To amend section 4710.01 and to enact section 4710.05 of the Revised Code relative to the practice of debt settlement regulation.

Section 1. That section 4710.01 be amended and section 4710.05 of the Revised Code be enacted to read as follows:

Sec. 4710.01.  As used in this chapter:

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

(B) "Debt adjusting" means doing business in debt adjusting, budget counseling, debt management, or debt pooling service, or holding oneself out, by words of similar import, as providing services to debtors in the management of their debts, 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 the debtor's creditors any money or other thing of value.

Debt adjusting does not include debt settlement service.

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

(D) "Debt settlement service" means the negotiation, adjustment, or settlement of a consumer's debt without holding, receiving, or disbursing the debtor's funds.

(E) "Debt settlement provider" means any person engaging in or holding oneself out as engaging in the business of debt settlement for compensation that does not in the usual, customary and regular course of business hold, receive and disburse the debtor's funds in connection with debt settlement service, but shall not include any of the following:

(1) Attorneys, escrow agents, accountants, broker-dealers in securities, or investment advisors in securities, when acting in the ordinary practice of their professions;

(2) Any bank, trust company, savings and loan association, savings bank, credit union, crop credit association, development credit corporation, industrial development corporation, title insurance company, or insurance company, operating or organized under the laws of this state, another state, or the United States, or any person registered to make loans pursuant to sections 1321.51 to 1321.60 of the Revised Code;

(3) Persons who perform credit services for their employer while receiving a regular salary or wage of an employer not engaged in the business of debt settlement;

(4) Public officers while acting in their official capacities and persons acting under court order;

(5) Any person while performing services incidental to the dissolution, winding up, or liquidating of a partnership, corporation, or other business enterprise.

Sec. 4710.05. (A) A debt settlement provider shall obtain and maintain at all times insurance coverage for dishonesty, fraud, theft, and other misconduct on the part of a director, employee, or agent of the person. The insurance coverage shall meet all of the following requirements:

(1) Be for a minimum amount of coverage of not less than one hundred thousand dollars;

(2) Include a deductible that does not exceed ten thousand dollars;

(3) Be issued by an insurer rated at least A- or its equivalent by a nationally recognized rating organization;

(4) Require that thirty days advance written notice be given by the debt settlement provider to the consumer protection division of the attorney general before coverage is terminated if that coverage is not being replaced by another insurance policy that meets the requirements of this section.

(B) A debt settlement provider shall maintain books and records according to generally accepted accounting principles and file a financial statement annually with the consumer protection division of the attorney general. The attorney general may require an audit or review of the financial statement by an independent certified public accountant.

(C) In the event of cancellation of the contract by the debtor prior to its successful completion, a debt settlement provider shall refund fifty per cent of any collected fees, excluding enrollment fees, set-up fees, and fees earned on debt settled at the time of the termination of the contract, as long as the consumer has fulfilled the consumer's obligations under the debt settlement service contract.

(D) A debt settlement provider shall not do any of the following:

(1) Provide debt settlement service without a written contract, or take any contract or other written instrument that has incomplete or blank sections when the contract or written instrument is signed by the debtor;

(2) Receive or charge fees in an aggregate amount in excess of twenty per cent of the principal amount of the debt;

(3) Make loans or offer credit;

(4) Take any confession of the judgment or power of attorney to confess judgment against the debtor or appear as the debtor in any judicial proceedings;

(5) Take as part of any agreement to provide debt settlement services a release of any obligation to be performed on the part of the debt settlement provider;

(6) Advertise, display, distribute, or broadcast or televise services, or permit services to be displayed, advertised, distributed, broadcasted or televised, in any manner whatsoever in which is made any false, misleading, or deceptive statement or representation with regard to the services to be performed or the fees to be charged by the debt settlement provider;

(7) Receive any cash, fee, gift, bonus, premium, reward, or other compensation from any person other than the debtor or a person on the debtor's behalf in connection with the debt settlement provider's activities;

(8) Disclose to anyone the name or any personal information of a debtor for whom the debt settlement provider has or is providing debt settlement service other than a debtor's own creditors or the provider's agents. The debt settlement provider shall not disclose the name of a debtor's creditor to anyone other than the debtor or another creditor of the debtor and then only to the extent necessary to secure the cooperation of a creditor in a debt settlement plan.

(E) The attorney general or the prosecuting attorney of any county may bring an action to enforce this section. Upon a finding that any person has engaged or is engaging in any act or practice in violation of this section, a court may make any necessary order or enter a judgment including, but not limited to, an injunction, restitution, or an award of reasonable attorney's fees and costs of investigation and litigation for each violation of this section. In seeking injunctive relief, the attorney general or prosecuting attorney is not required to establish irreparable harm but, in the alternative, shall establish either a violation of this section or that the requested order will enjoin an act of fraud, deception, willful misrepresentation, or other intentional wrongdoing.

(F) In any case in which the attorney general or prosecuting attorney has authority to institute an action or proceeding under this section, the attorney general or prosecuting attorney may accept an assurance of discontinuance of any method, act, or practice that is in violation of this section from any person alleged to be engaged in or to have engaged in the unlawful method, act, or practice. The assurance may include a stipulation for the voluntary payment by the person of the costs of investigation, or of an amount to be held in escrow pending the outcome of any action or as restitution to any aggrieved person or both. The alleged violator shall give the assurance of discontinuance in writing and the attorney general or prosecuting attorney shall file the document with the court of common pleas in the county in which the alleged violator resides or has principal place of business if received by the prosecuting attorney, or in Franklin county if received by the attorney general. Any evidence of a violation of the assurance of discontinuance is prima-facie evidence of a violation of this section in any subsequent action or proceeding brought by the attorney general or prosecuting attorney, and the court may award to the state a civil penalty of not more than ten thousand dollars for each violation. The attorney general or prosecuting attorney may reopen any matter that has been closed by the acceptance of an assurance of discontinuance at any time for further proceedings in the public interest.

Section 2. That existing section 4710.01 of the Revised Code is hereby repealed.