AB902: Bill Text

3. Provide specified business, financial, officer, director, accreditation, and certification information.

4. Describe certain criminal convictions, civil judgments, litigation, and governmental actions regarding the applicant.

5. Submit the results of fingerprint-based criminal history checks on the applicant's officers.

6. Describe the applicant's educational programs, financial analyses, and initial budget programs for individuals whom the applicant counsels.

7. Provide copies of the agreements for providing debt-settlement services that the applicant will use in this state.

8. Provide the applicant's fee schedule.

The division must issue a license to an applicant, unless any of the following applies: 1) the application is incomplete or contains materially erroneous information; or 2) an officer, director, or owner of the applicant has defaulted in the payment of money collected for others or has been convicted of a crime, or suffered a civil judgment, involving dishonesty or the violation of federal or state securities laws. The bill also requires the division to deny a license if the applicant is liable for delinquent taxes or is delinquent in making court-ordered child or family support payments.

If a person is licensed under the bill, the bill imposes various requirements on the person's provision of debt-settlement services, including the following: 1) the person must act in good faith; 2) the person must maintain a toll-free customer service communication system; and 3) before providing services to an individual, the person must provide the individual with an itemized list of goods, services, and charges; educate the individual about personal finance management; make certain disclosures; and prepare a financial analysis and debt program for the individual. The bill also imposes requirements on agreements for licensed persons to provide debt-settlement services to individuals, including requirements for terminating such agreements. In addition, the bill specifies records that licensed persons must maintain and prohibits licensed persons from engaging in specified conduct.

The bill creates other requirements, including the following:

1. The bill imposes deadlines on the division's consideration of an application for a license.

2. The bill requires licensed persons to renew their licenses annually.

3. The bill allows a person licensed or registered in another state to apply for a license in this state by submitting the other state's application and license or registration.

4. The bill allows the division to suspend, revoke, or deny renewal of a license if a person is insolvent; commits a material violation of the bill's requirements; fails to cooperate with certain investigations by the division; is liable for delinquent taxes; or is delinquent in making court-ordered child or family support payments.

5. The bill allows the division to investigate and enforce the bill's requirements, including by ordering persons to take corrective action or by obtaining civil forfeitures.

6. The bill allows an individual to void a debt-settlement service agreement with a person who violates the requirement to be licensed and, with certain exceptions, allows an individual who is harmed by a licensed person's violation of the bill's requirements to bring a civil action against the licensed person.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB902, s. 1 Section 1. 49.857 (1) (d) 12. of the statutes is amended to read:

AB902,3,4 49.857 (1) (d) 12. A license or certificate of registration issued under ss. 138.09, 138.12, 217.06, 218.0101 to 218.0163, 218.02, 218.03, 218.04, 218.05, 224.72, 224.93 or subch. III of ch. 551.

AB902, s. 2 Section 2. 73.0301 (1) (d) 6. of the statutes is amended to read:

AB902,3,9 73.0301 (1) (d) 6. A license or certificate of registration issued by the department of financial institutions, or a division of it, under ss. 138.09, 138.12, 217.06, 218.0101 to 218.0163, 218.02, 218.03, 218.04, 218.05, 224.72, 224.93 or under subch. III of ch. 551.

AB902, s. 3 Section 3. Chapter 218 (title) of the statutes is amended to read:

AB902,4,1 Chapter 218

AB902,4,2 Finance companies, auto dealers,

AB902,4,3 adjustment companies, debt-

AB902,4,4 settlement service providers,

AB902,4,5 and collection agencies

AB902, s. 4 Section 4. Subchapter II (title) of chapter 218 [precedes 218.02] of the statutes is amended to read:

AB902,4,8 Chapter 218

AB902,4,9 Subchapter II

AB902,4,10 Adjustment service companies And

AB902,4,11 Debt-settlement service providers

AB902, s. 5 Section 5. 218.02 (1) (a) of the statutes is amended to read:

AB902,4,21 218.02 (1) (a) "Adjustment service company," hereinafter called company, shall mean a corporation, limited liability company, association, partnership or individual engaged as principal in the business of prorating the income of a debtor to the debtor's creditor or creditors, or of assuming the obligations of any debtor by purchasing the accounts the debtor may have with the debtor's several creditors, in return for which the principal receives a service charge or other consideration. "Adjustment service company" does not include a person licensed as a provider of debt-settlement services under s. 218.03 if the person is acting within the course and scope of that license.

AB902, s. 6 Section 6. 218.03 of the statutes is created to read:

AB902,4,23 218.03 Debt-settlement service providers.

AB902,4,24 (1) Definitions. In this section:

AB902,4,25 (a) 1. "Affiliate," with respect to an individual, means any of the following:

AB902,5,1 a. The spouse of the individual.

AB902,5,2 b. A sibling of the individual or the spouse of a sibling.

AB902,5,4 c. An individual or the spouse of an individual who is a lineal ancestor or lineal descendant of the individual or the individual's spouse.

AB902,5,7 d. An aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, or grandnephew, whether related by the whole or the half blood or adoption, or the spouse of any of them.

AB902,5,8 e. Any other individual occupying the residence of the individual.

AB902,5,9 2. "Affiliate," with respect to an entity, means any of the following:

AB902,5,11 a. A person that directly or indirectly controls, is controlled by, or is under common control with the entity.

AB902,5,13 b. An officer of, or an individual performing similar functions with respect to, the entity.

AB902,5,15 c. A director of, or an individual performing similar functions with respect to, the entity.

AB902,5,20 d. Subject to adjustment of the dollar amount pursuant to sub. (28) (f), a person that receives or received more than $25,000 from the entity in either the current year or the preceding year or a person that owns more than 10 percent of, or an individual who is employed by or is a director of, a person that receives or received more than $25,000 from the entity in either the current year or the preceding year.

AB902,5,22 e. An officer or director of, or an individual performing similar functions with respect to, a person described in subd. 2. a.

AB902,5,24 f. The spouse of, or an individual occupying the residence of, an individual described in subd. 2. a. to e.

AB902,6,2 g. An individual who has the relationship specified in subd. 1. d. to an individual or the spouse of an individual described in subd. 2. a. to e.

AB902,6,4 (b) "Agreement" means an agreement between a provider and an individual for the performance of debt-settlement services.

AB902,6,6 (c) "Business address" means the physical location of a business, including the name and number of a street.

AB902,6,10 (d) "Certified debt specialist" means an individual certified by a training program or certifying organization that authenticates the competence of individuals providing assistance to other individuals in connection with debt-settlement services.

AB902,6,12 (e) "Concessions" means assent to repayment of a debt on terms more favorable to an individual than the terms of the contract between the individual and a creditor.

AB902,6,13 (f) "Day" means calendar day.

AB902,6,17 (g) "Debt-settlement services" means services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions without receiving money from the individual with the intent to distribute money to the individual's creditors.

AB902,6,18 (h) "Division" means the division of banking.

AB902,6,19 (i) "Entity" means a person other than an individual.

AB902,6,23 (j) "Financial institution" means a financial institution, including a commercial bank, savings bank, savings and loan association, credit union, and trust company, engaged in the business of banking, chartered under federal or state law, and regulated by a federal or state banking regulatory authority.

AB902,6,25 (k) "Good faith" means honesty in fact and the observance of reasonable standards of fair dealing.

AB902,7,4 (L) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, or any other legal or commercial entity. "Person" does not include a public corporation, government, or governmental subdivision, agency, or instrumentality.

AB902,7,6 (m) "Principal amount of the debt" means the amount of a debt at the time of the execution of an agreement.

AB902,7,10 (n) "Program" means a program or strategy in which a provider furnishes debt-settlement services, which contemplates that creditors will settle debts for less than the full principal amount of the debt owed by an individual, and under which the individual makes payments directly to the creditors.

AB902,7,12 (o) "Provider" means a person that provides, offers to provide, or agrees to provide debt-settlement services directly or through others.

AB902,7,14 (p) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

AB902,7,19 (q) "Settlement fee" means a fee charged pursuant to a fee agreement between an individual and debt settlement provider under which the fee is calculated using a percentage of savings the individual realizes from a settled debt in connection with a creditor's assent to accept in full satisfaction of a debt an amount less than the principal amount of the debt.

AB902,7,21 (r) "Sign" means, with present intent to authenticate or adopt a record, any of the following:

AB902,7,22 1. To execute or adopt a tangible symbol.

AB902,7,24 2. To attach to or logically associate with the record an electronic sound, symbol, or process.

AB902,8,3 (s) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

AB902,8,6 (2) Exempt agreements and persons. (a) This section does not apply to an agreement with an individual who the provider has no reason to know resides in this state at the time of the agreement.

AB902,8,8 (b) This section does not apply to a provider to the extent that the provider does any of the following:

AB902,8,11 1. Provides or agrees to provide debt-settlement, educational, or counseling services to an individual who the provider has no reason to know resides in this state at the time the provider agrees to provide the services.

AB902,8,13 2. Receives no compensation for debt-settlement services from or on behalf of the individuals to whom it provides the services or from their creditors.

AB902,8,16 (c) This section does not apply to any of the following persons or their employees when the person or the employee is engaged in the regular course of the person's business or profession:

AB902,8,18 1. A judicial officer, a person acting under an order of a court or an administrative agency, or an assignee for the benefit of creditors.

AB902,8,19 2. A financial institution.

AB902,8,21 3. An affiliate, as defined in sub. (1) (a) 2. a., of a financial institution if the affiliate is regulated by a federal or state banking regulatory authority.

AB902,8,24 4. A title insurer, escrow company, or other person, that provides bill-paying services, if the provision of debt-settlement services is incidental to the bill-paying services.

AB902,9,3 5. An attorney licensed or otherwise authorized to practice law in this state who provides legal services in an attorney-client relationship, if the provision of debt-settlement services is incidental to the provision of legal services.

AB902,9,7 6. A certified public accountant licensed to provide accounting services in this state who provides accounting services in an accountant-client relationship, if the provision of debt-settlement services is incidental to the provision of accounting services.

AB902,9,12 7. A member of a financial-planning profession whose members the division, by rule, determines are licensed by this state and subject to a disciplinary mechanism, code of professional responsibility, and continuing education requirement, if the member's provision of debt-settlement services is incidental to the provision of financial-planning services.

AB902,9,14 8. A person licensed as an adjustment service company under s. 218.02 if the person is acting within the course and scope of that license.

AB902,9,18 (3) License required. (a) Except as otherwise provided in par. (b), a provider may not provide debt-settlement services to an individual who it reasonably should know resides in this state at the time it agrees to provide the services, unless the provider is licensed under this section.

AB902,9,20 (b) If a provider is licensed under this section, par. (a) does not apply to an employee or agent of the provider.

AB902,9,22 (c) The division shall maintain and publicize a list of the names of all licensed providers.

AB902,9,24 (4) Application for license: form, fee, and accompanying documents. (a) An application for licensure as a provider shall be in a form prescribed by the division.