130th Ohio General Assembly
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(125th General Assembly)
(Substitute House Bill Number 420)



AN ACT
To amend sections 1309.613, 1309.625, 1349.99, 2716.03, 2716.11, and 4710.01, to enact new sections 4710.02, 4710.03, and 4710.99 and sections 1329.71, 1349.45, and 4710.04, and to repeal sections 4710.02, 4710.03, and 4710.99 of the Revised Code to modify the Secured Transactions Law relating to notice of the location for the disposition of collateral that is given to certain persons and to reduce the amount of damages recoverable by a debtor or secondary obligor in an action against a person found in violation of the Secured Transactions Law; relative to property subject to garnishment held by a judgment debtor's employer or another person; relative to engaging in the business of debt adjusting for debtors, to specify contribution limits and auditing and insurance coverage duties, to require timely disbursement of debtor funds, and to provide penalties, including a criminal penalty, for a violation; to eliminate previous provisions regulating entities engaging in the business of debt pooling; and to prohibit the unauthorized use of the name or logo of a financial institution in connection with the sale or advertising of any product or service if such use is misleading or deceptive.

Be it enacted by the General Assembly of the State of Ohio:

SECTION 1. That sections 1309.613, 1309.625, 1349.99, 2716.03, 2716.11, and 4710.01 be amended and new sections 4710.02, 4710.03, and 4710.99 and sections 1329.71, 1349.45, and 4710.04 of the Revised Code be enacted to read as follows:

Sec. 1309.613.  (A) Except in a consumer-goods transaction, all of the following rules apply to a notification of disposition of collateral and to a disposition of collateral:

(1) The contents of a notification of disposition are sufficient if the notification:

(a) Describes the debtor and the secured party;

(b) Describes the collateral that is the subject of the intended disposition;

(c) States the method of intended disposition;

(d) States that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and

(e) States the time and place, by identifying the place of business or address or by providing other information that, in each case, reasonably describes the location, of a public disposition or the time after which any other disposition is to be made.

(2) Whether the contents of a notification that lacks any of the information specified in division (A)(1) of this section are nevertheless sufficient is a question of fact.

(3) The contents of a notification providing substantially the information specified in division (A)(1) of this section are sufficient, even if the notification includes:

(a) Information not specified by that division; or

(b) Minor errors that are not seriously misleading.

(4) A particular phrasing of the notification is not required.

(B) The following form of notification and the form appearing in division (B) of section 1309.614 of the Revised Code, when completed, each provides sufficient information:

"NOTIFICATION OF DISPOSITION OF COLLATERAL

To: (Name of debtor, obligor, or other person to whom the notification is sent)

From: (Name, address, and telephone number of secured party)

Name of Debtor(s): (Include only if debtor(s) are not an addressee)

(FOR A PUBLIC DISPOSITION:)

We will sell (or lease or license, as applicable) the (describe collateral) to the highest qualified bidder in public as follows:

Day and Date:.............

Time:.....................

Place:....................

(FOR A PRIVATE DISPOSITION:)

We will sell (or lease or license, as applicable) the (describe collateral) privately sometime after (day and date).

You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $.........). You may request an accounting by calling us at (telephone number)."

Sec. 1309.625.  (A) If it is established that a secured party is not proceeding in accordance with this chapter, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

(B) Subject to divisions (C), (D), and (F) of this section, a person is liable for damages in the amount of any loss caused by a failure to comply with this chapter. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.

(C) Except as provided in section 1309.628 of the Revised Code:

(1) A person who, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under division (B) of this section for its loss; and

(2) If the collateral is consumer goods, a person who was a debtor or a secondary obligor at the time a secured party failed to comply with sections 1309.601 to 1309.628 of the Revised Code may recover for that failure in any event an amount not less than the credit service charge plus ten per cent of the principal amount of the obligation or the time-price differential plus ten per cent of the cash price;.

(D) A debtor whose deficiency is eliminated under section 1309.626 of the Revised Code may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under section 1309.626 of the Revised Code may not recover otherwise under division (B) of this section for noncompliance with sections 1309.601 to 1309.628 of the Revised Code relating to collection, enforcement, disposition, or acceptance. Regardless of whether the debtor's or secondary obligor's deficiency is eliminated or reduced under section 1309.626 of the Revised Code, any damages recovered by the debtor or secondary obligor under division (C) of this section shall be reduced by the amount that the sum of the secured obligation, expenses, and attorney's fees exceeds the proceeds of collection, enforcement, disposition, or acceptance.

(E) In addition to any damages recoverable under division (B) of this section, the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover five hundred dollars in each case from a person that:

(1) Fails to comply with section 1309.208 of the Revised Code;

(2) Fails to comply with section 1309.209 of the Revised Code;

(3) Files a record that the person is not entitled to file under division (A) of section 1309.509 of the Revised Code;

(4) Fails to cause the secured party of record to file or send a termination statement as required by division (A) or (C) of section 1309.513 of the Revised Code;

(5) Fails to comply with division (B)(1) of section 1309.616 of the Revised Code and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or

(6) Fails to comply with division (B)(2) of section 1309.616 of the Revised Code.

(F) A debtor or consumer obligor may recover damages under division (B) of this section and, in addition, five hundred dollars in each case from a person who, without reasonable cause, fails to comply with a request under section 1309.210 of the Revised Code. A recipient of a request under section 1309.210 of the Revised Code who never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this division.

(G) If a secured party fails to comply with a request regarding a list of collateral or a statement of account under section 1309.210 of the Revised Code, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person who is reasonably misled by the failure.

Sec. 1329.71.  (A) As used in this section, "financial institution" means any bank, savings and loan association, savings bank, or credit union; any affiliate or subsidiary of a bank, savings and loan association, savings bank, or credit union; or any registrant as defined in section 1321.51 of the Revised Code.

(B) Any financial institution may proceed by suit to enjoin the use of the financial institution's name or logo in connection with the sale, offering for sale, distribution, or advertising of any product or service without the express written consent of the financial institution, if such use is misleading or deceptive as to the source of origin or sponsorship of, or the affiliation with, the product or service. Any court of competent jurisdiction may grant injunctions to restrain such use as the court considers just and reasonable and may require the defendants to pay to the financial institution all profits derived from and all damages suffered by reason of the wrongful use of the name or logo.

(C) Notwithstanding division (B) of this section, the only remedies that are available for the wrongful use of a financial institution's name or logo by a registrant or licensee under sections 1322.01 to 1322.12 of the Revised Code are those set forth in section 1322.10 of the Revised Code or otherwise provided by statute or common law.

(D) The provisions of this section are not intended to be exclusive remedies and do not preclude the use of any other remedy provided by law.

Sec. 1349.45.  (A) As used in this section, "financial institution" means any bank, savings and loan association, savings bank, or credit union; any affiliate or subsidiary of a bank, savings and loan association, savings bank, or credit union; or any registrant as defined in section 1321.51 of the Revised Code.

(B) No person shall use the name or logo of any financial institution in connection with the sale, offering for sale, distribution, or advertising of any product or service without the express written consent of the financial institution, if such use is misleading or deceptive as to the source of origin or sponsorship of, or the affiliation with, the product or service.

Sec. 1349.99. (A) Whoever violates section 1349.06 or 1349.17 of the Revised Code is guilty of a minor misdemeanor.

(B)(1) Whoever violates section 1349.45 of the Revised Code is guilty of a misdemeanor of the first degree.

(2) Notwithstanding division (B)(1) of this section, the only remedies that are available for a violation of section 1349.45 of the Revised Code by a registrant or licensee under sections 1322.01 to 1322.12 of the Revised Code are those set forth in section 1322.10 of the Revised Code or otherwise provided by statute or common law.

(3) The provisions of division (B) of this section are not intended to be exclusive remedies and do not preclude the use of any other remedy provided by law.

Sec. 2716.03.  (A) Subject to the limitation on the commencement of proceedings contained in division (B) of section 124.10 of the Revised Code, a proceeding in garnishment of personal earnings may be commenced after a judgment has been obtained by a judgment creditor by the filing of an affidavit in writing made by the judgment creditor or the judgment creditor's attorney setting forth all of the following:

(1) The name of the judgment debtor whose personal earnings the judgment creditor seeks to garnish;

(2) That the affiant has good reason to believe and does believe that the person, partnership, limited liability company, or corporation named in the affidavit as the garnishee is an employer of the judgment debtor who has may have personal earnings of the judgment debtor that are not exempt under section 2329.66 of the Revised Code;

(3) That the demand in writing, as required by section 2716.02 of the Revised Code, has been made;

(4) That the payment demanded in the notice required by section 2716.02 of the Revised Code has not been made, and a sufficient portion of the payment demanded has not been made to prevent the garnishment of personal earnings as described in section 2716.02 of the Revised Code;

(5) That the affiant has no knowledge of any application by the judgment debtor for the appointment of a trustee so as to preclude the garnishment of the judgment debtor's personal earnings;

(6) That the affiant has no knowledge that the debt to which the affidavit pertains is the subject of a debt scheduling agreement of a nature that precludes the garnishment of the personal earnings of the judgment debtor under division (B) of this section.

(B) No proceeding in garnishment of personal earnings shall be brought against a judgment debtor for the collection of a debt that is the subject of an agreement for debt scheduling between the judgment debtor and a budget and debt counseling service, unless any payment to be made by the judgment debtor, or by a budget and debt counseling service to the judgment creditor under the agreement for debt scheduling between the judgment debtor and the budget and debt counseling service, is due and unpaid for more than forty-five days after the date on which the payment became due, or unless the judgment creditor previously was notified by the service that the debt scheduling agreement between the judgment debtor and the service was terminated.

(C) Upon a court's issuance of an order of garnishment of personal earnings following a judgment creditor's filing of an affidavit under this section and compliance with section 2716.04 of the Revised Code, the garnishee and the judgment debtor shall be notified of the proceeding in garnishment of personal earnings in accordance with sections 2716.05 and 2716.06 of the Revised Code.

(D) As used in this chapter:

(1) A "budget and debt counseling service" or "service" means a corporation organized under Chapter 1702. of the Revised Code for the purpose of counseling consumers with respect to their financial obligations and assisting them in dealing with their creditors.

(2) "Debt scheduling" means counseling and assistance provided to a consumer by a budget and debt counseling service under all of the following circumstances:

(a) The counseling and assistance is manifested in an agreement between the consumer and the service under which the consumer regularly pays that portion of the consumer's income to the service that has been determined not to be required for the maintenance of health or the essentials of life.

(b) The payments are made to the service until the debts of the consumer that are the subject of the agreement are fully retired.

(c) The service has sent written notice, by certified mail, return receipt requested, or by regular mail evidenced by a properly completed and stamped certificate of mailing by regular mail, to the creditors of the consumer that are disclosed by the consumer to the service. The notice shall contain all of the following:

(i) A statement of the consumer's intent to participate in debt scheduling;

(ii) A summary of the consumer's income, proposed itemized budget, schedule of creditors, and proposed debt retirement plan;

(iii) A statement of the particular creditor's duty to respond, in writing, to the service regarding the consumer's participation in debt scheduling within fifteen days after receiving the notice.

(d) The debts of the consumer that are the subject of the agreement for debt scheduling are determined as follows:

(i) Any debt owed to a creditor that was notified of the consumer's intent to participate is a subject of the agreement if the creditor responds to the service and enters into an agreement with the service, pursuant to which the creditor agrees not to attempt to collect the debts of the consumer as long as the consumer regularly pays to the service the amount previously agreed upon by the service and the consumer, and no payment to be made by the judgment debtor to the service or by the service to the creditor is due and unpaid for more than forty-five days after the date on which the payment became due, as long as the debt scheduling agreement between the consumer and the service has not been terminated, and as long as the service regularly pays to the creditor a mutually acceptable amount that is either the amount agreed upon by the service and the creditor on the date they entered into their original agreement or an amount agreed upon by both the service and the creditor on a date after the date of the original agreement.

(ii) Any debt owed to a creditor that was notified of the consumer's intent to participate is a subject of the agreement if the creditor does not respond to the service and state the creditor's objection, in writing, to the consumer's participation in debt scheduling within fifteen days after receiving notice of the consumer's intention to do so; however, no debt that is subject to a lien or security interest of any type, other than a judgment lien or execution lien, shall be a subject of the agreement unless the creditor specifically assents, in writing, to the debt being a subject of the agreement. The creditor shall be considered to have entered into an agreement of the type described in division (D)(2)(d)(i) of this section, and the amount to be regularly paid by the service to the creditor shall be an amount determined to be reasonable by the service or an amount agreed upon by both the service and the creditor on a date after the expiration of the fifteen-day period.

(iii) Any debt owed to a creditor that was not notified of the consumer's intent to participate, or a debt owed to a creditor that was notified of the consumer's intent to participate and that responded to the service and stated its objection, in writing, to the consumer's participation in debt scheduling within fifteen days after receiving notice of the consumer's intention to do so, is not a subject of the agreement.

(e) The service agrees that, if the consumer fails to make a payment under the agreement within forty-five days of its due date or if the agreement is terminated, the service will notify each creditor that is owed a debt that is subject to the agreement of the failure or termination by regular mail within two business days of the failure or termination, and the service provides that notice in accordance with the agreement.

Sec. 2716.11.  A proceeding for garnishment of property, other than personal earnings, may be commenced after a judgment has been obtained by a judgment creditor by the filing of an affidavit in writing made by the judgment creditor or the judgment creditor's attorney setting forth all of the following:

(A) The name of the judgment debtor whose property, other than personal earnings, the judgment creditor seeks to garnish;

(B) That the affiant has good reason to believe and does believe that the person named in the affidavit as the garnishee has may have property, other than personal earnings, of the judgment debtor that is not exempt under the law of this state or the United States;

(C) A description of the property.

Sec. 4710.01.  As used in sections 4710.01, 4710.02, and 4710.99 of the Revised Code this chapter:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) The insurance coverage is not less than one hundred thousand dollars.

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

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

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

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

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

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

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

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

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

(D) A registrant as defined in section 1321.51 of the Revised Code;

(E) A registrant or licensee as both are defined in section 1322.01 of the Revised Code.

Sec. 4710.04.  (A) Any violation of division (F)(1) of section 4710.02 of the Revised Code is deemed an unfair or deceptive act or practice in violation of section 1345.02 of the Revised Code. A person injured by a violation of that division has a cause of action and is entitled to the same relief available to a consumer under section 1345.09 of the Revised Code, and all the powers and remedies available to the attorney general to enforce sections 1345.01 to 1345.13 of the Revised Code are available to the attorney general to enforce division (F)(1) of section 4710.02 of the Revised Code.

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

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

SECTION 2. That existing sections 1309.613, 1309.625, 1349.99, 2716.03, 2716.11, and 4710.01 and sections Sec. 4710.02. , Sec. 4710.03. , and Sec. 4710.99.  of the Revised Code are hereby repealed.

SECTION 3.  Section 2716.03 of the Revised Code is presented in this act as a composite of the section as amended by both Am. Sub. S.B. 144 and Am. Sub. S.B. 170 of the 122nd General Assembly. The General Assembly, applying the principle stated in division (B) of section 1.52 of the Revised Code that amendments are to be harmonized if reasonably capable of simultaneous operation, finds that the composite is the resulting version of the section in effect prior to the effective date of the section as presented in this act.

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