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SF 892

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:17am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to commerce; enacting the Uniform Debt-Management Services Act
approved and recommended for enactment in all the states by the National
Conference of Commissioners on Uniform State Laws; making conforming
changes; proposing coding for new law in Minnesota Statutes, chapter 332A;
repealing Minnesota Statutes 2008, sections 332A.02; 332A.03; 332A.04;
332A.05; 332A.06; 332A.07; 332A.08; 332A.09; 332A.10; 332A.11; 332A.12;
332A.13; 332A.14; 332A.16; 332A.17; 332A.18; 332A.19.

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

Section 1.

new text begin [332A.20] SHORT TITLE.
new text end

new text begin This chapter may be cited as the Uniform Debt-Management Services Act.
new text end

Sec. 2.

new text begin [332A.21] DEFINITIONS.
new text end

new text begin In this chapter:
new text end

new text begin (1) "Administrator" means the commissioner of commerce.
new text end

new text begin (2) "Affiliate":
new text end

new text begin (A) with respect to an individual, means:
new text end

new text begin (i) the spouse of the individual;
new text end

new text begin (ii) a sibling of the individual or the spouse of a sibling;
new text end

new text begin (iii) an individual or the spouse of an individual who is a lineal ancestor or lineal
descendant of the individual or the individual's spouse;
new text end

new text begin (iv) an aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, or
grandnephew, whether related by the whole or the half blood or adoption, or the spouse
of any of them; or
new text end

new text begin (v) any other individual occupying the residence of the individual; and
new text end

new text begin (B) with respect to an entity, means:
new text end

new text begin (i) a person that directly or indirectly controls, is controlled by, or is under common
control with the entity;
new text end

new text begin (ii) an officer of, or an individual performing similar functions with respect to,
the entity;
new text end

new text begin (iii) a director of, or an individual performing similar functions with respect to,
the entity;
new text end

new text begin (iv) subject to adjustment of the dollar amount pursuant to section 32(f), a person
that receives or received more than $25,000 from the entity in either the current year or the
preceding year or a person that owns more than ten percent of, or an individual who is
employed by or is a director of, a person that receives or received more than $25,000 from
the entity in either the current year or the preceding year;
new text end

new text begin (v) an officer or director of, or an individual performing similar functions with
respect to, a person described in subsubparagraph (i);
new text end

new text begin (vi) the spouse of, or an individual occupying the residence of, an individual
described in subsubparagraphs (i) through (v); or
new text end

new text begin (vii) an individual who has the relationship specified in subparagraph (A)(iv) to an
individual or the spouse of an individual described in subsubparagraphs (i) through (v).
new text end

new text begin (3) "Agreement" means an agreement between a provider and an individual for the
performance of debt-management services.
new text end

new text begin (4) "Bank" means a financial institution, including a commercial bank, savings bank,
savings and loan association, credit union, and trust company, engaged in the business of
banking, chartered under federal or state law, and regulated by a federal or state banking
regulatory authority.
new text end

new text begin (5) "Business address" means the physical location of a business, including the name
and number of a street.
new text end

new text begin (6)(A) "Certified counselor" means an individual certified by a training program or
certifying organization, approved by the administrator, that authenticates the competence
of individuals providing education and assistance to other individuals in connection with
debt-management services in which an agreement contemplates that creditors will reduce
finance charges or fees for late payment, default, or delinquency.
new text end

new text begin (B) "Certified debt specialist" means an individual certified by a training program or
certifying organization, approved by the administrator, that authenticates the competence
of individuals providing education and assistance to other individuals in connection with
debt-management services in which an agreement contemplates that creditors will settle
debts for less than the full principle amount of debt owed.
new text end

new text begin (7) "Concessions" means assent to repayment of a debt on terms more favorable to
an individual than the terms of the contract between the individual and a creditor.
new text end

new text begin (8) "Day" means calendar day.
new text end

new text begin (9) "Debt-management services" means services as an intermediary between an
individual and one or more creditors of the individual for the purpose of obtaining
concessions, but does not include:
new text end

new text begin (A) legal services provided in an attorney-client relationship by an attorney licensed
or otherwise authorized to practice law in this state;
new text end

new text begin (B) accounting services provided in an accountant-client relationship by a certified
public accountant licensed to provide accounting services in this state; or
new text end

new text begin (C) financial planning services provided in a financial planner-client relationship
by a member of a financial planning profession whose members the administrator, by
rule, determines are:
new text end

new text begin (i) licensed by this state;
new text end

new text begin (ii) subject to a disciplinary mechanism;
new text end

new text begin (iii) subject to a code of professional responsibility; and
new text end

new text begin (iv) subject to a continuing education requirement.
new text end

new text begin (10) "Entity" means a person other than an individual.
new text end

new text begin (11) "Good faith" means honesty in fact and the observance of reasonable standards
of fair dealing.
new text end

new text begin (12) "Person" means an individual, corporation, business trust, estate, trust,
partnership, limited liability company, association, joint venture, or any other legal or
commercial entity. The term does not include a public corporation, government, or
governmental subdivision, agency, or instrumentality.
new text end

new text begin (13) "Plan" means a program or strategy in which a provider furnishes
debt-management services to an individual and which includes a schedule of payments to
be made by or on behalf of the individual and used to pay debts owed by the individual.
new text end

new text begin (14) "Principal amount of the debt" means the amount of a debt at the time of an
agreement.
new text end

new text begin (15) "Provider" means a person that provides, offers to provide, or agrees to provide
debt-management services directly or through others.
new text end

new text begin (16) "Record" means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
new text end

new text begin (17) "Settlement fee" means a charge imposed on or paid by an individual in
connection with a creditor's assent to accept in full satisfaction of a debt an amount less
than the principal amount of the debt.
new text end

new text begin (18) "Sign" means, with present intent to authenticate or adopt a record:
new text end

new text begin (A) to execute or adopt a tangible symbol; or
new text end

new text begin (B) to attach to or logically associate with the record an electronic sound, symbol,
or process.
new text end

new text begin (19) "State" means a state of the United States, the District of Columbia, Puerto
Rico, the United States Virgin Islands, or any territory or insular possession subject to the
jurisdiction of the United States.
new text end

new text begin (20) "Trust account" means an account held by a provider that is:
new text end

new text begin (A) established in an insured bank;
new text end

new text begin (B) separate from other accounts of the provider or its designee;
new text end

new text begin (C) designated as a trust account or other account designated to indicate that the
money in the account is not the money of the provider or its designee; and
new text end

new text begin (D) used to hold money of one or more individuals for disbursement to creditors
of the individuals.
new text end

Sec. 3.

new text begin [332A.22] EXEMPT AGREEMENTS AND PERSONS.
new text end

new text begin (a) This chapter does not apply to an agreement with an individual who the provider
has no reason to know resides in this state at the time of the agreement.
new text end

new text begin (b) This chapter does not apply to a provider to the extent that the provider:
new text end

new text begin (1) provides or agrees to provide debt-management, educational, or counseling
services to an individual who the provider has no reason to know resides in this state at the
time the provider agrees to provide the services; or
new text end

new text begin (2) receives no compensation for debt-management services from or on behalf of the
individuals to whom it provides the services or from their creditors.
new text end

new text begin (c) This chapter does not apply to the following persons or their employees when
the person or the employee is engaged in the regular course of the person's business
or profession:
new text end

new text begin (1) a judicial officer, a person acting under an order of a court or an administrative
agency, or an assignee for the benefit of creditors;
new text end

new text begin (2) a bank;
new text end

new text begin (3) an affiliate, as defined in section 332A.21(2)(B)(i), of a bank if the affiliate is
regulated by a federal or state banking regulatory authority; or
new text end

new text begin (4) a title insurer, escrow company, or other person that provides bill-paying services
if the provision of debt-management services is incidental to the bill-paying services.
new text end

Sec. 4.

new text begin [332A.23] REGISTRATION REQUIRED.
new text end

new text begin (a) Except as otherwise provided in subsection (b), a provider may not provide
debt-management services to an individual who it reasonably should know resides in
this state at the time it agrees to provide the services, unless the provider is registered
under this chapter.
new text end

new text begin (b) If a provider is registered under this chapter, subsection (a) does not apply to an
employee or agent of the provider.
new text end

new text begin (c) The administrator shall maintain and publicize a list of the names of all registered
providers.
new text end

Sec. 5.

new text begin [332A.24] APPLICATION FOR REGISTRATION: FORM, FEE, AND
ACCOMPANYING DOCUMENTS.
new text end

new text begin (a) An application for registration as a provider must be in a form prescribed by the
administrator.
new text end

new text begin (b) Subject to adjustment of dollar amounts pursuant to section 332A.51(f), an
application for registration as a provider must be accompanied by:
new text end

new text begin (1) the fee established by the administrator;
new text end

new text begin (2) the bond required by section 332A.32;
new text end

new text begin (3) identification of all trust accounts required by section 332A.41 and an irrevocable
consent authorizing the administrator to review and examine the trust accounts;
new text end

new text begin (4) evidence of insurance in the amount of $250,000:
new text end

new text begin (A) against the risks of dishonesty, fraud, theft, and other misconduct on the part of
the applicant or a director, employee, or agent of the applicant;
new text end

new text begin (B) issued by an insurance company authorized to do business in this state and
rated at least A or equivalent by a nationally recognized rating organization approved by
the administrator;
new text end

new text begin (C) with a deductible not exceeding $5,000;
new text end

new text begin (D) payable for the benefit of the applicant, this state, and individuals who are
residents of this state, as their interests may appear; and
new text end

new text begin (E) not subject to cancellation by the applicant or the insurer until 60 days after
written notice has been given to the administrator;
new text end

new text begin (5) a certificate of good standing issued pursuant to section 5.12; and
new text end

new text begin (6) if the application is exempt from taxation under the Internal Revenue Code,
United States Code, title 26, section 501, as amended, evidence of that status.
new text end

Sec. 6.

new text begin [332A.25] APPLICATION FOR REGISTRATION: REQUIRED
INFORMATION.
new text end

new text begin An application for registration must be signed under oath and include:
new text end

new text begin (1) the applicant's name, principal business address and telephone number, and
all other business addresses in this state, electronic mail addresses, and Internet Web
site addresses;
new text end

new text begin (2) all names under which the applicant conducts business;
new text end

new text begin (3) the address of each location in this state at which the applicant will provide
debt-management services or a statement that the applicant will have no such location;
new text end

new text begin (4) the name and home address of each officer and director of the applicant and each
person that owns at least ten percent of the applicant;
new text end

new text begin (5) identification of every jurisdiction in which, during the five years immediately
preceding the application:
new text end

new text begin (A) the applicant or any of its officers or directors has been licensed or registered
to provide debt-management services; or
new text end

new text begin (B) individuals have resided when they received debt-management services from
the applicant;
new text end

new text begin (6) a statement describing, to the extent it is known or should be known by
the applicant, any material civil or criminal judgment or litigation and any material
administrative or enforcement action by a governmental agency in any jurisdiction against
the applicant, any of its officers, directors, owners, or agents, or any person who is
authorized to have access to the trust account required by section 332A.41;
new text end

new text begin (7) the applicant's financial statements, audited by an accountant licensed to conduct
audits, for each of the two years immediately preceding the application or, if it has not been
in operation for the two years preceding the application, for the period of its existence;
new text end

new text begin (8) evidence of accreditation by an independent accrediting organization approved
by the administrator;
new text end

new text begin (9) evidence that, within 12 months after initial employment, each of the applicant's
counselors becomes certified as a certified counselor or certified debt specialist;
new text end

new text begin (10) a description of the three most commonly used educational programs that the
applicant provides or intends to provide to individuals who reside in this state and a copy
of any materials used or to be used in those programs;
new text end

new text begin (11) a description of the applicant's financial analysis and initial budget plan,
including any form or electronic model, used to evaluate the financial condition of
individuals;
new text end

new text begin (12) a copy of each form of agreement that the applicant will use with individuals
who reside in this state;
new text end

new text begin (13) the schedule of fees and charges that the applicant will use with individuals
who reside in this state;
new text end

new text begin (14) at the applicant's expense, the results of a criminal-records check, including
fingerprints, conducted within the immediately preceding 12 months, covering every
officer of the applicant and every employee or agent of the applicant who is authorized to
have access to the trust account required by section 332A.41;
new text end

new text begin (15) the names and addresses of all employers of each director during the ten years
immediately preceding the application;
new text end

new text begin (16) a description of any ownership interest of at least ten percent by a director,
owner, or employee of the applicant in:
new text end

new text begin (A) any affiliate of the applicant; or
new text end

new text begin (B) any entity that provides products or services to the applicant or any individual
relating to the applicant's debt-management services;
new text end

new text begin (17) a statement of the amount of compensation of the applicant's five most highly
compensated employees for each of the three years immediately preceding the application
or, if it has not been in operation for the three years preceding the application, for the
period of its existence;
new text end

new text begin (18) the identity of each director who is an affiliate, as defined in section
332A.21(2)(A) or (B)(i), (ii), (iv), (v), (vi), or (vii), of the applicant; and
new text end

new text begin (19) any other information that the administrator reasonably requires to perform the
administrator's duties under section 332A.28.
new text end

Sec. 7.

new text begin [332A.26] APPLICATION FOR REGISTRATION: OBLIGATION TO
UPDATE INFORMATION.
new text end

new text begin An applicant or registered provider shall notify the administrator within ten days
after a change in the information specified in section 332A.24(b)(4) or (6) or 6(1), (3), (6),
(12), or (13).
new text end

Sec. 8.

new text begin [332A.27] APPLICATION FOR REGISTRATION: PUBLIC
INFORMATION.
new text end

new text begin Except for the information required by section 332A.25(7), (14), and (17); and the
addresses required by section 332A.25(4), the administrator shall make the information in
an application for registration as a provider available to the public.
new text end

Sec. 9.

new text begin [332A.28] CERTIFICATE OF REGISTRATION: ISSUANCE OR
DENIAL.
new text end

new text begin (a) Except as otherwise provided in subsections (c) and (d), the administrator shall
issue a certificate of registration as a provider to a person that complies with sections
5 and 6.
new text end

new text begin (b) If an applicant has otherwise complied with sections 332A.24 and 332A.25,
including a timely effort to obtain the information required by section 332A.25(14) but the
information has not been received, the administrator may issue a temporary certificate of
registration. The temporary certificate shall expire no later than 180 days after issuance.
new text end

new text begin (c) The administrator may deny registration if:
new text end

new text begin (1) the application contains information that is materially erroneous or incomplete;
new text end

new text begin (2) an officer, director, or owner of the applicant has been convicted of a crime,
or suffered a civil judgment, involving dishonesty or the violation of state or federal
securities laws;
new text end

new text begin (3) the applicant or any of its officers, directors, or owners has defaulted in the
payment of money collected for others; or
new text end

new text begin (4) the administrator finds that the financial responsibility, experience, character,
or general fitness of the applicant or its owners, directors, employees, or agents does not
warrant belief that the business will be operated in compliance with this chapter.
new text end

new text begin (d) The administrator shall deny registration if, with respect to an applicant that is
organized as a not-for-profit entity or has obtained tax-exempt status under the Internal
Revenue Code, United States Code, title 26, section 501, as amended, the applicant's board
of directors is not independent of the applicant's employees and agents.
new text end

new text begin (e) Subject to adjustment of the dollar amount pursuant to section 32(f), a board of
directors is not independent for purposes of subsection (d) if more than one-fourth of its
members:
new text end

new text begin (1) are affiliates of the applicant, as defined in section 332A.21(2)(A) or (B)(i), (ii),
(iv), (v), (vi), or (vii); or
new text end

new text begin (2) after the date ten years before first becoming a director of the applicant, were
employed by or directors of a person that received from the applicant more than $25,000
in either the current year or the preceding year.
new text end

Sec. 10.

new text begin [332A.29] CERTIFICATE OF REGISTRATION: TIMING.
new text end

new text begin (a) The administrator shall approve or deny an initial registration as a provider
within 120 days after an application is filed. In connection with a request pursuant to
section 332A.25(19) for additional information, the administrator may extend the 120-day
period for not more than 60 days. Within seven days after denying an application, the
administrator, in a record, shall inform the applicant of the reasons for the denial.
new text end

new text begin (b) If the administrator denies an application for registration as a provider or does
not act on an application within the time prescribed in subsection (a), the applicant may
appeal and request a hearing pursuant to chapter 14.
new text end

new text begin (c) Subject to sections 332A.30(d) and 332A.53, a registration as a provider is
valid for one year.
new text end

Sec. 11.

new text begin [332A.30] RENEWAL OF REGISTRATION.
new text end

new text begin (a) A provider must obtain a renewal of its registration annually.
new text end

new text begin (b) An application for renewal of registration as a provider must be in a form
prescribed by the administrator, signed under oath, and:
new text end

new text begin (1) be filed no fewer than 30 and no more than 60 days before the registration expires;
new text end

new text begin (2) be accompanied by the fee established by the administrator and the bond required
by section 332A.32;
new text end

new text begin (3) contain the matter required for initial registration as a provider by section
332A.25(8) and (9) and a financial statement, audited by an accountant licensed to conduct
audits, for the applicant's fiscal year immediately preceding the application;
new text end

new text begin (4) disclose any changes in the information contained in the applicant's application
for registration or its immediately previous application for renewal, as applicable. If an
application is otherwise complete and the applicant has made a timely effort to obtain the
information required by section 332A.25(14) but the information has not been received,
the administrator may issue a temporary renewal of registration. The temporary renewal
shall expire no later than 180 days after issuance;
new text end

new text begin (5) supply evidence of insurance in an amount equal to the larger of $250,000 or
the highest daily balance in the trust account required by section 332A.41 during the
six-month period immediately preceding the application:
new text end

new text begin (A) against risks of dishonesty, fraud, theft, and other misconduct on the part of the
applicant or a director, employee, or agent of the applicant;
new text end

new text begin (B) issued by an insurance company authorized to do business in this state and
rated at least A or equivalent by a nationally recognized rating organization approved by
the administrator;
new text end

new text begin (C) with a deductible not exceeding $5,000;
new text end

new text begin (D) payable for the benefit of the applicant, this state, and individuals who are
residents of this state, as their interests may appear; and
new text end

new text begin (E) not subject to cancellation by the applicant or the insurer until 60 days after
written notice has been given to the administrator;
new text end

new text begin (6) disclose the total amount of money received by the applicant pursuant to plans
during the preceding 12 months from or on behalf of individuals who reside in this
state and the total amount of money distributed to creditors of those individuals during
that period;
new text end

new text begin (7) disclose, to the best of the applicant's knowledge, the gross amount of money
accumulated during the preceding 12 months pursuant to plans by or on behalf of
individuals who reside in this state and with whom the applicant has agreements; and
new text end

new text begin (8) provide any other information that the administrator reasonably requires to
perform the administrator's duties under this section.
new text end

new text begin (c) Except for the information required by section 332A.25(7), (14), and (17); and
the addresses required by section 332A.25(4), the administrator shall make the information
in an application for renewal of registration as a provider available to the public.
new text end

new text begin (d) If a registered provider files a timely and complete application for renewal of
registration, the registration remains effective until the administrator, in a record, notifies
the applicant of a denial and states the reasons for the denial.
new text end

new text begin (e) If the administrator denies an application for renewal of registration as a provider,
the applicant, within 30 days after receiving notice of the denial, may appeal and request a
hearing pursuant to chapter 14. Subject to section 332A.53, while the appeal is pending
the applicant shall continue to provide debt-management services to individuals with
whom it has agreements. If the denial is affirmed, subject to the administrator's order and
section 332A.53, the applicant shall continue to provide debt-management services to
individuals with whom it has agreements until, with the approval of the administrator, it
transfers the agreements to another registered provider or returns to the individuals all
unexpended money that is under the applicant's control.
new text end

Sec. 12.

new text begin [332A.31] REGISTRATION IN ANOTHER STATE.
new text end

new text begin If a provider holds a license or certificate of registration in another state authorizing
it to provide debt-management services, the provider may submit a copy of that license
or certificate and the application for it instead of an application in the form prescribed
by section 332A.24(a), 332A.25, or 332A.30(b). The administrator shall accept the
application and the license or certificate from the other state as an application for
registration as a provider or for renewal of registration as a provider, as appropriate,
in this state if:
new text end

new text begin (1) the application in the other state contains information substantially similar to or
more comprehensive than that required in an application submitted in this state;
new text end

new text begin (2) the applicant provides the information required by section 332A.25(1), (3),
(10), (12), and (13); and
new text end

new text begin (3) the applicant, under oath, certifies that the information contained in the
application is current or, to the extent it is not current, supplements the application to make
the information current.
new text end

Sec. 13.

new text begin [332A.32] BOND REQUIRED.
new text end

new text begin (a) Except as otherwise provided in section 332A.23, a provider that is required to
be registered under this chapter shall file a surety bond with the administrator, which must:
new text end

new text begin (1) be in effect during the period of registration and for two years after the provider
ceases providing debt-management services to individuals in this state; and
new text end

new text begin (2) run to this state for the benefit of this state and of individuals who reside in this
state when they agree to receive debt-management services from the provider, as their
interests may appear.
new text end

new text begin (b) Subject to adjustment of the dollar amount pursuant to section 32(f), a surety
bond filed pursuant to subsection (a) must:
new text end

new text begin (1) be in the amount of $50,000 or other larger or smaller amount that the
administrator determines is warranted by the financial condition and business experience
of the provider, the history of the provider in performing debt-management services, the
risk to individuals, and any other factor the administrator considers appropriate;
new text end

new text begin (2) be issued by a bonding, surety, or insurance company authorized to do business
in this state and rated at least A by a nationally recognized rating organization; and
new text end

new text begin (3) have payment conditioned upon noncompliance of the provider or its agent
with this chapter.
new text end

new text begin (c) If the principal amount of a surety bond is reduced by payment of a claim or a
judgment, the provider shall immediately notify the administrator and, within 30 days
after notice by the administrator, file a new or additional surety bond in an amount set by
the administrator. The amount of the new or additional bond must be at least the amount of
the bond immediately before payment of the claim or judgment. If for any reason a surety
terminates a bond, the provider shall immediately file a new surety bond in the amount of
$50,000 or other amount determined pursuant to subsection (b).
new text end

new text begin (d) The administrator or an individual may obtain satisfaction out of the surety
bond procured pursuant to this section if:
new text end

new text begin (1) the administrator assesses expenses under section 332A.51(b)(1), issues a
final order under section 332A.52(a)(2), or recovers a final judgment under section
332A.52(a)(4) or (5) or (d); or
new text end

new text begin (2) an individual recovers a final judgment pursuant to section 332A.54(a), (b),
or (c)(1), (2), or (4).
new text end

new text begin (e) If claims against a surety bond exceed or are reasonably expected to exceed the
amount of the bond, the administrator, on the initiative of the administrator or on petition
of the surety, shall, unless the proceeds are adequate to pay all costs, judgments, and
claims, distribute the proceeds in the following order:
new text end

new text begin (1) to satisfaction of a final order or judgment under section 332A.52(a)(2), (4), or
(5) or (d);
new text end

new text begin (2) to final judgments recovered by individuals pursuant to section 332A.54(a),
(b), or (c)(1), (2), or (4), pro rata;
new text end

new text begin (3) to claims of individuals established to the satisfaction of the administrator, pro
rata; and
new text end

new text begin (4) if a final order or judgment is issued under section 332A.52(a), to the expenses
charged pursuant to section 332A.51(b)(1).
new text end

Sec. 14.

new text begin [332A.33] BOND REQUIRED: SUBSTITUTE.
new text end

new text begin (a) Instead of the surety bond required by section 332A.32, a provider may deliver to
the administrator, in the amount required by section 332A.32(b), and, except as otherwise
provided in paragraph (2)(A), payable or available to this state and to individuals who
reside in this state when they agree to receive debt-management services from the provider,
as their interests may appear, if the provider or its agent does not comply with this chapter:
new text end

new text begin (1) a certificate of insurance:
new text end

new text begin (A) issued by an insurance company authorized to do business in this state and rated
at least A or equivalent by a nationally recognized rating organization approved by the
administrator; and
new text end

new text begin (B) with no deductible, or if the provider supplies a bond in the amount of $5,000, a
deductible not exceeding $5,000; or
new text end

new text begin (2) with the approval of the administrator:
new text end

new text begin (A) an irrevocable letter of credit, issued or confirmed by a bank approved by the
administrator, payable upon presentation of a certificate by the administrator stating that
the provider or its agent has not complied with this chapter; or
new text end

new text begin (B) bonds or other obligations of the United States or guaranteed by the United
States or bonds or other obligations of this state or a political subdivision of this state, to
be deposited and maintained with a bank approved by the administrator for this purpose.
new text end

new text begin (b) If a provider furnishes a substitute pursuant to subsection (a), the provisions of
section 332A.32(a), (c), (d), and (e) apply to the substitute.
new text end

Sec. 15.

new text begin [332A.34] REQUIREMENT OF GOOD FAITH.
new text end

new text begin A provider shall act in good faith in all matters under this chapter.
new text end

Sec. 16.

new text begin [332A.35] CUSTOMER SERVICE.
new text end

new text begin A provider that is required to be registered under this chapter shall maintain a
toll-free communication system, staffed at a level that reasonably permits an individual to
speak to a certified counselor, certified debt specialist, or customer service representative,
as appropriate, during ordinary business hours.
new text end

Sec. 17.

new text begin [332A.36] PREREQUISITES FOR PROVIDING DEBT-MANAGEMENT
SERVICES.
new text end

new text begin (a) Before providing debt-management services, a registered provider shall give the
individual an itemized list of goods and services and the charges for each. The list must be
clear and conspicuous, be in a record the individual may keep whether or not the individual
assents to an agreement, and describe the goods and services the provider offers:
new text end

new text begin (1) free of additional charge if the individual enters into an agreement;
new text end

new text begin (2) for a charge if the individual does not enter into an agreement; and
new text end

new text begin (3) for a charge if the individual enters into an agreement, using the following
terminology, as applicable, and format:
new text end

new text begin Setup fee
new text end
new text begin _
new text end
new text begin dollar amount of fee
new text end
new text begin Monthly
service fee
new text end
new text begin _
new text end
new text begin dollar amount of fee or method of determining amount
new text end
new text begin Settlement
fee
new text end
new text begin _
new text end
new text begin dollar amount of fee or method of determining amount
new text end
new text begin Goods and services in addition to those provided in connection
with a plan:
new text end
new text begin _
new text end
new text begin _
new text end
new text begin (item)
new text end
new text begin dollar amount or method of determining amount
new text end
new text begin _
new text end
new text begin _
new text end
new text begin item
new text end
new text begin dollar amount or method of determining amount.
new text end

new text begin (b) A provider may not furnish debt-management services unless the provider,
through the services of a certified counselor or certified debt specialist:
new text end

new text begin (1) provides the individual with reasonable education about the management of
personal finance;
new text end

new text begin (2) has prepared a financial analysis; and
new text end

new text begin (3) if the individual is to make regular, periodic payments:
new text end

new text begin (A) has prepared a plan for the individual;
new text end

new text begin (B) has made a determination, based on the provider's analysis of the information
provided by the individual and otherwise available to it, that the plan is suitable for the
individual and the individual will be able to meet the payment obligations under the
plan; and
new text end

new text begin (C) believes that each creditor of the individual listed as a participating creditor in
the plan will accept payment of the individual's debts as provided in the plan.
new text end

new text begin (c) Before an individual assents to an agreement to engage in a plan, a provider shall:
new text end

new text begin (1) provide the individual with a copy of the analysis and plan required by subsection
(b) in a record that identifies the provider and that the individual may keep whether or not
the individual assents to the agreement;
new text end

new text begin (2) inform the individual of the availability, at the individual's option, of assistance
by a toll-free communication system or in person to discuss the financial analysis and plan
required by subsection (b); and
new text end

new text begin (3) with respect to all creditors identified by the individual or otherwise known by
the provider to be creditors of the individual, provide the individual with a list of:
new text end

new text begin (A) creditors that the provider expects to participate in the plan and grant
concessions;
new text end

new text begin (B) creditors that the provider expects to participate in the plan but not grant
concessions;
new text end

new text begin (C) creditors that the provider expects not to participate in the plan; and
new text end

new text begin (D) all other creditors.
new text end

new text begin (d) Before an individual assents to an agreement, the provider shall inform the
individual, in a record that contains nothing else, that is given separately, and that the
individual may keep whether or not the individual assents to the agreement:
new text end

new text begin (1) of the name and business address of the provider;
new text end

new text begin (2) that plans are not suitable for all individuals and the individual may ask the
provider about other ways, including bankruptcy, to deal with indebtedness;
new text end

new text begin (3) that establishment of a plan may adversely affect the individual's credit rating or
credit scores;
new text end

new text begin (4) that nonpayment of debt may lead creditors to increase finance and other charges
or undertake collection activity, including litigation;
new text end

new text begin (5) unless it is not true, that the provider may receive compensation from the
creditors of the individual; and
new text end

new text begin (6) that, unless the individual is insolvent, if a creditor settles for less than the full
amount of the debt, the plan may result in the creation of taxable income to the individual,
even though the individual does not receive any money.
new text end

new text begin (e) If a provider may receive payments from an individual's creditors and the
plan contemplates that the individual's creditors will reduce finance charges or fees for
late payment, default, or delinquency, the provider may comply with subsection (d) by
providing the following disclosure, surrounded by black lines:
new text end

new text begin IMPORTANT INFORMATION FOR YOU TO CONSIDER
new text end
new text begin (1) Debt-management plans are not right for all individuals, and you
may ask us to provide information about other ways, including bankruptcy, to
deal with your debts.
new text end
new text begin (2) Using a debt-management plan may make it harder for you to
obtain credit.
new text end
new text begin (3) We may receive compensation for our services from your
creditors.
new text end
new text begin _
new text end
new text begin Name and business address of provider
new text end

new text begin (f) If a provider will not receive payments from an individual's creditors and the plan
contemplates that the individual's creditors will reduce finance charges or fees for late
payment, default, or delinquency, a provider may comply with subsection (d) by providing
the following disclosure, surrounded by black lines:
new text end

new text begin IMPORTANT INFORMATION FOR YOU TO CONSIDER
new text end
new text begin (1) Debt-management plans are not right for all individuals, and you
may ask us to provide information about other ways, including bankruptcy, to
deal with your debts.
new text end
new text begin (2) Using a debt-management plan may make it harder for you to
obtain credit.
new text end
new text begin _
new text end
new text begin Name and business address of provider
new text end

new text begin (g) If an agreement contemplates that creditors will settle debts for less than the full
principal amount of debt owed, a provider may comply with subsection (d) by providing
the following disclosure, surrounded by black lines:
new text end

new text begin IMPORTANT INFORMATION FOR YOU TO CONSIDER
new text end
new text begin (1) Our program is not right for all individuals, and you may ask us to
provide information about bankruptcy and other ways to deal with your debts.
new text end
new text begin (2) Nonpayment of your debts under our program may hurt your
credit rating or credit scores; lead your creditors to increase finance and other
charges; and lead your creditors to undertake activity, including lawsuits, to
collect the debts.
new text end
new text begin (3) Reduction of debt under our program may result in taxable
income to you, even though you will not actually receive any money.
new text end
new text begin _
new text end
new text begin Name and business address of provider
new text end

Sec. 18.

new text begin [332A.37] COMMUNICATION BY ELECTRONIC OR OTHER
MEANS.
new text end

new text begin (a) In this section:
new text end

new text begin (1) "Federal act" means the Electronic Signatures in Global and National Commerce
Act, United States Code, title 15, section 7001 et seq, as amended.
new text end

new text begin (2) "Consumer" means an individual who seeks or obtains goods or services that are
used primarily for personal, family, or household purposes.
new text end

new text begin (b) A provider may satisfy the requirements of section 332A.36, 332A.38, or
332A.46 by means of the Internet or other electronic means if the provider obtains a
consumer's consent in the manner provided by section 101(c)(1) of the federal act.
new text end

new text begin (c) The disclosures and materials required by sections 332A.36, 332A.38, and
332A.46 shall be presented in a form that is capable of being accurately reproduced for
later reference.
new text end

new text begin (d) With respect to disclosure by means of an Internet Web site, the disclosure of the
information required by section 332A.36(d) must appear on one or more screens that:
new text end

new text begin (1) contain no other information; and
new text end

new text begin (2) the individual must see before proceeding to assent to formation of an agreement.
new text end

new text begin (e) At the time of providing the materials and agreement required by sections
332A.36(c) and (d), 332A.38, and 332A.46, a provider shall inform the individual that
upon electronic, telephonic, or written request, it will send the individual a written copy of
the materials, and shall comply with a request as provided in subsection (f).
new text end

new text begin (f) If a provider is requested, before the expiration of 90 days after an agreement
is completed or terminated, to send a written copy of the materials required by section
332A.36(c) and (d), 332A.38, or 332A.46, the provider shall send them at no charge
within three business days after the request is received, but the provider need not comply
with a request more than once per calendar month or if it reasonably believes the request
is made for purposes of harassment. If a request is made more than 90 days after an
agreement is completed or terminated, the provider shall send within a reasonable time a
written copy of the materials requested.
new text end

new text begin (g) A provider that maintains an Internet Web site shall disclose on the home page of
its Web site or on a page that is clearly and conspicuously connected to the home page
by a link that clearly reveals its contents:
new text end

new text begin (1) its name and all names under which it does business;
new text end

new text begin (2) its principal business address, telephone number, and electronic-mail address, if
any; and
new text end

new text begin (3) the names of its principal officers.
new text end

new text begin (h) Subject to subsection (i), if a consumer who has consented to electronic
communication in the manner provided by section 101 of the federal act withdraws consent
as provided in the federal act, a provider may terminate its agreement with the consumer.
new text end

new text begin (i) If a provider wishes to terminate an agreement with a consumer pursuant to
subsection (h), it shall notify the consumer that it will terminate the agreement unless
the consumer, within 30 days after receiving the notification, consents to electronic
communication in the manner provided in section 101(c) of the federal act. If the
consumer consents, the provider may terminate the agreement only as permitted by
section 332A.38(a)(6)(G).
new text end

Sec. 19.

new text begin [332A.38] FORM AND CONTENTS OF AGREEMENT.
new text end

new text begin (a) An agreement must:
new text end

new text begin (1) be in a record;
new text end

new text begin (2) be dated and signed by the provider and the individual;
new text end

new text begin (3) include the name of the individual and the address where the individual resides;
new text end

new text begin (4) include the name, business address, and telephone number of the provider;
new text end

new text begin (5) be delivered to the individual immediately upon formation of the agreement; and
new text end

new text begin (6) disclose:
new text end

new text begin (A) the services to be provided;
new text end

new text begin (B) the amount, or method of determining the amount, of all fees, individually
itemized, to be paid by the individual;
new text end

new text begin (C) the schedule of payments to be made by or on behalf of the individual, including
the amount of each payment, the date on which each payment is due, and an estimate
of the date of the final payment;
new text end

new text begin (D) if a plan provides for regular periodic payments to creditors:
new text end

new text begin (i) each creditor of the individual to which payment will be made, the amount owed
to each creditor, and any concessions the provider reasonably believes each creditor will
offer; and
new text end

new text begin (ii) the schedule of expected payments to each creditor, including the amount of each
payment and the date on which it will be made;
new text end

new text begin (E) each creditor that the provider believes will not participate in the plan and to
which the provider will not direct payment;
new text end

new text begin (F) how the provider will comply with its obligations under section 332A.46(a);
new text end

new text begin (G) that the provider may terminate the agreement for good cause, upon return
of unexpended money of the individual;
new text end

new text begin (H) that the individual may cancel the agreement as provided in section 332A.39;
new text end

new text begin (I) that the individual may contact the administrator with any questions or complaints
regarding the provider; and
new text end

new text begin (J) the address, telephone number, and Internet address or Web site of the
administrator.
new text end

new text begin (b) For purposes of subsection (a)(5), delivery of an electronic record occurs when it
is made available in a format in which the individual may retrieve, save, and print it and
the individual is notified that it is available.
new text end

new text begin (c) If the administrator supplies the provider with any information required under
subsection (a)(6)(J), the provider may comply with that requirement only by disclosing the
information supplied by the administrator.
new text end

new text begin (d) An agreement must provide that:
new text end

new text begin (1) the individual has a right to terminate the agreement at any time, without penalty
or obligation, by giving the provider written or electronic notice, in which event:
new text end

new text begin (A) the provider will refund all unexpended money that the provider or its agent
has received from or on behalf of the individual for the reduction or satisfaction of the
individual's debt;
new text end

new text begin (B) with respect to an agreement that contemplates that creditors will settle debts for
less than the principal amount of debt, the provider will refund 65 percent of any portion
of the setup fee that has not been credited against the settlement fee; and
new text end

new text begin (C) all powers of attorney granted by the individual to the provider are revoked
and ineffective;
new text end

new text begin (2) the individual authorizes any bank in which the provider or its agent has
established a trust account to disclose to the administrator any financial records relating
to the trust account; and
new text end

new text begin (3) the provider will notify the individual within five days after learning of a
creditor's final decision to reject or withdraw from a plan and that this notice will include:
new text end

new text begin (A) the identity of the creditor; and
new text end

new text begin (B) the right of the individual to modify or terminate the agreement.
new text end

new text begin (e) An agreement may confer on a provider a power of attorney to settle the
individual's debt for no more than 50 percent of the principal amount of the debt. An
agreement may not confer a power of attorney to settle a debt for more than 50 percent
of that amount, but may confer a power of attorney to negotiate with creditors of the
individual on behalf of the individual. An agreement must provide that the provider will
obtain the assent of the individual after a creditor has assented to a settlement for more
than 50 percent of the principal amount of the debt.
new text end

new text begin (f) An agreement may not:
new text end

new text begin (1) provide for application of the law of any jurisdiction other than the United States
and this state;
new text end

new text begin (2) except as permitted by section 2 of the Federal Arbitration Act, United States
Code, title 9, section 2, as amended, or sections 572.08 to 572.30, contain a provision that
modifies or limits otherwise available forums or procedural rights, including the right to
trial by jury, that are generally available to the individual under law other than this chapter;
new text end

new text begin (3) contain a provision that restricts the individual's remedies under this chapter
or law other than this chapter; or
new text end

new text begin (4) contain a provision that:
new text end

new text begin (A) limits or releases the liability of any person for not performing the agreement
or for violating this chapter; or
new text end

new text begin (B) indemnifies any person for liability arising under the agreement or this chapter.
new text end

new text begin (g) All rights and obligations specified in subsection (d) and section 332A.39 exist
even if not provided in the agreement. A provision in an agreement which violates
subsection (d), (e), or (f) is void.
new text end

Sec. 20.

new text begin [332A.39] CANCELLATION OF AGREEMENT; WAIVER.
new text end

new text begin (a) An individual may cancel an agreement before midnight of the third business day
after the individual assents to it, unless the agreement does not comply with subsection (b)
or section 19 or 28, in which event the individual may cancel the agreement within 30
days after the individual assents to it. To exercise the right to cancel, the individual must
give notice in a record to the provider. Notice by mail is given when mailed.
new text end

new text begin (b) An agreement must be accompanied by a form that contains in bold-face type,
surrounded by bold black lines:
new text end

new text begin Notice of Right to Cancel
new text end
new text begin You may cancel this agreement, without any penalty or obligation, at
any time before midnight of the third business day that begins the day after
you agree to it by electronic communication or by signing it.
new text end
new text begin To cancel this agreement during this period, send an e-mail to
new text end
new text begin _ or mail or deliver a signed, dated copy of
new text end
new text begin E-mail address of provider
new text end
new text begin this notice, or any other written notice to
_
new text end
new text begin Name of provider
new text end
new text begin at _ before midnight on
new text end
new text begin _ .
new text end
new text begin Address of provider
new text end
new text begin Date
new text end
new text begin If you cancel this agreement within the three-day period, we will refund all
money you already have paid us.
new text end
new text begin You also may terminate this agreement at any later time, but we may
not be required to refund fees you have paid us.
new text end
new text begin I cancel this agreement,
new text end
new text begin _
new text end
new text begin Print your name
new text end
new text begin _
new text end
new text begin Signature
new text end
new text begin _
new text end
new text begin Date
new text end

new text begin (c) If a personal financial emergency necessitates the disbursement of an individual's
money to one or more of the individual's creditors before the expiration of three days after
an agreement is signed, an individual may waive the right to cancel. To waive the right,
the individual must send or deliver a signed, dated statement in the individual's own words
describing the circumstances that necessitate a waiver. The waiver must explicitly waive
the right to cancel. A waiver by means of a standard-form record is void.
new text end

Sec. 21.

new text begin [332A.40] REQUIRED LANGUAGE.
new text end

new text begin Unless the administrator, by rule, provides otherwise, the disclosures and documents
required by this chapter must be in English. If a provider communicates with an individual
primarily in a language other than English, the provider must furnish a translation into the
other language of the disclosures and documents required by this chapter.
new text end

Sec. 22.

new text begin [332A.41] TRUST ACCOUNT.
new text end

new text begin (a) All money paid to a provider by or on behalf of an individual for distribution
to creditors pursuant to a plan is held in trust. Within two business days after receipt,
the provider shall deposit the money in a trust account established for the benefit of
individuals to whom the provider is furnishing debt-management services.
new text end

new text begin (b) Money held in trust by a provider is not property of the provider or its designee.
The money is not available to creditors of the provider or designee, except an individual
from whom or on whose behalf the provider received money, to the extent that the money
has not been disbursed to creditors of the individual.
new text end

new text begin (c) A provider shall:
new text end

new text begin (1) maintain separate records of account for each individual to whom the provider
is furnishing debt-management services;
new text end

new text begin (2) disburse money paid by or on behalf of the individual to creditors of the
individual as disclosed in the agreement, except that:
new text end

new text begin (A) the provider may delay payment to the extent that a payment by the individual is
not final; and
new text end

new text begin (B) if a plan provides for regular periodic payments to creditors, the disbursement
must comply with the due dates established by each creditor; and
new text end

new text begin (3) promptly correct any payments that are not made or that are misdirected as
a result of an error by the provider or other person in control of the trust account and
reimburse the individual for any costs or fees imposed by a creditor as a result of the
failure to pay or misdirection.
new text end

new text begin (d) A provider may not commingle money in a trust account established for the
benefit of individuals to whom the provider is furnishing debt-management services with
money of other persons.
new text end

new text begin (e) A trust account must at all times have a cash balance equal to the sum of the
balances of each individual's account.
new text end

new text begin (f) If a provider has established a trust account pursuant to subsection (a), the
provider shall reconcile the trust account at least once a month. The reconciliation must
compare the cash balance in the trust account with the sum of the balances in each
individual's account. If the provider or its designee has more than one trust account, each
trust account must be individually reconciled.
new text end

new text begin (g) If a provider discovers, or has a reasonable suspicion of, embezzlement or other
unlawful appropriation of money held in trust, the provider immediately shall notify the
administrator by a method approved by the administrator. Unless the administrator by
rule provides otherwise, within five days thereafter, the provider shall give notice to the
administrator describing the remedial action taken or to be taken.
new text end

new text begin (h) If an individual terminates an agreement or it becomes reasonably apparent to
a provider that a plan has failed, the provider shall promptly refund to the individual all
money paid by or on behalf of the individual which has not been paid to creditors, less
fees that are payable to the provider under section 332A.42.
new text end

new text begin (i) Before relocating a trust account from one bank to another, a provider shall
inform the administrator of the name, business address, and telephone number of the new
bank. As soon as practicable, the provider shall inform the administrator of the account
number of the trust account at the new bank.
new text end

Sec. 23.

new text begin [332A.42] FEES AND OTHER CHARGES.
new text end

new text begin (a) A provider may not impose directly or indirectly a fee or other charge on an
individual or receive money from or on behalf of an individual for debt-management
services except as permitted by this section.
new text end

new text begin (b) A provider may not impose charges or receive payment for debt-management
services until the provider and the individual have signed an agreement that complies with
sections 332A.38 and 332A.47.
new text end

new text begin (c) If an individual assents to an agreement, a provider may not impose a fee or other
charge for educational or counseling services, or the like, except as otherwise provided
in this subsection and section 332A.47(d). The administrator may authorize a provider
to charge a fee based on the nature and extent of the educational or counseling services
furnished by the provider.
new text end

new text begin (d) Subject to adjustment of dollar amounts pursuant to section 332A.51(f), the
following rules apply:
new text end

new text begin (1) If an individual assents to a plan that contemplates that creditors will reduce
finance charges or fees for late payment, default, or delinquency, the provider may charge:
new text end

new text begin (A) a fee not exceeding $50 for consultation, obtaining a credit report, setting up an
account, and the like; and
new text end

new text begin (B) a monthly service fee, not to exceed $10 times the number of creditors remaining
in a plan at the time the fee is assessed, but not more than $50 in any month.
new text end

new text begin (2) If an individual assents to an agreement that contemplates that creditors will
settle debts for less than the principal amount of the debt, a provider may charge:
new text end

new text begin (A) subject to section 332A.38(d), a fee for consultation, obtaining a credit report,
setting up an account, and the like, in an amount not exceeding the lesser of $400 and four
percent of the debt in the plan at the inception of the plan; and
new text end

new text begin (B) a monthly service fee, not to exceed $10 times the number of creditors remaining
in a plan at the time the fee is assessed, but not more than $50 in any month.
new text end

new text begin (3) A provider may not impose or receive fees under both paragraphs (1) and (2).
new text end

new text begin (4) Except as otherwise provided in section 332A.47(d), if an individual does not
assent to an agreement, a provider may receive for educational and counseling services
it provides to the individual a fee not exceeding $100 or, with the approval of the
administrator, a larger fee. The administrator may approve a fee larger than $100 if the
nature and extent of the educational and counseling services warrant the larger fee.
new text end

new text begin (e) If, before the expiration of 90 days after the completion or termination of
educational or counseling services, an individual assents to an agreement, the provider
shall refund to the individual any fee paid pursuant to subsection (d)(4).
new text end

new text begin (f) Except as otherwise provided in subsections (c) and (d), if an agreement
contemplates that creditors will settle an individual's debts for less than the principal
amount of the debt, compensation for services in connection with settling a debt may not
exceed, with respect to each debt:
new text end

new text begin (1) 30 percent of the excess of the principal amount of the debt over the amount paid
the creditor pursuant to the agreement, less
new text end

new text begin (2) to the extent it has not been credited against an earlier settlement fee:
new text end

new text begin (A) the fee charged pursuant to subsection (d)(2)(A); and
new text end

new text begin (B) the aggregate of fees charged pursuant to subsection (d)(2)(B).
new text end

new text begin (g) Subject to adjustment of the dollar amount pursuant to section 332A.51(f), if a
payment to a provider by an individual under this chapter is dishonored, a provider may
impose a reasonable charge on the individual, not to exceed the lesser of $25 and the
amount permitted by law other than this chapter.
new text end

Sec. 24.

new text begin [332A.43] VOLUNTARY CONTRIBUTIONS.
new text end

new text begin A provider may not solicit a voluntary contribution from an individual or an
affiliate of the individual for any service provided to the individual. A provider may
accept voluntary contributions from an individual but, until 30 days after completion or
termination of a plan, the aggregate amount of money received from or on behalf of
the individual may not exceed the total amount the provider may charge the individual
under section 332A.42.
new text end

Sec. 25.

new text begin [332A.44] VOIDABLE AGREEMENTS.
new text end

new text begin (a) If a provider imposes a fee or other charge or receives money or other payments
not authorized by section 332A.42 or 332A.43, the individual may void the agreement and
recover as provided in section 332A.54.
new text end

new text begin (b) If a provider is not registered as required by this chapter when an individual
assents to an agreement, the agreement is voidable by the individual.
new text end

new text begin (c) If an individual voids an agreement under subsection (b), the provider does not
have a claim against the individual for breach of contract or for restitution.
new text end

Sec. 26.

new text begin [332A.45] TERMINATION OF AGREEMENTS.
new text end

new text begin (a) If an individual who has entered into an agreement fails for 60 days to make
payments required by the agreement, a provider may terminate the agreement.
new text end

new text begin (b) If a provider or an individual terminates an agreement, the provider shall
immediately return to the individual:
new text end

new text begin (1) any money of the individual held in trust for the benefit of the individual; and
new text end

new text begin (2) 65 percent of any portion of the setup fee received pursuant to section
332A.42(d)(2) which has not been credited against settlement fees.
new text end

Sec. 27.

new text begin [332A.46] PERIODIC REPORTS AND RETENTION OF RECORDS.
new text end

new text begin (a) A provider shall provide the accounting required by subsection (b):
new text end

new text begin (1) upon cancellation or termination of an agreement; and
new text end

new text begin (2) before cancellation or termination of any agreement:
new text end

new text begin (A) at least once each month; and
new text end

new text begin (B) within five business days after a request by an individual, but the provider need
not comply with more than one request in any calendar month.
new text end

new text begin (b) A provider, in a record, shall provide each individual for whom it has established
a plan an accounting of the following information:
new text end

new text begin (1) the amount of money received from the individual since the last report;
new text end

new text begin (2) the amounts and dates of disbursement made on the individual's behalf, or by
the individual upon the direction of the provider, since the last report to each creditor
listed in the plan;
new text end

new text begin (3) the amounts deducted from the amount received from the individual;
new text end

new text begin (4) the amount held in reserve; and
new text end

new text begin (5) if, since the last report, a creditor has agreed to accept as payment in full an
amount less than the principal amount of the debt owed by the individual:
new text end

new text begin (A) the total amount and terms of the settlement;
new text end

new text begin (B) the amount of the debt when the individual assented to the plan;
new text end

new text begin (C) the amount of the debt when the creditor agreed to the settlement; and
new text end

new text begin (D) the calculation of a settlement fee.
new text end

new text begin (c) A provider shall maintain records for each individual for whom it provides
debt-management services for five years after the final payment made by the individual
and produce a copy of them to the individual within a reasonable time after a request for
them. The provider may use electronic or other means of storage of the records.
new text end

Sec. 28.

new text begin [332A.47] PROHIBITED ACTS AND PRACTICES.
new text end

new text begin (a) A provider may not, directly or indirectly:
new text end

new text begin (1) misappropriate or misapply money held in trust;
new text end

new text begin (2) settle a debt on behalf of an individual for more than 50 percent of the principal
amount of the debt owed a creditor, unless the individual assents to the settlement after
the creditor has assented;
new text end

new text begin (3) take a power of attorney that authorizes it to settle a debt, unless the power of
attorney expressly limits the provider's authority to settle debts for not more than 50
percent of the principal amount of the debt owed a creditor;
new text end

new text begin (4) exercise or attempt to exercise a power of attorney after an individual has
terminated an agreement;
new text end

new text begin (5) initiate a transfer from an individual's account at a bank or with another person
unless the transfer is:
new text end

new text begin (A) a return of money to the individual; or
new text end

new text begin (B) before termination of an agreement, properly authorized by the agreement and
this chapter, and for:
new text end

new text begin (i) payment to one or more creditors pursuant to an agreement; or
new text end

new text begin (ii) payment of a fee;
new text end

new text begin (6) offer a gift or bonus, premium, reward, or other compensation to an individual
for executing an agreement;
new text end

new text begin (7) offer, pay, or give a gift or bonus, premium, reward, or other compensation to
a person for referring a prospective customer, if the person making the referral has a
financial interest in the outcome of debt-management services provided to the customer,
unless neither the provider nor the person making the referral communicates to the
prospective customer the identity of the source of the referral;
new text end

new text begin (8) receive a bonus, commission, or other benefit for referring an individual to
a person;
new text end

new text begin (9) structure a plan in a manner that would result in a negative amortization of any of
an individual's debts, unless a creditor that is owed a negatively amortizing debt agrees to
refund or waive the finance charge upon payment of the principal amount of the debt;
new text end

new text begin (10) compensate its employees on the basis of a formula that incorporates the
number of individuals the employee induces to enter into agreements;
new text end

new text begin (11) 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 by the creditor that the payment is in full settlement of the debt;
new text end

new text begin (12) make a representation that:
new text end

new text begin (A) the provider will furnish money to pay bills or prevent attachments;
new text end

new text begin (B) payment of a certain amount will permit satisfaction of a certain amount or
range of indebtedness; or
new text end

new text begin (C) participation in a plan will or may prevent litigation, garnishment, attachment,
repossession, foreclosure, eviction, or loss of employment;
new text end

new text begin (13) misrepresent that it is authorized or competent to furnish legal advice or
perform legal services;
new text end

new text begin (14) represent in its agreements, disclosures required by this chapter, advertisements,
or Internet Web site that it is:
new text end

new text begin (A) a not-for-profit entity unless it is organized and properly operating as a
not-for-profit entity under the law of the state in which it was formed; or
new text end

new text begin (B) a tax-exempt entity unless it has received certification of tax-exempt status from
the Internal Revenue Service and is properly operating as a not-for-profit entity under the
law of the state in which it was formed;
new text end

new text begin (15) take a confession of judgment or power of attorney to confess judgment against
an individual; or
new text end

new text begin (16) employ an unfair, unconscionable, or deceptive act or practice, including the
knowing omission of any material information.
new text end

new text begin (b) If a provider furnishes debt-management services to an individual, the provider
may not, directly or indirectly:
new text end

new text begin (1) purchase a debt or obligation of the individual;
new text end

new text begin (2) receive from or on behalf of the individual:
new text end

new text begin (A) a promissory note or other negotiable instrument other than a check or a demand
draft; or
new text end

new text begin (B) a postdated check or demand draft;
new text end

new text begin (3) lend money or provide credit to the individual, except as a deferral of a settlement
fee at no additional expense to the individual;
new text end

new text begin (4) obtain a mortgage or other security interest from any person in connection with
the services provided to the individual;
new text end

new text begin (5) except as permitted by federal law, disclose the identity or identifying
information of the individual or the identity of the individual's creditors, except to:
new text end

new text begin (A) the administrator, upon proper demand;
new text end

new text begin (B) a creditor of the individual, to the extent necessary to secure the cooperation of
the creditor in a plan; or
new text end

new text begin (C) the extent necessary to administer the plan;
new text end

new text begin (6) except as otherwise provided in section 332A.42(f), provide the individual less
than the full benefit of a compromise of a debt arranged by the provider;
new text end

new text begin (7) charge the individual for or provide credit or other insurance, coupons for
goods or services, membership in a club, access to computers or the Internet, or any
other matter not directly related to debt-management services or educational services
concerning personal finance; or
new text end

new text begin (8) furnish legal advice or perform legal services, unless the person furnishing that
advice to or performing those services for the individual is licensed to practice law.
new text end

new text begin (c) This chapter does not authorize any person to engage in the practice of law.
new text end

new text begin (d) A provider may not receive a gift or bonus, premium, reward, or other
compensation, directly or indirectly, for advising, arranging, or assisting an individual in
connection with obtaining, an extension of credit or other service from a lender or service
provider, except for educational or counseling services required in connection with a
government-sponsored program.
new text end

new text begin (e) Unless a person supplies goods, services, or facilities generally and supplies them
to the provider at a cost no greater than the cost the person generally charges to others, a
provider may not purchase goods, services, or facilities from the person if an employee or
a person that the provider should reasonable know is an affiliate of the provider:
new text end

new text begin (1) owns more than ten percent of the person; or
new text end

new text begin (2) is an employee or affiliate of the person.
new text end

Sec. 29.

new text begin [332A.48] NOTICE OF LITIGATION.
new text end

new text begin No later than 30 days after a provider has been served with notice of a civil action
for violation of this chapter by or on behalf of an individual who resides in this state at
either the time of an agreement or the time the notice is served, the provider shall notify
the administrator in a record that it has been sued.
new text end

Sec. 30.

new text begin [332A.49] ADVERTISING.
new text end

new text begin (a) If the agreements of a provider contemplate that creditors will reduce finance
charges or fees for late payment, default, or delinquency and the provider advertises
debt-management services, it shall disclose, in an easily comprehensible manner, that
using a debt-management plan may make it harder for the individual to obtain credit.
new text end

new text begin (b) If the agreements of a provider contemplate that creditors will settle for less than
the full principal amount of debt and the provider advertises debt-management services, it
shall disclose, in an easily comprehensible manner, the information specified in section
332A.36(d)(3) and (4).
new text end

Sec. 31.

new text begin [332A.50] LIABILITY FOR THE CONDUCT OF OTHER PERSONS.
new text end

new text begin If a provider delegates any of its duties or obligations under an agreement or this
chapter to another person, including an independent contractor, the provider is liable
for conduct of the person which, if done by the provider, would violate the agreement
or this chapter.
new text end

Sec. 32.

new text begin [332A.51] POWERS OF ADMINISTRATOR.
new text end

new text begin (a) The administrator may act on its own initiative or in response to complaints and
may receive complaints, take action to obtain voluntary compliance with this chapter, refer
cases to the attorney general, and seek or provide remedies as provided in this chapter.
new text end

new text begin (b) The administrator may investigate and examine, in this state or elsewhere,
by subpoena or otherwise, the activities, books, accounts, and records of a person that
provides or offers to provide debt-management services, or a person to which a provider
has delegated its obligations under an agreement or this chapter, to determine compliance
with this chapter. Information that identifies individuals who have agreements with the
provider shall not be disclosed to the public. In connection with the investigation, the
administrator may:
new text end

new text begin (1) charge the person the reasonable expenses necessarily incurred to conduct the
examination;
new text end

new text begin (2) require or permit a person to file a statement under oath as to all the facts and
circumstances of a matter to be investigated; and
new text end

new text begin (3) seek a court order authorizing seizure from a bank at which the person maintains
a trust account required by section 332A.41, any or all money, books, records, accounts,
and other property of the provider that is in the control of the bank and relates to
individuals who reside in this state.
new text end

new text begin (c) The administrator may adopt rules to implement the provisions of this chapter
in accordance with chapter 14.
new text end

new text begin (d) The administrator may enter into cooperative arrangements with any other
federal or state agency having authority over providers and may exchange with any of
those agencies information about a provider, including information obtained during an
examination of the provider.
new text end

new text begin (e) The administrator, by rule, shall establish reasonable fees to be paid by providers
for the expense of administering this chapter.
new text end

new text begin (f) The administrator, by rule, shall adopt dollar amounts instead of those specified
in sections 332A.21, 332A.24, 332A.28, 332A.32, 332A.42, 332A.52, and 332A.54 to
reflect inflation, as measured by the United States Bureau of Labor Statistics Consumer
Price Index for all urban consumers or, if that index is not available, another index adopted
by rule by the administrator. The administrator shall adopt a base year and adjust the
dollar amounts, effective on July 1 of each year, if the change in the index from the base
year, as of December 31 of the preceding year, is at least ten percent. The dollar amount
must be rounded to the nearest $100, except that the amounts in section 332A.42 must
be rounded to the nearest dollar.
new text end

new text begin (g) The administrator shall notify registered providers of any change in dollar
amounts made pursuant to subsection (f) and make that information available to the public.
new text end

Sec. 33.

new text begin [332A.52] ADMINISTRATIVE REMEDIES.
new text end

new text begin (a) The administrator may enforce this chapter and rules adopted under this chapter
by taking one or more of the following actions:
new text end

new text begin (1) ordering a provider or a director, employee, or other agent of a provider to cease
and desist from any violations;
new text end

new text begin (2) ordering a provider or a person that has caused a violation to correct the violation,
including making restitution of money or property to a person aggrieved by a violation;
new text end

new text begin (3) subject to adjustment of the dollar amount pursuant to section 332A.51(f),
imposing on a provider or a person that has caused a violation a civil penalty not exceeding
$10,000 for each violation;
new text end

new text begin (4) prosecuting a civil action to:
new text end

new text begin (A) enforce an order;
new text end

new text begin (B) obtain restitution or an injunction or other equitable relief, or both; or
new text end

new text begin (5) intervening in an action brought under section 332A.54.
new text end

new text begin (b) Subject to adjustment of the dollar amount pursuant to section 332A.51(f), if a
person violates or knowingly authorizes, directs, or aids in the violation of a final order
issued under subsection (a)(1) or (2), the administrator may impose a civil penalty not
exceeding $20,000 for each violation.
new text end

new text begin (c) The administrator may maintain an action to enforce this chapter in any county.
new text end

new text begin (d) The administrator may recover the reasonable costs of enforcing this chapter
under subsections (a) through (c), including attorney fees based on the hours reasonably
expended and the hourly rates for attorneys of comparable experience in the community.
new text end

new text begin (e) In determining the amount of a civil penalty to impose under subsection (a) or
(b), the administrator shall consider the seriousness of the violation, the good faith of the
violator, any previous violations by the violator, the deleterious effect of the violation on
the public, the net worth of the violator, and any other factor the administrator considers
relevant to the determination of the civil penalty.
new text end

Sec. 34.

new text begin [332A.53] SUSPENSION, REVOCATION, OR NONRENEWAL OF
REGISTRATION.
new text end

new text begin (a) In this section, "insolvent" means:
new text end

new text begin (1) having generally ceased to pay debts in the ordinary course of business other
than as a result of good-faith dispute;
new text end

new text begin (2) being unable to pay debts as they become due; or
new text end

new text begin (3) being insolvent within the meaning of the federal bankruptcy law, United States
Code, title 11, section 101 et seq., as amended.
new text end

new text begin (b) The administrator may suspend, revoke, or deny renewal of a provider's
registration if:
new text end

new text begin (1) a fact or condition exists that, if it had existed when the registrant applied for
registration as a provider, would have been a reason for denying registration;
new text end

new text begin (2) the provider has committed a material violation of this chapter or a rule or order
of the administrator under this chapter;
new text end

new text begin (3) the provider is insolvent;
new text end

new text begin (4) the provider or an employee or affiliate of the provider has refused to permit the
administrator to make an examination authorized by this chapter, failed to comply with
section 332A.51(b)(2) within 15 days after request, or made a material misrepresentation
or omission in complying with section 332A.51(b)(2); or
new text end

new text begin (5) the provider has not responded within a reasonable time and in an appropriate
manner to communications from the administrator.
new text end

new text begin (c) If a provider does not comply with section 332A.41(f) or if the administrator
otherwise finds that the public health or safety or general welfare requires emergency
action, the administrator may order a summary suspension of the provider's registration,
effective on the date specified in the order.
new text end

new text begin (d) If the administrator suspends, revokes, or denies renewal of the registration of
a provider, the administrator may seek a court order authorizing seizure of any or all of
the money in a trust account required by section 332A.41, books, records, accounts, and
other property of the provider which are located in this state.
new text end

new text begin (e) If the administrator suspends or revokes a provider's registration, the provider
may appeal and request a hearing pursuant to [insert the citation to the appropriate section
of the administrative procedure act or other statute governing administrative procedure].
new text end

Sec. 35.

new text begin [332A.54] PRIVATE ENFORCEMENT.
new text end

new text begin (a) If an individual voids an agreement pursuant to section 332A.44(b), the
individual may recover in a civil action all money paid or deposited by or on behalf of the
individual pursuant to the agreement, except amounts paid to creditors, in addition to the
recovery under subsection (c)(3) and (4).
new text end

new text begin (b) If an individual voids an agreement pursuant to section 332A.44(a), the
individual may recover in a civil action three times the total amount of the fees, charges,
money, and payments made by the individual to the provider, in addition to the recovery
under subsection (c)(4).
new text end

new text begin (c) Subject to subsection (d), an individual with respect to whom a provider violates
this chapter may recover in a civil action from the provider and any person that caused
the violation:
new text end

new text begin (1) compensatory damages for injury, including noneconomic injury, caused by
the violation;
new text end

new text begin (2) except as otherwise provided in subsection (d) and subject to adjustment
of the dollar amount pursuant to section 332A.51(f), with respect to a violation of
section 332A.36, 332A.38, 332A.39, 332A.40, 332A.41, 332A.42, 332A.43, 332A.46,
or 332A.47(a), (b), or (d), the greater of the amount recoverable under paragraph (1)
or $5,000;
new text end

new text begin (3) punitive damages; and
new text end

new text begin (4) reasonable attorney fees and costs.
new text end

new text begin (d) In a class action, except for a violation of section 332A.47(a)(5), the minimum
damages provided in subsection (c)(2) do not apply.
new text end

new text begin (e) In addition to the remedy available under subsection (c), if a provider violates
an individual's rights under section 332A.39, the individual may recover in a civil action
all money paid or deposited by or on behalf of the individual pursuant to the agreement,
except for amounts paid to creditors.
new text end

new text begin (f) A provider is not liable under this section for a violation of this chapter if the
provider proves that the violation was not intentional and resulted from a good-faith error
notwithstanding the maintenance of procedures reasonably adapted to avoid the error. An
error of legal judgment with respect to a provider's obligations under this chapter is not
a good-faith error. If, in connection with a violation, the provider has received more
money than authorized by an agreement or this chapter, the defense provided by this
subsection is not available unless the provider refunds the excess within two business
days of learning of the violation.
new text end

new text begin (g) The administrator shall assist an individual in enforcing a judgment against the
surety bond or other security provided under section 332A.32 or 332A.33.
new text end

Sec. 36.

new text begin [332A.55] VIOLATION OF UNFAIR OR DECEPTIVE PRACTICES
ACT.
new text end

new text begin If an act or practice of a provider violates both this chapter and sections 72A.17 to
72A.32, an individual may not recover under both for the same act or practice.
new text end

Sec. 37.

new text begin [332A.56] STATUTE OF LIMITATIONS.
new text end

new text begin (a) An action or proceeding brought pursuant to section 332A.52(a), (b), or (c) must
be commenced within four years after the conduct that is the basis of the administrator's
complaint.
new text end

new text begin (b) An action brought pursuant to section 332A.54 must be commenced within two
years after the latest of:
new text end

new text begin (1) the individual's last transmission of money to a provider;
new text end

new text begin (2) the individual's last transmission of money to a creditor at the direction of the
provider;
new text end

new text begin (3) the provider's last disbursement to a creditor of the individual;
new text end

new text begin (4) the provider's last accounting to the individual pursuant to section 332A.46(a);
new text end

new text begin (5) the date on which the individual discovered or reasonably should have discovered
the facts giving rise to the individual's claim; or
new text end

new text begin (6) termination of actions or proceedings by the administrator with respect to a
violation of this chapter.
new text end

new text begin (c) The period prescribed in subsection (b)(5) is tolled during any period
during which the provider or, if different, the defendant has materially and willfully
misrepresented information required by this chapter to be disclosed to the individual, if
the information so misrepresented is material to the establishment of the liability of the
defendant under this chapter.
new text end

Sec. 38.

new text begin [332A.57] UNIFORMITY OF APPLICATION AND CONSTRUCTION.
new text end

new text begin In applying and construing this Uniform Act, consideration must be given to the
need to promote uniformity of the law with respect to its subject matter among states
that enact it.
new text end

Sec. 39.

new text begin [332A.58] RELATION TO ELECTRONIC SIGNATURES IN GLOBAL
AND NATIONAL COMMERCE ACT.
new text end

new text begin This chapter modifies, limits, and supersedes the federal Electronic Signatures in
Global and National Commerce Act (United States Code, title 15, section 7001 et seq.)
but does not modify, limit, or supersede section 101(c) of that act (United States Code,
title 15, section 7001(c)) or authorize electronic delivery of any of the notices described in
section 103(b) of that act (United States Code, title 15, section 7003(b)).
new text end

Sec. 40.

new text begin [332A.59] TRANSITIONAL PROVISIONS; APPLICATION TO
EXISTING TRANSACTIONS.
new text end

new text begin Transactions entered into before this chapter takes effect and the rights, duties, and
interests resulting from them may be completed, terminated, or enforced as required
or permitted by a law amended, repealed, or modified by this chapter as though the
amendment, repeal, or modification had not occurred.
new text end

Sec. 41.

new text begin [332A.60] SEVERABILITY.
new text end

new text begin If any provision of this chapter or its application to any person or circumstance is
held invalid, the invalidity does not affect other provisions or applications of this chapter
that can be given effect without the invalid provision or application, and to this end the
provisions of this chapter are severable.
new text end

Sec. 42. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, sections 332A.02; 332A.03; 332A.04; 332A.05; 332A.06;
332A.07; 332A.08; 332A.09; 332A.10; 332A.11; 332A.12; 332A.13; 332A.14; 332A.16;
332A.17; 332A.18; and 332A.19,
new text end new text begin are repealed.
new text end

Sec. 43. new text beginEFFECTIVE DATE.
new text end

new text begin This chapter takes effect 12 months after final enactment.
new text end