Bill Text: OH HB549 | 2009-2010 | 128th General Assembly | Introduced
Bill Title: To establish licensing and regulation of debt settlement services.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2010-06-09 - To Financial Institutions, Real Estate, & Securities [HB549 Detail]
Download: Ohio-2009-HB549-Introduced.html
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Representative Dyer
Cosponsors:
Representatives Harris, Murray
To amend section 4710.01 and to enact sections | 1 |
4710.20 to 4710.43 of the Revised Code to | 2 |
establish licensing and regulation of debt | 3 |
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 |
4710.20, 4710.21, 4710.22, 4710.23, 4710.24, 4710.25, 4710.26, | 6 |
4710.27, 4710.28, 4710.29, 4710.30, 4710.31, 4710.32, 4710.33, | 7 |
4710.34, 4710.35, 4710.36, 4710.37, 4710.38, 4710.39, 4710.40, | 8 |
4710.41, 4710.42, and 4710.43 of the Revised Code be enacted to | 9 |
read as follows: | 10 |
Sec. 4710.01. As used in this chapter: | 11 |
(A) "Person" includes individuals, partnerships, | 12 |
associations, corporations, trusts, and other legal entities. | 13 |
(B) "Debt adjusting" means doing business in debt adjusting, | 14 |
budget counseling, debt management, or debt pooling service, or | 15 |
holding oneself out, by words of similar import, as providing | 16 |
services to debtors in the management of their debts, to do either | 17 |
of the following: | 18 |
(1) To effect the adjustment, compromise, or discharge of any | 19 |
account, note, or other indebtedness of the debtor; | 20 |
(2) To receive from the debtor and disburse to the debtor's | 21 |
creditors any money or other thing of value. | 22 |
"Debt adjusting" does not include debt settlement service as | 23 |
defined in section 4710.20 of the Revised Code. | 24 |
(C) "Resides" means to live in a particular place on a | 25 |
temporary or a permanent basis. | 26 |
Sec. 4710.20. As used in sections 4710.20 to 4710.43 of the | 27 |
Revised Code: | 28 |
(A) "Affiliate" means a person that controls, is controlled | 29 |
by, or is under common control with the licensee. | 30 |
(B) "Agreement" means an agreement between a provider and an | 31 |
individual for the performance of debt settlement services. | 32 |
(C) "Business address" means the physical location of a | 33 |
business, including the name and number of a street. | 34 |
(D) "Concessions" means assent to repayment of a debt on | 35 |
terms more favorable to an individual than the terms of the | 36 |
contract between the individual and a creditor. | 37 |
(E) "Day" means a calendar day. | 38 |
(F) "Debt settlement services" means the services as an | 39 |
intermediary between an individual and one or more unsecured | 40 |
creditors of the individual for the purpose of obtaining | 41 |
concessions and without receiving money from the individual for | 42 |
distribution of that money to the individual's creditor, but does | 43 |
not include any of the following: | 44 |
(1) Legal services provided in an attorney-client | 45 |
relationship by an attorney licensed or otherwise authorized to | 46 |
practice law in this state; | 47 |
(2) Accounting services provided in an accountant–client | 48 |
relationship by a certified public accountant licensed to provide | 49 |
accounting services in this state; or | 50 |
(3) Financial planning services provided in a financial | 51 |
planner-client relationship by a member of a financial planning | 52 |
profession who holds current certification by the certified | 53 |
financial planner board of standards, inc. | 54 |
(G) "Financial institution" means any national bank, any bank | 55 |
doing business under authority granted by the superintendent of | 56 |
financial institutions or the regulatory authority of another | 57 |
state of the United States, any federal savings association, any | 58 |
savings and loan association or savings bank doing business under | 59 |
authority granted by the superintendent or the regulatory | 60 |
authority of another state of the United States, or any credit | 61 |
union regulated by a state or federal regulatory authority. | 62 |
(H) "Good faith" means honesty in fact and the observance of | 63 |
reasonable standards of fair dealing. | 64 |
(I) "Person" means an individual, corporation, business | 65 |
trust, estate, trust, partnership, limited liability company, | 66 |
association, joint venture, or any other legal or commercial | 67 |
entity. The term does not include a public corporation, | 68 |
government, or governmental subdivision, agency, or | 69 |
instrumentality. | 70 |
(J) "Program" means a program or strategy in which a provider | 71 |
furnishes debt settlement services, which contemplate that | 72 |
creditors will settle debts for less than the full amount of debt | 73 |
owed by an individual, and in which the individual makes payments | 74 |
directly to the creditors. | 75 |
(K) "Record" means information that is inscribed on a | 76 |
tangible medium or that is stored in an electronic or other medium | 77 |
and is retrievable in a perceivable form. | 78 |
(L) "Sign" means, with present intent to authenticate or | 79 |
adopt a record: | 80 |
(1) To execute or adopt a tangible symbol; or | 81 |
(2) To attach to or logically associate with the record an | 82 |
electronic sound, symbol, or process. | 83 |
(M) "State" means, except when the context indicates the term | 84 |
is referring to the state of Ohio, a state of the United States, | 85 |
the District of Columbia, Puerto Rico, the United States Virgin | 86 |
Islands, or any territory or insular possession subject to the | 87 |
jurisdiction of the United States. | 88 |
(N) "Settlement" means an arrangement under which a creditor | 89 |
accepts concessions on an individual's account resulting from | 90 |
negotiations conducted by a provider of debt settlement services | 91 |
and money is paid to the creditor. | 92 |
Sec. 4710.21. (A) No person shall provide debt settlement | 93 |
services for compensation without first having obtained a license, | 94 |
from the director of commerce under sections 4710.20 to 4710.43 of | 95 |
the Revised Code, for each business location to be maintained by | 96 |
the person for the transaction of business in this state. | 97 |
(B) Sections 4710.20 to 4710.43 of the Revised Code do not | 98 |
apply to the following persons or their employees when the person | 99 |
or the employee is engaged in the regular course of the person's | 100 |
business or profession: | 101 |
(1) A judicial officer, a person acting under an order of a | 102 |
court or an administrative agency, or an assignee for the benefit | 103 |
of creditors; | 104 |
(2) A financial institution, bank holding company, or the | 105 |
subsidiary, agent, or affiliate of either; | 106 |
(3) A title insurer, escrow company, or other person that | 107 |
provides bill-paying services if the provision of debt settlement | 108 |
services is incidental to the bill-paying services; | 109 |
(4) An employee of a licensee who is working under the | 110 |
supervision of the licensee at the place of business maintained | 111 |
under a license issued pursuant to sections 4710.20 to 4710.43 of | 112 |
the Revised Code. | 113 |
Sec. 4710.22. (A) Application for an original or renewal | 114 |
license to provide debt settlement services shall be in writing, | 115 |
signed under oath, and in the form prescribed by the director of | 116 |
commerce. The application form shall contain a statement informing | 117 |
the applicant that a false or dishonest answer to a question may | 118 |
be grounds for denial or subsequent suspension or revocation of | 119 |
the applicant's license. The application for an original or | 120 |
renewal license shall be accompanied by a license fee as | 121 |
determined by the director by rule, and shall contain all of the | 122 |
following: | 123 |
(1) The applicant's name, principal business address and | 124 |
telephone number, and all of the applicant's other business | 125 |
addresses in this state, electronic mail addresses, and internet | 126 |
web site addresses; | 127 |
(2) All names under which the applicant conducts business; | 128 |
(3) The address of each location in this state at which the | 129 |
applicant will provide debt settlement services or a statement | 130 |
that the applicant does not maintain a physical location in the | 131 |
state; | 132 |
(4) The name and home address of each officer and director of | 133 |
the applicant and each person that owns at least ten per cent of | 134 |
the applicant's business; | 135 |
(5) A statement describing, to the extent it is known or | 136 |
should be known by the applicant, any material civil or criminal | 137 |
judgment relating to financial fraud or misuse, any material | 138 |
violation of state or federal securities laws, and any material | 139 |
administrative or enforcement action relating to financial fraud | 140 |
or misuse by a governmental agency in any jurisdiction against the | 141 |
applicant, any of its officers, directors, owners, or agents; | 142 |
(6) A copy of each form of agreement that the applicant will | 143 |
use with individuals who reside in this state; | 144 |
(7) The schedule of fees and charges that the applicant will | 145 |
use with individuals who reside in this state; | 146 |
(8) A copy or description of any ownership interest of at | 147 |
least ten per cent by a director, owner, or employee of the | 148 |
applicant's debt settlement services; | 149 |
(9) A description of any ownership interest of at least ten | 150 |
per cent by a director, owner, or employee of the applicant in: | 151 |
(a) Any affiliate of the applicant; or | 152 |
(b) Any entity that provides products or services to the | 153 |
applicant or any individual relating to the applicant's debt | 154 |
settlement services. | 155 |
(10) The identity of each director who is an affiliate of the | 156 |
applicant; | 157 |
(11) Evidence that the applicant has a resident agent in the | 158 |
state recorded with the secretary of state; | 159 |
(12) Any other information that the director reasonably | 160 |
requires to perform the director's duties, which the director may | 161 |
require by rule. | 162 |
(B) The director may, upon receipt and review of an | 163 |
application, request additional information that the director | 164 |
reasonably requires to perform the director's duties. | 165 |
(C) The term of any license issued pursuant to sections | 166 |
4710.20 to 4710.43 of the Revised Code shall not be more than one | 167 |
year. Licensees who wish to renew their license must submit an | 168 |
application for renewal at least thirty days, but not more than | 169 |
sixty days, before the license expiration date. | 170 |
(D) If a person who provides debt settlement services holds a | 171 |
license or certificate of registration in another state | 172 |
authorizing it to provide debt settlement services, the person may | 173 |
submit a copy of that license or certificate and the application | 174 |
for it instead of the application in the form prescribed by this | 175 |
section if all of the following apply: | 176 |
(1) The application in the other state contains information | 177 |
substantially similar to or more comprehensive than that required | 178 |
in an application submitted in this state. | 179 |
(2) The applicant provides the information required by | 180 |
divisions (A)(1), (3), (6), and (7) of this section. | 181 |
(3) The applicant certifies that the information contained in | 182 |
the application is current, and to the extent it is not current, | 183 |
supplements the application to make the information current. | 184 |
Sec. 4710.23. (A) The director of commerce shall issue an | 185 |
original or renewal certificate of licensure to the applicant | 186 |
unless the director finds any of the following: | 187 |
(1) The applicant has not complied with the requirements of | 188 |
section 4710.22 of the Revised Code. | 189 |
(2) The application contains information that is materially | 190 |
erroneous or incomplete. | 191 |
(3) An officer, director, or owner of the applicant has been | 192 |
convicted of a crime, or suffered a civil judgment, involving | 193 |
dishonesty or the violation of state or federal securities laws. | 194 |
(4) The application is not accompanied by the fee established | 195 |
by the director. | 196 |
(5) There is reasonable evidence to support the director's | 197 |
opinion that the applicant will not provide debt settlement | 198 |
services in a lawful, honest, and fair manner. | 199 |
(B) The director shall approve or deny an initial license | 200 |
within sixty days after an application is filed. In connection | 201 |
with a request pursuant to division (B) of section 4710.22 of the | 202 |
Revised Code for additional information, the director may extend | 203 |
the sixty-day period for not more than forty-five days. | 204 |
(C) If a licensee has filed a timely and complete application | 205 |
for license renewal, the license remains in effect until the | 206 |
director notifies the applicant of a denial. | 207 |
(D) Within seven days after issuing an order denying an | 208 |
application the director shall notify the applicant of the denial, | 209 |
the grounds for the denial, and the applicant's opportunity for a | 210 |
hearing pursuant to Chapter 119. of the Revised Code. If the | 211 |
application is denied, the superintendent shall return the annual | 212 |
license fee. | 213 |
(E) If the director has denied an application for a renewal | 214 |
license, the licensee, within thirty days after receiving notice | 215 |
of the denial, may appeal and request a hearing in accordance with | 216 |
Chapter 119. of the Revised Code. While an appeal is pending, the | 217 |
licensee shall continue to provide debt settlement services to | 218 |
individuals with whom the licensee has agreements. If the | 219 |
licensee's appeal fails, the licensee may, with the approval of | 220 |
the director, continue to provide debt settlement services to | 221 |
individuals with whom it has agreements until the licensee | 222 |
transfers the agreements to another licensee. | 223 |
Sec. 4710.24. Not more than one license shall be issued | 224 |
under sections 4710.20 to 4710.43 of the Revised Code per single | 225 |
place of business, but the director of commerce may issue | 226 |
additional licenses for other places of business to the same | 227 |
licensee upon compliance with those sections. | 228 |
No change in the place of business of a licensee shall be | 229 |
permitted under the same license. When a licensee wishes to change | 230 |
the licensee's place of business the licensee shall give written | 231 |
notice thereof in advance to the director who shall provide a | 232 |
license for the new address, without cost. | 233 |
Sec. 4710.25. No person licensed under sections 4710.20 to | 234 |
4710.43 of the Revised Code shall conduct business in this state | 235 |
unless the licensee has obtained and maintains in effect at all | 236 |
times a corporate surety bond issued by a bonding company or | 237 |
insurance company authorized to do business in this state. The | 238 |
bond shall be in favor of the director of commerce and in a penal | 239 |
sum the director determines is warranted by the financial | 240 |
condition and business experience of the licensee, the history of | 241 |
the licensee in performing debt settlement services, the risk to | 242 |
individuals, and any other factor the director considers | 243 |
appropriate. The penal sum shall be at least ten thousand dollars | 244 |
and not more than fifty thousand dollars. | 245 |
The term of the bond shall coincide with the term of the | 246 |
license. The licensee shall file a copy of the bond with the | 247 |
superintendent. The bond shall be for the exclusive benefit of any | 248 |
individual injured by a violation of or failure to comply with any | 249 |
provision of sections 4710.20 to 4710.43 of the Revised Code by a | 250 |
licensee or an employee of a licensee. | 251 |
Sec. 4710.26. A licensee shall do all of the following: | 252 |
(A) Act in good faith when engaging in the business of debt | 253 |
settlement services; | 254 |
(B) Maintain a toll-free communication system, staffed at a | 255 |
level that reasonably permits an individual to speak to a customer | 256 |
service representative, as appropriate, during ordinary business | 257 |
hours; | 258 |
(C) Establish an internal formal complaint policy that | 259 |
creates a process for the licensee to receive, review, and address | 260 |
or resolve formal complaints internally. The availability of this | 261 |
process shall be communicated in writing to individuals enrolled | 262 |
in the licensee's program. This policy shall include a provision | 263 |
that all consumers who file a formal complaint shall receive a | 264 |
response from the licensee within a reasonable time from the | 265 |
licensee's receipt of such complaint. The licensee shall maintain | 266 |
a file for each such formal complaint that documents the | 267 |
complaint, the licensee's actions in response to the complaint, | 268 |
and if and how the complaint was resolved. | 269 |
(D) Provide all disclosures and documents required by | 270 |
sections 4710.20 to 4710.43 of the Revised Code in English and in | 271 |
any other language the licensee has or will use primarily to | 272 |
communicate with the individual. | 273 |
Sec. 4710.27. (A) Before providing debt settlement services, | 274 |
a licensee shall give the individual an itemized list of goods and | 275 |
services and the charges for each. The list must be clear and | 276 |
conspicuous. | 277 |
(B) A licensee may not furnish debt settlement services | 278 |
unless the licensee has prepared a financial analysis with respect | 279 |
to the income and debts of the individual seeking service. | 280 |
(C) Before an individual assents to an agreement to engage in | 281 |
a program, a licensee shall do the following: | 282 |
(1) Provide the individual with a copy of the financial | 283 |
analysis required by division (B) of this section in a record that | 284 |
identifies the licensee and that the individual may keep whether | 285 |
or not the individual assents to the agreement; | 286 |
(2) Inform the individual of the availability, at the | 287 |
individual's option, of assistance by a toll-free communication | 288 |
system or in person to discuss the financial analysis required by | 289 |
division (B) of this section. | 290 |
(D) Before an individual assents to an agreement to engage in | 291 |
a program, the licensee shall inform the individual of the | 292 |
following: | 293 |
(1) Programs are not suitable for all individuals. | 294 |
(2) Participation in a program may adversely affect the | 295 |
individual's credit rating or credit scores. | 296 |
(3) Nonpayment of debt may lead creditors to increase finance | 297 |
and other charges or undertake collection activity, including | 298 |
litigation. | 299 |
(4) If a creditor settles for less than the full amount of | 300 |
the debt, the program may result in the creation of taxable income | 301 |
to the individual, even if the individual does not receive any | 302 |
money. | 303 |
(5) Specific results cannot be predicted or guaranteed and | 304 |
the licensee cannot force negotiations or settlements with | 305 |
creditors but will advocate solely on behalf of the individual. | 306 |
(6) Programs require that individuals meet a certain savings | 307 |
goal in order to maximize settlement results. | 308 |
(7) The licensee does not provide accounting or legal advice | 309 |
to individuals, unless the licensee is professionally licensed to | 310 |
provide such advice. | 311 |
(8) The licensee is the individual's advocate and may not | 312 |
receive compensation from creditors, financial institutions, or | 313 |
third-party collection agencies. | 314 |
(9) The licensee does not make payments to the individual's | 315 |
creditors. | 316 |
(10) The name and business address of the licensee. | 317 |
Sec. 4710.28. (A) As used in this section: | 318 |
(1) "Federal act" means the "Electronic Signatures in Global | 319 |
and National Commerce Act," 114 Stat. 464, 15 U.S.C. 7001 et seq., | 320 |
as amended. | 321 |
(2) "Consumer" means an individual who seeks or obtains goods | 322 |
or services that are used primarily for personal, family, or | 323 |
household purposes. | 324 |
(B) A licensee may satisfy the requirements of sections | 325 |
4710.27, 4710.29, and 4710.35 of the Revised Code by utilizing the | 326 |
internet or other electronic means if the licensee obtains a | 327 |
consumer's consent in the manner provided for in the federal act. | 328 |
(C) The disclosures and materials required by sections | 329 |
4710.27, 4710.29, and 4710.35 of the Revised Code shall be | 330 |
presented in a form that is capable of being accurately reproduced | 331 |
for later reference. | 332 |
(D) With respect to disclosure by means of an internet web | 333 |
site, the disclosure of the information required by division (D) | 334 |
of section 4710.27 of the Revised Code must appear on one or more | 335 |
screens that contain no other information, and the individual must | 336 |
indicate that the individual has seen the information before | 337 |
proceeding to assent to formation of a program. | 338 |
(E) At the time of providing the materials and agreement | 339 |
required by divisions (C) and (D) of section 4710.27, and sections | 340 |
4710.29 and 4710.35 of the Revised Code, a licensee shall inform | 341 |
the individual that upon electronic, telephonic, or written | 342 |
request, it will send the individual a written copy of the | 343 |
materials and shall comply with a request as provided in division | 344 |
(F) of this section. | 345 |
(F) If a licensee is requested, before the expiration of | 346 |
ninety days after a program is completed or terminated, to send a | 347 |
written copy of the materials required by divisions (C) and (D) of | 348 |
section 4710.27, and sections 4710.29 and 4710.35 of the Revised | 349 |
Code, the licensee shall send them at no charge within three | 350 |
business days after the request is made, but the licensee need not | 351 |
comply with a request more than once per calendar month or if it | 352 |
reasonably believes the request is made for purposes of | 353 |
harassment. If a request is made more than ninety days after a | 354 |
program is completed or terminated, the licensee shall send within | 355 |
a reasonable time a written copy of the materials requested. | 356 |
(G) A licensee that maintains an internet web site shall | 357 |
disclose on the home page of its web site or on a page that is | 358 |
clearly and conspicuously connected to the home page by a link | 359 |
that clearly reveals its contents all of the following: | 360 |
(1) Its name and all names under which it does business; | 361 |
(2) Its principal business address, telephone number, and | 362 |
electronic mail address, if any. | 363 |
(H) Subject to division (I) of this section, if a consumer | 364 |
who has consented to electronic communication in the manner | 365 |
provided by section 101 of the federal act withdraws consent as | 366 |
provided in the federal act, a licensee may terminate its | 367 |
agreement with the consumer. | 368 |
(I) If a licensee wishes to terminate an agreement with a | 369 |
consumer pursuant to division (H) of this section, it shall notify | 370 |
the consumer that it will terminate the agreement unless the | 371 |
consumer, within thirty days after receiving the notification, | 372 |
consents to electronic communication in the manner provided in | 373 |
section 101(c) of the federal act. | 374 |
(J) This section modifies, limits, and supersedes the federal | 375 |
act, but does not modify, limit, or supersede section 101(c) of | 376 |
that act or authorize electronic delivery of any of the notices | 377 |
described in section 103(b) of that act. | 378 |
Sec. 4710.29. (A) An agreement must meet the following | 379 |
requirements: | 380 |
(1) Be in a record; | 381 |
(2) Be dated and signed by the individual; | 382 |
(3) Include the name of the individual and the address where | 383 |
the individual resides; | 384 |
(4) Include the name, business address, and telephone number | 385 |
of the licensee; | 386 |
(5) Be delivered to the individual immediately upon formation | 387 |
of the agreement; | 388 |
(6) Disclose all of the following: | 389 |
(a) The services to be provided; | 390 |
(b) The amount or method of determining the amount of all | 391 |
fees, individually itemized, to be paid by the individual; | 392 |
(c) How the licensee will comply with its obligations under | 393 |
section 4710.35 of the Revised Code; | 394 |
(d) That the individual may cancel the agreement as provided | 395 |
in section 4710.30 of the Revised Code; | 396 |
(e) That the individual may contact the director of commerce | 397 |
with any questions or complaints regarding the licensee; | 398 |
(f) The address, telephone number, and internet address or | 399 |
web site of the director. | 400 |
(B) For purposes of division (A)(5) of this section, delivery | 401 |
of an electronic record occurs when it is made available in a | 402 |
format in which the individual may retrieve, save, and print the | 403 |
record, and the individual is notified that it is available. | 404 |
(C) If the director supplies the licensee with any | 405 |
information required under division (A)(6)(f) of this section, the | 406 |
licensee may comply with that requirement only by disclosing the | 407 |
information supplied by the director. | 408 |
(D) An agreement must provide that the individual has a right | 409 |
to terminate the agreement at any time by giving the licensee | 410 |
written or electronic notice, in which event all powers of | 411 |
attorney granted by the individual to the licensee are revoked and | 412 |
ineffective. | 413 |
(E) In accordance with section 4710.30 of the Revised Code, | 414 |
an agreement must be accompanied by a form that contains the | 415 |
following in boldface type, surrounded by bold black lines: | 416 |
"Notice of right of cancellation: | 417 |
You may cancel this agreement, without any penalty or | 418 |
obligation, at any time before midnight of the third business day | 419 |
after the day you agree to it by electronic communication or by | 420 |
signing it. | 421 |
To cancel this agreement during this period, send an e-mail | 422 |
to [e-mail address of licensee] or mail or deliver a signed, dated | 423 |
copy of this notice, or any other written notice to [name of | 424 |
licensee] at [address of licensee] before midnight of the third | 425 |
business day after the day you execute this agreement. | 426 |
If you cancel this agreement within the 3-day period, we will | 427 |
refund all money you already have paid us. | 428 |
I cancel this agreement, | 429 |
____________________ | 430 |
Print your name | 431 |
____________________ | 432 |
Signature | 433 |
____________________ | 434 |
Date" | 435 |
(F) An agreement may confer on a licensee a power of attorney | 436 |
to settle up to fifty per cent of an individual's debt. An | 437 |
agreement may not confer a power of attorney to negotiate with | 438 |
creditors of the individual on behalf of the individual. An | 439 |
agreement must state that the licensee will obtain the assent of | 440 |
the individual after a creditor has assented to a settlement for | 441 |
more than fifty per cent of the amount of the individual's debt. | 442 |
(G) An agreement may not do the following: | 443 |
(1) Provide for application of the law of any jurisdiction | 444 |
other than the United States and this state; | 445 |
(2) Except as permitted by Section 2 of the "Federal | 446 |
Arbitration Act," 61 Stat. 669, 9 U.S.C. 1, et seq., as amended, | 447 |
contain a provision that modifies or limits otherwise available | 448 |
forums or procedural rights, including the right to trial by jury, | 449 |
that are generally available to the individual under law; | 450 |
(3) Contain a provision that restricts the individual's | 451 |
remedies under sections 4710.20 to 4710.43 of the Revised Code, or | 452 |
other law; | 453 |
(4) Contain a provision that does the following: | 454 |
(a) Limits or releases the liability of any person for not | 455 |
performing the agreement or for violating sections 4710.20 to | 456 |
4710.43 of the Revised Code; | 457 |
(b) Indemnifies any person for liability arising under the | 458 |
agreement or sections 4710.20 to 4710.43 of the Revised Code. | 459 |
(H) All rights and obligations specified in division (D) of | 460 |
this section and section 4710.30 of the Revised Code apply even if | 461 |
not recited in the agreement. | 462 |
Sec. 4710.30. An individual may cancel an agreement before | 463 |
midnight of the third business day after the individual assents to | 464 |
it, unless the agreement does not comply with section 4710.29 or | 465 |
4710.34 of the Revised Code, in which event the individual may | 466 |
cancel the agreement within thirty days after the individual | 467 |
assents to it. To exercise the right of cancellation, the | 468 |
individual must give notice in a record to the licensee. Notice by | 469 |
mail is given when mailed. | 470 |
Sec. 4710.31. (A) A licensee may not impose, directly or | 471 |
indirectly, a fee or other charge on an individual or receive | 472 |
money from or on behalf of an individual for debt settlement | 473 |
services, except as permitted by this section. | 474 |
(B) A debt settlement service fee or charge must be derived | 475 |
from a settlement between a creditor and debtor, negotiated by the | 476 |
licensee. The total fee or charge may not exceed fifteen per cent | 477 |
of the principal amount of the debt being settled in the | 478 |
settlement. The fee or charge shall be collected at a rate of not | 479 |
more than one per cent per month, or if the payment plan included | 480 |
in the settlement is less than fifteen months in length, in equal | 481 |
monthly payments for the term of the settlement. The debtor may | 482 |
voluntarily accelerate or prepay any unpaid installment fee or | 483 |
charge, and the licensee may collect the fee or charge on a pro | 484 |
rata basis once the licensee has a finalized settlement from the | 485 |
creditor. The licensee may charge an additional fee not to exceed | 486 |
five per cent of the amount equal to the principal amount of the | 487 |
debt being settled minus the amount to be paid under the | 488 |
settlement. | 489 |
(C) A licensee may not impose fees or charges or receive | 490 |
payment for debt settlement services until a settlement has been | 491 |
executed in the form required under division (C) of section | 492 |
4710.35 of the Revised Code. If the settlement calls for money to | 493 |
be paid to the creditor in installments, the licensee may collect, | 494 |
at the time the installment payment is made, a debt settlement | 495 |
service fee or charge for each installment payment, provided that | 496 |
the total fee or charge is proportionally distributed equally | 497 |
among the total number of installment payments. | 498 |
(D) A licensee may not impose fees or charges or receive | 499 |
payment for debt settlement services until the licensee and the | 500 |
individual have signed an agreement that complies with sections | 501 |
4710.29 and 4710.34 of the Revised Code. | 502 |
(E) A licensee may impose a reasonable charge to the | 503 |
individual, plus any amount passed on from a financial institution | 504 |
for each check, negotiable order of withdrawal, share draft, or | 505 |
other negotiable instrument returned or dishonored for any reason, | 506 |
provided that the terms and conditions upon which such | 507 |
insufficient funds charges will be charged to the individual are | 508 |
set forth in the agreement. | 509 |
(F) A licensee may not solicit or accept a voluntary | 510 |
contribution from an individual or on behalf of an individual. | 511 |
Sec. 4710.32. (A) If a licensee imposes a fee or other | 512 |
charge or receives money or other payments not authorized by | 513 |
section 4710.31 of the Revised Code, the individual may void the | 514 |
agreement and recover as provided for in section 4710.41 of the | 515 |
Revised Code. | 516 |
(B) If a person providing debt settlement services is not | 517 |
licensed as required by section 4710.21 of the Revised Code when | 518 |
an individual assents to an agreement, the agreement is voidable | 519 |
by the individual. | 520 |
(C) If an individual voids an agreement under this section, | 521 |
the licensee or person providing debt settlement services without | 522 |
a license does not have a claim against the individual for breach | 523 |
of contract or for restitution. | 524 |
Sec. 4710.33. If an individual who has entered into a fee | 525 |
agreement fails for sixty days to make payments required by the | 526 |
agreement, a licensee may terminate the agreement. | 527 |
Sec. 4710.34. (A) A licensee may not do any of the | 528 |
following: | 529 |
(1) Settle a debt on behalf of an individual for more than | 530 |
fifty per cent of the amount of the debt owed a creditor, unless | 531 |
the individual assents to the settlement after the creditor has | 532 |
assented; | 533 |
(2) Take a power of attorney that authorizes the licensee to | 534 |
settle a debt, unless the power of attorney expressly limits the | 535 |
licensee's authority to settle debts for not more than fifty per | 536 |
cent of the amount of the debt owed a creditor; | 537 |
(3) Exercise or attempt to exercise a power of attorney after | 538 |
an individual has terminated an agreement; | 539 |
(4) Initiate a transfer of money from an individual's account | 540 |
at a financial institution or with another person, unless the | 541 |
transfer is one of the following: | 542 |
(a) A return of money to the individual; | 543 |
(b) Before termination of an agreement, properly authorized | 544 |
by the agreement for payment of a fee; | 545 |
(c) In payment of a creditor to fund a negotiated settlement | 546 |
authorized by an individual under division (A)(1) of this section | 547 |
or through a power of attorney under division (A)(2) of this | 548 |
section; | 549 |
(d) In payment of a creditor to fund a negotiated settlement | 550 |
of which both the settlement and transfer of money had been | 551 |
authorized by the debtor. | 552 |
(5) Structure a settlement in a manner that would result in a | 553 |
negative amortization of any of an individual's debts; | 554 |
(6) Settle a debt or lead an individual to believe that a | 555 |
payment to a creditor is in settlement of a debt to the creditor | 556 |
unless, at the time of settlement, the individual receives a | 557 |
certification or confirmation by the creditor that the payment is | 558 |
in full settlement of the debt, or is part of a payment plan that | 559 |
is in full settlement of the debt; | 560 |
(7) Represent that: | 561 |
(a) The licensee will furnish money to pay bills or prevent | 562 |
attachments; | 563 |
(b) Payment of a certain amount will guarantee satisfaction | 564 |
of a certain amount or range of indebtedness; or | 565 |
(c) Participation in a program will or may prevent | 566 |
litigation, garnishment, attachment, repossession, foreclosure, | 567 |
eviction, or loss of employment. | 568 |
(8) Represent that the licensee is authorized or competent to | 569 |
furnish legal advice or perform legal services, unless such advice | 570 |
or services is provided by a licensed attorney working with the | 571 |
licensee; | 572 |
(9) Represent that it is one of the following: | 573 |
(a) A not-for-profit entity, unless it is organized and | 574 |
properly operating as a not-for-profit entity under the laws of | 575 |
this state; | 576 |
(b) A tax-exempt entity, unless it has received certification | 577 |
of tax-exempt status from the federal internal revenue service. | 578 |
(10) Take a confession of judgment or power of attorney to | 579 |
confess judgment against an individual; | 580 |
(11) Employ an unfair, unconscionable, or deceptive act or | 581 |
practice, including the knowing omission of any material | 582 |
information. | 583 |
(B) If a licensee furnishes debt settlement services to an | 584 |
individual, the licensee may not do any of the following, directly | 585 |
or indirectly: | 586 |
(1) Purchase a debt or obligation of the individual; | 587 |
(2) Receive from or on behalf of the individual any of the | 588 |
following: | 589 |
(a) A promissory note or other negotiable instrument other | 590 |
than a check or a demand draft; | 591 |
(b) A post-dated check or demand draft. | 592 |
(3) Lend money to provide credit to the individual, except as | 593 |
a deferral of a fee payment at no additional expense to the | 594 |
individual; | 595 |
(4) Obtain a mortgage or other security interest from any | 596 |
person in connection with the services provided to the individual; | 597 |
(5) Disclose the identity or identifying information of the | 598 |
individual or the identity of the individual's creditors, except | 599 |
in the following circumstances: | 600 |
(a) To the director of commerce, upon proper demand; | 601 |
(b) To a creditor of the individual, to the extent necessary | 602 |
to secure the cooperation of the creditor in a program; | 603 |
(c) To the extent necessary to administer the program; | 604 |
(d) As permitted by federal law. | 605 |
(6) Except as otherwise provided in section 4710.31 of the | 606 |
Revised Code, provide the individual less than the full benefit of | 607 |
a compromise of a debt arranged by the licensee; | 608 |
(7) Furnish legal advice or perform legal services, unless | 609 |
the person furnishing that advice to, or performing those services | 610 |
for, the individual is licensed to practice law; | 611 |
(8) Advise individuals to stop payment on any of the accounts | 612 |
being handled by the licensee; | 613 |
(9) Receive compensation from creditors, financial | 614 |
institutions, or third-party collection agencies, as a result of | 615 |
providing debt settlement services to an individual. | 616 |
(C) A licensee that advertises debt settlement services shall | 617 |
not make statements that are misleading or deceptive, and the | 618 |
advertisements shall not conflict with the information specified | 619 |
in divisions (D)(2), (3), and (5) of section 4710.27 of the | 620 |
Revised Code. | 621 |
Sec. 4710.35. (A) A licensee shall provide the accounting | 622 |
required by division (B) of this section in accordance with the | 623 |
following requirements: | 624 |
(1) At the following times while the agreement is in effect: | 625 |
(a) After each settlement of debt with a creditor on behalf | 626 |
of the individual; | 627 |
(b) Within five business days after a request by an | 628 |
individual, but the licensee need not comply with more than one | 629 |
request in any calendar month. | 630 |
(2) Upon cancellation or termination of an agreement. | 631 |
(B) If a creditor has agreed to accept as payment in full an | 632 |
amount less than the full amount of the debt owed by an | 633 |
individual, the licensee shall document in a record an accounting | 634 |
of all of the following: | 635 |
(1) The amount the creditor accepts as settlement in full of | 636 |
the debt; | 637 |
(2) Any other terms of the settlement; | 638 |
(3) The amount of the debt when the creditor agreed to the | 639 |
settlement; | 640 |
(4) For licensees using fee agreements that calculate any | 641 |
portion of the fee based on a percentage of savings the individual | 642 |
realizes from a settled debt, the calculation of that fee. | 643 |
(C) A settlement must be in writing, indicate the assent of | 644 |
the creditor and the debtor or the debtor's attorney in fact | 645 |
through endorsement, and clearly set forth the original amount of | 646 |
the debt, the amount the creditor has agreed to accept as payment | 647 |
in full of the debt, and the difference between these amounts | 648 |
which shall be the amount of debt forgiven. | 649 |
(D) A licensee shall maintain records for each individual for | 650 |
whom it provides debt settlement services for four years after the | 651 |
final payment made by the individual and produce a copy of them to | 652 |
the individual within a reasonable time after a request is made | 653 |
for them. The licensee may use electronic or other means of | 654 |
storage of the records. | 655 |
Sec. 4710.36. (A) The director of commerce may do the | 656 |
following: | 657 |
(1) Act on the director's own initiative or in response to | 658 |
complaints and may receive complaints regarding, or take action to | 659 |
obtain voluntary compliance with, sections 4710.20 to 4710.43 of | 660 |
the Revised Code; | 661 |
(2) Seek or provide remedies as provided for in section | 662 |
4710.38 of the Revised Code. | 663 |
(B) The director may investigate and examine, by subpoena or | 664 |
otherwise, the activities, books, accounts, and records of a | 665 |
licensee, or a person to which a licensee has delegated its | 666 |
obligations under an agreement, to determine compliance with | 667 |
sections 4710.20 to 4710.43 of the Revised Code. Information that | 668 |
identifies individuals who have agreements with the licensee shall | 669 |
not be disclosed to the public. In connection with the | 670 |
investigation, the director may do the following: | 671 |
(1) Charge the person the reasonable expenses necessarily | 672 |
incurred to conduct the examination; | 673 |
(2) Require or permit a person to file a statement under oath | 674 |
as to all the facts and circumstances of a matter to be | 675 |
investigated. | 676 |
(C) The director may adopt rules in accordance with Chapter | 677 |
119. of the Revised Code to implement the provisions of sections | 678 |
4710.20 to 4710.43 of the Revised Code. | 679 |
(D) The director may enter into cooperative arrangements with | 680 |
any other federal or state agency having authority over licensees | 681 |
and may exchange with any of those agencies information about a | 682 |
licensee, including information obtained during an examination of | 683 |
the licensee. | 684 |
Sec. 4710.37. (A) As used in this section, "consumer price | 685 |
index" means the consumer price index prepared by the United | 686 |
States bureau of labor statistics (U.S. city average for urban | 687 |
wage earners and clerical workers: all items, 1982-1984=100) or, | 688 |
if that index is no longer published, a generally available | 689 |
comparable index. | 690 |
(B) The director of commerce, by rule adopted in accordance | 691 |
with Chapter 119. of the Revised Code, shall establish reasonable | 692 |
fees to be paid by licensees for the expense of administering | 693 |
sections 4710.20 to 4710.43 of the Revised Code. All fees, | 694 |
charges, and penalties collected under sections 4710.20 to 4710.43 | 695 |
of the Revised Code shall be paid to the director and shall be | 696 |
deposited by the director into the state treasury to the credit of | 697 |
the debt settlement services fund, which is hereby created. Funds | 698 |
in the debt settlement services fund shall be used for | 699 |
administering sections 4710.20 to 4710.43 of the Revised Code. | 700 |
(C) The director, by rule adopted in accordance with Chapter | 701 |
119. of the Revised Code, shall establish the dollar amounts for | 702 |
license fees under section 4710.22 of the Revised Code and shall | 703 |
establish that license fees under section 4710.22, and penalties | 704 |
collected under section 4710.38 of the Revised Code, shall adjust | 705 |
to reflect inflation, as measured by the consumer price index. The | 706 |
director shall adopt a base year and adjust the dollar amounts, | 707 |
effective on July 1 of each year, if the change in the index from | 708 |
the base year, as of December 31 of the preceding year, is at | 709 |
least ten per cent. The dollar amount must be rounded to the | 710 |
nearest ten dollars. | 711 |
(D) The director shall notify licensees of any change in | 712 |
dollar amounts made pursuant to division (C) of this section and | 713 |
make that information available to the public. | 714 |
Sec. 4710.38. (A) The director of commerce shall enforce | 715 |
sections 4710.20 to 4710.43 of the Revised Code and any rule | 716 |
adopted pursuant to section 4710.36 of the Revised Code by taking | 717 |
one or more of the following actions: | 718 |
(1) Ordering a licensee or a director, employee, or other | 719 |
agent of a licensee to cease and desist from any violations; | 720 |
(2) Ordering a licensee or a person that has caused a | 721 |
violation to correct the violation or that has failed to comply | 722 |
with those sections to correct the failure, including making | 723 |
restitution of money or property to a person aggrieved by a | 724 |
violation or failure to comply; | 725 |
(3) Imposing on a licensee or a person that has caused a | 726 |
violation or has failed to comply a civil penalty not exceeding | 727 |
one thousand dollars for each violation or failure to comply; | 728 |
(4) Prosecuting a civil action to do either of the following: | 729 |
(a) Enforce an order; | 730 |
(b) Obtain restitution or an injunction or other equitable | 731 |
relief, or both. | 732 |
(5) Intervening in an action brought under section 4710.39 of | 733 |
the Revised Code. | 734 |
(B) If a person violates or fails to comply with, or | 735 |
knowingly authorizes, directs, or aids in the violation of or | 736 |
failure to comply with, a final order issued under division (A)(1) | 737 |
or (2) of this section, the director may impose an additional | 738 |
civil penalty not exceeding one thousand dollars for each | 739 |
violation or failure. | 740 |
(C) The director may maintain an action to enforce sections | 741 |
4710.20 to 4710.43 of the Revised Code in any county. | 742 |
(D) The director may recover the reasonable costs of | 743 |
enforcing divisions (A), (B), and (C) of this section, including | 744 |
attorney's fees based on the hours reasonably expended and the | 745 |
hourly rates for attorneys of comparable experience in the | 746 |
community. | 747 |
(E) In determining the amount of a civil penalty to impose | 748 |
under division (A) or (B) of this section, the director shall | 749 |
consider the seriousness of the violation or failure, the good | 750 |
faith of the person committing the violation or failure, any | 751 |
previous violations or failures by the person, the deleterious | 752 |
effect of the violation or failure on the public, and any other | 753 |
factor the director considers relevant to the determination of the | 754 |
civil penalty. | 755 |
(F) No enforcement action or adjudication order made by the | 756 |
director under this section shall be valid unless an opportunity | 757 |
for a hearing is afforded in accordance with Chapter 119. of the | 758 |
Revised Code. Such opportunity for a hearing shall be given before | 759 |
taking the enforcement action or making the adjudication order | 760 |
except in those situations where section 119.06 of the Revised | 761 |
Code provides otherwise. | 762 |
Sec. 4710.39. The director of commerce shall publish and | 763 |
maintain, on the department of commerce internet web site, a | 764 |
current list of all providers licensed under sections 4710.20 to | 765 |
4710.43 of the Revised Code. | 766 |
Sec. 4710.40. (A) As used in this section, "insolvent" | 767 |
means: | 768 |
(1) Having generally ceased to pay debts in the ordinary | 769 |
course of business other than as a result of a good-faith dispute; | 770 |
(2) Being unable to pay debts as they become due; | 771 |
(3) Being insolvent within the meaning of the federal | 772 |
bankruptcy law. | 773 |
(B) The director may suspend, revoke, or deny renewal of a | 774 |
license if any of the following apply: | 775 |
(1) A fact or condition exists that, if it had existed when | 776 |
the licensee applied for a license, it would have been a reason | 777 |
for denial. | 778 |
(2) The licensee has committed a material violation of or | 779 |
failure to comply with any provision of sections 4710.20 to | 780 |
4710.43 of the Revised Code or a rule or order of the director. | 781 |
(3) The licensee is insolvent. | 782 |
(4) The licensee or an employee or affiliate of the licensee | 783 |
has refused to permit the director to make an examination | 784 |
authorized by section 4710.36 of the Revised Code, failed to | 785 |
comply with an order to file a statement pursuant to division | 786 |
(B)(2) of section 4710.36 of the Revised Code within thirty days | 787 |
after the request, or made a material misrepresentation or | 788 |
omission with regard to such statement. | 789 |
(5) The licensee has not responded within a reasonable time | 790 |
and in an appropriate manner to communications from the director. | 791 |
(C) If the director suspends or revokes a license, the | 792 |
licensee may appeal and request a hearing pursuant to Chapter 119. | 793 |
of the Revised Code. | 794 |
Sec. 4710.41. (A) If an individual voids an agreement | 795 |
pursuant to section 4710.32 of the Revised Code, the individual | 796 |
may recover in a civil action all money paid by or on behalf of | 797 |
the individual pursuant to the agreement, in addition to the | 798 |
recovery under division (B)(3) of this section. | 799 |
(B) Subject to division (C) of this section, an individual | 800 |
with respect to whom a licensee or a person providing debt | 801 |
settlement service without a license violates or fails to comply | 802 |
with any provision of sections 4710.20 to 4710.43 of the Revised | 803 |
Code may recover in a civil action all of the following from the | 804 |
licensee or person that caused the violation or failure: | 805 |
(1) Compensatory damages for economic injury caused by the | 806 |
violation or failure; | 807 |
(2) Except as otherwise provided in division (C) of this | 808 |
section and subject to adjustment of the dollar amount pursuant to | 809 |
section 4710.37 of the Revised Code, with respect to a failure to | 810 |
comply with division (D) of section 4710.26, a violation of | 811 |
divisions (A) and (B) of section 4710.34, and a violation of or | 812 |
failure to comply with sections 4710.27, 4710.29, 4710.30, and | 813 |
4710.31 of the Revised Code, the greater of the amount recovered | 814 |
under division (B)(1) of this section or one thousand dollars; | 815 |
(3) Reasonable attorney's fees and costs. | 816 |
(C) In a class action, the minimum damages provided in | 817 |
division (B) of this section do not apply. | 818 |
(D) In addition to the remedies available under division (B) | 819 |
of this section, if a licensee fails to comply with an | 820 |
individual's right to cancellation under section 4710.30 of the | 821 |
Revised Code, the individual may recover in a civil action all | 822 |
money paid by or on behalf of the individual pursuant to the | 823 |
agreement, except for amounts paid to creditors. | 824 |
(E) A licensee is not liable under this section for a | 825 |
violation or failure to comply with any provision of sections | 826 |
4710.20 to 4710.43 of the Revised Code if the licensee proves that | 827 |
the violation or failure was not intentional and resulted from a | 828 |
good-faith error notwithstanding the maintenance of procedures | 829 |
reasonably adapted to avoid the error. If, in connection with a | 830 |
violation or failure, the licensee has received more money than | 831 |
authorized by an agreement or sections 4710.20 to 4710.43 of the | 832 |
Revised Code, the defense provided by division (E) of this section | 833 |
is not available unless the licensee refunds the excess within | 834 |
three business days after learning of the violation or failure. | 835 |
(F) If a licensee or a person providing debt settlement | 836 |
service without a license violates or fails to comply with any | 837 |
provision of sections 4710.20 to 4710.43 of the Revised Code, an | 838 |
individual may recover under this section or pursuant to section | 839 |
4710.43 of the Revised Code, but not both for the same act or | 840 |
practice. | 841 |
Sec. 4710.42. (A) An action or proceeding brought pursuant | 842 |
to division (A), (B), or (C) of section 4710.38 of the Revised | 843 |
Code must be commenced within four years after the conduct occurs | 844 |
that is the basis of the director's complaint. | 845 |
(B) An action brought pursuant to section 4710.41 of the | 846 |
Revised Code must be commenced within two years after the latest | 847 |
of the following: | 848 |
(1) The individual's last transmission of money to the | 849 |
licensee; | 850 |
(2) The date on which the individual discovered or reasonably | 851 |
should have discovered the facts giving rise to the individual's | 852 |
claim; | 853 |
(3) Termination of actions or proceedings by the director | 854 |
with respect to a violation or failure to comply with any | 855 |
provision of sections 4710.20 to 4710.43 of the Revised Code. | 856 |
(C) The period prescribed in division (B)(2) of this section | 857 |
is tolled during any period during which the licensee or, if | 858 |
different, the defendant, has materially and willfully | 859 |
misrepresented information required by sections 4710.20 to 4710.43 | 860 |
of the Revised Code to be disclosed to the individual, if the | 861 |
information so misrepresented is material to the establishment of | 862 |
the liability of the defendant under sections 4710.20 to 4710.43 | 863 |
of the Revised Code. | 864 |
Sec. 4710.43. Any violation or failure to comply with | 865 |
sections 4710.20 to 4710.43 of the Revised Code by a licensee or a | 866 |
person providing debt settlement service without a license is | 867 |
deemed an unfair or deceptive act or practice in violation of | 868 |
section 1345.02 of the Revised Code. A person injured by such a | 869 |
violation has a cause of action and is entitled to the same relief | 870 |
available to a consumer under section 1345.09 of the Revised Code, | 871 |
and all the powers and remedies available to the attorney general | 872 |
to enforce sections 1345.01 to 1345.13 of the Revised Code are | 873 |
available to the attorney general to enforce sections 4710.20 to | 874 |
4710.43 of the Revised Code. | 875 |
Section 2. That existing section 4710.01 of the Revised Code | 876 |
is hereby repealed. | 877 |