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SF 518

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:13am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to commerce; regulating debt management and debt settlement services;
amending Minnesota Statutes 2008, sections 45.011, subdivision 1; 46.04,
subdivision 1; 46.05; 46.131, subdivision 2; 325E.311, subdivision 6; 332A.02,
subdivisions 5, 8, 9, 10, 13, by adding subdivisions; 332A.04, subdivision 6;
332A.08; 332A.10; 332A.11, subdivision 2; 332A.14; proposing coding for new
law as Minnesota Statutes, chapter 332B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 45.011, subdivision 1, is amended to read:


Subdivision 1.

Scope.

As used in chapters 45 to 83, 155A, 332, 332A, new text begin332B,
new text end345, and 359, and sections 325D.30 to 325D.42, 326B.802 to 326B.885, and 386.61 to
386.78, unless the context indicates otherwise, the terms defined in this section have
the meanings given them.

Sec. 2.

Minnesota Statutes 2008, section 46.04, subdivision 1, is amended to read:


Subdivision 1.

General.

The commissioner of commerce, referred to in chapters 46
to 59Adeleted text begin,deleted text end and deleted text beginchapterdeleted text end 332Adeleted text begin,deleted text endnew text begin and 332Bnew text end as the commissioner, is vested with all the powers,
authority, and privileges which, prior to the enactment of Laws 1909, chapter 201, were
conferred by law upon the public examiner, and shall take over all duties in relation to
state banks, savings banks, trust companies, savings associations, and other financial
institutions within the state which, prior to the enactment of chapter 201, were imposed
upon the public examiner. The commissioner of commerce shall exercise a constant
supervision, either personally or through the examiners herein provided for, over the
books and affairs of all state banks, savings banks, trust companies, savings associations,
credit unions, industrial loan and thrift companies, and other financial institutions doing
business within this state; and shall, through examiners, examine each financial institution
at least once every 24 calendar months. In satisfying this examination requirement, the
commissioner may accept reports of examination prepared by a federal agency having
comparable supervisory powers and examination procedures. With the exception of
industrial loan and thrift companies which do not have deposit liabilities and licensed
regulated lenders, it shall be the principal purpose of these examinations to inspect and
verify the assets and liabilities of each and so far investigate the character and value of
the assets of each institution as to determine with reasonable certainty that the values are
correctly carried on its books. Assets and liabilities shall be verified in accordance with
methods of procedure which the commissioner may determine to be adequate to carry out
the intentions of this section. It shall be the further purpose of these examinations to
assess the adequacy of capital protection and the capacity of the institution to meet usual
and reasonably anticipated deposit withdrawals and other cash commitments without
resorting to excessive borrowing or sale of assets at a significant loss, and to investigate
each institution's compliance with applicable laws and rules. Based on the examination
findings, the commissioner shall make a determination as to whether the institution
is being operated in a safe and sound manner. None of the above provisions limits the
commissioner in making additional examinations as deemed necessary or advisable. The
commissioner shall investigate the methods of operation and conduct of these institutions
and their systems of accounting, to ascertain whether these methods and systems are
in accordance with law and sound banking principles. The commissioner may make
requirements as to records as deemed necessary to facilitate the carrying out of the
commissioner's duties and to properly protect the public interest. The commissioner may
examine, or cause to be examined by these examiners, on oath, any officer, director,
trustee, owner, agent, clerk, customer, or depositor of any financial institution touching
the affairs and business thereof, and may issue, or cause to be issued by the examiners,
subpoenas, and administer, or cause to be administered by the examiners, oaths. In
case of any refusal to obey any subpoena issued under the commissioner's direction,
the refusal may at once be reported to the district court of the district in which the bank
or other financial institution is located, and this court shall enforce obedience to these
subpoenas in the manner provided by law for enforcing obedience to subpoenas of the
court. In all matters relating to official duties, the commissioner of commerce has the
power possessed by courts of law to issue subpoenas and cause them to be served and
enforced, and all officers, directors, trustees, and employees of state banks, savings banks,
trust companies, savings associations, and other financial institutions within the state,
and all persons having dealings with or knowledge of the affairs or methods of these
institutions, shall afford reasonable facilities for these examinations, make returns and
reports to the commissioner of commerce as the commissioner may require; attend and
answer, under oath, the commissioner's lawful inquiries; produce and exhibit any books,
accounts, documents, and property as the commissioner may desire to inspect, and in all
things aid the commissioner in the performance of duties.

Sec. 3.

Minnesota Statutes 2008, section 46.05, is amended to read:


46.05 SUPERVISION OVER FINANCIAL INSTITUTIONS.

Every state bank, savings bank, trust company, savings association, debt management
services provider, new text begindebt settlement services provider, new text endand other financial institutions shall
be at all times under the supervision and subject to the control of the commissioner
of commerce. If, and whenever in the performance of duties, the commissioner finds
it necessary to make a special investigation of any financial institution under the
commissioner's supervision, and other than a complete examination, the commissioner
shall make a charge therefor to include only the necessary costs thereof. Such a fee shall
be payable to the commissioner on the commissioner's making a request for payment.

Sec. 4.

Minnesota Statutes 2008, section 46.131, subdivision 2, is amended to read:


Subd. 2.

Assessment authority.

Each bank, trust company, savings bank, savings
association, regulated lender, industrial loan and thrift company, credit union, motor
vehicle sales finance company, debt management services providernew text begin, debt settlement
services provider,
new text end and insurance premium finance company organized under the laws of
this state or required to be administered by the commissioner of commerce shall pay
into the state treasury its proportionate share of the cost of maintaining the Department
of Commerce.

Sec. 5.

Minnesota Statutes 2008, section 325E.311, subdivision 6, is amended to read:


Subd. 6.

Telephone solicitation.

"Telephone solicitation" means any voice
communication over a telephone line for the purpose of encouraging the purchase or
rental of, or investment in, property, goods, or services, whether the communication is
made by a live operator, through the use of an automatic dialing-announcing device as
defined in section 325E.26, subdivision 2, or by other means. Telephone solicitation
does not include communications:

(1) to any residential subscriber with that subscriber's prior express invitation or
permission; or

(2) by or on behalf of any person or entity with whom a residential subscriber has a
prior or current business or personal relationship.

Telephone solicitation also does not include communications if the caller is identified by a
caller identification service and the call is:

(i) by or on behalf of an organization that is identified as a nonprofit organization
under state or federal law, unless the organization is a debt management services provider
defined in section 332A.02new text begin or a debt settlement services provider defined in section
332B.02
new text end;

(ii) by a person soliciting without the intent to complete, and who does not in
fact complete, the sales presentation during the call, but who will complete the sales
presentation at a later face-to-face meeting between the solicitor who makes the call
and the prospective purchaser; or

(iii) by a political party as defined under section 200.02, subdivision 6.

Sec. 6.

Minnesota Statutes 2008, section 332A.02, is amended by adding a subdivision
to read:


new text begin Subd. 2a. new text end

new text begin Advertise. new text end

new text begin "Advertise" means to solicit business through any means or
medium.
new text end

Sec. 7.

Minnesota Statutes 2008, section 332A.02, subdivision 5, is amended to read:


Subd. 5.

Controlling or affiliated party.

"Controlling or affiliated party" means
any person new text beginor entity that controls or is controlled, new text enddirectly or indirectly deleted text begincontrolling,
controlled by
deleted text end, or new text beginis new text endunder common control with another person.new text begin Controlling or affiliated
party includes, but is not limited to, employees, officers, independent contractors,
corporations, partnerships, and limited liability corporations.
new text end

Sec. 8.

Minnesota Statutes 2008, section 332A.02, is amended by adding a subdivision
to read:


new text begin Subd. 5a. new text end

new text begin Creditor. new text end

new text begin "Creditor" means any party:
new text end

new text begin (1) named by the debtor as a creditor in the debt management services plan or debt
management services agreement;
new text end

new text begin (2) that acquires or holds the debt; or
new text end

new text begin (3) to whom interactions with the debt management services is assigned in relation
to the debt listed in the debt management services plan or debt management services
agreement.
new text end

Sec. 9.

Minnesota Statutes 2008, section 332A.02, subdivision 8, is amended to read:


Subd. 8.

Debt management services provider.

"Debt management services
provider" means any person offering or providing debt management services to a debtor
domiciled in this state, regardless of whether or not a fee is charged for the services and
regardless of whether the person maintains a physical presence in the state. This term
new text begin includes any person to whom duties under a debt management services agreement or
debt management services plan are delegated, and
new text enddoes not include services performed
by the following when engaged in the regular course of their respective businesses and
professions:

(1) attorneys at law, escrow agents, accountants, broker-dealers in securities;

(2) state or national banks, new text begincredit unions,new text end trust companies, savings associations,
title insurance companies, insurance companies, and all other lending institutions duly
authorized to transact business in Minnesotadeleted text begin, provided no fee is charged for the servicedeleted text end;

(3) persons who, as employees on a regular salary or wage of an employer not
engaged in the business of debt management, perform credit services for their employer;

(4) public officers acting in their official capacities and persons acting as a debt
management services provider pursuant to court order;

(5) any person while performing services incidental to the dissolution, winding up,
or liquidation of a partnership, corporation, or other business enterprise;

(6) the state, its political subdivisions, public agencies, and their employees;

(7) deleted text begincredit unions anddeleted text end collection agencies, provided deleted text beginno fee is charged for the servicedeleted text end
new text begin that the services are provided to a creditornew text end;

(8) "qualified organizations" designated as representative payees for purposes of the
Social Security and Supplemental Security Income Representative Payee System and the
federal Omnibus Budget Reconciliation Act of 1990, Public Law 101-508;

(9) accelerated mortgage payment providers. "Accelerated mortgage payment
providers" are persons who, after satisfying the requirements of sections 332.30 to
332.303, receive funds to make mortgage payments to a lender or lenders, on behalf
of mortgagors, in order to exceed regularly scheduled minimum payment obligations
under the terms of the indebtedness. The term does not include: (i) persons or entities
described in clauses (1) to (8); (ii) mortgage lenders or servicers, industrial loan and
thrift companies, or regulated lenders under chapter 56; or (iii) persons authorized to
make loans under section 47.20, subdivision 1. For purposes of this clause and sections
332.30 to 332.303, "lender" means the original lender or that lender's assignee, whichever
is the current mortgage holder;

(10) trustees, guardians, and conservators; and

(11) debt settlement new text beginservices new text endproviders.

Sec. 10.

Minnesota Statutes 2008, section 332A.02, subdivision 9, is amended to read:


Subd. 9.

Debt management services.

"Debt management services" means the
provision of any deleted text beginone or more of the followingdeleted text end services deleted text beginin connection with debt incurred
primarily for personal, family, or household services:
deleted text end

deleted text begin (1) managing the financial affairs of an individual by distributing income or money
to the individual's creditors;
deleted text end

deleted text begin (2) receiving funds for the purpose of distributing the funds among creditors in
payment or partial payment of obligations of a debtor; or
deleted text end

deleted text begin (3) adjusting, prorating, pooling, or liquidating the indebtedness of a debtordeleted text endnew text begin whereby
a debt management services provider assists in managing the financial affairs of a debtor
by distributing periodic payments to the debtor's creditors from funds that the debt
management services provider receives from the debtor and where the primary purpose
of the services is to effect repayment of debt incurred primarily for personal, family, or
household services
new text end.

Any person so engaged or holding out as so engaged is deemed to be engaged in the
provision of debt management services regardless of whether or not a fee is charged for
such services.

Sec. 11.

Minnesota Statutes 2008, section 332A.02, subdivision 10, is amended to read:


Subd. 10.

Debtor.

"Debtor" means the person for whom the debt deleted text beginprorating service
is
deleted text endnew text begin management services arenew text end performed.

Sec. 12.

Minnesota Statutes 2008, section 332A.02, subdivision 13, is amended to read:


Subd. 13.

Debt settlement new text beginservices new text endprovider.

"Debt settlement new text beginservices new text endprovider"
deleted text begin means any person engaging in or holding out as engaging in the business of negotiating,
adjusting, or settling debt incurred primarily for personal, family, or household purposes
without holding or receiving the debtor's funds or personal property and without paying
the debtor's funds to, or distributing the debtor's property among, creditors
deleted text endnew text begin has the
meaning given in section 332B.02, subdivision 11
new text end. deleted text beginThe term shall not include persons
deleted text enddeleted text beginlisted in subdivision 8, clauses (1) to (10).
deleted text end

Sec. 13.

Minnesota Statutes 2008, section 332A.04, subdivision 6, is amended to read:


Subd. 6.

Right of action on bond.

If the registrant has failed to account to a debtor
or distribute to the debtor's creditors the amounts required by this chapter deleted text beginanddeleted text endnew text begin, or has
failed to perform any of the services promised in
new text end the debt management services agreement
deleted text begin between the debtor and registrantdeleted text end, new text beginthe registrant is in default. new text endThe debtor or the debtor's
legal representative or receiver, the commissioner, or the attorney general, shall have, in
addition to all other legal remedies, a right of action in the name of the debtor on the bond
or the security given under this section, for loss suffered by the debtor, not exceeding the
face amount of the bond or security, and without the necessity of joining the registrant
in the suit or actionnew text begin based on the defaultnew text end.

Sec. 14.

Minnesota Statutes 2008, section 332A.08, is amended to read:


332A.08 DENIAL OF REGISTRATION.

The commissioner, with notice to the applicant by certified mail sent to the address
listed on the application, may deny an application for a registration upon finding that
the applicant:

(1) has submitted an application required under section 332A.04 that contains
incorrect, misleading, incomplete, or materially untrue information. An application is
incomplete if it does not include all the information required in section 332A.04;

(2) has failed to pay any fee or pay or maintain any bond required by this chapter,
or failed to comply with any order, decision, or finding of the commissioner made under
and within the authority of this chapter;

(3) has violated any provision of this chapter or any rule or direction lawfully made
by the commissioner under and within the authority of this chapter;

(4) or any controlling or affiliated party has ever been convicted of a crime or found
civilly liable for an offense involving moral turpitude, including forgery, embezzlement,
obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any
other similar offense or violation, or any violation of a federal or state law or regulation
in connection with activities relating to the rendition of debt management services or
any consumer fraud, false advertising, deceptive trade practices, or similar consumer
protection law;

(5) has had a registration or license previously revoked or suspended in this state or
any other state or the applicant or licensee has been permanently or temporarily enjoined
by any court of competent jurisdiction from engaging in or continuing any conduct or
practice involving any aspect of the debt management services provider business; or
any controlling or affiliated party has been an officer, director, manager, or shareholder
owning more than a ten percent interest in a debt management services provider whose
registration has previously been revoked or suspended in this state or any other state, or
who has been permanently or temporarily enjoined by any court of competent jurisdiction
from engaging in or continuing any conduct or practice involving any aspect of the debt
management services provider business;

(6) has made any false statement or representation to the commissioner;

(7) is insolvent;

(8) refuses to fully comply with an investigation or examination of the debt
management services provider by the commissioner;

(9) has improperly withheld, misappropriated, or converted any money or properties
received in the course of doing business;

(10) has failed to have a trust account with an actual cash balance equal to or greater
than the sum of the escrow balances of each debtor's account;

(11) has defaulted in making payments to creditors on behalf of debtors as required
by agreements between the provider and debtor; deleted text beginor
deleted text end

(12) has used fraudulent, coercive, or dishonest practices, or demonstrated
incompetence, untrustworthiness, or financial irresponsibility in this state or elsewherenew text begin; or
new text end

new text begin (13) has been shown to have engaged in a pattern of failing to perform the services
promised
new text end.

Sec. 15.

Minnesota Statutes 2008, section 332A.10, is amended to read:


332A.10 WRITTEN DEBT MANAGEMENT SERVICES AGREEMENT.

Subdivision 1.

Written agreement required.

new text begin(a) new text endA debt management services
provider may not perform any debt management services or receive any money related
to a debt management services plan until the provider has obtained a debt management
services agreement that contains all terms of the agreement between the debt management
services provider and the debtor.

new text begin (b)new text end A debt management services agreement mustnew text begin:new text end

new text begin (1) new text endbe in writing, dated, and signed by the debt management services provider and
the debtornew text begin;
new text end

new text begin (2) conspicuously indicate whether or not the debt management services provider
is registered with the Minnesota Department of Commerce and include any registration
number; and
new text end

new text begin (3) be written in the debtor's primary language if the debt management services
provider advertised in that language
new text end.

new text begin (c) new text endThe registrant must furnish the debtor with a copy of the signed contract upon
execution.

Subd. 2.

Actions prior to written agreement.

No person may provide debt
management services for a debtor new text beginor execute a debt management services agreement
new text endunless the person first has:

(1) provided the debtor individualized counseling and educational information
that, at a minimum, addresses managing household finances, managing credit and debt,
budgeting, and personal savings strategies;

(2) prepared in writing and provided to the debtor, in a form that the debtor may
keep, an individualized financial analysis and a proposed debt management services
plan listing the debtor's known debts with specific recommendations regarding actions
the debtor should take to reduce or eliminate the amount of the debts, including written
disclosure that debt management services are not suitable for all debtors and that there are
other ways, including bankruptcy, to deal with indebtedness;

(3) made a determination supported by an individualized financial analysis that the
debtor can reasonably meet the requirements of the proposed debt management services
plan and that there is a net tangible benefit to the debtor of entering into the proposed debt
management services plan; deleted text beginand
deleted text end

(4) prepared, in a form the debtor may keep, a written list identifying all known
creditors of the debtor that the provider reasonably expects to participate in the plan
and the creditors, including secured creditors, that the provider reasonably expects not
to participatenew text begin; and
new text end

new text begin (5) disclosed, in addition to the written disclosure on the agreement required under
subdivision 1, whether or not the debt management services provider is registered with the
Minnesota Department of Commerce and any registration number
new text end.

Subd. 3.

Required deleted text begintermsdeleted text endnew text begin provisionsnew text end.

(a) Each debt management services
agreement must contain the following deleted text begintermsdeleted text endnew text begin provisionsnew text end, which must be disclosed
prominently and clearly in bold print on the front page of the agreement, segregated by
bold lines from all other information on the page:

(1) the new text beginorigination new text endfee amount to be paid by the debtor and whether new text beginall or a portion
of
new text endthe deleted text begininitialdeleted text endnew text begin originationnew text end fee deleted text beginamountdeleted text end is refundable or nonrefundable;

(2) the monthly fee amount or percentage to be paid by the debtor; and

(3) the total amount of fees reasonably anticipated to be paid by the debtor over
the term of the agreement.

(b) Each debt management services agreement must also contain the following:

(1) a disclosure that if the amount of debt owed is increased by interest, late fees,
over the limit fees, and other amounts imposed by the creditors, the length of the debt
management services agreement will be extended and remain in force and that the total
dollar charges agreed upon may increase at the rate agreed upon in the original contract
agreement;

(2) a prominent statement describing the terms upon which the debtor may cancel
the contract as set forth in section 332A.11;

(3) a detailed description of all services to be performed by the debt management
services provider for the debtor;

(4) the debt management services provider's refund policy; and

(5) the debt management services provider's principal business address and the name
and address of its agent in this state authorized to receive service of process.

Subd. 4.

Prohibited terms.

The following terms shall not be included in the debt
management services agreement:

(1) a hold harmless clause;

(2) a confession of judgment, or a power of attorney to confess judgment against the
debtor or appear as the debtor in any judicial proceeding;

(3) a waiver of the right to a jury trial, if applicable, in any action brought by
or against a debtor;

(4) an assignment of or an order for payment of wages or other compensation for
services;

(5) a provision in which the debtor agrees not to assert any claim or defense arising
out of the debt management services agreement;

(6) a waiver of any provision of this chapter or a release of any obligation required
to be performed on the part of the debt management services provider; or

(7) a mandatory arbitration new text beginor choice of law new text endclause.

Subd. 5.

New debt management services agreements; modification of existing
agreements.

(a) Separate and additional debt management services agreements that
comply with this chapter may be entered into by the debt management services provider
and the debtor provided that no additional deleted text begininitialdeleted text endnew text begin originationnew text end fee may be charged by the
debt management services provider.

(b) Any modification of an existing debt management services agreement, including
any increase in the number or amount of debts included in the debt management deleted text beginservicedeleted text endnew text begin
services agreement
new text end, must be in writing and signed by both parties, except that the signature
of the debtor is not required if:

(1) a creditor is added to or deleted from a debt management services agreement
at the request of the debtor or a debtor voluntarily increases the amount of a payment,
provided the debt management services provider must provide an updated payment
schedule to the debtor within seven days; or

(2) the payment amount to a creditor in the agreement increases by $10 or less
and the total payment amount to all creditors increases a total of $20 or less as a result
of incorrect or incomplete information provided by the debtor regarding the amount of
debt owed a creditor, provided the debt management services provider must notify the
debtor of the increase within seven days.

No fees, charges, or other consideration may be demanded from the debtor for
the modification, other than an increase in the amount of the monthly maintenance fee
established in the original debt management services agreement.

Sec. 16.

Minnesota Statutes 2008, section 332A.11, subdivision 2, is amended to read:


Subd. 2.

Notice of debtor's right to cancel.

A debt management services
agreement must contain, on its face, in an easily readable deleted text begintypefacedeleted text endnew text begin typenew text end immediately
adjacent to the space for signature by the debtor, the following notice: "Right To Cancel:
You have the right to cancel this contract at any time on ten days' written notice."

Sec. 17.

Minnesota Statutes 2008, section 332A.14, is amended to read:


332A.14 PROHIBITIONS.

deleted text begin A registrantdeleted text endnew text begin (a) No debt management services providernew text end shall deleted text beginnotdeleted text end:

(1) purchase from a creditor any obligation of a debtor;

(2) use, threaten to use, seek to have used, or seek to have threatened the use of any
legal process, including but not limited to garnishment and repossession of personal
property, against any debtor while the debt management services agreement between the
registrant and the debtor remains executory;

(3) advisenew text begin, counsel, or encouragenew text end a debtor to stop paying a creditor deleted text beginuntil a debt
management services plan is in place
deleted text endnew text begin, or imply, infer, encourage, or in any other way
indicate, that it is advisable to stop paying a creditor
new text end;

new text begin (4) sanction or condone the act by a debtor of ceasing payments or imply, infer,
or in any manner indicate that the act of ceasing payments is advisable or beneficial to
the debtor;
new text end

deleted text begin (4)deleted text endnew text begin (5)new text end require as a condition of performing debt management services the purchase
of any services, stock, insurance, commodity, or other property or any interest therein
either by the debtor or the registrant;

deleted text begin (5)deleted text endnew text begin (6)new text end compromise any debts unless the prior written approval of the debtor has
been obtained to such compromise and unless such compromise inures solely to the
benefit of the debtor;

deleted text begin (6)deleted text endnew text begin (7)new text end receive from any debtor as security or in payment of any fee a promissory
note or other promise to pay or any mortgage or other security, whether as to real or
personal property;

deleted text begin (7)deleted text endnew text begin (8)new text end lend money or provide credit to any debtor if any interest or fee is charged,
or directly or indirectly collect any fee for referring, advising, procuring, arranging, or
assisting a consumer in obtaining any extension of credit or other debtor service from a
lender or debt management services provider;

deleted text begin (8)deleted text endnew text begin (9)new text end structure a debt management services agreement that would result in negative
amortization of any debt in the plan;

deleted text begin (9)deleted text endnew text begin (10)new text end engage in any unfair, deceptive, or unconscionable act or practice in
connection with any service provided to any debtor;

deleted text begin (10)deleted text endnew text begin (11)new text end offer, pay, or give any material cash fee, gift, bonus, premium, reward, or
other compensation to any person for referring any prospective customer to the registrant
or for enrolling a debtor in a debt management services plan, or provide any other
incentives for employees or agents of the debt management services provider to induce
debtors to enter into a debt management services plan;

deleted text begin (11)deleted text endnew text begin (12)new text end receive any cash, fee, gift, bonus, premium, reward, or other compensation
from any person other than the debtor or a person on the debtor's behalf in connection
with activities as a registrant, provided that this paragraph does not apply to a registrant
which is a bona fide nonprofit corporation duly organized under chapter 317A or under
the similar laws of another state;

deleted text begin (12)deleted text endnew text begin (13)new text end enter into a contract with a debtor unless a thorough written budget analysis
indicates that the debtor can reasonably meet the requirements of the financial adjustment
plan and will be benefited by the plan;

deleted text begin (13)deleted text endnew text begin (14)new text end in any way charge or purport to charge or provide any debtor credit
insurance in conjunction with any contract or agreement involved in the debt management
services plan;

deleted text begin (14)deleted text endnew text begin (15)new text end operate or employ a person who is an employee or owner of a collection
agency or process-serving business; or

deleted text begin (15)deleted text endnew text begin (16)new text end solicit, demand, collect, require, or attempt to require payment of a sum
that the registrant states, discloses, or advertises to be a voluntary contribution new text beginto a debt
management services provider or designee
new text endfrom the debtor.

Sec. 18.

new text begin [332B.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin Unless a different meaning is clearly indicated by the context,
for the purposes of this chapter, the terms defined in this section have the meanings given
them.
new text end

new text begin Subd. 2. new text end

new text begin Advertise. new text end

new text begin "Advertise" means to solicit business through any means or
medium.
new text end

new text begin Subd. 3. new text end

new text begin Aggregate debt. new text end

new text begin "Aggregate debt" means the total of principal and interest
that is owed by the debtor to the creditors at the time of execution of the debt settlement
agreement.
new text end

new text begin Subd. 4. new text end

new text begin Attorney general. new text end

new text begin "Attorney general" means the attorney general of the
state of Minnesota.
new text end

new text begin Subd. 5. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 6. new text end

new text begin Controlling or affiliated party. new text end

new text begin "Controlling or affiliated party" means
any person or entity that controls or is controlled, directly or indirectly, or is under
common control with another person. Controlling or affiliated party includes, but is not
limited to, employees, officers, independent contractors, corporations, partnerships, and
limited liability corporations.
new text end

new text begin Subd. 7. new text end

new text begin Creditor. new text end

new text begin "Creditor" means any party:
new text end

new text begin (1) named by the debtor as a creditor in the debt settlement services plan or debt
settlement services agreement;
new text end

new text begin (2) that acquires or holds the debt; or
new text end

new text begin (3) to whom interactions with the debt settlement services is assigned in relation to
the debt listed in the debt settlement services plan or debt settlement services agreement.
new text end

new text begin Subd. 8. new text end

new text begin Debt settlement services. new text end

new text begin "Debt settlement services" means any one or
more of the following activities:
new text end

new text begin (1) offering to provide advice, or offering to act or acting as an intermediary between
a debtor and one or more of the debtor's creditors, where the primary purpose of the
advice or action is to obtain a settlement for less than the full amount of debt, whether
in principal, interest, fees, or other charges, incurred primarily for personal, family, or
household purposes including, but not limited to, offering debt negotiation, debt reduction,
or debt relief services; or
new text end

new text begin (2) advising, encouraging, assisting, or counseling a debtor to accumulate funds in
an account for future payment of a reduced amount of debt to one or more of the debtor's
creditors.
new text end

new text begin Any person so engaged or holding out as so engaged is deemed to be engaged in
the provision of debt settlement services, regardless of whether or not a fee is charged for
such services.
new text end

new text begin Subd. 9. new text end

new text begin Debt settlement services agreement. new text end

new text begin "Debt settlement services
agreement" means the written contract between the debt settlement services provider
and the debtor.
new text end

new text begin Subd. 10. new text end

new text begin Debt settlement services plan. new text end

new text begin "Debt settlement services plan" means
the debtor's individualized package of debt settlement services set forth in the debt
settlement services agreement.
new text end

new text begin Subd. 11. new text end

new text begin Debt settlement services provider. new text end

new text begin "Debt settlement services provider"
means any person offering or providing debt settlement services to a debtor domiciled
in this state, regardless of whether or not a fee is charged for the services and regardless
of whether the person maintains a physical presence in the state. The term includes any
person to whom duties under a debt management agreement or debt management plan are
delegated, a lead generator, or any other person acting as an intermediary or referral agent
between a debtor and an entity actually providing debt settlement services. The term shall
not include persons listed in section 332A.02, subdivision 8, clauses (1) to (10).
new text end

new text begin Subd. 12. new text end

new text begin Lead generator. new text end

new text begin "Lead generator" means a person that solicits debtors
to engage in debt settlement through mail, in-person, or electronic Web site-based
solicitation or any other means.
new text end

new text begin Subd. 13. new text end

new text begin Person. new text end

new text begin "Person" means an individual, firm, partnership, association,
or corporation.
new text end

new text begin Subd. 14. new text end

new text begin Registrant. new text end

new text begin "Registrant" means any person registered by the
commissioner pursuant to this chapter and, where used in conjunction with an act or
omission required or prohibited by this chapter, shall mean any person performing debt
settlement services.
new text end

Sec. 19.

new text begin [332B.03] REQUIREMENT OF REGISTRATION.
new text end

new text begin On or after August 1, 2009, it is unlawful for any person, whether or not located
in this state, to operate as a debt settlement services provider or provide debt settlement
services including, but not limited to, offering, advertising, or executing or causing to be
executed any debt settlement services or debt settlement services agreement, except as
authorized by law, without first becoming registered as provided in this chapter. Debt
settlement services providers may continue to provide debt settlement services without
complying with this chapter to those debtors who entered into a contract to participate
in a debt settlement services plan prior to August 1, 2009, but may not enter into a debt
settlement services agreement with a debt on or after August 1, 2009, without complying
with this chapter.
new text end

Sec. 20.

new text begin [332B.04] REGISTRATION.
new text end

new text begin Subdivision 1. new text end

new text begin Form. new text end

new text begin Application for registration to operate as a debt settlement
services provider in this state must be made in writing to the commissioner, under oath, in
the form prescribed by the commissioner, and must contain:
new text end

new text begin (1) the full name of each principal of the entity applying;
new text end

new text begin (2) the address, which must not be a post office box, and the telephone number and,
if applicable, the e-mail address, of the applicant;
new text end

new text begin (3) consent to the jurisdiction of the courts of this state;
new text end

new text begin (4) the name and address of the registered agent authorized to accept service of
process on behalf of the applicant or appointment of the commissioner as the applicant's
agent for purposes of accepting service of process;
new text end

new text begin (5) disclosure of:
new text end

new text begin (i) whether any controlling or affiliated party has ever been convicted of a crime
or found civilly liable for an offense involving moral turpitude, including forgery,
embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to
defraud, or any other similar offense or violation, or any violation of a federal or state
law or regulation in connection with activities relating to the rendition of debt settlement
services or involving any consumer fraud, false advertising, deceptive trade practices, or
similar consumer protection law;
new text end

new text begin (ii) any judgments, private or public litigation, tax liens, written complaints,
administrative actions, or investigations by any government agency against the applicant
or any officer, director, manager, or shareholder owning more than five percent interest
in the applicant, unresolved or otherwise, filed or otherwise commenced within the
preceding ten years;
new text end

new text begin (iii) whether the applicant or any person employed by the applicant has had a record
of having defaulted in the payment of money collected for others, including the discharge
of debts through bankruptcy proceedings; and
new text end

new text begin (iv) whether the applicant's license or registration to provide debt settlement services
in any other state has ever been revoked or suspended;
new text end

new text begin (6) a copy of the applicant's standard debt settlement services agreement that the
applicant intends to execute with debtors;
new text end

new text begin (7) proof of accreditation; and
new text end

new text begin (8) any other information and material as the commissioner may require.
new text end

new text begin The commissioner may, for good cause shown, temporarily waive any requirement
of this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Term and scope of registration. new text end

new text begin A registration is effective until 11:59
p.m. on December 31 of the year for which the application for registration is filed or until
it is surrendered by the registrant or revoked or suspended by the commissioner. The
registration is limited solely to the business of providing debt settlement services.
new text end

new text begin Subd. 3. new text end

new text begin Fees; bond. new text end

new text begin An applicant for registration as a debt settlement services
provider must comply with the requirements of section 332A.04, subdivisions 3, 4, and 5.
new text end

new text begin Subd. 4. new text end

new text begin Right of action on bond. new text end

new text begin If the registrant has failed to account to a debtor,
or has failed to perform any of the services promised, the registrant is in default. The
debtor or the debtor's legal representative or receiver, the commissioner, or the attorney
general, shall have, in addition to all other legal remedies, a right of action in the name of
the debtor on the bond or the security given under this section, for loss suffered by the
debtor, not exceeding the face amount of the bond or security, and without the necessity of
joining the registrant in the suit or action based on the default.
new text end

new text begin Subd. 5. new text end

new text begin Registrant list. new text end

new text begin The commissioner must maintain a list of registered debt
settlement services providers. The list must be made available to the public in written
form upon request and on the Department of Commerce Web site.
new text end

new text begin Subd. 6. new text end

new text begin Renewal of registration. new text end

new text begin Each year, each registrant under the provisions
of this chapter must not, more than 60 nor less than 30 days before its registration is to
expire, apply to the commissioner for renewal of its registration on a form prescribed by
the commissioner. The application must be signed by the registrant under penalty of
perjury, contain current information on all matters required in the original application, and
be accompanied by a payment of $250. The registrant must maintain a continuous surety
bond that satisfies the requirements of section 332A.04, subdivision 4. The renewal is
effective for one year. The commissioner may, for good cause shown, temporarily waive
any requirement of this section.
new text end

Sec. 21.

new text begin [332B.05] DENIAL, SUSPENSION, REVOCATION, OR
NONRENEWAL OF REGISTRATION.
new text end

new text begin Subdivision 1. new text end

new text begin Denial. new text end

new text begin The commissioner, with notice to the applicant by certified
mail sent to the address listed on the application, may deny an application for a registration
for any of the reasons specified under section 332A.08.
new text end

new text begin Subd. 2. new text end

new text begin Suspension, revocation, or nonrenewal. new text end

new text begin The commissioner may suspend,
revoke, or refuse to renew any registration issued under this chapter, or may levy a civil
penalty under section 45.027, or any combination of actions, if the debt settlement services
provider or any controlling or affiliated person has committed any act or omission for
which the commissioner could have refused to issue an initial registration.
new text end

new text begin Subd. 3. new text end

new text begin Procedure. new text end

new text begin Suspension, revocation, or nonrenewal must be upon notice
and under the conditions prescribed in section 332A.09, subdivision 1. Upon issuance of
an order suspending, revoking, or refusing to renew a registration, the commissioner:
new text end

new text begin (1) shall follow the procedure established in section 332A.09, subdivision 2; and
new text end

new text begin (2) may follow the procedure specified in section 332A.09, subdivision 3, concerning
the appointment of a receiver for funds of sanctioned registrants.
new text end

Sec. 22.

new text begin [332B.06] WRITTEN DEBT SETTLEMENT SERVICES AGREEMENT;
DISCLOSURES; TRUST ACCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Written agreement required. new text end

new text begin (a) A debt settlement services
provider may not perform, or impose any charges or receive any payment for, any debt
settlement services until the provider and the debtor have executed a debt settlement
services agreement that contains all terms of the agreement between the debt settlement
services provider and the debtor and complies with all the applicable requirements of
this chapter.
new text end

new text begin (b) A debt settlement services agreement must:
new text end

new text begin (1) be in writing, dated, and signed by the debt settlement services provider and
the debtor;
new text end

new text begin (2) conspicuously indicate whether or not the debt settlement services provider is
registered with the Minnesota Department of Commerce and include any registration
number; and
new text end

new text begin (3) be written in the debtor's primary language if the debt settlement services
provider advertises in that language.
new text end

new text begin (c) The registrant must furnish the debtor with a copy of the signed contract upon
execution.
new text end

new text begin Subd. 2. new text end

new text begin Actions prior to executing a written agreement. new text end

new text begin No person may provide
debt settlement services for a debtor or execute a debt settlement services agreement
unless the person first has:
new text end

new text begin (1) provided the debtor individualized counseling that, at a minimum, addresses
managing household finances, managing credit and debt, budgeting, personal savings
strategies, and a detailed description of all the various ways to reduce or eliminate the
debt, which must, at a minimum, include bankruptcy; and
new text end

new text begin (2) prepared in writing and provided to the debtor, in a form the debtor may keep,
an individualized financial analysis of the debtor's financial circumstances, including
income and liabilities, and made a determination supported by the individualized financial
analysis that:
new text end

new text begin (i) the debt settlement plan proposed for addressing the debt is suitable for the
individual debtor;
new text end

new text begin (ii) the debtor can reasonably meet the requirements of the proposed debt settlement
services plan; and
new text end

new text begin (iii) there is a net tangible benefit to the debtor of entering into the proposed debt
settlement services plan.
new text end

new text begin Subd. 3. new text end

new text begin Determination concerning creditor participation. new text end

new text begin (a) Before executing a
debt settlement services agreement or providing any services, a debt settlement services
provider must make a determination, supported by sufficient bases, which creditors listed
by the debtor are reasonably likely, and which are not reasonably likely, to participate in
the debt settlement services plan set forth in the debt settlement services agreement.
new text end

new text begin (b) A debt settlement provider must make personal or written contact with a creditor
to determine the reasonable likelihood of participation or nonparticipation of the creditor,
unless the debt settlement services provider:
new text end

new text begin (1) has written confirmation from the creditor that the creditor and the debt
settlement services provider are currently engaged in negotiations to settle a debt for
another debtor; or
new text end

new text begin (2) can produce evidence that the provider and the creditor have entered into a
settlement of a debt within the prior six months.
new text end

new text begin (c) A debt settlement services provider has a defense against a claim that no
sufficient basis existed to make a determination that a creditor was likely to participate if,
at the time the determination was made, the debt settlement services provider can produce:
new text end

new text begin (1) written confirmation from the creditor that the creditor and the debt settlement
services provider were currently engaged in negotiations to settle a debt for another
debtor; or
new text end

new text begin (2) evidence that the provider and the creditor had entered into a settlement of a debt
within the six months prior to the date of the determination.
new text end

new text begin (d) The debt settlement services provider must notify the debtor as soon as
practicable after the provider has made a determination on the likelihood of participation
or nonparticipation of all the creditors listed for inclusion in the debt settlement services
agreement or debt settlement services plan. If not all creditors listed in the debt settlement
services agreement are reasonably likely to participate in the debt settlement services
plan, the debt settlement services provider must obtain the written authorization from the
debtor to proceed with the debt settlement services agreement without the participation of
all listed creditors.
new text end

new text begin Subd. 4. new text end

new text begin Disclosures. new text end

new text begin (a) A person offering to provide or providing debt settlement
services must disclose both orally and in writing whether or not the person is registered
with the Minnesota Department of Commerce and any registration number.
new text end

new text begin (b) No person may provide debt settlement services unless the person first has
provided, both orally and in writing, on a single sheet of paper, separate from any other
document or writing, the following verbatim notice:
new text end

new text begin WARNING
new text end

new text begin We CANNOT GUARANTEE that you will successfully reduce or eliminate your
debt.
new text end

new text begin If you stop paying your creditors, there is a strong likelihood some or all of the
following may happen:
new text end

new text begin ? (1) YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
new text end

new text begin ? (2) YOU MAY STILL BE CONTACTED BY CREDITORS.
new text end

new text begin ? (3) YOU MAY STILL BE SUED BY CREDITORS for the money you owe.
new text end

new text begin ? (4) FEES, INTEREST, AND OTHER CHARGES WILL CONTINUE TO MOUNT
UP DURING THE (INSERT NUMBER) MONTHS THIS PLAN IS IN EFFECT.
new text end

new text begin Even if we do settle your debt, YOU MAY STILL HAVE TO PAY TAXES on
the amount forgiven.
new text end

new text begin Your credit rating may be adversely affected.
new text end

new text begin (c) The heading, "WARNING," must be in bold, underlined, 28-point type, and the
remaining text must be in 14-point type, with a double space between each statement.
new text end

new text begin (d) The disclosure and notice required under this subdivision must be provided in
the debtor's primary language if the debt settlement provider advertises in that language.
new text end

new text begin Subd. 5. new text end

new text begin Required information. new text end

new text begin (a) Each debt settlement services agreement must
contain the following information, which must be disclosed prominently and clearly in
bold print on the front page of the agreement, segregated by bold lines from all other
information on the page:
new text end

new text begin (1) the origination fee amount to be paid by the debtor and whether all or part of the
origination fee is refundable or nonrefundable; and
new text end

new text begin (2) the service fee formula and the total amount of service fees reasonably
anticipated to be paid by the debtor over the term of the agreement.
new text end

new text begin (b) Each debt settlement services agreement must also contain the following:
new text end

new text begin (1) a prominent statement describing the terms upon which the debtor may cancel
the contract as set forth in section 332B.07;
new text end

new text begin (2) a detailed description of all services to be performed by the debt settlement
services provider for the debtor;
new text end

new text begin (3) the debt settlement services provider's refund policy;
new text end

new text begin (4) the debt settlement services provider's principal business address, which must
not be a post office box, and the name and address of its agent in this state authorized to
receive service of process; and
new text end

new text begin (5) the name of each creditor the debtor has listed and the aggregate debt owed to
each creditor that will be the subject of settlement.
new text end

new text begin Subd. 6. new text end

new text begin Prohibited terms. new text end

new text begin A debt settlement services agreement may not contain
any of the terms prohibited under section 332A.10, subdivision 4.
new text end

new text begin Subd. 7. new text end

new text begin New debt settlement services agreements; modifications of existing
agreements.
new text end

new text begin (a) Separate and additional debt settlement services agreements that comply
with this chapter may be entered into by the debt settlement services provider and the
debtor, provided that no additional origination fee may be charged by the debt settlement
services provider.
new text end

new text begin (b) Any modification of an existing debt settlement services agreement, including
any increase in the number or amount of debts included in the debt settlement services
agreement, must be in writing and signed by both parties. No fee may be charged to
modify an existing agreement.
new text end

new text begin Subd. 8. new text end

new text begin Funds held in trust. new text end

new text begin Debtor funds may be temporarily held in trust for the
purpose of writing exchange checks. If the registrant temporarily holds debtor funds, the
registrant must maintain a separate trust account, except that the registrant may commingle
debtor funds with the registrant's own funds, in the form of an interest fund, to the extent
necessary to ensure maintenance of a minimum balance, if the financial institution at
which the trust account is held requires a minimum balance to avoid the assessment of
fees or penalties for failure to maintain a minimum balance.
new text end

Sec. 23.

new text begin [332B.07] RIGHT TO CANCEL.
new text end

new text begin Subdivision 1. new text end

new text begin Debtor's right to cancel. new text end

new text begin (a) A debtor has the right to cancel a debt
settlement services agreement without cause at any time upon ten days' written notice
to the debt settlement services provider.
new text end

new text begin (b) In the event of cancellation, the debt settlement services provider must, within
ten days of the cancellation, notify the debtor's creditors of the cancellation and provide
a refund of all funds paid by or for the debtor to the debt settlement services provider,
except for the origination fee specified in section 332B.09, subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Notice of debtor's right to cancel. new text end

new text begin A debt settlement services agreement
must contain, on its face, in an easily readable type immediately adjacent to the space for
signature by the debtor, the following notice: "Right to Cancel: You have the right to
cancel this contract at any time on ten days' written notice."
new text end

new text begin Subd. 3. new text end

new text begin Automatic termination. new text end

new text begin Upon the payment of all listed or settled debts
and fees, the debt settlement services agreement must automatically terminate, and all
unexpended funds paid by or for the debtor to the debt settlement services provider must
be immediately returned to the debtor.
new text end

new text begin Subd. 4. new text end

new text begin Debt settlement services provider's right to cancel. new text end

new text begin (a) A debt settlement
services provider may cancel a debt settlement services agreement with good cause upon
30 days' written notice to the debtor.
new text end

new text begin (b) Within ten days after the cancellation, the debt settlement services provider must:
new text end

new text begin (1) notify the debtor's creditors of the cancellation; and
new text end

new text begin (2) return to the debtor all funds paid by or for the debtor to the debt settlement
provider, except for the origination fee specified in section 332B.09, subdivision 1.
new text end

Sec. 24.

new text begin [332B.08] BOOKS, RECORDS, AND INFORMATION.
new text end

new text begin Subdivision 1. new text end

new text begin Records retention; annual report. new text end

new text begin Every registrant must keep, and
use in the registrant's business, such books, accounts, and records, including electronic
records, as will enable the commissioner to determine whether the registrant is complying
with this chapter and the rules, orders, and directives adopted by the commissioner under
this chapter. Every registrant must preserve such books, accounts, and records for at least
six years after making the final entry on any transaction recorded therein. Examinations
of the books, records, and method of operations conducted under the supervision of the
commissioner shall be done at the cost of the registrant. The cost must be assessed as
determined under section 46.131.
new text end

new text begin Subd. 2. new text end

new text begin Annual report. new text end

new text begin On or before March 15 of each calendar year, each
registrant must file a report with the commissioner containing such information as the
commissioner may require about the preceding calendar year. The report must be in a
form the commissioner prescribes.
new text end

new text begin Subd. 3. new text end

new text begin Statements to debtors. new text end

new text begin (a) Each registrant must:
new text end

new text begin (1) maintain and make available records and accounts that will enable each debtor to
ascertain the amounts paid to the creditors of the debtor. A statement showing amounts
received from the debtor, disbursements to each creditor, amounts that any creditor has
agreed to as payment in full for any debt owed the creditor by the debtor, charges deducted
by the registrant, and other information as the commissioner may prescribe, must be
furnished by the registrant to the debtor at least monthly and, in addition, upon any
cancellation or termination of the contract;
new text end

new text begin (2) include in the statement furnished to debtors a list of all activities conducted
pursuant to the contract, including the number and description of communications with
each creditor during the reporting period; and
new text end

new text begin (3) prepare and retain in the file of each debtor a written analysis of the debtor's
income and expenses to substantiate that the plan of payment is feasible and practicable.
new text end

new text begin (b) Each debtor must have reasonable access, without cost, by electronic or other
means, to information in the registrant's files applicable to the debtor. These statements,
records, and accounts must otherwise remain confidential, except for duly authorized
state and government officials, the commissioner, the attorney general, the debtor, and
the debtor's representative and designees.
new text end

Sec. 25.

new text begin [332B.09] FEES; WITHDRAWAL OF CREDITORS.
new text end

new text begin Subdivision 1. new text end

new text begin Origination fee. new text end

new text begin A debt settlement services provider may charge a
nonrefundable origination fee of not more than $500.
new text end

new text begin Subd. 2. new text end

new text begin Monthly fee. new text end

new text begin In addition to the origination fee under subdivision 1, a debt
settlement services provider may, beginning in the fourth month after the execution of the
debt settlement services agreement, charge a monthly fee of up to $50:
new text end

new text begin (1) for the first two years that the debt settlement services agreement is in effect if
the aggregate debt is $20,000 or less; or
new text end

new text begin (2) for the first three years that the debt settlement services agreement is in effect if
the aggregate debt is more than $20,000.
new text end

new text begin Subd. 3. new text end

new text begin Settlement fee. new text end

new text begin (a) A debt settlement services provider may charge a
settlement fee equal to ten percent of the savings actually negotiated by the debt settlement
services provider. The savings shall be calculated as the difference between the aggregate
debt that is stated in the debt settlement services agreement at the time of its execution
and total amount that the debtor actually pays to settle all the debts stated in the debt
settlement services agreement, provided that only savings resulting from concessions
actually negotiated by the debt settlement services provider may be counted.
new text end

new text begin (b) If a written offer of settlement is made by a creditor but rejected by the debtor,
a debt settlement services provider may charge a settlement fee equal to ten percent of
the potential savings. The potential savings shall be calculated as the difference between
the aggregate debt that is stated in the debt settlement services agreement at the time of
its execution and written settlement offer from the creditor, provided that only savings
resulting from proposed concessions actually negotiated by the debt settlement services
provider may be counted.
new text end

new text begin (c) No other fees may be charged.
new text end

new text begin Subd. 4. new text end

new text begin Collection of fees. new text end

new text begin No debt settlement services provider may claim,
demand, charge, collect, or receive any compensation until after the debt settlement
service provider has fully performed each and every service the provider has contracted to
perform or represented would be performed or as otherwise provided in this section.
new text end

new text begin Subd. 5. new text end

new text begin Withdrawal of creditor. new text end

new text begin Whenever a creditor withdraws from a debt
settlement services plan, the debt settlement services provider must promptly notify the
debtor of the withdrawal, identify the creditor, and inform the debtor of the right to cancel
the debt settlement services agreement. In no case may this notice be provided more
than 15 days after the debt settlement services provider learns of the creditor's decision
to withdraw from a plan.
new text end

new text begin Subd. 6. new text end

new text begin Timely notification of settlement. new text end

new text begin A debt settlement services provider
must notify the debtor within 24 hours of settlement of a debt with a creditor.
new text end

Sec. 26.

new text begin [332B.10] PROHIBITIONS.
new text end

new text begin No debt settlement services provider shall:
new text end

new text begin (1) engage in any activity, act, or omission prohibited under section 332A.14;
new text end

new text begin (2) promise, guarantee, or directly or indirectly imply, infer, or in any manner
represent that any debt will be settled prior to the presentation to the debtor of an offer by
the creditors participating in the debt settlement plan to settle;
new text end

new text begin (3) misrepresent the timing of negotiations with creditors;
new text end

new text begin (4) imply, infer, or in any manner represent that:
new text end

new text begin (i) fees, interest, and other charges will not continue to accrue prior to the time
debts are settled;
new text end

new text begin (ii) wages or bank accounts are not subject to garnishment;
new text end

new text begin (iii) creditors will not continue to contact the debtor;
new text end

new text begin (iv) the debtor is not subject to legal action; and
new text end

new text begin (v) the debtor will not be subject to tax consequences for the portion of any debts
forgiven;
new text end

new text begin (5) execute a power of attorney or any other agreement, oral or written, express
or implied, that extinguishes or limits the debtor's right at any time to contract or
communicate with any creditor or the creditor's right at any time to communicate with
the debtor;
new text end

new text begin (6) exercise or attempt to exercise a power of attorney after an individual has
terminated an agreement;
new text end

new text begin (7) state, imply, infer, or, in any other manner, indicate that entering into a debt
settlement services agreement or settling debts will either have no effect on, or improve,
the debtor's credit, credit rating, and credit score;
new text end

new text begin (8) challenge a debt without the written consent of the debtor;
new text end

new text begin (9) make any false or misleading claim regarding a creditor's right to collect a debt;
new text end

new text begin (10) falsely represent that the debt settlement services provider can negotiate better
settlement terms with a creditor than the debtor alone can negotiate;
new text end

new text begin (11) provide or offer to provide legal advice or legal services unless the person
providing or offering to provide legal advice is licensed to practice law in the state;
new text end

new text begin (12) misrepresent that it is authorized or competent to furnish legal advice or
perform legal services; and
new text end

new text begin (13) settle a debt or lead an individual to believe that a payment to a creditor is in
settlement of a debt to the creditor unless, at the time of settlement, the individual receives
a certification from the creditor that the payment is in full settlement of the debt.
new text end

Sec. 27.

new text begin [332B.11] ADVERTISEMENT OF DEBT SETTLEMENT SERVICES
PLAN.
new text end

new text begin No debt settlement services provider may engage in any activity proscribed by
section 332A.16, or represent, claim, imply, or infer that secured debts may be settled.
new text end

Sec. 28.

new text begin [332B.12] DEBT SETTLEMENT SERVICES AGREEMENT
RESCISSION.
new text end

new text begin Any debtor has the right to rescind any debt settlement services agreement with a
debt settlement services provider that commits a material violation of this chapter. On
rescission, all fees paid to the debt settlement services provider or any other person other
than creditors of the debtor must be returned to the debtor entering into the debt settlement
services agreement within ten days of rescission of the debt settlement services agreement.
new text end

Sec. 29.

new text begin [332B.13] ENFORCEMENT; REMEDIES.
new text end

new text begin Subdivision 1. new text end

new text begin Violation as deceptive practice. new text end

new text begin A violation of any of the provisions
of this chapter is considered an unfair or deceptive trade practice under section 8.31,
subdivision 1. A private right of action under section 8.31 by an aggrieved debtor is in
the public interest.
new text end

new text begin Subd. 2. new text end

new text begin Private right of action. new text end

new text begin (a) A debt settlement provider who fails to comply
with any of the provisions of this chapter is liable under this section in an individual
action for the sum of:
new text end

new text begin (1) actual, incidental, and consequential damages sustained by the debtor as a result
of the failure; and
new text end

new text begin (2) statutory damages of up to $5,000.
new text end

new text begin (b) A debt settlement provider who fails to comply with any of the provisions of this
chapter is liable to the named plaintiffs under this section in a class action for the amount
that each named plaintiff could recover under paragraph (a), clause (1), and to the other
class members for such amount as the court may allow.
new text end

new text begin (c) In determining the amount of statutory damages, the court shall consider, among
other relevant factors:
new text end

new text begin (1) the frequency, nature, and persistence of noncompliance;
new text end

new text begin (2) the extent to which the noncompliance was intentional; and
new text end

new text begin (3) in the case of a class action, the number of debtors adversely affected.
new text end

new text begin (d) A plaintiff or class successful in a legal or equitable action under this section is
entitled to the costs of the action, plus reasonable attorney fees.
new text end

new text begin Subd. 3. new text end

new text begin Injunctive relief. new text end

new text begin A debtor may sue a debt settlement services provider
for temporary or permanent injunctive or other appropriate equitable relief to prevent
violations of any provision of this chapter. A court must grant injunctive relief on a
showing that the debt settlement services provider has violated any provision of this
chapter, or in the case of a temporary injunction, on a showing that the debtor is likely to
prevail on allegations that the debt settlement services provider violated any provision
of this chapter.
new text end

new text begin Subd. 4. new text end

new text begin Remedies cumulative. new text end

new text begin The remedies provided in this section are
cumulative and do not restrict any remedy that is otherwise available. The provisions
of this chapter are not exclusive and are in addition to any other requirements, rights,
remedies, and penalties provided by law.
new text end

new text begin Subd. 5. new text end

new text begin Public enforcement. new text end

new text begin The attorney general shall enforce this chapter
under section 8.31.
new text end

Sec. 30.

new text begin [332B.14] INVESTIGATIONS.
new text end

new text begin At any reasonable time, the commissioner may examine the books and records of
every registrant and of any person engaged in the business of providing debt settlement
services. The commissioner, once during any calendar year, may require the submission
of an audit prepared by a certified public accountant of the books and records of each
registrant. If the registrant has, within one year previous to the commissioner's demand,
had an audit prepared for some other purpose, this audit may be submitted to satisfy the
requirement of this section. The commissioner may investigate any complaint concerning
violations of this chapter and may require the attendance and sworn testimony of witnesses
and the production of documents.
new text end