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       Florida Senate - 2010                                     SB 332
       By Senator Fasano
       11-00315A-10                                           2010332__
    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., relating to unlawful fees and costs;
    6         conforming a cross-reference; amending s. 817.803,
    7         F.S.; providing that an attorney providing legal
    8         representation is exempt from debt negotiation
    9         organization requirements; creating s. 817.807, F.S.;
   10         requiring a debt negotiation organization to annually
   11         register with the Office of Financial Regulation;
   12         providing registration requirements; requiring an
   13         annual fee; authorizing the office to adopt rules;
   14         creating s. 817.8071, F.S.; specifying acts prohibited
   15         by a debt negotiation organization; creating s.
   16         817.8072, F.S.; providing insurance requirements for a
   17         debt negotiation organization; authorizing the office
   18         to adopt rules; creating s. 817.8073, F.S.; providing
   19         requirements for debt negotiation service contracts;
   20         providing an effective date.
   22  Be It Enacted by the Legislature of the State of Florida:
   24         Section 1. Section 817.801, Florida Statutes, is amended to
   25  read:
   26         817.801 Definitions.—As used in this part:
   27         (1) “Concessions” means assent to repayment of an unsecured
   28  debt for terms more favorable to a debtor then the terms of the
   29  original contract between the debtor and a creditor.
   30         (2)(1) “Credit counseling agency” means an any organization
   31  providing debt management services or credit counseling
   32  services.
   33         (3)(2) “Credit counseling services” means confidential
   34  money management, debt reduction, and financial educational
   35  services.
   36         (4)(3) “Creditor contribution” means a any sum that a
   37  creditor agrees to contribute to a credit counseling agency,
   38  whether directly or by setoff against amounts otherwise payable
   39  to the creditor on behalf of debtors.
   40         (5)(4) “Debt management services” means services provided
   41  to a debtor by a credit counseling organization for a fee to:
   42         (a) Effect the adjustment, compromise, or discharge of any
   43  unsecured account, note, or other indebtedness of the debtor; or
   44         (b) Receive from the debtor and disburse to a creditor any
   45  money or other thing of value.
   46         (6) “Debt negotiation organization” means any person
   47  providing debt negotiation services.
   48         (7) “Debt negotiation services” means intermediary services
   49  provided for a fee by a debt negotiation organization between a
   50  debtor and one or more of the debtor’s creditors for the purpose
   51  of obtaining concessions, but without the paid intermediary
   52  holding or disbursing funds to the individual creditors.
   53         (8) “Debt principal” means the total amount of original
   54  debt, including unpaid interest and fees, owed by the debtor as
   55  of the date of initial enrollment in a debt negotiation
   56  organization’s plan.
   57         (9) “Office” means the Office of Financial Regulation.
   58         (10)(5) “Person” means any individual, corporation,
   59  partnership, trust, association, or other legal entity, but does
   60  not include governmental organizations or any subdivision
   61  thereof.
   62         (11) “Plan” means a program or strategy in which a debt
   63  negotiation organization furnishes debt negotiation services to
   64  a debtor in contemplation that during the course of the plan the
   65  debtor’s creditors will settle debts for less than the full
   66  amount of the debts owed.
   67         Section 2. Subsection (1) of section 817.802, Florida
   68  Statutes, is amended to read:
   69         817.802 Unlawful fees and costs.—
   70         (1) It is unlawful for any person, while engaging in debt
   71  management services or credit counseling services, to charge or
   72  accept from a debtor residing in this state, directly or
   73  indirectly, a fee or contribution greater than $50 for the
   74  initial setup or initial consultation. Subsequently, the person
   75  may not charge or accept a fee or contribution from a debtor
   76  residing in this state greater than $120 per year for additional
   77  consultations or, alternatively, if debt management services as
   78  defined in s. 817.801(5)(b) s. 817.801(4)(b) are provided, the
   79  person may charge the greater of 7.5 percent of the amount paid
   80  monthly by the debtor to the person or $35 per month.
   81         Section 3. Section 817.803, Florida Statutes, is amended to
   82  read:
   83         817.803 Exceptions.—Nothing in This part does not apply
   84  applies to:
   85         (1) A person licensed to practice law in this state who is
   86  providing legal representation to a client with respect to Any
   87  debt management, or credit counseling, or debt negotiation
   88  services. provided in the practice of law in this state;
   89         (2) A Any person who engages in debt adjustment to adjust
   90  the indebtedness owed to such person.; or
   91         (3) The following entities or their subsidiaries:
   92         (a) The Federal National Mortgage Association.;
   93         (b) The Federal Home Loan Mortgage Corporation.;
   94         (c) The Florida Housing Finance Corporation., a public
   95  corporation created in s. 420.504;
   96         (d) A bank, bank holding company, trust company, savings
   97  and loan association, credit union, credit card bank, or savings
   98  bank that is regulated and supervised by the Office of the
   99  Comptroller of the Currency, the Office of Thrift Supervision,
  100  the Federal Reserve, the Federal Deposit Insurance Corporation,
  101  the National Credit Union Administration, the Office of
  102  Financial Regulation of the Department of Financial Services, or
  103  any state banking regulator.;
  104         (e) A consumer reporting agency as defined in the Federal
  105  Fair Credit Reporting Act, 15 U.S.C. ss. 1681-1681y, as it
  106  existed on April 5, 2004.; or
  107         (f) Any subsidiary or affiliate of a bank holding company,
  108  its employees and its exclusive agents acting under written
  109  agreement.
  110         Section 4. Section 817.807, Florida Statutes, is created to
  111  read:
  112         817.807Debt negotiation organization; registration.—A debt
  113  negotiation organization doing business in this state must
  114  register and annually renew such registration with the office in
  115  accordance with this section.
  116         (1) To register or renew registration, the debt negotiation
  117  organization shall provide the following to the office:
  118         (a) The organization’s business or trade name, the
  119  organization’s current mailing address, the address of each
  120  location or branch at which the organization conducts business,
  121  and a designation of which location is its principal place of
  122  business.
  123         (b) A statement as to whether the organization is a
  124  domestic or foreign corporation and, if domestic, the state and
  125  date of incorporation and the charter number of the corporation,
  126  or, if a foreign corporation, the date the corporation first
  127  registered to do business in this state.
  128         (c) A statement indicating whether the organization holds a
  129  current telemarketing license from the Department of Agriculture
  130  and Consumer Services or, if not, an explanation as to why a
  131  telemarketing license is not required.
  132         (d) A statement listing the names of any other businesses
  133  or entities through which the organization is currently
  134  operating or did business as a debt negotiation organization
  135  within the 5 calendar years immediately preceding the date of
  136  registration or registration renewal, and whether the
  137  organization was the subject of any state action, including
  138  suspension or revocation.
  139         (e) A statement identifying and explaining any ongoing or
  140  prior state or federal investigation, or any civil, criminal, or
  141  administrative action taken against the organization, including
  142  a withholding of adjudication or conviction for any crime
  143  involving fraud, moral turpitude, or dishonest dealing within
  144  the 5 calendar years immediately preceding the date of
  145  registration or registration renewal.
  146         (f) A copy of all service contracts offered to debtors.
  147         (g) Pursuant to s. 817.8072, a copy of the organization’s
  148  insurance policy and related documentation required to be filed
  149  with the office.
  150         (h) An annual registration or renewal fee of $2,500.
  151         (2) A debt negotiation organization changing its registered
  152  name, location, or agent for service of process at any time
  153  other than at the time of renewing its registration must notify
  154  the office of such change. The office must be notified in
  155  writing before there is a change in the organization’s business
  156  location. A registration is not valid for an organization that
  157  transacts business at a location other than those designated in
  158  its registration.
  159         (3) A registration issued under this section is not
  160  assignable or transferable.
  161         (4) The office may deny or refuse to renew the registration
  162  of any debt negotiation organization based upon a determination
  163  that the organization has:
  164         (a) Failed to meet the requirements for registration or
  165  renewal as provided in this section;
  166         (b) Been convicted of a crime involving fraud, moral
  167  turpitude, or dishonest dealing;
  168         (c) Not satisfied a fine or penalty arising out of an
  169  administrative or civil enforcement action brought by a
  170  governmental agency or individual and based upon conduct
  171  involving fraud, moral turpitude, dishonest dealing, or any
  172  violation of this part; or
  173         (d) Had a judgment entered against the organization in any
  174  action brought under the Florida Deceptive and Unfair Trade
  175  Practices Act or this part.
  176         (5) All moneys collected by the office shall be deposited
  177  into the office’s Regulatory Trust Fund and used to administer
  178  this part.
  179         (6) The office may adopt rules to administer this section.
  180         Section 5. Section 817.8071, Florida Statutes, is created
  181  to read:
  182         817.8071Prohibited acts.—
  183         (1) A debt negotiation organization may not:
  184         (a) Directly or indirectly, impose a fee or other charge on
  185  a debtor or receive money from, or on behalf of, a debtor for
  186  debt negotiation services except as provided under this section.
  187         (b) Impose charges or receive payment for debt negotiation
  188  services before the debt negotiation organization and the debtor
  189  have signed an agreement that complies with the provisions of
  190  this part.
  191         (c) Make or use any false or misleading representations or
  192  omit any material fact in the offer or sale of debt negotiation
  193  services offered, or engage, directly or indirectly, in any
  194  fraudulent, false, misleading, unconscionable, unfair, or
  195  deceptive act or practice in connection with the offer or sale
  196  of any of such services.
  197         (d) Provide services to a debtor without executing a
  198  service contract that complies with this part.
  199         (e) Fail to provide to the debtor copies of all service
  200  contracts and other documents that the debtor is required to
  201  sign.
  202         (f) Fail to obtain insurance coverage or fail to make such
  203  coverage information available for public inspection.
  204         (2)If a debtor assents to a plan that contemplates that a
  205  creditor will settle debt for less than the principal amount of
  206  debt, the debt negotiation organization may charge as the total
  207  amount of settlement fees only an amount that does not exceed
  208  one half of the difference between the debt principal and the
  209  concession agreed upon with the debtor’s creditor on a specific
  210  account. A debt negotiation organization may not collect any
  211  fees other than settlement fees, and may collect settlement fees
  212  only after a settlement of an account with the debtor’s creditor
  213  has been agreed upon and executed.
  214         Section 6. Section 817.8072, Florida Statutes, is created
  215  to read:
  216         817.8072Insurance requirements.—
  217         (1) A debt negotiation organization must obtain and
  218  maintain insurance coverage at all times for employee
  219  dishonesty, depositor’s forgery, and computer fraud in an amount
  220  not less than the $100,000. The deductible on such coverage may
  221  not exceed 10 percent of the face amount of the policy coverage.
  222         (2) Upon written request, a debt negotiation organization
  223  must provide a copy of the insurance policies required under
  224  this section to any party requesting a copy for a charge that
  225  does not exceed the cost of copying.
  226         (3) The office may adopt rules to administer this section.
  227         Section 7. Section 817.8073, Florida Statutes, is created
  228  to read:
  229         817.8073Service contract.—
  230         (1) The service contract between the debt negotiation
  231  organization and the debtor must be signed and dated by the
  232  debtor and include all of the following:
  233         (a) A full and detailed description of the debt negotiation
  234  services to be performed for the debtor by the organization, and
  235  the estimated date or length of time for performing the
  236  services.
  237         (b) All terms and conditions of payment, including the
  238  estimated total of all payments to be made by the debtor.
  239         (c) The organization’s principal business address and the
  240  name and address of its agent authorized to receive service of
  241  process in this state.
  242         (d) A clear and conspicuous statement, in boldface type in
  243  the immediate proximity to the space reserved for the debtor’s
  244  signature, which states: “You, the debtor, may cancel this
  245  service contract at any time before midnight of the 5th business
  246  day after the date of signing this contract. [See the attached
  247  Notice of Right to Cancel for further explanation of this
  248  right.]
  249         (e) A Notice of Right to Cancel, which must be
  250  substantially in the following form:
  252                      NOTICE OF RIGHT TO CANCEL                    
  261         TO:...(name of debt negotiation organization)...
  262         AT:...(address of debt negotiation organization)...
  265  SERVICE CONTRACT, EXECUTED ON:...(date service contract
  266  signed)...
  268         ...(Signature of Debtor)...
  269         ...(Date Cancellation Signed)...
  270         ...(Address of Debtor)...
  271         ...(Phone Number of Debtor)...
  272         (2) At the time the documents are signed, the debt
  273  negotiation organization must provide the debtor with a copy of
  274  the completed service contract and all other documents that the
  275  organization requires the debtor to sign.
  276         Section 8. This act shall take effect July 1, 2010.

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