| 1 | A bill to be entitled |
| 2 | An act relating to debt settlement services; providing a |
| 3 | directive to the Division of Statutory Revision; creating |
| 4 | s. 559.101, F.S.; providing a short title; creating s. |
| 5 | 559.102, F.S.; providing definitions; creating s. 559.103, |
| 6 | F.S.; providing the powers of the Office of Financial |
| 7 | Regulation; creating s. 559.104, F.S.; authorizing the |
| 8 | Financial Services Commission to adopt rules; creating s. |
| 9 | 559.105, F.S.; providing exceptions from the applicability |
| 10 | of provisions regulating debt settlement services; |
| 11 | providing an exception for attorneys representing clients; |
| 12 | creating s. 559.106, F.S.; requiring debt settlement |
| 13 | organizations to be registered with the office; providing |
| 14 | a registration fee; requiring background screening of |
| 15 | applicants and control persons; providing grounds for |
| 16 | registration issuance or denial; requiring annual renewal; |
| 17 | creating s. 559.107, F.S.; requiring registration renewal; |
| 18 | creating s. 559.108, F.S.; requiring a debt settlement |
| 19 | organization to obtain certain insurance coverage and a |
| 20 | surety bond and to provide proof of such bond to the |
| 21 | office; creating s. 559.109, F.S.; requiring a debt |
| 22 | settlement organization to maintain records; creating s. |
| 23 | 559.111, F.S.; requiring a debt settlement organization to |
| 24 | prepare a financial analysis for the debtor; providing for |
| 25 | service contracts; requiring certain provisions to be |
| 26 | included in such contracts; requiring the debt settlement |
| 27 | organization to provide the debtor with copies of all |
| 28 | signed documents; creating s. 559.112, F.S.; prohibiting |
| 29 | certain acts by debt settlement organizations; providing |
| 30 | penalties; creating s. 559.113, F.S.; providing for debtor |
| 31 | complaints to the office; providing procedures and office |
| 32 | duties, including administrative penalties; creating s. |
| 33 | 559.114, F.S.; providing for the issuance of subpoenas by |
| 34 | the office; creating s. 559.115, F.S.; authorizing the |
| 35 | office to issue cease and desist orders; creating s. |
| 36 | 559.116, F.S.; declaring that violations of the part are |
| 37 | deceptive and unfair trade practices; providing |
| 38 | administrative penalties; specifying violations that |
| 39 | result in criminal penalties; amending s. 516.07, F.S.; |
| 40 | conforming a cross-reference; repealing ss. 559.10, |
| 41 | 559.11, 559.12, and 559.13, F.S., relating to budget |
| 42 | planning; providing an appropriation and authorizing |
| 43 | additional positions; providing effective dates. |
| 44 |
|
| 45 | Be It Enacted by the Legislature of the State of Florida: |
| 46 |
|
| 47 | Section 1. The Division of Statutory Revision is directed |
| 48 | to redesignate the title of part II of chapter 559, Florida |
| 49 | Statutes, consisting of ss. 559.101-559.116, as "Debt Settlement |
| 50 | Services." |
| 51 | Section 2. Section 559.101, Florida Statutes, is created |
| 52 | to read: |
| 53 | 559.101 Short title.-This part may be cited as the "Debt |
| 54 | Settlement Services Act." |
| 55 | Section 3. Section 559.102, Florida Statutes, is created |
| 56 | to read: |
| 57 | 559.102 Definitions.-As used in this part, the term: |
| 58 | (1) "Commission" means the Financial Services Commission. |
| 59 | (2) "Control person" means an individual, partnership, |
| 60 | corporation, trust, or other organization that possesses the |
| 61 | power, directly or indirectly, to direct the management or |
| 62 | policies of a company, whether through ownership of securities, |
| 63 | by contract, or otherwise. The term includes, but is not limited |
| 64 | to: |
| 65 | (a) A company's executive officers, including the |
| 66 | president, chief executive officer, chief financial officer, |
| 67 | chief operations officer, chief legal officer, chief compliance |
| 68 | officer, director, or other individuals having similar status or |
| 69 | functions. |
| 70 | (b) For a corporation, each shareholder who, directly or |
| 71 | indirectly, owns 10 percent or more, or who has the power to |
| 72 | vote 10 percent or more, of a class of voting securities, unless |
| 73 | the applicant is a publicly traded company. |
| 74 | (c) For a partnership, all general partners and limited or |
| 75 | special partners who have contributed 10 percent or more, or who |
| 76 | have the right to receive upon dissolution 10 percent or more, |
| 77 | of the partnership's capital. |
| 78 | (d) For a trust, each trustee. |
| 79 | (e) For a limited liability company, all managing members |
| 80 | and those members who have contributed 10 percent or more, or |
| 81 | who have the right to receive upon dissolution 10 percent or |
| 82 | more, of the partnership's capital. |
| 83 | (3) "Debt settlement organization " means a person who |
| 84 | provides or offers to provide debt settlement services for |
| 85 | compensation. |
| 86 | (4) "Debt settlement services" means services, other than |
| 87 | foreclosure-related rescue services, provided to a debtor with |
| 88 | the expectation of obtaining the creditor's agreement to accept |
| 89 | less than the principal amount of a debt in full satisfaction of |
| 90 | the debt. |
| 91 | (5) "Debtor" means an individual who obtains credit, seeks |
| 92 | a credit agreement with a creditor, or owes money to a creditor. |
| 93 | (6) "Enrolled debt" means the amount of debt at the time |
| 94 | the contract for debt settlement services is entered but does |
| 95 | not include any increases in the amount of debt or additional |
| 96 | fees or penalties applied to the debt after services included in |
| 97 | the contract are initiated. |
| 98 | (7) "Financial analysis" means the review of an |
| 99 | individual's budget, income, expenses, and debt by the debt |
| 100 | settlement organization in order to determine the individual's |
| 101 | suitability for additional debt settlement services provided by |
| 102 | the organization. |
| 103 | (8) "Office" means the Office of Financial Regulation of |
| 104 | the Financial Services Commission. |
| 105 | (9) "Person" has the same meaning as provided in s. 1.01. |
| 106 | (10) "Service contract" means the agreement for services |
| 107 | between a debt settlement organization and a debtor. |
| 108 | Section 4. Section 559.103, Florida Statutes, is created |
| 109 | to read: |
| 110 | 559.103 Powers and duties of the Office of Financial |
| 111 | Regulation; fees.- |
| 112 | (1) The office is responsible for the administration and |
| 113 | enforcement of this part. |
| 114 | (2) The office may conduct an investigation of any person |
| 115 | if the office has reason to believe, upon complaint or |
| 116 | otherwise, that any violation of this part may have been |
| 117 | committed or is about to be committed. |
| 118 | (3) All fees, charges, and fines collected pursuant to |
| 119 | this part shall be deposited in the State Treasury to the credit |
| 120 | of the Regulatory Trust Fund under the office. |
| 121 | Section 5. Section 559.104, Florida Statutes, is created |
| 122 | to read: |
| 123 | 559.104 Rules.-The commission may adopt rules to |
| 124 | administer this part, including rules that: |
| 125 | (1) Require electronic submission of any forms, documents, |
| 126 | or fees required under this part. |
| 127 | (2) Establish time periods during which an applicant for |
| 128 | registration is barred from registration or a registered debt |
| 129 | settlement organization is barred from renewal due to prior |
| 130 | criminal convictions of, or guilty or nolo contendere pleas by, |
| 131 | any of the applicant's or registrant's control persons, |
| 132 | regardless of adjudication. |
| 133 | (a) The rules must provide: |
| 134 | 1. Permanent bars for felonies involving money laundering, |
| 135 | breach of trust, dishonesty, embezzlement, fraud, fraudulent |
| 136 | conversion, misappropriation of property, racketeering, or |
| 137 | theft; |
| 138 | 2. A 15-year disqualifying period for felonies involving |
| 139 | moral turpitude; |
| 140 | 3. A 7-year disqualifying period for all other felonies; |
| 141 | and |
| 142 | 4. A 5-year disqualifying period for misdemeanors |
| 143 | involving fraud, dishonesty, or any other act of moral |
| 144 | turpitude. |
| 145 | (b) The rules may provide for an additional waiting period |
| 146 | due to dates of imprisonment or community supervision, the |
| 147 | commitment of multiple crimes, and other factors reasonably |
| 148 | related to the applicant's criminal history. |
| 149 | (c) The rules may provide for mitigating factors for |
| 150 | crimes identified in subparagraph (a)2. However, the mitigation |
| 151 | may not result in a period of disqualification less than 7 |
| 152 | years. The rule may not mitigate the disqualifying periods in |
| 153 | subparagraphs (a)1., (a)3., and (a)4. |
| 154 | (d) An applicant is not eligible for registration until |
| 155 | the expiration of the disqualifying period set by rule. |
| 156 | (e) Section 112.011 is not applicable to eligibility for |
| 157 | registration under this part. |
| 158 | Section 6. Section 559.105, Florida Statutes, is created |
| 159 | to read: |
| 160 | 559.105 Exceptions.-This part does not apply to: |
| 161 | (1) A person licensed to practice law in this state who is |
| 162 | providing debt settlement services. |
| 163 | (2) A person who engages in debt settlement services to |
| 164 | adjust the indebtedness owed to such person. |
| 165 | (3) The following entities or their subsidiaries: |
| 166 | (a) The Federal National Mortgage Association. |
| 167 | (b) The Federal Home Loan Mortgage Corporation. |
| 168 | (c) The Florida Housing Finance Corporation created |
| 169 | pursuant to s. 420.504. |
| 170 | (d) Any financial institution as defined in s. |
| 171 | 655.005(1)(h). |
| 172 | (e) A consumer reporting agency as defined in the Federal |
| 173 | Fair Credit Reporting Act, 15 U.S.C. s. 1681a. |
| 174 | Section 7. Section 559.106, Florida Statutes, is created |
| 175 | to read: |
| 176 | 559.106 Registration of debt settlement organization.- |
| 177 | (1) Effective April 1, 2011, each person who acts as a |
| 178 | debt settlement organization in this state must be registered in |
| 179 | accordance with this section. This applies to debt settlement |
| 180 | organizations operating in this state or from another state, |
| 181 | regardless of whether such organization is registered, licensed, |
| 182 | or the equivalent in accordance with the laws of another state. |
| 183 | (2) In order to apply for registration, an applicant must |
| 184 | submit: |
| 185 | (a) A completed registration application form as |
| 186 | prescribed by commission rule which includes the name and |
| 187 | principal business address and e-mail address of the debt |
| 188 | settlement organization. |
| 189 | (b) A registration fee of $1,000. The registration fee is |
| 190 | nonrefundable and may not be prorated for a partial year of |
| 191 | registration. |
| 192 | (c) Fingerprints for the applicant and each of the |
| 193 | applicant's control persons in accordance with rules adopted by |
| 194 | the commission. |
| 195 | 1. The fingerprints may be submitted to the office or a |
| 196 | vendor acting on behalf of the office. |
| 197 | 2. The office may contract with a third-party vendor to |
| 198 | provide live-scan fingerprinting in lieu of a paper fingerprint |
| 199 | card. |
| 200 | 3. A state criminal history background check must be |
| 201 | conducted through the Department of Law Enforcement, and a |
| 202 | federal criminal history background check must be conducted |
| 203 | through the Federal Bureau of Investigation. |
| 204 | 4. All fingerprints submitted to the Department of Law |
| 205 | Enforcement must be submitted electronically and entered into |
| 206 | the statewide automated fingerprint identification system |
| 207 | established in s. 943.05(2)(b) and available for use in |
| 208 | accordance with s. 943.05(2)(g) and (h). The office shall pay an |
| 209 | annual fee to the department to participate in the system and |
| 210 | inform the department of any person whose fingerprints are no |
| 211 | longer required to be retained. |
| 212 | 5. The costs of fingerprint processing, including the cost |
| 213 | of retaining the fingerprints, shall be borne by the person |
| 214 | subject to the background check. |
| 215 | 6. The office is responsible for reviewing the results of |
| 216 | the state and federal criminal history checks and determining |
| 217 | whether the applicant meets registration requirements. |
| 218 | (d) Submit documentation demonstrating that the surety |
| 219 | bond requirements specified in s. 559.108 have been satisfied. |
| 220 | (e) Submit additional information or documentation |
| 221 | requested by the office and required by rule concerning the |
| 222 | applicant or a control person of the applicant. Additional |
| 223 | information may include documentation of pending and prior |
| 224 | disciplinary and criminal history events, including arrest |
| 225 | reports and certified copies of charging documents, plea |
| 226 | agreements, judgments and sentencing documents, documents |
| 227 | relating to pretrial intervention, orders terminating probation |
| 228 | or supervised release, final administrative agency orders, or |
| 229 | other comparable documents that may provide the office with the |
| 230 | appropriate information to determine eligibility for |
| 231 | registration. |
| 232 | (3) An application is considered received for the purposes |
| 233 | of s. 120.60 upon the office's receipt of the completed |
| 234 | application form, all required documentation, criminal history |
| 235 | information, the application fee, and all applicable |
| 236 | fingerprinting processing fees. |
| 237 | (4) The office shall issue a debt settlement organization |
| 238 | registration to each applicant who is not otherwise ineligible |
| 239 | and who meets the requirements of this section. However, it is a |
| 240 | ground for denial of registration if the applicant or one of the |
| 241 | applicant's control persons: |
| 242 | (a) Has been found guilty of, regardless of adjudication, |
| 243 | or has entered a plea of nolo contendere or guilty to, any |
| 244 | felony, any crime involving racketeering, fraud, theft, |
| 245 | embezzlement, fraudulent conversion, breach of trust, |
| 246 | misappropriation of property, dishonesty, or moral turpitude; |
| 247 | (b) Has committed any violation specified in s. 559.113; |
| 248 | (c) Is the subject of a pending felony criminal |
| 249 | prosecution or a prosecution or an administrative enforcement |
| 250 | action, in any jurisdiction, which involves fraud, racketeering, |
| 251 | embezzlement, fraudulent conversion, misappropriation of |
| 252 | property, theft, dishonesty, breach of trust, or any other act |
| 253 | of moral turpitude; |
| 254 | (d) Pays the office any fee, fine, or other amount with a |
| 255 | check or electronic transmission of funds which fails to clear |
| 256 | the applicant's financial institution; |
| 257 | (e) Makes a material misstatement on any application, |
| 258 | document, or record required to be submitted under this part or |
| 259 | the rules of the commission; or |
| 260 | (f) Has been the subject of any decision, finding, |
| 261 | injunction, suspension, prohibition, revocation, denial, |
| 262 | judgment, or other adverse action by any state or federal |
| 263 | agency. |
| 264 | (5) A registration issued under this section expires |
| 265 | annually on March 31, unless canceled, suspended, revoked, or |
| 266 | otherwise terminated, and must be renewed as provided under s. |
| 267 | 559.107. |
| 268 | Section 8. Effective April 1, 2011, section 559.107, |
| 269 | Florida Statutes, is created to read: |
| 270 | 559.107 Registration renewal.- |
| 271 | (1) In order to renew a debt settlement organization |
| 272 | registration, a debt settlement organization must submit: |
| 273 | (a) A completed registration renewal form as prescribed by |
| 274 | commission rule. |
| 275 | (b) Fingerprints, in accordance with s. 559.106, for any |
| 276 | new control persons who have not been screened. |
| 277 | (c) Any additional information or documentation requested |
| 278 | by the office and required by rule concerning the registrant or |
| 279 | control person of the registrant. Additional information may |
| 280 | include documentation of any pending and prior disciplinary and |
| 281 | criminal history events, including arrest reports and certified |
| 282 | copies of charging documents, plea agreements, judgments and |
| 283 | sentencing documents, documents relating to pretrial |
| 284 | intervention, orders terminating probation or supervised |
| 285 | release, final administrative agency orders, or other comparable |
| 286 | documents that may provide the office with the appropriate |
| 287 | information to determine eligibility for renewal of |
| 288 | registration. |
| 289 | (d) A nonrefundable renewal fee of $750 and nonrefundable |
| 290 | fees to cover the cost of further fingerprint processing and |
| 291 | retention as set forth in commission rule. |
| 292 | (2) The office may not renew a debt settlement |
| 293 | organization registration unless the registrant continues to |
| 294 | meet the minimum requirements for initial registration pursuant |
| 295 | to s. 559.106 and adopted rule. |
| 296 | Section 9. Section 559.108, Florida Statutes, is created |
| 297 | to read: |
| 298 | 559.108 Financial requirements; surety bond; disclosure.-A |
| 299 | debt settlement organization must: |
| 300 | (1) Obtain and maintain at all times insurance coverage |
| 301 | for employee dishonesty, depositor's forgery, and computer fraud |
| 302 | in an amount not less than the greater of $100,000 or 10 percent |
| 303 | of the monthly average of the aggregate of all deposits made by |
| 304 | debtors to the organization for distribution to creditors for |
| 305 | the 6 months immediately preceding the date of initial |
| 306 | application for or renewal of the insurance. The deductible on |
| 307 | such coverage may not exceed 10 percent of the face amount of |
| 308 | the policy coverage. |
| 309 | (2) Obtain and maintain a surety bond from a surety |
| 310 | company authorized to do business in this state. The amount and |
| 311 | form of the bond shall be specified by rule and must be at least |
| 312 | $50,000 but may not exceed $1 million. The rule must provide |
| 313 | allowances for business volume. The bond shall be in favor of |
| 314 | the state for the use and benefit of any debtor who suffers or |
| 315 | sustains any loss or damage by reason of any violation of this |
| 316 | part. Pursuant to initial registration and renewal, each |
| 317 | applicant shall furnish to the office: |
| 318 | (a) The original executed surety bond issued by a surety |
| 319 | company authorized to do business in this state. |
| 320 | (b) A statement from the surety company that the premium |
| 321 | for the bond has been paid in full by the applicant. |
| 322 | (c) A statement from the surety company that the bond |
| 323 | issued by the surety company meets the requirements of this |
| 324 | part. The liability of the surety company under any bond issued |
| 325 | pursuant to this section may not, in the aggregate, exceed the |
| 326 | amount of the bond regardless of the number or amount of any |
| 327 | claims filed or which might be asserted against the surety on |
| 328 | such bond. If multiple claims are filed which collectively |
| 329 | exceed the amount of the bond, the surety may pay the full |
| 330 | amount of the bond to the office and is not further liable under |
| 331 | the bond. The office shall hold such funds for distribution to |
| 332 | claimants and administratively determine and pay to each |
| 333 | claimant a pro rata share of each valid claim made within 6 |
| 334 | months after the date the first claim is filed against the |
| 335 | surety. |
| 336 | Section 10. Section 559.109, Florida Statutes, is created |
| 337 | to read: |
| 338 | 559.109 Maintenance of records.- |
| 339 | (1) Each registered debt settlement organization shall |
| 340 | maintain, at the principal place of business designated on the |
| 341 | registration, all books, accounts, records, and documents |
| 342 | necessary to determine the registrant's compliance with this |
| 343 | part. |
| 344 | (2) The office may authorize the maintenance of records at |
| 345 | a location other than a principal place of business. The office |
| 346 | may require books, accounts, and records to be produced and |
| 347 | available at a reasonable and convenient location in this state. |
| 348 | (3) The commission may prescribe by rule the minimum |
| 349 | information to be shown in the books, accounts, records, and |
| 350 | documents of registrants so that such records enable the office |
| 351 | to determine the registrant's compliance with this part. |
| 352 | (4) All books, accounts, records, documents, and receipts |
| 353 | of any payment transaction must be preserved and kept available |
| 354 | for inspection by the office for at least 5 years after the date |
| 355 | the transaction is completed. The commission may prescribe by |
| 356 | rule requirements for the destruction of books, accounts, |
| 357 | records, and documents retained by the registrant after the |
| 358 | completion of the required 5-year period. |
| 359 | Section 11. Section 559.111, Florida Statutes, is created |
| 360 | to read: |
| 361 | 559.111 Financial analysis; service contracts.- |
| 362 | (1) Before a debtor signs a service contract, the debt |
| 363 | settlement organization shall prepare, retain a copy of, and |
| 364 | provide to the debtor a written financial analysis specific to |
| 365 | the debtor which includes an evaluation of the debtor's income, |
| 366 | expenses, and all debts. An additional fee may not be charged |
| 367 | for the financial analysis. |
| 368 | (2) Based on the completed financial analysis, the debt |
| 369 | settlement organization shall provide to the debtor, and retain |
| 370 | a copy of, a written determination of the debtor's suitability |
| 371 | for debt settlement services and whether the debtor can |
| 372 | reasonably meet the requirements of the service contract, |
| 373 | including the debtor's ability to save the amount estimated to |
| 374 | be needed to fund the settlement of the debt. |
| 375 | (3) The service contract between the debt settlement |
| 376 | organization and the debtor must be signed and dated by the |
| 377 | debtor and include all of the following: |
| 378 | (a) The following statement in at least 12-point uppercase |
| 379 | type at the top of the service contract: |
| 380 |
|
| 381 | IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR |
| 382 | CREDITORS BEFORE SIGNING THIS CONTRACT. YOUR CREDITORS |
| 383 | MAY BE WILLING TO DIRECTLY NEGOTIATE A SETTLEMENT, |
| 384 | INTEREST RATE REDUCTION, MODIFICATION, PAYMENT PLAN, |
| 385 | OR RESTRUCTURING OF YOUR DEBT FREE OF CHARGE. |
| 386 |
|
| 387 | YOUR USE OF DEBT SETTLEMENT SERVICES MAY RESULT IN |
| 388 | LATE FEES, ADDITIONAL DEBTS, AND AN ADVERSE CREDIT |
| 389 | RATING. YOU SHOULD CONTACT YOUR CREDITOR FOR MORE |
| 390 | INFORMATION. |
| 391 |
|
| 392 | (b) A full and detailed description of the services to be |
| 393 | performed by the debt settlement organization for the debtor, |
| 394 | including the financial analysis determining the suitability of |
| 395 | the debtor for debt settlement services, all guarantees and all |
| 396 | promises of full or partial refunds, the estimated date or |
| 397 | length of time by which the services are to be performed, and a |
| 398 | copy of the Florida Debt Settlement Services Act. |
| 399 | (c) All terms and conditions of payment, including the |
| 400 | anticipated total of all payments to be made by the debtor and |
| 401 | the estimated amount of any payments to be made to the debt |
| 402 | settlement organization or to any other person. |
| 403 | (d) The debt settlement organization's principal business |
| 404 | address and the name and address of its agent in the state |
| 405 | authorized to receive service of process. |
| 406 | (e) A clear and conspicuous statement in boldface type, in |
| 407 | immediate proximity to the space reserved for the debtor's |
| 408 | signature, which states: "You, the debtor, may cancel this |
| 409 | service contract at any time before midnight of the 5th business |
| 410 | day after the date of signing this contract. (See the attached |
| 411 | notice of right to cancel for further explanation of this |
| 412 | right.)" |
| 413 | (f) A notice of right to cancel attached to the contract, |
| 414 | in duplicate and easily detachable, which contains the following |
| 415 | statement in at least 12-point uppercase type: |
| 416 |
|
| 417 | NOTICE OF RIGHT TO CANCEL |
| 418 |
|
| 419 | YOU MAY CANCEL ANY CONTRACT FOR DEBT SETTLEMENT |
| 420 | SERVICES WITHIN 5 BUSINESS DAYS AFTER THE DATE THE |
| 421 | CONTRACT IS SIGNED BY YOU WITHOUT INCURRING ANY |
| 422 | PENALTY OR OBLIGATION. |
| 423 |
|
| 424 | YOUR PAYMENT MUST BE RETURNED TO YOU WITHIN 10 |
| 425 | BUSINESS DAYS AFTER RECEIPT OF YOUR CANCELLATION |
| 426 | NOTICE. |
| 427 |
|
| 428 | TO CANCEL THIS CONTRACT, YOU MUST MAIL OR DELIVER A |
| 429 | SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR |
| 430 | ANY OTHER WRITTEN NOTICE CLEARLY INDICATING YOUR |
| 431 | DESIRE TO CANCEL YOUR CONTRACT. |
| 432 |
|
| 433 | TO: ...(name of debt settlement organization)... |
| 434 | AT: ...(address)... |
| 435 |
|
| 436 | BY SIGNING AND DATING THIS NOTICE, I HEREBY CANCEL MY |
| 437 | SERVICE CONTRACT, EXECUTED ON: ...(date service |
| 438 | contract signed)... |
| 439 |
|
| 440 | ...(Signature of Debtor)... |
| 441 | ...(Date)... |
| 442 | ...(Address)... |
| 443 | ...(Phone Number)... |
| 444 |
|
| 445 | (4) The debt settlement organization must provide the |
| 446 | debtor, at the time the documents are signed, with a copy of the |
| 447 | completed service contract as described in subsection (3) and |
| 448 | all other documents the organization requires the debtor to |
| 449 | sign. |
| 450 | Section 12. Section 559.112, Florida Statutes, is created |
| 451 | to read: |
| 452 | 559.112 Prohibited acts.- |
| 453 | (1) A debt settlement organization may not, directly or |
| 454 | indirectly, charge or accept from a debtor: |
| 455 | (a) Any payment for services before the execution of a |
| 456 | written service contract. |
| 457 | (b) A fee or contribution greater than $50 for the initial |
| 458 | setup or initial consultation. |
| 459 | (c) A fee or contribution greater than $120 per year for |
| 460 | debt settlement services provided in addition to the initial |
| 461 | consultation under paragraph (b). |
| 462 | (d) A fee or contribution for debt settlement services |
| 463 | that exceeds 7.5 percent of the amount paid monthly by the |
| 464 | debtor to the organization for disbursement to a creditor or $35 |
| 465 | per month, whichever is greater, or 7.5 percent of the enrolled |
| 466 | debt. |
| 467 | (e) A fee or contribution for debt settlement services |
| 468 | that exceeds 40 percent of the savings realized, which is |
| 469 | defined as the difference between the amount of enrolled debt |
| 470 | and the amount paid to the creditor in discharge of the enrolled |
| 471 | debt, less any fees collected pursuant to paragraphs (b) and |
| 472 | (c). However, such fees collected for debt settlement services, |
| 473 | in the aggregate, may not exceed 20 percent of the enrolled |
| 474 | debt. For service contracts requiring fees to be paid on a |
| 475 | monthly basis, the payment of such fees must be spread uniformly |
| 476 | over at least 18 months or 50 percent of the term of the |
| 477 | contract, whichever is greater. |
| 478 | (f) A fee or contribution unless the debt settlement |
| 479 | services result in a settlement, discharge, or modification of |
| 480 | the debt on terms more favorable to the debtor than the terms of |
| 481 | the original agreement between the debtor and creditor. |
| 482 | (g) Any fee or contribution for debt settlement services, |
| 483 | unless no other payment has been received, directly or |
| 484 | indirectly, from the debtor for such services. Fees authorized |
| 485 | under this subsection may not be a part of or included in the |
| 486 | calculation of total enrolled debt. |
| 487 | (2) A debt settlement organization may not: |
| 488 | (a) Advise any debtor, directly or indirectly, against |
| 489 | contacting or communicating with her or his creditors before or |
| 490 | during the service contract period. |
| 491 | (b) Make or use any false or misleading representations or |
| 492 | omit any material fact in connection with the offer, sale, or |
| 493 | provision of services, or engage, directly or indirectly, in any |
| 494 | fraudulent, false, misleading, unconscionable, unfair, or |
| 495 | deceptive act or practice in connection with the offer or sale |
| 496 | of any of the services of a debt settlement organization. |
| 497 | (c) Provide services to a debtor without executing a |
| 498 | service contract that complies with s. 559.111. |
| 499 | (d) Fail to provide copies of the financial analysis, all |
| 500 | service contracts, and any other documents the debtor is |
| 501 | required to sign as provided under s. 559.111. |
| 502 | (e) Fail to perform any of the terms, conditions, and |
| 503 | obligations provided in the service contract with the debtor. |
| 504 | (f) Fail to disclose on any offer or sale of services, |
| 505 | including any Internet website, the debt settlement |
| 506 | organization's name, business address, telephone number, and e- |
| 507 | mail address, if any. |
| 508 | (g) Fail to provide the debtor with a 5-business-day right |
| 509 | of cancellation without the debtor incurring any penalty or |
| 510 | obligation. |
| 511 | (h) Fail to report on a form prescribed by commission rule |
| 512 | any change to information contained in an initial application |
| 513 | form or any amendment to the application within 30 days after |
| 514 | the change is effective. |
| 515 | (i) Fail to comply with any of the provisions of this |
| 516 | part. |
| 517 | Section 13. Section 559.113, Florida Statutes, is created |
| 518 | to read: |
| 519 | 559.113 Debtor complaints; administrative duties.- |
| 520 | (1) The office shall receive and maintain records of |
| 521 | correspondence and complaints from debtors concerning any person |
| 522 | who provides debt settlement services, including any debt |
| 523 | settlement organization. |
| 524 | (2) The office shall inform and furnish relevant |
| 525 | information to the appropriate regulatory body if a debt |
| 526 | settlement organization exempt from registration under this part |
| 527 | has been named in consumer complaints alleging violations of |
| 528 | this part. |
| 529 | (3) The office shall investigate complaints and record the |
| 530 | resolution of such complaints. |
| 531 | (4) A debt settlement organization that provides or |
| 532 | attempts to provide debt settlement services without first |
| 533 | registering in accordance with this part is subject to a penalty |
| 534 | of up to $25,000 in addition to the other remedies provided in |
| 535 | this part and under part II of chapter 501. The office shall |
| 536 | advise the appropriate state attorney, or the Attorney General, |
| 537 | of any determination by the office of a violation of this part |
| 538 | by any debt settlement organization that is not registered as |
| 539 | required by this part. The office shall furnish the state |
| 540 | attorney or Attorney General with the office's information |
| 541 | concerning the alleged violations of such requirements. The |
| 542 | enforcing authority is entitled to reasonable attorney's fees |
| 543 | and costs in any action brought to enforce this part against an |
| 544 | unregistered debt settlement organization. |
| 545 | (5) A registered debt settlement organization must provide |
| 546 | a written response to the office within 20 days after receipt of |
| 547 | a written request from the office for information concerning a |
| 548 | consumer complaint. The response must address the issues and |
| 549 | allegations raised in the complaint. The office may impose an |
| 550 | administrative fine of up to $2,500 per request per day upon any |
| 551 | registrant that fails to comply with this subsection. |
| 552 | Section 14. Section 559.114, Florida Statutes, is created |
| 553 | to read: |
| 554 | 559.114 Subpoenas.- |
| 555 | (1) The office may: |
| 556 | (a) Issue and serve subpoenas and subpoenas duces tecum to |
| 557 | compel the attendance of witnesses and the production of all |
| 558 | books, accounts, records, and other documents and materials |
| 559 | relevant to an investigation conducted by the office. The |
| 560 | office, or its authorized representative, may administer oaths |
| 561 | and affirmations to any person. |
| 562 | (b) Seek subpoenas or subpoenas duces tecum from any court |
| 563 | to command the appearance of witnesses and the production of |
| 564 | books, accounts, records, and other documents or materials at a |
| 565 | time and place named in the subpoenas, and an authorized |
| 566 | representative of the office may serve such subpoenas. |
| 567 | (2) If there is substantial noncompliance with a subpoena |
| 568 | or subpoena duces tecum issued by the office, the office may |
| 569 | petition the court in the county where the person subpoenaed |
| 570 | resides or has her or his principal place of business for an |
| 571 | order requiring the person to appear, testify, or produce such |
| 572 | books, accounts, records, and other documents as are specified |
| 573 | in the subpoena or subpoena duces tecum. |
| 574 | (3) The office is entitled to the summary procedure |
| 575 | provided in s. 51.011, and the court shall advance such cause on |
| 576 | its calendar. Attorney's fees and any other costs incurred by |
| 577 | the office to obtain an order granting, in whole or in part, a |
| 578 | petition for enforcement of a subpoena or subpoena duces tecum |
| 579 | shall be taxed against the subpoenaed person, and failure to |
| 580 | comply with such order is a contempt of court. |
| 581 | (4) To aid in the enforcement of this part, the office may |
| 582 | require or permit a person to file a statement in writing, under |
| 583 | oath or otherwise as the office determines, as to all the facts |
| 584 | and circumstances concerning the matter to be investigated. |
| 585 | Section 15. Section 559.115, Florida Statutes, is created |
| 586 | to read: |
| 587 | 559.115 Cease and desist orders.-The office may issue and |
| 588 | serve upon any person an order to cease and desist and to take |
| 589 | corrective action if it has reason to believe the person is |
| 590 | violating, has violated, or is about to violate any provision of |
| 591 | this part, any rule or order issued under this part, or any |
| 592 | written agreement between the person and the office. All |
| 593 | procedural matters relating to issuance and enforcement of such |
| 594 | order are governed by the Administrative Procedure Act. |
| 595 | Section 16. Section 559.116, Florida Statutes, is created |
| 596 | to read: |
| 597 | 559.116 Violations; penalties.- |
| 598 | (1) A person who violates any provision of this part |
| 599 | commits an unfair or deceptive trade practice as defined in part |
| 600 | II of chapter 501 and is also subject to the penalties, |
| 601 | remedies, and enforcement actions provided therein. Further, any |
| 602 | debtor injured by a violation of this part may bring an action |
| 603 | for recovery of damages. Judgment shall be entered for actual |
| 604 | damages, but in no case less than the amount paid by the debtor |
| 605 | to the debt settlement organization plus reasonable attorney's |
| 606 | fees and costs. |
| 607 | (2) The office may impose an administrative fine on, or |
| 608 | revoke or suspend the registration of a registrant who has |
| 609 | committed a violation of this part. Final action to fine, |
| 610 | suspend, or revoke the registration of a registrant is subject |
| 611 | to review in accordance with chapter 120. |
| 612 | (a) The office may impose suspension rather than |
| 613 | revocation of a registration if circumstances warrant that one |
| 614 | or the other should be imposed and the registrant demonstrates |
| 615 | that the registrant has taken affirmative steps that can be |
| 616 | expected to effectively eliminate the violations and that the |
| 617 | registrant's registration has never been previously suspended. |
| 618 | (b) In addition to, or in lieu of suspension or revocation |
| 619 | of a registration, the office may impose an administrative fine |
| 620 | of up to $25,000 per violation. The office shall adopt rules |
| 621 | establishing guidelines for imposing administrative penalties. |
| 622 | (3) A person who provides debt settlement services in this |
| 623 | state without first registering with the office, or who |
| 624 | registers or attempts to register by means of fraud, |
| 625 | misrepresentation, or concealment, commits a felony of the third |
| 626 | degree, punishable as provided in s. 775.082, s. 775.083, or s. |
| 627 | 775.084. |
| 628 | Section 17. Paragraph (g) of subsection (1) of section |
| 629 | 516.07, Florida Statutes, is amended to read: |
| 630 | 516.07 Grounds for denial of license or for disciplinary |
| 631 | action.- |
| 632 | (1) The following acts are violations of this chapter and |
| 633 | constitute grounds for denial of an application for a license to |
| 634 | make consumer finance loans and grounds for any of the |
| 635 | disciplinary actions specified in subsection (2): |
| 636 | (g) Any violation of part III of chapter 817 or part II of |
| 637 | chapter 559 or of any rule adopted under part II of chapter 559. |
| 638 | Section 18. Sections 559.10, 559.11, 559.12, and 559.13, |
| 639 | Florida Statutes, are repealed. |
| 640 | Section 19. Effective July 1, 2010, the sums of $261,938 |
| 641 | in recurring funds and $213,767 in nonrecurring funds are |
| 642 | appropriated from the Regulatory Trust Fund of the Department of |
| 643 | Financial Services to the Office of Financial Regulation, and |
| 644 | four full-time equivalent positions with the associated salary |
| 645 | rate of 187,707 are authorized, for the purpose of administering |
| 646 | this act during the 2010-2011 fiscal year. |
| 647 | Section 20. Except as otherwise expressly provided in this |
| 648 | act and except for this section, which shall take effect upon |
| 649 | this act becoming a law, this act shall take effect January 1, |
| 650 | 2011. |