Florida Senate - 2009                             CS for SB 1132
       
       
       
       By the Committee on Banking and Insurance; and Senator Fasano
       
       
       
       
       597-02659-09                                          20091132c1
    1                        A bill to be entitled                      
    2         An act relating to credit counseling services;
    3         amending s. 817.801, F.S.; defining and redefining
    4         terms; amending s. 817.802, F.S.; prohibiting a credit
    5         counseling organization from engaging in certain
    6         additional specified acts; deleting a provision that
    7         allows the organization to collect a fee for
    8         insufficient fund transactions; amending s. 817.803,
    9         F.S.; revising provisions relating to an exception
   10         provided to attorneys providing representation to
   11         clients; amending s. 817.804, F.S.; requiring a credit
   12         counseling organization to obtain a surety bond;
   13         creating s. 817.8045, F.S.; providing for service
   14         contracts; requiring certain provisions to be included
   15         in such contracts; requiring the credit counseling
   16         organization to provide the consumer with copies of
   17         all signed documents; amending ss. 817.805 and
   18         817.806, F.S.; conforming terms to changes made by the
   19         act; providing an effective date.
   20  
   21  Be It Enacted by the Legislature of the State of Florida:
   22  
   23         Section 1. Section 817.801, Florida Statutes, is amended to
   24  read:
   25         817.801 Definitions.—As used in this part, the term:
   26         (1)“Control person” means any person who possesses the
   27  power, directly or indirectly, to affect the management or
   28  policies of a credit counseling organization, including, but not
   29  limited to, the organization’s owners if the organization is a
   30  partnership or sole proprietorship, and the organization’s
   31  corporate officers, corporate directors, resident agents, and
   32  trustees.
   33         (2)(1) “Credit counseling organization agency” means any
   34  person organization providing debt management services or credit
   35  counseling services.
   36         (3)(2) “Credit counseling services” means confidential
   37  money management, debt reduction, and financial educational
   38  services. The term does not include foreclosure-related rescue
   39  services as defined in s. 501.1377.
   40         (4)(3) “Creditor contribution” means any sum that a
   41  creditor agrees to contribute to a credit counseling
   42  organization agency, whether directly or by setoff against
   43  amounts otherwise payable to the creditor on behalf of a
   44  consumer debtors.
   45         (5)(4) “Debt management services” means services provided
   46  to a consumer debtor by a credit counseling organization for a
   47  fee to:
   48         (a) Effect the adjustment, compromise, or discharge of any
   49  unsecured account, note, or other indebtedness of the consumer,
   50  except for residential mortgage loan obligations debtor; or
   51         (b) Receive from the consumer debtor and disburse to a
   52  creditor any money or other thing of value.
   53         (6)(5) “Person” has the same meaning as in s. 1.01 means
   54  any individual, corporation, partnership, trust, association, or
   55  other legal entity.
   56         Section 2. Section 817.802, Florida Statutes, is amended to
   57  read:
   58         817.802 Prohibited acts Unlawful fees and costs.—A credit
   59  counseling organization may not:
   60         (1) It is unlawful for any person, while engaging in debt
   61  management services or credit counseling services, to Charge or
   62  accept from a consumer debtor residing in this state, directly
   63  or indirectly, any payment for services before the execution of
   64  a written service contract, or charge or accept from a consumer
   65  a fee or contribution greater than $50 for the initial setup or
   66  initial consultation. Subsequently, the organization person may
   67  not charge or accept a fee or contribution from a consumer
   68  debtor residing in this state greater than $120 per year for
   69  additional consultations; however or, alternatively, if debt
   70  management services as defined in s. 817.801(4)(b) are provided,
   71  the organization person may charge the greater of 7.5 percent of
   72  the amount paid monthly by the consumer debtor to the
   73  organization person or $35 per month, whichever is greater.
   74         (2)Advise any consumer, directly or indirectly, not to
   75  contact or communicate with his or her creditors before or
   76  during the service contract period.
   77         (3)Make or use any false or misleading representations or
   78  omit any material fact in the offer or sale of services offered,
   79  or engage, directly or indirectly, in any fraudulent, false,
   80  misleading, unconscionable, unfair, or deceptive act or practice
   81  in connection with the offer or sale of any of the services of a
   82  credit counseling organization.
   83         (4)Provide services to a consumer without executing a
   84  service contract that complies with s. 817.8045.
   85         (5)Fail to provide copies of all service contracts and
   86  other documents the consumer is required to sign as provided
   87  under s. 817.8045.
   88         (6)Fail to perform any of the terms, conditions, and
   89  obligations provided in the service contract with the consumer.
   90         (7)Fail to comply with the requirements of s. 817.805.
   91         (2)This section does not prohibit any person, while
   92  engaging in debt management or credit counseling services, from
   93  imposing upon and receiving from a debtor a reasonable and
   94  separate charge or fee for insufficient funds transactions.
   95         Section 3. Section 817.803, Florida Statutes, is amended to
   96  read:
   97         817.803 Exceptions.—Nothing in This part does not apply
   98  applies to:
   99         (1) A person licensed to practice law in this state who is
  100  providing legal representation to a client with respect to
  101  credit counseling services or debt management and who does not
  102  engage in the business of providing credit counseling or debt
  103  management services on a continuing basis. Any Debt management
  104  or credit counseling services provided in the practice of law in
  105  this state;
  106         (2) A Any person who engages in debt adjustment to adjust
  107  the indebtedness owed to such person.; or
  108         (3) The following entities or their subsidiaries:
  109         (a) The Federal National Mortgage Association;
  110         (b) The Federal Home Loan Mortgage Corporation;
  111         (c) The Florida Housing Finance Corporation, a public
  112  corporation created in s. 420.504;
  113         (d) A bank, bank holding company, trust company, savings
  114  and loan association, credit union, credit card bank, or savings
  115  bank that is regulated and supervised by the Office of the
  116  Comptroller of the Currency, the Office of Thrift Supervision,
  117  the Federal Reserve, the Federal Deposit Insurance Corporation,
  118  the National Credit Union Administration, the Office of
  119  Financial Regulation of the Department of Financial Services, or
  120  any state banking regulator;
  121         (e) A consumer reporting agency as defined in the Federal
  122  Fair Credit Reporting Act, 15 U.S.C. s. 1681a ss. 1681-1681y, as
  123  it existed on April 5, 2004; or
  124         (f) Any subsidiary or affiliate of a bank holding company,
  125  its employees and its exclusive agents acting under written
  126  agreement.
  127         Section 4. Section 817.804, Florida Statutes, is amended to
  128  read:
  129         817.804 Financial requirements; disclosure and financial
  130  reporting.—
  131         (1) A credit counseling organization must Any person
  132  engaged in debt management services or credit counseling
  133  services shall:
  134         (a) Obtain from a licensed certified public accountant an
  135  annual audit that is conducted in accordance with generally
  136  accepted auditing standards and that includes shall include all
  137  of the organization’s accounts of such person in which the funds
  138  of consumers debtors are deposited and from which payments are
  139  made to creditors on behalf of consumers debtors.
  140         (b) Obtain and maintain at all times insurance coverage for
  141  employee dishonesty, depositor’s forgery, and computer fraud.
  142  The insurance coverage must be in an amount not less than the
  143  greater of $100,000 or 10 percent of the monthly average of the
  144  aggregate amount of all deposits made by consumers to the
  145  organization for distribution to creditors with such person by
  146  all debtors for the 6 months immediately preceding the date of
  147  initial application for or renewal of the insurance. The
  148  deductible on such coverage may shall not exceed 10 percent of
  149  the face amount of the policy coverage.
  150         (c)Obtain and maintain a surety bond in the amount of
  151  $100,000 from a surety company authorized to do business in this
  152  state. The bond shall be in favor of the state for the use and
  153  benefit of any consumer who suffers or sustains any loss or
  154  damage by reason of any violation of the provisions of this
  155  part.
  156         (2) A copy of the annual audit and insurance policies
  157  required by this section must shall be available for public
  158  inspection at each branch location of the organization. Copies
  159  shall be provided, upon written request, to any party requesting
  160  a copy for a charge that does not to exceed the cost of copying
  161  the reproduction of documents.
  162         Section 5. Section 817.8045, Florida Statutes, is created
  163  to read:
  164         817.8045Service contracts.—
  165         (1)The service contract between the credit counseling
  166  organization and the consumer must be signed and dated by the
  167  consumer and include all of the following:
  168         (a)The following statement in at least 12-point uppercase
  169  type at the top of the service contract:
  170  
  171         IMPORTANT:IT IS RECOMMENDED THAT YOU CONTACT YOUR
  172         CREDITORS BEFORE SIGNING THIS CONTRACT. YOUR CREDITORS
  173         MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN OR A
  174         RESTRUCTURING OF YOUR DEBT FREE OF CHARGE.
  175  
  176         YOUR FAILURE TO DIRECTLY CONTACT YOUR CREDITORS MAY
  177         RESULT IN LATE FEES, ADDITIONAL DEBTS, AND AN ADVERSE
  178         CREDIT RATING.
  179  
  180         (b)A full and detailed description of the services to be
  181  performed by the credit counseling organization for the
  182  consumer, including all guarantees and all promises of full or
  183  partial refunds, and the estimated date or length of time by
  184  which the services are to be performed.
  185         (c)All terms and conditions of payment, including the
  186  total of all payments to be made by the consumer and the
  187  specific amount of any payments to be made to the credit
  188  counseling organization or to any other person.
  189         (d)The organization’s principal business address and the
  190  name and address of its agent in the state authorized to receive
  191  service of process.
  192         (e)A clear and conspicuous statement in boldface type, in
  193  the immediate proximity to the space reserved for the consumer’s
  194  signature, which states: “You, the consumer, may cancel this
  195  service contract at any time prior to midnight of the 5th
  196  business day after the date of the signing this contract. [See
  197  the attached Notice of Right to Cancel for further explanation
  198  of this right.]”
  199         (f)A Notice of Right to Cancel attached to the contract,
  200  in duplicate and easily detachable, which contains the following
  201  statement in at least 12-point uppercase type:
  202  
  203                      NOTICE OF RIGHT TO CANCEL                    
  204  
  205         YOU MAY CANCEL ANY CONTRACT FOR DEBT MANAGEMENT OR
  206         CREDIT COUNSELING SERVICES WITHIN 5 BUSINESS DAYS
  207         AFTER THE DATE THE CONTRACT IS SIGNED BY YOU WITHOUT
  208         INCURRING ANY PENALTY OR OBLIGATION.
  209  
  210         YOUR PAYMENT MUST BE RETURNED TO YOU WITHIN 10
  211         BUSINESS DAYS AFTER RECEIPT OF YOUR CANCELLATION
  212         NOTICE.
  213  
  214         TO CANCEL THIS CONTRACT, MAIL OR DELIVER A SIGNED AND
  215         DATED COPY OF THIS CANCELATION NOTICE OR ANY OTHER
  216         WRITTEN NOTICE CLEARLY INDICATING YOUR DESIRE TO
  217         CANCEL YOUR CONTRACT.
  218  
  219         TO:...(name of credit counseling organization)...
  220         AT:...(address)................
  221  
  222         BY SIGNING AND DATING THIS NOTICE, I HEREBY CANCEL MY
  223         SERVICE CONTRACT, EXECUTED ON:...(date service
  224         contract signed)...
  225  
  226         ...(Signature of Consumer)...
  227         ...(Date)....................
  228         ...(Address).................
  229         ...(Phone Number)............
  230  
  231         (2)The credit counseling organization must provide the
  232  consumer, at the time the documents are signed, with a copy of
  233  the completed service contract and all other documents the
  234  credit counseling organization requires the consumer to sign.
  235         Section 6. Section 817.805, Florida Statutes, is amended to
  236  read:
  237         817.805 Disbursement of funds.—A credit counseling
  238  organization must Any person engaged in debt management or
  239  credit counseling services shall disburse to the appropriate
  240  creditors all funds received from a consumer debtor, less any
  241  fees permitted by s. 817.802 and any creditor contributions,
  242  within 30 days after receipt of such funds. However, a creditor
  243  contribution may not reduce any sums to be credited to the
  244  account of a consumer debtor making a payment to the
  245  organization credit counseling agency for further payment to the
  246  creditor. Further, a credit counseling organization must any
  247  person engaged in such services shall maintain a separate trust
  248  account for the receipt of any funds from consumers debtors and
  249  the disbursement of such funds on behalf of such consumers
  250  debtors.
  251         Section 7. Section 817.806, Florida Statutes, is amended to
  252  read:
  253         817.806 Violations.—
  254         (1) Any person who violates any provision of this part
  255  commits an unfair or deceptive trade practice as defined in part
  256  II of chapter 501. Violators are shall be subject to the
  257  penalties and remedies provided therein. Further, any consumer
  258  injured by a violation of this part may bring an action for
  259  recovery of damages. Judgment shall be entered for actual
  260  damages, but in no case less than the amount paid by the
  261  consumer to the credit counseling organization agency, plus
  262  reasonable attorney’s fees and costs.
  263         (2) Any person who violates any provision of this part
  264  commits a felony of the third degree, punishable as provided in
  265  s. 775.082 or s. 775.083.
  266         Section 8. This act shall take effect October 1, 2009.