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| To amend section 4710.01 and to enact section 4710.05 | 1 |
| of the Revised Code relative to the practice of | 2 |
| debt settlement regulation. | 3 |
| Section 1. That section 4710.01 be amended and section | 4 |
| 4710.05 of the Revised Code be enacted to read as follows: | 5 |
| Sec. 4710.01. As used in this chapter: | 6 |
| (A) "Person" includes individuals, partnerships, | 7 |
| associations, corporations, trusts, and other legal entities. | 8 |
| (B) "Debt adjusting" means doing business in debt adjusting, | 9 |
| budget counseling, debt management, or debt pooling service, or | 10 |
| holding oneself out, by words of similar import, as providing | 11 |
| services to debtors in the management of their debts, to do either | 12 |
| of the following: | 13 |
| (1) To effect the adjustment, compromise, or discharge of any | 14 |
| account, note, or other indebtedness of the debtor; | 15 |
| (2) To receive from the debtor and disburse to the debtor's | 16 |
| creditors any money or other thing of value. | 17 |
| Debt adjusting does not include debt settlement service. | 18 |
| (C) "Resides" means to live in a particular place on a | 19 |
| temporary or a permanent basis. | 20 |
| (D) "Debt settlement service" means the negotiation, | 21 |
| adjustment, or settlement of a consumer's debt without holding, | 22 |
| receiving, or disbursing the debtor's funds. | 23 |
| (E) "Debt settlement provider" means any person engaging in | 24 |
| or holding oneself out as engaging in the business of debt | 25 |
| settlement for compensation that does not in the usual, customary | 26 |
| and regular course of business hold, receive and disburse the | 27 |
| debtor's funds in connection with debt settlement service, but | 28 |
| shall not include any of the following: | 29 |
| (1) Attorneys, escrow agents, accountants, broker-dealers in | 30 |
| securities, or investment advisors in securities, when acting in | 31 |
| the ordinary practice of their professions; | 32 |
| (2) Any bank, trust company, savings and loan association, | 33 |
| savings bank, credit union, crop credit association, development | 34 |
| credit corporation, industrial development corporation, title | 35 |
| insurance company, or insurance company, operating or organized | 36 |
| under the laws of this state, another state, or the United States, | 37 |
| or any person registered to make loans pursuant to sections | 38 |
| 1321.51 to 1321.60 of the Revised Code; | 39 |
| (3) Persons who perform credit services for their employer | 40 |
| while receiving a regular salary or wage of an employer not | 41 |
| engaged in the business of debt settlement; | 42 |
| (4) Public officers while acting in their official capacities | 43 |
| and persons acting under court order; | 44 |
| (5) Any person while performing services incidental to the | 45 |
| dissolution, winding up, or liquidating of a partnership, | 46 |
| corporation, or other business enterprise. | 47 |
| Sec. 4710.05. (A) A debt settlement provider shall obtain and | 48 |
| maintain at all times insurance coverage for dishonesty, fraud, | 49 |
| theft, and other misconduct on the part of a director, employee, | 50 |
| or agent of the person. The insurance coverage shall meet all of | 51 |
| the following requirements: | 52 |
| (1) Be for a minimum amount of coverage of not less than one | 53 |
| hundred thousand dollars; | 54 |
| (2) Include a deductible that does not exceed ten thousand | 55 |
| dollars; | 56 |
| (3) Be issued by an insurer rated at least A- or its | 57 |
| equivalent by a nationally recognized rating organization; | 58 |
| (4) Require that thirty days advance written notice be given | 59 |
| by the debt settlement provider to the consumer protection | 60 |
| division of the attorney general before coverage is terminated if | 61 |
| that coverage is not being replaced by another insurance policy | 62 |
| that meets the requirements of this section. | 63 |
| (B) A debt settlement provider shall maintain books and | 64 |
| records according to generally accepted accounting principles and | 65 |
| file a financial statement annually with the consumer protection | 66 |
| division of the attorney general. The attorney general may require | 67 |
| an audit or review of the financial statement by an independent | 68 |
| certified public accountant. | 69 |
| (C) In the event of cancellation of the contract by the | 70 |
| debtor prior to its successful completion, a debt settlement | 71 |
| provider shall refund fifty per cent of any collected fees, | 72 |
| excluding enrollment fees, set-up fees, and fees earned on debt | 73 |
| settled at the time of the termination of the contract, as long as | 74 |
| the consumer has fulfilled the consumer's obligations under the | 75 |
| debt settlement service contract. | 76 |
| (D) A debt settlement provider shall not do any of the | 77 |
| following: | 78 |
| (1) Provide debt settlement service without a written | 79 |
| contract, or take any contract or other written instrument that | 80 |
| has incomplete or blank sections when the contract or written | 81 |
| instrument is signed by the debtor; | 82 |
| (2) Receive or charge fees in an aggregate amount in excess | 83 |
| of twenty per cent of the principal amount of the debt; | 84 |
| (3) Make loans or offer credit; | 85 |
| (4) Take any confession of the judgment or power of attorney | 86 |
| to confess judgment against the debtor or appear as the debtor in | 87 |
| any judicial proceedings; | 88 |
| (5) Take as part of any agreement to provide debt settlement | 89 |
| services a release of any obligation to be performed on the part | 90 |
| of the debt settlement provider; | 91 |
| (6) Advertise, display, distribute, or broadcast or televise | 92 |
| services, or permit services to be displayed, advertised, | 93 |
| distributed, broadcasted or televised, in any manner whatsoever in | 94 |
| which is made any false, misleading, or deceptive statement or | 95 |
| representation with regard to the services to be performed or the | 96 |
| fees to be charged by the debt settlement provider; | 97 |
| (7) Receive any cash, fee, gift, bonus, premium, reward, or | 98 |
| other compensation from any person other than the debtor or a | 99 |
| person on the debtor's behalf in connection with the debt | 100 |
| settlement provider's activities; | 101 |
| (8) Disclose to anyone the name or any personal information | 102 |
| of a debtor for whom the debt settlement provider has or is | 103 |
| providing debt settlement service other than a debtor's own | 104 |
| creditors or the provider's agents. The debt settlement provider | 105 |
| shall not disclose the name of a debtor's creditor to anyone other | 106 |
| than the debtor or another creditor of the debtor and then only to | 107 |
| the extent necessary to secure the cooperation of a creditor in a | 108 |
| debt settlement plan. | 109 |
| (E) The attorney general or the prosecuting attorney of any | 110 |
| county may bring an action to enforce this section. Upon a finding | 111 |
| that any person has engaged or is engaging in any act or practice | 112 |
| in violation of this section, a court may make any necessary order | 113 |
| or enter a judgment including, but not limited to, an injunction, | 114 |
| restitution, or an award of reasonable attorney's fees and costs | 115 |
| of investigation and litigation for each violation of this | 116 |
| section. In seeking injunctive relief, the attorney general or | 117 |
| prosecuting attorney is not required to establish irreparable harm | 118 |
| but, in the alternative, shall establish either a violation of | 119 |
| this section or that the requested order will enjoin an act of | 120 |
| fraud, deception, willful misrepresentation, or other intentional | 121 |
| wrongdoing. | 122 |
| (F) In any case in which the attorney general or prosecuting | 123 |
| attorney has authority to institute an action or proceeding under | 124 |
| this section, the attorney general or prosecuting attorney may | 125 |
| accept an assurance of discontinuance of any method, act, or | 126 |
| practice that is in violation of this section from any person | 127 |
| alleged to be engaged in or to have engaged in the unlawful | 128 |
| method, act, or practice. The assurance may include a stipulation | 129 |
| for the voluntary payment by the person of the costs of | 130 |
| investigation, or of an amount to be held in escrow pending the | 131 |
| outcome of any action or as restitution to any aggrieved person or | 132 |
| both. The alleged violator shall give the assurance of | 133 |
| discontinuance in writing and the attorney general or prosecuting | 134 |
| attorney shall file the document with the court of common pleas in | 135 |
| the county in which the alleged violator resides or has principal | 136 |
| place of business if received by the prosecuting attorney, or in | 137 |
| Franklin county if received by the attorney general. Any evidence | 138 |
| of a violation of the assurance of discontinuance is prima-facie | 139 |
| evidence of a violation of this section in any subsequent action | 140 |
| or proceeding brought by the attorney general or prosecuting | 141 |
| attorney, and the court may award to the state a civil penalty of | 142 |
| not more than ten thousand dollars for each violation. The | 143 |
| attorney general or prosecuting attorney may reopen any matter | 144 |
| that has been closed by the acceptance of an assurance of | 145 |
| discontinuance at any time for further proceedings in the public | 146 |
| interest. | 147 |
| Section 2. That existing section 4710.01 of the Revised Code | 148 |
| is hereby repealed. | 149 |