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[Introduced][Amended][Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 167 Enrolled

             1     

AMENDMENTS TO UNIFORM

             2     
DEBT-MANAGEMENT SERVICES ACT

             3     
2009 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Lyle W. Hillyard

             6     
House Sponsor: Jack R. Draxler

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill amends the Uniform Debt-Management Services Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    amends the insurance requirements for a debt-management services provider;
             14          .    amends the advertising requirements for a debt-management services provider; and
             15          .    makes technical corrections.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          13-42-105, as last amended by Laws of Utah 2008, Chapter 382
             23          13-42-111, as last amended by Laws of Utah 2008, Chapter 382
             24          13-42-114, as enacted by Laws of Utah 2006, Chapter 154
             25          13-42-117, as enacted by Laws of Utah 2006, Chapter 154
             26          13-42-118, as enacted by Laws of Utah 2006, Chapter 154
             27          13-42-119, as last amended by Laws of Utah 2008, Chapter 3
             28          13-42-120, as enacted by Laws of Utah 2006, Chapter 154
             29          13-42-122, as enacted by Laws of Utah 2006, Chapter 154


             30          13-42-123, as enacted by Laws of Utah 2006, Chapter 154
             31          13-42-128, as enacted by Laws of Utah 2006, Chapter 154
             32          13-42-130, as enacted by Laws of Utah 2006, Chapter 154
             33     
             34      Be it enacted by the Legislature of the state of Utah:
             35          Section 1. Section 13-42-105 is amended to read:
             36           13-42-105. Application for registration -- Form, fee, and accompanying
             37      documents.
             38          (1) An application for registration as a provider must be in a form prescribed by the
             39      administrator.
             40          (2) Subject to adjustment of dollar amounts pursuant to Subsection 13-42-132 (6), an
             41      application for registration as a provider must be accompanied by:
             42          (a) the fee established by the administrator in accordance with Section 63J-1-303 ;
             43          (b) the bond required by Section 13-42-113 ;
             44          (c) identification of all trust accounts required by Section 13-42-122 and an
             45      irrevocable consent authorizing the administrator to review and examine the trust accounts;
             46          (d) evidence of insurance in the amount of $250,000:
             47          (i) against the risks of dishonesty, fraud, theft, and other misconduct on the part of the
             48      applicant or a director, employee, or agent of the applicant;
             49          (ii) issued by an insurance company authorized to do business in this state and rated at
             50      least A or equivalent by a nationally recognized rating organization approved by the
             51      administrator;
             52          (iii) with [no] a deductible not exceeding $5,000;
             53          (iv) payable [to] for the benefit of the applicant, [the] this state, and individuals who
             54      [have agreements with the applicant, and] are residents of this state, as their interests may
             55      appear; and
             56          (v) not subject to cancellation by the applicant [without the approval of] or the insurer
             57      until 60 days after written notice has been given to the administrator;


             58          (e) a record consenting to the jurisdiction of this state containing:
             59          (i) the name, business address, and other contact information of its registered agent in
             60      this state for purposes of service of process; or
             61          (ii) the appointment of the administrator as agent of the provider for purposes of
             62      service of process; and
             63          (f) if the applicant is organized as a not-for-profit entity or is exempt from taxation,
             64      evidence of not-for-profit and tax-exempt status applicable to the applicant under the Internal
             65      Revenue Code, 26 U.S.C. Section 501.
             66          (3) (a) The administrator may waive or reduce the insurance requirement in
             67      Subsection 13-42-105 (2)(d) if the provider does not:
             68          (i) maintain control of a trust account or receive money paid by an individual pursuant
             69      to a plan for distribution to creditors;
             70          (ii) make payments to creditors on behalf of individuals;
             71          (iii) collect fees by means of automatic payment from individuals; and
             72          (iv) execute any powers of attorney that may be utilized by the provider to collect fees
             73      from or expend funds on behalf of an individual.
             74          (b) A waiver or reduction in insurance requirements allowed by the administrator
             75      under Subsection (3)(a) shall balance the reduction in risk posed by a provider meeting the
             76      stated requirements against any continued need for insurance against employee and director
             77      dishonesty.
             78          Section 2. Section 13-42-111 is amended to read:
             79           13-42-111. Renewal of registration.
             80          (1) A provider must obtain a renewal of its registration annually.
             81          (2) An application for renewal of registration as a provider must be in a form
             82      prescribed by the administrator, signed under penalty of perjury, and:
             83          (a) be filed no fewer than 30 and no more than 60 days before the registration expires;
             84          (b) be accompanied by the fee established by the administrator in accordance with
             85      Section 63J-1-303 and the bond required by Section 13-42-113 ;


             86          (c) contain the matter required for initial registration as a provider by Subsections
             87      13-42-106 (8) and (9) and a financial statement, audited by an accountant licensed to conduct
             88      audits, for the applicant's fiscal year immediately preceding the application;
             89          (d) disclose any changes in the information contained in the applicant's application for
             90      registration or its immediately previous application for renewal, as applicable;
             91          (e) supply evidence of insurance in an amount equal to the larger of $250,000 or the
             92      highest daily balance in the trust account required by Section 13-42-122 during the six-month
             93      period immediately preceding the application:
             94          (i) against risks of dishonesty, fraud, theft, and other misconduct on the part of the
             95      applicant or a director, employee, or agent of the applicant;
             96          (ii) issued by an insurance company authorized to do business in this state and rated at
             97      least A or equivalent by a nationally recognized rating organization approved by the
             98      administrator;
             99          (iii) with [no] a deductible not exceeding $5,000;
             100          (iv) payable [to] for the benefit of the applicant, [the] this state, and individuals who
             101      [have agreements with the applicant, and] are residents of this state, as their interests may
             102      appear; and
             103          (v) not subject to cancellation by the applicant [without the approval of] or the insurer
             104      until 60 days after written notice has been given to the administrator;
             105          (f) disclose the total amount of money received by the applicant pursuant to plans
             106      during the preceding 12 months from or on behalf of individuals who reside in this state and
             107      the total amount of money distributed to creditors of those individuals during that period;
             108          (g) disclose, to the best of the applicant's knowledge, the gross amount of money
             109      accumulated during the preceding 12 months pursuant to plans by or on behalf of individuals
             110      who reside in this state and with whom the applicant has agreements; and
             111          (h) provide any other information that the administrator reasonably requires to perform
             112      the administrator's duties under this section.
             113          (3) Except for the information required by Subsections 13-42-106 (7), (14), and (17)


             114      and the addresses required by Subsection 13-42-106 (4), the administrator shall make the
             115      information in an application for renewal of registration as a provider available to the public.
             116          (4) If a registered provider files a timely and complete application for renewal of
             117      registration, the registration remains effective until the administrator, in a record, notifies the
             118      applicant of a denial and states the reasons for the denial.
             119          (5) If the administrator denies an application for renewal of registration as a provider,
             120      the applicant, within 30 days after receiving notice of the denial, may appeal and request a
             121      hearing pursuant to Title 63G, Chapter 4, Administrative Procedures Act. Subject to Section
             122      13-42-134 , while the appeal is pending the applicant shall continue to provide
             123      debt-management services to individuals with whom it has agreements. If the denial is
             124      affirmed, subject to the administrator's order and Section 13-42-134 , the applicant shall
             125      continue to provide debt-management services to individuals with whom it has agreements
             126      until, with the approval of the administrator, it transfers the agreements to another registered
             127      provider or returns to the individuals all unexpended money that is under the applicant's
             128      control.
             129          (6) (a) The administrator may waive or reduce the insurance requirement in
             130      Subsection 13-42-111 (1)(e) if the provider does not:
             131          (i) maintain control of a trust account or receive money paid by an individual pursuant
             132      to a plan for distribution to creditors;
             133          (ii) make payments to creditors on behalf of individuals;
             134          (iii) collect fees by means of automatic payment from individuals; and
             135          (iv) execute any powers of attorney that may be utilized by the provider to collect fees
             136      from or expend funds on behalf of an individual.
             137          (b) A waiver or reduction in insurance requirements allowed by the administrator
             138      under Subsection (6)(a) shall balance the reduction in risk posed by a provider meeting the
             139      stated requirements against any continued need for insurance against employee and director
             140      dishonesty.
             141          Section 3. Section 13-42-114 is amended to read:


             142           13-42-114. Bond required -- Substitute.
             143          (1) Instead of the surety bond required by Section 13-42-113 , a provider may deliver
             144      to the administrator, in the amount required by Subsection 13-42-113 (2), and, except as
             145      otherwise provided in Subsection (1)(c)(i), payable or available to this state and to individuals
             146      who reside in this state when they agree to receive debt-management services from the
             147      provider, as their interests may appear, if the provider or its agent does not comply with this
             148      chapter:
             149          (a) a certificate of insurance:
             150          (i) issued by an insurance company authorized to do business in this state and rated at
             151      least A or equivalent by a nationally recognized rating organization[,] approved by the
             152      administrator; and
             153          (ii) with no deductible, or if the provider supplies a bond in the amount of $5,000, a
             154      deductible not exceeding $5,000;
             155          (b) a certificate of deposit issued or confirmed by a bank approved by the
             156      administrator, payable upon presentation of a certificate by the administrator stating that the
             157      provider or its agent has not complied with this chapter; or
             158          (c) with the approval of the administrator:
             159          (i) an irrevocable letter of credit, issued or confirmed by a bank approved by the
             160      administrator, payable upon presentation of a certificate by the administrator stating that the
             161      provider or its agent has not complied with this chapter; or
             162          (ii) bonds or other obligations of the United States or guaranteed by the United States
             163      or bonds or other obligations of this state or a political subdivision of this state, to be
             164      deposited and maintained with a bank approved by the administrator for this purpose.
             165          (2) If a provider furnishes a substitute pursuant to Subsection (1), the provisions of
             166      Subsections 13-42-113 (1), (3), (4), and (5) apply to the substitute.
             167          Section 4. Section 13-42-117 is amended to read:
             168           13-42-117. Prerequisites for providing debt-management services.
             169          (1) Before providing debt-management services, a registered provider shall give the


             170      individual an itemized list of goods and services and the charges for each. The list must be
             171      clear and conspicuous, be in a record the individual may keep whether or not the individual
             172      assents to an agreement, and describe the goods and services the provider offers:
             173          (a) free of additional charge if the individual enters into an agreement;
             174          (b) for a charge if the individual does not enter into an agreement; and
             175          (c) for a charge if the individual enters into an agreement, using the following
             176      terminology, as applicable, and format:
             177              Set-up fee _________________________________________________
             178                              dollar amount of fee
             179              Monthly service fee __________________________________________
             180                          dollar amount of fee or method of determining amount
             181              Settlement fee ______________________________________________
             182                          dollar amount of fee or method of determining amount
             183              Goods and services in addition to those provided in connection with a plan:
             184              _____________ ____________________________________________
             185                  (item) dollar amount or method of determining amount
             186              _____________ ____________________________________________
             187                  (item) dollar amount or method of determining amount.
             188          (2) A provider may not furnish debt-management services unless the provider, through
             189      the services of a certified counselor:
             190          (a) provides the individual with reasonable education about the management of
             191      personal finance;
             192          (b) has prepared a financial analysis; and
             193          (c) if the individual is to make regular, periodic payments to a creditor or a provider:
             194          (i) has prepared a plan for the individual;
             195          (ii) has made a determination, based on the provider's analysis of the information
             196      provided by the individual and otherwise available to it, that the plan is suitable for the
             197      individual and the individual will be able to meet the payment obligations under the plan; and


             198          (iii) believes that each creditor of the individual listed as a participating creditor in the
             199      plan will accept payment of the individual's debts as provided in the plan.
             200          (3) Before an individual assents to an agreement to engage in a plan, a provider shall:
             201          (a) provide the individual with a copy of the analysis and plan required by Subsection
             202      (2) in a record that identifies the provider and that the individual may keep whether or not the
             203      individual assents to the agreement;
             204          (b) inform the individual of the availability, at the individual's option, of assistance by
             205      a toll-free communication system or in person to discuss the financial analysis and plan
             206      required by Subsection (2); and
             207          (c) with respect to all creditors identified by the individual or otherwise known by the
             208      provider to be creditors of the individual, provide the individual with a list of:
             209          (i) creditors that the provider expects to participate in the plan and grant concessions;
             210          (ii) creditors that the provider expects to participate in the plan but not grant
             211      concessions;
             212          (iii) creditors that the provider expects not to participate in the plan; and
             213          (iv) all other creditors.
             214          (4) Before an individual assents to an agreement [to engage in a plan], the provider
             215      shall inform the individual, in a record that contains nothing else, that is given separately, and
             216      that the individual may keep whether or not the individual assents to the agreement:
             217          (a) of the name and business address of the provider;
             218          (b) that plans are not suitable for all individuals and the individual may ask the
             219      provider about other ways, including bankruptcy, to deal with indebtedness;
             220          (c) that establishment of a plan may adversely affect the individual's credit rating or
             221      credit scores;
             222          (d) that nonpayment of debt may lead creditors to increase finance and other charges
             223      or undertake collection activity, including litigation;
             224          (e) unless it is not true, that the provider may receive compensation from the creditors
             225      of the individual; and


             226          (f) that, unless the individual is insolvent, if a creditor settles for less than the full
             227      amount of the debt, the plan may result in the creation of taxable income to the individual,
             228      even though the individual does not receive any money.
             229          (5) If a provider may receive payments from an individual's creditors and the plan
             230      contemplates that the individual's creditors will reduce finance charges or fees for late
             231      payment, default, or delinquency, the provider may comply with Subsection (4) by providing
             232      the following disclosure, surrounded by black lines:
             233     
IMPORTANT INFORMATION FOR YOU TO CONSIDER

             234          (1) Debt-management plans are not right for all individuals, and you may ask us to
             235      provide information about other ways, including bankruptcy, to deal with your debts.
             236          (2) Using a debt-management plan may [hurt your credit rating or credit scores] make
             237      it harder for you to obtain credit.
             238          (3) We may receive compensation for our services from your creditors.
             239     
_______________________________________

             240     
Name and business address of provider

             241          (6) If a provider will not receive payments from an individual's creditors and the plan
             242      contemplates that the individual's creditors will reduce finance charges or fees for late
             243      payment, default, or delinquency, a provider may comply with Subsection (4) by providing the
             244      following disclosure, surrounded by black lines:
             245     
IMPORTANT INFORMATION FOR YOU TO CONSIDER

             246          (1) Debt-management plans are not right for all individuals, and you may ask us to
             247      provide information about other ways, including bankruptcy, to deal with your debts.
             248          (2) Using a debt-management plan may [hurt your credit rating or credit scores] make
             249      it harder for you to obtain credit.
             250     
______________________________________

             251     
Name and business address of provider

             252          (7) If [a plan] an agreement contemplates that creditors will settle debts for less than
             253      the full principal amount of debt owed, a provider may comply with Subsection (4) by


             254      providing the following disclosure, surrounded by black lines:
             255     
IMPORTANT INFORMATION FOR YOU TO CONSIDER

             256          (1) Our program is not right for all individuals, and you may ask us to provide
             257      information about bankruptcy and other ways to deal with your debts.
             258          (2) Nonpayment of your debts under our program may
             259          hurt your credit rating or credit scores;
             260          lead your creditors to increase finance and other charges; and
             261          lead your creditors to undertake activity, including lawsuits, to collect the debts.
             262          (3) Reduction of debt under our program may result in taxable income to you, even
             263      though you will not actually receive any money.
             264     
_________________________________________

             265     
Name and business address of provider

             266          Section 5. Section 13-42-118 is amended to read:
             267           13-42-118. Communication by electronic or other means.
             268          (1) In this section:
             269          (a) "Consumer" means an individual who seeks or obtains goods or services that are
             270      used primarily for personal, family, or household purposes.
             271          (b) "Federal act" means the Electronic Signatures in Global and National Commerce
             272      Act, 15 U.S.C. Section 7001 et seq.
             273          (2) A provider may satisfy the requirements of Section 13-42-117 , 13-42-119 , or
             274      13-42-127 by means of the Internet or other electronic means if the provider obtains a
             275      consumer's consent in the manner provided by Section 101(c)(1) of the federal act.
             276          (3) The disclosures and materials required by Sections 13-42-117 , 13-42-119 , and
             277      13-42-127 shall be presented in a form that is capable of being accurately reproduced for later
             278      reference.
             279          (4) With respect to disclosure by means of an Internet website, the disclosure of the
             280      information required by Subsection 13-42-117 (4) must appear on one or more screens that:
             281          (a) contain no other information; and


             282          (b) the individual must see before proceeding to assent to formation of [a plan] an
             283      agreement.
             284          (5) At the time of providing the materials and agreement required by Subsections
             285      13-42-117 (3) and (4), Section 13-42-119 , and Section 13-42-127 , a provider shall inform the
             286      individual that upon electronic, telephonic, or written request, it will send the individual a
             287      written copy of the materials, and shall comply with a request as provided in Subsection (6).
             288          (6) If a provider is requested, before the expiration of 90 days after [a plan] an
             289      agreement is completed or terminated, to send a written copy of the materials required by
             290      Subsections 13-42-117 (3) and (4), Section 13-42-119 , or Section 13-42-127 , the provider
             291      shall send them at no charge within three business days after the request, but the provider need
             292      not comply with a request more than once per calendar month or if it reasonably believes the
             293      request is made for purposes of harassment. If a request is made more than 90 days after [a
             294      plan] an agreement is completed or terminated, the provider shall send within a reasonable
             295      time a written copy of the materials requested.
             296          (7) A provider that maintains an Internet website shall disclose on the home page of its
             297      website or on a page that is clearly and conspicuously connected to the home page by a link
             298      that clearly reveals its contents:
             299          (a) its name and all names under which it does business;
             300          (b) its principal business address, telephone number, and electronic-mail address, if
             301      any; and
             302          (c) the names of its principal officers.
             303          (8) Subject to Subsection (9), if a consumer who has consented to electronic
             304      communication in the manner provided by Section 101 of the federal act withdraws consent as
             305      provided in the federal act, a provider may terminate its agreement with the consumer.
             306          (9) If a provider wishes to terminate an agreement with a consumer pursuant to
             307      Subsection (8), it shall notify the consumer that it will terminate the agreement unless the
             308      consumer, within 30 days after receiving the notification, consents to electronic
             309      communication in the manner provided in Section 101(c) of the federal act. If the consumer


             310      consents, the provider may terminate the agreement only as permitted by Subsection
             311      13-42-119 (1)(f)(vii).
             312          Section 6. Section 13-42-119 is amended to read:
             313           13-42-119. Form and contents of agreement.
             314          (1) An agreement must:
             315          (a) be in a record;
             316          (b) be dated and signed by the provider and the individual;
             317          (c) include the name of the individual and the address where the individual resides;
             318          (d) include the name, business address, and telephone number of the provider;
             319          (e) be delivered to the individual immediately upon formation of the agreement; and
             320          (f) disclose:
             321          (i) the services to be provided;
             322          (ii) the amount, or method of determining the amount, of all fees, individually
             323      itemized, to be paid by the individual;
             324          (iii) the schedule of payments to be made by or on behalf of the individual, including
             325      the amount of each payment, the date on which each payment is due, and an estimate of the
             326      date of the final payment;
             327          (iv) if a plan provides for regular periodic payments to creditors:
             328          (A) each creditor of the individual to which payment will be made, the amount owed
             329      to each creditor, and any concessions the provider reasonably believes each creditor will offer;
             330      and
             331          (B) the schedule of expected payments to each creditor, including the amount of each
             332      payment and the date on which it will be made;
             333          (v) each creditor that the provider believes will not participate in the plan and to which
             334      the provider will not direct payment;
             335          (vi) how the provider will comply with its obligations under Subsection 13-42-127 (1);
             336          (vii) that the provider may terminate the agreement for good cause, upon return of
             337      unexpended money of the individual;


             338          (viii) that the individual may cancel the agreement as provided in Section 13-42-120 ;
             339          (ix) that the individual may contact the administrator with any questions or complaints
             340      regarding the provider; and
             341          (x) the address, telephone number, and Internet address or website of the
             342      administrator.
             343          (2) For purposes of Subsection (1)(e), delivery of an electronic record occurs when it
             344      is made available in a format in which the individual may retrieve, save, and print it and the
             345      individual is notified that it is available.
             346          (3) If the administrator supplies the provider with any information required under
             347      Subsection (1)(f)(x), the provider may comply with that requirement only by disclosing the
             348      information supplied by the administrator.
             349          (4) An agreement must provide that:
             350          (a) the individual has a right to terminate the agreement at any time, without penalty
             351      or obligation, by giving the provider written or electronic notice, in which event:
             352          (i) the provider will refund all unexpended money that the provider or its agent has
             353      received from or on behalf of the individual for the reduction or satisfaction of the individual's
             354      debt;
             355          (ii) with respect to an agreement that contemplates that creditors will settle debts for
             356      less than the principal amount of debt, the provider will refund 65% of any portion of the
             357      set-up fee that has not been credited against the settlement fee; and
             358          (iii) all powers of attorney granted by the individual to the provider are revoked and
             359      ineffective;
             360          (b) the individual authorizes any bank in which the provider or its agent has
             361      established a trust account to disclose to the administrator any financial records relating to the
             362      trust account; and
             363          (c) the provider will notify the individual within five days after learning of a creditor's
             364      final decision to reject or withdraw from a plan and that this notice will include:
             365          (i) the identity of the creditor; and


             366          (ii) the right of the individual to modify or terminate the agreement.
             367          (5) An agreement may confer on a provider a power of attorney to settle the
             368      individual's debt for no more than 50% of the principal amount of the debt. An agreement
             369      may not confer a power of attorney to settle a debt for more than 50% of that amount, but may
             370      confer a power of attorney to negotiate with creditors of the individual on behalf of the
             371      individual. An agreement must provide that the provider will obtain the assent of the
             372      individual after a creditor has assented to a settlement for more than 50% of the principal
             373      amount of the debt.
             374          (6) An agreement may not:
             375          (a) provide for application of the law of any jurisdiction other than the United States
             376      and this state;
             377          (b) except as permitted by Section 2 of the Federal Arbitration Act, 9 U.S.C. Section
             378      2, or Title 78B, Chapter 11, Utah Uniform Arbitration Act, contain a provision that modifies
             379      or limits otherwise available forums or procedural rights, including the right to trial by jury,
             380      that are generally available to the individual under law other than this chapter;
             381          (c) contain a provision that restricts the individual's remedies under this chapter or law
             382      other than this chapter; or
             383          (d) contain a provision that:
             384          (i) limits or releases the liability of any person for not performing the agreement or for
             385      violating this chapter; or
             386          (ii) indemnifies any person for liability arising under the agreement or this chapter.
             387          (7) All rights and obligations specified in Subsection (4) and Section 13-42-120 exist
             388      even if not provided in the agreement. A provision in an agreement which violates Subsection
             389      (4), (5), or (6) is void.
             390          Section 7. Section 13-42-120 is amended to read:
             391           13-42-120. Cancellation of agreement -- Waiver.
             392          (1) An individual may cancel an agreement before midnight of the third business day
             393      after the individual assents to it, unless the agreement does not comply with Subsection (2) or


             394      Section 13-42-119 or Section 13-42-128 , in which event the individual may cancel the
             395      agreement within 30 days after the individual assents to it. To exercise the right to cancel, the
             396      individual must give notice in a record to the provider. Notice by mail is given when mailed.
             397          (2) An agreement must be accompanied by a form that contains in bold-face type,
             398      surrounded by bold black lines:
             399     
Notice of Right to Cancel

             400          You may cancel this agreement, without any penalty or obligation, at any time before
             401      midnight of the third business day that begins the day after you agree to it by electronic
             402      communication or by signing it.
             403          To cancel this agreement during this period, send an e-mail to
             404          ____________________________ or mail or deliver a signed, dated copy of this
             405          E-mail address of provider
             406          notice, or any other written notice to ___________________________________
             407                                  Name of provider
             408          at _______________________________ before midnight on ___________________.
             409              Address of provider                         Date
             410          If you cancel this agreement within the 3-day period, we will refund all money you
             411      already have paid us.
             412          You also may terminate this agreement at any later time, but we [are] may not be
             413      required to refund fees you have paid us.
             414          I cancel this agreement,
             415          __________________________________
             416                  Print your name
             417          __________________________________
             418                  Signature
             419          __________________________________
             420                   Date
             421          (3) If a personal financial emergency necessitates the disbursement of an individual's


             422      money to one or more of the individual's creditors before the expiration of three days after an
             423      agreement is signed, an individual may waive the right to cancel. To waive the right, the
             424      individual must send or deliver a signed, dated statement in the individual's own words
             425      describing the circumstances that necessitate a waiver. The waiver must explicitly waive the
             426      right to cancel. A waiver by means of a standard form record is void.
             427          Section 8. Section 13-42-122 is amended to read:
             428           13-42-122. Trust account.
             429          (1) All money paid to a provider by or on behalf of an individual [pursuant to a plan]
             430      for distribution to creditors pursuant to a plan is held in trust. Within two business days after
             431      receipt, the provider shall deposit the money in a trust account established for the benefit of
             432      individuals to whom the provider is furnishing debt-management services.
             433          (2) Money held in trust by a provider is not property of the provider or its designee.
             434      The money is not available to creditors of the provider or designee, except an individual from
             435      whom or on whose behalf the provider received money, to the extent that the money has not
             436      been disbursed to creditors of the individual.
             437          (3) A provider shall:
             438          (a) maintain separate records of account for each individual to whom the provider is
             439      furnishing debt-management services;
             440          (b) disburse money paid by or on behalf of the individual to creditors of the individual
             441      as disclosed in the agreement, except that:
             442          (i) the provider may delay payment to the extent that a payment by the individual is
             443      not final; and
             444          (ii) if a plan provides for regular periodic payments to creditors, the disbursement
             445      must comply with the due dates established by each creditor; and
             446          (c) promptly correct any payments that are not made or that are misdirected as a result
             447      of an error by the provider or other person in control of the trust account and reimburse the
             448      individual for any costs or fees imposed by a creditor as a result of the failure to pay or
             449      misdirection.


             450          (4) A provider may not commingle money in a trust account established for the benefit
             451      of individuals to whom the provider is furnishing debt-management services with money of
             452      other persons.
             453          (5) A trust account must at all times have a cash balance equal to the sum of the
             454      balances of each individual's account.
             455          (6) If a provider has established a trust account pursuant to Subsection (1), the
             456      provider shall reconcile the trust account at least once a month. The reconciliation must
             457      compare the cash balance in the trust account with the sum of the balances in each individual's
             458      account. If the provider or its designee has more than one trust account, each trust account
             459      must be individually reconciled.
             460          (7) If a provider discovers, or has a reasonable suspicion of, embezzlement or other
             461      unlawful appropriation of money held in trust, the provider immediately shall notify the
             462      administrator by a method approved by the administrator. Unless the administrator by rule
             463      provides otherwise, within five days thereafter, the provider shall give notice to the
             464      administrator describing the remedial action taken or to be taken.
             465          (8) If an individual terminates an agreement or it becomes reasonably apparent to a
             466      provider that a plan has failed, the provider shall promptly refund to the individual all money
             467      paid by or on behalf of the individual which has not been paid to creditors, less fees that are
             468      payable to the provider under Section 13-42-123 .
             469          (9) Before relocating a trust account from one bank to another, a provider shall inform
             470      the administrator of the name, business address, and telephone number of the new bank. As
             471      soon as practicable, the provider shall inform the administrator of the account number of the
             472      trust account at the new bank.
             473          Section 9. Section 13-42-123 is amended to read:
             474           13-42-123. Fees and other charges.
             475          (1) A provider may not impose directly or indirectly a fee or other charge on an
             476      individual or receive money from or on behalf of an individual for debt-management services
             477      except as permitted by this section.


             478          (2) A provider may not impose charges or receive payment for debt-management
             479      services until the provider and the individual have signed an agreement that complies with
             480      Sections 13-42-119 and 13-42-128 .
             481          (3) If an individual assents to an agreement, a provider may not impose a fee or other
             482      charge for educational or counseling services, or the like, except as otherwise provided in this
             483      Subsection (3) and Subsection 13-42-128 (4). The administrator may authorize a provider to
             484      charge a fee based on the nature and extent of the educational or counseling services furnished
             485      by the provider.
             486          (4) Subject to adjustment of dollar amounts pursuant to Subsection 13-42-132 (6), the
             487      following rules apply:
             488          (a) If an individual assents to a plan that contemplates that creditors will reduce
             489      finance charges or fees for late payment, default, or delinquency, the provider may charge:
             490          (i) a fee not exceeding $50 for consultation, obtaining a credit report, setting up an
             491      account, and the like; and
             492          (ii) a monthly service fee, not to exceed $10 times the number of [creditors] accounts
             493      remaining in a plan at the time the fee is assessed, but not more than $50 in any month.
             494          (b) If an individual assents to [a plan] an agreement that contemplates that creditors
             495      will settle debts for less than the principal amount of the debt, a provider may charge:
             496          (i) subject to Subsection 13-42-119 (4), a fee for consultation, obtaining a credit report,
             497      setting up an account, and the like, in an amount not exceeding the lesser of $400 and 4% of
             498      the debt in the plan at the inception of the plan; and
             499          (ii) a monthly service fee, not to exceed $10 times the number of [creditors] accounts
             500      remaining in a plan at the time the fee is assessed, but not more than $50 in any month.
             501          (c) A provider may not impose or receive fees under both Subsections (4)(a) and (b).
             502          (d) Except as otherwise provided in Subsection 13-42-128 (4), if an individual does
             503      not assent to an agreement, a provider may receive for educational and counseling services it
             504      provides to the individual a fee not exceeding $100 or, with the approval of the administrator,
             505      a larger fee. The administrator may approve a fee larger than $100 if the nature and extent of


             506      the educational and counseling services warrant the larger fee.
             507          (5) If, before the expiration of 90 days after the completion or termination of
             508      educational or counseling services, an individual assents to an agreement, the provider shall
             509      refund to the individual any fee paid pursuant to Subsection (4)(d).
             510          (6) (a) Except as otherwise provided in Subsections (3) and (4), if [a plan] an
             511      agreement contemplates that creditors will settle an individual's debts for less than the
             512      principal amount of the debt, compensation for services in connection with settling a debt may
             513      not exceed[, with respect to each debt, 30% of the excess of the principal amount of the debt
             514      over the amount paid the creditor pursuant to the plan, less to the extent it has not been
             515      credited against an earlier settlement fee:] one of the following applicable settlement fee limits
             516      in Subsection (6)(b) or (c), the terms of which shall be clearly disclosed in the agreement.
             517          [(a) the fee charged pursuant to Subsection (4)(b)(i); and]
             518          [(b) the aggregate of fees charged pursuant to Subsection (4)(b)(ii).]
             519          (b) (i) With respect to agreements where a flat settlement fee is charged based on the
             520      overall amount of included debt, total aggregate fees charged may not exceed 17% of the
             521      principal amount of debt included in the agreement, including any fees charged under
             522      Subsections (4)(b)(i) and (ii).
             523          (ii) The flat settlement fee authorized under this Subsection (6)(b) shall be assessed in
             524      equal monthly payments over no less than half of the length of the plan, as estimated at the
             525      plan's inception, unless:
             526          (A) payment is voluntarily accelerated by the individual in a separate record; and
             527          (B) at least half of the principal amount of overall debt included in the agreement at its
             528      inception has been settled.
             529          (c) (i) With respect to agreements where fees are calculated as a percentage of the
             530      amount saved by an individual, a settlement fee may not exceed 30% of the excess of the
             531      outstanding amount of each debt over the amount actually paid to the creditor, as calculated at
             532      the time of settlement.
             533          (ii) Settlement fees authorized under this Subsection (6)(c):


             534          (A) may be collected only as debts are settled; and
             535          (B) the total aggregate amount of fees charged to any individual under this chapter,
             536      including fees charged under Subsections (4)(b)(i) and (ii), may not exceed 20% of the
             537      principal amount of debt included in the agreement at the agreement's inception.
             538          (d) A provider may not impose or receive fees under both Subsections (6)(b) and (c).
             539          (7) Subject to adjustment of the dollar amount pursuant to Subsection 13-42-132 (6), if
             540      a payment to a provider by an individual under this chapter is dishonored, a provider may
             541      impose a reasonable charge on the individual, not to exceed the lesser of $25 and the amount
             542      permitted by law other than this chapter.
             543          Section 10. Section 13-42-128 is amended to read:
             544           13-42-128. Prohibited acts and practices.
             545          (1) A provider may not, directly or indirectly:
             546          (a) misappropriate or misapply money held in trust;
             547          (b) settle a debt on behalf of an individual for more than 50% of the principal amount
             548      of the debt owed a creditor, unless the individual assents to the settlement after the creditor has
             549      assented;
             550          (c) take a power of attorney that authorizes it to settle a debt, unless the power of
             551      attorney expressly limits the provider's authority to settle debts for not more than 50% of the
             552      principal amount of the debt owed a creditor;
             553          (d) exercise or attempt to exercise a power of attorney after an individual has
             554      terminated an agreement;
             555          (e) initiate a transfer from an individual's account at a bank or with another person
             556      unless the transfer is:
             557          (i) a return of money to the individual; or
             558          (ii) before termination of an agreement, properly authorized by the agreement and this
             559      chapter, and for:
             560          (A) payment to one or more creditors pursuant to [a plan] an agreement; or
             561          (B) payment of a fee;


             562          (f) offer a gift or bonus, premium, reward, or other compensation to an individual for
             563      executing an agreement;
             564          (g) offer, pay, or give a gift or bonus, premium, reward, or other compensation to a
             565      person for referring a prospective customer, if the person making the referral has a financial
             566      interest in the outcome of debt-management services provided to the customer, unless neither
             567      the provider nor the person making the referral communicates to the prospective customer the
             568      identity of the source of the referral;
             569          (h) receive a bonus, commission, or other benefit for referring an individual to a
             570      person;
             571          (i) structure a plan in a manner that would result in a negative amortization of any of
             572      an individual's debts, unless a creditor that is owed a negatively amortizing debt agrees to
             573      refund or waive the finance charge upon payment of the principal amount of the debt;
             574          (j) compensate its employees on the basis of a formula that incorporates the number of
             575      individuals the employee induces to enter into agreements;
             576          (k) settle a debt or lead an individual to believe that a payment to a creditor is in
             577      settlement of a debt to the creditor unless, at the time of settlement, the individual:
             578          (i) receives a certification by the creditor that the payment is in full settlement of the
             579      debt; or
             580          (ii) is part of a payment plan, the terms of which are included in the certification,
             581      which upon completion will result in full settlement of the debt;
             582          (l) make a representation that:
             583          (i) the provider will furnish money to pay bills or prevent attachments;
             584          (ii) payment of a certain amount will permit satisfaction of a certain amount or range
             585      of indebtedness; or
             586          (iii) participation in a plan will or may prevent litigation, garnishment, attachment,
             587      repossession, foreclosure, eviction, or loss of employment;
             588          (m) misrepresent that it is authorized or competent to furnish legal advice or perform
             589      legal services;


             590          (n) represent in its agreements, disclosures required by this chapter, advertisements, or
             591      Internet website that it is:
             592          (i) a not-for-profit entity unless it is organized and properly operating as a
             593      not-for-profit entity under the law of the state in which it was formed [or that it is]; or
             594          (ii) a tax-exempt entity unless it has received certification of tax-exempt status from
             595      the Internal Revenue Service and is properly operating as a not-for-profit entity under the law
             596      of the state in which it was formed;
             597          (o) take a confession of judgment or power of attorney to confess judgment against an
             598      individual;
             599          (p) employ an unfair, unconscionable, or deceptive act or practice, including the
             600      knowing omission of any material information; or
             601          (q) make or use any untrue or misleading statement:
             602          (i) to the administrator; or
             603          (ii) in the provision of services subject to this chapter.
             604          (2) If a provider furnishes debt-management services to an individual, the provider
             605      may not, directly or indirectly:
             606          (a) purchase a debt or obligation of the individual;
             607          (b) receive from or on behalf of the individual:
             608          (i) a promissory note or other negotiable instrument other than a check or a demand
             609      draft; or
             610          (ii) a post-dated check or demand draft;
             611          (c) lend money or provide credit to the individual, except as a deferral of a settlement
             612      fee at no additional expense to the individual;
             613          (d) obtain a mortgage or other security interest from any person in connection with the
             614      services provided to the individual;
             615          (e) except as permitted by federal law, disclose the identity or identifying information
             616      of the individual or the identity of the individual's creditors, except to:
             617          (i) the administrator, upon proper demand;


             618          (ii) a creditor of the individual, to the extent necessary to secure the cooperation of the
             619      creditor in a plan; or
             620          (iii) the extent necessary to administer the plan;
             621          (f) except as otherwise provided in Subsection 13-42-123 (6), provide the individual
             622      less than the full benefit of a compromise of a debt arranged by the provider;
             623          (g) charge the individual for or provide credit or other insurance, coupons for goods or
             624      services, membership in a club, access to computers or the Internet, or any other matter not
             625      directly related to debt-management services or educational services concerning personal
             626      finance, except to the extent such services are expressly authorized by the administrator; or
             627          (h) furnish legal advice or perform legal services, unless the person furnishing that
             628      advice to or performing those services for the individual is licensed to practice law.
             629          (3) This chapter does not authorize any person to engage in the practice of law.
             630          (4) A provider may not receive a gift or bonus, premium, reward, or other
             631      compensation, directly or indirectly, for advising, arranging, or assisting an individual in
             632      connection with obtaining, an extension of credit or other service from a lender or service
             633      provider, except for educational or counseling services required in connection with a
             634      government-sponsored program.
             635          (5) Unless a person supplies goods, services, or facilities generally and supplies them
             636      to the provider at a cost no greater than the cost the person generally charges to others, a
             637      provider may not purchase goods, services, or facilities from the person if an employee or a
             638      person that the provider should reasonably know is an affiliate of the provider:
             639          (a) owns more than 10% of the person; or
             640          (b) is an employee or affiliate of the person.
             641          Section 11. Section 13-42-130 is amended to read:
             642           13-42-130. Advertising.
             643          [A provider] (1) If a provider whose agreements contemplate that creditors will reduce
             644      finance charges or fees for late payment, default, or delinquency advertises debt-management
             645      services, it shall disclose, in an easily comprehensible manner, that using a debt-management


             646      plan may make it harder for the individual to obtain credit.
             647          (2) If a provider whose agreements contemplate that creditors will settle for less than
             648      the full principal amount of debt that advertises debt-management services, it shall disclose, in
             649      an easily comprehensible manner[,]:
             650          (a) the information specified in Subsections 13-42-117 (4)(c) and (d)[.]; and
             651          (b) the provider's settlement fee structure, consistent with the limitations of Section
             652      13-42-123 .


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