Florida Senate - 2010 SB 706
By Senator Fasano
11-00582B-10 2010706__
1 A bill to be entitled
2 An act relating to debt negotiation services; amending
3 s. 817.801, F.S.; providing additional definitions
4 relating to debt negotiation services; amending s.
5 817.802, F.S., conforming a cross-reference; amending
6 s. 817.803, F.S.; providing that an attorney providing
7 legal representation is exempt from debt negotiation
8 organization requirements; creating s. 817.8071, F.S.;
9 specifying acts prohibited by a debt negotiation
10 organization; creating s. 817.8072, F.S.; providing
11 insurance requirements for a debt negotiation
12 organization; creating s. 817.8073, F.S.; providing
13 requirements for debt negotiation service contracts;
14 providing an effective date.
15
16 Be It Enacted by the Legislature of the State of Florida:
17
18 Section 1. Section 817.801, Florida Statutes, is amended to
19 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 then 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 services
45 provided for a fee by a debt negotiation organization between a
46 debtor and one or more of the debtor’s creditors for the purpose
47 of obtaining concessions, but without the paid intermediary
48 holding or disbursing funds to the individual creditors.
49 (8) “Debt principal” means the total amount of original
50 debt, including unpaid interest and fees, owed by the debtor as
51 of the date of initial enrollment in a debt negotiation
52 organization’s plan.
53 (9)(5) “Person” means an any individual, corporation,
54 partnership, trust, association, or other legal entity, but does
55 not include a governmental organization or subdivision thereof.
56 (10) “Plan” means a program or strategy in which a debt
57 negotiation organization furnishes debt negotiation services to
58 a debtor in contemplation that during the course of the plan the
59 debtor’s creditors will settle debts for less than the full
60 amount of the debts owed.
61 Section 2. Subsection (1) of section 817.802, Florida
62 Statutes, is amended to read:
63 817.802 Unlawful fees and costs.—
64 (1) It is unlawful for any person, while engaging in debt
65 management services or credit counseling services, to charge or
66 accept from a debtor residing in this state, directly or
67 indirectly, a fee or contribution greater than $50 for the
68 initial setup or initial consultation. Subsequently, the person
69 may not charge or accept a fee or contribution from a debtor
70 residing in this state greater than $120 per year for additional
71 consultations or, alternatively, if debt management services as
72 defined in s. 817.801(4)(b) are provided, the person may charge
73 the greater of 7.5 percent of the amount paid monthly by the
74 debtor to the person or $35 per month.
75 Section 3. Section 817.803, Florida Statutes, is amended to
76 read:
77 817.803 Exceptions.—Nothing in This part does not apply
78 applies to:
79 (1) A person licensed to practice law in this state who is
80 providing legal representation to a client with respect to Any
81 debt management, or credit counseling, or debt negotiation
82 services. provided in the practice of law in this state;
83 (2) A Any person who engages in debt adjustment to adjust
84 the indebtedness owed to such person.; or
85 (3) The following entities or their subsidiaries:
86 (a) The Federal National Mortgage Association.;
87 (b) The Federal Home Loan Mortgage Corporation.;
88 (c) The Florida Housing Finance Corporation., a public
89 corporation created in s. 420.504;
90 (d) A bank, bank holding company, trust company, savings
91 and loan association, credit union, credit card bank, or savings
92 bank that is regulated and supervised by the Office of the
93 Comptroller of the Currency, the Office of Thrift Supervision,
94 the Federal Reserve, the Federal Deposit Insurance Corporation,
95 the National Credit Union Administration, the Office of
96 Financial Regulation of the Department of Financial Services, or
97 any state banking regulator.;
98 (e) A consumer reporting agency as defined in the Federal
99 Fair Credit Reporting Act, 15 U.S.C. ss. 1681-1681y, as it
100 existed on April 5, 2004.; or
101 (f) Any subsidiary or affiliate of a bank holding company,
102 its employees and its exclusive agents acting under written
103 agreement.
104 Section 4. Section 817.8071, Florida Statutes, is created
105 to read:
106 817.8071 Debt negotiation organization.—
107 (1) A debt negotiation organization may not:
108 (a) Directly or indirectly, impose a fee or other charge on
109 a debtor or receive money from, or on behalf of, a debtor for
110 debt negotiation services except as provided under this section.
111 (b) Impose charges or receive payment for debt negotiation
112 services before the debt negotiation organization and the debtor
113 have signed a service contract that complies with s. 817.8073.
114 (c) Make or use any false or misleading representations or
115 omit any material fact in the offer or sale of debt negotiation
116 services offered, or engage, directly or indirectly, in any
117 fraudulent, false, misleading, unconscionable, unfair, or
118 deceptive act or practice in connection with the offer or sale
119 of any of such services.
120 (d) Provide services to a debtor without executing a
121 service contract that complies with s. 817.8073.
122 (e) Fail to provide to the debtor copies of all service
123 contracts and other documents that the debtor is required to
124 sign.
125 (f) Fail to obtain insurance coverage or fail to make such
126 coverage information available for public inspection.
127 (2) If a debtor assents to a plan that contemplates that a
128 creditor will settle debt for less than the principal amount of
129 debt, the debt negotiation organization may charge as the total
130 amount of settlement fees only an amount that does not exceed
131 one-half of the difference between the debt principal and the
132 concession agreed upon with the debtor’s creditor on a specific
133 account. A debt negotiation organization may not collect any
134 fees other than settlement fees, and may collect settlement fees
135 only after a settlement of an account with the debtor’s creditor
136 has been agreed upon and documentation memorializing such
137 settlement has been executed.
138 Section 5. Section 817.8072, Florida Statutes, is created
139 to read:
140 817.8072 Insurance requirements for debt negotiation
141 service.—
142 (1) A debt negotiation organization must obtain and
143 maintain insurance coverage at all times for employee
144 dishonesty, depositor’s forgery, and computer fraud in an amount
145 not less than $100,000. The deductible on such coverage may not
146 exceed 10 percent of the face amount of the policy coverage.
147 (2) Upon written request, a debt negotiation organization
148 must provide a copy of the insurance policies required under
149 this section to any party requesting a copy for a charge that
150 does not exceed the cost of copying.
151 Section 6. Section 817.8073, Florida Statutes, is created
152 to read:
153 817.8073 Debt negotiation service contract.—
154 (1) The service contract between the debt negotiation
155 organization and the debtor must be signed and dated by the
156 debtor and include all of the following:
157 (a) A full and detailed description of the debt negotiation
158 services to be performed for the debtor by the organization, and
159 the estimated date or length of time for performing the
160 services.
161 (b) All terms and conditions of payment, including the
162 estimated total of all payments to be made by the debtor.
163 (c) The organization’s principal business address and the
164 name and address of its agent authorized to receive service of
165 process in this state.
166 (d) A clear and conspicuous statement, in boldface type in
167 the immediate proximity to the space reserved for the debtor’s
168 signature, which states: “You, the debtor, may cancel this
169 service contract at any time before midnight of the 5th business
170 day after the date of signing this contract. [See the attached
171 Notice of Right to Cancel for further explanation of this
172 right.]”
173 (e) A Notice of Right to Cancel, which must be
174 substantially in the following form:
175
176 NOTICE OF RIGHT TO CANCEL
177
178 YOU MAY CANCEL A CONTRACT FOR DEBT NEGOTIATION SERVICES
179 WITHIN 5 BUSINESS DAYS AFTER THE DATE THE CONTRACT IS SIGNED BY
180 YOU WITHOUT INCURRING A PENALTY OR OBLIGATION. TO CANCEL THIS
181 CONTRACT, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS
182 CANCELATION NOTICE OR ANY OTHER WRITTEN NOTICE CLEARLY
183 INDICATING YOUR DESIRE TO CANCEL YOUR CONTRACT.
184
185 TO:...(name of debt negotiation organization)...
186 AT:...(address of debt negotiation organization)...
187
188 BY SIGNING AND DATING THIS NOTICE, I HEREBY CANCEL MY
189 SERVICE CONTRACT, EXECUTED ON:...(date service contract
190 signed)...
191
192 ...(Signature of Debtor)...
193 ...(Date Cancellation Signed)...
194 ...(Address of Debtor)...
195 ...(Phone Number of Debtor)...
196 (2) At the time the documents are signed, the debt
197 negotiation organization must provide the debtor with a copy of
198 the completed service contract and all other documents that the
199 organization requires the debtor to sign.
200 Section 7. This act shall take effect July 1, 2010.