A00597 Summary:

BILL NO    A00597 

SAME AS    No same as 

SPONSOR    Dinowitz (MS)

COSPNSR    Benedetto

MLTSPNSR   

Amd SS455 & 457, Gen Bus L; amd SS579, 584-a, 584-b, 585, 36, 39 & 44, add Art
12-CC SS588-a - 588-v, Bank L

Provides for budget planning and debt settlement services.
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A00597 Actions:

BILL NO    A00597 

01/09/2013 referred to consumer affairs and protection
01/08/2014 referred to consumer affairs and protection
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A00597 Votes:

There are no votes for this bill in this legislative session.
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A00597 Memo:

BILL NUMBER:A597

TITLE OF BILL:
An act
to amend the general business law and the banking law, in relation to
providing for budget planning and debt settlement services

PURPOSE: The purpose of this
bill is to
protect consumers from unfair and deceptive practices in the debt
management services industry by expanding state oversight of the
industry and implementing  several new consumer protections.

SUMMARY OF PROVISIONS: This bill would allow
for-profit
credit counselors and debt management companies to conduct business
in New York. Licensed providers would only be able to impose fees and
charges that are fair, reasonable, and easily understood.

This bill would also prohibit debt settlement providers from
conducting business in New York without first obtaining a license
from the State Banking Department. Applicants would have to meet
several requirements, including obtaining a surety bond for $250,000
and paying a licensing fee.

Every contract between a licensed debt settlement provider and a
consumer would be required to include, among other items:

> a clear and conspicuous listing of all fees;

> the amount to be saved per month by the consumer and the time period
over which the consumer is expected to do so;

> a notice that if a creditor settles a debt for less than the
consumer's current principal balance the consumer may incur a tax
liability; and

> a notice of a consumer's right to cancel.

Before entering into a contract with a consumer, a licensee would be
required to provide in writing a clear and conspicuous notice that
the utilization of debt settlement services may not be suitable for
all consumers, that using a debt settlement service may adversely
impact a consumer's credit score, that the consumer remains legally
obligated to make scheduled payments to creditors, and the potential
consequences of failing to make such scheduled payments.

A licensee would be prohibited from:

> charging any fees except for an enrollment fee not to exceed fifty
dollars and a settlement fee not to exceed twenty percent of the
amount of the difference between the principal and the settlement
amount negotiated by the licensee with the creditor on the consumer's
behalf;

> collecting a settlement fee until a settlement has been reached with
a creditor,


> settling a consumer's debt for more than fifty percent of the
principal amount, unless the consumer agrees to the settlement and

> claiming that a consumer's participation in the program would
prevent litigation, garnishment, repossession, eviction, or loss of
employment.

JUSTIFICATION:
Advertisements for entities offering debt settlement
services have become ubiquitous. Many debt-laden consumers are
confused as to which entities offering help are legitimate. Calls for
strict regulation of the debt settlement services industry have
increased significantly in recent years. Several witnesses at the
December 1, 2008, Assembly hearing on Senior Scams recommended that
the State regulate and license debt settlement providers. The U.S.
Senate Homeland Security and Governmental Affair's Investigative
Subcommittee, the U.S. Government Accountability Office, the Consumer
Federation of America, and the National Consumer Law Center have all
issued reports in the past five years documenting abuses in the
industry.

This legislation is aimed at reining in the excesses of the debt
settlement services industry. The legislation provides for, among
other things, licensure requirements, bonding requirements,
disclosure requirements, and penalties for non-compliance.

The legislation also amends the existing budget planner law to allow
for-profit entities to offer credit counseling services in the State,
which would provide for increased consumer choice in this industry
and increased competition, which would result in lower costs for
consumers. For-profit entities would be subject to the same rigorous
regulations and oversight as non-profit entities. In addition,
forty-two other states allow for-profit entities to operate.

LEGISLATIVE HISTORY:
2011-12- A.8341- Referred to Consumer Affairs and Protection
2009-10- A.7268-B - Ordered to third reading rules cal. 431

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE: One hundred and eighty days after
enactment.
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A00597 Text:

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

                                          597

                              2013-2014 Regular Sessions

                                 I N  A S S E M B L Y

                                      (PREFILED)

                                    January 9, 2013
                                      ___________

       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:

    1    Section 1. Section 455 of the general  business  law,  as  amended  by
    2  chapter  629  of  the  laws  of 2002, subdivisions 1 and 4 as amended by
    3  chapter 456 of the laws of 2006, is amended to read as follows:
    4    S 455. Definitions. 1. Budget planning, as used in this article, means
    5  the making of a contract between a person or entity engaged in the busi-
    6  ness of budget planning with a particular debtor whereby:
    7    (i) the debtor agrees to pay a sum or sums of money in any  manner  or
    8  form and the person or entity engaged in the business of budget planning
    9  distributes, or supervises, coordinates or controls the distribution of,
   10  or  has  a  contractual  relationship with another person or entity that
   11  distributes, or supervises, coordinates or  controls  such  distribution
   12  of,  the  same  among  certain  specified creditors in accordance with a
   13  PERIODIC PAYMENT plan agreed upon; and
   14    (ii) the debtor agrees to pay to such person or entity, or such  other
   15  person  or  entity  that  distributes,  or  supervises,  coordinates  or
   16  controls such distribution of, a sum or  sums  of  money,  any  valuable
   17  consideration  for  such  services or for any other services rendered in
   18  connection therewith; PROVIDED, HOWEVER, THAT "BUDGET PLANNING" DOES NOT
   19  INCLUDE "DEBT SETTLEMENT SERVICES" AS DEFINED IN  SECTION  FIVE  HUNDRED
   20  EIGHTY-EIGHT-A  OF  THE BANKING LAW. For the purposes of this article, a
   21  person or entity shall be considered as engaged in the business of budg-
   22  et planning in New York, and subject to this article and  the  licensing
   23  and  other  requirements of article twelve-C of the banking law, if such
   24  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.
                                                                  LBD04397-02-3
       A. 597                              2

    1  and,  in  connection  with such solicitation, enters into a contract for
    2  budget planning with an individual then resident in this state.
    3    2.  Person, as used in this article, shall not include a person admit-
    4  ted to practice law in this state.
    5    3. Entity, as used in this article, shall not include a firm, partner-
    6  ship, professional  corporation,  or  other  organization,  all  of  the
    7  members  or  principals  of  which  are admitted to practice law in this
    8  state.
    9    4. [Person or entity as used in this article shall not include a  type
   10  B  not-for-profit  corporation  as defined in section two hundred one of
   11  the not-for-profit corporation law of this state, or an entity  incorpo-
   12  rated  in  another  state  and  having  a similar not-for-profit status,
   13  licensed by the superintendent, to engage  in  the  business  of  budget
   14  planning as defined in this section.
   15    5.] Any attorney licensed to practice law in this state who is engaged
   16  in budget planning shall:
   17    (a) negotiate directly with creditors on behalf of the client;
   18    (b)  ensure  that all moneys received from the client are deposited in
   19  the attorney's account maintained for client funds;
   20    (c) pay creditors from such account; and
   21    (d) offer budget planning services through the same legal entity  that
   22  the attorney uses to practice law.
   23    S  2.  Section  457 of the general business law, as amended by chapter
   24  629 of the laws of 2002, is amended to read as follows:
   25    S 457. [Penalty] PENALTIES FOR VIOLATION OF THIS ARTICLE; CRIMINAL AND
   26  CIVIL.   (A) Whoever either individually  or  as  officer,  director  or
   27  employee  of  any person, firm, association or corporation, violates any
   28  of the provisions of the preceding section shall be guilty of a CLASS  A
   29  misdemeanor [for each such violation] PUNISHABLE AS PROVIDED IN ARTICLES
   30  SEVENTY AND EIGHTY OF THE PENAL LAW.
   31    (B)  WHENEVER THERE SHALL BE A VIOLATION OF THIS  ARTICLE, APPLICATION
   32  MAY BE MADE BY THE ATTORNEY GENERAL IN THE NAME OF  THE  PEOPLE  OF  THE
   33  STATE OF NEW YORK TO A COURT OR JUSTICE HAVING JURISDICTION BY A SPECIAL
   34  PROCEEDING  TO  ISSUE AN INJUNCTION, AND UPON NOTICE TO THE DEFENDANT OF
   35  NOT LESS THAN FIVE DAYS, TO ENJOIN AND RESTRAIN THE CONTINUANCE OF  SUCH
   36  VIOLATIONS;  AND  IF IT SHALL APPEAR TO THE SATISFACTION OF THE COURT OR
   37  JUSTICE THAT THE DEFENDANT HAS,  IN  FACT,  VIOLATED  THIS  ARTICLE,  AN
   38  INJUNCTION  MAY  BE  ISSUED  BY  SUCH  COURT  OR  JUSTICE, ENJOINING AND
   39  RESTRAINING ANY FURTHER VIOLATION,  WITHOUT  REQUIRING  PROOF  THAT  ANY
   40  PERSON HAS, IN FACT, BEEN INJURED OR DAMAGED THEREBY. IN CONNECTION WITH
   41  ANY  SUCH  PROPOSED  APPLICATION,  THE ATTORNEY GENERAL IS AUTHORIZED TO
   42  TAKE PROOF AND MAKE A DETERMINATION OF THE RELEVANT FACTS AND  TO  ISSUE
   43  SUBPOENAS  IN ACCORDANCE WITH THE CIVIL PRACTICE LAW AND RULES. WHENEVER
   44  THE COURT SHALL DETERMINE THAT  A  VIOLATION  OF  SECTION  FOUR  HUNDRED
   45  FIFTY-SIX  OF  THIS  ARTICLE  HAS OCCURRED, THE COURT MAY IMPOSE A CIVIL
   46  PENALTY OF NOT MORE THAN FIVE  HUNDRED  DOLLARS  PER  CONTRACT  MADE  IN
   47  VIOLATION OF SUCH SECTION, NOT TO EXCEED ONE HUNDRED THOUSAND DOLLARS.
   48    S  3. Section 579 of the banking law, as amended by chapter 629 of the
   49  laws of 2002, is amended to read as follows:
   50    S 579. Doing business without license prohibited. [Only a type B  not-
   51  for-profit  corporation  as  defined  in  section two hundred one of the
   52  not-for-profit corporation law of this state, or an entity  incorporated
   53  in  another state and having a similar not-for-profit status,] NO PERSON
   54  OR ENTITY shall engage in the business of budget planning as defined  in
   55  subdivision  one of section four hundred fifty-five of the general busi-
       A. 597                              3

    1  ness law [of this state] except as authorized by this article and  with-
    2  out first obtaining a license from the superintendent.
    3    S  4.  Subdivision  2 of section 584-a of the banking law, as added by
    4  chapter 629 of the laws of 2002, is amended to read as follows:
    5    2. the total fees agreed to for such services, including  any  adjust-
    6  ments  for  estimated  available  rebates  from creditors, provided that
    7  nothing in this subdivision shall require a licensee  to  share  rebates
    8  with  its  clients AND PROVIDED THAT ANY FEES OR CHARGES IMPOSED MUST BE
    9  FAIR, REASONABLE AND EASILY UNDERSTOOD;
   10    S 5. Section 584-b of the banking law  is  amended  by  adding  a  new
   11  subdivision 4-a to read as follows:
   12    4-A.    NO  LICENSEE SHALL IMPOSE ANY FEE OR CHARGE WHATSOEVER THAT IS
   13  NOT FAIR, REASONABLE AND ABLE TO BE EASILY UNDERSTOOD.
   14    S 6. Section 585 of the banking law, as amended by chapter 629 of  the
   15  laws of 2002, is amended to read as follows:
   16    S  585.  Superintendent  authorized  to  examine.  For  the purpose of
   17  discovering violations of this article or securing information  lawfully
   18  required  by  him  or her hereunder, the superintendent may at any time,
   19  and as often as he or she may  determine,  either  personally  or  by  a
   20  person duly designated by him or her, investigate the business and exam-
   21  ine the books, accounts, records, and files used therein of every licen-
   22  see  hereunder.  For that purpose the superintendent and his or her duly
   23  designated representative shall have free  access  to  the  offices  and
   24  place  of  business,  books, accounts, papers, records, files, safes and
   25  vaults of all such licensees. The superintendent  and  any  person  duly
   26  designated  by him or her shall have authority to require the attendance
   27  of and to examine under oath all persons whose testimony he or  she  may
   28  require  relative  to such business. The expenses incurred in making any
   29  examination pursuant to this section shall be assessed against and  paid
   30  by  the  licensee  so  examined,  except  that traveling and subsistence
   31  expenses so incurred shall be charged against and paid by  licensees  in
   32  such  proportions  as the superintendent shall deem just and reasonable,
   33  and such proportionate charges shall be added to the assessment  of  the
   34  other  expenses  incurred  upon each examination. Upon written notice by
   35  the superintendent of the total amount of such assessment, the  licensee
   36  shall become liable for and shall pay such assessment to the superinten-
   37  dent.  If, upon review, the superintendent shall determine that the fees
   38  or service charges set by  the  licensee  are  UNFAIR,  unreasonable  OR
   39  UNCLEAR, he or she shall direct the licensee to make adjustments in said
   40  fees  and  service charges in accordance with his or her findings, which
   41  shall set forth a detailed factual basis and reasoning  supporting  such
   42  finding.
   43    S  7.  Subdivision  10 of section 36 of the banking law, as amended by
   44  chapter 182 of the laws of 2011, is amended to read as follows:
   45    10. All reports of examinations and investigations, correspondence and
   46  memoranda concerning or arising out of  such  examination  and  investi-
   47  gations,  including any duly authenticated copy or copies thereof in the
   48  possession of any banking organization,  bank  holding  company  or  any
   49  subsidiary  thereof  (as  such terms "bank holding company" and "subsid-
   50  iary" are defined in article three-A of this chapter),  any  corporation
   51  or  any  other  entity affiliated with a banking organization within the
   52  meaning of subdivision six of this section and any  non-banking  subsid-
   53  iary  of  a  corporation  or any other entity which is an affiliate of a
   54  banking organization within the meaning of  subdivision  six-a  of  this
   55  section,  foreign  banking corporation, licensed lender, licensed casher
   56  of  checks,  licensed  mortgage  banker,  registered  mortgage   broker,
       A. 597                              4

    1  licensed  mortgage  loan  originator,  licensed  sales  finance company,
    2  registered mortgage loan servicer, licensed  insurance  premium  finance
    3  agency, licensed transmitter of money, licensed budget planner, LICENSED
    4  DEBT  SETTLEMENT  COMPANY,  any other person or entity subject to super-
    5  vision under this chapter, or  the  department,  shall  be  confidential
    6  communications,  shall  not be subject to subpoena and shall not be made
    7  public unless, in the  judgment  of  the  superintendent,  the  ends  of
    8  justice  and  the  public advantage will be subserved by the publication
    9  thereof, in which event the superintendent may publish or authorize  the
   10  publication  of  a  copy  of any such report or any part thereof in such
   11  manner as may be deemed proper or unless such laws specifically  author-
   12  ize  such  disclosure. For the purposes of this subdivision, "reports of
   13  examinations and investigations, and any  correspondence  and  memoranda
   14  concerning  or  arising  out  of  such examinations and investigations",
   15  includes any such materials of a bank, insurance or securities regulato-
   16  ry agency or any unit of the federal government or that  of  this  state
   17  any  other  state or that of any foreign government which are considered
   18  confidential by such agency or unit and which are in the  possession  of
   19  the  department  or which are otherwise confidential materials that have
   20  been shared by the department with any such agency or unit  and  are  in
   21  the possession of such agency or unit.
   22    S  8.  Subdivisions  1,  2,  3 and 5 of section 39 of the banking law,
   23  subdivisions 1, 2 and 5 as amended by chapter 123 of the  laws  of  2009
   24  and  subdivision  3  as  amended by chapter 155 of the laws of 2012, are
   25  amended to read as follows:
   26    1. To appear and explain an  apparent  violation.  Whenever  it  shall
   27  appear to the superintendent that any banking organization, bank holding
   28  company,  registered  mortgage  broker, licensed mortgage banker, regis-
   29  tered  mortgage  loan  servicer,  licensed  mortgage  loan   originator,
   30  licensed  lender,  licensed  casher  of  checks,  licensed sales finance
   31  company, licensed insurance premium finance agency, licensed transmitter
   32  of money, licensed budget planner,  LICENSED  DEBT  SETTLEMENT  COMPANY,
   33  out-of-state state bank that maintains a branch or branches or represen-
   34  tative  or  other  offices in this state, or foreign banking corporation
   35  licensed by the superintendent to do business or  maintain  a  represen-
   36  tative  office  in  this state has violated any law or regulation, he or
   37  she may, in his or her discretion, issue an order describing such appar-
   38  ent violation and requiring  such  banking  organization,  bank  holding
   39  company,  registered mortgage broker, licensed mortgage banker, licensed
   40  mortgage loan originator, licensed lender, licensed  casher  of  checks,
   41  licensed sales finance company, licensed insurance premium finance agen-
   42  cy,  licensed  transmitter  of  money, licensed budget planner, LICENSED
   43  DEBT SETTLEMENT COMPANY, out-of-state state bank that maintains a branch
   44  or branches or representative or other offices in this state, or foreign
   45  banking corporation to appear before him or her, at  a  time  and  place
   46  fixed  in  said  order,  to  present  an  explanation  of  such apparent
   47  violation.
   48    2. To discontinue unauthorized or unsafe and unsound practices.  When-
   49  ever  it  shall  appear to the superintendent that any banking organiza-
   50  tion, bank holding company, registered mortgage broker,  licensed  mort-
   51  gage  banker,  registered mortgage loan servicer, licensed mortgage loan
   52  originator, licensed lender, licensed casher of checks,  licensed  sales
   53  finance  company,  licensed  insurance  premium finance agency, licensed
   54  transmitter of money, licensed budget planner, LICENSED DEBT  SETTLEMENT
   55  COMPANY,  out-of-state state bank that maintains a branch or branches or
   56  representative or other offices in this state, or foreign banking corpo-
       A. 597                              5

    1  ration licensed by the superintendent to do business in  this  state  is
    2  conducting  business in an unauthorized or unsafe and unsound manner, he
    3  or she may, in his or her  discretion,  issue  an  order  directing  the
    4  discontinuance of such unauthorized or unsafe and unsound practices, and
    5  fixing a time and place at which such banking organization, bank holding
    6  company,  registered  mortgage  broker, licensed mortgage banker, regis-
    7  tered  mortgage  loan  servicer,  licensed  mortgage  loan   originator,
    8  licensed  lender,  licensed  casher  of  checks,  licensed sales finance
    9  company, licensed insurance premium finance agency, licensed transmitter
   10  of money, licensed budget planner,  LICENSED  DEBT  SETTLEMENT  COMPANY,
   11  out-of-state state bank that maintains a branch or branches or represen-
   12  tative  or  other  offices in this state, or foreign banking corporation
   13  may voluntarily appear before him or her to present any  explanation  in
   14  defense of the practices directed in said order to be discontinued.
   15    3.  To  make  good  impairment of capital or to ensure compliance with
   16  financial requirements. Whenever it shall appear to  the  superintendent
   17  that  the  capital  or  capital  stock of any banking organization, bank
   18  holding company or any subsidiary thereof which is  organized,  licensed
   19  or  registered  pursuant  to this chapter, is impaired, or the financial
   20  requirements imposed by subdivision one of section two hundred two-b  of
   21  this  chapter  or  any regulation of the superintendent on any branch or
   22  agency of a foreign banking corporation or  the  financial  requirements
   23  imposed  by  this chapter or any regulation of the superintendent on any
   24  licensed lender, registered mortgage broker, licensed  mortgage  banker,
   25  licensed  casher  of  checks,  licensed  sales finance company, licensed
   26  insurance  premium  finance  agency,  licensed  transmitter  of   money,
   27  licensed  budget  planner,  LICENSED  DEBT SETTLEMENT COMPANY or private
   28  banker are not satisfied, the superintendent  may,  in  the  superinten-
   29  dent's  discretion, issue an order directing that such banking organiza-
   30  tion, bank holding company, branch or agency of a foreign banking corpo-
   31  ration, registered mortgage broker, licensed mortgage  banker,  licensed
   32  lender,  licensed  casher  of  checks,  licensed  sales finance company,
   33  licensed insurance  premium  finance  agency,  licensed  transmitter  of
   34  money,  licensed  budget  planner,  LICENSED  DEBT SETTLEMENT COMPANY or
   35  private banker make good such deficiency  forthwith  or  within  a  time
   36  specified in such order.
   37    5.  To keep books and accounts as prescribed. Whenever it shall appear
   38  to the superintendent that any banking organization, bank holding compa-
   39  ny, registered mortgage broker,  licensed  mortgage  banker,  registered
   40  mortgage  loan  servicer,  licensed  mortgage  loan originator, licensed
   41  lender, licensed casher  of  checks,  licensed  sales  finance  company,
   42  licensed  insurance  premium  finance  agency,  licensed  transmitter of
   43  money, licensed budget planner, LICENSED DEBT SETTLEMENT COMPANY, agency
   44  or branch of a foreign banking corporation licensed by  the  superinten-
   45  dent  to do business in this state, does not keep its books and accounts
   46  in such manner as to enable him or her to  readily  ascertain  its  true
   47  condition,  he  or  she  may,  in  his or her discretion, issue an order
   48  requiring such banking organization, bank  holding  company,  registered
   49  mortgage  broker,  licensed  mortgage  banker,  registered mortgage loan
   50  servicer, licensed mortgage loan originator, licensed  lender,  licensed
   51  casher  of  checks,  licensed  sales finance company, licensed insurance
   52  premium finance agency, licensed transmitter of money,  licensed  budget
   53  planner,  LICENSED  DEBT  SETTLEMENT  COMPANY, or foreign banking corpo-
   54  ration, or the officers or agents thereof, or any of them, to  open  and
   55  keep  such books or accounts as he or she may, in his or her discretion,
       A. 597                              6

    1  determine and prescribe for the purpose of keeping accurate and  conven-
    2  ient records of its transactions and accounts.
    3    S  9. Paragraph (a) of subdivision 1 of section 44 of the banking law,
    4  as amended by chapter 155 of the laws of 2012, is  amended  to  read  as
    5  follows:
    6    (a) Without limiting any power granted to the superintendent under any
    7  other provision of this chapter, the superintendent may, in a proceeding
    8  after  notice  and a hearing, require any safe deposit company, licensed
    9  lender, licensed casher  of  checks,  licensed  sales  finance  company,
   10  licensed  insurance  premium  finance  agency,  licensed  transmitter of
   11  money, licensed mortgage banker, registered  mortgage  broker,  licensed
   12  mortgage  loan  originator,  registered  mortgage  loan  servicer  [or],
   13  licensed budget planner OR LICENSED DEBT SETTLEMENT COMPANY  to  pay  to
   14  the  people  of  this state a penalty for any violation of this chapter,
   15  any regulation promulgated thereunder,  any  final  or  temporary  order
   16  issued  pursuant  to  section thirty-nine of this article, any condition
   17  imposed in writing by the superintendent in connection with the grant of
   18  any application or request, or any written agreement entered  into  with
   19  the superintendent.
   20    S 10. The banking law is amended by adding a new article 12-CC to read
   21  as follows:
   22                               ARTICLE XII-CC
   23                          DEBT SETTLEMENT COMPANIES
   24  SECTION 588-A. DEFINITIONS.
   25          588-B. DOING BUSINESS WITHOUT LICENSE PROHIBITED.
   26          588-C. APPLICATION FOR LICENSE.
   27          588-D. CONDITIONS  FOR  ISSUANCE  OF  A LICENSE; PROCEDURE WHERE
   28                   APPLICATION DENIED.
   29          588-E. LICENSE PROVISIONS.
   30          588-F. CHANGES IN OFFICERS OR DIRECTORS OF LICENSEE.
   31          588-G. CHANGES IN CONTROL.
   32          588-H. GROUNDS FOR SUSPENSION,  REVOCATION,  OR  TERMINATION  OF
   33                   LICENSE; PROCEDURE.
   34          588-I. ADVERTISING AND MARKETING PRACTICES.
   35          588-J. INDIVIDUALIZED FINANCIAL ANALYSIS; STATEMENT.
   36          588-K. REQUIRED PRE-AGREEMENT DISCLOSURES AND WARNINGS.
   37          588-L. DEBT SETTLEMENT SERVICES AGREEMENTS.
   38          588-M. FEES.
   39          588-N. DEBTOR SETTLEMENT ACCOUNTS; MONTHLY ACCOUNTING.
   40          588-O. CANCELLATION OF DEBT SETTLEMENT SERVICES AGREEMENT; RIGHT
   41                   TO REFUNDS.
   42          588-P. OBLIGATION OF GOOD FAITH.
   43          588-Q. PROHIBITED ACTIVITIES.
   44          588-R. SUPERINTENDENT AUTHORIZED TO EXAMINE.
   45          588-S. LICENSEE'S BOOKS AND RECORDS; REPORTS.
   46          588-T. PENALTIES; NONCOMPLIANCE.
   47          588-U. AUTHORITY OF SUPERINTENDENT.
   48          588-V. SEVERABILITY.
   49    S  588-A.  DEFINITIONS.  AS USED IN THIS ARTICLE: 1. "AFFILIATE" MEANS
   50  ANY PERSON THAT DIRECTLY OR INDIRECTLY CONTROLS, IS CONTROLLED BY, OR IS
   51  UNDER COMMON CONTROL WITH ANOTHER PERSON.
   52    2. "CLEARLY AND CONSPICUOUSLY" MEANS THAT A STATEMENT, REPRESENTATION,
   53  TERM, OR DISCLOSURE IS SO PRESENTED AS TO BE READILY APPARENT AND UNDER-
   54  STOOD BY THE PERSON TO WHOM IT IS BEING ADDRESSED. FACTORS TO BE CONSID-
   55  ERED FOR THIS PURPOSE INCLUDE BUT ARE NOT LIMITED  TO  SIZE,  PLACEMENT,
   56  COLOR CONTRAST, LENGTH, CRAWL TIME, AND AUDIBILITY.
       A. 597                              7

    1    3. "DEBTOR" MEANS ANY INDIVIDUAL WHO HAS INCURRED INDEBTEDNESS OR OWES
    2  A DEBT.
    3    4.  "DEBTOR  SETTLEMENT  ACCOUNT"  MEANS ANY ACCOUNT OR OTHER MEANS OR
    4  DEVICE IN WHICH PAYMENTS, DEPOSITS, OR OTHER TRANSFERS FROM A DEBTOR ARE
    5  ARRANGED, HELD, OR TRANSFERRED BY OR TO A DEBT  SETTLEMENT  COMPANY  FOR
    6  THE  ACCUMULATION OF THE DEBTOR'S FUNDS IN ANTICIPATION OF PROFFERING AN
    7  ADJUSTMENT OR SETTLEMENT OF A DEBT OR OBLIGATION OF THE DEBTOR.
    8    5. "DEBT SETTLEMENT COMPANY" MEANS ANY PERSON:
    9    (A) ENGAGING IN, OR HOLDING HIMSELF, HERSELF, OR ITSELF OUT AS  ENGAG-
   10  ING  IN,  THE BUSINESS OF PROVIDING DEBT SETTLEMENT SERVICES IN EXCHANGE
   11  FOR OR IN EXPECTATION OF ANY COMPENSATION OR GAIN; OR
   12    (B) SOLICITING FOR OR ACTING ON BEHALF OF ANY PERSON ENGAGING  IN,  OR
   13  HOLDING  HIMSELF, HERSELF, OR ITSELF OUT AS ENGAGING IN, THE BUSINESS OF
   14  PROVIDING DEBT SETTLEMENT SERVICES IN EXCHANGE FOR OR IN EXPECTATION  OF
   15  ANY  COMPENSATION  OR  GAIN;  PROVIDED,  HOWEVER,  THAT "DEBT SETTLEMENT
   16  COMPANY" SHALL NOT INCLUDE:
   17    (I) THE FOLLOWING EXEMPT PERSONS:
   18    (A) ANY ATTORNEY LICENSED TO PRACTICE LAW IN THIS STATE WHEN ACTING IN
   19  THE ORDINARY PRACTICE OF LAW AND THROUGH THE ENTITY USED BY THE ATTORNEY
   20  IN THE ORDINARY PRACTICE OF LAW, AND NOT HOLDING HIMSELF OR HERSELF  OUT
   21  AS  A  DEBT  SETTLEMENT  COMPANY,  AND  NOT  PROVIDING  DEBT  SETTLEMENT
   22  SERVICES, EXCEPT AS INCIDENTAL TO LEGAL REPRESENTATION;
   23    (B) ANY PUBLIC OFFICER WHILE ACTING IN AN OFFICIAL  CAPACITY  AND  ANY
   24  PERSON ACTING UNDER COURT ORDER; OR
   25    (C)  ANY  PERSON  WHILE  PERFORMING SERVICES INCIDENTAL TO THE DISSOL-
   26  UTION, WINDING UP, OR LIQUIDATION  OF  A  PARTNERSHIP,  CORPORATION,  OR
   27  OTHER BUSINESS ENTERPRISE; OR
   28    (D)  ANY  BANK,  TRUST COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCI-
   29  ATION, OR CREDIT UNION, WHETHER INCORPORATED,  CHARTERED,  OR  ORGANIZED
   30  UNDER THE LAWS OF THIS STATE OR ANY OTHER STATE OR THE UNITED STATES, OR
   31  ANY  OPERATING SUBSIDIARY OF ANY SUCH BANK, TRUST COMPANY, SAVINGS BANK,
   32  SAVINGS AND LOAN ASSOCIATION, OR CREDIT UNION.
   33    (II) SUCH OTHER PERSONS AS MAY BE SPECIFICALLY EXEMPTED BY THE  SUPER-
   34  INTENDENT IN HIS OR HER SOLE DISCRETION AND CONSISTENT WITH THE PURPOSES
   35  OF THIS ARTICLE AND THE RULES AND REGULATIONS PROMULGATED HEREUNDER.
   36    6. "DEBT SETTLEMENT SERVICES" MEANS:
   37    (A)  OFFERING  TO PROVIDE OR PROVIDING ADVICE OR SERVICES, OR OFFERING
   38  TO ACT OR ACTING AS AN INTERMEDIARY BETWEEN OR ON BEHALF OF A DEBTOR AND
   39  ONE OR MORE OF THE DEBTOR'S CREDITORS, WHERE THE PRIMARY PURPOSE OF  THE
   40  ADVICE,  SERVICE,  OR  ACTION  IS TO OBTAIN A SETTLEMENT, ADJUSTMENT, OR
   41  SATISFACTION OF THE DEBTOR'S UNSECURED DEBT TO A CREDITOR IN  AN  AMOUNT
   42  LESS THAN THE PRINCIPAL AMOUNT OF THE DEBT OR IN AN AMOUNT LESS THAN THE
   43  CURRENT OUTSTANDING BALANCE OF THE DEBT; OR
   44    (B)  OFFERING  TO  PROVIDE  SERVICES  RELATED TO OR PROVIDING SERVICES
   45  ADVISING, ENCOURAGING, ASSISTING, OR COUNSELING A DEBTOR  TO  ACCUMULATE
   46  FUNDS  FOR  THE  PRIMARY  PURPOSE OF PROPOSING, OBTAINING, OR SEEKING TO
   47  OBTAIN A SETTLEMENT, ADJUSTMENT, OR SATISFACTION OF THE  DEBTOR'S  UNSE-
   48  CURED  DEBT TO A CREDITOR IN AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT OF
   49  THE DEBT OR IN AN AMOUNT LESS THAN THE CURRENT  OUTSTANDING  BALANCE  OF
   50  THE  DEBT;  PROVIDED,  HOWEVER,  THAT DEBT SETTLEMENT SERVICES SHALL NOT
   51  INCLUDE:
   52    (I) "BUDGET PLANNING" AS DEFINED IN SECTION FOUR HUNDRED FIFTY-FIVE OF
   53  THE GENERAL BUSINESS LAW; OR
   54    (II) THE SERVICES OF AN ATTORNEY IN PROVIDING INFORMATION, ADVICE,  OR
   55  LEGAL  REPRESENTATION  WITH RESPECT TO FILING A CASE OR PROCEEDING UNDER
   56  TITLE 11 OF THE UNITED STATES CODE.
       A. 597                              8

    1    7. "DEBT SETTLEMENT SERVICES AGREEMENT"  MEANS  A  CONTRACT  OR  OTHER
    2  AGREEMENT  WITH  A  DEBTOR  RELATED  TO THE PROVISION OF DEBT SETTLEMENT
    3  SERVICES.
    4    8. "ENROLLMENT FEE" MEANS ANY FEE, OBLIGATION, OR COMPENSATION PAID OR
    5  TO  BE  PAID BY THE DEBTOR TO A DEBT SETTLEMENT COMPANY IN CONSIDERATION
    6  OF OR IN CONNECTION WITH ESTABLISHING A DEBT SETTLEMENT SERVICES  AGREE-
    7  MENT.
    8    9.  "MAINTENANCE  FEE" MEANS ANY FEE, OBLIGATION, OR COMPENSATION PAID
    9  OR TO BE PAID BY A DEBTOR TO A DEBT SETTLEMENT COMPANY IN  CONSIDERATION
   10  OF  OR  IN  CONNECTION  WITH  MAINTAINING  THE RELATIONSHIP AND SERVICES
   11  PROVIDED BY A DEBT SETTLEMENT COMPANY IN ACCORDANCE WITH A DEBT  SETTLE-
   12  MENT SERVICES AGREEMENT.
   13    10.  "PERSON"  MEANS  AN  INDIVIDUAL,  PARTNERSHIP,  LIMITED LIABILITY
   14  COMPANY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
   15    11. "PRINCIPAL AMOUNT OF THE DEBT" MEANS THE TOTAL AMOUNT  OWED  BY  A
   16  DEBTOR  TO  ONE  OR MORE CREDITORS FOR A DEBT THAT IS INCLUDED IN A DEBT
   17  SETTLEMENT SERVICES AGREEMENT AT THE TIME WHEN THE  DEBTOR  ENTERS  INTO
   18  SUCH AGREEMENT.
   19    12.  "SETTLEMENT  FEE" MEANS ANY FEE, OBLIGATION, OR COMPENSATION PAID
   20  OR TO BE PAID BY A DEBTOR TO A DEBT SETTLEMENT COMPANY IN  CONSIDERATION
   21  OF  OR  IN CONNECTION WITH AN AGREEMENT OR OTHER ARRANGEMENT ON THE PART
   22  OF A CREDITOR TO ACCEPT LESS THAN THE PRINCIPAL AMOUNT OF  THE  DEBT  AS
   23  SATISFACTION OF THE CREDITOR'S CLAIM AGAINST THE DEBTOR.
   24    S  588-B.  DOING  BUSINESS  WITHOUT  LICENSE  PROHIBITED. 1. EXCEPT AS
   25  PROVIDED IN SUBDIVISION THREE OF THIS SECTION, NO PERSON SHALL ENGAGE IN
   26  THE BUSINESS OF A DEBT SETTLEMENT COMPANY IN THIS  STATE  WITHOUT  FIRST
   27  OBTAINING  A  LICENSE  FROM  THE  SUPERINTENDENT  IN ACCORDANCE WITH THE
   28  LICENSING PROCEDURE PROVIDED IN THIS ARTICLE AND SUCH  RULES  AND  REGU-
   29  LATIONS AS MAY BE PROMULGATED HEREUNDER.
   30    2.  THE  BUSINESS  OF  A  DEBT SETTLEMENT COMPANY IS CONDUCTED IN THIS
   31  STATE IF THE DEBT SETTLEMENT COMPANY, ITS EMPLOYEES, OR ITS  AGENTS  ARE
   32  LOCATED  IN  THIS  STATE  OR  IF THE DEBT SETTLEMENT COMPANY ADVERTISES,
   33  SOLICITS, OFFERS, OR CONTRACTS TO PROVIDE DEBT  SETTLEMENT  SERVICES  TO
   34  DEBTORS THEN RESIDENT IN THIS STATE.
   35    3. IF A DEBT SETTLEMENT COMPANY IS LICENSED UNDER THIS ARTICLE, SUBDI-
   36  VISION ONE OF THIS SECTION DOES NOT APPLY TO ANY EMPLOYEE OF SUCH LICEN-
   37  SEE.
   38    S  588-C.  APPLICATION  FOR  LICENSE.  1.  APPLICATION  FOR  A LICENSE
   39  REQUIRED UNDER THIS ARTICLE SHALL BE IN WRITING, UNDER OATH, AND IN  THE
   40  FORM PRESCRIBED BY THE SUPERINTENDENT, AND SHALL CONTAIN THE FOLLOWING:
   41    (A)  THE  EXACT NAME AND COMPLETE STREET ADDRESS OF THE APPLICANT AND,
   42  IF APPLICABLE, ITS DATE OF INCORPORATION OR ORGANIZATION;
   43    (B) THE NAME AND COMPLETE BUSINESS AND RESIDENTIAL ADDRESS AND OCCUPA-
   44  TION OF EACH OFFICER AND DIRECTOR OF THE APPLICANT AND EACH PERSON  THAT
   45  OWNS  AT LEAST TEN PERCENT OF THE SHARES OR OTHER OWNERSHIP INTERESTS OF
   46  THE APPLICANT;
   47    (C) THE COMPLETE STREET ADDRESS OF THE PRINCIPAL OFFICE FROM WHICH THE
   48  BUSINESS IS TO BE CONDUCTED;
   49    (D) IF THE APPLICANT HAS ONE OR MORE BRANCHES, SUBSIDIARIES, OR AFFIL-
   50  IATES LOCATED IN THIS STATE, SOLICITING BUSINESS IN THIS STATE, OR DOING
   51  BUSINESS WITH RESIDENTS OF THIS STATE, THE COMPLETE ADDRESS OF EACH SUCH
   52  PLACE OF BUSINESS; AND
   53    (E)  SUCH  OTHER  PERTINENT  INFORMATION  AS  THE  SUPERINTENDENT  MAY
   54  REQUIRE,  INCLUDING  BUT  NOT  LIMITED  TO  EVIDENCE INDICATING THAT THE
   55  APPLICANT, OR AN OFFICER, DIRECTOR, OR MANAGER OF SUCH APPLICANT HAS  AT
       A. 597                              9

    1  LEAST  ONE  YEAR  OF  EXPERIENCE IN FINANCIAL SERVICES OR RELATED FIELDS
    2  APPLICABLE TO DEBT SETTLEMENT SERVICES.
    3    2.  AN  APPLICANT  SHALL  FILE  A MASTER APPLICATION FOR ITS PRINCIPAL
    4  OFFICE AND SUPPLEMENTAL APPLICATIONS FOR EACH BRANCH  OFFICE  THAT  WILL
    5  CONDUCT THE BUSINESS OF A DEBT SETTLEMENT COMPANY IN THIS STATE.
    6    3.  UPON ORIGINAL APPLICATION FOR A LICENSE OR LICENSES, THE APPLICANT
    7  SHALL PAY AN INVESTIGATION FEE IN  AN  AGGREGATE  AMOUNT  AS  PRESCRIBED
    8  PURSUANT  TO  SECTION EIGHTEEN-A OF THIS CHAPTER. NO ADDITIONAL INVESTI-
    9  GATION FEE SHALL BE  REQUIRED  FOR  ANY  SUBSEQUENT  APPLICATION  FOR  A
   10  LICENSE  UNLESS  SUCH APPLICATION IS SUBSEQUENT TO A DENIAL OF A LICENSE
   11  OR TO A REVOCATION, SUSPENSION, SURRENDER, OR TERMINATION OF A  LICENSE;
   12  PROVIDED,  HOWEVER,  THAT AN APPLICATION TO ESTABLISH A BRANCH OFFICE OF
   13  THE LICENSEE SHALL BE ACCOMPANIED BY THE FEE PRESCRIBED IN SECTION EIGH-
   14  TEEN-A OF THIS CHAPTER.
   15    4. AS A CONDITION FOR THE ISSUANCE AND RETENTION  OF  A  LICENSE,  AND
   16  SUBJECT  TO  SUCH  REGULATIONS  AS  THE  SUPERINTENDENT SHALL PRESCRIBE,
   17  APPLICANTS FOR A LICENSE SHALL FILE WITH  THE  SUPERINTENDENT  A  SURETY
   18  BOND  IN  FAVOR  OR  THE  SUPERINTENDENT, ISSUED BY A BONDING COMPANY OR
   19  INSURANCE COMPANY AUTHORIZED TO DO BUSINESS IN THIS STATE, AND IN A FORM
   20  SATISFACTORY TO THE SUPERINTENDENT.
   21    (A) IN LIEU OF THE SURETY BOND REQUIRED BY THIS SUBDIVISION, AN APPLI-
   22  CANT MAY PLEDGE TO THE SUPERINTENDENT AND MAINTAIN IN A  PLEDGE  ACCOUNT
   23  WITH  SUCH  BANKS,  SAVINGS  BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST
   24  COMPANIES, NATIONAL BANKS, FEDERAL SAVINGS BANKS, OR FEDERAL SAVINGS AND
   25  LOAN ASSOCIATIONS IN THE STATE AS SUCH LICENSEE MAY  DESIGNATE  AND  THE
   26  SUPERINTENDENT MAY APPROVE:
   27    (I)  INTEREST-BEARING  BILLS, NOTES, BONDS, DEBENTURES, OR OTHER OBLI-
   28  GATIONS ISSUED OR GUARANTEED BY THE UNITED STATES OR ANY STATE OR  OTHER
   29  LOCAL  GOVERNMENTAL  ENTITY  OR  ANY  INSTRUMENTALITY THEREOF, BEARING A
   30  RATING OF ONE OF THE THREE HIGHEST GRADES  BY  A  NATIONALLY  RECOGNIZED
   31  STATISTICAL  RATING  ORGANIZATION  THAT HAS BEEN ENGAGED IN RATING STATE
   32  AND MUNICIPAL ISSUES FOR A PERIOD OF NOT LESS THAN FIVE YEARS;
   33    (II) DOLLAR DEPOSITS; OR
   34    (III) SUCH OTHER ASSETS OR LETTERS OF  CREDIT  AS  THE  SUPERINTENDENT
   35  SHALL BY RULE OR REGULATION PERMIT.
   36    (B)  EXCEPT AS PROVIDED HEREUNDER, THE PRINCIPAL AMOUNT OF SUCH SURETY
   37  BOND OR DEPOSIT SHALL BE TWO HUNDRED FIFTY THOUSAND DOLLARS. THE  SUPER-
   38  INTENDENT MAY:
   39    (I)  REQUIRE  A LARGER BOND OR DEPOSIT IF HE OR SHE DETERMINES, IN HIS
   40  OR HER SOLE DISCRETION, THAT A LICENSEE HAS  ENGAGED  IN  A  PATTERN  OF
   41  CONDUCT  RESULTING IN BONA FIDE DEBTOR COMPLAINTS OF MISCONDUCT AND THAT
   42  SUCH INCREASED BOND OR  DEPOSIT  IS  NECESSARY  FOR  THE  PROTECTION  OF
   43  DEBTORS; OR
   44    (II)  INCREASE  OR  DECREASE  THE AMOUNT OF SUCH BOND OR DEPOSIT BASED
   45  UPON THE APPLICANT'S OR LICENSEE'S FINANCIAL CONDITION,  BUSINESS  PLAN,
   46  BUSINESS  EXPERIENCE,  OR  ANY OTHER FACTOR THE SUPERINTENDENT CONSIDERS
   47  APPROPRIATE.
   48    (C) THE PROCEEDS OF SUCH SURETY BOND OR  DEPOSIT  SHALL  CONSTITUTE  A
   49  TRUST FUND TO BE USED EXCLUSIVELY:
   50    (A)  TO  REIMBURSE  FEES  THAT  HAVE  BEEN  IMPROPERLY  CHARGED  TO OR
   51  COLLECTED FROM DEBTORS WITH RESPECT TO THE BUSINESS OF A DEBT SETTLEMENT
   52  COMPANY IN THIS STATE, AS SUCH BUSINESS IS  DESCRIBED  IN  SECTION  FIVE
   53  HUNDRED EIGHTY-EIGHT-B OF THIS ARTICLE;
   54    (B)  TO  REIMBURSE  AMOUNTS THAT HAVE NOT BEEN PROPERLY DISTRIBUTED TO
   55  CREDITORS OR PROPERLY RETURNED TO DEBTORS WITH RESPECT TO  THE  BUSINESS
       A. 597                             10

    1  OF  A  DEBT  SETTLEMENT  COMPANY  IN  THIS  STATE,  AS  SUCH BUSINESS IS
    2  DESCRIBED IN SECTION FIVE HUNDRED EIGHTY-EIGHT-B OF THIS ARTICLE; AND
    3    (C)  TO  PAY  OUTSTANDING  BANKING  DEPARTMENT  EXAMINATION  COSTS AND
    4  ASSESSMENTS.
    5    S 588-D. CONDITIONS FOR ISSUANCE OF A LICENSE; PROCEDURE WHERE  APPLI-
    6  CATION  DENIED.  UPON THE FILING OF AN APPLICATION FOR A LICENSE, IF THE
    7  SUPERINTENDENT SHALL FIND THAT THE FINANCIAL RESPONSIBILITY, EXPERIENCE,
    8  CHARACTER, AND GENERAL FITNESS OF THE  APPLICANT,  AND  OF  THE  CONTROL
    9  PERSONS,  OFFICERS,  AND  DIRECTORS  THEREOF  ARE SUCH AS TO COMMAND THE
   10  CONFIDENCE OF THE COMMUNITY AND TO WARRANT BELIEF THAT THE BUSINESS WILL
   11  BE OPERATED HONESTLY, FAIRLY, AND EFFICIENTLY  WITHIN  THE  PURPOSES  OF
   12  THIS  ARTICLE, HE OR SHE SHALL THEREUPON ISSUE A LICENSE IN DUPLICATE TO
   13  ENGAGE IN DEBT SETTLEMENT SERVICES IN ACCORDANCE WITH THE PROVISIONS  OF
   14  THIS  ARTICLE.    THE  SUPERINTENDENT  SHALL  TRANSMIT  ONE COPY OF SUCH
   15  LICENSE TO THE APPLICANT AND FILE THE OTHER IN THE OFFICE OF THE DEPART-
   16  MENT. SUCH LICENSE SHALL REMAIN IN FULL FORCE AND  EFFECT  UNTIL  IT  IS
   17  SURRENDERED  BY  THE  LICENSEE  OR  REVOKED, SUSPENDED, OR TERMINATED AS
   18  HEREINAFTER PROVIDED.  IF THE SUPERINTENDENT SHALL NOT SO  FIND,  HE  OR
   19  SHE  SHALL  NOT ISSUE SUCH LICENSE AND HE OR SHE SHALL NOTIFY THE APPLI-
   20  CANT OF THE DENIAL.
   21    S 588-E. LICENSE PROVISIONS. EACH LICENSE ISSUED  UNDER  THIS  ARTICLE
   22  SHALL STATE THE PRINCIPAL OFFICE ADDRESS AND, IF APPLICABLE, THE ADDRESS
   23  OF  THE  BRANCH OFFICE FOR WHICH IT WAS ISSUED. SUCH LICENSE SHALL STATE
   24  FULLY THE NAME OF THE LICENSEE AND, IF APPLICABLE, THE DATE AND PLACE OF
   25  ITS INCORPORATION OR ORGANIZATION. A COPY OF SUCH LICENSE SHALL BE PROM-
   26  INENTLY POSTED IN THE PRINCIPAL OFFICE AND, IF APPLICABLE,  SUCH  BRANCH
   27  OFFICE.    SUCH  LICENSE SHALL NOT BE TRANSFERABLE OR ASSIGNABLE. IN THE
   28  EVENT THE LOCATION AT WHICH THE BUSINESS IS TO  BE  CONDUCTED  SHALL  BE
   29  CHANGED,  THE  LICENSEE  SHALL  FORTHWITH  NOTIFY THE SUPERINTENDENT WHO
   30  SHALL THEREUPON WITHOUT CHARGE ATTACH TO THE  LICENSE  A  RIDER  SETTING
   31  FORTH SUCH CHANGED LOCATION.
   32    S  588-F.  CHANGES  IN OFFICERS OR DIRECTORS OF LICENSEE. IN THE EVENT
   33  THAT THERE SHALL BE ANY CHANGE AMONG THE OFFICERS OR  DIRECTORS  OF  ANY
   34  LICENSEE,  THE  LICENSEE SHALL PROMPTLY NOTIFY THE SUPERINTENDENT OF THE
   35  NAME, ADDRESS, AND OCCUPATION  OF  EACH  NEW  OFFICER  OR  DIRECTOR  AND
   36  PROVIDE SUCH OTHER INFORMATION AS THE SUPERINTENDENT MAY REQUIRE.
   37    S  588-G.  CHANGES IN CONTROL. 1. IT SHALL BE UNLAWFUL EXCEPT WITH THE
   38  PRIOR APPROVAL OF THE SUPERINTENDENT FOR ANY ACTION TO  BE  TAKEN  WHICH
   39  RESULTS  IN  A CHANGE OF CONTROL OF THE BUSINESS OF A LICENSEE. PRIOR TO
   40  ANY CHANGE OF CONTROL, THE PERSON DESIROUS OF ACQUIRING CONTROL  OF  THE
   41  BUSINESS OF A LICENSEE SHALL MAKE WRITTEN APPLICATION TO THE SUPERINTEN-
   42  DENT  AND  PAY  AN  INVESTIGATION  FEE AS PRESCRIBED PURSUANT TO SECTION
   43  EIGHTEEN-A OF THIS CHAPTER TO THE SUPERINTENDENT.  THE APPLICATION SHALL
   44  CONTAIN SUCH INFORMATION AS THE SUPERINTENDENT MAY PRESCRIBE  AS  NECES-
   45  SARY OR APPROPRIATE FOR THE PURPOSE OF MAKING THE DETERMINATION REQUIRED
   46  BY SUBDIVISION TWO OF THIS SECTION.
   47    2.  THE SUPERINTENDENT SHALL APPROVE OR DISAPPROVE THE PROPOSED CHANGE
   48  OF CONTROL OF A LICENSEE IN ACCORDANCE WITH THE  PROVISIONS  OF  SECTION
   49  FIVE HUNDRED EIGHTY-EIGHT-D OF THIS ARTICLE.
   50    3.  AS  USED IN THIS SECTION, THE TERM "CONTROL" MEANS THE POSSESSION,
   51  DIRECTLY OR INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF
   52  THE MANAGEMENT AND POLICIES OF A LICENSEE, WHETHER THROUGH THE OWNERSHIP
   53  OF VOTING STOCK OF SUCH LICENSEE, THE OWNERSHIP OF VOTING STOCK  OF  ANY
   54  PERSON  WHICH  POSSESSES  SUCH  POWER  OR  OTHERWISE.  CONTROL  SHALL BE
   55  PRESUMED TO EXIST IF ANY PERSON, DIRECTLY OR INDIRECTLY, OWNS,  CONTROLS
   56  OR  HOLDS  WITH POWER TO VOTE TEN PERCENT OR MORE OF THE VOTING STOCK OF
       A. 597                             11

    1  ANY LICENSEE OR OF ANY PERSON WHICH OWNS, CONTROLS OR HOLDS  WITH  POWER
    2  TO  VOTE TEN PERCENT OR MORE OF THE VOTING STOCK OF ANY LICENSEE, BUT NO
    3  PERSON SHALL BE DEEMED TO CONTROL A LICENSEE SOLELY BY REASON  OF  BEING
    4  AN  OFFICER  OR  DIRECTOR OF SUCH LICENSEE OR PERSON. THE SUPERINTENDENT
    5  MAY IN HIS OR HER DISCRETION, UPON THE APPLICATION OF A LICENSEE OR  ANY
    6  PERSON  WHO,  DIRECTLY OR INDIRECTLY, OWNS, CONTROLS OR HOLDS WITH POWER
    7  TO VOTE OR SEEKS TO OWN, CONTROL OR HOLD WITH POWER TO VOTE  ANY  VOTING
    8  STOCK  OF SUCH LICENSEE, DETERMINE WHETHER OR NOT THE OWNERSHIP, CONTROL
    9  OR HOLDING OF SUCH VOTING STOCK CONSTITUTES OR WOULD CONSTITUTE  CONTROL
   10  OF SUCH LICENSEE FOR PURPOSES OF THIS SECTION.
   11    S  588-H.  GROUNDS  FOR  SUSPENSION,  REVOCATION,  OR  TERMINATION  OF
   12  LICENSE; PROCEDURE. 1. IN ADDITION TO THE AUTHORITY SET FORTH IN  SUBDI-
   13  VISION TWO OF THIS SECTION, THE SUPERINTENDENT MAY SUSPEND OR REVOKE ANY
   14  LICENSE  ISSUED UNDER THIS ARTICLE IF, AFTER NOTICE AND A HEARING, HE OR
   15  SHE SHALL FIND THAT:
   16    (A) THE LICENSEE HAS VIOLATED ANY PROVISIONS OF THIS  ARTICLE,  OR  OF
   17  ANY  RULE  OR REGULATION MADE BY THE SUPERINTENDENT UNDER AND WITHIN THE
   18  AUTHORITY OF THIS ARTICLE;
   19    (B) ANY FACT OR CONDITION EXISTS WHICH, IF IT HAD EXISTED AT THE  TIME
   20  OF  THE  ORIGINAL APPLICATION FOR SUCH LICENSE, WOULD HAVE WARRANTED THE
   21  SUPERINTENDENT IN REFUSING ORIGINALLY TO ISSUE SUCH LICENSE; OR
   22    (C) THE LICENSEE OR AN OFFICER, DIRECTOR, OR  CONTROL  PERSON  OF  THE
   23  LICENSEE HAS BEEN CONVICTED OF A CRIME AGAINST THE LAWS OF THIS STATE OR
   24  ANY  OTHER  STATE  OR  OF THE UNITED STATES INVOLVING MORAL TURPITUDE OR
   25  FRAUDULENT OR DISHONEST ACTIONS, OR A  FINAL  JUDGMENT  IN  A  COURT  OF
   26  COMPETENT JURISDICTION HAS BEEN ENTERED AGAINST THE LICENSEE OR AN OFFI-
   27  CER, DIRECTOR, OR CONTROL PERSON OF THE LICENSEE IN A CIVIL ACTION ARIS-
   28  ING FROM FRAUD, MISREPRESENTATION, OR DECEIT.
   29    2.  (A)  THE  SUPERINTENDENT  MAY, FOR GOOD CAUSE, WITHOUT NOTICE OR A
   30  HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE ISSUED PURSUANT  TO  THIS
   31  ARTICLE  FOR  A PERIOD NOT EXCEEDING NINETY DAYS, PENDING INVESTIGATION.
   32  "GOOD CAUSE", AS USED IN THIS SUBDIVISION, SHALL  EXIST  ONLY  WHEN  THE
   33  LICENSEE  HAS DEFAULTED OR IS LIKELY TO DEFAULT IN PERFORMING ITS FINAN-
   34  CIAL ENGAGEMENTS OR ENGAGES OR HAS ENGAGED IN DISHONEST  OR  INEQUITABLE
   35  PRACTICES  WHICH  MAY CAUSE SUBSTANTIAL HARM TO THE PERSONS AFFORDED THE
   36  PROTECTION OF THIS ARTICLE.
   37    (B) THE SUPERINTENDENT MAY, IN HIS OR  HER  SOLE  DISCRETION,  WITHOUT
   38  NOTICE OR A HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE ISSUED PURSU-
   39  ANT  TO  THE AUTHORITY OF THIS ARTICLE UPON THE FAILURE OF SUCH LICENSEE
   40  TO MAKE ANY PAYMENTS AS REQUIRED BY THIS CHAPTER.
   41    (C) THE SUPERINTENDENT MAY, IN HIS OR  HER  SOLE  DISCRETION,  WITHOUT
   42  NOTICE OR A HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE ISSUED PURSU-
   43  ANT TO THE AUTHORITY OF THIS ARTICLE:
   44    (I)  THIRTY  DAYS AFTER THE DATE THE LICENSEE FAILS TO FILE ANY REPORT
   45  REQUIRED UNDER THIS ARTICLE TO BE FILED BY IT WITH THE SUPERINTENDENT;
   46    (II) IMMEDIATELY UPON THE LICENSEE FILING A PETITION IN BANKRUPTCY;
   47    (III) AT LEAST THIRTY DAYS AFTER THE LICENSEE HAS HAD FILED AGAINST IT
   48  A PETITION IN BANKRUPTCY; OR
   49    (IV) IMMEDIATELY UPON THE RECEIPT BY THE SUPERINTENDENT OF NOTICE THAT
   50  THE SURETY BOND REQUIRED PURSUANT TO SECTION FIVE HUNDRED EIGHTY-EIGHT-C
   51  OF THIS ARTICLE IS NO LONGER IN EFFECT OR THAT THE VALUE  OF  ASSETS  IN
   52  THE PLEDGE ACCOUNT IS LESS THAN THE REQUIRED AMOUNT.
   53    3.  IF  THE  SUPERINTENDENT  HAS  ISSUED AN ORDER SUSPENDING A LICENSE
   54  ISSUED PURSUANT TO THE AUTHORITY OF THIS ARTICLE PURSUANT  TO  PARAGRAPH
   55  (A)  OF  SUBDIVISION TWO OF THIS SECTION, SUCH LICENSE MAY BE REINSTATED
   56  IF THE SUPERINTENDENT DETERMINES, IN HIS OR HER  SOLE  DISCRETION  AFTER
       A. 597                             12

    1  INVESTIGATION,  THAT  GOOD  CAUSE  THEREFOR  DID  NOT EXIST OR NO LONGER
    2  EXISTS. IF THE SUPERINTENDENT HAS ISSUED AN ORDER SUSPENDING  A  LICENSE
    3  ISSUED  PURSUANT  TO  PARAGRAPH  (B)  OR  (C) OF SUBDIVISION TWO OF THIS
    4  SECTION,  SUCH  LICENSE  MAY BE REINSTATED, IF THE SUPERINTENDENT DETER-
    5  MINES, IN HIS OR HER SOLE DISCRETION, THAT THE LICENSEE  HAS  CURED  ALL
    6  DEFICIENCIES  SET  FORTH  IN  SUCH ORDER BY THE CLOSE OF BUSINESS NINETY
    7  DAYS AFTER THE DATE OF SUCH SUSPENSION ORDER, INCLUDING, WITHOUT LIMITA-
    8  TION, MAKING ANY OVERDUE PAYMENT, HAVING ANY  SUCH  BANKRUPTCY  PETITION
    9  DISMISSED,  OR  HAVING  SUCH  BOND REINSTATED OR DEPOSITING ALL REQUIRED
   10  ADDITIONAL ASSETS. OTHERWISE, IN THE CASE OF A  SUSPENSION  PURSUANT  TO
   11  PARAGRAPH  (B)  OR  (C)  OF  SUBDIVISION TWO OF THIS SECTION, UNLESS THE
   12  SUPERINTENDENT HAS, IN HIS OR HER SOLE DISCRETION, EXTENDED SUCH SUSPEN-
   13  SION, ALL LICENSES OF SUCH LICENSEE SHALL BE DEEMED TO BE  AUTOMATICALLY
   14  TERMINATED  BY OPERATION OF LAW AT THE CLOSE OF BUSINESS ON SUCH NINETI-
   15  ETH DAY.
   16    4. EXCEPT AS PROVIDED FOR IN  SUBDIVISION  TWO  OF  THIS  SECTION,  NO
   17  LICENSE  SHALL BE REVOKED OR SUSPENDED EXCEPT AFTER NOTICE AND A HEARING
   18  THEREON.
   19    5. WITH THE PRIOR CONSENT OF  THE  SUPERINTENDENT,  ANY  LICENSEE  MAY
   20  SURRENDER ANY LICENSE BY DELIVERING TO THE SUPERINTENDENT WRITTEN NOTICE
   21  THAT  IT  THEREBY  SURRENDERS SUCH LICENSE, BUT SUCH SURRENDER SHALL NOT
   22  AFFECT SUCH LICENSEE'S CIVIL OR CRIMINAL LIABILITY  FOR  ACTS  COMMITTED
   23  PRIOR  TO  SUCH  SURRENDER  OR ITS OBLIGATIONS TO THE SUPERINTENDENT FOR
   24  ASSESSMENTS, FEES, OR ADMINISTRATIVE ACTIONS WITH RESPECT TO THE PERIODS
   25  BEFORE SUCH SURRENDER.
   26    6. NO REVOCATION, SUSPENSION, TERMINATION, OR SURRENDER OF ANY LICENSE
   27  SHALL IMPAIR  OR  AFFECT  THE  OBLIGATION  OF  ANY  PRE-EXISTING  LAWFUL
   28  CONTRACT BETWEEN THE LICENSEE AND ANY PERSON.
   29    7.  EVERY  LICENSE  ISSUED  HEREUNDER SHALL REMAIN IN FORCE AND EFFECT
   30  UNTIL THE SAME SHALL  HAVE  BEEN  SURRENDERED,  REVOKED,  SUSPENDED,  OR
   31  TERMINATED  IN  ACCORDANCE  WITH THE PROVISIONS OF THIS ARTICLE, BUT THE
   32  SUPERINTENDENT SHALL HAVE AUTHORITY TO REINSTATE A SUSPENDED LICENSE  OR
   33  TO  ISSUE  A  NEW  LICENSE  TO  A LICENSEE WHOSE LICENSE SHALL HAVE BEEN
   34  REVOKED IF NO FACT OR CONDITION THEN EXISTS WHICH WOULD  HAVE  WARRANTED
   35  THE  SUPERINTENDENT  IN  REFUSING ORIGINALLY TO ISSUE SUCH LICENSE UNDER
   36  THIS ARTICLE.
   37    8. WHENEVER THE SUPERINTENDENT  SHALL  REVOKE  OR  SUSPEND  A  LICENSE
   38  ISSUED  PURSUANT  TO  THIS ARTICLE, HE OR SHE SHALL FORTHWITH EXECUTE IN
   39  DUPLICATE A WRITTEN ORDER TO THAT EFFECT. THE SUPERINTENDENT SHALL  FILE
   40  ONE  COPY OF SUCH ORDER IN THE OFFICE OF THE DEPARTMENT AND SHALL FORTH-
   41  WITH SERVE THE OTHER COPY UPON THE  LICENSEE.  ANY  SUCH  ORDER  MAY  BE
   42  REVIEWED  IN  THE  MANNER PROVIDED BY ARTICLE SEVENTY-EIGHT OF THE CIVIL
   43  PRACTICE LAW AND RULES. SUCH APPLICATION FOR  REVIEW  AS  AUTHORIZED  BY
   44  THIS SECTION MUST BE MADE WITHIN THIRTY DAYS FROM THE DATE OF SUCH ORDER
   45  OF SUSPENSION OR REVOCATION.
   46    9.  WHENEVER  A  LICENSE SHALL HAVE TERMINATED IN ACCORDANCE WITH THIS
   47  ARTICLE, THE SUPERINTENDENT SHALL NOTIFY THE LICENSEE THAT  THE  LICENSE
   48  HAS TERMINATED AND THAT THE LICENSEE MAY NOT ENGAGE IN THE BUSINESS OF A
   49  DEBT SETTLEMENT COMPANY IN THIS STATE.
   50    S  588-I.  ADVERTISING  AND  MARKETING PRACTICES. 1. A DEBT SETTLEMENT
   51  COMPANY SHALL NOT, EXPRESSLY OR  BY  IMPLICATION,  MAKE  ANY  UNFAIR  OR
   52  DECEPTIVE REPRESENTATIONS, OR ANY OMISSIONS OF MATERIAL FACTS, IN ANY OF
   53  ITS  ADVERTISING  OR MARKETING COMMUNICATIONS CONCERNING DEBT SETTLEMENT
   54  SERVICES.
   55    2.  ALL  ADVERTISING  AND  MARKETING  COMMUNICATIONS  CONCERNING  DEBT
   56  SETTLEMENT SERVICES SHALL DISCLOSE THE FOLLOWING INFORMATION CLEARLY AND
       A. 597                             13

    1  CONSPICUOUSLY:  "DEBT SETTLEMENT SERVICES ARE NOT APPROPRIATE FOR EVERY-
    2  ONE. FAILURE TO PAY YOUR MONTHLY BILLS IN A TIMELY MANNER WILL RESULT IN
    3  INCREASED  BALANCES  AND WILL HARM YOUR CREDIT RATING. NOT ALL CREDITORS
    4  WILL AGREE TO REDUCE THE AMOUNT YOU OWE, AND THEY MAY PURSUE COLLECTION,
    5  INCLUDING LAWSUITS."
    6    3.  ALL  ADVERTISING  AND  MARKETING COMMUNICATIONS OF A LICENSED DEBT
    7  SETTLEMENT COMPANY CONCERNING DEBT SETTLEMENT  SERVICES  SHALL  INDICATE
    8  THAT THE DEBT SETTLEMENT COMPANY IS LICENSED BY THE DEPARTMENT AND SHALL
    9  CONTAIN  THE  NAME  AND  OFFICE ADDRESS OF SUCH DEBT SETTLEMENT COMPANY,
   10  WHICH SHALL CONFORM TO A NAME AND ADDRESS ON RECORD WITH THE DEPARTMENT.
   11    S 588-J. INDIVIDUALIZED FINANCIAL ANALYSIS;  STATEMENT.  1.  PRIOR  TO
   12  ENTERING  INTO  A  DEBT SETTLEMENT SERVICES AGREEMENT, A DEBT SETTLEMENT
   13  COMPANY SHALL PREPARE AND PROVIDE TO THE DEBTOR IN WRITING AND RETAIN  A
   14  COPY OF:
   15    (A)  AN  INDIVIDUALIZED FINANCIAL ANALYSIS, INCLUDING A LISTING OF THE
   16  DEBTOR'S INCOME, EXPENSES, AND DEBTS; AND
   17    (B) A STATEMENT CONTAINING:
   18    (I) A DESCRIPTION OF THE SERVICES TO BE PROVIDED  UNDER  THE  PROPOSED
   19  DEBT SETTLEMENT SERVICES AGREEMENT;
   20    (II)  A  GOOD  FAITH ESTIMATE OF THE TIME IT WILL TAKE TO COMPLETE ALL
   21  STEPS NECESSARY FOR  A  SETTLEMENT  OF  EACH  DEBT  INCLUDED  UNDER  THE
   22  PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT;
   23    (III)  THE  TOTAL  AMOUNT OF DEBT OWED TO EACH CREDITOR INCLUDED UNDER
   24  THE PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT;
   25    (IV) THE TOTAL AMOUNT OF MONEY ESTIMATED TO BE NECESSARY  TO  COMPLETE
   26  ALL  STEPS  NECESSARY  FOR  A SETTLEMENT OF EACH DEBT INCLUDED UNDER THE
   27  PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT; AND
   28    (V) THE MONTHLY TARGETED AMOUNT OF MONEY  NECESSARY  TO  COMPLETE  ALL
   29  STEPS  NECESSARY  FOR  A  SETTLEMENT  OF  EACH  DEBT  INCLUDED UNDER THE
   30  PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT.
   31    2. A DEBT SETTLEMENT COMPANY SHALL NOT ENTER INTO  A  DEBT  SETTLEMENT
   32  SERVICES  AGREEMENT UNLESS IT MAKES WRITTEN DETERMINATIONS, SUPPORTED BY
   33  THE FINANCIAL ANALYSIS, THAT:
   34    (A) THE DEBTOR CAN REASONABLY MEET THE REQUIREMENTS OF  SUCH  PROPOSED
   35  DEBT  SETTLEMENT  SERVICES AGREEMENT, INCLUDING THE FEES AND THE SAVINGS
   36  GOALS; AND
   37    (B) SUCH PROPOSED DEBT SETTLEMENT SERVICES AGREEMENT WILL BE  SUITABLE
   38  FOR THE DEBTOR AT THE TIME IT IS TO BE SIGNED.
   39    S  588-K.  REQUIRED  PRE-AGREEMENT DISCLOSURES AND WARNINGS. 1. BEFORE
   40  THE DEBTOR SIGNS A DEBT SETTLEMENT SERVICES AGREEMENT, THE DEBT  SETTLE-
   41  MENT COMPANY SHALL PROVIDE AN ORAL AND WRITTEN NOTICE TO THE DEBTOR THAT
   42  CLEARLY AND CONSPICUOUSLY DISCLOSES ALL OF THE FOLLOWING:
   43    (A) DEBT SETTLEMENT SERVICES MAY NOT BE SUITABLE FOR ALL DEBTORS;
   44    (B) USING DEBT SETTLEMENT SERVICES LIKELY WILL HARM THE DEBTOR'S CRED-
   45  IT HISTORY, CREDIT RATING, AND CREDIT SCORE;
   46    (C)  USING  DEBT SETTLEMENT SERVICES DOES NOT STOP CREDITOR COLLECTION
   47  ACTIVITY, INCLUDING CREDITOR LAWSUITS AND GARNISHMENTS;
   48    (D) NOT ALL CREDITORS WILL ACCEPT A REDUCTION IN THE BALANCE, INTEREST
   49  RATE, OR FEES A DEBTOR OWES;
   50    (E) THE DEBTOR SHOULD INQUIRE ABOUT OTHER MEANS OF DEALING WITH  DEBT,
   51  INCLUDING BUT NOT LIMITED TO BUDGET PLANNING AND BANKRUPTCY;
   52    (F)  THE  DEBTOR  REMAINS  OBLIGATED  TO  MAKE  PERIODIC  OR SCHEDULED
   53  PAYMENTS TO CREDITORS WHILE PARTICIPATING IN A DEBT SETTLEMENT PROGRAM;
   54    (G) THE FAILURE TO MAKE PERIODIC OR SCHEDULED PAYMENTS TO  A  CREDITOR
   55  IS LIKELY TO:
       A. 597                             14

    1    (I)  HARM  THE  DEBTOR'S  CREDIT HISTORY, CREDIT RATING, AND/OR CREDIT
    2  SCORE;
    3    (II) LEAD THE CREDITOR TO INCREASE LAWFUL COLLECTION ACTIVITY, INCLUD-
    4  ING LITIGATION, GARNISHMENT OF THE DEBTOR'S WAGES, AND JUDGMENT LIENS ON
    5  THE DEBTOR'S PROPERTY; AND
    6    (III) LEAD TO THE IMPOSITION BY THE CREDITOR OF INTEREST CHARGES, LATE
    7  FEES,  AND OTHER PENALTY FEES, INCREASING THE AMOUNT OWED BY THE DEBTOR;
    8  AND
    9    (H) THE DEBTOR MAY BE REQUIRED TO PAY TAXES ON ANY AMOUNT OF DEBT THAT
   10  IS FORGIVEN.
   11    2. THE WRITTEN NOTICE REQUIRED BY  SUBDIVISION  ONE  OF  THIS  SECTION
   12  SHALL BE ENTITLED "DEBTOR NOTICE AND RIGHTS FORM".
   13    3.  PRIOR  TO SIGNING A DEBT SETTLEMENT SERVICES AGREEMENT, THE DEBTOR
   14  SHALL SIGN AND DATE AN ACKNOWLEDGMENT FORM AT  THE  END  OF  THE  DEBTOR
   15  NOTICE  AND  RIGHTS FORM.   THE ACKNOWLEDGMENT FORM SHALL STATE: "I, THE
   16  DEBTOR, HAVE RECEIVED FROM THE DEBT SETTLEMENT COMPANY  A  COPY  OF  THE
   17  FORM ENTITLED DEBTOR NOTICE AND RIGHTS FORM." THE DEBT SETTLEMENT COMPA-
   18  NY  OR  ITS  REPRESENTATIVE  SHALL ALSO SIGN AND DATE THE ACKNOWLEDGMENT
   19  FORM, WHICH SHALL INCLUDE THE NAME AND ADDRESS OF  THE  DEBT  SETTLEMENT
   20  COMPANY.  THE ACKNOWLEDGMENT FORM SHALL BE IN DUPLICATE AND INCORPORATED
   21  INTO THE DEBTOR NOTICE AND RIGHTS FORM. THE ORIGINAL ACKNOWLEDGMENT FORM
   22  SHALL BE RETAINED BY THE DEBT SETTLEMENT COMPANY, AND THE DUPLICATE COPY
   23  SHALL BE GIVEN TO THE DEBTOR.
   24    4. THE REQUIREMENTS OF THIS SECTION ARE SATISFIED IF THE DEBT  SETTLE-
   25  MENT COMPANY GIVES THE DEBTOR THE FOLLOWING WARNING VERBATIM, BOTH ORAL-
   26  LY  AND  IN WRITING, WITH THE CAPTION "DEBTOR NOTICE AND RIGHTS FORM" IN
   27  AT LEAST TWENTY-EIGHT-POINT FONT AND THE REMAINING PORTION IN  AT  LEAST
   28  FOURTEEN-POINT  FONT, BEFORE THE DEBTOR SIGNS A DEBT SETTLEMENT SERVICES
   29  AGREEMENT:

   30                       "DEBTOR NOTICE AND RIGHTS FORM
   31                                   CAUTION
   32    USING DEBT SETTLEMENT SERVICES WILL LIKELY HARM YOUR  CREDIT  HISTORY,
   33  CREDIT RATING, AND CREDIT SCORE.
   34    WE  CANNOT  GUARANTEE  THAT  YOU WILL SUCCESSFULLY REDUCE OR ELIMINATE
   35  YOUR DEBT.
   36    YOU REMAIN OBLIGATED TO MAKE PAYMENTS TO YOUR CREDITORS.  IF YOU  STOP
   37  PAYING  YOUR  CREDITORS, THERE IS A STRONG LIKELIHOOD SOME OR ALL OF THE
   38  FOLLOWING MAY HAPPEN:
   39    - CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT.
   40    - CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
   41    - YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
   42    - LIENS MAY STILL BE PLACED ON YOUR PROPERTY.
   43    - YOUR CREDIT HISTORY, CREDIT RATING, AND/OR CREDIT SCORE LIKELY  WILL
   44  BE HARMED.
   45    -  THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR IMPOSITION
   46  OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY FEES.
   47    - NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE REDUCTION.
   48    IF WE DO SETTLE YOUR DEBT, YOU MAY BE REQUIRED TO  PAY  TAXES  ON  THE
   49  AMOUNT FORGIVEN.
   50    DEBT  SETTLEMENT  SERVICES  ARE  NOT  RIGHT  FOR  EVERYONE. YOU SHOULD
   51  CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR DEBT, SUCH AS BUDGET PLAN-
   52  NING OR A BANKRUPTCY FILING.
   53    YOUR RIGHT TO CANCEL
   54    IF YOU SIGN A DEBT SETTLEMENT SERVICES AGREEMENT, YOU HAVE  THE  RIGHT
   55  TO CANCEL AT ANY TIME AND RECEIVE A FULL REFUND OF ALL UNEARNED FEES YOU
       A. 597                             15

    1  HAVE  PAID  TO  THE DEBT SETTLEMENT COMPANY AND ALL FUNDS PLACED IN YOUR
    2  DEBTOR SETTLEMENT ACCOUNT THAT HAVE NOT BEEN PAID TO ANY  CREDITORS.  IF
    3  YOU  CANCEL  WITHIN  NINETY DAYS OF SIGNING THE DEBT SETTLEMENT SERVICES
    4  AGREEMENT  YOU  ALSO  HAVE  THE  RIGHT  TO  RECEIVE A FULL REFUND OF ANY
    5  ENROLLMENT FEES YOU HAVE PAID.
    6    ACKNOWLEDGMENT BY DEBTOR
    7    I, THE DEBTOR, HAVE RECEIVED FROM THE DEBT SETTLEMENT COMPANY  A  COPY
    8  OF THE FORM ENTITLED DEBTOR NOTICE AND RIGHTS FORM."
    9    S  588-L.  DEBT  SETTLEMENT  SERVICES AGREEMENTS. 1. A DEBT SETTLEMENT
   10  COMPANY SHALL NOT PROVIDE DEBT SETTLEMENT SERVICES TO A DEBTOR WITHOUT A
   11  WRITTEN DEBT SETTLEMENT SERVICES AGREEMENT SIGNED AND DATED BY BOTH  THE
   12  DEBTOR AND THE DEBT SETTLEMENT COMPANY.
   13    2. ANY DEBT SETTLEMENT SERVICES AGREEMENT ENTERED INTO IN VIOLATION OF
   14  THE PROVISIONS OF THIS SECTION IS VOID.
   15    3. EACH DEBT SETTLEMENT COMPANY SHALL SUBMIT TO THE BANKING DEPARTMENT
   16  ANY FORM OF DEBT SETTLEMENT SERVICES AGREEMENT IT INTENDS TO USE.
   17    4.  A  DEBT  SETTLEMENT  SERVICES  AGREEMENT SHALL DISCLOSE ALL OF THE
   18  FOLLOWING CLEARLY AND CONSPICUOUSLY:
   19    (A) THE NAME AND ADDRESS OF THE DEBTOR;
   20    (B) THE DATE OF EXECUTION OF THE DEBT SETTLEMENT SERVICES AGREEMENT;
   21    (C) THE LEGAL NAME OF THE DEBT SETTLEMENT COMPANY, INCLUDING ANY OTHER
   22  BUSINESS NAMES USED IN THIS STATE BY THE DEBT SETTLEMENT COMPANY;
   23    (D) THE COMPLETE STREET ADDRESS OF THE DEBT SETTLEMENT COMPANY,  WHICH
   24  SHALL CONFORM TO AN ADDRESS ON RECORD WITH THE DEPARTMENT;
   25    (E)  THE LICENSE NUMBER OF THE PRINCIPAL OFFICE AND, IF APPLICABLE, OF
   26  THE BRANCH OFFICE UNDER WHICH THE DEBT SETTLEMENT COMPANY IS LICENSED IN
   27  THIS STATE;
   28    (F) A TOLL-FREE TELEPHONE NUMBER AT WHICH THE DEBTOR MAY SPEAK WITH  A
   29  REPRESENTATIVE  OF  THE  DEBT  SETTLEMENT COMPANY DURING NORMAL BUSINESS
   30  HOURS;
   31    (G) A COMPLETE LIST OF THE DEBTOR'S ACCOUNTS, DEBTS,  AND  OBLIGATIONS
   32  COVERED BY THE DEBT SETTLEMENT SERVICES AGREEMENT, INCLUDING THE NAME OF
   33  EACH CREDITOR AND THE PRINCIPAL AMOUNT OF EACH DEBT;
   34    (H)  A  DESCRIPTION OF THE SERVICES TO BE PROVIDED BY THE DEBT SETTLE-
   35  MENT COMPANY, INCLUDING THE EXPECTED TIME FRAME FOR SETTLEMENT FOR  EACH
   36  ACCOUNT,  DEBT, OR OBLIGATION INCLUDED IN PARAGRAPH (G) OF THIS SUBDIVI-
   37  SION;
   38    (I) AN ITEMIZED LIST OF ALL FEES, INCLUDING  ANY  ENROLLMENT  FEE  AND
   39  SETTLEMENT FEES TO BE PAID BY THE DEBTOR TO THE DEBT SETTLEMENT COMPANY,
   40  AND  THE  DATE,  APPROXIMATE DATE, OR CIRCUMSTANCES UNDER WHICH EACH FEE
   41  WILL BECOME DUE;
   42    (J) A GOOD FAITH ESTIMATE OF THE  TOTAL  AMOUNT  OF  ALL  FEES  TO  BE
   43  COLLECTED  BY  THE  DEBT  SETTLEMENT  COMPANY  FROM  THE  DEBTOR FOR THE
   44  PROVISION OF DEBT SETTLEMENT SERVICES UNDER THE DEBT SETTLEMENT SERVICES
   45  AGREEMENT;
   46    (K) A STATEMENT OF THE PROPOSED SAVINGS GOALS FOR THE DEBTOR, STATING:
   47    (I) THE AMOUNT TO BE SAVED PER MONTH;
   48    (II) THE TIME PERIOD OVER WHICH THE SAVINGS GOALS EXTEND;
   49    (III) THE AMOUNT OF MONEY THE DEBTOR MUST  SAVE  BEFORE  A  SETTLEMENT
   50  OFFER WILL BE MADE TO EACH OF THE DEBTOR'S CREDITORS; AND
   51    (IV) THE TOTAL AMOUNT OF THE SAVINGS EXPECTED TO BE PAID BY THE DEBTOR
   52  PURSUANT TO THE TERMS OF THE DEBT SETTLEMENT SERVICES AGREEMENT;
   53    (L)  THE WRITTEN INDIVIDUALIZED FINANCIAL ANALYSIS REQUIRED BY SECTION
   54  FIVE HUNDRED EIGHTY-EIGHT-J OF THIS ARTICLE;
   55    (M) A WRITTEN NOTICE TO THE DEBTOR STATING:
       A. 597                             16

    1    (I) THAT THE DEBTOR MAY CANCEL THE DEBT SETTLEMENT SERVICES  AGREEMENT
    2  AT ANY TIME; AND
    3    (II) THAT UPON SUCH CANCELLATION:
    4    (A)  ALL  POWERS OF ATTORNEY GRANTED TO THE DEBT SETTLEMENT COMPANY BY
    5  THE DEBTOR SHALL BE CONSIDERED REVOKED AND VOIDED; AND
    6    (B) THE DEBTOR MAY BE ENTITLED TO A REFUND. THE TERMS OF  SUCH  REFUND
    7  SHALL  ALSO  BE  STATED AND SHALL BE CONSISTENT WITH THE REQUIREMENTS OF
    8  SECTION FIVE HUNDRED EIGHTY-EIGHT-O OF THIS ARTICLE.
    9    (N) A FORM THE DEBTOR MAY USE TO CANCEL THE DEBT  SETTLEMENT  SERVICES
   10  AGREEMENT   PURSUANT   TO   THE   PROVISIONS  OF  SECTION  FIVE  HUNDRED
   11  EIGHTY-EIGHT-O OF THIS ARTICLE. THE  FORM  SHALL  DISCLOSE  CLEARLY  AND
   12  CONSPICUOUSLY  HOW  THE  DEBTOR  CAN CANCEL THE DEBT SETTLEMENT SERVICES
   13  AGREEMENT, INCLUDING APPLICABLE ADDRESSES, TELEPHONE NUMBERS,  FACSIMILE
   14  NUMBERS,  AND ELECTRONIC MAIL ADDRESSES THE DEBTOR CAN USE TO CANCEL THE
   15  DEBT SETTLEMENT SERVICES AGREEMENT;
   16    (O) A CLEAR AND CONSPICUOUS NOTICE TO THE DEBTOR THAT THE  DEBTOR  MAY
   17  CONTACT  THE  DEPARTMENT  WITH ANY QUESTIONS OR COMPLAINTS REGARDING THE
   18  DEBT SETTLEMENT COMPANY ALONG WITH THE  ADDRESS,  TELEPHONE  NUMBER  AND
   19  INTERNET WEBSITE OF THE DEPARTMENT.
   20    5.  (A)  A  DEBT  SETTLEMENT  SERVICES  AGREEMENT MAY CONFER ON A DEBT
   21  SETTLEMENT COMPANY A POWER OF ATTORNEY TO SETTLE THE DEBTOR'S  DEBT  FOR
   22  NO  MORE  THAN  FIFTY  PERCENT  OF  THE PRINCIPAL AMOUNT OF THE DEBT. AN
   23  AGREEMENT MAY NOT CONFER A POWER OF ATTORNEY TO SETTLE A DEBT  FOR  MORE
   24  THAN FIFTY PERCENT OF THAT AMOUNT, BUT MAY CONFER A POWER OF ATTORNEY TO
   25  NEGOTIATE  WITH  CREDITORS OF THE DEBTOR ON BEHALF OF THE DEBTOR. A DEBT
   26  SETTLEMENT SERVICES AGREEMENT MUST  PROVIDE  THAT  THE  DEBT  SETTLEMENT
   27  COMPANY  WILL  OBTAIN  THE  ASSENT  OF  THE  DEBTOR AFTER A CREDITOR HAS
   28  ASSENTED TO A SETTLEMENT FOR MORE THAN FIFTY PERCENT  OF  THE  PRINCIPAL
   29  AMOUNT OF THE DEBT.
   30    (B)  A DEBT SETTLEMENT SERVICES AGREEMENT MAY NOT PROVIDE FOR APPLICA-
   31  TION OF THE LAW OF ANY JURISDICTION OTHER THAN  THE  UNITED  STATES  AND
   32  THIS STATE.
   33    6.  IF  A DEBT SETTLEMENT COMPANY COMMUNICATES WITH A DEBTOR PRIMARILY
   34  IN A LANGUAGE OTHER THAN ENGLISH, THEN THE DEBT SETTLEMENT COMPANY SHALL
   35  FURNISH TO THE DEBTOR A WRITTEN TRANSLATION IN THAT  OTHER  LANGUAGE  OF
   36  ALL THE DISCLOSURES AND DOCUMENTS REQUIRED BY THIS ARTICLE.
   37    S 588-M. FEES. 1. THE TYPES OF FEES THAT A DEBT SETTLEMENT COMPANY MAY
   38  CHARGE A DEBTOR ARE THE FOLLOWING:
   39    (A) ENROLLMENT FEES; AND
   40    (B) SETTLEMENT FEES.
   41    2.  ALL  FEE  TYPES NOT INCLUDED UNDER SUBDIVISION ONE OF THIS SECTION
   42  ARE PROHIBITED, INCLUDING MAINTENANCE FEES.
   43    3. THE AMOUNT OF AN ENROLLMENT FEE CHARGED BY A DEBT SETTLEMENT COMPA-
   44  NY SHALL NOT EXCEED FIFTY DOLLARS OR SUCH OTHER AMOUNT  AS  SET  BY  THE
   45  SUPERINTENDENT.
   46    4.  THE  AMOUNT  OF  THE  SETTLEMENT  FEE CHARGED BY A DEBT SETTLEMENT
   47  COMPANY WITH RESPECT TO EACH DEBT COVERED BY A DEBT SETTLEMENT  SERVICES
   48  AGREEMENT SHALL NOT EXCEED THE LESSER OF:
   49    (A) THE AMOUNT THAT IS REASONABLE AND COMMENSURATE TO THE DEBT SETTLE-
   50  MENT SERVICES PROVIDED TO THE DEBTOR; AND
   51    (B) THE AMOUNT THAT IS TWENTY PERCENT OF THE DIFFERENCE BETWEEN:
   52    (I) THE PRINCIPAL AMOUNT OF THE DEBT; AND
   53    (II) THE AMOUNT:
   54    (A)  PAID  BY  THE DEBT SETTLEMENT COMPANY TO THE CREDITOR PURSUANT TO
   55  THE SETTLEMENT NEGOTIATED BY THE DEBT SETTLEMENT COMPANY  ON  BEHALF  OF
       A. 597                             17

    1  THE  DEBTOR  AS  FULL  AND COMPLETE SATISFACTION OF THE CREDITOR'S CLAIM
    2  WITH REGARD TO THAT DEBT; OR
    3    (B)  NEGOTIATED  BY THE DEBT SETTLEMENT COMPANY AND PAID BY THE DEBTOR
    4  TO THE CREDITOR PURSUANT TO A SETTLEMENT NEGOTIATED BY THE DEBT  SETTLE-
    5  MENT  COMPANY  ON BEHALF OF THE DEBTOR AS FULL AND COMPLETE SATISFACTION
    6  OF THE CREDITOR'S CLAIM WITH REGARD TO THAT DEBT.
    7    5. A DEBT SETTLEMENT COMPANY SHALL NOT COLLECT ANY SETTLEMENT FEE FROM
    8  A DEBTOR UNTIL:
    9    (A) THE CREDITOR ENTERS INTO A LEGALLY ENFORCEABLE AGREEMENT WITH  THE
   10  DEBTOR  TO ACCEPT FUNDS IN A SPECIFIC DOLLAR AMOUNT AS FULL AND COMPLETE
   11  SATISFACTION OF THE CREDITOR'S CLAIM WITH REGARD TO THAT DEBT; AND
   12    (B) THOSE FUNDS ARE PROVIDED TO THE CREDITOR:
   13    (I) BY THE DEBT SETTLEMENT COMPANY ON BEHALF OF THE DEBTOR; OR
   14    (II) DIRECTLY BY THE DEBTOR PURSUANT TO A SETTLEMENT NEGOTIATED BY THE
   15  DEBT SETTLEMENT COMPANY.
   16    6. IT SHALL BE UNLAWFUL TO SPLIT  OR  DIVIDE  THE  PROVISION  OF  DEBT
   17  SETTLEMENT  SERVICES  TO A DEBTOR INTO SEPARATE DEBT SETTLEMENT SERVICES
   18  AGREEMENTS FOR THE PURPOSE  OF  COLLECTING  ADDITIONAL  FEES  FROM  SUCH
   19  DEBTOR.
   20    S  588-N.  DEBTOR  SETTLEMENT  ACCOUNTS; MONTHLY ACCOUNTING. 1. A DEBT
   21  SETTLEMENT COMPANY THAT RECEIVES FUNDS FROM  A  DEBTOR  SHALL  HOLD  ALL
   22  FUNDS  RECEIVED FOR A DEBTOR SETTLEMENT ACCOUNT IN A PROPERLY DESIGNATED
   23  BANK ACCOUNT IN A FEDERALLY INSURED DEPOSITORY INSTITUTION.
   24    (A) SUCH FUNDS SHALL:
   25    (I) CONSTITUTE TRUST FUNDS OWNED BY THE DEBTOR  FROM  WHOM  THEY  WERE
   26  RECEIVED;
   27    (II)  REMAIN  THE  PROPERTY  OF  SUCH DEBTOR UNTIL THE DEBT SETTLEMENT
   28  COMPANY DISBURSES THE FUNDS TO A CREDITOR ON BEHALF OF SUCH DEBTOR;
   29    (III) BE KEPT SEPARATE AND APART AT ALL TIMES FROM FUNDS BELONGING  TO
   30  THE  DEBT  SETTLEMENT  COMPANY  OR  ANY  OF  ITS OFFICERS, EMPLOYEES, OR
   31  AGENTS; AND
   32    (IV) BE DEPOSITED IN SUCH BANK ACCOUNT NOT LATER THAN THE END  OF  THE
   33  BUSINESS  DAY  FOLLOWING  RECEIPT  BY THE DEBT SETTLEMENT COMPANY OR ITS
   34  AGENT.
   35    (B) A DEBT SETTLEMENT COMPANY OR ITS AGENT THAT MAINTAINS ONE OR  MORE
   36  DEBTOR SETTLEMENT ACCOUNTS SHALL OBTAIN AND PRESERVE A WRITTEN AGREEMENT
   37  FROM  EACH  BANK  IN  WHICH ANY SUCH ACCOUNT IS MAINTAINED. SUCH WRITTEN
   38  AGREEMENT SHALL EXPRESSLY PROVIDE THAT THE FUNDS IN SUCH DEBTOR  SETTLE-
   39  MENT  ACCOUNT  SHALL  BE SUBJECT TO NO RIGHT, CHARGE, SECURITY INTEREST,
   40  LIEN, OR CLAIM OF ANY KIND IN FAVOR OF SUCH BANK OR ANY PERSON  CLAIMING
   41  THROUGH SUCH BANK.
   42    (C)  ANY INTEREST EARNED ON A DEBTOR SETTLEMENT ACCOUNT SHALL BE CRED-
   43  ITED TO THE DEBTOR. IF THE FUNDS OF  MULTIPLE  DEBTORS  ARE  KEPT  IN  A
   44  SINGLE  INTEREST EARNING BANK ACCOUNT, THEN THE INTEREST EARNED SHALL BE
   45  DEPOSITED PRO RATA AMONG THE DEBTORS WHOSE FUNDS ARE IN THE ACCOUNT.
   46    (D) A DEBT SETTLEMENT COMPANY MAY NOT HOLD FUNDS RECEIVED FOR A DEBTOR
   47  SETTLEMENT ACCOUNT IN AN ACCOUNT ADMINISTERED BY A PERSON THAT GIVES  OR
   48  ACCEPTS  ANY  MONEY  OR  OTHER COMPENSATION IN EXCHANGE FOR REFERRALS OF
   49  BUSINESS INVOLVING THE DEBT SETTLEMENT COMPANY.
   50    2. A DEBT SETTLEMENT COMPANY SHALL, NO LESS THAN MONTHLY, PROVIDE EACH
   51  DEBTOR WITH WHICH IT HAS A DEBT SETTLEMENT SERVICES AGREEMENT  A  STATE-
   52  MENT  OF FEES PAID, SETTLEMENTS COMPLETED, REMAINING DEBTS AND, IF FUNDS
   53  ARE HELD IN A BANK ACCOUNT PURSUANT TO SUBDIVISION ONE OF THIS  SECTION,
   54  ACCOUNT BALANCES.
   55    3.  NOTHING  IN  THIS  ARTICLE  REQUIRES THE ESTABLISHMENT OF A DEBTOR
   56  SETTLEMENT ACCOUNT IF NO DEBTOR FUNDS  OTHER  THAN  ENROLLMENT  FEES  OR
       A. 597                             18

    1  EARNED  SETTLEMENT  FEES  ARE  HELD  OR  CONTROLLED BY A DEBT SETTLEMENT
    2  COMPANY.
    3    S  588-O. CANCELLATION OF DEBT SETTLEMENT SERVICES AGREEMENT; RIGHT TO
    4  REFUNDS. 1.  A DEBTOR MAY CANCEL A DEBT SETTLEMENT SERVICES AGREEMENT AT
    5  ANY TIME UNTIL AFTER THE DEBT SETTLEMENT  COMPANY  HAS  FULLY  PERFORMED
    6  EACH  SERVICE  THE  DEBT  SETTLEMENT  COMPANY  CONTRACTED  TO PERFORM OR
    7  REPRESENTED THAT IT WOULD PERFORM.
    8    2. IF A DEBTOR CANCELS A DEBT SETTLEMENT SERVICES AGREEMENT NOT  LATER
    9  THAN  NINETY DAYS AFTER THE DATE OF THE EXECUTION OF THE DEBT SETTLEMENT
   10  SERVICES AGREEMENT OR AT ANY TIME UPON A VIOLATION  OF  A  PROVISION  OF
   11  THIS ARTICLE BY THE DEBT SETTLEMENT COMPANY, THE DEBT SETTLEMENT COMPANY
   12  SHALL REFUND TO THE DEBTOR:
   13    (A)  ALL  FEES PAID TO THE DEBT SETTLEMENT COMPANY BY THE DEBTOR, WITH
   14  THE EXCEPTION OF ANY EARNED SETTLEMENT FEE; AND
   15    (B) ALL FUNDS PROVIDED BY THE DEBTOR TO THE  DEBT  SETTLEMENT  COMPANY
   16  THAT:
   17    (I) HAVE ACCUMULATED IN A DEBTOR SETTLEMENT ACCOUNT; AND
   18    (II) THE DEBT SETTLEMENT COMPANY HAS NOT DISBURSED TO CREDITORS.
   19    3. IF A DEBTOR CANCELS A DEBT SETTLEMENT SERVICES AGREEMENT LATER THAN
   20  NINETY  DAYS  AFTER  THE  DATE  OF  THE EXECUTION OF THE DEBT SETTLEMENT
   21  SERVICES AGREEMENT AND FOR ANY REASON OTHER THAN FOR A  VIOLATION  OF  A
   22  PROVISION  OF  THIS  ARTICLE  BY  THE  DEBT SETTLEMENT COMPANY, THE DEBT
   23  SETTLEMENT COMPANY SHALL REFUND TO THE DEBTOR:
   24    (A) ALL FEES PAID TO THE DEBT SETTLEMENT COMPANY BY THE  DEBTOR,  WITH
   25  THE EXCEPTION OF ANY EARNED SETTLEMENT FEE AND ANY ENROLLMENT FEE; AND
   26    (B)  ALL  FUNDS  PROVIDED BY THE DEBTOR TO THE DEBT SETTLEMENT COMPANY
   27  THAT:
   28    (I) HAVE ACCUMULATED IN A DEBTOR SETTLEMENT ACCOUNT; AND
   29    (II) THE DEBT SETTLEMENT COMPANY HAS NOT DISBURSED TO CREDITORS.
   30    4. A DEBT SETTLEMENT COMPANY SHALL MAKE ANY REFUND REQUIRED UNDER THIS
   31  SECTION WITHIN FIVE BUSINESS DAYS AFTER RECEIPT  OF  WRITTEN  NOTICE  OF
   32  CANCELLATION,  AND  SHALL  INCLUDE  WITH SUCH REFUND A FULL STATEMENT OF
   33  ACCOUNT SHOWING:
   34    (A) THE FEES RECEIVED BY THE DEBT SETTLEMENT COMPANY FROM THE DEBTOR;
   35    (B) THE FEES REFUNDED TO THE DEBTOR BY THE DEBT SETTLEMENT COMPANY;
   36    (C) THE PAYMENTS MADE BY THE DEBT SETTLEMENT COMPANY TO  CREDITORS  ON
   37  BEHALF OF THE DEBTOR;
   38    (D) THE SETTLEMENT FEES EARNED, IF ANY, BY THE DEBT SETTLEMENT COMPANY
   39  BY SETTLING DEBT ON BEHALF OF THE DEBTOR;
   40    (E)  THE  SAVINGS  OF  THE  DEBTOR HELD BY THE DEBT SETTLEMENT COMPANY
   41  IMMEDIATELY PRIOR TO SUCH REFUND; AND
   42    (F) THE SAVINGS OF THE DEBTOR REFUNDED  TO  THE  DEBTOR  BY  THE  DEBT
   43  SETTLEMENT COMPANY.
   44    5.  UPON  CANCELLATION  OF A DEBT SETTLEMENT SERVICES AGREEMENT BY THE
   45  DEBTOR:
   46    (A) ALL POWERS OF ATTORNEY AND DIRECT DEBIT AUTHORIZATIONS GRANTED  TO
   47  THE  DEBT  SETTLEMENT  COMPANY BY THE DEBTOR SHALL BE CONSIDERED REVOKED
   48  AND VOIDED; AND
   49    (B) THE DEBT SETTLEMENT COMPANY  SHALL  IMMEDIATELY  TAKE  ANY  ACTION
   50  NECESSARY TO REFLECT CANCELLATION OF THE DEBT SETTLEMENT SERVICES AGREE-
   51  MENT, INCLUDING BUT NOT LIMITED TO NOTIFYING THE RECIPIENT OF ANY DIRECT
   52  DEBIT AUTHORIZATION.
   53    6.  UPON THE CANCELLATION OF A DEBT SETTLEMENT SERVICES AGREEMENT, THE
   54  DEBT SETTLEMENT COMPANY SHALL  PROVIDE  TIMELY  WRITTEN  NOTICE  OF  THE
   55  CANCELLATION  OF  SUCH  AGREEMENT TO EACH OF THE CREDITORS WITH WHOM THE
       A. 597                             19

    1  DEBT SETTLEMENT COMPANY HAS HAD ANY PRIOR COMMUNICATION ON BEHALF OF THE
    2  DEBTOR IN CONNECTION WITH THE PROVISION OF ANY DEBT SETTLEMENT SERVICES.
    3    S 588-P. OBLIGATION OF GOOD FAITH. A DEBT SETTLEMENT COMPANY SHALL ACT
    4  IN GOOD FAITH IN ALL MATTERS UNDER THIS ARTICLE.
    5    S  588-Q.  PROHIBITED ACTIVITIES. 1. NO PERSON, EXCEPT A LICENSEE, MAY
    6  MAKE ANY REPRESENTATION, DIRECTLY OR INDIRECTLY, ORALLY  OR  IN  WRITING
    7  THAT HE, SHE, OR IT IS LICENSED UNDER THIS ARTICLE.
    8    2.  NO  PERSON,  OTHER  THAN  A  LICENSEE  OR A PERSON EXEMPT FROM THE
    9  LICENSING REQUIREMENTS OF  THIS  ARTICLE,  SHALL  USE  THE  TITLE  "DEBT
   10  SETTLEMENT  COMPANY"  OR THE TERMS "DEBT SETTLEMENT" OR "DEBT SETTLEMENT
   11  SERVICES" IN ANY ADVERTISING, MARKETING COMMUNICATION, BUSINESS CARD, OR
   12  LETTERHEAD.
   13    3. A DEBT SETTLEMENT COMPANY SHALL NOT DO ANY OF THE FOLLOWING:
   14    (A) CHARGE OR COLLECT FROM A DEBTOR ANY FEE NOT PERMITTED  BY,  IN  AN
   15  AMOUNT IN EXCESS OF THE MAXIMUM AMOUNT PERMITTED BY, OR AT A TIME EARLI-
   16  ER  THAN  PERMITTED BY SECTION FIVE HUNDRED EIGHTY-EIGHT-M OF THIS ARTI-
   17  CLE;
   18    (B) INCLUDE IN A DEBT SETTLEMENT SERVICES AGREEMENT ANY SECURED DEBT;
   19    (C) ADVISE OR REPRESENT, EXPRESSLY OR  BY  IMPLICATION,  THAT  DEBTORS
   20  SHOULD STOP MAKING PAYMENTS TO THEIR CREDITORS;
   21    (D)  ADVISE  OR  REPRESENT,  EXPRESSLY OR BY IMPLICATION, THAT DEBTORS
   22  SHOULD STOP COMMUNICATING WITH THEIR CREDITORS;
   23    (E) ENGAGE IN ANY PRACTICE THAT PROHIBITS OR LIMITS THE DEBTOR OR  ANY
   24  CREDITOR FROM COMMUNICATION DIRECTLY WITH ONE ANOTHER;
   25    (F)  CHANGE THE MAILING ADDRESS ON ANY OF A DEBTOR'S STATEMENTS FROM A
   26  CREDITOR;
   27    (G) MAKE LOANS OR OFFER CREDIT OR SOLICIT OR ACCEPT  ANY  NOTE,  MORT-
   28  GAGE,  OR  NEGOTIABLE INSTRUMENT OTHER THAN A CHECK SIGNED BY THE DEBTOR
   29  AND DATED NO LATER THAN THE DATE OF SIGNATURE;
   30    (H) TAKE ANY CONFESSION OF JUDGMENT OR POWER OF  ATTORNEY  TO  CONFESS
   31  JUDGMENT  AGAINST THE DEBTOR OR APPEAR AS THE DEBTOR OR ON BEHALF OF THE
   32  DEBTOR IN ANY JUDICIAL, ADMINISTRATIVE, OR OTHER ACTION OR PROCEEDING;
   33    (I) TAKE ANY RELEASE OR WAIVER OF ANY OBLIGATION TO  BE  PERFORMED  ON
   34  THE PART OF THE DEBT SETTLEMENT COMPANY OR ANY RIGHT OF THE DEBTOR;
   35    (J) ADVERTISE, DISPLAY, DISTRIBUTE, BROADCAST, OR TELEVISE SERVICES OR
   36  PERMIT  SERVICES  TO BE ADVERTISED, DISPLAYED, DISTRIBUTED, BROADCASTED,
   37  OR TELEVISED,  IN  ANY  MANNER  WHATSOEVER,  THAT  CONTAINS  ANY  FALSE,
   38  MISLEADING,  OR  DECEPTIVE  STATEMENTS OR REPRESENTATIONS WITH REGARD TO
   39  ANY MATTER INVOLVING THE BUSINESS OF DEBT SETTLEMENT SERVICES, INCLUDING
   40  BUT NOT LIMITED TO THE FEES TO BE CHARGED, THE SERVICES TO BE PERFORMED,
   41  THE RESULTS OR OUTCOMES OF THOSE SERVICES, OR THE EFFECT THOSE  SERVICES
   42  WILL HAVE ON A DEBTOR'S CREDIT RATING OR ON CREDITOR COLLECTION EFFORTS;
   43    (K)  RECEIVE  ANY  CASH,  FEE,  GIFT, BONUS, PREMIUM, REWARD, OR OTHER
   44  COMPENSATION FROM ANY PERSON OTHER THAN THE DEBTOR  EXPLICITLY  FOR  THE
   45  PROVISION OF DEBT SETTLEMENT SERVICES TO THAT DEBTOR;
   46    (L)  OFFER  OR  PROVIDE GIFTS OR BONUSES TO DEBTORS FOR SIGNING A DEBT
   47  SETTLEMENT SERVICES AGREEMENT OR FOR REFERRING ANOTHER POTENTIAL CUSTOM-
   48  ER OR CUSTOMERS;
   49    (M) EXCEPT WITH THE PRIOR CONSENT OF THE DEBTOR,  DISCLOSE  TO  ANYONE
   50  THE  NAME  OR  ANY  PERSONAL  INFORMATION  OF A DEBTOR FOR WHOM THE DEBT
   51  SETTLEMENT COMPANY HAS PROVIDED OR IS PROVIDING DEBT SETTLEMENT SERVICES
   52  OTHER THAN TO A DEBTOR'S OWN CREDITORS OR THE DEBT SETTLEMENT  COMPANY'S
   53  AGENTS  OR  AFFILIATES  FOR  THE  PURPOSE  OF  PROVIDING DEBT SETTLEMENT
   54  SERVICES. "PERSONAL INFORMATION  OF  A  DEBTOR"  AS  USED  HEREIN  SHALL
   55  INCLUDE  BUT  NOT  BE  LIMITED  TO A DEBTOR'S NAME, PHOTOGRAPH, ADDRESS,
   56  TELEPHONE NUMBER, SOCIAL SECURITY NUMBER, DATE OF BIRTH, DRIVER'S  IDEN-
       A. 597                             20

    1  TIFICATION  NUMBER,  CREDIT  CARD  NUMBER, BANK ACCOUNT NUMBER, MOTHER'S
    2  MAIDEN NAME, MEDICAL OR DISABILITY INFORMATION, IF ANY, AS WELL  AS  ANY
    3  OTHER IDENTIFICATION NUMBER WHICH A LICENSEE MAY POSSESS;
    4    (N)  ENTER  INTO  A  DEBT  SETTLEMENT SERVICES AGREEMENT WITH A DEBTOR
    5  WITHOUT FIRST PROVIDING  THE  DISCLOSURES  AND  FINANCIAL  ANALYSIS  AND
    6  MAKING THE DETERMINATIONS REQUIRED BY THIS ARTICLE;
    7    (O)  MISREPRESENT ANY MATERIAL FACT, MAKE A MATERIAL OMISSION, OR MAKE
    8  A FALSE PROMISE DIRECTED TO ONE OR MORE DEBTORS IN CONNECTION  WITH  THE
    9  SOLICITATION,  OFFERING,  CONTRACTING,  OR  PROVISION OF DEBT SETTLEMENT
   10  SERVICES;
   11    (P) VIOLATE THE PROVISIONS OF APPLICABLE DO-NOT-CALL STATUTES;
   12    (Q) PURCHASE DEBTS OR ENGAGE IN  THE  PRACTICE  OR  BUSINESS  OF  DEBT
   13  COLLECTION;
   14    (R)  REPRESENT  OR  IMPLY  TO A PERSON PARTICIPATING IN OR CONSIDERING
   15  DEBT SETTLEMENT SERVICES THAT THE PURCHASE OF  ANY  ANCILLARY  GOODS  OR
   16  SERVICES IS REQUIRED;
   17    (S) USE A COMMUNICATION WHICH SIMULATES IN ANY MANNER A LEGAL OR JUDI-
   18  CIAL  PROCESS,  OR WHICH GIVES THE FALSE APPEARANCE OF BEING AUTHORIZED,
   19  ISSUED,  OR  APPROVED  BY  A   GOVERNMENT,   GOVERNMENTAL   AGENCY,   OR
   20  ATTORNEY-AT-LAW; OR
   21    (T)  MAKE  A  REPRESENTATION  THAT  THE  DEBT  SETTLEMENT COMPANY WILL
   22  FURNISH MONEY TO PAY BILLS OR PREVENT ATTACHMENT.
   23    S 588-R. SUPERINTENDENT AUTHORIZED TO  EXAMINE.  FOR  THE  PURPOSE  OF
   24  DISCOVERING  VIOLATIONS OF THIS ARTICLE OR SECURING INFORMATION LAWFULLY
   25  REQUIRED BY HIM OR HER HEREUNDER, THE SUPERINTENDENT MAY  AT  ANY  TIME,
   26  AND  AS  OFTEN  AS  HE  OR  SHE MAY DETERMINE, EITHER PERSONALLY OR BY A
   27  PERSON DULY DESIGNATED BY HIM OR HER, INVESTIGATE THE BUSINESS AND EXAM-
   28  INE THE BOOKS, ACCOUNTS, RECORDS, AND FILES USED THEREIN OF EVERY LICEN-
   29  SEE HEREUNDER. FOR THAT PURPOSE THE SUPERINTENDENT AND HIS OR  HER  DULY
   30  DESIGNATED  REPRESENTATIVE  SHALL  HAVE  FREE  ACCESS TO THE OFFICES AND
   31  PLACE OF BUSINESS, BOOKS, ACCOUNTS, PAPERS, RECORDS,  FILES,  SAFES  AND
   32  VAULTS  OF  ALL  SUCH  LICENSEES. THE SUPERINTENDENT AND ANY PERSON DULY
   33  DESIGNATED BY HIM OR HER SHALL HAVE AUTHORITY TO REQUIRE THE  ATTENDANCE
   34  OF  AND  TO EXAMINE UNDER OATH ALL PERSONS WHOSE TESTIMONY HE OR SHE MAY
   35  REQUIRE RELATIVE TO SUCH BUSINESS. THE EXPENSES INCURRED IN  MAKING  ANY
   36  EXAMINATION  PURSUANT TO THIS SECTION SHALL BE ASSESSED AGAINST AND PAID
   37  BY THE LICENSEE SO  EXAMINED,  EXCEPT  THAT  TRAVELING  AND  SUBSISTENCE
   38  EXPENSES  SO  INCURRED SHALL BE CHARGED AGAINST AND PAID BY LICENSEES IN
   39  SUCH PROPORTIONS AS THE SUPERINTENDENT SHALL DEEM JUST  AND  REASONABLE,
   40  AND  SUCH  PROPORTIONATE CHARGES SHALL BE ADDED TO THE ASSESSMENT OF THE
   41  OTHER EXPENSES INCURRED UPON EACH EXAMINATION. UPON  WRITTEN  NOTICE  BY
   42  THE  SUPERINTENDENT OF THE TOTAL AMOUNT OF SUCH ASSESSMENT, THE LICENSEE
   43  SHALL BECOME LIABLE FOR AND SHALL PAY SUCH ASSESSMENT TO THE SUPERINTEN-
   44  DENT.
   45    S 588-S. LICENSEE'S BOOKS AND RECORDS; REPORTS. 1. THE LICENSEE  SHALL
   46  CREATE AND USE IN ITS BUSINESS SUCH BOOKS, ACCOUNTS, AND RECORDS AS WILL
   47  ENABLE  THE SUPERINTENDENT TO DETERMINE WHETHER SUCH LICENSEE IS COMPLY-
   48  ING WITH THE PROVISIONS OF THIS ARTICLE AND WITH  THE  RULES  AND  REGU-
   49  LATIONS  LAWFULLY  MADE  BY THE SUPERINTENDENT HEREUNDER. EVERY LICENSEE
   50  SHALL PRESERVE SUCH BOOKS, ACCOUNTS, AND RECORDS FOR AT LEAST SIX  YEARS
   51  BY ANY MANNER PERMITTED BY THIS CHAPTER.
   52    2.  EACH LICENSEE SHALL ANNUALLY, ON OR BEFORE THE FIRST DAY OF FEBRU-
   53  ARY, FILE A REPORT WITH THE SUPERINTENDENT GIVING  SUCH  INFORMATION  AS
   54  THE  SUPERINTENDENT  MAY  REQUIRE CONCERNING THE BUSINESS AND OPERATIONS
   55  DURING THE PRECEDING CALENDAR YEAR OF SUCH LICENSEE UNDER  AUTHORITY  OF
   56  THIS  ARTICLE.  SUCH  REPORT SHALL BE SUBSCRIBED AND AFFIRMED AS TRUE BY
       A. 597                             21

    1  THE LICENSEE UNDER THE PENALTIES OF PERJURY AND SHALL  BE  IN  THE  FORM
    2  PRESCRIBED  BY  THE  SUPERINTENDENT.  IN ADDITION TO ANNUAL REPORTS, THE
    3  SUPERINTENDENT MAY REQUIRE SUCH ADDITIONAL REGULAR OR SPECIAL REPORTS AS
    4  HE  OR  SHE  MAY  DEEM  NECESSARY TO THE PROPER SUPERVISION OF LICENSEES
    5  UNDER THIS ARTICLE.  SUCH  ADDITIONAL  REPORTS  SHALL  BE  IN  THE  FORM
    6  PRESCRIBED BY THE SUPERINTENDENT AND SHALL BE SUBSCRIBED AND AFFIRMED AS
    7  TRUE UNDER THE PENALTIES OF PERJURY.
    8    3.  EACH  LICENSEE, WITHIN ONE HUNDRED TWENTY DAYS OF THE CLOSE OF THE
    9  LICENSEE'S FISCAL YEAR, SHALL SUBMIT AN INDEPENDENTLY AUDITED  FINANCIAL
   10  STATEMENT TO THE SUPERINTENDENT.
   11    S  588-T.  PENALTIES;  NONCOMPLIANCE.  1.  ANY PERSON WHO VIOLATES ANY
   12  PROVISION OF THE LICENSING REQUIREMENTS OF SECTION FIVE HUNDRED  EIGHTY-
   13  EIGHT-B  OF  THIS  ARTICLE  SHALL  BE  GUILTY  OF A CLASS A MISDEMEANOR,
   14  PUNISHABLE AS PROVIDED IN ARTICLES SEVENTY AND EIGHTY OF THE PENAL LAW.
   15    2. ANY DEBT SETTLEMENT SERVICES AGREEMENT THAT DOES  NOT  COMPLY  WITH
   16  THE PROVISIONS OF THIS ARTICLE IS VOID.
   17    3.  ANY  WAIVER BY A DEBTOR OF ANY PROTECTION PROVIDED BY OR ANY RIGHT
   18  OF THE DEBTOR UNDER THIS ARTICLE IS VOID.
   19    4. ANY ATTEMPT BY ANY PERSON TO OBTAIN A WAIVER FROM ANY DEBTOR OF ANY
   20  PROTECTION PROVIDED BY OR ANY RIGHT OR PROTECTION OF THE DEBTOR  OR  ANY
   21  OBLIGATION  OR  REQUIREMENT  OF  THE  DEBT SETTLEMENT COMPANY UNDER THIS
   22  ARTICLE SHALL BE A VIOLATION OF THIS ARTICLE.
   23    5. UPON PROPER NOTICE OF A VOID DEBT  SETTLEMENT  SERVICES  AGREEMENT,
   24  THE  DEBT SETTLEMENT COMPANY SHALL MAKE A REFUND TO THE DEBTOR AS IF THE
   25  DEBT SETTLEMENT SERVICES AGREEMENT HAD BEEN  CANCELLED  AS  PROVIDED  IN
   26  SUBDIVISION TWO OF SECTION FIVE HUNDRED EIGHTY-EIGHT-O OF THIS ARTICLE.
   27    6.  IN  ADDITION  TO  SUCH PENALTIES AS MAY OTHERWISE BE APPLICABLE BY
   28  LAW, THE SUPERINTENDENT MAY, AFTER NOTICE AND HEARING AS PROVIDED  ELSE-
   29  WHERE IN THIS ARTICLE, REQUIRE ANY PERSON FOUND VIOLATING THE PROVISIONS
   30  OF THIS ARTICLE OR THE RULES OR REGULATIONS PROMULGATED HEREUNDER TO PAY
   31  TO  THE PEOPLE OF THIS STATE AN ADDITIONAL PENALTY FOR EACH VIOLATION OF
   32  THE ARTICLE OR ANY REGULATION OR POLICY PROMULGATED HEREUNDER A SUM  NOT
   33  TO EXCEED AN AMOUNT AS DETERMINED PURSUANT TO SECTION FORTY-FOUR OF THIS
   34  CHAPTER FOR EACH SUCH VIOLATION.
   35    7.  NOTHING  IN THIS ARTICLE SHALL CREATE A PRIVATE RIGHT OF ACTION ON
   36  BEHALF OF A DEBTOR AGAINST A DEBT SETTLEMENT COMPANY FOR  VIOLATIONS  OF
   37  THIS ARTICLE.
   38    8.  NOTHING  IN  THIS  ARTICLE SHALL LIMIT ANY STATUTORY OR COMMON-LAW
   39  RIGHT OF ANY PERSON TO BRING ANY ACTION IN ANY COURT FOR ANY ACT, OR THE
   40  RIGHT OF THE STATE TO PUNISH ANY PERSON FOR ANY VIOLATION OF ANY LAW.
   41    S 588-U. AUTHORITY OF SUPERINTENDENT.  THE  SUPERINTENDENT  IS  HEREBY
   42  AUTHORIZED  AND EMPOWERED TO MAKE, IN ADDITION HERETO AND NOT INCONSIST-
   43  ENT HEREWITH, SUCH GENERAL RULES  AND  REGULATIONS,  AND  SUCH  SPECIFIC
   44  RULINGS,  DEMANDS,  AND FINDINGS AS HE OR SHE MAY DEEM NECESSARY FOR THE
   45  PROPER CONDUCT OF THE BUSINESS AUTHORIZED AND LICENSED HEREUNDER AND FOR
   46  THE ENFORCEMENT OF THIS ARTICLE.
   47    S 588-V. SEVERABILITY. IF ANY WORD, PHRASE,  CLAUSE,  SENTENCE,  PARA-
   48  GRAPH,  SUBDIVISION,  SECTION, OR PART OF THIS ARTICLE SHALL BE ADJUDGED
   49  BY ANY COURT OF COMPETENT JURISDICTION  TO  BE  INVALID,  SUCH  JUDGMENT
   50  SHALL  NOT AFFECT, IMPAIR, OR INVALIDATE THE REMAINDER THEREOF WHICH CAN
   51  BE GIVEN EFFECT WITHOUT THE INVALID PROVISION, BUT SHALL BE CONFINED  IN
   52  ITS OPERATION TO THE WORD, PHRASE, CLAUSE, SENTENCE, PARAGRAPH, SUBDIVI-
   53  SION,  SECTION, OR PART OF THIS ARTICLE DIRECTLY INVOLVED IN THE CONTRO-
   54  VERSY IN WHICH THE JUDGMENT SHALL HAVE BEEN RENDERED.
   55    S 11. This act shall take effect on  the  one  hundred  eightieth  day
   56  after  it shall have become a law and shall apply to all debt settlement
       A. 597                             22

    1  services agreements entered into or  offered  on  or  after  such  date;
    2  provided,  however,  that  effective  immediately, the superintendent of
    3  financial services shall add, amend, and/or repeal  any  rule  or  regu-
    4  lation he or she deems necessary or desirable for implementation of this
    5  act.
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