LRB-4012/2
MDK:wlj:nwn
2007 - 2008 LEGISLATURE
March 4, 2008 - Introduced by Representatives Newcomer, Townsend and Wood,
cosponsored by Senator Darling. Referred to Committee on Financial
Institutions.
AB902,1,5
1An Act to amend 49.857 (1) (d) 12., 73.0301 (1) (d) 6., chapter 218 (title),
2subchapter II (title) of chapter 218 [precedes 218.02], 218.02 (1) (a), 220.02 (2)
3(b) and 220.02 (3); and
to create 218.03 of the statutes;
relating to: regulating
4the provision of debt-settlement services, granting rule-making authority, and
5providing a penalty.
Analysis by the Legislative Reference Bureau
Under this bill, with certain exceptions, a person may not provide
debt-settlement services to a resident of this state unless the person obtains a license
from the Division of Banking (division) of the Department of Financial Institutions
(DFI). "Debt-settlement services" is defined as services as an intermediary between
an individual and one or more of the individual's creditors for the purpose of
obtaining concessions, but without receiving from the individual money that is
intended to be distributed to the creditors. "Concessions" is defined as assents to
repayment of debt on terms that are more favorable to the individual than the terms
of a contract between the individual and a creditor.
A person is exempt from the licensure requirement if the person receives no
compensation for providing debt-settlement services. Also exempt is a person who
provides debt-settlement services to an individual who the person has no reason to
believe resides in this state at the time the person agrees to provide the services. In
addition, the bill exempts all of the following persons:
1. Agents and employees of a person who is licensed under the bill.
2. Judicial officers and persons acting under court or administrative orders.
3. Assignees for the benefit of creditors.
4. Financial institutions and certain of their affiliates.
5. Title insurers, escrow companies, and other persons whose provision of
debt-settlement services is incidental to their provision of bill-paying services.
6. Attorneys, certified public accountants, or financial-planning professionals
whose provision of debt-settlement services is incidental to their provision of legal,
accounting, or financial-planning services. The bill requires the division to
promulgate rules for determining the financial-planning professionals that are
subject to the exemption.
7. Persons licensed by DFI as adjustment service companies under current law
who act within the course and scope of that license.
The bill requires an applicant for a license to pay a license fee established by
the division and do all of the following:
1. Provide evidence that the applicant has aggregate umbrella insurance, or
has obtained a surety bond, that satisfies requirements specified in the bill.
2. If the applicant is an out-of-state corporation or limited liability company,
provide a certificate of good standing issued by the other state.
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
1Section
1. 49.857 (1) (d) 12. of the statutes is amended to read:
AB902,3,42
49.857
(1) (d) 12. A license or certificate of registration issued under ss. 138.09,
3138.12, 217.06, 218.0101 to 218.0163, 218.02,
218.03, 218.04, 218.05, 224.72, 224.93
4or subch. III of ch. 551.
AB902, s. 2
5Section
2. 73.0301 (1) (d) 6. of the statutes is amended to read:
AB902,3,96
73.0301
(1) (d) 6. A license or certificate of registration issued by the
7department of financial institutions, or a division of it, under ss. 138.09, 138.12,
8217.06, 218.0101 to 218.0163, 218.02,
218.03, 218.04, 218.05, 224.72, 224.93 or under
9subch. III of ch. 551.
AB902, s. 3
10Section
3. Chapter 218 (title) of the statutes is amended to read:
AB902,4,22
Finance companies, auto dealers,
AB902,4,33
adjustment companies
, debt-
AB902,4,4
4settlement service providers,
AB902,4,55
and collection agencies
AB902, s. 4
6Section
4. Subchapter II (title) of chapter 218 [precedes 218.02] of the statutes
7is amended to read:
