised | 629 |
|
Code provides otherwise. | 630 |
| Sec. 4710.37. The director of commerce shall publish and | 631 |
|
maintain, on the department of commerce internet web site, a | 632 |
|
current list of all licensees. | 633 |
| Sec. 4710.38. (A) As used in this section, "insolvent" | 634 |
|
means: | 635 |
| (1) Having generally ceased to pay debts in the ordinary | 636 |
|
course of business other than as a result of a good-faith dispute; | 637 |
| (2) Being unable to pay debts as they become due; | 638 |
| (3) Being insolvent within the meaning of the federal | 639 |
|
bankruptcy law. | 640 |
| (B) The director of commerce may suspend, revoke, or deny | 641 |
|
renewal of a license if any of the following apply: | 642 |
| (1) A fact or condition exists that, if it had existed when | 643 |
|
the licensee applied for a license, it would have been a reason | 644 |
|
for denial. | 645 |
| (2) The licensee has committed a material violation of or | 646 |
|
failure to comply with any provision of sections 4710.20 to | 647 |
|
4710.41 of the Revised Code or a rule or order of the director. | 648 |
| (3) The licensee is insolvent. | 649 |
| (4) The licensee or an employee or affiliate of the licensee | 650 |
|
has refused to permit the director to make an examination | 651 |
|
authorized by division (B) of section 4710.34 of the Revised Code, | 652 |
|
failed to comply with an order to file a statement pursuant to | 653 |
|
division (B)(2) of section 4710.34 of the Revised Code within | 654 |
|
thirty days after the request, or made a material | 655 |
|
misrepresentation or omission with regard to that statement. | 656 |
| (5) The licensee has not responded within a reasonable time | 657 |
|
and in an appropriate manner to communications from the director. | 658 |
| (C) If the director suspends or revokes a license, the | 659 |
|
licensee may appeal and request a hearing pursuant to Chapter 119. | 660 |
|
of the Revised Code. | 661 |
| Sec. 4710.39. (A) If an individual voids an agreement | 662 |
|
pursuant to section 4710.30 of the Revised Code, the individual | 663 |
|
may recover in a civil action all money paid by or on behalf of | 664 |
|
the individual pursuant to the agreement, in addition to the | 665 |
|
recovery under division (B)(3) of this section. | 666 |
| (B) Subject to division (C) of this section, an individual | 667 |
|
with respect to whom a licensee or a person providing debt | 668 |
|
settlement services without a license violates or fails to comply | 669 |
|
with any provision of sections 4710.20 to 4710.41 of the Revised | 670 |
|
Code may recover in a civil action all of the following from the | 671 |
|
licensee or person that caused the violation or failure: | 672 |
| (1) Compensatory damages for economic injury caused by the | 673 |
|
violation or failure; | 674 |
| (2) Except as otherwise provided in division (C) of this | 675 |
|
section, with respect to a failure to comply with division (C) of | 676 |
|
section 4710.25 of the Revised Code, a violation of section | 677 |
|
4710.32 of the Revised Code, and a violation of or failure to | 678 |
|
comply with sections 4710.26, 4710.28, and 4710.29 of the Revised | 679 |
|
Code, the greater of the amount recovered under division (B)(1) of | 680 |
|
this section or one thousand dollars; | 681 |
| (3) For violations of section 4710.21 or 4710.29 of the | 682 |
|
Revised Code, reasonable attorney's fees and costs. | 683 |
| (C) In a class action, the minimum damages provided in | 684 |
|
division (B) of this section do not apply. | 685 |
| (D) A licensee is not liable under this section for a | 686 |
|
violation or failure to comply with any provision of sections | 687 |
|
4710.20 to 4710.41 of the Revised Code if the licensee proves that | 688 |
|
the violation or failure was not intentional and resulted from a | 689 |
|
good-faith error notwithstanding the maintenance of procedures | 690 |
|
reasonably adapted to avoid the error. If, in connection with a | 691 |
|
violation or failure, the licensee has received more money than | 692 |
|
authorized by an agreement or by sections 4710.20 to 4710.41 of | 693 |
|
the Revised Code, the defense provided by this division is not | 694 |
|
available unless the licensee refunds the excess within three | 695 |
|
business days after learning of the violation or failure. | 696 |
| (E) If a licensee or a person providing debt settlement | 697 |
|
services without a license violates or fails to comply with any | 698 |
|
provision of sections 4710.20 to 4710.41 of the Revised Code, an | 699 |
|
individual may recover under this section or pursuant to section | 700 |
|
4710.41 of the Revised Code, but not both for the same act or | 701 |
|
practice. | 702 |
| Sec. 4710.40. (A) An action or proceeding brought pursuant | 703 |
|
to division (A) or (B) of section 4710.36 of the Revised Code must | 704 |
|
be commenced within two years after the conduct that is the basis | 705 |
|
of the director of commerce's complaint occurs. | 706 |
| (B) An action brought pursuant to section 4710.41 of the | 707 |
|
Revised Code must be commenced within two years after the latest | 708 |
|
of the following: | 709 |
| (1) The individual's last transmission of money to the | 710 |
|
licensee; | 711 |
| (2) The date on which the individual discovered or reasonably | 712 |
|
should have discovered the facts giving rise to the individual's | 713 |
|
claim; | 714 |
| (3) Termination of actions or proceedings by the director | 715 |
|
with respect to a violation of or failure to comply with any | 716 |
|
provision of sections 4710.20 to 4710.41 of the Revised Code. | 717 |
| (C) The period prescribed in division (B)(2) of this section | 718 |
|
is tolled during any period during which the licensee or, if | 719 |
|
different, the defendant, has materially and willfully | 720 |
|
misrepresented information required by sections 4710.20 to 4710.41 | 721 |
|
of the Revised Code to be disclosed to the individual, if the | 722 |
|
information so misrepresented is material to the establishment of | 723 |
|
the liability of the defendant under sections 4710.20 to 4710.41 | 724 |
|
of the Revised Code. | 725 |
| Sec. 4710.41. Any violation of or failure to comply with any | 726 |
|
provision of sections 4710.20 to 4710.41 of the Revised Code by a | 727 |
|
person providing debt settlement services without a license is | 728 |
|
deemed an unfair or deceptive act or practice in violation of | 729 |
|
section 1345.02 of the Revised Code. A person injured by such a | 730 |
|
violation has a cause of action and is entitled to the same relief | 731 |
|
available to a consumer under section 1345.09 of the Revised Code, | 732 |
|
and all the powers and remedies available to the attorney general | 733 |
|
to enforce sections 1345.01 to 1345.13 of the Revised Code are | 734 |
|
available to the attorney general to enforce sections 4710.20 to | 735 |
|
4710.41 of the Revised Code. | 736 |
| Section 2. That existing section 4710.01 of the Revised Code | 737 |
|
is hereby repealed. | 738 |
