Establishes the uniform debt-management services act
download bill text pdf| Date of Action |
Assembly Actions -
Lowercase Senate Actions - UPPERCASE |
|---|---|
| Jan 09, 2025 |
referred to consumer affairs and protection |
S T A T E O F N E W Y O R K
________________________________________________________________________
1427
2025-2026 Regular Sessions
I N A S S E M B L Y
January 9, 2025
___________
Introduced by M. of A. DINOWITZ, BENEDETTO -- read once and referred to
the Committee on Consumer Affairs and Protection
AN ACT to amend the general business law and the banking law, in
relation to providing for budget planning and debt settlement services
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, subdivision 1 as amended by chapter 456
of the laws of 2006, and subdivision 4 as amended by chapter 549 of the
laws of 2013, is amended to read as follows:
§ 455. Definitions. 1. Budget planning, as used in this article, means
the making of a contract between a person or entity engaged in the busi-
ness of budget planning with a particular debtor whereby:
(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
PERIODIC PAYMENT plan agreed upon; and
(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; PROVIDED, HOWEVER, THAT "BUDGET PLANNING" DOES NOT
INCLUDE "DEBT SETTLEMENT SERVICES" AS DEFINED IN SECTION FIVE HUNDRED
EIGHTY-EIGHT-A OF THE BANKING LAW. For the purposes of this article, a
person or entity shall be considered as engaged in the business of budg-
et planning in New York, and subject to this article and the licensing
and other requirements of article twelve-C of the banking law, if such
person or entity solicits budget planning business within this state
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03186-01-5
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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, 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 char-
itable corporation as defined in paragraph (a) of section one hundred
two (Definitions) 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.
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.
§ 2. Section 457 of the general business law, as amended by chapter
629 of the laws of 2002, is amended to read as follows:
§ 457. [Penalty] PENALTIES FOR VIOLATION OF THIS ARTICLE; CRIMINAL AND
CIVIL. (A) 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 shall be guilty of a CLASS A
misdemeanor [for each such violation] PUNISHABLE AS PROVIDED IN ARTICLES
SEVENTY AND EIGHTY OF THE PENAL LAW.
(B) WHENEVER THERE SHALL BE A VIOLATION OF THIS ARTICLE, APPLICATION
MAY BE MADE BY THE ATTORNEY GENERAL IN THE NAME OF THE PEOPLE OF THE
STATE OF NEW YORK TO A COURT OR JUSTICE HAVING JURISDICTION BY A SPECIAL
PROCEEDING TO ISSUE AN INJUNCTION, AND UPON NOTICE TO THE DEFENDANT OF
NOT LESS THAN FIVE DAYS, TO ENJOIN AND RESTRAIN THE CONTINUANCE OF SUCH
VIOLATIONS; AND IF IT SHALL APPEAR TO THE SATISFACTION OF THE COURT OR
JUSTICE THAT THE DEFENDANT HAS, IN FACT, VIOLATED THIS ARTICLE, AN
INJUNCTION MAY BE ISSUED BY SUCH COURT OR JUSTICE, ENJOINING AND
RESTRAINING ANY FURTHER VIOLATION, WITHOUT REQUIRING PROOF THAT ANY
PERSON HAS, IN FACT, BEEN INJURED OR DAMAGED THEREBY. IN CONNECTION WITH
ANY SUCH PROPOSED APPLICATION, THE ATTORNEY GENERAL IS AUTHORIZED TO
TAKE PROOF AND MAKE A DETERMINATION OF THE RELEVANT FACTS AND TO ISSUE
SUBPOENAS IN ACCORDANCE WITH THE CIVIL PRACTICE LAW AND RULES. WHENEVER
THE COURT SHALL DETERMINE THAT A VIOLATION OF SECTION FOUR HUNDRED
FIFTY-SIX OF THIS ARTICLE HAS OCCURRED, THE COURT MAY IMPOSE A CIVIL
PENALTY OF NOT MORE THAN FIVE HUNDRED DOLLARS PER CONTRACT MADE IN
VIOLATION OF SUCH SECTION, NOT TO EXCEED ONE HUNDRED THOUSAND DOLLARS.
§ 3. Section 579 of the banking law, as amended by chapter 549 of the
laws of 2013, is amended to read as follows:
§ 579. Doing business without license prohibited. [Only a charitable
corporation as defined in paragraph (a) of section one hundred two
(Definitions) 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 OR ENTITY shall engage in the business of budget
planning as defined in subdivision one of section four hundred fifty-
five of the general business law [of this state] except as authorized by
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this article and without first obtaining a license from the superinten-
dent.
§ 4. Subdivision 2 of section 584-a of the banking law, as added by
chapter 629 of the laws of 2002, is amended to read as follows:
2. the total fees agreed to for such services, including any adjust-
ments for estimated available rebates from creditors, provided that
nothing in this subdivision shall require a licensee to share rebates
with its clients AND PROVIDED THAT ANY FEES OR CHARGES IMPOSED MUST BE
FAIR, REASONABLE AND EASILY UNDERSTOOD;
§ 5. Section 584-b of the banking law is amended by adding a new
subdivision 4-a to read as follows:
4-A. NO LICENSEE SHALL IMPOSE ANY FEE OR CHARGE WHATSOEVER THAT IS
NOT FAIR, REASONABLE AND ABLE TO BE EASILY UNDERSTOOD.
§ 6. Section 585 of the banking law, as amended by chapter 629 of the
laws of 2002, is amended to read as follows:
§ 585. Superintendent authorized to examine. For the purpose of
discovering violations of this article or securing information lawfully
required [by him or her] hereunder, the superintendent may at any time,
and as often as [he or she] THEY may determine, either personally or by
a person duly designated by [him or her] SUCH SUPERINTENDENT, investi-
gate the business and examine the books, accounts, records, and files
used therein of every licensee hereunder. For that purpose the super-
intendent and [his or her] THEIR duly designated representative shall
have free access to the offices and place of business, books, accounts,
papers, records, files, safes and vaults of all such licensees. The
superintendent and any person duly designated by [him or her] THE SUPER-
INTENDENT shall have authority to require the attendance of and to exam-
ine under oath all persons whose testimony [he or she] may [require] BE
REQUIRED relative to such business. The expenses incurred in making any
examination pursuant to this section shall be assessed against and paid
by the licensee so examined, except that traveling and subsistence
expenses so incurred shall be charged against and paid by licensees in
such proportions as the superintendent shall deem just and reasonable,
and such proportionate charges shall be added to the assessment of the
other expenses incurred upon each examination. Upon written notice by
the superintendent of the total amount of such assessment, the licensee
shall become liable for and shall pay such assessment to the superinten-
dent. If, upon review, the superintendent shall determine that the fees
or service charges set by the licensee are UNFAIR, unreasonable OR
UNCLEAR, [he or she] THE SUPERINTENDENT shall direct the licensee to
make adjustments in said fees and service charges in accordance with
[his or her] THEIR findings, which shall set forth a detailed factual
basis and reasoning supporting such finding.
§ 7. Subdivision 10 of section 36 of the banking law, as amended by
section 2 of part L of chapter 58 of the laws of 2019, is amended to
read as follows:
10. All reports of examinations and investigations, correspondence and
memoranda concerning or arising out of such examination and investi-
gations, including any duly authenticated copy or copies thereof in the
possession of any banking organization, bank holding company or any
subsidiary thereof (as such terms "bank holding company" and "subsid-
iary" are defined in article three-A of this chapter), any corporation
or any other entity affiliated with a banking organization within the
meaning of subdivision six of this section and any non-banking subsid-
iary of a corporation or any other entity which is an affiliate of a
banking organization within the meaning of subdivision six-a of this
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section, foreign banking corporation, licensed lender, licensed casher
of checks, licensed mortgage banker, registered mortgage broker,
licensed mortgage loan originator, licensed sales finance company,
registered mortgage loan servicer, licensed student loan servicer,
licensed insurance premium finance agency, licensed transmitter of
money, licensed budget planner, LICENSED DEBT SETTLEMENT COMPANY, any
other person or entity subject to supervision under this chapter, or the
department, shall be confidential communications, shall not be subject
to subpoena and shall not be made public unless, in the judgment of the
superintendent, the ends of justice and the public advantage will be
subserved by the publication thereof, in which event the superintendent
may publish or authorize the publication of a copy of any such report or
any part thereof in such manner as may be deemed proper or unless such
laws specifically authorize such disclosure. For the purposes of this
subdivision, "reports of examinations and investigations, and any corre-
spondence and memoranda concerning or arising out of such examinations
and investigations", includes any such materials of a bank, insurance or
securities regulatory agency or any unit of the federal government or
that of this state, any other state or that of any foreign government
which are considered confidential by such agency or unit and which are
in the possession of the department or which are otherwise confidential
materials that have been shared by the department with any such agency
or unit and are in the possession of such agency or unit.
§ 8. Subdivisions 1, 2, 3 and 5 of section 39 of the banking law, as
amended by section 3 of part L of chapter 58 of the laws of 2019, are
amended to read as follows:
1. To appear and explain an apparent violation. Whenever it shall
appear to the superintendent that any banking organization, bank holding
company, registered mortgage broker, licensed mortgage banker, licensed
student loan servicer, registered mortgage loan servicer, licensed mort-
gage loan originator, licensed lender, licensed casher of checks,
licensed sales finance company, licensed insurance premium finance agen-
cy, licensed transmitter of money, licensed budget planner, LICENSED
DEBT SETTLEMENT COMPANY, out-of-state state bank that maintains a branch
or branches or representative or other offices in this state, or foreign
banking corporation licensed by the superintendent to do business or
maintain a representative office in this state has violated any law or
regulation, [he or she] THE SUPERINTENDENT may, in [his or her] THEIR
discretion, issue an order describing such apparent violation and
requiring such banking organization, bank holding company, registered
mortgage broker, licensed mortgage banker, licensed student loan servi-
cer, licensed mortgage loan originator, licensed lender, licensed casher
of checks, licensed sales finance company, licensed insurance premium
finance agency, licensed transmitter of money, licensed budget planner,
LICENSED DEBT SETTLEMENT COMPANY, out-of-state state bank that maintains
a branch or branches or representative or other offices in this state,
or foreign banking corporation to appear before [him or her] THE SUPER-
INTENDENT, at a time and place fixed in said order, to present an expla-
nation of such apparent violation.
2. To discontinue unauthorized or unsafe and unsound practices. When-
ever it shall appear to the superintendent that any banking organiza-
tion, bank holding company, registered mortgage broker, licensed mort-
gage banker, licensed student loan servicer, registered mortgage loan
servicer, licensed mortgage loan originator, licensed lender, licensed
casher of checks, licensed sales finance company, licensed insurance
premium finance agency, licensed transmitter of money, licensed budget
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planner, LICENSED DEBT SETTLEMENT COMPANY, out-of-state state bank that
maintains a branch or branches or representative or other offices in
this state, or foreign banking corporation licensed by the superinten-
dent to do business in this state is conducting business in an unauthor-
ized or unsafe and unsound manner, [he or she] THE SUPERINTENDENT may,
in [his or her] THEIR discretion, issue an order directing the discon-
tinuance of such unauthorized or unsafe and unsound practices, and
fixing a time and place at which such banking organization, bank holding
company, registered mortgage broker, licensed mortgage banker, licensed
student loan servicer, registered mortgage loan servicer, licensed mort-
gage loan originator, licensed lender, licensed casher of checks,
licensed sales finance company, licensed insurance premium finance agen-
cy, licensed transmitter of money, licensed budget planner, LICENSED
DEBT SETTLEMENT COMPANY, out-of-state state bank that maintains a branch
or branches or representative or other offices in this state, or foreign
banking corporation may voluntarily appear before [him or her] THE
SUPERINTENDENT to present any explanation in defense of the practices
directed in said order to be discontinued.
3. To make good impairment of capital or to ensure compliance with
financial requirements. Whenever it shall appear to the superintendent
that the capital or capital stock of any banking organization, bank
holding company or any subsidiary thereof which is organized, licensed
or registered pursuant to this chapter, is impaired, or the financial
requirements imposed by subdivision one of section two hundred two-b of
this chapter or any regulation of the superintendent on any branch or
agency of a foreign banking corporation or the financial requirements
imposed by this chapter or any regulation of the superintendent on any
licensed lender, registered mortgage broker, licensed mortgage banker,
licensed student loan servicer, licensed casher of checks, licensed
sales finance company, licensed insurance premium finance agency,
licensed transmitter of money, licensed budget planner, LICENSED DEBT
SETTLEMENT COMPANY, or private banker are not satisfied, the superinten-
dent may, in the superintendent's discretion, issue an order directing
that such banking organization, bank holding company, branch or agency
of a foreign banking corporation, registered mortgage broker, licensed
mortgage banker, licensed student loan servicer, licensed lender,
licensed casher of checks, licensed sales finance company, licensed
insurance premium finance agency, licensed transmitter of money,
licensed budget planner, LICENSED DEBT SETTLEMENT COMPANY, or private
banker make good such deficiency forthwith or within a time specified in
such order.
5. To keep books and accounts as prescribed. Whenever it shall appear
to the superintendent that any banking organization, bank holding compa-
ny, registered mortgage broker, licensed mortgage banker, licensed
student loan servicer, registered mortgage loan servicer, licensed mort-
gage loan originator, licensed lender, licensed casher of checks,
licensed sales finance company, licensed insurance premium finance agen-
cy, licensed transmitter of money, licensed budget planner, LICENSED
DEBT SETTLEMENT COMPANY, agency or branch of a foreign banking corpo-
ration licensed by the superintendent to do business in this state, does
not keep its books and accounts in such manner as to enable [him or her]
THE SUPERINTENDENT to readily ascertain its true condition, [he or she]
THE SUPERINTENDENT may, in [his or her] THEIR discretion, issue an order
requiring such banking organization, bank holding company, registered
mortgage broker, licensed mortgage banker, licensed student loan servi-
cer, registered mortgage loan servicer, licensed mortgage loan origina-
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tor, licensed lender, licensed casher of checks, licensed sales finance
company, licensed insurance premium finance agency, licensed transmitter
of money, licensed budget planner, LICENSED DEBT SETTLEMENT COMPANY, or
foreign banking corporation, or the officers or agents thereof, or any
of them, to open and keep such books or accounts as [he or she] THE
SUPERINTENDENT may, in [his or her] THEIR discretion, determine and
prescribe for the purpose of keeping accurate and convenient records of
its transactions and accounts.
§ 9. Paragraph (a) of subdivision 1 of section 44 of the banking law,
as amended by section 4 of part L of chapter 58 of the laws of 2019, is
amended to read as follows:
(a) Without limiting any power granted to the superintendent under any
other provision of this chapter, the superintendent may, in a proceeding
after notice and a hearing, require any safe deposit company, licensed
lender, licensed casher of checks, licensed sales finance company,
licensed insurance premium finance agency, licensed transmitter of
money, licensed mortgage banker, licensed student loan servicer, regis-
tered mortgage broker, licensed mortgage loan originator, registered
mortgage loan servicer[or], licensed budget planner OR LICENSED DEBT
SETTLEMENT COMPANY to pay to the people of this state a penalty for any
violation of this chapter, any regulation promulgated thereunder, any
final or temporary order issued pursuant to section thirty-nine of this
article, any condition imposed in writing by the superintendent in
connection with the grant of any application or request, or any written
agreement entered into with the superintendent.
§ 10. The banking law is amended by adding a new article 12-CC to read
as follows:
ARTICLE XII-CC
DEBT SETTLEMENT COMPANIES
SECTION 588-A. DEFINITIONS.
588-B. DOING BUSINESS WITHOUT LICENSE PROHIBITED.
588-C. APPLICATION FOR LICENSE.
588-D. CONDITIONS FOR ISSUANCE OF A LICENSE; PROCEDURE WHERE
APPLICATION DENIED.
588-E. LICENSE PROVISIONS.
588-F. CHANGES IN OFFICERS OR DIRECTORS OF LICENSEE.
588-G. CHANGES IN CONTROL.
588-H. GROUNDS FOR SUSPENSION, REVOCATION, OR TERMINATION OF
LICENSE; PROCEDURE.
588-I. ADVERTISING AND MARKETING PRACTICES.
588-J. INDIVIDUALIZED FINANCIAL ANALYSIS; STATEMENT.
588-K. REQUIRED PRE-AGREEMENT DISCLOSURES AND WARNINGS.
588-L. DEBT SETTLEMENT SERVICES AGREEMENTS.
588-M. FEES.
588-N. DEBTOR SETTLEMENT ACCOUNTS; MONTHLY ACCOUNTING.
588-O. CANCELLATION OF DEBT SETTLEMENT SERVICES AGREEMENT; RIGHT
TO REFUNDS.
588-P. OBLIGATION OF GOOD FAITH.
588-Q. PROHIBITED ACTIVITIES.
588-R. SUPERINTENDENT AUTHORIZED TO EXAMINE.
588-S. LICENSEE'S BOOKS AND RECORDS; REPORTS.
588-T. PENALTIES; NONCOMPLIANCE.
588-U. AUTHORITY OF SUPERINTENDENT.
588-V. SEVERABILITY.
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§ 588-A. DEFINITIONS. AS USED IN THIS ARTICLE: 1. "AFFILIATE" MEANS
ANY PERSON THAT DIRECTLY OR INDIRECTLY CONTROLS, IS CONTROLLED BY, OR IS
UNDER COMMON CONTROL WITH ANOTHER PERSON.
2. "CLEARLY AND CONSPICUOUSLY" MEANS THAT A STATEMENT, REPRESENTATION,
TERM, OR DISCLOSURE IS SO PRESENTED AS TO BE READILY APPARENT AND UNDER-
STOOD BY THE PERSON TO WHOM IT IS BEING ADDRESSED. FACTORS TO BE CONSID-
ERED FOR THIS PURPOSE INCLUDE BUT ARE NOT LIMITED TO SIZE, PLACEMENT,
COLOR CONTRAST, LENGTH, CRAWL TIME, AND AUDIBILITY.
3. "DEBTOR" MEANS ANY INDIVIDUAL WHO HAS INCURRED INDEBTEDNESS OR OWES
A DEBT.
4. "DEBTOR SETTLEMENT ACCOUNT" MEANS ANY ACCOUNT OR OTHER MEANS OR
DEVICE IN WHICH PAYMENTS, DEPOSITS, OR OTHER TRANSFERS FROM A DEBTOR ARE
ARRANGED, HELD, OR TRANSFERRED BY OR TO A DEBT SETTLEMENT COMPANY FOR
THE ACCUMULATION OF THE DEBTOR'S FUNDS IN ANTICIPATION OF PROFFERING AN
ADJUSTMENT OR SETTLEMENT OF A DEBT OR OBLIGATION OF THE DEBTOR.
5. "DEBT SETTLEMENT COMPANY" MEANS ANY PERSON:
(A) ENGAGING IN, OR HOLDING THEMSELF OR ITSELF OUT AS ENGAGING IN, THE
BUSINESS OF PROVIDING DEBT SETTLEMENT SERVICES IN EXCHANGE FOR OR IN
EXPECTATION OF ANY COMPENSATION OR GAIN; OR
(B) SOLICITING FOR OR ACTING ON BEHALF OF ANY PERSON ENGAGING IN, OR
HOLDING THEMSELF OR ITSELF OUT AS ENGAGING IN, THE BUSINESS OF PROVIDING
DEBT SETTLEMENT SERVICES IN EXCHANGE FOR OR IN EXPECTATION OF ANY
COMPENSATION OR GAIN; PROVIDED, HOWEVER, THAT "DEBT SETTLEMENT COMPANY"
SHALL NOT INCLUDE:
(I) THE FOLLOWING EXEMPT PERSONS:
(A) 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 THEMSELF OUT AS A DEBT
SETTLEMENT COMPANY, AND NOT PROVIDING DEBT SETTLEMENT SERVICES, EXCEPT
AS INCIDENTAL TO LEGAL REPRESENTATION; OR
(B) ANY PUBLIC OFFICER WHILE ACTING IN AN OFFICIAL CAPACITY AND ANY
PERSON ACTING UNDER COURT ORDER; OR
(C) ANY PERSON WHILE PERFORMING SERVICES INCIDENTAL TO THE DISSOL-
UTION, WINDING UP, OR LIQUIDATION OF A PARTNERSHIP, CORPORATION, OR
OTHER BUSINESS ENTERPRISE; OR
(D) 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.
(II) SUCH OTHER PERSONS AS MAY BE SPECIFICALLY EXEMPTED BY THE SUPER-
INTENDENT IN THEIR SOLE DISCRETION AND CONSISTENT WITH THE PURPOSES OF
THIS ARTICLE AND THE RULES AND REGULATIONS PROMULGATED HEREUNDER.
6. "DEBT SETTLEMENT SERVICES" MEANS:
(A) OFFERING TO PROVIDE OR PROVIDING ADVICE OR SERVICES, OR OFFERING
TO ACT OR ACTING AS AN INTERMEDIARY BETWEEN OR ON BEHALF OF A DEBTOR AND
ONE OR MORE OF THE DEBTOR'S CREDITORS, WHERE THE PRIMARY PURPOSE OF THE
ADVICE, SERVICE, OR ACTION IS TO OBTAIN A SETTLEMENT, 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; OR
(B) OFFERING TO PROVIDE SERVICES RELATED TO OR PROVIDING SERVICES
ADVISING, ENCOURAGING, ASSISTING, OR COUNSELING A DEBTOR TO ACCUMULATE
FUNDS FOR THE PRIMARY PURPOSE OF PROPOSING, OBTAINING, OR SEEKING 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
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THE DEBT OR IN AN AMOUNT LESS THAN THE CURRENT OUTSTANDING BALANCE OF
THE DEBT; PROVIDED, HOWEVER, THAT DEBT SETTLEMENT SERVICES SHALL NOT
INCLUDE:
(I) "BUDGET PLANNING" AS DEFINED IN SECTION FOUR HUNDRED FIFTY-FIVE OF
THE GENERAL BUSINESS LAW; OR
(II) THE SERVICES OF AN ATTORNEY IN PROVIDING INFORMATION, ADVICE, OR
LEGAL REPRESENTATION WITH RESPECT TO FILING A CASE OR PROCEEDING UNDER
TITLE 11 OF THE UNITED STATES CODE.
7. "DEBT SETTLEMENT SERVICES AGREEMENT" MEANS A CONTRACT OR OTHER
AGREEMENT WITH A DEBTOR RELATED TO THE PROVISION OF DEBT SETTLEMENT
SERVICES.
8. "ENROLLMENT FEE" MEANS ANY FEE, OBLIGATION, OR COMPENSATION PAID OR
TO BE PAID BY THE DEBTOR TO A DEBT SETTLEMENT COMPANY IN CONSIDERATION
OF OR IN CONNECTION WITH ESTABLISHING A DEBT SETTLEMENT SERVICES AGREE-
MENT.
9. "MAINTENANCE FEE" MEANS ANY FEE, OBLIGATION, OR COMPENSATION PAID
OR TO BE PAID BY A DEBTOR TO A DEBT SETTLEMENT COMPANY IN CONSIDERATION
OF OR IN CONNECTION WITH MAINTAINING THE RELATIONSHIP AND SERVICES
PROVIDED BY A DEBT SETTLEMENT COMPANY IN ACCORDANCE WITH A DEBT SETTLE-
MENT SERVICES AGREEMENT.
10. "PERSON" MEANS AN INDIVIDUAL, PARTNERSHIP, LIMITED LIABILITY
COMPANY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
11. "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 SERVICES AGREEMENT AT THE TIME WHEN THE DEBTOR ENTERS INTO
SUCH AGREEMENT.
12. "SETTLEMENT FEE" MEANS ANY FEE, OBLIGATION, OR COMPENSATION PAID
OR TO BE PAID BY A DEBTOR TO A DEBT SETTLEMENT COMPANY IN CONSIDERATION
OF OR IN CONNECTION WITH AN AGREEMENT OR OTHER ARRANGEMENT ON THE PART
OF A CREDITOR TO ACCEPT LESS THAN THE PRINCIPAL AMOUNT OF THE DEBT AS
SATISFACTION OF THE CREDITOR'S CLAIM AGAINST THE DEBTOR.
§ 588-B. DOING BUSINESS WITHOUT LICENSE PROHIBITED. 1. EXCEPT AS
PROVIDED IN SUBDIVISION THREE OF THIS SECTION, NO PERSON SHALL ENGAGE IN
THE BUSINESS OF A DEBT SETTLEMENT COMPANY IN THIS STATE WITHOUT FIRST
OBTAINING A LICENSE FROM THE SUPERINTENDENT IN ACCORDANCE WITH THE
LICENSING PROCEDURE PROVIDED IN THIS ARTICLE AND SUCH RULES AND REGU-
LATIONS AS MAY BE PROMULGATED HEREUNDER.
2. THE BUSINESS OF A DEBT SETTLEMENT COMPANY IS CONDUCTED IN THIS
STATE IF THE DEBT SETTLEMENT COMPANY, ITS EMPLOYEES, OR ITS AGENTS ARE
LOCATED IN THIS STATE OR IF THE DEBT SETTLEMENT COMPANY ADVERTISES,
SOLICITS, OFFERS, OR CONTRACTS TO PROVIDE DEBT SETTLEMENT SERVICES TO
DEBTORS THEN RESIDENT IN THIS STATE.
3. IF A DEBT SETTLEMENT COMPANY IS LICENSED UNDER THIS ARTICLE, SUBDI-
VISION ONE OF THIS SECTION DOES NOT APPLY TO ANY EMPLOYEE OF SUCH LICEN-
SEE.
§ 588-C. APPLICATION FOR LICENSE. 1. APPLICATION FOR A LICENSE
REQUIRED UNDER THIS ARTICLE SHALL BE IN WRITING, UNDER OATH, AND IN THE
FORM PRESCRIBED BY THE SUPERINTENDENT, AND SHALL CONTAIN THE FOLLOWING:
(A) THE EXACT NAME AND COMPLETE STREET ADDRESS OF THE APPLICANT AND,
IF APPLICABLE, ITS DATE OF INCORPORATION OR ORGANIZATION;
(B) THE NAME AND COMPLETE BUSINESS AND RESIDENTIAL ADDRESS AND OCCUPA-
TION OF EACH OFFICER AND DIRECTOR OF THE APPLICANT AND EACH PERSON THAT
OWNS AT LEAST TEN PERCENT OF THE SHARES OR OTHER OWNERSHIP INTERESTS OF
THE APPLICANT;
(C) THE COMPLETE STREET ADDRESS OF THE PRINCIPAL OFFICE FROM WHICH THE
BUSINESS IS TO BE CONDUCTED;
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(D) IF THE APPLICANT HAS ONE OR MORE BRANCHES, SUBSIDIARIES, OR AFFIL-
IATES LOCATED IN THIS STATE, SOLICITING BUSINESS IN THIS STATE, OR DOING
BUSINESS WITH RESIDENTS OF THIS STATE, THE COMPLETE ADDRESS OF EACH SUCH
PLACE OF BUSINESS; AND
(E) SUCH OTHER PERTINENT INFORMATION AS THE SUPERINTENDENT MAY
REQUIRE, INCLUDING BUT NOT LIMITED TO EVIDENCE INDICATING THAT THE
APPLICANT, OR AN OFFICER, DIRECTOR, OR MANAGER OF SUCH APPLICANT HAS AT
LEAST ONE YEAR OF EXPERIENCE IN FINANCIAL SERVICES OR RELATED FIELDS
APPLICABLE TO DEBT SETTLEMENT SERVICES.
2. AN APPLICANT SHALL FILE A MASTER APPLICATION FOR ITS PRINCIPAL
OFFICE AND SUPPLEMENTAL APPLICATIONS FOR EACH BRANCH OFFICE THAT WILL
CONDUCT THE BUSINESS OF A DEBT SETTLEMENT COMPANY IN THIS STATE.
3. UPON ORIGINAL APPLICATION FOR A LICENSE OR LICENSES, THE APPLICANT
SHALL PAY AN INVESTIGATION FEE IN AN AGGREGATE AMOUNT AS PRESCRIBED
PURSUANT TO SECTION EIGHTEEN-A OF THIS CHAPTER. NO ADDITIONAL INVESTI-
GATION FEE SHALL BE REQUIRED FOR ANY SUBSEQUENT APPLICATION FOR A
LICENSE UNLESS SUCH APPLICATION IS SUBSEQUENT TO A DENIAL OF A LICENSE
OR TO A REVOCATION, SUSPENSION, SURRENDER, OR TERMINATION OF A LICENSE;
PROVIDED, HOWEVER, THAT AN APPLICATION TO ESTABLISH A BRANCH OFFICE OF
THE LICENSEE SHALL BE ACCOMPANIED BY THE FEE PRESCRIBED IN SECTION EIGH-
TEEN-A OF THIS CHAPTER.
4. AS A CONDITION FOR THE ISSUANCE AND RETENTION OF A LICENSE, AND
SUBJECT TO SUCH REGULATIONS AS THE SUPERINTENDENT SHALL PRESCRIBE,
APPLICANTS FOR A LICENSE SHALL FILE WITH THE SUPERINTENDENT A SURETY
BOND IN FAVOR OR THE SUPERINTENDENT, ISSUED BY A BONDING COMPANY OR
INSURANCE COMPANY AUTHORIZED TO DO BUSINESS IN THIS STATE, AND IN A FORM
SATISFACTORY TO THE SUPERINTENDENT.
(A) IN LIEU OF THE SURETY BOND REQUIRED BY THIS SUBDIVISION, AN APPLI-
CANT MAY PLEDGE TO THE SUPERINTENDENT AND MAINTAIN IN A PLEDGE ACCOUNT
WITH SUCH BANKS, SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST
COMPANIES, NATIONAL BANKS, FEDERAL SAVINGS BANKS, OR FEDERAL SAVINGS AND
LOAN ASSOCIATIONS IN THE STATE AS SUCH LICENSEE MAY DESIGNATE AND THE
SUPERINTENDENT MAY APPROVE:
(I) INTEREST-BEARING BILLS, NOTES, BONDS, DEBENTURES, OR OTHER OBLI-
GATIONS ISSUED OR GUARANTEED BY THE UNITED STATES OR ANY STATE OR OTHER
LOCAL GOVERNMENTAL ENTITY OR ANY INSTRUMENTALITY THEREOF, BEARING A
RATING OF ONE OF THE THREE HIGHEST GRADES BY A NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATION THAT HAS BEEN ENGAGED IN RATING STATE
AND MUNICIPAL ISSUES FOR A PERIOD OF NOT LESS THAN FIVE YEARS;
(II) DOLLAR DEPOSITS; OR
(III) SUCH OTHER ASSETS OR LETTERS OF CREDIT AS THE SUPERINTENDENT
SHALL BY RULE OR REGULATION PERMIT.
(B) EXCEPT AS PROVIDED HEREUNDER, THE PRINCIPAL AMOUNT OF SUCH SURETY
BOND OR DEPOSIT SHALL BE TWO HUNDRED FIFTY THOUSAND DOLLARS. THE SUPER-
INTENDENT MAY:
(I) REQUIRE A LARGER BOND OR DEPOSIT IF THE SUPERINTENDENT DETERMINES,
IN THEIR SOLE DISCRETION, THAT A LICENSEE HAS ENGAGED IN A PATTERN OF
CONDUCT RESULTING IN BONA FIDE DEBTOR COMPLAINTS OF MISCONDUCT AND THAT
SUCH INCREASED BOND OR DEPOSIT IS NECESSARY FOR THE PROTECTION OF
DEBTORS; OR
(II) INCREASE OR DECREASE THE AMOUNT OF SUCH BOND OR DEPOSIT BASED
UPON THE APPLICANT'S OR LICENSEE'S FINANCIAL CONDITION, BUSINESS PLAN,
BUSINESS EXPERIENCE, OR ANY OTHER FACTOR THE SUPERINTENDENT CONSIDERS
APPROPRIATE.
(C) THE PROCEEDS OF SUCH SURETY BOND OR DEPOSIT SHALL CONSTITUTE A
TRUST FUND TO BE USED EXCLUSIVELY:
A. 1427 10
(I) TO REIMBURSE FEES THAT HAVE BEEN IMPROPERLY CHARGED TO OR
COLLECTED FROM DEBTORS WITH RESPECT TO THE BUSINESS OF A DEBT SETTLEMENT
COMPANY IN THIS STATE, AS SUCH BUSINESS IS DESCRIBED IN SECTION FIVE
HUNDRED EIGHTY-EIGHT-B OF THIS ARTICLE;
(II) TO REIMBURSE AMOUNTS THAT HAVE NOT BEEN PROPERLY DISTRIBUTED TO
CREDITORS OR PROPERLY RETURNED TO DEBTORS WITH RESPECT TO THE BUSINESS
OF A DEBT SETTLEMENT COMPANY IN THIS STATE, AS SUCH BUSINESS IS
DESCRIBED IN SECTION FIVE HUNDRED EIGHTY-EIGHT-B OF THIS ARTICLE; AND
(III) TO PAY OUTSTANDING BANKING DEPARTMENT EXAMINATION COSTS AND
ASSESSMENTS.
§ 588-D. CONDITIONS FOR ISSUANCE OF A LICENSE; PROCEDURE WHERE APPLI-
CATION DENIED. UPON THE FILING OF AN APPLICATION FOR A LICENSE, IF THE
SUPERINTENDENT SHALL FIND THAT THE FINANCIAL RESPONSIBILITY, EXPERIENCE,
CHARACTER, AND GENERAL FITNESS OF THE APPLICANT, AND OF THE CONTROL
PERSONS, OFFICERS, AND DIRECTORS THEREOF ARE SUCH AS TO COMMAND THE
CONFIDENCE OF THE COMMUNITY AND TO WARRANT BELIEF THAT THE BUSINESS WILL
BE OPERATED HONESTLY, FAIRLY, AND EFFICIENTLY WITHIN THE PURPOSES OF
THIS ARTICLE, THE SUPERINTENDENT SHALL THEREUPON ISSUE A LICENSE IN
DUPLICATE TO ENGAGE IN DEBT SETTLEMENT SERVICES IN ACCORDANCE WITH THE
PROVISIONS OF THIS ARTICLE. THE SUPERINTENDENT SHALL TRANSMIT ONE COPY
OF SUCH LICENSE TO THE APPLICANT AND FILE THE OTHER IN THE OFFICE OF THE
DEPARTMENT. SUCH LICENSE SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL IT
IS SURRENDERED BY THE LICENSEE OR REVOKED, SUSPENDED, OR TERMINATED AS
HEREINAFTER PROVIDED. IF THE SUPERINTENDENT SHALL NOT SO FIND, THEY
SHALL NOT ISSUE SUCH LICENSE AND SHALL NOTIFY THE APPLICANT OF THE
DENIAL.
§ 588-E. LICENSE PROVISIONS. EACH LICENSE ISSUED UNDER THIS ARTICLE
SHALL STATE THE PRINCIPAL OFFICE ADDRESS AND, IF APPLICABLE, THE ADDRESS
OF THE BRANCH OFFICE FOR WHICH IT WAS ISSUED. SUCH LICENSE SHALL STATE
FULLY THE NAME OF THE LICENSEE AND, IF APPLICABLE, THE DATE AND PLACE OF
ITS INCORPORATION OR ORGANIZATION. A COPY OF SUCH LICENSE SHALL BE PROM-
INENTLY POSTED IN THE PRINCIPAL OFFICE AND, IF APPLICABLE, SUCH BRANCH
OFFICE. SUCH LICENSE SHALL NOT BE TRANSFERABLE OR ASSIGNABLE. IN THE
EVENT THE LOCATION AT WHICH THE BUSINESS IS TO BE CONDUCTED SHALL BE
CHANGED, THE LICENSEE SHALL FORTHWITH NOTIFY THE SUPERINTENDENT WHO
SHALL THEREUPON WITHOUT CHARGE ATTACH TO THE LICENSE A RIDER SETTING
FORTH SUCH CHANGED LOCATION.
§ 588-F. CHANGES IN OFFICERS OR DIRECTORS OF LICENSEE. IN THE EVENT
THAT THERE SHALL BE ANY CHANGE AMONG THE OFFICERS OR DIRECTORS OF ANY
LICENSEE, THE LICENSEE SHALL PROMPTLY NOTIFY THE SUPERINTENDENT OF THE
NAME, ADDRESS, AND OCCUPATION OF EACH NEW OFFICER OR DIRECTOR AND
PROVIDE SUCH OTHER INFORMATION AS THE SUPERINTENDENT MAY REQUIRE.
§ 588-G. CHANGES IN CONTROL. 1. IT SHALL BE UNLAWFUL EXCEPT WITH THE
PRIOR APPROVAL OF THE SUPERINTENDENT FOR ANY ACTION TO BE TAKEN WHICH
RESULTS IN A CHANGE OF CONTROL OF THE BUSINESS OF A LICENSEE. PRIOR TO
ANY CHANGE OF CONTROL, THE PERSON DESIROUS OF ACQUIRING CONTROL OF THE
BUSINESS OF A LICENSEE SHALL MAKE WRITTEN APPLICATION TO THE SUPERINTEN-
DENT AND PAY AN INVESTIGATION FEE AS PRESCRIBED PURSUANT TO SECTION
EIGHTEEN-A OF THIS CHAPTER TO THE SUPERINTENDENT. THE APPLICATION SHALL
CONTAIN SUCH INFORMATION AS THE SUPERINTENDENT MAY PRESCRIBE AS NECES-
SARY OR APPROPRIATE FOR THE PURPOSE OF MAKING THE DETERMINATION REQUIRED
BY SUBDIVISION TWO OF THIS SECTION.
2. THE SUPERINTENDENT SHALL APPROVE OR DISAPPROVE THE PROPOSED CHANGE
OF CONTROL OF A LICENSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION
FIVE HUNDRED EIGHTY-EIGHT-D OF THIS ARTICLE.
A. 1427 11
3. AS USED IN THIS SECTION, THE TERM "CONTROL" MEANS THE POSSESSION,
DIRECTLY OR INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF
THE MANAGEMENT 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 PERCENT OR MORE OF THE VOTING STOCK OF
ANY LICENSEE OR OF ANY PERSON WHICH OWNS, CONTROLS OR HOLDS WITH POWER
TO VOTE TEN PERCENT 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 THEIR DISCRETION, UPON THE APPLICATION OF A LICENSEE OR ANY
PERSON 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 HOLDING OF SUCH VOTING STOCK CONSTITUTES OR WOULD CONSTITUTE CONTROL
OF SUCH LICENSEE FOR PURPOSES OF THIS SECTION.
§ 588-H. GROUNDS FOR SUSPENSION, REVOCATION, OR TERMINATION OF
LICENSE; PROCEDURE. 1. IN ADDITION TO THE AUTHORITY SET FORTH IN SUBDI-
VISION TWO OF THIS SECTION, THE SUPERINTENDENT MAY SUSPEND OR REVOKE ANY
LICENSE ISSUED UNDER THIS ARTICLE IF, AFTER NOTICE AND A HEARING, THE
SUPERINTENDENT SHALL FIND THAT:
(A) THE LICENSEE HAS VIOLATED ANY PROVISIONS OF THIS ARTICLE, OR OF
ANY RULE OR REGULATION MADE BY THE SUPERINTENDENT UNDER AND WITHIN THE
AUTHORITY OF THIS ARTICLE;
(B) ANY FACT OR CONDITION EXISTS WHICH, IF IT HAD EXISTED AT THE TIME
OF THE ORIGINAL APPLICATION FOR SUCH LICENSE, WOULD HAVE WARRANTED THE
SUPERINTENDENT IN REFUSING ORIGINALLY TO ISSUE SUCH LICENSE; OR
(C) THE LICENSEE OR AN OFFICER, DIRECTOR, OR CONTROL PERSON OF THE
LICENSEE HAS BEEN CONVICTED OF A CRIME AGAINST THE LAWS OF THIS STATE OR
ANY OTHER STATE OR OF THE UNITED STATES INVOLVING MORAL TURPITUDE OR
FRAUDULENT OR DISHONEST ACTIONS, OR A FINAL JUDGMENT IN A COURT OF
COMPETENT JURISDICTION HAS BEEN ENTERED AGAINST THE LICENSEE OR AN OFFI-
CER, DIRECTOR, OR CONTROL PERSON OF THE LICENSEE IN A CIVIL ACTION ARIS-
ING FROM FRAUD, MISREPRESENTATION, OR DECEIT.
2. (A) THE SUPERINTENDENT MAY, FOR GOOD CAUSE, WITHOUT NOTICE OR A
HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE ISSUED PURSUANT TO THIS
ARTICLE FOR A PERIOD NOT EXCEEDING NINETY DAYS, PENDING INVESTIGATION.
"GOOD CAUSE", AS USED IN THIS SUBDIVISION, SHALL EXIST ONLY WHEN THE
LICENSEE HAS DEFAULTED OR IS LIKELY TO DEFAULT IN PERFORMING ITS FINAN-
CIAL ENGAGEMENTS OR ENGAGES OR HAS ENGAGED IN DISHONEST OR INEQUITABLE
PRACTICES WHICH MAY CAUSE SUBSTANTIAL HARM TO THE PERSONS AFFORDED THE
PROTECTION OF THIS ARTICLE.
(B) THE SUPERINTENDENT MAY, IN THEIR SOLE DISCRETION, WITHOUT NOTICE
OR A HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE ISSUED PURSUANT TO
THE AUTHORITY OF THIS ARTICLE UPON THE FAILURE OF SUCH LICENSEE TO MAKE
ANY PAYMENTS AS REQUIRED BY THIS CHAPTER.
(C) THE SUPERINTENDENT MAY, IN THEIR SOLE DISCRETION, WITHOUT NOTICE
OR A HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE ISSUED PURSUANT TO
THE AUTHORITY OF THIS ARTICLE:
(I) THIRTY DAYS AFTER THE DATE THE LICENSEE FAILS TO FILE ANY REPORT
REQUIRED UNDER THIS ARTICLE TO BE FILED BY IT WITH THE SUPERINTENDENT;
(II) IMMEDIATELY UPON THE LICENSEE FILING A PETITION IN BANKRUPTCY;
(III) AT LEAST THIRTY DAYS AFTER THE LICENSEE HAS HAD FILED AGAINST IT
A PETITION IN BANKRUPTCY; OR
A. 1427 12
(IV) IMMEDIATELY UPON THE RECEIPT BY THE SUPERINTENDENT OF NOTICE THAT
THE SURETY BOND REQUIRED PURSUANT TO SECTION FIVE HUNDRED EIGHTY-EIGHT-C
OF THIS ARTICLE IS NO LONGER IN EFFECT OR THAT THE VALUE OF ASSETS IN
THE PLEDGE ACCOUNT IS LESS THAN THE REQUIRED AMOUNT.
3. IF THE SUPERINTENDENT HAS ISSUED AN ORDER SUSPENDING A LICENSE
ISSUED PURSUANT TO THE AUTHORITY OF THIS ARTICLE PURSUANT TO PARAGRAPH
(A) OF SUBDIVISION TWO OF THIS SECTION, SUCH LICENSE MAY BE REINSTATED
IF THE SUPERINTENDENT DETERMINES, IN THEIR SOLE DISCRETION AFTER INVES-
TIGATION, THAT GOOD CAUSE THEREFOR DID NOT EXIST OR NO LONGER EXISTS. IF
THE SUPERINTENDENT HAS ISSUED AN ORDER SUSPENDING A LICENSE ISSUED
PURSUANT TO PARAGRAPH (B) OR (C) OF SUBDIVISION TWO OF THIS SECTION,
SUCH LICENSE MAY BE REINSTATED, IF THE SUPERINTENDENT DETERMINES, IN
THEIR SOLE DISCRETION, THAT THE LICENSEE HAS CURED ALL DEFICIENCIES SET
FORTH IN SUCH ORDER BY THE CLOSE OF BUSINESS NINETY DAYS AFTER THE DATE
OF SUCH SUSPENSION ORDER, INCLUDING, WITHOUT LIMITATION, MAKING ANY
OVERDUE PAYMENT, HAVING ANY SUCH BANKRUPTCY PETITION DISMISSED, OR
HAVING SUCH BOND REINSTATED OR DEPOSITING ALL REQUIRED ADDITIONAL
ASSETS. OTHERWISE, IN THE CASE OF A SUSPENSION PURSUANT TO PARAGRAPH (B)
OR (C) OF SUBDIVISION TWO OF THIS SECTION, UNLESS THE SUPERINTENDENT
HAS, IN THEIR SOLE DISCRETION, EXTENDED SUCH SUSPENSION, ALL LICENSES OF
SUCH LICENSEE SHALL BE DEEMED TO BE AUTOMATICALLY TERMINATED BY OPERA-
TION OF LAW AT THE CLOSE OF BUSINESS ON SUCH NINETIETH DAY.
4. EXCEPT AS PROVIDED FOR IN SUBDIVISION TWO OF THIS SECTION, NO
LICENSE SHALL BE REVOKED OR SUSPENDED EXCEPT AFTER NOTICE AND A HEARING
THEREON.
5. WITH THE PRIOR CONSENT OF THE SUPERINTENDENT, ANY LICENSEE MAY
SURRENDER ANY LICENSE BY DELIVERING TO THE SUPERINTENDENT WRITTEN NOTICE
THAT IT THEREBY SURRENDERS SUCH LICENSE, BUT SUCH SURRENDER SHALL NOT
AFFECT SUCH LICENSEE'S CIVIL OR CRIMINAL LIABILITY FOR ACTS COMMITTED
PRIOR TO SUCH SURRENDER OR ITS OBLIGATIONS TO THE SUPERINTENDENT FOR
ASSESSMENTS, FEES, OR ADMINISTRATIVE ACTIONS WITH RESPECT TO THE PERIODS
BEFORE SUCH SURRENDER.
6. NO REVOCATION, SUSPENSION, TERMINATION, OR SURRENDER OF ANY LICENSE
SHALL IMPAIR OR AFFECT THE OBLIGATION OF ANY PRE-EXISTING LAWFUL
CONTRACT BETWEEN THE LICENSEE AND ANY PERSON.
7. EVERY LICENSE ISSUED HEREUNDER SHALL REMAIN IN FORCE AND EFFECT
UNTIL THE SAME SHALL HAVE BEEN SURRENDERED, REVOKED, SUSPENDED, OR
TERMINATED IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE, BUT THE
SUPERINTENDENT SHALL HAVE AUTHORITY TO REINSTATE A SUSPENDED LICENSE OR
TO ISSUE A NEW LICENSE TO A LICENSEE WHOSE LICENSE SHALL HAVE BEEN
REVOKED IF NO FACT OR CONDITION THEN EXISTS WHICH WOULD HAVE WARRANTED
THE SUPERINTENDENT IN REFUSING ORIGINALLY TO ISSUE SUCH LICENSE UNDER
THIS ARTICLE.
8. WHENEVER THE SUPERINTENDENT SHALL REVOKE OR SUSPEND A LICENSE
ISSUED PURSUANT TO THIS ARTICLE, THEY SHALL FORTHWITH EXECUTE IN DUPLI-
CATE A WRITTEN ORDER TO THAT EFFECT. THE SUPERINTENDENT SHALL FILE ONE
COPY OF SUCH ORDER IN THE OFFICE OF THE DEPARTMENT AND SHALL FORTHWITH
SERVE THE OTHER COPY UPON THE LICENSEE. ANY SUCH ORDER MAY BE REVIEWED
IN THE MANNER PROVIDED BY ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE
LAW AND RULES. SUCH APPLICATION FOR REVIEW AS AUTHORIZED BY THIS SECTION
MUST BE MADE WITHIN THIRTY DAYS FROM THE DATE OF SUCH ORDER OF SUSPEN-
SION OR REVOCATION.
9. WHENEVER A LICENSE SHALL HAVE TERMINATED IN ACCORDANCE WITH THIS
ARTICLE, THE SUPERINTENDENT SHALL NOTIFY THE LICENSEE THAT THE LICENSE
HAS TERMINATED AND THAT THE LICENSEE MAY NOT ENGAGE IN THE BUSINESS OF A
DEBT SETTLEMENT COMPANY IN THIS STATE.
A. 1427 13
§ 588-I. ADVERTISING AND MARKETING PRACTICES. 1. A DEBT SETTLEMENT
COMPANY SHALL NOT, EXPRESSLY OR BY IMPLICATION, MAKE ANY UNFAIR OR
DECEPTIVE REPRESENTATIONS, OR ANY OMISSIONS OF MATERIAL FACTS, IN ANY OF
ITS ADVERTISING OR MARKETING COMMUNICATIONS CONCERNING DEBT SETTLEMENT
SERVICES.
2. ALL ADVERTISING AND MARKETING COMMUNICATIONS CONCERNING DEBT
SETTLEMENT SERVICES SHALL DISCLOSE THE FOLLOWING INFORMATION CLEARLY AND
CONSPICUOUSLY: "DEBT SETTLEMENT SERVICES ARE NOT APPROPRIATE FOR EVERY-
ONE. FAILURE TO PAY YOUR MONTHLY BILLS IN A TIMELY MANNER WILL RESULT IN
INCREASED BALANCES AND WILL HARM YOUR CREDIT RATING. NOT ALL CREDITORS
WILL AGREE TO REDUCE THE AMOUNT YOU OWE, AND THEY MAY PURSUE COLLECTION,
INCLUDING LAWSUITS."
3. ALL ADVERTISING AND MARKETING COMMUNICATIONS OF A LICENSED DEBT
SETTLEMENT COMPANY CONCERNING DEBT SETTLEMENT SERVICES SHALL INDICATE
THAT THE DEBT SETTLEMENT COMPANY IS LICENSED BY THE DEPARTMENT AND SHALL
CONTAIN THE NAME AND OFFICE ADDRESS OF SUCH DEBT SETTLEMENT COMPANY,
WHICH SHALL CONFORM TO A NAME AND ADDRESS ON RECORD WITH THE DEPARTMENT.
§ 588-J. INDIVIDUALIZED FINANCIAL ANALYSIS; STATEMENT. 1. PRIOR TO
ENTERING INTO A DEBT SETTLEMENT SERVICES AGREEMENT, A DEBT SETTLEMENT
COMPANY SHALL PREPARE AND PROVIDE TO THE DEBTOR IN WRITING AND RETAIN A
COPY OF:
(A) AN INDIVIDUALIZED FINANCIAL ANALYSIS, INCLUDING A LISTING OF THE
DEBTOR'S INCOME, EXPENSES, AND DEBTS; AND
(B) A STATEMENT CONTAINING:
(I) A DESCRIPTION OF THE SERVICES TO BE PROVIDED UNDER THE PROPOSED
DEBT SETTLEMENT SERVICES AGREEMENT;
(II) A GOOD FAITH ESTIMATE OF THE TIME IT WILL TAKE TO COMPLETE ALL
STEPS NECESSARY FOR A SETTLEMENT OF EACH DEBT INCLUDED UNDER THE
PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT;
(III) THE TOTAL AMOUNT OF DEBT OWED TO EACH CREDITOR INCLUDED UNDER
THE PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT;
(IV) THE TOTAL AMOUNT OF MONEY ESTIMATED TO BE NECESSARY TO COMPLETE
ALL STEPS NECESSARY FOR A SETTLEMENT OF EACH DEBT INCLUDED UNDER THE
PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT; AND
(V) THE MONTHLY TARGETED AMOUNT OF MONEY NECESSARY TO COMPLETE ALL
STEPS NECESSARY FOR A SETTLEMENT OF EACH DEBT INCLUDED UNDER THE
PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT.
2. A DEBT SETTLEMENT COMPANY SHALL NOT ENTER INTO A DEBT SETTLEMENT
SERVICES AGREEMENT UNLESS IT MAKES WRITTEN DETERMINATIONS, SUPPORTED BY
THE FINANCIAL ANALYSIS, THAT:
(A) THE DEBTOR CAN REASONABLY MEET THE REQUIREMENTS OF SUCH PROPOSED
DEBT SETTLEMENT SERVICES AGREEMENT, INCLUDING THE FEES AND THE SAVINGS
GOALS; AND
(B) SUCH PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT WILL BE SUITABLE
FOR THE DEBTOR AT THE TIME IT IS TO BE SIGNED.
§ 588-K. REQUIRED PRE-AGREEMENT DISCLOSURES AND WARNINGS. 1. BEFORE
THE DEBTOR SIGNS A DEBT SETTLEMENT SERVICES AGREEMENT, THE DEBT SETTLE-
MENT COMPANY SHALL PROVIDE AN ORAL AND WRITTEN NOTICE TO THE DEBTOR THAT
CLEARLY AND CONSPICUOUSLY DISCLOSES ALL OF THE FOLLOWING:
(A) DEBT SETTLEMENT SERVICES MAY NOT BE SUITABLE FOR ALL DEBTORS;
(B) USING DEBT SETTLEMENT SERVICES LIKELY WILL HARM THE DEBTOR'S CRED-
IT HISTORY, CREDIT RATING, AND CREDIT SCORE;
(C) USING DEBT SETTLEMENT SERVICES DOES NOT STOP CREDITOR COLLECTION
ACTIVITY, INCLUDING CREDITOR LAWSUITS AND GARNISHMENTS;
(D) NOT ALL CREDITORS WILL ACCEPT A REDUCTION IN THE BALANCE, INTEREST
RATE, OR FEES A DEBTOR OWES;
A. 1427 14
(E) THE DEBTOR SHOULD INQUIRE ABOUT OTHER MEANS OF DEALING WITH DEBT,
INCLUDING BUT NOT LIMITED TO BUDGET PLANNING AND BANKRUPTCY;
(F) THE DEBTOR REMAINS OBLIGATED TO MAKE PERIODIC OR SCHEDULED
PAYMENTS TO CREDITORS WHILE PARTICIPATING IN A DEBT SETTLEMENT PROGRAM;
(G) THE FAILURE TO MAKE PERIODIC OR SCHEDULED PAYMENTS TO A CREDITOR
IS LIKELY TO:
(I) HARM THE DEBTOR'S CREDIT HISTORY, CREDIT RATING, AND/OR CREDIT
SCORE;
(II) LEAD THE CREDITOR TO INCREASE LAWFUL COLLECTION ACTIVITY, INCLUD-
ING LITIGATION, GARNISHMENT OF THE DEBTOR'S WAGES, AND JUDGMENT LIENS ON
THE DEBTOR'S PROPERTY; AND
(III) LEAD TO THE IMPOSITION BY THE CREDITOR OF INTEREST CHARGES, LATE
FEES, AND OTHER PENALTY FEES, INCREASING THE AMOUNT OWED BY THE DEBTOR;
AND
(H) THE DEBTOR MAY BE REQUIRED TO PAY TAXES ON ANY AMOUNT OF DEBT THAT
IS FORGIVEN.
2. THE WRITTEN NOTICE REQUIRED BY SUBDIVISION ONE OF THIS SECTION
SHALL BE ENTITLED "DEBTOR NOTICE AND RIGHTS FORM".
3. PRIOR TO SIGNING A DEBT SETTLEMENT SERVICES AGREEMENT, THE DEBTOR
SHALL SIGN AND DATE AN ACKNOWLEDGMENT FORM AT THE END OF THE DEBTOR
NOTICE AND RIGHTS FORM. THE ACKNOWLEDGMENT FORM SHALL STATE: "I, THE
DEBTOR, HAVE RECEIVED FROM THE DEBT SETTLEMENT COMPANY A COPY OF THE
FORM ENTITLED DEBTOR NOTICE AND RIGHTS FORM." THE DEBT SETTLEMENT COMPA-
NY OR ITS REPRESENTATIVE SHALL ALSO SIGN AND DATE THE ACKNOWLEDGMENT
FORM, WHICH SHALL INCLUDE THE NAME AND ADDRESS OF THE DEBT SETTLEMENT
COMPANY. THE ACKNOWLEDGMENT FORM SHALL BE IN DUPLICATE AND INCORPORATED
INTO THE DEBTOR NOTICE AND RIGHTS FORM. THE ORIGINAL ACKNOWLEDGMENT FORM
SHALL BE RETAINED BY THE DEBT SETTLEMENT COMPANY, AND THE DUPLICATE COPY
SHALL BE GIVEN TO THE DEBTOR.
4. THE REQUIREMENTS OF THIS SECTION ARE SATISFIED IF THE DEBT SETTLE-
MENT COMPANY GIVES THE DEBTOR THE FOLLOWING WARNING VERBATIM, BOTH ORAL-
LY AND IN WRITING, WITH THE CAPTION "DEBTOR NOTICE AND RIGHTS FORM" IN
AT LEAST TWENTY-EIGHT-POINT FONT AND THE REMAINING PORTION IN AT LEAST
FOURTEEN-POINT FONT, BEFORE THE DEBTOR SIGNS A DEBT SETTLEMENT SERVICES
AGREEMENT:
"DEBTOR NOTICE AND RIGHTS FORM
CAUTION
USING DEBT SETTLEMENT SERVICES WILL LIKELY HARM YOUR CREDIT HISTORY,
CREDIT RATING, AND CREDIT SCORE.
WE CANNOT GUARANTEE THAT YOU WILL SUCCESSFULLY REDUCE OR ELIMINATE
YOUR DEBT.
YOU REMAIN OBLIGATED TO MAKE PAYMENTS TO YOUR CREDITORS. IF YOU STOP
PAYING YOUR CREDITORS, THERE IS A STRONG LIKELIHOOD SOME OR ALL OF THE
FOLLOWING MAY HAPPEN:
- CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT.
- CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
- YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
- LIENS MAY STILL BE PLACED ON YOUR PROPERTY.
- YOUR CREDIT HISTORY, CREDIT RATING, AND/OR CREDIT SCORE LIKELY WILL
BE HARMED.
- THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR IMPOSITION
OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY FEES.
- NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE REDUCTION.
IF WE DO SETTLE YOUR DEBT, YOU MAY BE REQUIRED TO PAY TAXES ON THE
AMOUNT FORGIVEN.
A. 1427 15
DEBT SETTLEMENT SERVICES ARE NOT RIGHT FOR EVERYONE. YOU SHOULD
CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR DEBT, SUCH AS BUDGET PLAN-
NING OR A BANKRUPTCY FILING.
YOUR RIGHT TO CANCEL
IF YOU SIGN A DEBT SETTLEMENT SERVICES AGREEMENT, YOU HAVE THE RIGHT
TO CANCEL AT ANY TIME AND RECEIVE A FULL REFUND OF ALL UNEARNED FEES YOU
HAVE PAID TO THE DEBT SETTLEMENT COMPANY AND ALL FUNDS PLACED IN YOUR
DEBTOR SETTLEMENT ACCOUNT THAT HAVE NOT BEEN PAID TO ANY CREDITORS. IF
YOU CANCEL WITHIN NINETY DAYS OF SIGNING THE DEBT SETTLEMENT SERVICES
AGREEMENT YOU ALSO HAVE THE RIGHT TO RECEIVE A FULL REFUND OF ANY
ENROLLMENT FEES YOU HAVE PAID.
ACKNOWLEDGMENT BY DEBTOR
I, THE DEBTOR, HAVE RECEIVED FROM THE DEBT SETTLEMENT COMPANY A COPY
OF THE FORM ENTITLED DEBTOR NOTICE AND RIGHTS FORM."
§ 588-L. DEBT SETTLEMENT SERVICES AGREEMENTS. 1. A DEBT SETTLEMENT
COMPANY SHALL NOT PROVIDE DEBT SETTLEMENT SERVICES TO A DEBTOR WITHOUT A
WRITTEN DEBT SETTLEMENT SERVICES AGREEMENT SIGNED AND DATED BY BOTH THE
DEBTOR AND THE DEBT SETTLEMENT COMPANY.
2. ANY DEBT SETTLEMENT SERVICES AGREEMENT ENTERED INTO IN VIOLATION OF
THE PROVISIONS OF THIS SECTION IS VOID.
3. EACH DEBT SETTLEMENT COMPANY SHALL SUBMIT TO THE BANKING DEPARTMENT
ANY FORM OF DEBT SETTLEMENT SERVICES AGREEMENT IT INTENDS TO USE.
4. A DEBT SETTLEMENT SERVICES AGREEMENT SHALL DISCLOSE ALL OF THE
FOLLOWING CLEARLY AND CONSPICUOUSLY:
(A) THE NAME AND ADDRESS OF THE DEBTOR;
(B) THE DATE OF EXECUTION OF THE DEBT SETTLEMENT SERVICES AGREEMENT;
(C) THE LEGAL NAME OF THE DEBT SETTLEMENT COMPANY, INCLUDING ANY OTHER
BUSINESS NAMES USED IN THIS STATE BY THE DEBT SETTLEMENT COMPANY;
(D) THE COMPLETE STREET ADDRESS OF THE DEBT SETTLEMENT COMPANY, WHICH
SHALL CONFORM TO AN ADDRESS ON RECORD WITH THE DEPARTMENT;
(E) THE LICENSE NUMBER OF THE PRINCIPAL OFFICE AND, IF APPLICABLE, OF
THE BRANCH OFFICE UNDER WHICH THE DEBT SETTLEMENT COMPANY IS LICENSED IN
THIS STATE;
(F) A TOLL-FREE TELEPHONE NUMBER AT WHICH THE DEBTOR MAY SPEAK WITH A
REPRESENTATIVE OF THE DEBT SETTLEMENT COMPANY DURING NORMAL BUSINESS
HOURS;
(G) A COMPLETE LIST OF THE DEBTOR'S ACCOUNTS, DEBTS, AND OBLIGATIONS
COVERED BY THE DEBT SETTLEMENT SERVICES AGREEMENT, INCLUDING THE NAME OF
EACH CREDITOR AND THE PRINCIPAL AMOUNT OF EACH DEBT;
(H) A DESCRIPTION OF THE SERVICES TO BE PROVIDED BY THE DEBT SETTLE-
MENT COMPANY, INCLUDING THE EXPECTED TIME FRAME FOR SETTLEMENT FOR EACH
ACCOUNT, DEBT, OR OBLIGATION INCLUDED IN PARAGRAPH (G) OF THIS SUBDIVI-
SION;
(I) AN ITEMIZED LIST OF ALL FEES, INCLUDING ANY ENROLLMENT FEE AND
SETTLEMENT FEES TO BE PAID BY THE DEBTOR TO THE DEBT SETTLEMENT COMPANY,
AND THE DATE, APPROXIMATE DATE, OR CIRCUMSTANCES UNDER WHICH EACH FEE
WILL BECOME DUE;
(J) A GOOD FAITH ESTIMATE OF THE TOTAL AMOUNT OF ALL FEES TO BE
COLLECTED BY THE DEBT SETTLEMENT COMPANY FROM THE DEBTOR FOR THE
PROVISION OF DEBT SETTLEMENT SERVICES UNDER THE DEBT SETTLEMENT SERVICES
AGREEMENT;
(K) A STATEMENT OF THE PROPOSED SAVINGS GOALS FOR THE DEBTOR, STATING:
(I) THE AMOUNT TO BE SAVED PER MONTH;
(II) THE TIME PERIOD OVER WHICH THE SAVINGS GOALS EXTEND;
(III) THE AMOUNT OF MONEY THE DEBTOR MUST SAVE BEFORE A SETTLEMENT
OFFER WILL BE MADE TO EACH OF THE DEBTOR'S CREDITORS; AND
A. 1427 16
(IV) THE TOTAL AMOUNT OF THE SAVINGS EXPECTED TO BE PAID BY THE DEBTOR
PURSUANT TO THE TERMS OF THE DEBT SETTLEMENT SERVICES AGREEMENT;
(L) THE WRITTEN INDIVIDUALIZED FINANCIAL ANALYSIS REQUIRED BY SECTION
FIVE HUNDRED EIGHTY-EIGHT-J OF THIS ARTICLE;
(M) A WRITTEN NOTICE TO THE DEBTOR STATING:
(I) THAT THE DEBTOR MAY CANCEL THE DEBT SETTLEMENT SERVICES AGREEMENT
AT ANY TIME; AND
(II) THAT UPON SUCH CANCELLATION:
(A) ALL POWERS OF ATTORNEY GRANTED TO THE DEBT SETTLEMENT COMPANY BY
THE DEBTOR SHALL BE CONSIDERED REVOKED AND VOIDED; AND
(B) THE DEBTOR MAY BE ENTITLED TO A REFUND. THE TERMS OF SUCH REFUND
SHALL ALSO BE STATED AND SHALL BE CONSISTENT WITH THE REQUIREMENTS OF
SECTION FIVE HUNDRED EIGHTY-EIGHT-O OF THIS ARTICLE;
(N) A FORM THE DEBTOR MAY USE TO CANCEL THE DEBT SETTLEMENT SERVICES
AGREEMENT PURSUANT TO THE PROVISIONS OF SECTION FIVE HUNDRED EIGHTY-
EIGHT-O OF THIS ARTICLE. THE FORM SHALL DISCLOSE CLEARLY AND CONSPICU-
OUSLY HOW THE DEBTOR CAN CANCEL THE DEBT SETTLEMENT SERVICES AGREEMENT,
INCLUDING APPLICABLE ADDRESSES, TELEPHONE NUMBERS, FACSIMILE NUMBERS,
AND ELECTRONIC MAIL ADDRESSES THE DEBTOR CAN USE TO CANCEL THE DEBT
SETTLEMENT SERVICES AGREEMENT; AND
(O) A CLEAR AND CONSPICUOUS NOTICE TO THE DEBTOR THAT THE DEBTOR MAY
CONTACT THE DEPARTMENT WITH ANY QUESTIONS OR COMPLAINTS REGARDING THE
DEBT SETTLEMENT COMPANY ALONG WITH THE ADDRESS, TELEPHONE NUMBER AND
INTERNET WEBSITE OF THE DEPARTMENT.
5. (A) A DEBT SETTLEMENT SERVICES AGREEMENT MAY CONFER ON A DEBT
SETTLEMENT COMPANY A POWER OF ATTORNEY TO SETTLE THE DEBTOR'S DEBT FOR
NO MORE THAN FIFTY PERCENT OF THE PRINCIPAL AMOUNT OF THE DEBT. AN
AGREEMENT MAY NOT CONFER A POWER OF ATTORNEY TO SETTLE A DEBT FOR MORE
THAN FIFTY PERCENT OF THAT AMOUNT, BUT MAY CONFER A POWER OF ATTORNEY TO
NEGOTIATE WITH CREDITORS OF THE DEBTOR ON BEHALF OF THE DEBTOR. A DEBT
SETTLEMENT SERVICES AGREEMENT MUST PROVIDE THAT THE DEBT SETTLEMENT
COMPANY WILL OBTAIN THE ASSENT OF THE DEBTOR AFTER A CREDITOR HAS
ASSENTED TO A SETTLEMENT FOR MORE THAN FIFTY PERCENT OF THE PRINCIPAL
AMOUNT OF THE DEBT.
(B) A DEBT SETTLEMENT SERVICES AGREEMENT MAY NOT PROVIDE FOR APPLICA-
TION OF THE LAW OF ANY JURISDICTION OTHER THAN THE UNITED STATES AND
THIS STATE.
6. IF A DEBT SETTLEMENT COMPANY COMMUNICATES WITH A DEBTOR PRIMARILY
IN A LANGUAGE OTHER THAN ENGLISH, THEN THE DEBT SETTLEMENT COMPANY SHALL
FURNISH TO THE DEBTOR A WRITTEN TRANSLATION IN THAT OTHER LANGUAGE OF
ALL THE DISCLOSURES AND DOCUMENTS REQUIRED BY THIS ARTICLE.
§ 588-M. FEES. 1. THE TYPES OF FEES THAT A DEBT SETTLEMENT COMPANY MAY
CHARGE A DEBTOR ARE THE FOLLOWING:
(A) ENROLLMENT FEES; AND
(B) SETTLEMENT FEES.
2. ALL FEE TYPES NOT INCLUDED UNDER SUBDIVISION ONE OF THIS SECTION
ARE PROHIBITED, INCLUDING MAINTENANCE FEES.
3. THE AMOUNT OF AN ENROLLMENT FEE CHARGED BY A DEBT SETTLEMENT COMPA-
NY SHALL NOT EXCEED FIFTY DOLLARS OR SUCH OTHER AMOUNT AS SET BY THE
SUPERINTENDENT.
4. THE AMOUNT OF THE SETTLEMENT FEE CHARGED BY A DEBT SETTLEMENT
COMPANY WITH RESPECT TO EACH DEBT COVERED BY A DEBT SETTLEMENT SERVICES
AGREEMENT SHALL NOT EXCEED THE LESSER OF:
(A) THE AMOUNT THAT IS REASONABLE AND COMMENSURATE TO THE DEBT SETTLE-
MENT SERVICES PROVIDED TO THE DEBTOR; AND
(B) THE AMOUNT THAT IS TWENTY PERCENT OF THE DIFFERENCE BETWEEN:
A. 1427 17
(I) THE PRINCIPAL AMOUNT OF THE DEBT; AND
(II) THE AMOUNT:
(A) PAID BY THE DEBT SETTLEMENT COMPANY TO THE CREDITOR PURSUANT TO
THE SETTLEMENT NEGOTIATED BY THE DEBT SETTLEMENT COMPANY ON BEHALF OF
THE DEBTOR AS FULL AND COMPLETE SATISFACTION OF THE CREDITOR'S CLAIM
WITH REGARD TO THAT DEBT; OR
(B) NEGOTIATED BY THE DEBT SETTLEMENT COMPANY AND PAID BY THE DEBTOR
TO THE CREDITOR PURSUANT TO A SETTLEMENT NEGOTIATED BY THE DEBT SETTLE-
MENT COMPANY ON BEHALF OF THE DEBTOR AS FULL AND COMPLETE SATISFACTION
OF THE CREDITOR'S CLAIM WITH REGARD TO THAT DEBT.
5. A DEBT SETTLEMENT COMPANY SHALL NOT COLLECT ANY SETTLEMENT FEE FROM
A DEBTOR UNTIL:
(A) THE CREDITOR ENTERS INTO A LEGALLY ENFORCEABLE AGREEMENT WITH THE
DEBTOR TO ACCEPT FUNDS IN A SPECIFIC DOLLAR AMOUNT AS FULL AND COMPLETE
SATISFACTION OF THE CREDITOR'S CLAIM WITH REGARD TO THAT DEBT; AND
(B) THOSE FUNDS ARE PROVIDED TO THE CREDITOR:
(I) BY THE DEBT SETTLEMENT COMPANY ON BEHALF OF THE DEBTOR; OR
(II) DIRECTLY BY THE DEBTOR PURSUANT TO A SETTLEMENT NEGOTIATED BY THE
DEBT SETTLEMENT COMPANY.
6. IT SHALL BE UNLAWFUL TO SPLIT OR DIVIDE THE PROVISION OF DEBT
SETTLEMENT SERVICES TO A DEBTOR INTO SEPARATE DEBT SETTLEMENT SERVICES
AGREEMENTS FOR THE PURPOSE OF COLLECTING ADDITIONAL FEES FROM SUCH
DEBTOR.
§ 588-N. DEBTOR SETTLEMENT ACCOUNTS; MONTHLY ACCOUNTING. 1. A DEBT
SETTLEMENT COMPANY THAT RECEIVES FUNDS FROM A DEBTOR SHALL HOLD ALL
FUNDS RECEIVED FOR A DEBTOR SETTLEMENT ACCOUNT IN A PROPERLY DESIGNATED
BANK ACCOUNT IN A FEDERALLY INSURED DEPOSITORY INSTITUTION.
(A) SUCH FUNDS SHALL:
(I) CONSTITUTE TRUST FUNDS OWNED BY THE DEBTOR FROM WHOM THEY WERE
RECEIVED;
(II) REMAIN THE PROPERTY OF SUCH DEBTOR UNTIL THE DEBT SETTLEMENT
COMPANY DISBURSES THE FUNDS TO A CREDITOR ON BEHALF OF SUCH DEBTOR;
(III) BE KEPT SEPARATE AND APART AT ALL TIMES FROM FUNDS BELONGING TO
THE DEBT SETTLEMENT COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES, OR
AGENTS; AND
(IV) BE DEPOSITED IN SUCH BANK ACCOUNT NOT LATER THAN THE END OF THE
BUSINESS DAY FOLLOWING RECEIPT BY THE DEBT SETTLEMENT COMPANY OR ITS
AGENT.
(B) A DEBT SETTLEMENT COMPANY OR ITS AGENT THAT MAINTAINS ONE OR MORE
DEBTOR SETTLEMENT ACCOUNTS SHALL OBTAIN AND PRESERVE A WRITTEN AGREEMENT
FROM EACH BANK IN WHICH ANY SUCH ACCOUNT IS MAINTAINED. SUCH WRITTEN
AGREEMENT SHALL EXPRESSLY PROVIDE THAT THE FUNDS IN SUCH DEBTOR SETTLE-
MENT ACCOUNT SHALL BE SUBJECT TO NO RIGHT, CHARGE, SECURITY INTEREST,
LIEN, OR CLAIM OF ANY KIND IN FAVOR OF SUCH BANK OR ANY PERSON CLAIMING
THROUGH SUCH BANK.
(C) ANY INTEREST EARNED ON A DEBTOR SETTLEMENT ACCOUNT SHALL BE CRED-
ITED TO THE DEBTOR. IF THE FUNDS OF MULTIPLE DEBTORS ARE KEPT IN A
SINGLE INTEREST EARNING BANK ACCOUNT, THEN THE INTEREST EARNED SHALL BE
DEPOSITED PRO RATA AMONG THE DEBTORS WHOSE FUNDS ARE IN THE ACCOUNT.
(D) A DEBT SETTLEMENT COMPANY MAY NOT HOLD FUNDS RECEIVED FOR A DEBTOR
SETTLEMENT ACCOUNT IN AN ACCOUNT ADMINISTERED BY A PERSON THAT GIVES OR
ACCEPTS ANY MONEY OR OTHER COMPENSATION IN EXCHANGE FOR REFERRALS OF
BUSINESS INVOLVING THE DEBT SETTLEMENT COMPANY.
2. A DEBT SETTLEMENT COMPANY SHALL, NO LESS THAN MONTHLY, PROVIDE EACH
DEBTOR WITH WHICH IT HAS A DEBT SETTLEMENT SERVICES AGREEMENT A STATE-
MENT OF FEES PAID, SETTLEMENTS COMPLETED, REMAINING DEBTS AND, IF FUNDS
A. 1427 18
ARE HELD IN A BANK ACCOUNT PURSUANT TO SUBDIVISION ONE OF THIS SECTION,
ACCOUNT BALANCES.
3. NOTHING IN THIS ARTICLE REQUIRES THE ESTABLISHMENT OF A DEBTOR
SETTLEMENT ACCOUNT IF NO DEBTOR FUNDS OTHER THAN ENROLLMENT FEES OR
EARNED SETTLEMENT FEES ARE HELD OR CONTROLLED BY A DEBT SETTLEMENT
COMPANY.
§ 588-O. CANCELLATION OF DEBT SETTLEMENT SERVICES AGREEMENT; RIGHT TO
REFUNDS. 1. A DEBTOR MAY CANCEL A DEBT SETTLEMENT SERVICES AGREEMENT AT
ANY TIME UNTIL AFTER THE DEBT SETTLEMENT COMPANY HAS FULLY PERFORMED
EACH SERVICE THE DEBT SETTLEMENT COMPANY CONTRACTED TO PERFORM OR
REPRESENTED THAT IT WOULD PERFORM.
2. IF A DEBTOR CANCELS A DEBT SETTLEMENT SERVICES AGREEMENT NOT LATER
THAN NINETY DAYS AFTER THE DATE OF THE EXECUTION OF THE DEBT SETTLEMENT
SERVICES AGREEMENT OR AT ANY TIME UPON A VIOLATION OF A PROVISION OF
THIS ARTICLE BY THE DEBT SETTLEMENT COMPANY, THE DEBT SETTLEMENT COMPANY
SHALL REFUND TO THE DEBTOR:
(A) ALL FEES PAID TO THE DEBT SETTLEMENT COMPANY BY THE DEBTOR, WITH
THE EXCEPTION OF ANY EARNED SETTLEMENT FEE; AND
(B) ALL FUNDS PROVIDED BY THE DEBTOR TO THE DEBT SETTLEMENT COMPANY
THAT:
(I) HAVE ACCUMULATED IN A DEBTOR SETTLEMENT ACCOUNT; AND
(II) THE DEBT SETTLEMENT COMPANY HAS NOT DISBURSED TO CREDITORS.
3. IF A DEBTOR CANCELS A DEBT SETTLEMENT SERVICES AGREEMENT LATER THAN
NINETY DAYS AFTER THE DATE OF THE EXECUTION OF THE DEBT SETTLEMENT
SERVICES AGREEMENT AND FOR ANY REASON OTHER THAN FOR A VIOLATION OF A
PROVISION OF THIS ARTICLE BY THE DEBT SETTLEMENT COMPANY, THE DEBT
SETTLEMENT COMPANY SHALL REFUND TO THE DEBTOR:
(A) ALL FEES PAID TO THE DEBT SETTLEMENT COMPANY BY THE DEBTOR, WITH
THE EXCEPTION OF ANY EARNED SETTLEMENT FEE AND ANY ENROLLMENT FEE; AND
(B) ALL FUNDS PROVIDED BY THE DEBTOR TO THE DEBT SETTLEMENT COMPANY
THAT:
(I) HAVE ACCUMULATED IN A DEBTOR SETTLEMENT ACCOUNT; AND
(II) THE DEBT SETTLEMENT COMPANY HAS NOT DISBURSED TO CREDITORS.
4. A DEBT SETTLEMENT COMPANY SHALL MAKE ANY REFUND REQUIRED UNDER THIS
SECTION WITHIN FIVE BUSINESS DAYS AFTER RECEIPT OF WRITTEN NOTICE OF
CANCELLATION, AND SHALL INCLUDE WITH SUCH REFUND A FULL STATEMENT OF
ACCOUNT SHOWING:
(A) THE FEES RECEIVED BY THE DEBT SETTLEMENT COMPANY FROM THE DEBTOR;
(B) THE FEES REFUNDED TO THE DEBTOR BY THE DEBT SETTLEMENT COMPANY;
(C) THE PAYMENTS MADE BY THE DEBT SETTLEMENT COMPANY TO CREDITORS ON
BEHALF OF THE DEBTOR;
(D) THE SETTLEMENT FEES EARNED, IF ANY, BY THE DEBT SETTLEMENT COMPANY
BY SETTLING DEBT ON BEHALF OF THE DEBTOR;
(E) THE SAVINGS OF THE DEBTOR HELD BY THE DEBT SETTLEMENT COMPANY
IMMEDIATELY PRIOR TO SUCH REFUND; AND
(F) THE SAVINGS OF THE DEBTOR REFUNDED TO THE DEBTOR BY THE DEBT
SETTLEMENT COMPANY.
5. UPON CANCELLATION OF A DEBT SETTLEMENT SERVICES AGREEMENT BY THE
DEBTOR:
(A) ALL POWERS OF ATTORNEY AND DIRECT DEBIT AUTHORIZATIONS GRANTED TO
THE DEBT SETTLEMENT COMPANY BY THE DEBTOR SHALL BE CONSIDERED REVOKED
AND VOIDED; AND
(B) THE DEBT SETTLEMENT COMPANY SHALL IMMEDIATELY TAKE ANY ACTION
NECESSARY TO REFLECT CANCELLATION OF THE DEBT SETTLEMENT SERVICES AGREE-
MENT, INCLUDING BUT NOT LIMITED TO NOTIFYING THE RECIPIENT OF ANY DIRECT
DEBIT AUTHORIZATION.
A. 1427 19
6. UPON THE CANCELLATION OF A DEBT SETTLEMENT SERVICES AGREEMENT, THE
DEBT SETTLEMENT COMPANY SHALL PROVIDE TIMELY WRITTEN NOTICE OF THE
CANCELLATION OF SUCH AGREEMENT TO EACH OF THE CREDITORS WITH WHOM THE
DEBT SETTLEMENT COMPANY HAS HAD ANY PRIOR COMMUNICATION ON BEHALF OF THE
DEBTOR IN CONNECTION WITH THE PROVISION OF ANY DEBT SETTLEMENT SERVICES.
§ 588-P. OBLIGATION OF GOOD FAITH. A DEBT SETTLEMENT COMPANY SHALL ACT
IN GOOD FAITH IN ALL MATTERS UNDER THIS ARTICLE.
§ 588-Q. PROHIBITED ACTIVITIES. 1. NO PERSON, EXCEPT A LICENSEE, MAY
MAKE ANY REPRESENTATION, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING
THAT THEY, OR IT IS LICENSED UNDER THIS ARTICLE.
2. NO PERSON, OTHER THAN A LICENSEE OR A PERSON EXEMPT FROM THE
LICENSING REQUIREMENTS OF THIS ARTICLE, SHALL USE THE TITLE "DEBT
SETTLEMENT COMPANY" OR THE TERMS "DEBT SETTLEMENT" OR "DEBT SETTLEMENT
SERVICES" IN ANY ADVERTISING, MARKETING COMMUNICATION, BUSINESS CARD, OR
LETTERHEAD.
3. A DEBT SETTLEMENT COMPANY SHALL NOT DO ANY OF THE FOLLOWING:
(A) CHARGE OR COLLECT FROM A DEBTOR ANY FEE NOT PERMITTED BY, IN AN
AMOUNT IN EXCESS OF THE MAXIMUM AMOUNT PERMITTED BY, OR AT A TIME EARLI-
ER THAN PERMITTED BY SECTION FIVE HUNDRED EIGHTY-EIGHT-M OF THIS ARTI-
CLE;
(B) INCLUDE IN A DEBT SETTLEMENT SERVICES AGREEMENT ANY SECURED DEBT;
(C) ADVISE OR REPRESENT, EXPRESSLY OR BY IMPLICATION, THAT DEBTORS
SHOULD STOP MAKING PAYMENTS TO THEIR CREDITORS;
(D) ADVISE OR REPRESENT, EXPRESSLY OR BY IMPLICATION, THAT DEBTORS
SHOULD STOP COMMUNICATING WITH THEIR CREDITORS;
(E) ENGAGE IN ANY PRACTICE THAT PROHIBITS OR LIMITS THE DEBTOR OR ANY
CREDITOR FROM COMMUNICATION DIRECTLY WITH ONE ANOTHER;
(F) CHANGE THE MAILING ADDRESS ON ANY OF A DEBTOR'S STATEMENTS FROM A
CREDITOR;
(G) MAKE LOANS OR OFFER CREDIT OR SOLICIT OR ACCEPT ANY NOTE, MORT-
GAGE, OR NEGOTIABLE INSTRUMENT OTHER THAN A CHECK SIGNED BY THE DEBTOR
AND DATED NO LATER THAN THE DATE OF SIGNATURE;
(H) TAKE ANY CONFESSION OF JUDGMENT OR POWER OF ATTORNEY TO CONFESS
JUDGMENT AGAINST THE DEBTOR OR APPEAR AS THE DEBTOR OR ON BEHALF OF THE
DEBTOR IN ANY JUDICIAL, ADMINISTRATIVE, OR OTHER ACTION OR PROCEEDING;
(I) TAKE ANY RELEASE OR WAIVER OF ANY OBLIGATION TO BE PERFORMED ON
THE PART OF THE DEBT SETTLEMENT COMPANY OR ANY RIGHT OF THE DEBTOR;
(J) ADVERTISE, DISPLAY, DISTRIBUTE, BROADCAST, OR TELEVISE SERVICES OR
PERMIT SERVICES TO BE ADVERTISED, DISPLAYED, DISTRIBUTED, BROADCASTED,
OR TELEVISED, IN ANY MANNER WHATSOEVER, THAT CONTAINS ANY FALSE,
MISLEADING, OR DECEPTIVE STATEMENTS OR REPRESENTATIONS WITH REGARD TO
ANY MATTER INVOLVING THE BUSINESS OF DEBT SETTLEMENT SERVICES, INCLUDING
BUT NOT LIMITED TO THE FEES TO BE CHARGED, THE SERVICES TO BE PERFORMED,
THE RESULTS OR OUTCOMES OF THOSE SERVICES, OR THE EFFECT THOSE SERVICES
WILL HAVE ON A DEBTOR'S CREDIT RATING OR ON CREDITOR COLLECTION EFFORTS;
(K) RECEIVE ANY CASH, FEE, GIFT, BONUS, PREMIUM, REWARD, OR OTHER
COMPENSATION FROM ANY PERSON OTHER THAN THE DEBTOR EXPLICITLY FOR THE
PROVISION OF DEBT SETTLEMENT SERVICES TO THAT DEBTOR;
(L) OFFER OR PROVIDE GIFTS OR BONUSES TO DEBTORS FOR SIGNING A DEBT
SETTLEMENT SERVICES AGREEMENT OR FOR REFERRING ANOTHER POTENTIAL CUSTOM-
ER OR CUSTOMERS;
(M) EXCEPT WITH THE PRIOR CONSENT OF THE DEBTOR, DISCLOSE TO ANYONE
THE NAME OR ANY PERSONAL INFORMATION OF A DEBTOR FOR WHOM THE DEBT
SETTLEMENT COMPANY HAS PROVIDED OR IS PROVIDING DEBT SETTLEMENT SERVICES
OTHER THAN TO A DEBTOR'S OWN CREDITORS OR THE DEBT SETTLEMENT COMPANY'S
AGENTS OR AFFILIATES FOR THE PURPOSE OF PROVIDING DEBT SETTLEMENT
A. 1427 20
SERVICES. "PERSONAL INFORMATION OF A DEBTOR" AS USED HEREIN SHALL
INCLUDE BUT NOT BE LIMITED TO A DEBTOR'S NAME, PHOTOGRAPH, ADDRESS,
TELEPHONE NUMBER, SOCIAL SECURITY NUMBER, DATE OF BIRTH, DRIVER'S IDEN-
TIFICATION NUMBER, CREDIT CARD NUMBER, BANK ACCOUNT NUMBER, MOTHER'S
MAIDEN NAME, MEDICAL OR DISABILITY INFORMATION, IF ANY, AS WELL AS ANY
OTHER IDENTIFICATION NUMBER WHICH A LICENSEE MAY POSSESS;
(N) ENTER INTO A DEBT SETTLEMENT SERVICES AGREEMENT WITH A DEBTOR
WITHOUT FIRST PROVIDING THE DISCLOSURES AND FINANCIAL ANALYSIS AND
MAKING THE DETERMINATIONS REQUIRED BY THIS ARTICLE;
(O) MISREPRESENT ANY MATERIAL FACT, MAKE A MATERIAL OMISSION, OR MAKE
A FALSE PROMISE DIRECTED TO ONE OR MORE DEBTORS IN CONNECTION WITH THE
SOLICITATION, OFFERING, CONTRACTING, OR PROVISION OF DEBT SETTLEMENT
SERVICES;
(P) VIOLATE THE PROVISIONS OF APPLICABLE DO-NOT-CALL STATUTES;
(Q) PURCHASE DEBTS OR ENGAGE IN THE PRACTICE OR BUSINESS OF DEBT
COLLECTION;
(R) REPRESENT OR IMPLY TO A PERSON PARTICIPATING IN OR CONSIDERING
DEBT SETTLEMENT SERVICES THAT THE PURCHASE OF ANY ANCILLARY GOODS OR
SERVICES IS REQUIRED;
(S) USE A COMMUNICATION WHICH SIMULATES IN ANY MANNER A LEGAL OR JUDI-
CIAL PROCESS, OR WHICH GIVES THE FALSE APPEARANCE OF BEING AUTHORIZED,
ISSUED, OR APPROVED BY A GOVERNMENT, GOVERNMENTAL AGENCY, OR ATTORNEY-
AT-LAW; OR
(T) MAKE A REPRESENTATION THAT THE DEBT SETTLEMENT COMPANY WILL
FURNISH MONEY TO PAY BILLS OR PREVENT ATTACHMENT.
§ 588-R. SUPERINTENDENT AUTHORIZED TO EXAMINE. FOR THE PURPOSE OF
DISCOVERING VIOLATIONS OF THIS ARTICLE OR SECURING INFORMATION LAWFULLY
REQUIRED BY THE SUPERINTENDENT HEREUNDER, THE SUPERINTENDENT MAY AT ANY
TIME, AND AS OFTEN AS THEY MAY DETERMINE, EITHER PERSONALLY OR BY A
PERSON DULY DESIGNATED BY THEM, INVESTIGATE THE BUSINESS AND EXAMINE THE
BOOKS, ACCOUNTS, RECORDS, AND FILES USED THEREIN OF EVERY LICENSEE HERE-
UNDER. FOR THAT PURPOSE THE SUPERINTENDENT AND THEIR DULY DESIGNATED
REPRESENTATIVE SHALL HAVE FREE ACCESS TO THE OFFICES AND PLACE OF BUSI-
NESS, BOOKS, ACCOUNTS, PAPERS, RECORDS, FILES, SAFES AND VAULTS OF ALL
SUCH LICENSEES. THE SUPERINTENDENT AND ANY PERSON DULY DESIGNATED BY
THEM SHALL HAVE AUTHORITY TO REQUIRE THE ATTENDANCE OF AND TO EXAMINE
UNDER OATH ALL PERSONS WHOSE TESTIMONY THE SUPERINTENDENT MAY REQUIRE
RELATIVE TO SUCH BUSINESS. THE EXPENSES INCURRED IN MAKING ANY EXAMINA-
TION PURSUANT TO THIS SECTION SHALL BE ASSESSED AGAINST AND PAID BY THE
LICENSEE SO EXAMINED, EXCEPT THAT TRAVELING AND SUBSISTENCE EXPENSES SO
INCURRED SHALL BE CHARGED AGAINST AND PAID BY LICENSEES IN SUCH
PROPORTIONS AS THE SUPERINTENDENT SHALL DEEM JUST AND REASONABLE, AND
SUCH PROPORTIONATE CHARGES SHALL BE ADDED TO THE ASSESSMENT OF THE OTHER
EXPENSES INCURRED UPON EACH EXAMINATION. UPON WRITTEN NOTICE BY THE
SUPERINTENDENT OF THE TOTAL AMOUNT OF SUCH ASSESSMENT, THE LICENSEE
SHALL BECOME LIABLE FOR AND SHALL PAY SUCH ASSESSMENT TO THE SUPERINTEN-
DENT.
§ 588-S. LICENSEE'S BOOKS AND RECORDS; REPORTS. 1. THE LICENSEE SHALL
CREATE AND USE IN ITS BUSINESS SUCH BOOKS, ACCOUNTS, AND RECORDS AS WILL
ENABLE THE SUPERINTENDENT TO DETERMINE WHETHER SUCH LICENSEE IS COMPLY-
ING WITH THE PROVISIONS OF THIS ARTICLE AND WITH THE RULES AND REGU-
LATIONS LAWFULLY MADE BY THE SUPERINTENDENT HEREUNDER. EVERY LICENSEE
SHALL PRESERVE SUCH BOOKS, ACCOUNTS, AND RECORDS FOR AT LEAST SIX YEARS
BY ANY MANNER PERMITTED BY THIS CHAPTER.
2. EACH LICENSEE SHALL ANNUALLY, ON OR BEFORE THE FIRST DAY OF FEBRU-
ARY, FILE A REPORT WITH THE SUPERINTENDENT GIVING SUCH INFORMATION AS
A. 1427 21
THE SUPERINTENDENT MAY REQUIRE CONCERNING THE BUSINESS AND OPERATIONS
DURING THE PRECEDING CALENDAR YEAR OF SUCH LICENSEE UNDER AUTHORITY OF
THIS ARTICLE. SUCH REPORT SHALL BE SUBSCRIBED AND AFFIRMED AS TRUE BY
THE LICENSEE UNDER THE PENALTIES OF PERJURY AND SHALL BE IN THE FORM
PRESCRIBED BY THE SUPERINTENDENT. IN ADDITION TO ANNUAL REPORTS, THE
SUPERINTENDENT MAY REQUIRE SUCH ADDITIONAL REGULAR OR SPECIAL REPORTS AS
THEY MAY DEEM NECESSARY TO THE PROPER SUPERVISION OF LICENSEES UNDER
THIS ARTICLE. SUCH ADDITIONAL REPORTS SHALL BE IN THE FORM PRESCRIBED BY
THE SUPERINTENDENT AND SHALL BE SUBSCRIBED AND AFFIRMED AS TRUE UNDER
THE PENALTIES OF PERJURY.
3. EACH LICENSEE, WITHIN ONE HUNDRED TWENTY DAYS OF THE CLOSE OF THE
LICENSEE'S FISCAL YEAR, SHALL SUBMIT AN INDEPENDENTLY AUDITED FINANCIAL
STATEMENT TO THE SUPERINTENDENT.
§ 588-T. PENALTIES; NONCOMPLIANCE. 1. ANY PERSON WHO VIOLATES ANY
PROVISION OF THE LICENSING REQUIREMENTS OF SECTION FIVE HUNDRED EIGHTY-
EIGHT-B OF THIS ARTICLE SHALL BE GUILTY OF A CLASS A MISDEMEANOR,
PUNISHABLE AS PROVIDED IN ARTICLES SEVENTY AND EIGHTY OF THE PENAL LAW.
2. ANY DEBT SETTLEMENT SERVICES AGREEMENT THAT DOES NOT COMPLY WITH
THE PROVISIONS OF THIS ARTICLE IS VOID.
3. ANY WAIVER BY A DEBTOR OF ANY PROTECTION PROVIDED BY OR ANY RIGHT
OF THE DEBTOR UNDER THIS ARTICLE IS VOID.
4. ANY ATTEMPT BY ANY PERSON TO OBTAIN A WAIVER FROM ANY DEBTOR OF ANY
PROTECTION PROVIDED BY OR ANY RIGHT OR PROTECTION OF THE DEBTOR OR ANY
OBLIGATION OR REQUIREMENT OF THE DEBT SETTLEMENT COMPANY UNDER THIS
ARTICLE SHALL BE A VIOLATION OF THIS ARTICLE.
5. UPON PROPER NOTICE OF A VOID DEBT SETTLEMENT SERVICES AGREEMENT,
THE DEBT SETTLEMENT COMPANY SHALL MAKE A REFUND TO THE DEBTOR AS IF THE
DEBT SETTLEMENT SERVICES AGREEMENT HAD BEEN CANCELLED AS PROVIDED IN
SUBDIVISION TWO OF SECTION FIVE HUNDRED EIGHTY-EIGHT-O OF THIS ARTICLE.
6. IN ADDITION TO SUCH PENALTIES AS MAY OTHERWISE BE APPLICABLE BY
LAW, THE SUPERINTENDENT MAY, AFTER NOTICE AND HEARING AS PROVIDED ELSE-
WHERE IN THIS ARTICLE, REQUIRE ANY PERSON FOUND VIOLATING THE PROVISIONS
OF THIS ARTICLE OR THE RULES OR REGULATIONS PROMULGATED HEREUNDER TO PAY
TO THE PEOPLE OF THIS STATE AN ADDITIONAL PENALTY FOR EACH VIOLATION OF
THE ARTICLE OR ANY REGULATION OR POLICY PROMULGATED HEREUNDER A SUM NOT
TO EXCEED AN AMOUNT AS DETERMINED PURSUANT TO SECTION FORTY-FOUR OF THIS
CHAPTER FOR EACH SUCH VIOLATION.
7. NOTHING IN THIS ARTICLE SHALL CREATE A PRIVATE RIGHT OF ACTION ON
BEHALF OF A DEBTOR AGAINST A DEBT SETTLEMENT COMPANY FOR VIOLATIONS OF
THIS ARTICLE.
8. NOTHING IN THIS ARTICLE SHALL LIMIT ANY STATUTORY OR COMMON-LAW
RIGHT OF ANY PERSON TO BRING ANY ACTION IN ANY COURT FOR ANY ACT, OR THE
RIGHT OF THE STATE TO PUNISH ANY PERSON FOR ANY VIOLATION OF ANY LAW.
§ 588-U. AUTHORITY OF SUPERINTENDENT. THE SUPERINTENDENT IS HEREBY
AUTHORIZED AND EMPOWERED TO MAKE, IN ADDITION HERETO AND NOT INCONSIST-
ENT HEREWITH, SUCH GENERAL RULES AND REGULATIONS, AND SUCH SPECIFIC
RULINGS, DEMANDS, AND FINDINGS AS HE OR SHE MAY DEEM NECESSARY FOR THE
PROPER CONDUCT OF THE BUSINESS AUTHORIZED AND LICENSED HEREUNDER AND FOR
THE ENFORCEMENT OF THIS ARTICLE.
§ 588-V. SEVERABILITY. IF ANY WORD, PHRASE, CLAUSE, SENTENCE, PARA-
GRAPH, SUBDIVISION, SECTION, OR PART OF THIS ARTICLE SHALL BE ADJUDGED
BY ANY COURT OF COMPETENT JURISDICTION TO BE INVALID, SUCH JUDGMENT
SHALL NOT AFFECT, IMPAIR, OR INVALIDATE THE REMAINDER THEREOF WHICH CAN
BE GIVEN EFFECT WITHOUT THE INVALID PROVISION, BUT SHALL BE CONFINED IN
ITS OPERATION TO THE WORD, PHRASE, CLAUSE, SENTENCE, PARAGRAPH, SUBDIVI-
A. 1427 22
SION, SECTION, OR PART OF THIS ARTICLE DIRECTLY INVOLVED IN THE CONTRO-
VERSY IN WHICH THE JUDGMENT SHALL HAVE BEEN RENDERED.
§ 11. This act shall take effect on the one hundred eightieth day
after it shall have become a law and shall apply to all debt settlement
services agreements entered into or offered on or after such date;
provided, however, that effective immediately, the superintendent of
financial services shall add, amend, and/or repeal any rule or regu-
lation the superintendent deems necessary or desirable for implementa-
tion of this act.
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