AB218: Bill Text

AB218,33,5 (f) If a provider has established a trust account pursuant to par. (a), the provider shall reconcile the trust account at least once a month. The reconciliation must compare the cash balance in the trust account with the sum of the balances in each individual's account. If the provider or its designee has more than one trust account, each trust account must be individually reconciled.

AB218,33,10 (g) If a provider discovers, or has a reasonable suspicion of, embezzlement or other unlawful appropriation of money held in trust, the provider immediately shall notify the division by a method approved by the division. Unless the division by rule provides otherwise, within 5 days thereafter, the provider shall give notice to the division describing the remedial action taken or to be taken.

AB218,33,14 (h) If an individual terminates an agreement or it becomes reasonably apparent to a provider that a plan has failed, the provider shall promptly refund to the individual all money paid by or on behalf of the individual which has not been paid to creditors, less fees that are payable to the provider under sub. (22).

AB218,33,19 (i) Before relocating a trust account from one financial institution to another, a provider shall inform the division of the name, business address, and telephone number of the new financial institution. As soon as practicable, the provider shall inform the administrator of the account number of the trust account at the new financial institution.

AB218,33,23 (22) Fees and other charges. (a) A provider may not impose directly or indirectly a fee or other charge on an individual or receive money from or on behalf of an individual for debt-management services except as permitted by this subsection.

AB218,34,3 (b) A provider may not impose charges or receive payment for debt-management services until the provider and the individual have signed an agreement that complies with subs. (18) and (27).

AB218,34,8 (c) If an individual assents to an agreement, a provider may not impose a fee or other charge for educational or counseling services, or the like, except as otherwise provided in this subsection and sub. (27) (d). The division may authorize a provider to charge a fee based on the nature and extent of the educational or counseling services furnished by the provider.

AB218,34,10 (d) Subject to adjustment of dollar amounts pursuant to sub. (31) (f), all of the following rules apply:

AB218,34,13 1. If an individual assents to a plan that contemplates that creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may charge all of the following:

AB218,34,15 a. A fee not exceeding $50 for consultation, obtaining a credit report, setting up an account, and the like.

AB218,34,18 b. A monthly service fee, not to exceed $10 times the number of creditors remaining in a plan at the time the fee is assessed, but not more than $50 in any month.

AB218,34,21 2. If an individual assents to a plan that contemplates that creditors will settle debts for less than the principal amount of the debt, a provider may charge all of the following:

AB218,34,24 a. Subject to sub. sub. (18) (d), a fee for consultation, obtaining a credit report, setting up an account, and the like, in an amount not exceeding the lesser of $400 and 4 percent of the debt in the plan at the inception of the plan.

AB218,35,3 b. A monthly service fee, not to exceed $10 times the number of creditors remaining in a plan at the time the fee is assessed, but not more than $50 in any month.

AB218,35,4 3. A provider may not impose or receive fees under both subds. 1. and 2.

AB218,35,9 4. Except as otherwise provided in sub. (27) (d), if an individual does not assent to an agreement, a provider may receive for educational and counseling services it provides to the individual a fee not exceeding $100 or, with the approval of the division, a larger fee. The division may approve a fee larger than $100 if the nature and extent of the educational and counseling services warrant the larger fee.

AB218,35,12 (e) If, before the expiration of 90 days after the completion or termination of educational or counseling services, an individual assents to an agreement, the provider shall refund to the individual any fee paid pursuant to par. (d) 4.

AB218,35,18 (f) Except as otherwise provided in pars. (c) and (d), if a plan contemplates that creditors will settle an individual's debts for less than the principal amount of the debt, compensation for services in connection with settling a debt may not exceed, with respect to each debt, 30 percent of the excess of the principal amount of the debt over the amount paid the creditor pursuant to the plan, less the sum of the following, to the extent it has not been credited against an earlier settlement fee:

AB218,35,19 1. The fee charged pursuant to par. (d) 2. a.

AB218,35,20 2. The aggregate of fees charged pursuant to par. (d) 2. b.

AB218,35,24 (g) Subject to adjustment of the dollar amount pursuant to sub. (31) (f), if a payment to a provider by an individual under this section is dishonored, a provider may impose a reasonable charge on the individual, not to exceed the lesser of $25 and the amount permitted by law other than this section.

AB218,36,6 (23) Voluntary contributions. A provider may not solicit a voluntary contribution from an individual or an affiliate of the individual for any service provided to the individual. A provider may accept voluntary contributions from an individual but, until 30 days after completion or termination of a plan, the aggregate amount of money received from or on behalf of the individual may not exceed the total amount the provider may charge the individual under sub. (22).

AB218,36,9 (24) Voidable agreements. (a) If a provider imposes a fee or other charge or receives money or other payments not authorized by sub. (22) or (23), the individual may void the agreement and recover as provided in sub. (34).

AB218,36,11 (b) If a provider is not licensed as required by this section when an individual assents to an agreement, the agreement is voidable by the individual.

AB218,36,13 (c) If an individual voids an agreement under par. (b), the provider does not have a claim against the individual for breach of contract or for restitution.

AB218,36,16 (25) Termination of agreements. (a) If an individual who has entered into an agreement fails for 60 days to make payments required by the agreement, a provider may terminate the agreement.

AB218,36,18 (b) If a provider or an individual terminates an agreement, the provider shall immediately return to the individual all of the following:

AB218,36,19 1. Any money of the individual held in trust for the benefit of the individual.

AB218,36,21 2. Sixty-five percent of any portion of the set-up fee received pursuant to sub. (22) (d) 2. which has not been credited against settlement fees.

AB218,37,2 (26) Periodic reports and retention of records. (a) A provider shall provide the accounting required by par. (b) upon cancellation or termination of an agreement. Before cancellation or termination of any agreement, a provider shall also provide the accounting required by par. (b) at least once each month and within 5 business days after a request by an individual, but the provider need not comply with more than one request in any calendar month.

AB218,37,4 (b) A provider, in a record, shall provide each individual for whom it has established a plan an accounting of all of the following information:

AB218,37,5 1. The amount of money received from the individual since the last report.

AB218,37,8 2. The amounts and dates of disbursement made on the individual's behalf, or by the individual upon the direction of the provider, since the last report to each creditor listed in the plan.

AB218,37,9 3. The amounts deducted from the amount received from the individual.

AB218,37,10 4. The amount held in reserve.

AB218,37,13 5. If, since the last report, a creditor has agreed to accept as payment in full an amount less than the principal amount of the debt owed by the individual, all of the following:

AB218,37,14 a. The total amount and terms of the settlement.

AB218,37,15 b. The amount of the debt when the individual assented to the plan.

AB218,37,16 c. The amount of the debt when the creditor agreed to the settlement.

AB218,37,17 d. The calculation of a settlement fee.

AB218,37,22 (c) A provider shall maintain records for each individual for whom it provides debt-management services for 5 years after the final payment made by the individual and produce a copy of them to the individual within a reasonable time after a request for them. The provider may use electronic or other means of storage of the records.

AB218,37,24 (27) Prohibited acts and practices. (a) A provider may not, directly or indirectly, do any of the following:

AB218,37,25 1. Misappropriate or misapply money held in trust.

AB218,38,3 2. Settle a debt on behalf of an individual for more than 50 percent of the principal amount of the debt owed a creditor, unless the individual assents to the settlement after the creditor has assented.

AB218,38,6 3. Take a power of attorney that authorizes it to settle a debt, unless the power of attorney expressly limits the provider's authority to settle debts for not more than 50 percent of the principal amount of the debt owed a creditor.

AB218,38,8 4. Exercise or attempt to exercise a power of attorney after an individual has terminated an agreement.

AB218,38,13 5. Initiate a transfer from an individual's account at a financial institution or with another person unless the transfer is a return of money to the individual or unless the transfer is before termination of an agreement, properly authorized by the agreement and this section, and for payment to one or more creditors pursuant to a plan or payment of a fee.

AB218,38,15 6. Offer a gift or bonus, premium, reward, or other compensation to an individual for executing an agreement.

AB218,38,20 7. Offer, pay, or give a gift or bonus, premium, reward, or other compensation to a person for referring a prospective customer, if the person making the referral has a financial interest in the outcome of debt-management services provided to the customer, unless neither the provider nor the person making the referral communicates to the prospective customer the identity of the source of the referral.

AB218,38,22 8. Receive a bonus, commission, or other benefit for referring an individual to a person.

AB218,39,2 9. Structure a plan in a manner that would result in a negative amortization of any of an individual's debts, unless a creditor that is owed a negatively amortizing debt agrees to refund or waive the finance charge upon payment of the principal amount of the debt.

AB218,39,4 10. Compensate its employees on the basis of a formula that incorporates the number of individuals the employee induces to enter into agreements.

AB218,39,8 11. Settle a debt or lead an individual to believe that a payment to a creditor is in settlement of a debt to the creditor unless, at the time of settlement, the individual receives a certification by the creditor that the payment is in full settlement of the debt.

AB218,39,9 12. Make a representation of any of the following:

AB218,39,10 a. That the provider will furnish money to pay bills or prevent attachments.

AB218,39,12 b. That payment of a certain amount will permit satisfaction of a certain amount or range of indebtedness.

AB218,39,14 c. That participation in a plan will or may prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment.

AB218,39,16 13. Misrepresent that it is authorized or competent to furnish legal advice or perform legal services.

AB218,39,20 14. Represent that it is a not-for-profit entity unless it is organized and properly operating as a not-for-profit under the law of the state in which it was formed or that it is a tax-exempt entity unless it has received certification of tax-exempt status from the Internal Revenue Service.

AB218,39,22 15. Take a confession of judgment or power of attorney to confess judgment against an individual.

AB218,39,24 16. Employ an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information.

AB218,40,2 (b) If a provider furnishes debt-management services to an individual, the provider may not, directly or indirectly, do any of the following:

AB218,40,3 1. Purchase a debt or obligation of the individual.

AB218,40,4 2. Receive from or on behalf of the individual any of the following:

AB218,40,6 a. A promissory note or other negotiable instrument other than a check or a demand draft.

AB218,40,7 b. A post-dated check or demand draft.

AB218,40,9 3. Lend money or provide credit to the individual, except as a deferral of a settlement fee at no additional expense to the individual.

AB218,40,11 4. Obtain a mortgage or other security interest from any person in connection with the services provided to the individual.

AB218,40,14 5. Except as permitted by federal law, disclose the identity or identifying information of the individual or the identity of the individual's creditors, except to any of the following:

AB218,40,15 a. The division, upon proper demand.

AB218,40,17 b. A creditor of the individual, to the extent necessary to secure the cooperation of the creditor in a plan.

AB218,40,18 c. The extent necessary to administer the plan.

AB218,40,20 6. Except as otherwise provided in sub. (22) (f), provide the individual less than the full benefit of a compromise of a debt arranged by the provider.

AB218,40,24 7. Charge the individual for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the Internet, or any other matter not directly related to debt-management services or educational services concerning personal finance.

AB218,41,3 8. Furnish legal advice or perform legal services, unless the person furnishing that advice to or performing those services for the individual is licensed to practice law.

AB218,41,4 (c) This section does not authorize any person to engage in the practice of law.

AB218,41,9 (d) A provider may not receive a gift or bonus, premium, reward, or other compensation, directly or indirectly, for advising, arranging, or assisting an individual in connection with obtaining, an extension of credit or other service from a lender or service provider, except for educational or counseling services required in connection with a government-sponsored program.

AB218,41,15 (e) Unless a person supplies goods, services, or facilities generally and supplies them to the provider at a cost no greater than the cost the person generally charges to others, a provider may not purchase goods, services, or facilities from the person if an employee or a person that the provider should reasonably know is an affiliate of the provider owns more than 10 percent of the person or is an employee or affiliate of the person.

AB218,41,20 (28) Notice of litigation. No later than 30 days after a provider has been served with notice of a civil action for violation of this section by or on behalf of an individual who resides in this state at either the time of an agreement or the time the notice is served, the provider shall notify the division in a record that it has been sued.

AB218,41,23 (29) Advertising. A provider that advertises debt-management services shall disclose, in an easily comprehensible manner, the information specified in sub. (16) (d) 3. and 4.

AB218,42,2 (30) Liability for the conduct of other persons. If a provider delegates any of its duties or obligations under an agreement or this section to another person, including an independent contractor, the provider is liable for conduct of the person which, if done by the provider, would violate the agreement or this section.

AB218,42,6 (31) Powers of division. (a) The division may act on its own initiative or in response to complaints and may receive complaints, take action to obtain voluntary compliance with this section, refer cases to the attorney general, and seek or provide remedies as provided in this section.

AB218,42,13 (b) The division may investigate and examine, in this state or elsewhere, by subpoena or otherwise, the activities, books, accounts, and records of a person that provides or offers to provide debt-management services, or a person to which a provider has delegated its obligations under an agreement or this section, to determine compliance with this section. Information that identifies individuals who have agreements with the provider shall not be disclosed to the public. In connection with the investigation, the division may do any of the following:

AB218,42,15 1. Charge the person the reasonable costs necessarily incurred to conduct the examination.

AB218,42,17 2. Require or permit a person to file a statement, verified under oath or affirmation, as to all the facts and circumstances of a matter to be investigated.

AB218,42,21 3. Seek a court order authorizing seizure from a financial institution at which the person maintains a trust account required by sub. (21), any or all money, books, records, accounts, and other property of the provider that is in the control of the financial institution and relates to individuals who reside in this state.

AB218,42,23 (c) The division may adopt rules to implement the provisions of this section in accordance with subch. II of ch. 227.

AB218,43,2 (d) The division may enter into cooperative arrangements with any other federal or state agency having authority over providers and may exchange with any of those agencies information about a provider, including information obtained during an examination of the provider.

AB218,43,4 (e) The division, by rule, shall establish reasonable fees to be paid by providers for the expense of administering this section.