| 1 | A bill to be entitled |
| 2 | An act relating to debt negotiation services; amending s. |
| 3 | 817.801, F.S.; providing additional definitions relating |
| 4 | to debt negotiation services; amending s. 817.802, F.S., |
| 5 | conforming a cross-reference; amending s. 817.803, F.S.; |
| 6 | providing that an attorney providing legal representation |
| 7 | is exempt from debt negotiation organization requirements; |
| 8 | creating s. 817.8071, F.S.; prohibiting certain acts by a |
| 9 | debt negotiation organization; providing penalties; |
| 10 | creating s. 817.8072, F.S.; providing insurance |
| 11 | requirements for a debt negotiation organization; creating |
| 12 | s. 817.8073, F.S.; providing requirements for debt |
| 13 | negotiation service contracts; providing an effective |
| 14 | date. |
| 15 |
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| 16 | Be It Enacted by the Legislature of the State of Florida: |
| 17 |
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| 18 | Section 1. Section 817.801, Florida Statutes, is amended |
| 19 | to read: |
| 20 | 817.801 Definitions.-As used in this part: |
| 21 | (1) "Concession" means assent to repayment of an unsecured |
| 22 | debt for terms more favorable to a debtor than the terms of the |
| 23 | original contract between the debtor and a creditor. |
| 24 | (2)(1) "Credit counseling agency" means any organization, |
| 25 | other than a debt negotiation organization, providing debt |
| 26 | management services or credit counseling services. |
| 27 | (3)(2) "Credit counseling services" means confidential |
| 28 | money management, debt reduction, and financial educational |
| 29 | services provided to a debtor by a credit counseling agency. |
| 30 | (4)(3) "Creditor contribution" means a any sum that a |
| 31 | creditor agrees to contribute to a credit counseling agency, |
| 32 | whether directly or by setoff against amounts otherwise payable |
| 33 | to the creditor on behalf of debtors. |
| 34 | (5)(4) "Debt management services" means services provided |
| 35 | to a debtor by a credit counseling agency organization for a fee |
| 36 | to: |
| 37 | (a) Effect the adjustment, compromise, or discharge of any |
| 38 | unsecured account, note, or other indebtedness of the debtor; or |
| 39 | (b) Receive from the debtor and disburse to a creditor any |
| 40 | money or other thing of value. |
| 41 | (6) "Debt negotiation organization" means any person |
| 42 | providing debt negotiation services in accordance with s. |
| 43 | 817.8071. |
| 44 | (7) "Debt negotiation services" means intermediary |
| 45 | services provided for a fee by a debt negotiation organization |
| 46 | between a debtor and one or more of the debtor's creditors for |
| 47 | the purpose of obtaining concessions, but without the paid |
| 48 | intermediary holding or disbursing funds to the individual |
| 49 | creditors. |
| 50 | (8) "Debt principal" means the total amount of original |
| 51 | debt, including unpaid interest and fees, owed by the debtor as |
| 52 | of the date of initial enrollment in a debt negotiation |
| 53 | organization's plan. |
| 54 | (9)(5) "Person" means an any individual, corporation, |
| 55 | partnership, trust, association, or other legal entity, but does |
| 56 | not include a governmental organization or subdivision thereof. |
| 57 | (10) "Plan" means a program or strategy in which a debt |
| 58 | negotiation organization furnishes debt negotiation services to |
| 59 | a debtor in contemplation that during the course of the plan the |
| 60 | debtor's creditors will settle debts for less than the full |
| 61 | amount of the debts owed. |
| 62 | Section 2. Subsection (1) of section 817.802, Florida |
| 63 | Statutes, is amended to read: |
| 64 | 817.802 Unlawful fees and costs.- |
| 65 | (1) It is unlawful for any person, while engaging in debt |
| 66 | management services or credit counseling services, to charge or |
| 67 | accept from a debtor residing in this state, directly or |
| 68 | indirectly, a fee or contribution greater than $50 for the |
| 69 | initial setup or initial consultation. Subsequently, the person |
| 70 | may not charge or accept a fee or contribution from a debtor |
| 71 | residing in this state greater than $120 per year for additional |
| 72 | consultations or, alternatively, if debt management services as |
| 73 | defined in s. 817.801(4)(b) are provided, the person may charge |
| 74 | the greater of 7.5 percent of the amount paid monthly by the |
| 75 | debtor to the person or $35 per month. |
| 76 | Section 3. Section 817.803, Florida Statutes, is amended |
| 77 | to read: |
| 78 | 817.803 Exceptions.-Nothing in This part does not apply |
| 79 | applies to: |
| 80 | (1) A person licensed to practice law in this state who is |
| 81 | providing legal representation to a client with respect to Any |
| 82 | debt management, or credit counseling, or debt negotiation |
| 83 | services. provided in the practice of law in this state; |
| 84 | (2) A Any person who engages in debt adjustment to adjust |
| 85 | the indebtedness owed to such person.; or |
| 86 | (3) The following entities or their subsidiaries: |
| 87 | (a) The Federal National Mortgage Association.; |
| 88 | (b) The Federal Home Loan Mortgage Corporation.; |
| 89 | (c) The Florida Housing Finance Corporation., a public |
| 90 | corporation created in s. 420.504; |
| 91 | (d) A bank, bank holding company, trust company, savings |
| 92 | and loan association, credit union, credit card bank, or savings |
| 93 | bank that is regulated and supervised by the Office of the |
| 94 | Comptroller of the Currency, the Office of Thrift Supervision, |
| 95 | the Federal Reserve, the Federal Deposit Insurance Corporation, |
| 96 | the National Credit Union Administration, the Office of |
| 97 | Financial Regulation of the Department of Financial Services, or |
| 98 | any state banking regulator.; |
| 99 | (e) A consumer reporting agency as defined in the Federal |
| 100 | Fair Credit Reporting Act, 15 U.S.C. ss. 1681-1681y, as it |
| 101 | existed on April 5, 2004.; or |
| 102 | (f) Any subsidiary or affiliate of a bank holding company, |
| 103 | its employees and its exclusive agents acting under written |
| 104 | agreement. |
| 105 | Section 4. Section 817.8071, Florida Statutes, is created |
| 106 | to read: |
| 107 | 817.8071 Debt negotiation organization; prohibited acts.- |
| 108 | (1) A debt negotiation organization may not: |
| 109 | (a) Directly or indirectly impose a fee or other charge on |
| 110 | a debtor or receive money from, or on behalf of, a debtor for |
| 111 | debt negotiation services except as provided under this section. |
| 112 | (b) Impose charges or receive payment for debt negotiation |
| 113 | services before the debt negotiation organization and the debtor |
| 114 | have signed a service contract that complies with s. 817.8073. |
| 115 | (c) Make or use any false or misleading representations or |
| 116 | omit any material fact in the offer or sale of debt negotiation |
| 117 | services offered, or engage, directly or indirectly, in any |
| 118 | fraudulent, false, misleading, unconscionable, unfair, or |
| 119 | deceptive act or practice in connection with the offer or sale |
| 120 | of any of such services. |
| 121 | (d) Provide services to a debtor without executing a |
| 122 | service contract that complies with s. 817.8073. |
| 123 | (e) Fail to provide to the debtor copies of all service |
| 124 | contracts and other documents that the debtor is required to |
| 125 | sign. |
| 126 | (f) Fail to obtain insurance coverage or fail to make such |
| 127 | coverage information available for public inspection. |
| 128 | (2) If a debtor assents to a plan that contemplates that a |
| 129 | creditor will settle a debt for less than the principal amount |
| 130 | of the debt, the debt negotiation organization may charge as the |
| 131 | total amount of settlement fees only an amount that does not |
| 132 | exceed one-half of the difference between the debt principal and |
| 133 | the concession agreed upon with the debtor's creditor on a |
| 134 | specific account. A debt negotiation organization may not |
| 135 | collect any fees other than settlement fees and may collect |
| 136 | settlement fees only after a settlement of an account with the |
| 137 | debtor's creditor is agreed upon and documentation memorializing |
| 138 | such settlement is executed. |
| 139 | Section 5. Section 817.8072, Florida Statutes, is created |
| 140 | to read: |
| 141 | 817.8072 Insurance requirements for debt negotiation |
| 142 | services.- |
| 143 | (1) A debt negotiation organization must obtain and |
| 144 | maintain insurance coverage of at least $100,000 at all times |
| 145 | for employee dishonesty, depositor's forgery, and computer |
| 146 | fraud. The deductible on such coverage may not exceed 10 percent |
| 147 | of the face amount of the policy coverage. |
| 148 | (2) Upon written request, a debt negotiation organization |
| 149 | must provide a copy of the insurance coverage required under |
| 150 | this section to any individual requesting a copy for a charge |
| 151 | that does not exceed the cost of copying. |
| 152 | Section 6. Section 817.8073, Florida Statutes, is created |
| 153 | to read: |
| 154 | 817.8073 Debt negotiation service contract.- |
| 155 | (1) The service contract between the debt negotiation |
| 156 | organization and the debtor must be signed and dated by the |
| 157 | debtor and include all of the following: |
| 158 | (a) A full and detailed description of the debt |
| 159 | negotiation services to be performed for the debtor by the |
| 160 | organization and the estimated date or length of time for |
| 161 | performing the services. |
| 162 | (b) All terms and conditions of payment, including the |
| 163 | estimated total of all payments to be made by the debtor. |
| 164 | (c) The organization's principal business address and the |
| 165 | name and address of its registered agent authorized to receive |
| 166 | service of process in this state. |
| 167 | (d) A clear and conspicuous statement, in boldface type in |
| 168 | the immediate proximity to the space reserved for the debtor's |
| 169 | signature, which states: "You, the debtor, may cancel this |
| 170 | service contract at any time before midnight of the 5th business |
| 171 | day after the date of signing this contract. [See the attached |
| 172 | Notice of Right to Cancel for further explanation of this |
| 173 | right.]" |
| 174 | (e) A Notice of Right to Cancel, which must be |
| 175 | substantially in the following form: |
| 176 |
|
| 177 | NOTICE OF RIGHT TO CANCEL |
| 178 |
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| 179 | YOU MAY CANCEL A CONTRACT FOR DEBT NEGOTIATION SERVICES |
| 180 | WITHIN 5 BUSINESS DAYS AFTER THE DATE THE CONTRACT IS SIGNED BY |
| 181 | YOU WITHOUT INCURRING A PENALTY OR OBLIGATION. TO CANCEL THIS |
| 182 | CONTRACT, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS |
| 183 | CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE CLEARLY |
| 184 | INDICATING YOUR DESIRE TO CANCEL YOUR CONTRACT. |
| 185 |
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| 186 | TO:...(name of debt negotiation organization)... |
| 187 | AT:...(address of debt negotiation organization)... |
| 188 |
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| 189 | BY SIGNING AND DATING THIS NOTICE, I HEREBY CANCEL MY |
| 190 | SERVICE CONTRACT, EXECUTED ON:...(date service contract |
| 191 | signed)... |
| 192 |
|
| 193 | ...(Signature of Debtor)... |
| 194 | ...(Date Cancellation Signed)... |
| 195 | ...(Address of Debtor)... |
| 196 | ...(Phone Number of Debtor)... |
| 197 |
|
| 198 | (2) At the time the documents are signed, the debt |
| 199 | negotiation organization must provide the debtor with a copy of |
| 200 | the completed service contract and all other documents that the |
| 201 | organization requires the debtor to sign. |
| 202 | Section 7. This act shall take effect July 1, 2010. |