| 1 | A bill to be entitled |
| 2 | An act relating to credit counseling services; creating |
| 3 | pt. IV, ch. 817, F.S.; providing definitions; prohibiting |
| 4 | certain persons from accepting certain fees or costs from |
| 5 | debtors under certain circumstances; providing exceptions; |
| 6 | providing disclosure and financial reporting requirements |
| 7 | for debt management or credit counseling services; |
| 8 | providing disbursement of funds requirements; providing |
| 9 | civil penalties; providing for awards of attorney's fees |
| 10 | and costs; providing for criminal penalties; providing an |
| 11 | effective date. |
| 12 |
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| 13 | Be It Enacted by the Legislature of the State of Florida: |
| 14 |
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| 15 | Section 1. Part IV of chapter 817, Florida Statutes, |
| 16 | consisting of sections 817.801, 817.802, 817.803, 817.804, |
| 17 | 817.805, and 817.806, Florida Statutes, is created to read: |
| 18 |
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| 19 | PART IV |
| 20 | CREDIT COUNSELING SERVICES |
| 21 | 817.801 Definitions.--As used in this part: |
| 22 | (1) "Credit counseling services" means confidential money |
| 23 | management, debt reduction, and financial educational services. |
| 24 | (2) "Debt management services" means services provided to |
| 25 | a debtor by a credit counseling organization for a fee to: |
| 26 | (a) Effect the adjustment, compromise, or discharge of any |
| 27 | unsecured account, note, or other indebtedness of the debtor; or |
| 28 | (b) Receive from the debtor and disburse to a creditor any |
| 29 | money or other thing of value. |
| 30 | (3) "Person" means any individual, corporation, |
| 31 | partnership, trust, association, or other legal entity. |
| 32 | (4) "Credit counseling agency" means any organization |
| 33 | providing debt management services or credit counseling |
| 34 | services. |
| 35 | 817.802 Unlawful fees and costs.-- |
| 36 | (1) It is unlawful for any person, while engaging in debt |
| 37 | management services or credit counseling services, to charge or |
| 38 | accept from a debtor, directly or indirectly, a fee or |
| 39 | contribution greater than $50 for the initial setup or initial |
| 40 | consultation. Subsequently, the person may not charge or accept |
| 41 | a fee or contribution from a debtor greater than $120 per year |
| 42 | for additional consultations or, alternatively, if debt |
| 43 | management services as defined in s. 817.801(2)(b) are provided, |
| 44 | the person may charge the greater of 7.5 percent of the amount |
| 45 | paid monthly by the debtor to the person or $35 per month. |
| 46 | (2) No provision of this section prohibits any person, |
| 47 | while engaging in debt management or credit counseling services, |
| 48 | from imposing upon and receiving from a debtor a reasonable and |
| 49 | separate charge or fee for insufficient funds transactions. |
| 50 | 817.803 Exceptions.--Nothing in this part applies to: |
| 51 | (1) Any debt management or credit counseling services |
| 52 | provided in the practice of law in this state; |
| 53 | (2) Any person who engages in debt adjustment to adjust |
| 54 | the indebtedness owed to such person; or |
| 55 | (3) The following entities or their subsidiaries: |
| 56 | (a) The Federal National Mortgage Association; |
| 57 | (b) The Federal Home Loan Mortgage Corporation; |
| 58 | (c) The Florida Housing Finance Corporation, a public |
| 59 | corporation created in s. 420.504; |
| 60 | (d) A bank, bank holding company, trust company, savings |
| 61 | and loan association, credit union, credit card bank, or savings |
| 62 | bank that is regulated and supervised by the Office of the |
| 63 | Comptroller of the Currency, the Office of Thrift Supervision, |
| 64 | the Federal Reserve, the Federal Deposit Insurance Corporation, |
| 65 | the National Credit Union Administration, the Office of |
| 66 | Financial Regulation of the Department of Financial Services, or |
| 67 | any state banking regulator; |
| 68 | (e) A consumer reporting agency as defined in the Federal |
| 69 | Fair Credit Reporting Act, 15 U.S.C. ss. 1681-1681y, as it |
| 70 | existed on April 5, 2004; or |
| 71 | (f) Any subsidiary or affiliate of a bank holding company, |
| 72 | its employees, and its exclusive agents acting under written |
| 73 | agreement. |
| 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 | under s. 473.308 an annual audit of all accounts of such person |
| 80 | in which the funds of debtors are deposited and from which |
| 81 | payments are made to creditors on behalf of debtors. |
| 82 | (b) Obtain and maintain at all times insurance coverage |
| 83 | for employee dishonesty, depositor's forgery, and computer |
| 84 | fraud. The insurance coverage must be in an amount not less than |
| 85 | the greater of $100,000 or 10 percent of the monthly average of |
| 86 | the aggregate amount of all deposits made for distribution to |
| 87 | creditors with such person by all debtors for the 6 months |
| 88 | immediately preceding the date of initial application for or |
| 89 | renewal of the insurance. The deductible on such coverage shall |
| 90 | not exceed 10 percent of the face amount of the policy coverage. |
| 91 | (2) A copy of the annual audit and insurance policies |
| 92 | required by this section shall be available for public |
| 93 | inspection at each branch location. Copies shall be provided, |
| 94 | upon written request, to any party requesting a copy for a |
| 95 | charge not to exceed the cost of the reproduction of documents. |
| 96 | 817.805 Disbursement of funds.--Any person engaged in debt |
| 97 | management or credit counseling services shall disburse to the |
| 98 | appropriate creditors all funds received from a debtor, less any |
| 99 | fees permitted by s. 817.802, within 30 days after receipt of |
| 100 | such funds. Further, any person engaged in such services shall |
| 101 | maintain a separate trust account for the receipt of any funds |
| 102 | from each debtor and the disbursement of such funds on behalf of |
| 103 | such debtor. |
| 104 | 817.806 Violations.-- |
| 105 | (1) Any person who violates any provision of this part |
| 106 | commits an unfair or deceptive trade practice as defined in part |
| 107 | II of chapter 501. Violators shall be subject to the penalties |
| 108 | and remedies provided therein. Further, any consumer injured by |
| 109 | a violation of this part may bring an action for recovery of |
| 110 | damages. Judgment shall be entered for actual damages, but in no |
| 111 | case less than the amount paid by the consumer to the credit |
| 112 | counseling agency, plus reasonable attorney's fees and costs. |
| 113 | (2) Any person who violates any provision of this part |
| 114 | commits a felony of the third degree, punishable as provided in |
| 115 | s. 775.082 or s. 775.083. |
| 116 | Section 2. This act shall take effect July 1, 2004. |