SECOND REGULAR SESSION
94TH GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVES BURNETT (Sponsor), TALBOY, BAKER (25), YAEGER, GRILL, HUGHES AND LAMPE (Co-sponsors).
Pre-filed December 18, 2007 and copies ordered printed.
D. ADAM CRUMBLISS, Chief Clerk
AN ACT
To repeal sections 425.010, 425.020, 425.030, and 425.040, RSMo, and to enact in lieu thereof forty-two new sections relating to debt-management services.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 425.010, 425.020, 425.030, and 425.040, RSMo, are repealed and forty-two new sections enacted in lieu thereof, to be known as sections 425.050, 425.052, 425.054, 425.056, 425.058, 425.060, 425.062, 425.064, 425.066, 425.068, 425.070, 425.072, 425.074, 425.076, 425.078, 425.080, 425.082, 425.084, 425.086, 425.088, 425.090, 425.092, 425.094, 425.096, 425.098, 425.100, 425.102, 425.104, 425.106, 425.108, 425.110, 425.112, 425.114, 425.116, 425.118, 425.120, 425.122, 425.124, 425.126, 425.128, 425.130, and 425.132, to read as follows:
425.050. Sections 425.050 to 425.132 shall be known and may be cited as the "Uniform Debt-Management Services Act".
425.052. As used in sections 425.050 to 425.132, the following words shall mean:
(1) "Administrator", the attorney general who is in charge of enforcing sections 425.050 to 425.132;
(2) "Affiliate":
(a) With respect to an individual:
a. The spouse of the individual;
b. A sibling of the individual or the spouse of a sibling; c. An individual or the spouse of an individual who is a lineal ancestor or lineal descendant of the individual; or
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; or
e. Any other individual occupying the residence of the individual;
(b) With respect to an entity:
a. A person that directly or indirectly controls, is controlled by, or is under common control with the entity;
b. An officer of, or an individual performing similar functions with respect to, the entity;
c. A director of, or an individual performing similar functions with respect to, the entity;
d. Subject to adjustment of the dollar amount under subsection 6 of section 425.112, a person that receives or received more than twenty-five thousand dollars from the entity in either the current year or the preceding year or a person that owns more than ten percent of, or an individual who is employed by or is a director of, a person that receives or received more than twenty-five thousand dollars from the entity in either the current year or the preceding year;
e. An officer or director of, or an individual performing similar functions with respect to, a person described in subparagraph a. of paragraph (a) of this subdivision;
f. The spouse of, or an individual occupying the residence of, an individual described in subparagraphs a. to e. of paragraph (a) of this subdivision; or
g. An individual who has the relationship specified in subparagraph d. of paragraph (a) of this subdivision to an individual or the spouse of an individual described in subparagraphs a. to e. of paragraph (a) of this subdivision;
(3) "Agreement", an agreement between a provider and an individual for the performance of debt-management services;
(4) "Bank", 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;
(5) "Business address", the physical location of a business, including the name and number of a street;
(6) "Certified counselor", an individual certified by a training program or certifying organization, approved by the administrator, that authenticates the competence of individuals providing education and assistance to other individuals in connection with debt-management services;
(7) "Concessions", 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;
(8) "Day", calendar day;
(9) "Debt-management services", services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions, but shall not include:
(a) Legal services provided in an attorney-client relationship by an attorney licensed or otherwise authorized to practice law in this state;
(b) Accounting services provided in an accountant-client relationship by a certified public accountant licensed to provide accounting services in this state; or
(c) Financial-planning services provided in a financial planner-client relationship by a member of a financial-planning profession whose members the administrator, by rule, determines are:
a. Licensed by this state;
b. Subject to a disciplinary mechanism;
c. Subject to a code of professional responsibility; and
d. Subject to a continuing-education requirement;
(10) "Entity", a person other than an individual;
(11) "Good faith", honesty in fact and the observance of reasonable standards of fair dealing;
(12) "Person", an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, or any other legal or commercial entity. The term does not include a public corporation, government, or governmental subdivision, agency, or instrumentality;
(13) "Plan", a program or strategy in which a provider furnishes debt-management services to an individual and which includes a schedule of payments to be made by or on behalf of the individual and used to pay debts owed by the individual;
(14) "Principal amount of the debt", the amount of a debt at the time of an agreement;
(15) "Provider", a person that provides, offers to provide, or agrees to provide debt-management services directly or through others;
(16) "Record", information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;
(17) "Settlement fee", a charge imposed on or paid by an individual 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;
(18) "Sign", present intent to authenticate or adopt a record:
(a) To execute or adopt a tangible symbol; or
(b) To attach to or logically associate with the record an electronic sound, symbol, or process;
(19) "State", 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;
(20) "Trust account", an account held by a provider that is:
(a) Established in an insured bank;
(b) Separate from other accounts of the provider or its designee;
(c) Designated as a trust account or other account designated to indicate that the money in the account is not the money of the provider or its designee; and
(d) Used to hold money of one or more individuals for disbursement to creditors of the individuals.
425.054. 1. Sections 425.050 to 425.132 shall 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.
2. Sections 425.050 to 425.132 shall not apply to a provider to the extent that the provider:
(1) Provides or agrees to provide debt-management, 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; or
(2) Receives no compensation for debt-management services from or on behalf of the individuals to whom it provides the services or from their creditors.
3. Sections 425.050 to 425.132 shall not apply to 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:
(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;
(2) A bank;
(3) An affiliate, as defined in subdivision (2) of section 425.052, of a bank if the affiliate is regulated by a federal or state banking regulatory authority; or
(4) A title insurer, escrow company, or other person that provides bill-paying services if the provision of debt-management services is incidental to the bill-paying services.
425.056. 1. Except as otherwise provided in subsection 2 of this section, a provider shall not provide debt-management 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 registered under sections 425.050 to 425.132.
2. If a provider is registered under sections 425.050 to 425.132, subsection 1 of this section shall not apply to an employee or agent of the provider.
3. The administrator shall maintain and publicize a list of the names of all registered providers.
425.058. 1. An application for registration as a provider shall be in a form prescribed by the administrator.
2. Subject to adjustment of dollar amounts under subsection 6 of section 425.112, an application for registration as a provider shall be accompanied by:
(1) The fee established by the administrator;
(2) The bond required by section 425.074;
(3) Identification of all trust accounts required by section 425.092 and an irrevocable consent authorizing the administrator to review and examine the trust accounts;
(4) Evidence of insurance in the amount of two hundred fifty thousand dollars:
(a) Against the risks of dishonesty, fraud, theft, and other misconduct on the part of the applicant or a director, employee, or agent of the applicant;
(b) Issued by an insurance company authorized to do business in this state and rated at least "A" by a nationally recognized rating organization;
(c) With no deductible;
(d) Payable to the applicant, the individuals who have agreements with the applicant, and this state, as their interests may appear; and
(e) Not subject to cancellation by the applicant without the approval of the administrator;
(5) A record consenting to the jurisdiction of this state containing:
(a) The name, business address, and other contact information of its registered agent in this state for the purposes of service of process; or
(b) The appointment of the administrator or other state official as agent of the provider for purposes of service of process; and
(6) If the applicant is organized as a not-for-profit entity or is exempt from taxation, evidence of not-for-profit and tax-exempt status applicable to the applicant under section 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501) as amended.
425.060. An application for registration shall be signed under oath and include:
(1) The applicant’s name, principal business address and telephone number, and all other business addresses in this state, electronic-mail addresses, and Internet web site addresses;
(2) All names under which the applicant conducts business;
(3) The address of each location in this state at which the applicant will provide debt-management services or a statement that the applicant will have no such location;
(4) The name and home address of each officer and director of the applicant and each person that owns at least ten percent of the applicant;
(5) Identification of every jurisdiction in which, during the five years immediately preceding the application:
(a) The applicant or any of its officers or directors has been licensed or registered to provide debt-management services; or
(b) Individuals have resided when they received debt-management services from the applicant;
(6) A statement describing, to the extent it is known or should be known by the applicant, any material civil or criminal judgment or litigation and any material administrative or enforcement action by a governmental agency in any jurisdiction against the applicant, any of its officers, directors, owners, or agents, or any person who is authorized to have access to the trust account required by section 425.092;
(7) The applicant’s financial statements, audited by an accountant licensed to conduct audits, for each of the two years immediately preceding the application or, if it has not been in operation for the two years preceding the application, for the period of its existence;
(8) Evidence of accreditation by an independent accrediting organization approved by the administrator;
(9) Evidence that, within twelve months after initial employment, each of the applicant’s counselors becomes certified as a certified counselor;
(10) A description of the three most commonly used educational programs that the applicant provides or intends to provide to individuals who reside in this state and a copy of any materials used or to be used in those programs;
(11) A description of the applicant’s financial analysis and initial budget plan, including any form or electronic model, used to evaluate the financial condition of individuals;
(12) A copy of each form of agreement that the applicant will use with individuals who reside in this state;
(13) The schedule of fees and charges that the applicant will use with individuals who reside in this state;
(14) At the applicant’s expense, the results of a criminal-records check, including fingerprints, conducted within the immediately preceding twelve months, covering every officer of the applicant and every employee or agent of the applicant who is authorized to have access to the trust account required by section 425.092;
(15) The names and addresses of all employers of each director during the ten years immediately preceding the application;
(16) A description of any ownership interest of at least ten percent by a director, owner, or employee of the applicant in:
(a) Any affiliate of the applicant; or
(b) Any entity that provides products or services to the applicant or any individual relating to the applicant’s debt-management services;
(17) A statement of the amount of compensation of the applicant’s five most highly compensated employees for each of the three years immediately preceding the application or, if it has not been in operation for the three years preceding the application, for the period of its existence;
(18) The identity of each director who is an affiliate, as defined in paragraph (a) of subdivision (2) of section 425.052 or subparagraph a., b., d., e., f., or g. of paragraph (b) of subdivision (2) of section 425.052, of the applicant; and
(19) Any other information that the administrator reasonably requires to perform the administrator’s duties under section 425.066.
425.062. An applicant or registered provider shall notify the administrator within ten days after a change in the information specified in subdivision (4) of subsection 2 of section 425.058 or subdivision (1), (3), (6), (12), or (13) of section 425.060.
425.064. Except for the information required by subdivisions (7), (14), and (17) of section 425.060 and the addresses required by subdivision (4) of section 425.060, the administrator shall make the information in an application for registration as a provider available to the public.
425.066. 1. Except as otherwise provided in subsections 2 and 3 of this section, the administrator shall issue a certificate of registration as a provider to a person that complies with sections 425.058 and 425.060.
2. The administrator may deny registration if:
(1) The application contains information that is materially erroneous or incomplete;
(2) An officer, director, or owner of the applicant has been convicted of a crime, or suffered a civil judgment, involving dishonesty or the violation of state or federal securities laws;
(3) The applicant or any of its officers, directors, or owners has defaulted in the payment of money collected for others; or
(4) The administrator finds that the financial responsibility, experience, character, or general fitness of the applicant or its owners, directors, employees, or agents does not warrant belief that the business will be operated in compliance with sections 425.050 to 425.132.
3. The administrator shall deny registration if:
(1) The application is not accompanied by the fee established by the administrator; or
(2) With respect to an applicant that is organized as a not-for-profit entity or has obtained tax-exempt status under section 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501) as amended, the applicant’s board of directors is not independent of the applicant’s employees and agents.
4. Subject to adjustment of the dollar amount under subsection 6 of section 425.112, a board of directors shall not be independent for purposes of subsection 3 of this section if more than one-fourth of its members:
(1) Are affiliates of the applicant, as defined in paragraph (a) of subdivision (2) of section 425.052 or subparagraph a., b., d., e., f., or g. of paragraph (b) of subdivision (2) of section 425.052, of the applicant; or
(2) After the date ten years before first becoming a director of the applicant, were employed by or directors of a person that received from the applicant more than twenty-five thousand dollars in either the current year or the preceding year.
425.068. 1. The administrator shall approve or deny an initial registration as a provider within one hundred twenty days after an application is filed. In connection with a request under subdivision (19) of section 425.060 for additional information, the administrator may extend the one-hundred-twenty-day period for not more than sixty days. Within seven days after denying an application, the administrator, in a record, shall inform the applicant of the reasons for the denial.
2. If the administrator denies an application for registration as a provider or does not act on an application within the time prescribed in subsection 1 of this section, the applicant may appeal and request a hearing under chapter 536, RSMo.
3. Subject to subsection 4 of section 425.070 and section 425.116, a registration as a provider is valid for one year.
425.070. 1. A provider shall obtain a renewal of its registration annually.
2. An application for renewal of registration as a provider shall be in a form prescribed by the administrator, signed under oath, and:
(1) Be filed no fewer than thirty and no more than sixty days before the registration expires;
(2) Be accompanied by the fee established by the administrator and the bond required by section 425.074;
(3) Contain the matter required for initial registration as a provider by subdivisions (8) and (9) of section 425.060 and a financial statement, audited by an accountant licensed to conduct audits, for the applicant’s fiscal year immediately preceding the application;
(4) Disclose any changes in the information contained in the applicant’s application for registration or its immediately previous application for renewal, as applicable;
(5) Supply evidence of insurance in an amount equal to the larger of two hundred fifty thousand dollars or the highest daily balance in the trust account required by section 425.092 during the six-month period immediately preceding the application:
(a) Against risks of dishonesty, fraud, theft, and other misconduct on the part of the applicant or a director, employee, or agent of the applicant;
(b) Issued by an insurance company authorized to do business in this state and rated at least "A" by a nationally recognized rating organization;
(c) With no deductible;
(d) Payable to the applicant, the individuals who have agreements with the applicant, and this state, as their interests may appear; and
(e) Not subject to cancellation by the applicant without the approval of the administrator;
(6) Disclose the total amount of money received by the applicant under plans during the preceding twelve months from or on behalf of individuals who reside in this state and the total amount of money distributed to creditors of those individuals during that period;
(7) Disclose, to the best of the applicant’s knowledge, the gross amount of money accumulated during the preceding twelve months under plans by or on behalf of individuals who reside in this state and with whom the applicant has agreements; and
(8) Provide any other information that the administrator reasonably requires to perform the administrator’s duties under this section.
3. Except for the information required by subdivisions (7), (14), and (17) of section 425.060 and the addresses required by subdivision (4) of section 425.060, the administrator shall make the information in an application for renewal of registration as a provider available to the public.
4. If a registered provider files a timely and complete application for renewal of registration, the registration remains effective until the administrator, in a record, notifies the applicant of a denial and states the reasons for the denial.
5. If the administrator denies an application for renewal of registration as a provider, the applicant, within thirty days after receiving notice of the denial, may appeal and request a hearing under chapter 536, RSMo. Subject to section 425.116, while the appeal is pending the applicant shall continue to provide debt-management services to individuals with whom it has agreements. If the denial is affirmed, subject to the administrator’s order and section 425.116, the applicant shall continue to provide debt-management services to individuals with whom it has agreements until, with the approval of the administrator, it transfers the agreements to another registered provider or returns to the individuals all unexpended money that is under the applicant’s control.
425.072. If a provider holds a license or certificate of registration in another state authorizing it to provide debt-management services, the provider may submit a copy of that license or certificate and the application for it instead of an application in the form prescribed by subsection 1 of section 425.058, section 425.060, or subsection 2 of section 425.070. The administrator shall accept the application and the license or certificate from the other state as an application for registration as a provider or for renewal of registration as a provider, as appropriate, in this state if:
(1) The application in the other state contains information substantially similar to or more comprehensive than that required in an application submitted in this state;
(2) The applicant provides the information required by subdivisions (1), (3), (10), (12), and (13) of section 425.060; and
(3) The applicant, under oath, certifies that the information contained in the application is current or, to the extent it is not current, supplements the application to make the information current.
425.074. 1. Except as otherwise provided in section 425.076, a provider that is required to be registered under sections 425.050 to 425.132 shall file a surety bond with the administrator, which shall:
(1) Be in effect during the period of registration and for two years after the provider ceases providing debt-management services to individuals in this state; and
(2) Run to this state for the benefit of this state and of individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear.
2. Subject to adjustment of the dollar amount under subsection 6 of section 425.112, a surety bond filed under subsection 1 of this section shall:
(1) Be in the amount of fifty thousand dollars or other larger or smaller amount that the administrator determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals, and any other factor the administrator considers appropriate;
(2) Be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least "A" by a nationally recognized rating organization; and
(3) Have payment conditioned upon noncompliance of the provider or its agent under sections 425.050 to 425.132.
3. If the principal amount of a surety bond is reduced by payment of a claim or a judgment, the provider shall immediately notify the administrator and, within thirty days after notice by the administrator, file a new or additional surety bond in an amount set by the administrator. The amount of the new or additional bond shall be at least the amount of the bond immediately before payment of the claim or judgment. If for any reason a surety terminates a bond, the provider shall immediately file a new surety bond in the amount of fifty thousand dollars or other amount determined under subsection 2 of this section.
4. The administrator or an individual may obtain satisfaction out of the surety bond procured under this section if:
(1) The administrator assesses expenses under subdivision (1) of subsection 2 of section 425.112, issues a final order under subdivision (2) of subsection 1 of section 425.114, or recovers a final judgment under subdivision (4) or (5) of subsection 1 or subsection 4 of section 425.114; or
(2) An individual recovers a final judgment under subsection 1 or 2 of section 425.118 or subdivision (1), (2), or (4) of subsection 3 of section 425.118.
5. If claims against a surety bond exceed or are reasonably expected to exceed the amount of the bond, the administrator, on the initiative of the administrator or on petition of the surety, shall, unless the proceeds are adequate to pay all costs, judgments, and claims, distribute the proceeds in the following order:
(1) To satisfaction of a final order or judgment under subdivision (2), (4), or (5) of subsection 1 of section 425.114 or subsection 4 of section 425.114;
(2) To final judgments recovered by individuals under subsection 1 or 2 of section 425.118 or subdivision (1), (2), or (4) of subsection 3 of section 425.118, pro-rata;
(3) To claims of individuals established to the satisfaction of the administrator, pro rata; and
(4) If a final order or judgment is issued under subsection 1 of section 425.114, to the expenses charged under subdivision (1) of subsection 2 of section 425.112.
425.076. 1. Instead of the surety bond required by section 425.074, a provider may deliver to the administrator, in the amount required by subsection 2 of section 425.074, and, except as otherwise provided in paragraph (a) of subdivision (2) of this subsection, payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with sections 425.050 to 425.132:
(1) A certificate of insurance issued by an insurance company authorized to do business in this state and rated at least "A" by a nationally recognized rating organization, with no deductible; or
(2) With the approval of the administrator:
(a) An irrevocable letter of credit, issued or confirmed by a bank approved by the administrator, payable upon presentation of a certificate by the administrator stating that the provider or its agent has not complied with sections 425.050 to 425.134; or
(b) Bonds or other obligations of the United States or guaranteed by the United States or bonds or other obligations of this state or a political subdivision of this state, to be deposited and maintained with a bank approved by the administrator for this purpose.
2. If a provider furnishes a substitute under subsection 1 of this section, the provisions of subsections 1, 3, 4, and 5 of section 425.074 apply to the substitute.
425.078. A provider shall act in good faith in all matters under sections 425.050 to 425.132.
425.080. A provider that is required to be registered under sections 425.050 to 425.132 shall maintain a toll-free communication system, staffed at a level that reasonably permits an individual to speak to a certified counselor or customer-service representative, as appropriate, during ordinary business hours.
425.082. 1. Before providing debt-management services, a registered provider shall give the individual an itemized list of goods and services and the charges for each. The list shall be clear and conspicuous, be in a record the individual may keep whether or not the individual assents to an agreement, and describe the goods and services the provider offers:
(1) Free of additional charge if the individual enters into an agreement;
(2) For a charge if the individual does not enter into an agreement; and
(3) For a charge if the individual enters into an agreement, using the following terminology, as applicable:
(a) Set-up fee in a specific dollar amount;
(b) Monthly service fee in a specific dollar amount or method of determining amount;
(c) Settlement fee in a specific dollar amount or method of determining the amount; and
(d) Goods and services in addition to those provided in connection with a plan, with a specific dollar amount or method of determining the amount.
2. A provider shall not furnish debt-management services unless the provider, through the services of a certified counselor:
(1) Provides the individual with reasonable education about the management of personal finance;
(2) Has prepared a financial analysis; and
(3) If the individual is to make regular, periodic payments:
(a) Has prepared a plan for the individual;
(b) Has made a determination, based on the provider’s analysis of the information provided by the individual and otherwise available to it, that the plan is suitable for the individual and the individual will be able to meet the payment obligations under the plan; and
(c) Believes that each creditor of the individual listed as a participating creditor in the plan will accept payment of the individual’s debts as provided in the plan.
3. Before an individual assents to an agreement to engage in a plan, a provider shall:
(1) Provide the individual with a copy of the analysis and plan required by subsection 2 of this section in a record that identifies the provider and that the individual may keep whether or not the individual assents to the agreement;
(2) Inform the individual of the availability, at the individual’s option, of assistance by a toll-free communication system or in person to discuss the financial analysis and plan required by subsection 2 of this section; and
(3) With respect to all creditors identified by the individual or otherwise known by the provider to be creditors of the individual, provide the individual with a list of:
(a) Creditors that the provider expects to participate in the plan and grant concessions;
(b) Creditors that the provider expects to participate in the plan but not grant concessions;
(c) Creditors that the provider expects not to participate in the plan; and
(d) All other creditors.
4. Before an individual assents to an agreement to engage in a plan, the provider shall inform the individual, in a record that contains nothing else, that is given separately, and that the individual may keep whether or not the individual assents to the agreement:
(1) Of the name and business address of the provider;
(2) That plans are not suitable for all individuals and the individual may ask the provider about other ways, including bankruptcy, to deal with indebtedness;
(3) That establishment of a plan may adversely affect the individual’s credit rating or credit scores;
(4) That nonpayment of debt may lead creditors to increase finance and other charges or undertake collection activity, including litigation;
(5) Unless it is not true, that the provider may receive compensation from the creditors of the individual; and
(6) That, unless the individual is insolvent, if a creditor settles for less than the full amount of the debt, the plan may result in the creation of taxable income to the individual, even though the individual does not receive any money.
5. If a provider may receive payments from an individual’s creditors and the plan contemplates that the individual’s creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may comply with subsection 4 of this section by providing the following disclosure, surrounded by black lines:
(1) That the information was important information for the individual to consider;
(2) That debt-management plans are not right for all individuals, and the individual may ask the provider for information about other ways, including bankruptcy, to deal with the individual's debts;
(3) That using a debt-management plan may hurt the individual's credit rating or credit scores;
(4) That the individual may be required to compensate the provider for services from the individual's creditors; and
(5) The name and business address of the provider.
6. If a provider will not receive payments from an individual’s creditors and the plan contemplates that the individual’s creditors will reduce finance charges or fees for late payment, default, or delinquency, a provider may comply with subsection 4 of this section by providing the following disclosure, surrounded by black lines:
(1) That the information is important information for the individual to consider;
(2) That debt-management plans are not right for all individuals, and the individual may ask the provider to provide information about other ways, including bankruptcy, to deal with the individual's debts;
(3) That using a debt-management plan may hurt the individual's credit rating or credit scores; and
(4) The name and business address of provider.
7. If a plan contemplates that creditors will settle debts for less than the full principal amount of debt owed, a provider may comply with subsection 4 of this section by providing the following disclosure, surrounded by black lines:
(1) That the information is important information for the individual to consider;
(2) That the provider's program is not right for all individuals, and the individual may ask the provider to provide information about bankruptcy and other ways to deal with the individual's debts;
(3) That nonpayment of the individual's debts under the provider's program may hurt the individual's credit rating or credit scores; lead the individual's creditors to increase finance and other charges; and lead the individual's creditors to undertake activity, including lawsuits, to collect the debts;
(4) That reduction of debt under our program may result in taxable income to the individual, even though the individual will not actually receive any money; and
(5) The name and business address of provider.
425.084. 1. As used in this section, the following terms mean:
(1) "Federal act", the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001 et seq., as amended.
(2) "Consumer", an individual who seeks or obtains goods or services that are used primarily for personal, family, or household purposes.
2. A provider may satisfy the requirements of section 425.082, 425.086, or 425.102 by means of the Internet or other electronic means if the provider obtains a consumer’s consent in the manner provided by section 101(c)(1) of the federal act.
3. The disclosures and materials required by sections 425.082, 425.086, and 425.102 shall be presented in a form that is capable of being accurately reproduced for later reference.
4. With respect to disclosure by means of an Internet web site, the disclosure of the information required by subsection 4 of section 425.082 shall appear on one or more screens that:
(1) Contain no other information; and
(2) The individual shall see before proceeding to assent to formation of a plan.
5. At the time of providing the materials and agreement required by subsections 3 and 4 of section 425.082, and sections 425.086 and 425.102, a provider shall inform the individual that upon electronic, telephonic, or written request, it will send the individual a written copy of the materials, and shall comply with a request as provided in subsection 6 of this section.
6. If a provider is requested, before the expiration of ninety days after a plan is completed or terminated, to send a written copy of the materials required by subsections 3 and 4 of section 425.082 or section 425.086 or 425.102, the provider shall send them at no charge within three business days after the request, but the provider need not comply with a request more than once per calendar month or if it reasonably believes the request is made for purposes of harassment. If a request is made more than ninety days after a plan is completed or terminated, the provider shall send within a reasonable time a written copy of the materials requested.
7. A provider that maintains an Internet web site shall disclose on the home page of its web site or on a page that is clearly and conspicuously connected to the home page by a link that clearly reveals its contents:
(1) Its name and all names under which it does business;
(2) Its principal business address, telephone number, and electronic-mail address, if any; and
(3) The names of its principal officers.
8. Subject to subsection 9 of this section, if a consumer who has consented to electronic communication in the manner provided by section 101 of the federal act withdraws consent as provided in the federal act, a provider may terminate its agreement with the consumer.
9. If a provider wishes to terminate an agreement with a consumer under subsection 8 of this section, it shall notify the consumer that it will terminate the agreement unless the consumer, within thirty days after receiving the notification, consents to electronic communication in the manner provided in section 101(c) of the federal act. If the consumer consents, the provider may terminate the agreement only as permitted by paragraph (f) of subdivision (6) of subsection 1 of section 425.086.
425.086. 1. An agreement shall:
(1) Be in a record;
(2) Be dated and signed by the provider and the individual;
(3) Include the name of the individual and the address where the individual resides;
(4) Include the name, business address, and telephone number of the provider;
(5) Be delivered to the individual immediately upon formation of the agreement; and
(6) Disclose:
(a) The services to be provided;
(b) The amount, or method of determining the amount, of all fees, individually itemized, to be paid by the individual;
(c) The schedule of payments to be made by or on behalf of the individual, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment;
(d) If a plan provides for regular periodic payments to creditors:
a. Each creditor of the individual to which payment will be made, the amount owed to each creditor, and any concessions the provider reasonably believes each creditor will offer; and
b. The schedule of expected payments to each creditor, including the amount of each payment and the date on which it will be made;
(e) Each creditor that the provider believes will not participate in the plan and to which the provider will not direct payment;
(f) How the provider will comply with its obligations under subsection 1 of section 425.102;
(g) That the provider may terminate the agreement for good cause, upon return of unexpended money of the individual;
(h) That the individual may cancel the agreement as provided in section 425.088;
(i) That the individual may contact the administrator with any questions or complaints regarding the provider; and
(j) The address, telephone number, and Internet address or web site of the administrator.
2. For purposes of subdivision (5) of subsection 1 of this section, delivery of an electronic record occurs when it is made available in a format in which the individual may retrieve, save, and print it and the individual is notified that it is available.
3. If the administrator supplies the provider with any information required under paragraph (j) of subdivision (6) of subsection 1 of this section, the provider may comply with that requirement only by disclosing the information supplied by the administrator.
4. An agreement shall provide that:
(1) The individual has a right to terminate the agreement at any time, without penalty or obligation, by giving the provider written or electronic notice, in which event:
(a) The provider will refund all unexpended money that the provider or its agent has received from or on behalf of the individual for the reduction or satisfaction of the individual’s debt;
(b) With respect to an agreement that contemplates that creditors will settle debts for less than the principal amount of debt, the provider will refund sixty-five percent of any portion of the set-up fee that has not been credited against the settlement fee; and
(c) All powers of attorney granted by the individual to the provider are revoked and ineffective;
(2) The individual authorizes any bank, in which the provider or its agent has established a trust account, to disclose to the administrator any financial records relating to the trust account; and
(3) The provider will notify the individual within five days after learning of a creditor’s decision to reject or withdraw from a plan and that this notice will include:
(a) The identity of the creditor; and
(b) The right of the individual to modify or terminate the agreement.
5. An agreement may confer on a provider a power of attorney to settle the individual’s debt for no more than fifty percent of the principal amount of the debt. An agreement may not confer a power of attorney to settle a debt for more than fifty percent of that amount, but may confer a power of attorney to negotiate with creditors of the individual on behalf of the individual. An agreement shall provide that the provider will obtain the assent of the individual after a creditor has assented to a settlement for more than fifty percent of the principal amount of the debt.
6. An agreement shall not:
(1) Provide for application of the law of any jurisdiction other than the United States and this state;
(2) Except as permitted by section 2 of the Federal Arbitration Act (9 U.S.C. 2), as amended, contain a provision that modifies or limits otherwise available forums or procedural rights, including the right to trial by jury, that are generally available to the individual under law other than in sections 425.050 to 425.132;
(3) Contain a provision that restricts the individual’s remedies under sections 425.050 to 425.132 or law other than in sections 425.050 to 425.132; or
(4) Contain a provision that:
(a) Limits or releases the liability of any person for not performing the agreement or for violating sections 425.050 to 425.132; or
(b) Indemnifies any person for liability arising under the agreement or sections 425.050 to 425.132.
7. All rights and obligations specified in subsection 4 of this section and section 425.088 exist even if not provided in the agreement. A provision in an agreement which violates subsection 4, 5, or 6 of this section is void.
425.088. 1. An individual may cancel an agreement before midnight of the third business day after the individual assents to it, unless the agreement does not comply with subsection 2 of this section or section 425.086 or 425.104, in which event the individual may cancel the agreement within thirty days after the individual assents to it. To exercise the right to cancel, the individual shall give notice in a record to the provider. Notice by mail is given when mailed.
2. An agreement shall be accompanied by a form that contains in bold-face type, surrounded by bold black lines the following information:
(1) Notice of right to cancel;
(2) Notification that the person may cancel the agreement, without any penalty or obligation, at any time before midnight of the third business day that begins the day after the person agrees to it by electronic communication or by signing it;
(3) Notification that the person may cancel the agreement during the period to send an e-mail to the appropriate person or mail or deliver a signed, dated copy of the notice, or any other written notice to the appropriate person;
(4) Name of provider, the address of the provider and a specific time;
(5) The date;
(6) Notification that if the person cancels the agreement within the three-day period, he or she will receive a refund of all money the person paid;
(7) Notification that the person may terminate the agreement at any later time, but may not receive a refund of the fees paid;
(8) The person stating that he or she cancels the agreement; and
(9) The person's printed and signed name and the date.
3. If a personal financial emergency necessitates the disbursement of an individual’s money to one or more of the individual’s creditors before the expiration of three days after an agreement is signed, an individual may waive the right to cancel. To waive the right, the individual shall send or deliver a signed, dated statement in the individual’s own words describing the circumstances that necessitate a waiver. The waiver shall explicitly waive the right to cancel. A waiver by means of a standard-form record is void.
425.090. Unless the administrator, by rule, provides otherwise, the disclosures and documents required by sections 425.050 to 425.132 shall be in English. If a provider communicates with an individual primarily in a language other than English, the provider shall furnish a translation into the other language of the disclosures and documents required by sections 425.050 to 425.132.
425.092. 1. All money paid to a provider by or on behalf of an individual under a plan for distribution to creditors is held in trust. Within two business days after receipt, the provider shall deposit the money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services.
2. Money held in trust by a provider is not property of the provider or its designee. The money is not available to creditors of the provider or designee, except an individual from whom or on whose behalf the provider received money, to the extent that the money has not been disbursed to creditors of the individual.
3. A provider shall:
(1) Maintain separate records of account for each individual to whom the provider is furnishing debt-management services;
(2) Disburse money paid by or on behalf of the individual to creditors of the individual as disclosed in the agreement, except that:
(a) The provider may delay payment to the extent that a payment by the individual is not final; and
(b) If a plan provides for regular periodic payments to creditors, the disbursement shall comply with the due dates established by each creditor; and
(3) Promptly correct any payments that are not made or that are misdirected as a result of an error by the provider or other person in control of the trust account and reimburse the individual for any costs or fees imposed by a creditor as a result of the failure to pay or misdirection.
4. A provider shall not commingle money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services with money of other persons.
5. A trust account shall at all times have a cash balance equal to the sum of the balances of each individual’s account.
6. If a provider has established a trust account under subsection 1 of this section, the provider shall reconcile the trust account at least once a month. The reconciliation shall 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 shall be individually reconciled.
7. 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 administrator by a method approved by the administrator. Unless the administrator by rule provides otherwise, within five days thereafter, the provider shall give notice to the administrator describing the remedial action taken or to be taken.
8. 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 section 425.094.
9. Before relocating a trust account from one bank to another, a provider shall inform the administrator of the name, business address, and telephone number of the new bank. As soon as practicable, the provider shall inform the administrator of the account number of the trust account at the new bank.
425.094. 1. A provider shall 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 section.
2. A provider shall not impose charges or receive payment for debt-management services until the provider and the individual have signed an agreement that complies with sections 425.086 and 425.104.
3. If an individual assents to an agreement, a provider shall not impose a fee or other charge for educational or counseling services, or the like, except as otherwise provided in this subsection and subsection 4 of section 425.104. The administrator may authorize a provider to charge a fee based on the nature and extent of the educational or counseling services furnished by the provider.
4. Subject to adjustment of dollar amounts under subsection 6 of section 425.112, the following rules apply:
(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:
(a) A fee not exceeding fifty dollars for consultation, obtaining a credit report, setting up an account, and the like; and
(b) A monthly service fee, not to exceed ten dollars times the number of creditors remaining in a plan at the time the fee is assessed, but not more than fifty in any month;
(2) If an individual assents to a plan that contemplates that creditors may settle debts for less than the principal amount of the debt, a provider may charge:
(a) Subject to subsection 4 of section 425.086, a fee for consultation, obtaining a credit report, setting up an account, and the like, in an amount not exceeding the lesser of four hundred dollars and four percent of the debt in the plan at the inception of the plan; and
(b) A monthly service fee, not to exceed ten dollars times the number of creditors remaining in a plan at the time the fee is assessed, but not more than fifty dollars in any month;
(3) A provider shall not impose or receive fees under both subdivisions (1) and (2) of this subsection.
(4) Except as otherwise provided in subsection 4 of section 425.104, 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 one hundred dollars or, with the approval of the administrator, a larger fee. The administrator may approve a fee larger than one hundred dollars if the nature and extent of the educational and counseling services warrant the larger fee.
5. If, before the expiration of ninety 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 under subdivision (4) of subsection 4 of this section.
6. Except as otherwise provided in subsections 3 and 4 of this section, if a plan contemplates that creditors may settle an individual’s debts for less than the principal amount of the debt, compensation for services in connection with settling a debt shall not exceed, with respect to each debt thirty percent of the excess of the principal amount of the debt over the amount paid the creditor under the plan less to the extent it has not been credited against an earlier settlement fee:
(1) The fee charged under paragraph (a) of subdivision (2) of subsection 4 of this section; and
(2) The aggregate of fees charged under paragraph (b) of subdivision (2) of subsection 4 of this section.
7. Subject to adjustment of the dollar amount under subsection 6 of section 425.112, if a payment to a provider by an individual under sections 425.050 to 425.132 is dishonored, a provider may impose a reasonable charge on the individual, not to exceed the lesser of twenty-five dollars and the amount permitted by law other than under sections 425.050 to 425.132.
425.096. A provider shall 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 thirty days after completion or termination of a plan, the aggregate amount of money received from or on behalf of the individual shall not exceed the total amount the provider may charge the individual under section 425.094.
425.098. 1. If a provider imposes a fee or other charge or receives money or other payments not authorized by section 425.094 or 425.096, the individual may void the agreement and recover as provided in section 425.118.
2. If a provider is not registered as required by sections 425.050 to 425.132 when an individual assents to an agreement, the agreement is voidable by the individual.
3. If an individual voids an agreement under subsection 2 of this section, the provider shall not have a claim against the individual for breach of contract or for restitution.
425.100. 1. If an individual who has entered into an agreement fails for sixty days to make payments required by the agreement, a provider may terminate the agreement.
2. If a provider or an individual terminates an agreement, the provider shall immediately return to the individual:
(1) Any money of the individual held in trust for the benefit of the individual; and
(2) Sixty-five percent of any portion of the set-up fee received under subdivision (2) of subsection 4 of section 425.094 which has not been credited against settlement fees.
425.102. 1. A provider shall provide the accounting required by subsection 2 of this section:
(1) Upon cancellation or termination of an agreement; and
(2) Before cancellation or termination of any agreement:
(a) At least once each month; and
(b) Within five business days after a request by an individual, but the provider need not comply with more than one request in any calendar month.
2. A provider, in a record, shall provide each individual for whom it has established a plan, an accounting of the following information:
(1) The amount of money received from the individual since the last report;
(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;
(3) The amounts deducted from the amount received from the individual;
(4) The amount held in reserve; and
(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:
(a) The total amount and terms of t