senate Bill S5215

Amended

Defines certain terms related to budget planners and regulates the activities of budget planners

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 03 / May / 2011
    • REFERRED TO CONSUMER PROTECTION
  • 17 / May / 2011
    • REPORTED AND COMMITTED TO BANKS
  • 02 / Jun / 2011
    • AMEND AND RECOMMIT TO BANKS
  • 02 / Jun / 2011
    • PRINT NUMBER 5215A
  • 07 / Jun / 2011
    • 1ST REPORT CAL.1060
  • 13 / Jun / 2011
    • 2ND REPORT CAL.
  • 14 / Jun / 2011
    • ADVANCED TO THIRD READING
  • 14 / Jun / 2011
    • AMENDED ON THIRD READING 5215B
  • 24 / Jun / 2011
    • COMMITTED TO RULES
  • 04 / Jan / 2012
    • REFERRED TO CONSUMER PROTECTION
  • 18 / Jan / 2012
    • REPORTED AND COMMITTED TO FINANCE
  • 01 / Jun / 2012
    • AMEND AND RECOMMIT TO FINANCE
  • 01 / Jun / 2012
    • PRINT NUMBER 5215C
  • 13 / Jun / 2012
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 13 / Jun / 2012
    • ORDERED TO THIRD READING CAL.1235
  • 13 / Jun / 2012
    • PASSED SENATE
  • 13 / Jun / 2012
    • DELIVERED TO ASSEMBLY
  • 13 / Jun / 2012
    • REFERRED TO CODES

Summary

Defines certain terms related to budget planners and regulates the activities of budget planners.

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Bill Details

Versions:
S5215
S5215A
S5215B
S5215C
Legislative Cycle:
2011-2012
Current Committee:
Assembly Codes
Law Section:
General Business Law
Laws Affected:
Amd §§455 - 457, Gen Bus L; ren §579 to be §579-a, add §579, amd §§579-a & 583-a, ren §§584-a & 584-b to be 584-c & 584-d, add §§584-a & 584-b, amd §584-d, Bank L

Votes

10
0
10
Aye
0
Nay
0
aye with reservations
0
absent
0
excused
0
abstained
show Consumer Protection committee vote details

Sponsor Memo

BILL NUMBER:S5215

TITLE OF BILL:
An act
to amend the general business law and the banking law, in relation to
defining terms related to budget planning and regulating the activities
of budget planners

PURPOSE:
The purpose of this bill is to expand the scope of current law to
require persons conducting debt settlement and debt management
services to be registered as budget planners under the jurisdiction
of the Department of Financial Regulation and require all budget
planners to disclose specific information necessary for consumers to
make informed decision regarding whether budget planning services are
appropriate for them. The bill further regulates fees paid by
consumers to budget planners.

SUMMARY OF PROVISIONS:
Includes in the definition of budget planning those persons who
provide debt settlement and debt management services and removes the
requirement that all budget planners have not-for-profit tax status.

Adds new definitions of the terms "person", "principal amount of the
debt", "debt management plan" and "debt settlement plan." The bill
requires that persons engaged in the business of budget planning must
first obtain a license from the superintendent. The bill also
provides exemptions from the license requirement for: attorneys
licensed to practice law and who don't hold themselves out as budget
planners; any public officer while acting in an official capacity and
any persons acting under a court order; persons performing services
as part of a dissolution of a business enterprise; any bank, trust
company, savings bank, savings and loan association or credit union;
and any attorney providing legal services under the federal
bankruptcy code.

Requires budget planners to make four specific disclosures to
consumers including: how long it will take for consumers to see
results; how much the services will likely cost; the negative
consequences that could result from using debt relief services; and
key information about dedicated accounts if they choose to require
them.

Prohibits upfront fees to be paid by consumers prior to receiving
budget planning services. The bill also establishes a fee structure
that provides a 25 percent cap on fees whether the fees are paid as a
proportion to the entire debt balance as the individual debt amount
bears to the entire debt amount or as a percentage of the amount
saved as a result of the debt settlement.

The bill requires that if a consumer must establish an account for the
purposes of licensee's fees or the payment of funds to creditors the
account must be held in an insured financial institution; the debtor
maintains ownership of the funds; if the licensee doesn't manage the
account, the manager of the account must not have any affiliation
with the licensee; the manager of the account must not give or accept
any compensation in exchange for referrals; and the debtor may


withdraw from the budget plan at any time without penalty and receive
all funds minus fees earned by the licensee. Lastly, the bill
prohibits a licensee from misrepresenting any material aspect of
budget planning.

JUSTIFICATION:
As the size and scope of consumer debt has risen in this country so
has the growth of the debt settlement industry. As more and more New
Yorkers have become unable to pay their debts, the option of debt
settlement has become even more attractive.

The expansion of this industry, however, has come with its share of
burdens. Legitimate debt settlement companies are being tarnished by
the fraud and abuse that is apparent throughout the industry.
Hundreds of debt settlement companies are operating in an
under-regulated environment and lack enforceable standards and
regulations, which has eroded confidence in debt settlement among
regulators and consumers. For the debt settlement industry to remain
relevant and succeed as an effective option for New Yorkers facing
financial hardship over the long-term, the state must adopt
enforceable standards and seek appropriate oversight from regulators.

In October, 2010, the Federal Trade Commission (FTC) amended the
Telemarketing Sales Rule (TSR) to add specific provisions to curb
deceptive and abusive practices associated with debt settlement
services. The new rule, however, only applies to for-profit sellers
of debt relief services and telemarketers for debt settlement
companies. In addition, the new rule does not apply to in-person
marketing of debt settlement services.

The new rule expands the scope of the TSR to cover not only outbound
telemarketing calls but now will cover inbound calls from consumers
to debt settlement companies as well. The rule further makes it
illegal to charge upfront fees and requires the disclosure of certain
information before signing people up for services. This bill would
codify the FTC rules into New York Law strengthening the state's
current budget planner statute and providing necessary protections to
New York consumers. Furthermore, this bill goes beyond the FTC rule
to cover both for-profit and not-for-profit debt settlement providers
and will also apply to in-person sales and marketing of services that
the FTC rule fails to provide.

The bill further protects consumers by prohibiting a debt settlement
company from charging more than twenty-five percent of the debt
balance as the individual debt amount bears to the entire debt amount
or as a percentage of the amount saved as a result of the debt
settlement.

In addition to the enhanced consumer protection provisions of this
bill, the legislation seeks to remedy a longstanding misconception
regarding for-profit debt settlement companies. Current
New York law requires "budget planners" to be non-profit
organizations. The current approach to regulating budget planners by
allowing only non-profit providers to become licensed is based on the
false conclusion that non-profit providers offer a better service to
consumers than taxable providers. Taxable and non-profit providers
coexist and compete in health care, education, utilities and social


services across the state of New York. These services should not be
regulated on the basis of tax status, but on the provider's
qualifications and service to consumers. No state has ever determined
that the tax status of a legitimate debt settlement provider
influences the quality of service being offered.

Effective laws and regulations governing this industry will help
ensure that consumers are sufficiently protected when seeking the
services of debt settlement providers. Requiring high standards for
providing these services will ensure that only organizations
committed to helping consumers will be permitted to operate.

LEGISLATIVE HISTORY: This is a new bill.

FISCAL IMPLICATIONS: Undetermined.

EFFECTIVE DATE: Immediate.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5215

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 3, 2011
                               ___________

Introduced  by  Sen.  GRIFFO -- read twice and ordered printed, and when
  printed to be committed to the Committee on Consumer Protection

AN ACT to amend the  general  business  law  and  the  banking  law,  in
  relation  to  defining terms related to budget planning and regulating
  the activities of budget planners

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  455  of  the general business law, as amended by
chapter 629 of the laws of 2002, subdivisions 1  and  4  as  amended  by
chapter 456 of the laws of 2006, is amended to read as follows:
  S 455. Definitions. 1. Budget planning, as used in this article, means
the  making  of  a  contract between a person [or entity] engaged in the
business of budget planning with a particular debtor whereby THE  DEBTOR
AGREES  TO  PAY  TO  SUCH  PERSON ANY VALUABLE CONSIDERATION AND (i) the
debtor agrees to pay a sum or sums of money in any manner  or  form  and
the  person  [or  entity]  engaged  in  the  business of budget planning
distributes, or supervises, coordinates or controls the distribution of,
or has a contractual relationship with another person [or  entity]  that
distributes,  or  supervises,  coordinates or controls such distribution
of, the same among certain specified creditors in accordance with a plan
agreed upon [and]; OR (ii) the [debtor agrees to pay to such  person  or
entity,  or such other person or entity that distributes, or supervises,
coordinates or controls such distribution of, a sum or  sums  of  money,
any  valuable  consideration for such services or for any other services
rendered in connection therewith.] PERSON ENGAGED  IN  THE  BUSINESS  OF
BUDGET  PLANNING PROVIDES ADVICE OR SERVICES, OR ACTS AS AN INTERMEDIARY
BETWEEN OR ON BEHALF OF A DEBTOR AND ONE OR MORE OF THE DEBTOR'S  CREDI-
TORS,  WHERE THE PRIMARY PURPOSE OF THE ADVICE, SERVICE, OR ACTION IS TO
OBTAIN A SETTLEMENT, ADJUSTMENT, OR SATISFACTION OF THE  DEBTOR'S  UNSE-
CURED DEBT TO A CREDITOR IN AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT  OF
THE  DEBT  OR  IN AN AMOUNT LESS THAN THE CURRENT OUTSTANDING BALANCE OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11381-01-1

S. 5215                             2

THE DEBT; OR (III) THE PERSON ENGAGED IN THE BUSINESS OF BUDGET PLANNING
PROVIDES SERVICES RELATED TO, OR PROVIDES SERVICES  ADVISING,  ENCOURAG-
ING,  ASSISTING,  OR  COUNSELING  A  DEBTOR TO, ACCUMULATE FUNDS FOR THE
PRIMARY  PURPOSE OF PROPOSING, OBTAINING, OR SEEKING TO OBTAIN A SETTLE-
MENT, ADJUSTMENT, OR SATISFACTION OF THE DEBTOR'S UNSECURED  DEBT  TO  A
CREDITOR  IN  AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT OF THE DEBT OR IN
AN AMOUNT LESS THAN THE CURRENT OUTSTANDING BALANCE OF THE DEBT  TO  PAY
TO  SUCH  PERSON. For the purposes of this article, a person [or entity]
shall be considered as engaged in the business of budget planning in New
York, and subject to this article and the licensing and  other  require-
ments of article twelve-C of the banking law, if such person [or entity]
solicits  budget  planning business within this state and, in connection
with such solicitation, enters into a contract for budget planning  with
an individual then resident in this state.
  2.  PERSON,  AS  USED  IN  THIS  ARTICLE, MEANS AN INDIVIDUAL, LIMITED
LIABILITY COMPANY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
  3. Person, as used in this article, shall not include a person [admit-
ted to practice law in this state.
  3. Entity, as used in this article, shall not include a firm, partner-
ship, professional  corporation,  or  other  organization,  all  of  the
members  or  principals  of  which  are admitted to practice law in this
state.
  4. Person or entity as used in this article shall not include a type B
not-for-profit corporation as defined in section two hundred one of  the
not-for-profit  corporation law of this state, or an entity incorporated
in another state and having a similar not-for-profit  status,]  licensed
by  the  superintendent[,]  to engage in the business of budget planning
[as defined in this section] OR EXEMPT FROM LICENSURE AS A BUDGET  PLAN-
NER UNDER ARTICLE TWELVE-C OF THE BANKING LAW.
  [5. Any attorney licensed to practice law in this state who is engaged
in budget planning shall (a) negotiate directly with creditors on behalf
of  the  client; (b) ensure that all moneys received from the client are
deposited in the attorney's account maintained for client funds; (c) pay
creditors from such account; and  (d)  offer  budget  planning  services
through the same legal entity that the attorney uses to practice law.]
  S  2.  Section  456 of the general business law, as amended by chapter
456 of the laws of 2006, is amended to read as follows:
  S 456. Budget planning prohibited. No person [or entity] shall  engage
in  the  business  of budget planning as defined in section four hundred
fifty-five of this article, except as authorized in article twelve-C  of
the banking law.
  S  3.  Section  457 of the general business law, as amended by chapter
629 of the laws of 2002, is amended to read as follows:
  S 457. Penalty. Whoever either individually or as officer, director or
employee of any person[, firm, association or corporation,] violates any
of the provisions of [the preceding] section FOUR HUNDRED  FIFTY-SIX  OF
THIS ARTICLE shall be guilty of a misdemeanor for each such violation.
  S  4. Section 579 of the banking law is renumbered section 579-a and a
new section 579 is added to read as follows:
  S 579. DEFINITIONS. AS USED IN THIS ARTICLE:
  1. "PERSON" MEANS AN INDIVIDUAL, PARTNERSHIP, LIMITED LIABILITY COMPA-
NY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
  2. "PRINCIPAL AMOUNT OF THE DEBT" MEANS THE TOTAL  AMOUNT  OWED  BY  A
DEBTOR  TO  ONE  OR MORE CREDITORS FOR A DEBT THAT IS INCLUDED IN A DEBT
SETTLEMENT PLAN AT THE TIME WHEN THE DEBTOR ENTERS INTO SUCH DSP.

S. 5215                             3

  3. "DEBT MANAGEMENT PLAN" OR "DMP" MEANS A CONTRACT BETWEEN  A  PERSON
AND  A  DEBTOR  WHEREBY  THE  PERSON  WILL  PROVIDE BUDGET PLANNING THAT
CONTEMPLATES THAT CREDITORS WILL REDUCE FINANCE CHARGES OR FEES FOR LATE
PAYMENT, DEFAULT OR DELINQUENCY.
  4.  "DEBT  SETTLEMENT PLAN" OR "DSP" MEANS A CONTRACT BETWEEN A PERSON
AND A DEBTOR WHEREBY  THE  PERSON  WILL  PROVIDE  BUDGET  PLANNING  THAT
CONTEMPLATES  THAT CREDITORS WILL SETTLE DEBTS FOR LESS THAN THE PRINCI-
PAL AMOUNT OF THE DEBT.
  S 5. Section 579-a of the banking law, as amended by  chapter  629  of
the  laws  of  2002  and  as  renumbered by section four of this act, is
amended to read as follows:
  S 579-a.  Doing business without license prohibited. [Only  a  type  B
not-for-profit  corporation as defined in section two hundred one of the
not-for-profit corporation law of this state, or an entity  incorporated
in  another state and having a similar not-for-profit status,] NO PERSON
shall engage in the business of budget planning as defined  in  subdivi-
sion  one of section four hundred fifty-five of the general business law
of this state except as authorized by this  article  and  without  first
obtaining a license from the superintendent, EXCEPT:
  1.  ANY ATTORNEY LICENSED TO PRACTICE LAW IN THIS STATE WHEN ACTING IN
THE ORDINARY PRACTICE OF LAW AND THROUGH THE ENTITY USED BY THE ATTORNEY
IN THE ORDINARY PRACTICE OF LAW, AND NOT HOLDING HIMSELF OR HERSELF  OUT
AS  A BUDGET PLANNER, AND NOT PROVIDING BUDGET PLANNING SERVICES, EXCEPT
AS INCIDENTAL TO LEGAL REPRESENTATION; OR
  2. ANY PUBLIC OFFICER WHILE ACTING IN AN  OFFICIAL  CAPACITY  AND  ANY
PERSON ACTING UNDER COURT ORDER; OR
  3. ANY PERSON WHILE PERFORMING SERVICES INCIDENTAL TO THE DISSOLUTION,
WINDING UP, OR LIQUIDATING OF A PARTNERSHIP, CORPORATION, OR OTHER BUSI-
NESS ENTERPRISE; OR
  4.  ANY  BANK,  TRUST  COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCI-
ATION, OR CREDIT UNION, WHETHER INCORPORATED,  CHARTERED,  OR  ORGANIZED
UNDER THE LAWS OF THIS STATE OR ANY OTHER STATE OR THE UNITED STATES, OR
ANY  OPERATING SUBSIDIARY OF ANY SUCH BANK, TRUST COMPANY, SAVINGS BANK,
SAVINGS AND LOAN ASSOCIATION OR CREDIT UNION; OR
  5. AN ATTORNEY IN PROVIDING INFORMATION, ADVICE,  OR  LEGAL  REPRESEN-
TATION  WITH RESPECT TO FILING A CASE OR PRECEDING UNDER TITLE 11 OF THE
UNTIES STATES CODE; OR
  6. SUCH OTHER PERSONS AS MAY BE SPECIFICALLY EXEMPTED  BY  THE  SUPER-
INTENDENT IN HIS OR HER SOLE DISCRETION AND CONSISTENT WITH THE PURPOSES
OF THIS ARTICLE AND THE RULES AND REGULATIONS PROMULGATED HEREUNDER.
  S  6.  Subdivision  4 of section 583-a of the banking law, as added by
chapter 142 of the laws of 1992, is amended to read as follows:
  4. As used in this section[: (a)],  the  term  ["person"  includes  an
individual, partnership, corporation, association or any other organiza-
tion,  and  (b)  the  term]  "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the manage-
ment and policies of a licensee, whether through the ownership of voting
stock of such licensee, the ownership of  voting  stock  of  any  person
which  possesses  such  power or otherwise. Control shall be presumed to
exist if any person, directly or indirectly,  owns,  controls  or  holds
with  power  to  vote  ten per centum or more of the voting stock of any
licensee or of any person which owns, controls or holds  with  power  to
vote  ten per centum or more of the voting stock of any licensee, but no
person shall be deemed to control a licensee solely by reason  of  being
an  officer  or  director of such licensee or person. The superintendent
may in his discretion, upon the application of a licensee or any  person

S. 5215                             4

who,  directly or indirectly, owns, controls or holds with power to vote
or seeks to own, control or hold with power to vote any voting stock  of
such  licensee, determine whether or not the ownership, control or hold-
ing of such voting stock constitutes or would constitute control of such
licensee for purposes of this section.
  S  7.  Sections  584-a  and  584-b  of  the banking law are renumbered
sections 584-c and 584-d and two new sections 584-a and 584-b are  added
to read as follows:
  S 584-A. DISCLOSURES. BEFORE A DEBTOR SIGNS A CONTRACT WITH A LICENSEE
FOR  BUDGET  PLANNING, THE LICENSEE MUST DISCLOSE TRUTHFULLY, IN A CLEAR
AND CONSPICUOUS MANNER, THE FOLLOWING MATERIAL INFORMATION:
  1. THE AMOUNT OF TIME NECESSARY TO ACHIEVE  THE  REPRESENTED  RESULTS,
AND  TO  THE  EXTENT  THAT  THE BUDGET PLANNING MAY INCLUDE A SETTLEMENT
OFFER TO ANY OF THE DEBTOR'S CREDITORS OR DEBT COLLECTORS, THE  TIME  BY
WHICH  THE  LICENSEE  WILL  MAKE A BONA FIDE SETTLEMENT OFFER TO EACH OF
THEM;
  2. TO THE EXTENT THAT THE BUDGET PLANNING  MAY  INCLUDE  A  SETTLEMENT
OFFER TO ANY OF THE DEBTOR'S CREDITORS OR DEBT COLLECTORS, THE AMOUNT OF
MONEY  OR  THE  PERCENTAGE OF EACH OUTSTANDING DEBT THAT THE DEBTOR MUST
ACCUMULATE BEFORE THE LICENSEE WILL MAKE A BONA FIDE SETTLEMENT OFFER TO
EACH OF THEM;
  3. TO THE EXTENT THAT ANY ASPECT OF THE BUDGET PLANNING RELIES UPON OR
RESULTS IN THE DEBTOR'S FAILURE TO MAKE TIMELY PAYMENTS TO CREDITORS  OR
DEBT  COLLECTORS,  THAT  THE  USE  OF  THE  BUDGET  PLANNING WILL LIKELY
ADVERSELY AFFECT THE DEBTOR'S CREDITWORTHINESS, MAY RESULT IN THE DEBTOR
BEING SUBJECT TO COLLECTION ACTIONS OR SUED BY CREDITORS OR DEBT COLLEC-
TORS, AND MAY INCREASE THE AMOUNT OF MONEY THE DEBTOR OWES  DUE  TO  THE
ACCRUAL OF FEES AND INTEREST; AND
  4.  TO THE EXTENT THAT THE LICENSEE REQUESTS OR REQUIRES THE DEBTOR TO
PLACE FUNDS IN AN ACCOUNT AT AN INSURED FINANCIAL INSTITUTION, THAT  THE
DEBTOR  OWNS THE FUNDS HELD IN THE ACCOUNT, THE DEBTOR MAY WITHDRAW FROM
THE BUDGET PLANNING AT ANY TIME WITHOUT  PENALTY,  AND,  IF  THE  DEBTOR
WITHDRAWS,  THE DEBTOR MUST RECEIVE ALL FUNDS IN THE ACCOUNT, OTHER THAN
FEES EARNED BY THE LICENSEE, WITHIN SEVEN BUSINESS DAYS OF THE  DEBTOR'S
REQUEST.
  S  584-B.  FEES.  A  LICENSEE  SHALL NOT RECEIVE PAYMENT OF ANY FEE OR
CONSIDERATION FOR ANY BUDGET PLANNING UNTIL AND UNLESS:
  1. THE LICENSEE  HAS  RENEGOTIATED,  SETTLED,  REDUCED,  OR  OTHERWISE
ALTERED  THE  TERMS  OF  AT LEAST ONE DEBT PURSUANT TO A DEBT SETTLEMENT
PLAN OR DEBT MANAGEMENT PLAN;
  2. THE DEBTOR HAS MADE AT LEAST ONE  PAYMENT  PURSUANT  TO  THAT  DEBT
SETTLEMENT PLAN OR DEBT MANAGEMENT PLAN; AND
  3. THE FEE OR CONSIDERATION FOR SETTLING EACH INDIVIDUAL DEBT ENROLLED
IN  A  DEBT  SETTLEMENT PLAN SHALL NOT EXCEED TWENTY-FIVE PERCENT OF THE
DEBT AT THE TIME IT WAS ENROLLED, AND MUST EITHER:
  (A) BEAR THE SAME PROPORTIONAL  RELATIONSHIP  TO  THE  TOTAL  FEE  FOR
SETTLING  THE ENTIRE DEBT BALANCE AS THE INDIVIDUAL DEBT AMOUNT BEARS TO
THE ENTIRE DEBT AMOUNT. THE INDIVIDUAL DEBT AMOUNT AND THE  ENTIRE  DEBT
AMOUNT  ARE  THOSE  OWED AT THE TIME THE DEBT WAS ENROLLED IN THE BUDGET
PLANNING; OR
  (B) BE A PERCENTAGE OF THE AMOUNT SAVED AS A RESULT OF THE SETTLEMENT.
THE PERCENTAGE CHARGED CANNOT CHANGE FROM ONE INDIVIDUAL DEBT TO  ANOTH-
ER.  THE  AMOUNT  SAVED IS THE DIFFERENCE BETWEEN THE AMOUNT OWED AT THE
TIME THE DEBT WAS ENROLLED IN THE BUDGET PLANNING AND THE AMOUNT ACTUAL-
LY PAID TO SATISFY THE DEBT.

S. 5215                             5

  4. NOTHING IN THIS  SECTION  PROHIBITS  REQUESTING  OR  REQUIRING  THE
DEBTOR  TO  PLACE FUNDS IN AN ACCOUNT TO BE USED FOR THE LICENSEE'S FEES
AND FOR PAYMENTS TO CREDITORS OR DEBT COLLECTORS, PROVIDED THAT:
  (A)  THE FUNDS ARE HELD IN AN ACCOUNT AT AN INSURED FINANCIAL INSTITU-
TION;
  (B) THE DEBTOR OWNS THE FUNDS HELD IN THE ACCOUNT AND IS PAID  ACCRUED
INTEREST ON THE ACCOUNT, IF ANY;
  (C) IF THE LICENSEE DOES NOT ADMINISTER THE ACCOUNT, THE ENTITY ADMIN-
ISTERING THE ACCOUNT IS NOT OWNED OR CONTROLLED BY, OR IN ANY WAY AFFIL-
IATED WITH, THE LICENSEE;
  (D)  THE  ENTITY ADMINISTERING THE ACCOUNT DOES NOT GIVE OR ACCEPT ANY
MONEY OR OTHER COMPENSATION IN EXCHANGE FOR REFERRALS OF BUSINESS BY THE
LICENSEE; AND
  (E) THE DEBTOR MAY WITHDRAW FROM THE BUDGET PLANNING AT ANY TIME WITH-
OUT PENALTY, AND MUST RECEIVE ALL FUNDS IN THE ACCOUNT, OTHER THAN  FEES
EARNED  BY  THE  LICENSEE,  WITHIN  SEVEN  BUSINESS DAYS OF THE DEBTOR'S
REQUEST.
  S 8. Section 584-d of the banking law, as renumbered by section  seven
of  this  act,  is  amended  by  adding a new subdivision 3-a to read as
follows:
  3-A. NO LICENSEE SHALL MISREPRESENT, DIRECTLY OR BY  IMPLICATION,  ANY
MATERIAL  ASPECT  OF ANY BUDGET PLANNING, INCLUDING, BUT NOT LIMITED TO,
THE AMOUNT OF MONEY OR THE PERCENTAGE OF THE DEBT AMOUNT THAT  A  DEBTOR
MAY  SAVE BY USING SUCH SERVICE; THE AMOUNT OF TIME NECESSARY TO ACHIEVE
THE REPRESENTED RESULTS; THE AMOUNT OF MONEY OR THE PERCENTAGE  OF  EACH
OUTSTANDING DEBT THAT THE DEBTOR MUST ACCUMULATE BEFORE THE BUDGET PLAN-
NER  WILL  INITIATE ATTEMPTS WITH THE DEBTOR'S CREDITORS OR DEBT COLLEC-
TORS OR MAKE A BONA FIDE OFFER TO NEGOTIATE, SETTLE, OR MODIFY THE TERMS
OF THE DEBTOR'S DEBT; THE EFFECT OF THE SERVICE ON A DEBTOR'S CREDITWOR-
THINESS; THE EFFECT OF THE SERVICE ON COLLECTION EFFORTS OF THE DEBTOR'S
CREDITORS OR DEBT COLLECTORS; THE PERCENTAGE OR NUMBER  OF  DEBTORS  WHO
ATTAIN  THE  REPRESENTED  RESULTS;  AND  WHETHER  THE BUDGET PLANNING IS
OFFERED OR PROVIDED BY A NON-PROFIT ENTITY.
  S 9. This act shall take effect immediately.

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