| 1 | The Committee on Judiciary recommends the following: |
| 2 |
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| 3 | Committee Substitute |
| 4 | Remove the entire bill and insert: |
| 5 | A bill to be entitled |
| 6 | An act relating to credit counseling services; creating |
| 7 | pt. IV, ch. 817, F.S.; providing definitions; prohibiting |
| 8 | certain persons from accepting certain fees or costs from |
| 9 | debtors under certain circumstances; providing exceptions; |
| 10 | providing disclosure and financial reporting requirements |
| 11 | for debt management or credit counseling services; |
| 12 | requiring an annual audit; requiring a fidelity bond; |
| 13 | providing public inspection requirements; providing |
| 14 | disbursement of funds requirements; requiring maintenance |
| 15 | of a separate trust account under certain circumstances; |
| 16 | specifying certain violations as unfair or deceptive trade |
| 17 | practices; providing for penalties and damages; providing |
| 18 | for actions for damages; providing a criminal penalty; |
| 19 | providing for awards of attorney's fees and costs; |
| 20 | providing an effective date. |
| 21 |
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| 22 | Be It Enacted by the Legislature of the State of Florida: |
| 23 |
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| 24 | Section 1. Part IV of chapter 817, Florida Statutes, |
| 25 | consisting of sections 817.801, 817.802, 817.803, 817.804, and |
| 26 | 817.805, Florida Statutes, is created to read: |
| 27 | PART IV |
| 28 | CREDIT COUNSELING SERVICES |
| 29 | 817.801 Definitions.--As used in this part: |
| 30 | (1) "Credit counseling services" means confidential money |
| 31 | management, debt reduction, and financial educational services. |
| 32 | (2) "Debt management services" means services provided to |
| 33 | a debtor by a credit counseling organization for a fee to: |
| 34 | (a) Effect the adjustment, compromise, or discharge of any |
| 35 | unsecured account, note, or other indebtedness of the debtor; or |
| 36 | (b) Receive from the debtor and disburse to a creditor any |
| 37 | money or other thing of value. |
| 38 | (3) "Person" means any individual, corporation, |
| 39 | partnership, trust, association, or other legal entity. |
| 40 | (4) "Credit counseling agency" means any organization |
| 41 | providing credit counseling services. |
| 42 | 817.802 Unlawful fees and costs.-- |
| 43 | (1) It is unlawful for any person, while engaging in debt |
| 44 | management services or credit counseling services, to charge or |
| 45 | accept from a debtor, directly or indirectly, a fee or |
| 46 | contribution greater than $50 for the initial setup or initial |
| 47 | consultation. Subsequently, such person may not charge or accept |
| 48 | a fee or contribution greater than $120 per year for additional |
| 49 | consultations or, if debt management services as defined in s. |
| 50 | 817.801(2)(b) are provided, such person may charge the greater |
| 51 | of 7.5 percent of the amount paid monthly by such debtor to such |
| 52 | person or $35 per month. |
| 53 | (2) No provision of this part prohibits any person, while |
| 54 | engaging in debt management services or credit counseling |
| 55 | services, from imposing upon and receiving from a debtor a |
| 56 | reasonable and separate charge or fee for insufficient funds |
| 57 | transactions. |
| 58 | 817.803 Exceptions.--Nothing in this part applies to any |
| 59 | debt management services or credit counseling services provided |
| 60 | in the practice of law in this state. Nothing in this part |
| 61 | applies to any person or entity who engages in debt adjustment |
| 62 | to adjust the indebtedness owed to such person or entity. |
| 63 | Nothing in this part applies to the following entities or their |
| 64 | subsidiaries: the Federal National Mortgage Association; the |
| 65 | Federal Home Loan Mortgage Corporation; the Florida Housing |
| 66 | Finance Corporation, a public corporation created in s. 420.504, |
| 67 | or a bank, bank holding company, trust company, savings and loan |
| 68 | association, credit union, credit card bank, or savings bank |
| 69 | that is regulated and supervised by the Office of the |
| 70 | Comptroller of the Currency, the Office of Thrift Supervision, |
| 71 | the Federal Reserve, the Federal Deposit Insurance Corporation, |
| 72 | the National Credit Union Administration, or the Department of |
| 73 | Financial Services. |
| 74 | 817.804 Requirements; disclosure and financial |
| 75 | reporting.-- |
| 76 | (1) Any person engaged in debt management services or |
| 77 | credit counseling services shall: |
| 78 | (a) Obtain from a certified public accountant licensed |
| 79 | pursuant to s. 473.308 an annual audit of all accounts of such |
| 80 | person in which the funds of debtors are deposited and from |
| 81 | which payments are made to creditors on behalf of debtors. |
| 82 | (b) Obtain and maintain at all times a fidelity bond in an |
| 83 | amount not less than the greater of $100,000 or 10 percent of |
| 84 | the monthly average for the immediately preceding 6 months of |
| 85 | the aggregate amount of all deposits made with such person by |
| 86 | all debtors, provided the amount of such bond is not required to |
| 87 | exceed $500,000. The deductible on such coverage shall not |
| 88 | exceed 10 percent of the face amount of the policy coverage. |
| 89 | Such policy shall be issued by a company rated at least "A-" or |
| 90 | its equivalent by a nationally recognized rating organization |
| 91 | and shall provide for 30 days' advance written notice of |
| 92 | termination of the policy. |
| 93 | (2) A copy of the annual audit and insurance policies |
| 94 | required by this section shall be available for public |
| 95 | inspection at each branch location. Copies shall be made upon |
| 96 | written request to any party requesting a copy for a charge not |
| 97 | to exceed the cost of the reproduction of documents. |
| 98 | 817.805 Disbursement of funds.-- |
| 99 | (1) Any person engaged in debt management services or |
| 100 | credit counseling services shall disburse to the appropriate |
| 101 | creditors all funds received from a debtor, less any fees |
| 102 | permitted by s. 817.802, within 30 days after receipt of such |
| 103 | funds. Further, any person engaged in such services shall |
| 104 | maintain a separate trust account for the receipt of any funds |
| 105 | from each debtor and the disbursement of such funds on behalf of |
| 106 | such debtor. |
| 107 | (2) Any violation of this part by a person or agent or |
| 108 | employee of a person is an unfair or deceptive trade practice as |
| 109 | defined in part II of chapter 501. Violators shall be subject to |
| 110 | the penalties and remedies provided in such part. Further, any |
| 111 | consumer injured by a violation of this part may bring an action |
| 112 | for recovery of damages. Judgment shall be entered for actual |
| 113 | damages, but in no case less than the amount paid by the buyer |
| 114 | to the credit counseling organization, plus reasonable |
| 115 | attorney's fees and costs. |
| 116 | (3) Any person convicted of violating any provision of |
| 117 | this section commits a felony of the third degree, punishable as |
| 118 | provided in s. 775.082 or s. 775.083. |
| 119 | Section 2. This act shall take effect upon becoming a law. |