REPRESENTATIVE T. Patton

To amend section 4710.01, to enact new sections

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4710.02, 4710.03, and 4710.99 and section 4710.04,

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and to repeal sections 4710.02, 4710.03, and

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4710.99 of the Revised Code, relative to engaging

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in the business of debt adjusting for debtors, to

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specify contribution limits and auditing and

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insurance coverage duties, to require timely

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disbursement of debtor funds, and to provide

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penalties, including a criminal penalty, for a

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violation; and to eliminate previous provisions

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regulating entities engaging in the business of

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debt pooling.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 4710.01 be amended and new sections	13
4710.02, 4710.03, and 4710.99 and section 4710.04 of the Revised	14
Code be enacted to read as follows:	15

Sec. 4710.01.  As used in sections 4710.01, 4710.02, and	16
4710.99 of the Revised Codethis chapter:	17

(A) "Person" includes individuals, partnerships,	18
associations, and corporations, trusts, and other legal entities.	19

(B) "Debt pooling companyadjusting" means any person doing	20
business as ain debt adjusting, budget counseling, debt	21
management, prorating, or debt pooling service, or holding itself	22
oneself out, by words of similar import, as providing services to	23
debtors in the management of their debts, and contracting with a	24
debtor for a fee or other thing of value;to do either of the	25
following:	26

(1) To effect the adjustment, compromise, or discharge of any	27
account, note, or other indebtedness of the debtor;	28

(2) To receive from the debtor and disburse to histhe	29
debtor's creditors any money or other thing of value.	30

(C) "Resides" means to live in a particular place on a	31
temporary or a permanent basis.	32

Sec. 4710.02.  (A) Subject to division (C) of this section, a	33
person engaged in debt adjusting shall do both of the following:	34

(1) Unless specifically instructed otherwise by a debtor,	35
disburse to the appropriate creditors all funds received from the	36
debtor, less any contributions not prohibited by division (B) of	37
this section, within thirty days of receipt of the funds from the	38
debtor;	39

(2) Maintain a separate trust account for the receipt of any	40
funds from debtors and the disbursement of the funds to creditors	41
on behalf of the debtors.	42

(B) If contributions for engaging in debt adjusting are	43
accepted, directly or indirectly, no person engaged in debt	44
adjusting shall do any of the following:	45

(1) Accept a contribution exceeding seventy-five dollars from	46
a debtor residing in this state for an initial consultation or	47
initial set up;	48

(2) Accept a consultation contribution exceeding one hundred	49
dollars per calendar year from a debtor residing in this state;	50

(3) Accept a periodic contribution from a debtor residing in	51
this state, which contribution exceeds eight and one-half per cent	52
of the amount paid by the debtor each month for distribution to	53
the debtor's creditors or thirty dollars, whichever is greater.	54

(C) Division (A) or (B) of this section does not prohibit a	55
person engaged in debt adjusting for a debtor who is residing in	56
this state from charging the debtor a reasonable fee for	57
insufficient funds transactions that is in addition to	58
contributions not prohibited by division (B) of this section.	59

(D) Any person that engages in debt adjusting, annually,	60
shall arrange for and undergo an audit conducted by an	61
independent, third party, certified public accountant of the	62
person's business, including any trust funds deposited and	63
distributed to creditors on behalf of debtors. Both of the	64
following apply to an audit described in this division:	65

(1) The person shall file the results of the audit and the	66
auditor's opinion with the consumer protection division of the	67
attorney general.	68

(2) The attorney general shall make available a summary of	69
the results of the audit and the auditor's opinion upon written	70
request of a person and payment of a fee not exceeding the cost of	71
copying the summary and opinion.	72

(E) A person engaged in debt adjusting shall obtain and	73
maintain at all times insurance coverage for employee dishonesty,	74
depositor's forgery, and computer fraud in the amount of ten per	75
cent of the monthly average for the immediate preceding six months	76
of the aggregate amount of all deposits made with the person by	77
all debtors. The insurance coverage shall comply with all of the	78
following:	79

(1) The insurance coverage is not less than one hundred	80
thousand dollars nor more than five hundred thousand dollars.	81

(2) The insurance coverage includes a deductible that does	82
not exceed ten per cent of the face amount of the policy coverage.	83

(3) The insurance coverage is issued by an insurer rated at	84
least A- or its equivalent by a nationally recognized rating	85
organization.	86

(4) The insurance coverage provides that thirty days advance	87
written notice be given to the consumer protection division of the	88
attorney general before coverage is terminated.	89

(F)(1) No person engaged in debt adjusting shall fail to	90
comply with division (A) of this section.	91

(2) No person engaged in debt adjusting shall fail to comply	92
with divisions (D) and (E) of this section.	93

Sec. 4710.03. Nothing in this chapter applies to any of the	94
following:	95

(A) The federal national mortgage association; the federal	96
home loan mortgage corporation; a bank, bank holding company,	97
trust company, savings and loan association, credit union, savings	98
bank, or credit card bank, that is regulated by the office of the	99
comptroller of currency, office of thrift supervision, federal	100
reserve, federal deposit insurance corporation, national credit	101
union administration, or division of financial institutions; or to	102
subsidiaries of any of these entities;	103

(B) Debt adjusting incurred in the practice of law in this	104
state;	105

(C) A person that incidentally engages in debt adjusting to	106
adjust the indebtedness owed to that person.	107

Sec. 4710.04.  (A) Any violation of division (B) or (F)(1) of	108
section 4710.02 of the Revised Code is deemed an unfair or	109
deceptive act or practice in violation of section 1345.02 of the	110
Revised Code. A person injured by a violation of either division	111
has a cause of action and is entitled to the same relief available	112
to a consumer under section 1345.09 of the Revised Code, and all	113
the powers and remedies available to the attorney general to	114
enforce sections 1345.01 to 1345.13 of the Revised Code are	115
available to the attorney general to enforce divisions (B) and	116
(F)(1) of section 4710.02 of the Revised Code.	117

(B) Any person who violates division (F)(2) of section	118
4710.02 of the Revised Code, in addition to the penalties imposed	119
by section 4710.99 of the Revised Code, shall be fined not more	120
than ten thousand dollars for each violation.	121

Sec. 4710.99.  Whoever violates division (F) of section	122
4710.02 of the Revised Code is guilty of a misdemeanor of the	123
third degree for a first offense and a misdemeanor of the second	124
degree for any subsequent offense.	125

Section 2. That existing section 4710.01 and sections	126
Sec. 4710.02. ,        Sec. 4710.03. , and        Sec. 4710.99.  of the Revised Code are hereby	127
repealed.	128