SENATE AMENDED
        PRIOR PRINTER'S NOS. 3312, 3962, 4066         PRINTER'S NO. 4525

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2294 Session of 2008


        INTRODUCED BY D. EVANS, DALEY, BLACKWELL, DeLUCA, GEORGE,
           HARKINS, JOSEPHS, KORTZ, MUNDY, PASHINSKI, WATERS, WHEATLEY,
           BELFANTI AND CALTAGIRONE, MARCH 5, 2008

        AS AMENDED ON THIRD CONSIDERATION, IN SENATE, OCTOBER 7, 2008

                                     AN ACT

     1  Providing for the licensure of persons providing debt management
     2     services and for the powers and duties of the Department of
     3     Banking; requiring surety bonds; prohibiting certain fees and
     4     costs; providing for debt management plans; and prohibiting
     5     certain acts by persons providing debt management services.

     6     The General Assembly of the Commonwealth of Pennsylvania
     7  hereby enacts as follows:
     8  Section 1.  Short title.
     9     This act shall be known and may be cited as the Debt
    10  Management Services Act.
    11  Section 2.  Definitions.
    12     The following words and phrases when used in this act shall
    13  have the meanings given to them in this section unless the
    14  context clearly indicates otherwise:
    15     "APPLICANT."  A PERSON WHO APPLIES FOR A LICENSE UNDER THIS    <--
    16  ACT.
    17     "BANKING INSTITUTION."  A STATE-CHARTERED BANK, BANK AND
    18  TRUST COMPANY, SAVINGS BANK OR PRIVATE BANK, A NATIONAL BANK, A


     1  FEDERALLY CHARTERED OR STATE-CHARTERED SAVINGS ASSOCIATION OR A
     2  SUBSIDIARY OF ANY OF THE FOREGOING.
     3     "Consumer."  An individual who owes money for personal,
     4  family or household expenses to at least one creditor. The term   <--
     5  does not include an individual who owes money for business debt.
     6     "Consumer education program."  A program designed to improve
     7  a consumer's ability to manage the consumer's personal finances
     8  and that includes the following: budgeting, saving, investing,
     9  managing debt and maintaining creditworthiness.
    10     "CONSUMER EDUCATION PROGRAM."  A DETAILED AND CUSTOMIZED       <--
    11  EDUCATION PROGRAM THAT:
    12         (1)  IS PROVIDED TO A CONSUMER PRIOR TO OFFERING A
    13     CONSUMER A DEBT MANAGEMENT SERVICES AGREEMENT.
    14         (2)  IS DESIGNED TO IMPROVE A CONSUMER'S ABILITY TO
    15     MANAGE THE CONSUMER'S PERSONAL AND HOUSEHOLD FINANCES AND TO
    16     OTHERWISE IMPROVE THE FINANCIAL LITERACY OF THE CONSUMER.
    17         (3)  INCLUDES THE FOLLOWING, TAILORED TO THE NEEDS OF THE
    18     CONSUMER: BUDGETING, SAVING, INVESTING, MANAGING DEBT AND
    19     MAINTAINING CREDITWORTHINESS.
    20         (4)  IS NOT LIMITED TO DETERMINING WHETHER A CONSUMER
    21     WILL BENEFIT FROM DEBT MANAGEMENT SERVICES, BUT INCLUDES
    22     VARIOUS OPTIONS AND STRATEGIES FOR ADDRESSING THE CONSUMER'S
    23     DEBT PROBLEMS AND MAY INCLUDE THE PROVISION OF SERVICES FOR
    24     THE PURPOSE OF IMPROVING A CONSUMER'S CREDIT RECORD, CREDIT
    25     HISTORY OR CREDIT RATING, BUT ONLY TO THE EXTENT THAT SUCH
    26     SERVICES ARE INCIDENTAL TO PROVIDING THE OTHER ELEMENTS OF
    27     THE CONSUMER EDUCATION PROGRAM.
    28     "CREDIT COUNSELING AGENCY."  A PERSON THAT PROVIDES DEBT
    29  MANAGEMENT PLAN SERVICES TO CONSUMERS, FOR A FEE, CONTRIBUTION
    30  OR OTHER CONSIDERATION.
    20080H2294B4525                  - 2 -     

     1     "Debt management services."  The service of receiving funds
     2  periodically from a consumer under a debt management services     <--
     3  agreement and then distributing those funds to creditors of the
     4  consumer in partial or full payment of the consumer's PERSONAL    <--
     5  debts.
     6     "Department."  The Department of Banking of the Commonwealth.  <--
     7     "DEBT SETTLEMENT SERVICES."  AN ACTION OR NEGOTIATION MADE ON  <--
     8  BEHALF OF A CONSUMER WITH THAT CONSUMER'S CREDITORS FOR THE
     9  PURPOSE OF THE CREDITOR FORGIVING PART OR ALL OF THE PRINCIPAL
    10  OF THE DEBT INCURRED OR CREDIT EXTENDED TO THAT CONSUMER. THE
    11  TERM SHALL NOT INCLUDE ANY ACTION TAKEN TO CONVINCE A CREDITOR
    12  TO WAIVE ANY FEES OR CHARGES.
    13     "DEPARTMENT."  THE DEPARTMENT OF BANKING OF THE COMMONWEALTH.
    14     "LICENSEE."  A PERSON LICENSED UNDER THE PROVISIONS OF THIS
    15  ACT.
    16     "PAYDAY LOAN."  A SHORT-TERM CASH ADVANCE OF $3,000 OR LESS
    17  THAT IS SECURED OR FACILITATED BY A CONSUMER'S PERSONAL CHECK
    18  THAT IS HELD FOR FUTURE DEPOSIT OR BY ELECTRONIC ACCESS TO THE
    19  CONSUMER'S BANK ACCOUNT. THE TERM INCLUDES ANY FORM OF THIS
    20  LENDING, NOTWITHSTANDING THE PRESENCE OF SOME OTHER ELEMENT
    21  INTRODUCED TO DISGUISE THE TRUE NATURE OF THE TRANSACTION, SUCH
    22  AS THE SALE OR PROVISION OF A GOOD, SERVICE OR COMMODITY
    23  INCIDENTAL TO THE ADVANCE OF FUNDS AND NOTWITHSTANDING THE FACT
    24  THAT THE TRANSACTION IS CONDUCTED IN PERSON, BY MAIL, INTERNET
    25  OR TELEPHONE, OR THROUGH ANY OTHER MEANS.
    26     "Person."  An individual, corporation, partnership or other
    27  entity legally recognized by the Commonwealth for business
    28  purposes that provides debt management services.                  <--
    29     "Secretary."  The Secretary of Banking of the Commonwealth.
    30  Section 3.  License required.
    20080H2294B4525                  - 3 -     

     1     No person may provide debt management services unless the      <--
     2  person is licensed by the department.
     3     (A)  DEBT MANAGEMENT SERVICES.--NO PERSON MAY ADVERTISE,       <--
     4  SOLICIT, STATE OR REPRESENT THAT IT CAN OFFER, OBTAIN OR PROCURE
     5  DEBT MANAGEMENT SERVICES TO OR FOR A CONSUMER OR PROVIDE DEBT
     6  MANAGEMENT SERVICES TO A CONSUMER UNLESS THE PERSON IS LICENSED
     7  BY THE DEPARTMENT UNDER THIS ACT.
     8     (B)  DEBT SETTLEMENT SERVICES.--NO PERSON MAY ADVERTISE,
     9  SOLICIT, STATE OR REPRESENT THAT IT CAN OFFER, OBTAIN OR PROCURE
    10  DEBT SETTLEMENT SERVICES TO OR FOR A CONSUMER OR PROVIDE DEBT
    11  SETTLEMENT SERVICES TO A CONSUMER FOR A FEE UNLESS THE PERSON IS
    12  LICENSED BY THE DEPARTMENT UNDER THIS ACT AND IS OPERATING IN
    13  ACCORDANCE WITH REGULATIONS PROMULGATED BY THE DEPARTMENT
    14  REGARDING THE CONDUCT OF DEBT SETTLEMENT SERVICES.
    15  Section 4.  Nonapplicability.
    16     This act shall not apply to the following persons when they    <--
    17  are engaged in the regular course of their respective businesses
    18  or professions:
    19         (1)  Attorneys who are admitted to the bar of this
    20     Commonwealth and provide legal services within an attorney-
    21     client relationship.
    22         (2)  Certified public accountants who are licensed by the
    23     Commonwealth and provide accounting services within an
    24     accountant-client relationship.
    25         (3)  State-chartered banks, bank and trust companies,
    26     savings banks, private banks, national banks, federally
    27     chartered or State-chartered savings associations, credit
    28     unions or an operating subsidiary of any of these entities.
    29         (4)  Title insurance companies licensed under the act of
    30     May 17, 1921 (P.L.682, No.284), known as The Insurance
    20080H2294B4525                  - 4 -     

     1     Company Law of 1921, or their agents.
     2         (5)  Judicial officers or persons acting under court
     3     order.
     4         (6)  Licenses under the act of December 22, 1989
     5     (P.L.687, No.90), known as the Mortgage Bankers and Brokers
     6     and Consumer Equity Protection Act.
     7     (A)  EXEMPTION FROM ACT.--THIS ACT DOES NOT APPLY TO THE       <--
     8  FOLLOWING PERSONS:
     9         (1)  A BANKING INSTITUTION OR A FEDERALLY CHARTERED OR
    10     STATE-CHARTERED CREDIT UNION, IF THE PRIMARY REGULATOR OF THE
    11     BANKING INSTITUTION OF FEDERALLY CHARTERED OR STATE-CHARTERED
    12     CREDIT UNION SUPERVISES THE BANKING INSTITUTION OR FEDERALLY
    13     CHARTERED OR STATE-CHARTERED CREDIT UNION.
    14         (2)  JUDICIAL OFFICERS OR PERSONS ACTING UNDER COURT
    15     ORDER.
    16         (3)  AGENCIES OR INSTRUMENTALITIES OF FEDERAL, STATE OR
    17     LOCAL GOVERNMENT.
    18         (4)  EMPLOYEES OF LICENSEES OR EXEMPT PERSONS UNDER THIS
    19     ACT.
    20         (5)  ATTORNEYS WHO ARE ADMITTED TO THE BAR OF THIS
    21     COMMONWEALTH AND PROVIDE LEGAL SERVICES WITHIN AN ATTORNEY-
    22     CLIENT RELATIONSHIP WHO ENGAGE IN DEBT MANAGEMENT SERVICES OR
    23     DEBT SETTLEMENT SERVICES WITHIN THE NORMAL COURSE OF LEGAL
    24     PRACTICE.
    25     (B)  EXEMPTION FROM LICENSING.--THE FOLLOWING PERSONS ARE NOT
    26  REQUIRED TO BE LICENSED UNDER THIS ACT, BUT MUST COMPLY WITH THE
    27  PROVISIONS OF THIS ACT IF THEY OFFER, OBTAIN OR PROVIDE DEBT
    28  MANAGEMENT SERVICES OR DEBT SETTLEMENT SERVICES:
    29         (1)  CERTIFIED PUBLIC ACCOUNTANTS WHO ARE LICENSED BY THE
    30     COMMONWEALTH AND PROVIDE ACCOUNTING SERVICES WITHIN AN
    20080H2294B4525                  - 5 -     

     1     ACCOUNTANT-CLIENT RELATIONSHIP.
     2         (2)  TITLE INSURANCE COMPANIES LICENSED UNDER THE ACT OF
     3     MAY 17, 1921 (P.L.682, NO.284), KNOWN AS THE INSURANCE
     4     COMPANY LAW OF 1921, OR THEIR AGENTS.
     5         (3)  MORTGAGE LENDERS, MORTGAGE BROKERS AND MORTGAGE LOAN
     6     CORRESPONDENTS LICENSED UNDER THE PROVISIONS OF 7 PA.C.S. CH.
     7     61 (RELATING TO MORTGAGE LOAN INDUSTRY LICENSING AND CONSUMER
     8     PROTECTION).
     9  Section 5.  Application for licensure.
    10     An application for a license under this act shall be
    11  submitted to the department in the form required by the
    12  department and shall include following:
    13         (1)  The applicant's name, address, telephone number,
    14     electronic mail address and Internet website.
    15         (2)  The address of each location in the Commonwealth
    16     where the applicant will provide debt management services.
    17         (3)  The name and address of each owner, officer,
    18     director or principal of the applicant.
    19         (4)  The name and address of the applicant's agent for
    20     service of process in this Commonwealth.
    21         (5)  A description of the ownership interest of any
    22     officer, director, agent or employee of the applicant in an
    23     affiliate or subsidiary of the applicant or in any other
    24     business entity that will provide any service to the
    25     applicant or to a consumer relating to the applicant's
    26     provision of debt management services.
    27         (6)  A list of other states in which the applicant
    28     engages in the business of providing debt management
    29     services, including any relevant license or registration
    30     number and information regarding whether a license or
    20080H2294B4525                  - 6 -     

     1     registration in another state has ever been suspended or
     2     revoked.
     3         (7)  The AUDITED financial statement from the applicant's  <--
     4     most recent fiscal year, including an audit opinion from an
     5     independent certified public accountant.
     6         (8)  A copy of a liability or fidelity insurance policy
     7     that insures against dishonesty, fraud, theft or other
     8     malfeasance on the part of the applicant's employees,
     9     officers, directors or principals.
    10         (9)  A copy of the applicant's standard debt management
    11     services agreement.
    12         (10)  Information regarding the applicant's trust
    13     account, including the name and address of the FDIC-insured
    14     depository institution where the account is located and the
    15     number of the account.
    16         (11)  Information regarding the number of the applicant's  <--
    17     credit counselors, supervisors or managers who are certified
    18     by an independent certifying organization acceptable to the
    19     department and a plan to ensure that any of the credit
    20     counselors, supervisors or managers who are not certified
    21     become certified within six months of the issuance date of
    22     the license.
    23         (11)  INFORMATION REGARDING THE NUMBER OF THE APPLICANT'S  <--
    24     CREDIT COUNSELORS AND SUPERVISORS OR MANAGERS WITH DIRECT
    25     SUPERVISORY DUTIES OF CREDIT COUNSELORS WHO PERFORM THE
    26     CONSUMER EDUCATION PROGRAM WHO ARE CERTIFIED BY AN
    27     INDEPENDENT CERTIFYING ORGANIZATION ACCEPTABLE TO THE
    28     DEPARTMENT AND A PLAN TO ENSURE THAT ANY OF THE CREDIT
    29     COUNSELORS AND SUPERVISORS OR MANAGERS WITH DIRECT
    30     SUPERVISORY DUTIES OF CREDIT COUNSELORS WHO PERFORM THE
    20080H2294B4525                  - 7 -     

     1     CONSUMER EDUCATION PROGRAM WHO ARE NOT CERTIFIED BECOME
     2     CERTIFIED WITHIN SIX MONTHS OF THE ISSUANCE DATE OF THE
     3     LICENSE. A LICENSEE SHALL NOTIFY THE DEPARTMENT OF ANY CHANGE
     4     IN STATUS REGARDING THE LICENSEE'S CERTIFIED CREDIT
     5     COUNSELORS, SUPERVISOR OR MANAGERS WITH DIRECT SUPERVISORY
     6     DUTIES OF CREDIT COUNSELORS WITHIN TEN DAYS OF THE CHANGE.
     7         (12)  Evidence that the applicant is accredited by an
     8     independent accrediting organization acceptable to the
     9     department.
    10         (13)  A penal bond meeting the requirements of section 7.
    11         (14)  A nonrefundable fee of $2,000.
    12         (15)  Any other information that the department requires.  <--
    13         (15)  A DESCRIPTION OF THE CONSUMER EDUCATION PROGRAM      <--
    14     THAT THE APPLICANT PROVIDES OR INTENDS TO PROVIDE TO
    15     CONSUMERS ALONG WITH COPIES OF ANY WRITTEN MATERIALS USED OR
    16     TO BE USED IN THE PROGRAM.
    17         (16)  ANY OTHER INFORMATION THAT THE DEPARTMENT REQUIRES.
    18  Section 6.  License fees for certain entities.
    19     Notwithstanding any other provision of this act, a domestic
    20  or foreign not-for-profit corporation or association registered
    21  as such under 15 Pa.C.S. Pt. II Subpt. C (relating to nonprofit
    22  corporations) with the Secretary of the Commonwealth which has
    23  annual gross revenues from debt management service fees and
    24  charges of less than $3,000,000 annually shall only be required
    25  to pay an initial registration LICENSE fee of $500 and an annual  <--
    26  renewal fee of $350.
    27  Section 7.  Penal bond.
    28     (a)  General rule.--The department shall issue a license
    29  under this act if the applicant obtains and maintains a bond in
    30  the amount of $100,000 AN AMOUNT GREATER THAN THE TOTAL AMOUNT    <--
    20080H2294B4525                  - 8 -     

     1  OF PENNSYLVANIA CONSUMER FUNDS THAT THE LICENSEE WILL HOLD
     2  DIRECTLY OR IN TRUST AT ANY TIME, in a form acceptable to the
     3  department, prior to the issuance of the license, from a surety
     4  company authorized to do business in this Commonwealth. The bond
     5  shall be a penal bond conditioned on compliance with this act
     6  and subject to forfeiture by the department and shall run to the
     7  Commonwealth for its use. The bond shall also be for the use of
     8  any person against the licensee for the benefit of any consumer
     9  who is injured by a violation of this act or regulation
    10  promulgated under this act.
    11     (b)  Rights of aggrieved persons.--
    12         (1)  If the person is aggrieved, the person may, with the
    13     written consent of the department, recover fees and costs
    14     from the bond by filing a claim with the surety company or
    15     maintaining an action on the bond.
    16         (2)  In the alternative, an aggrieved person may recover
    17     fees and costs by filing a formal complaint against the
    18     licensee with the department which shall adjudicate the
    19     matter. The adjudication shall be binding upon the surety
    20     company and enforceable by the department in Commonwealth
    21     Court and by an aggrieved person in any court.
    22         (3)  Any aggrieved person seeking to recover from a bond
    23     that has already been forfeited by the department or which
    24     the department is in the process of forfeiting may recover
    25     payment on the bond if, after filing a petition with the
    26     department, the department consents to the aggrieved person's
    27     requested payment or portion thereof. The department may pay
    28     the aggrieved person from the bond proceeds it recovers.
    29     (c)  Other relief.--
    30         (1)  Nothing in this section shall be construed to limit
    20080H2294B4525                  - 9 -     

     1     the ability of any court or magisterial district judge to
     2     award to any aggrieved person other damages, court costs and
     3     attorney fees as permitted by law, but those claims that are
     4     not advance fees or related costs may not be recovered from    <--
     5     the bond.
     6         (2)  The department, in its discretion, may consent to or
     7     order pro rata or other recovery on the bond for any
     8     aggrieved person if claims against the bond may or do exceed
     9     its full monetary amount.
    10     (d)  Cancellation of bonds.--No bond shall comply with the
    11  requirements of this section unless it contains a provision that
    12  it shall not be canceled for any cause unless notice of
    13  intention to cancel is given to the department at least 30 days
    14  before the day upon which cancellation shall take effect.
    15  Cancellation of the bond shall not invalidate the bond regarding
    16  the period of time it was in effect.
    17  Section 8.  Issuance of license.
    18     (a)  Time for issuance.--The department shall decide whether
    19  to issue a license to an applicant within 60 days of receiving
    20  the applicant's completed application. If the department needs
    21  longer than 60 days to make a decision, it may extend the time
    22  period for 30 days. The department shall notify the applicant of
    23  the extended time period, including a final decision date, in
    24  writing.
    25     (b)  Investigation.--Upon receipt of a completed application,
    26  the department may conduct an investigation of the applicant,
    27  including its owners, officers, directors, principals or agents
    28  in order to decide whether to issue the license.
    29     (c)  Appeal of denial.--If the department refuses to issue a
    30  license, it shall notify the applicant in writing that the
    20080H2294B4525                 - 10 -     

     1  license has been denied, including the reason for the denial and
     2  that the applicant has the right to appeal the denial to the
     3  secretary within 30 days.
     4     (d)  Duration.--A license shall be issued for a period of one
     5  year ON A SCHEDULE DETERMINED BY THE DEPARTMENT, PROVIDED THAT    <--
     6  IF A LICENSE IS ISSUED PRIOR TO THE BEGINNING OF A LICENSING
     7  YEAR, THE LICENSE SHALL ONLY BE VALID UNTIL THE END OF THAT
     8  LICENSING YEAR, AT WHICH TIME IT MAY BE RENEWED SUBJECT TO THE
     9  PROVISIONS OF THIS ACT. IN THE EVENT THAT A LICENSE IS DENIED,
    10  CANCELED, SURRENDERED, REVOKED OR SUSPENDED, NO PART OF THE
    11  LICENSE FEE OR LICENSE RENEWAL FEE IS SUBJECT TO REBATE.
    12     (e)  Contents.--The license shall be on a form determined by
    13  the department and shall contain, at a minimum, the name of the
    14  licensee, the address at which the licensee is conducting
    15  business and a license number.
    16     (f)  Display.--The license shall be displayed prominently at
    17  the licensee's business location LOCATIONS.                       <--
    18     (g)  Transfer prohibited.--The license shall not be
    19  transferred, assigned or pledged.
    20     (H)  CONDITIONAL LICENSES.--THE DEPARTMENT MAY IMPOSE          <--
    21  CONDITIONS ON THE ISSUANCE OF ANY LICENSE UNDER THIS ACT. IF THE
    22  DEPARTMENT DETERMINES THAT CONDITIONS IMPOSED UPON A LICENSE
    23  HAVE NOT BEEN FULFILLED, THE DEPARTMENT MAY TAKE ANY ACTION
    24  AUTHORIZED UNDER THIS ACT AGAINST THE LICENSEE THAT THE
    25  DEPARTMENT DEEMS NECESSARY. IN THE CASE OF APPLICANTS, THE
    26  DEPARTMENT MAY ISSUE LICENSES EFFECTIVE IMMEDIATELY UPON RECEIPT
    27  OF AN APPLICATION, WHICH LICENSES SHALL BE CONDITIONAL LICENSES
    28  ISSUED UNDER THIS SUBSECTION.
    29  Section 9. Renewal of license.
    30     (a)  General rule.--An application for renewal of a license
    20080H2294B4525                 - 11 -     

     1  shall be submitted to the department on the form determined by
     2  the department and in the time period determined by the
     3  department. Each application for renewal shall be accompanied by
     4  a fee of $1,250.
     5     (b)  Required condition.--The department shall determine the
     6  information and documentation that shall be provided in the
     7  application for renewal of a license sufficient to establish
     8  that the licensee continues to conduct its business in
     9  accordance with this act.
    10     (c)  Continuing education.--In order to maintain its license,
    11  a licensee shall demonstrate to the satisfaction of the
    12  department that its credit counselors, supervisors and managers
    13  participate in continuing education as required by the
    14  department by regulation. THE DEPARTMENT SHALL DELINEATE THE      <--
    15  REQUIREMENTS FOR SUCH CONTINUING EDUCATION BY REGULATION WITHIN
    16  THREE YEARS AFTER THE EFFECTIVE DATE OF THIS ACT.
    17  Section 10.  Reasons for denial, suspension, revocation or
    18                 refusal.
    19     The department may deny, suspend, revoke or refuse to renew a
    20  license for the following reasons, if committed by the applicant
    21  or one of its owners, officers, directors, principals or agents:
    22         (1)  Made a material misstatement in the license
    23     application or any other submission required by this act or
    24     the department.
    25         (2)  Failed to comply with or violated any provision of
    26     this act or any regulation, order or statement of policy
    27     issued by the department under this act.
    28         (3)  Engaged in unfair or unethical conduct in connection
    29     with the debt management services business.
    30         (4)  Does not possess the financial responsibility,
    20080H2294B4525                 - 12 -     

     1     character, reputation, integrity and general fitness
     2     sufficient to warrant the belief that the debt management
     3     services business will be conducted lawfully, honestly and in
     4     the public interest.
     5         (5)  Been convicted of or pleaded guilty or nolo
     6     contendere to a crime of moral turpitude or to an offense
     7     graded as a felony.
     8         (6)  Been enjoined by a court of competent jurisdiction
     9     from engaging in the business of debt management services.
    10         (7)  Has had a license issued by the department denied,
    11     not renewed, suspended or revoked.
    12         (8)  Became the subject of a United States Postal Service
    13     fraud order.
    14         (9)  Demonstrated negligence or incompetence in
    15     performing an act for which the applicant is required to hold
    16     a license under this act.
    17         (10)  Has an outstanding debt to the Commonwealth or any
    18     Commonwealth agency.
    19         (11)  HAS FAILED TO MAINTAIN THE BOND REQUIRED UNDER       <--
    20     SECTION 7.
    21         (12)  BECOMES INSOLVENT, MEANING THAT THE LIABILITIES OF
    22     THE APPLICANT OR LICENSEE EXCEED THE ASSETS OF THE APPLICANT
    23     OR LICENSEE OR THAT THE APPLICANT OR LICENSEE CANNOT MEET THE
    24     OBLIGATIONS OF THE APPLICANT OR LICENSEE AS THEY MATURE OR IS
    25     IN SUCH FINANCIAL CONDITION THAT THE APPLICANT OR LICENSEE
    26     CANNOT CONTINUE IN BUSINESS WITH SAFETY TO THE CUSTOMERS OF
    27     THE APPLICANT OR LICENSEE.
    28         (13)  HAS FAILED TO DISBURSE A CONSUMER'S PAYMENTS TO
    29     CREDITORS IN A TIMELY MANNER AS AGREED TO UNDER A DEBT
    30     MANAGEMENT SERVICES AGREEMENT FOR ANY REASON OTHER THAN THE
    20080H2294B4525                 - 13 -     

     1     CONSUMER'S FAILURE TO MAKE THE AGREED-TO PAYMENTS TO THE
     2     LICENSEE OR BECAUSE SUCH DISBURSEMENT WOULD CONSTITUTE A
     3     VIOLATION OF APPLICABLE LAW OR AN ORDER ISSUED BY A COURT OR
     4     ADMINISTRATIVE BODY OF COMPETENT JURISDICTION.
     5  SECTION 10.1.  PAYDAY LOANS.
     6     THE DEPARTMENT SHALL DENY A LICENSE UNDER THIS ACT TO AN
     7  APPLICANT THAT OFFERS PAYDAY LOANS.
     8  Section 11.  Reinstatement.
     9     The department may reinstate a license that was previously
    10  suspended, revoked or denied renewal, if all of the following
    11  exist:
    12         (1)  A condition that warranted the original action has
    13     been corrected to the department's satisfaction.
    14         (2)  The department has reason to believe that the
    15     condition is not likely to occur again.
    16         (3)  The licensee satisfies all other requirements of
    17     this act.
    18  Section 12.  Limitations on license.
    19     (a)  Name or address.--A licensee shall not conduct business
    20  under this act under a name or at an address different from that
    21  contained on the licensee's license. When a licensee changes its
    22  name or its business address, it shall notify the department
    23  within ten days of the change and the department may issue a new
    24  license specifying the licensee's new name or address.
    25     (b)  Other businesses.--A licensee shall not conduct a
    26  business other than the debt management service business
    27  licensed by the department under this act unless it notifies the
    28  department in writing at least 30 days before beginning to
    29  conduct that business.
    30     (C)  CONSUMER FUNDS.--A LICENSEE MAY NOT HOLD MONEY FROM       <--
    20080H2294B4525                 - 14 -     

     1  PENNSYLVANIA CONSUMERS, EITHER DIRECTLY OR IN ANY TRUST, IN AN
     2  AMOUNT IN EXCESS OF THE BOND REQUIRED UNDER SECTION 7.
     3  Section 13.  Annual report.                                       <--
     4     (a)  Duty to file.--A licensee shall file an annual report
     5  with the department on a date determined by the department
     6  setting forth such information as the department shall require
     7  concerning the debt management services business conducted by
     8  the licensee during the preceding calendar year. The report
     9  shall be on a form provided by the department.
    10     (b)  Penalty for noncompliance.--A licensee who fails to file
    11  its annual report on the required date may be subject to a
    12  penalty of $100 for each day after the due date until the report
    13  is filed.
    14  SECTION 13.  REPORTS TO DEPARTMENT.                               <--
    15     (A)  ANNUAL REPORT.--A LICENSEE SHALL FILE AN ANNUAL REPORT
    16  WITH THE DEPARTMENT ON A DATE DETERMINED BY THE DEPARTMENT
    17  SETTING FORTH SUCH INFORMATION AS THE DEPARTMENT SHALL REQUIRE
    18  CONCERNING THE DEBT MANAGEMENT SERVICES BUSINESS CONDUCTED BY
    19  THE LICENSEE DURING THE PRECEDING CALENDAR YEAR. THE REPORT
    20  SHALL BE ON A FORM PROVIDED BY THE DEPARTMENT.
    21     (B)  REPORT OF ENFORCEMENT ACTION.--A LICENSEE SHALL REPORT
    22  TO THE DEPARTMENT ANY ENFORCEMENT ACTION TAKEN AGAINST THE
    23  LICENSEE BY ANY FEDERAL OR STATE AGENCY. THE REPORT SHALL BE
    24  FILED NO LATER THAN SEVEN DAYS AFTER THE LICENSEE BECOMES AWARE
    25  OF THE ENFORCEMENT ACTION. THE LICENSEE SHALL PROVIDE UPDATES TO
    26  THE DEPARTMENT AS TO THE STATUS OF ANY ENFORCEMENT ACTION AS
    27  REQUIRED BY THE DEPARTMENT.
    28     (C)  REPORT OF FAILURE TO REMIT PAYMENTS.--IN THE EVENT THAT
    29  A LICENSEE BELIEVES THAT IT MAY NOT BE ABLE TO REMIT A
    30  CONSUMER'S PAYMENT TO A CREDITOR FOR ANY REASON OTHER THAN THE
    20080H2294B4525                 - 15 -     

     1  CONSUMER'S FAILURE TO PROVIDE FUNDS TO THE LICENSEE, THE
     2  LICENSEE SHALL NOTIFY THE DEPARTMENT. THE NOTIFICATION SHALL BE
     3  FILED WITHIN ONE BUSINESS DAY OF THE LICENSEE BECOMING AWARE OF
     4  ITS INABILITY TO MAKE THE PAYMENT. THE NOTIFICATION SHALL
     5  CONTAIN ANY PERTINENT FACTS INCLUDING THE REASON THE LICENSEE
     6  BELIEVES IT MAY NOT BE ABLE TO MAKE THE PAYMENT AND WHAT STEPS
     7  THE LICENSEE WILL TAKE TO RESOLVE THE SITUATION. THE LICENSEE
     8  SHALL PROVIDE UPDATES TO THE DEPARTMENT AS TO THE STATUS OF THE
     9  REPORTED MATTER AS REQUIRED BY THE DEPARTMENT.
    10     (D)  PENALTY FOR NONCOMPLIANCE.--A LICENSEE WHO FAILS TO FILE
    11  AN ANNUAL REPORT WITH THE DEPARTMENT AS REQUIRED BY SUBSECTION
    12  (A) MAY BE SUBJECT TO A PENALTY OF $100 FOR EACH DAY AFTER THE
    13  DATE THAT THE ANNUAL REPORT WAS REQUIRED TO BE FILED.
    14  Section 14.  Requirements for providing debt management
    15                 services.
    16     A licensee shall provide debt management services in
    17  accordance with the following requirements:
    18         (1)  The licensee shall provide each consumer for whom it
    19     provides debt management services with a consumer education
    20     program at no cost to a consumer who enters into a debt        <--
    21     management services agreement THE CONSUMER.                    <--
    22         (2)  (i)  A LICENSEE MAY ONLY PROVIDE DEBT MANAGEMENT      <--
    23         SERVICES IN ACCORDANCE WITH A WRITTEN DEBT MANAGEMENT
    24         SERVICES AGREEMENT ENTERED INTO BETWEEN THE LICENSEE AND
    25         THE CONSUMER. Before the licensee and consumer enter into
    26         a debt management services agreement, the licensee shall
    27         prepare an analysis of the consumer's financial situation
    28         and a budget for the consumer. The analysis shall include
    29         a determination that the consumer will benefit from debt   <--
    30         management services and an explanation of that benefit. A  <--
    20080H2294B4525                 - 16 -     

     1         GOOD FAITH DETERMINATION WHETHER THE CONSUMER WILL
     2         BENEFIT FROM DEBT MANAGEMENT SERVICES AND AN EXPLANATION
     3         OF THAT BENEFIT. IF THE ANALYSIS DETERMINES THAT THE
     4         CONSUMER WILL NOT BENEFIT FROM DEBT MANAGEMENT SERVICES,
     5         THE LICENSEE SHALL NOT OFFER DEBT MANAGEMENT SERVICES TO
     6         THE CONSUMER.
     7             (ii)  The licensee may communicate with the consumer
     8         by electronic mail or the Internet, but shall not enter
     9         into a debt management services agreement unless A         <--
    10         CERTIFIED CREDIT COUNSELOR EMPLOYED BY the licensee and
    11         the consumer have orally reviewed the analysis, the
    12         budget and the debt management services agreement through
    13         a person-to-person discussion. The licensee shall provide
    14         copies of the analysis, budget and debt management
    15         services agreement to the consumer.
    16         (3)  A debt management services agreement shall be in
    17     writing, signed by the licensee and the consumer, in plain
    18     English and printed in at least 12-point type. It shall
    19     contain at least the following information:
    20             (i)  The name, address and telephone number of the
    21         consumer and of the licensee.
    22             (ii)  The license number of the licensee.
    23             (iii)  A description of the debt management services
    24         to be provided to the consumer.
    25             (iv)  A description of the fees that will be charged
    26         to the consumer.
    27             (v)  The name and address of the depository
    28         institution where the trust account into which the
    29         consumer's funds, paid to the licensee for disbursement
    30         to the consumer's creditors, is located.
    20080H2294B4525                 - 17 -     

     1             (vi)  A list of each of the consumer's creditors that
     2         the licensee in good faith reasonably expects to
     3         participate in the licensee's management of the
     4         consumer's debt, including the amount owed to each
     5         creditor and the schedule of payments to be made to each
     6         creditor. The schedule of payments shall include the       <--
     7         amount of each payment and the date on which it will be
     8         made.
     9             (vii)  A list of each of the consumer's creditors
    10         that the licensee in good faith reasonably expects not to
    11         participate in the licensee's management of the
    12         consumer's debt.
    13             (viii)  A schedule of the payments that the consumer
    14         must make to the licensee, including the amount of each
    15         payment, the date it is due and the form in which it must
    16         be made.
    17             (ix)  Disclosure of any fees that either the consumer
    18         must make to the licensee or that the licensee will
    19         retain from each of the consumer's payments to the
    20         licensee.
    21             (x)  A notice, in bold print, that the consumer's
    22         participation in the debt management services agreement
    23         may negatively impact the consumer's credit rating or
    24         credit score.
    25             (xi)  Disclosure that the licensee may receive
    26         compensation from the consumer's creditors for providing
    27         debt management services to the consumer.
    28             (xii)  Notice that either party may terminate the
    29         debt management services agreement upon ten days' written
    30         notice to the other party.
    20080H2294B4525                 - 18 -     

     1             (xiii)  Notice that if the debt management services
     2         agreement is terminated, the consumer is entitled to a
     3         prompt refund of any payments made that have not yet been
     4         disbursed to the consumer's creditors.
     5             (xiv)  An explanation of the way in which disputes
     6         that arise under the debt management services agreement
     7         will be resolved.
     8             (xv)  An explanation of applicable privacy laws.
     9         (4)  The licensee shall provide each consumer
    10     participating in a debt management services agreement with AT  <--
    11     LEAST quarterly statements setting forth the payments
    12     received from the consumer and the disbursements made to the
    13     consumer's creditors.
    14         (5)  The licensee shall deposit a consumer's payment       <--
    15     under a debt management services agreement into the
    16     licensee's trust account within two business days of
    17     receiving the payment.
    18         (5)  WITHIN TWO BUSINESS DAYS OF RECEIVING ANY PAYMENT,    <--
    19     THE LICENSEE SHALL DEPOSIT ALL PAYMENTS RECEIVED FROM
    20     CONSUMERS UNDER DEBT MANAGEMENT SERVICES AGREEMENTS INTO A
    21     TRUST ACCOUNT ESTABLISHED FOR THE BENEFIT OF THE CONSUMERS TO
    22     WHOM THE LICENSEE IS FURNISHING DEBT MANAGEMENT SERVICES. ALL
    23     MONEY PAID TO A LICENSEE BY OR ON BEHALF OF A CONSUMER FOR
    24     DISTRIBUTION TO CREDITORS PURSUANT TO A DEBT MANAGEMENT
    25     SERVICES AGREEMENT IS HELD IN TRUST. ANY INTEREST EARNED FROM
    26     MONEY HELD IN TRUST ON BEHALF OF A CONSUMER SHALL BE USED FOR
    27     THE BENEFIT OF THE CONSUMER. THE TRUST ACCOUNT SHALL BE IN A
    28     FEDERALLY INSURED DEPOSITORY INSTITUTION AND IS SUBJECT TO
    29     THE FOLLOWING:
    30             (I)  EXCEPT AS PROVIDED IN SUBPARAGRAPH (III), MONEY
    20080H2294B4525                 - 19 -     

     1         HELD IN TRUST BY A LICENSEE IS NOT PROPERTY OF THE
     2         LICENSEE OR ANY DESIGNEE. THE MONEY SHALL NOT BE
     3         AVAILABLE TO CREDITORS OF THE LICENSEE, EXCEPT FOR A
     4         CONSUMER FROM WHOM OR ON WHOSE BEHALF THE LICENSEE
     5         RECEIVED THE MONEY, TO THE EXTENT THE MONEY HAS NOT BEEN
     6         DISBURSED TO CREDITORS ON BEHALF OF THE CONSUMER.
     7             (II)  IN CONNECTION WITH THE TRUST ACCOUNT, A
     8         LICENSEE SHALL:
     9                 (A)  MAINTAIN SEPARATE RECORDS OF ACCOUNT FOR
    10             EACH INDIVIDUAL TO WHOM THE PROVIDER IS FURNISHING
    11             DEBT MANAGEMENT SERVICES; AND
    12                 (B)  DISBURSE MONEY PAID BY OR ON BEHALF OF THE
    13             INDIVIDUAL TO CREDITORS OF THE INDIVIDUAL AS
    14             DISCLOSED IN THE DEBT MANAGEMENT SERVICES AGREEMENT,
    15             EXCEPT THAT:
    16                     (I)  THE LICENSEE MAY DELAY PAYMENT TO THE
    17                 EXTENT THAT A PAYMENT BY THE CONSUMER DOES NOT
    18                 COMPLY WITH THE TERMS OF THE DEBT MANAGEMENT
    19                 SERVICES AGREEMENT BECAUSE IT IS NOT SUFFICIENT
    20                 TO PAY DESIGNATED CREDITORS.
    21                     (II)  IF THE DEBT MANAGEMENT SERVICES
    22                 AGREEMENT PROVIDES FOR REGULAR PERIODIC PAYMENTS
    23                 TO CREDITORS, THE LICENSEE SHALL MAKE PAYMENTS TO
    24                 COMPLY WITH THE DUE DATES ESTABLISHED BY EACH
    25                 CREDITOR.
    26                     (III)  THE LICENSEE MAY PROMPTLY CORRECT ANY
    27                 PAYMENTS THAT ARE NOT MADE OR THAT ARE
    28                 MISDIRECTED AS RESULT OF AN ERROR BY THE LICENSEE
    29                 OR ANY PERSON IN CONTROL OF THE TRUST ACCOUNT AND
    30                 REIMBURSE THE CONSUMER FOR ANY COSTS OR FEES
    20080H2294B4525                 - 20 -     

     1                 IMPOSED BY A CREDITOR AS A RESULT OF THE
     2                 LICENSEE'S FAILURE TO PAY A CREDITOR IN A TIMELY
     3                 MANNER.
     4             (III)  A LICENSEE MAY COMMINGLE MONEY IN A TRUST
     5         ACCOUNT ESTABLISHED FOR THE BENEFIT OF THE CONSUMERS WHO
     6         HAVE A DEBT MANAGEMENT SERVICES AGREEMENT OR DEBT
     7         SETTLEMENT SERVICES AGREEMENT WITH THE LICENSEE AND TO
     8         WHOM THE LICENSEE IS FURNISHING DEBT MANAGEMENT SERVICES
     9         OR DEBT SETTLEMENT SERVICES. IN THE EVENT A LICENSEE
    10         DEPOSITS A CONSUMER'S ENTIRE PAYMENT TO THE LICENSEE,
    11         INCLUDING BOTH MONEY FOR DISBURSEMENT TO CREDITORS AND
    12         FEES OWED TO THE LICENSEE, THE LICENSEE MAY ACCEPT
    13         PAYMENT OF FEES OWED TO IT FROM THE TRUST. ALL MONEY IN
    14         THE TRUST ACCOUNT ESTABLISHED FOR THE BENEFIT OF
    15         CONSUMERS HOWEVER, SHALL BE ACCOUNTED FOR SEPARATELY
    16         INCLUDING AN ACCOUNTING FOR FEES OWED TO THE LICENSEE. NO
    17         OTHER MONEY SHALL BE DEPOSITED INTO THE TRUST ACCOUNT AND
    18         THE MONEY IN THE ACCOUNT MAY ONLY BE USED FOR THE
    19         PURPOSES EXPRESSED IN THIS SUBPARAGRAPH.
    20             (IV)  A TRUST ACCOUNT SHALL AT ALL TIMES HAVE A CASH
    21         BALANCE EQUAL TO THE TOTAL AMOUNT HELD IN ALL CONSUMER
    22         ACCOUNTS.
    23             (V)  THE LICENSEE SHALL RECONCILE THE TRUST ACCOUNT
    24         AT LEAST ONCE A MONTH, WHICH SHALL INCLUDE RECONCILING
    25         THE CASH BALANCE IN THE TRUST ACCOUNT WITH THE SUM OF THE
    26         BALANCES IN EACH CONSUMER ACCOUNT. IF THE LICENSEE HAS
    27         MORE THAN ONE TRUST ACCOUNT, EACH TRUST ACCOUNT MUST BE
    28         INDIVIDUALLY RECONCILED.
    29             (VI)  IF A LICENSEE DISCOVERS, OR HAS REASONABLE
    30         SUSPICION OF, EMBEZZLEMENT OR OTHER UNLAWFUL
    20080H2294B4525                 - 21 -     

     1         APPROPRIATION OF MONEY HELD IN TRUST, THE LICENSEE SHALL
     2         IMMEDIATELY NOTIFY THE DEPARTMENT.
     3             (VII)  IF A CONSUMER TERMINATES A DEBT MANAGEMENT
     4         SERVICES AGREEMENT WITH A LICENSEE, THE LICENSEE SHALL
     5         PROMPTLY REFUND TO THE CONSUMER ALL MONEY PAID BY OR ON
     6         BEHALF OF THE CONSUMER WHICH HAS NOT BEEN PAID TO
     7         CREDITORS AND INTEREST ACCRUED THEREON, LESS FEES THAT
     8         ARE PAYABLE TO THE LICENSEE AS AUTHORIZED BY THIS ACT.
     9         (6)  The licensee shall disburse a consumer's funds to
    10     the consumer's creditors in a timely manner BASED ON THE       <--
    11     AVAILABILITY OF THE FUNDS pursuant to the consumer's debt
    12     management services agreement. IN THE EVENT THAT A CONSUMER    <--
    13     MAKES ONLY A PARTIAL PAYMENT AS REQUIRED BY A DEBT MANAGEMENT
    14     SERVICES AGREEMENT, THE LICENSEE SHALL DISBURSE THE AVAILABLE
    15     FUNDS TO CREDITORS PRIOR TO THE LICENSEE COLLECTING ITS OWN
    16     FEES FROM THE CONSUMER'S PARTIAL PAYMENT. IN THE EVENT THAT A
    17     CONSUMER FAILS TO RESOLVE ANY SCHEDULED PAYMENT DEFICIENCY
    18     WITHIN 45 DAYS OF THE DEFICIENCY OCCURRING, A LICENSEE MAY
    19     TERMINATE THE DEBT MANAGEMENT SERVICES AGREEMENT IN
    20     ACCORDANCE WITH THE AGREEMENT.
    21         (7)  The licensee shall not purchase any debt or           <--
    22     obligation of a consumer.
    23         (8)  The licensee shall not lend money or provide credit
    24     to a consumer.
    25         (9)  The licensee shall not offer or provide credit
    26     insurance to a consumer.
    27         (10)  The licensee shall not obtain a mortgage or other
    28     security interest in the property of a consumer.
    29         (7)  THE LICENSEE OR ANY BUSINESS ENTITY IN WHICH ANY      <--
    30     DIRECTOR, OWNER, OFFICER, EMPLOYEE OR PRINCIPAL OF THE
    20080H2294B4525                 - 22 -     

     1     LICENSEE, OR ANY MEMBER OF SUCH PERSON'S IMMEDIATE FAMILY AS
     2     DEFINED IN 65 PA.C.S. § 1102 (RELATING TO DEFINITIONS), HAS
     3     AN EQUITABLE, BENEFICIAL OR OTHER OWNERSHIP INTEREST SHALL
     4     NOT PURCHASE ANY DEBT OR OBLIGATION OF A CONSUMER.
     5         (8)  THE LICENSEE OR ANY BUSINESS ENTITY IN WHICH ANY
     6     DIRECTOR, OWNER, OFFICER, EMPLOYEE OR PRINCIPAL OF THE
     7     LICENSEE, OR ANY MEMBER OF SUCH PERSON'S IMMEDIATE FAMILY AS
     8     DEFINED IN 65 PA.C.S. § 1102, HAS AN EQUITABLE, BENEFICIAL OR
     9     OTHER OWNERSHIP INTEREST SHALL NOT LEND MONEY OR PROVIDE
    10     CREDIT TO A CONSUMER.
    11         (9)  THE LICENSEE OR ANY BUSINESS ENTITY IN WHICH ANY
    12     DIRECTOR, OWNER, OFFICER, EMPLOYEE OR PRINCIPAL OF THE
    13     LICENSEE, OR ANY MEMBER OF SUCH PERSON'S IMMEDIATE FAMILY AS
    14     DEFINED IN 65 PA.C.S. § 1102, HAS AN EQUITABLE, BENEFICIAL OR
    15     OTHER OWNERSHIP INTEREST SHALL NOT OFFER OR PROVIDE CREDIT
    16     INSURANCE TO A CONSUMER.
    17         (10)  THE LICENSEE OR ANY BUSINESS ENTITY IN WHICH ANY
    18     DIRECTOR, OWNER, OFFICER, EMPLOYEE OR PRINCIPAL OF THE
    19     LICENSEE, OR ANY MEMBER OF SUCH PERSON'S IMMEDIATE FAMILY AS
    20     THAT TERM IS DEFINED IN 65 PA.C.S. § 1102, HAS AN EQUITABLE,
    21     BENEFICIAL OR OTHER OWNERSHIP INTEREST SHALL NOT OBTAIN A
    22     MORTGAGE OR OTHER SECURITY INTEREST IN THE PROPERTY OF A
    23     CONSUMER.
    24         (11)  The licensee shall not operate as a collection
    25     agency or debt collector.
    26         (12)  The licensee shall not structure a consumer's debt
    27     management services agreement in a way that results in the
    28     negative amortization of any of the consumer's debts.
    29         (13)  The licensee shall not compromise any debt of a
    30     consumer unless the compromise benefits the consumer and the
    20080H2294B4525                 - 23 -     

     1     consumer has approved the proposed compromise in writing.
     2         (14)  The licensee shall have written policies describing
     3     its safeguards against conflicts of interest in the
     4     conducting of its business.
     5         (15)  The licensee shall not disseminate information,
     6     including by advertising, regarding its debt management
     7     services in any way that is false, misleading or deceptive.
     8         (16)  The licensee OR ANY BUSINESS ENTITY IN WHICH ANY     <--
     9     DIRECTOR, OWNER, OFFICER, EMPLOYEE OR PRINCIPAL OF THE
    10     LICENSEE, OR ANY MEMBER OF SUCH PERSON'S IMMEDIATE FAMILY AS
    11     DEFINED IN 65 PA.C.S. § 1102, HAS AN EQUITABLE, BENEFICIAL OR
    12     OTHER OWNERSHIP INTEREST, shall not offer, pay or give a
    13     gift, bonus, premium, reward or any other compensation to a
    14     person for referring a consumer to the licensee.
    15         (17)  The licensee shall not accept any gift, bonus,       <--
    16     premium, reward or any other compensation for referring a
    17     consumer to another agency or business or person.
    18         (17)  THE LICENSEE SHALL NOT DIRECTLY OR INDIRECTLY        <--
    19     ACCEPT, OFFER, PAY, PROVIDE, GIVE OR RECEIVE ANY GIFT, BONUS,
    20     PREMIUM, REWARD OR ANY OTHER COMPENSATION TO OR FROM ANY
    21     PERSON, INCLUDING, BUT NOT LIMITED TO, ANY FOR-PROFIT PARENT,
    22     SUBSIDIARY OR THE AFFILIATE OF ANY LICENSEE AND ANY ENTITY
    23     WHETHER OR NOT LEGALLY RECOGNIZED BY THE COMMONWEALTH FOR
    24     BUSINESS PURPOSES THAT PROVIDE DEBT MANAGEMENT SERVICES FOR
    25     REFERRING A CONSUMER TO THE LICENSEE OR TO ANOTHER LICENSEE
    26     OR PERSON.
    27         (18)  The licensee, OR ANY BUSINESS ENTITY IN WHICH ANY    <--
    28     DIRECTOR, OWNER, OFFICER, EMPLOYEE OR PRINCIPAL OF THE
    29     LICENSEE, OR ANY MEMBER OF SUCH PERSON'S IMMEDIATE FAMILY AS
    30     THAT TERM IS DEFINED IN 65 PA.C.S. § 1102, HAS AN EQUITABLE,
    20080H2294B4525                 - 24 -     

     1     BENEFICIAL OR OTHER OWNERSHIP INTEREST, shall not offer or
     2     pay an incentive, including a gift, bonus, premium, reward or
     3     any other compensation, to a consumer for executing a debt
     4     management services agreement with the licensee.
     5         (19)  The licensee shall not provide debt settlement       <--
     6     services except as provided by the department by regulation.
     7     For the purpose of this paragraph, "debt settlement services"
     8     means an action or negotiation made on behalf of a consumer
     9     with that consumer's creditors for the purpose of the
    10     creditor forgiving part of the debt incurred or credit
    11     extended to that consumer.
    12         (19)  A LICENSEE SHALL NOT, EXCEPT AS PROVIDED IN THIS     <--
    13     SECTION, INITIATE A TRANSFER TO OR FROM AN INDIVIDUAL'S
    14     ACCOUNT AT A FINANCIAL INSTITUTION OR WITH ANOTHER PERSON
    15     UNLESS THE TRANSFER IS ONE OF THE FOLLOWING:
    16             (I)  A RETURN OF MONEY TO THE INDIVIDUAL'S ACCOUNT;
    17         OR
    18             (II)  BEFORE TERMINATION OF DEBT MANAGEMENT SERVICES,
    19         PROPERLY AUTHORIZED BY THE DEBT MANAGEMENT SERVICES
    20         AGREEMENT AND THIS SECTION AND FOR EITHER OF THE
    21         FOLLOWING:
    22                 (A)  PAYMENT TO ONE OR MORE CREDITORS PURSUANT TO
    23             A DEBT MANAGEMENT SERVICES AGREEMENT; OR
    24                 (B)  PAYMENT OF A FEE PERMITTED BY THIS ACT AND
    25             AS PART OF A DEBT MANAGEMENT SERVICES AGREEMENT.
    26         (20)  The licensee shall not disclose the identity or
    27     identifying information of a consumer or the identity of the
    28     consumer's creditors except as permitted by Federal law.
    29     Disclosure may be made:
    30             (i)  to the department;
    20080H2294B4525                 - 25 -     

     1             (ii)  to a creditor of the consumer, to the extent
     2         necessary to secure the cooperation of the creditor in
     3         the debt management services agreement; or
     4             (iii)  as is necessary to administer the debt
     5         management services agreement.
     6         (21)  The licensee that primarily communicates with a
     7     consumer in a language other than English shall provide the
     8     debt management services agreement and any other documents or
     9     disclosures required by this act to the consumer in that
    10     other language.
    11         (22)  The licensee shall not delegate any of its duties
    12     or obligations under this act or a debt management services
    13     agreement to an independent contractor ANY PERSON WHO IS NOT   <--
    14     LICENSED PURSUANT TO THIS ACT AND TO WHOM THIS ACT IS
    15     APPLICABLE.
    16         (23)  The licensee shall have a toll-free telephone
    17     number that shall be prominently displayed on the licensee's
    18     literature and advertising.
    19         (24)  The licensee shall not compensate its employees on
    20     the basis of a formula that incorporates the number of
    21     consumers the employee induces to enter into debt management
    22     services agreements OR THE AMOUNT OF DEBT INCLUDED IN A DEBT   <--
    23     MANAGEMENT SERVICES AGREEMENT.
    24         (25)  A LICENSEE SHALL MAINTAIN A COMMUNICATIONS SYSTEM,
    25     STAFFED AT A LEVEL THAT REASONABLY PERMITS INQUIRING PERSONS
    26     AND CLIENTS TO INDIVIDUALLY SPEAK AND DISCUSS WITH COUNSELORS
    27     OR A CUSTOMER SERVICES REPRESENTATIVE OF THE LICENSEE DURING
    28     REGULAR BUSINESS HOURS.
    29  Section 15.  Fees.
    30     (a)  Limitation.--A licensee may charge a fee of not more
    20080H2294B4525                 - 26 -     

     1  than $50 for an initial consultation with a consumer, PROVIDED    <--
     2  THAT THE CONSULTATION INCLUDES A CONSUMER EDUCATION PROGRAM.
     3     (b)  Monthly maintenance fee.--When a consumer and a licensee
     4  have entered into a debt management services agreement, the
     5  licensee may charge the consumer a monthly maintenance fee not
     6  to exceed $10 times the number of accounts remaining INITIALLY    <--
     7  INCLUDED under the agreement for that month, provided that the    <--
     8  total monthly fee may not exceed $50.
     9     (c)  Insufficient funds fee.--A licensee may charge a          <--
    10  consumer a reasonable fee for any payment made by the consumer
    11  to the licensee that is dishonored for insufficient funds.
    12     (d)  Voluntary contributions prohibited.--A licensee shall
    13  not require or accept a voluntary contribution from a consumer
    14  for any service provided to the consumer by the licensee.
    15     (e)  Consumer education program fee.--If a licensee provides
    16  a consumer education program to a consumer who is not receiving
    17  debt management services, the licensee may charge the consumer a
    18  fee of not more than $50.
    19     (f)  No other fees permitted.--A licensee shall not charge a
    20  consumer any fees other than those described in subsection (a),
    21  (b), (c) or (e).
    22     (g)  Actual costs.--A licensee may charge a consumer for its
    23  actual cost in requesting the consumer's credit report.
    24     (C)  INSUFFICIENT FUNDS FEE.--A LICENSEE MAY COLLECT A FEE     <--
    25  FOR A SUBSEQUENT DISHONORED CHECK OR INSTRUMENT TAKEN IN
    26  PAYMENT, NOT TO EXCEED THE SERVICE CHARGE PERMITTED TO BE
    27  IMPOSED UNDER 18 PA.C.S. § 4105 (RELATING TO BAD CHECKS).
    28     (D)  ACTUAL COSTS.--A LICENSEE MAY CHARGE A CONSUMER FOR THE
    29  ACTUAL COST IN REQUESTING THE CONSUMER'S CREDIT REPORT.
    30     (E)  CONTRIBUTIONS PROHIBITED.--A LICENSEE SHALL NOT REQUIRE
    20080H2294B4525                 - 27 -     

     1  OR ACCEPT ANY CONTRIBUTION FROM A CONSUMER ON A DEBT MANAGEMENT
     2  PLAN FOR SERVICES REGULATED PURSUANT TO THIS ACT UNLESS
     3  OTHERWISE RESTRICTED BY REGULATIONS PROMULGATED BY THE
     4  DEPARTMENT PURSUANT TO THIS ACT.
     5     (F)  EDUCATION OR COUNSELING FEE.--A LICENSEE MAY NOT CHARGE
     6  A CONSUMER WHO ENTERS INTO A DEBT MANAGEMENT SERVICES AGREEMENT
     7  ANY FEE FOR PROVIDING EDUCATION OR COUNSELING. IN THE EVENT THAT
     8  A CONSUMER RECEIVES EDUCATION OR COUNSELING FROM A LICENSEE
     9  SUBJECT TO A FEE OR CHARGE WITHOUT ENTERING INTO A DEBT
    10  MANAGEMENT SERVICES AGREEMENT AND SUBSEQUENTLY ENTERS INTO A
    11  DEBT MANAGEMENT SERVICES AGREEMENT WITH THE LICENSEE WITHIN FOUR
    12  MONTHS OF BEGINNING THE EDUCATION OR COUNSELING, THE LICENSEE
    13  SHALL REFUND THE FEE CHARGED FOR THE EDUCATION OR COUNSELING.
    14     (G)  FEES SUBJECT TO DEBT MANAGEMENT PLAN AGREEMENT.--A
    15  LICENSEE MAY NOT IMPOSE CHARGES OR RECEIVE PAYMENT FOR DEBT
    16  MANAGEMENT SERVICES UNTIL THE LICENSEE AND THE CONSUMER HAVE
    17  SIGNED A DEBT MANAGEMENT SERVICES AGREEMENT.
    18     (H)  NO OTHER FEES PERMITTED.--A LICENSEE SHALL NOT CHARGE A
    19  CONSUMER ANY FEES OTHER THAN THOSE DESCRIBED IN THIS SECTION OR
    20  BY REGULATION PROMULGATED BY THE DEPARTMENT FOR SERVICES
    21  REGULATED PURSUANT TO THIS ACT.
    22     (I)  FEE LIMITS.--FOR THE 12-MONTH PERIOD BEGINNING WITH THE
    23  EFFECTIVE DATE OF THIS ACT, AND ANNUALLY THEREAFTER, THE FEE
    24  LIMITS PROVIDED IN THIS SECTION SHALL BE INCREASED BY THE
    25  PERCENTAGE OF CHANGE, IF ANY, IN THE CONSUMER PRICE INDEX FOR
    26  ALL URBAN CONSUMERS FOR THE PENNSYLVANIA, NEW JERSEY, DELAWARE
    27  AND MARYLAND AREA FOR THE MOST RECENT 12-MONTH PERIOD FOR WHICH
    28  FIGURES ARE OFFICIALLY REPORTED BY THE UNITED STATES DEPARTMENT
    29  OF LABOR, BUREAU OF LABOR STATISTICS, IMMEDIATELY PRIOR TO THE
    30  DATE THE ADJUSTMENT IS DUE TO TAKE EFFECT, BUT IN NO EVENT SHALL
    20080H2294B4525                 - 28 -     

     1  DEFLATION RESULT IN A NEGATIVE COST-OF-LIVING ADJUSTMENT.
     2  Section 16.  Violations.
     3     (a)  General rule.--The department may impose a civil penalty
     4  up to $10,000 for each violation of this act.
     5     (b)  Criminal liability.--A licensee who acts in accordance
     6  with the provisions of this act does not engage in "debt
     7  pooling" for purposes of 18 Pa.C.S. § 7312 (relating to debt
     8  pooling) and shall not be subject to criminal liability under 18
     9  Pa.C.S. § 7312 unless the license is denied, suspended or
    10  revoked or its renewal is refused.
    11     (C)  UNFAIR TRADE PRACTICES.--A PERSON WHO ENGAGES IN THE      <--
    12  BUSINESS OF OFFERING, SOLICITING OR PROVIDING DEBT MANAGEMENT
    13  SERVICES OR DEBT SETTLEMENT SERVICES WITHOUT BEING LICENSED
    14  UNDER OR EXEMPT FROM THE LICENSING PROVISIONS OF THIS ACT, OR IS
    15  OTHERWISE IN VIOLATION OF THIS ACT IN ANY WAY, SHALL BE IN
    16  VIOLATION OF THE ACT OF DECEMBER 17, 1968 (P.L.1224, NO.387),
    17  KNOWN AS THE UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW.
    18  Section 17.  Powers and duties of department.
    19     The department shall HAVE THE AUTHORITY TO:                    <--
    20         (1)  Examine any document, account, book or record of a    <--
    21     licensee or investigate as necessary to determine that the
    22     licensee is in compliance with this act. The examination may
    23     include documents, accounts, books or records that relate to
    24     the operation of the licensee that are in the possession of
    25     an affiliate, subsidiary or other business entity. The
    26     examination may be conducted without prior notice to the
    27     licensee and the costs of the examination shall be paid by
    28     the licensee.
    29         (1)  EXAMINE ANY INSTRUMENT, DOCUMENT, ACCOUNT, BOOK,      <--
    30     RECORD OR FILE OF A LICENSEE OR ANY PERSON HAVING A
    20080H2294B4525                 - 29 -     

     1     CONNECTION TO THE LICENSEE OR MAKE OTHER INVESTIGATION AS MAY
     2     BE NECESSARY TO ADMINISTER THE PROVISIONS OF THIS ACT. THE
     3     EXAMINATION MAY INCLUDE DOCUMENTS, ACCOUNTS, BOOKS OR RECORDS
     4     THAT RELATE TO THE OPERATION OF THE LICENSEE THAT ARE IN THE
     5     POSSESSION OF AN AFFILIATE, SUBSIDIARY OR OTHER BUSINESS
     6     ENTITY. PURSUANT TO THIS AUTHORITY, THE DEPARTMENT MAY REMOVE
     7     ANY INSTRUMENT, DOCUMENT, ACCOUNT, BOOK, RECORD OR FILE OF A
     8     LICENSEE OR PERSON TO A LOCATION OUTSIDE OF THE LICENSEE'S OR
     9     PERSON'S OFFICE LOCATION. THE EXAMINATION MAY BE CONDUCTED
    10     WITHOUT PRIOR NOTICE TO THE LICENSEE OR PERSON AND THE COSTS
    11     OF THE EXAMINATION SHALL BE BORNE BY THE LICENSEE OR PERSON
    12     SUBJECT TO THE EXAMINATION.
    13         (2)  Conduct administrative hearings on any matter
    14     pertaining to this act, issue subpoenas to compel the
    15     attendance of witnesses or the production of documents,
    16     accounts, books or records at a hearing. A document, account,
    17     book or record subject to subpoena may be retained by the
    18     department until the proceeding in connection with which it
    19     was subpoenaed is completed. A department official may
    20     administer oaths or affirmations to a person whose testimony
    21     is required.
    22         (3)  Request and receive information or records of any
    23     kind, including reports of criminal history record
    24     information, from any Federal, State, local or foreign
    25     government entity regarding an applicant, a licensee or a
    26     person related to the business of debt management services.
    27     The cost associated with the request shall be paid by the
    28     applicant or licensee.
    29         (4)  Promulgate regulations or issue statements of policy
    30     or orders to ensure the proper administration or enforcement
    20080H2294B4525                 - 30 -     

     1     of this act AND THE PROPER CONDUCT OF LICENSEES UNDER THIS     <--
     2     ACT.
     3         (5)  Prohibit a person OR LICENSEE who violates this act   <--
     4     from working in any capacity related to activities regulated
     5     by the department.
     6         (6)  Order a person OR LICENSEE to make restitution for    <--
     7     actual damages to consumers caused by a violation of this act
     8     OR TO REFUND FEES COLLECTED IN VIOLATION OF THIS ACT.          <--
     9         (7)  Issue a cease and desist order that takes effect
    10     immediately, but that is subject to a hearing within 14 days
    11     of the issuance of the order.
    12         (8)  Impose other conditions or take other actions as the
    13     department deems appropriate to administer or enforce this
    14     act.
    15         (9)  PROVIDE THE FOLLOWING ON ITS INTERNET WEBSITE:        <--
    16             (I)  INFORMATION FOR LICENSEES ON THE PROVISIONS OF
    17         THIS ACT.
    18             (II)  INFORMATION FOR CONSUMERS REGARDING THE
    19         PROTECTIONS OF THIS ACT.
    20             (III)  INFORMATION ON FILING CONSUMER COMPLAINTS,
    21         INCLUDING A TOLL-FREE TELEPHONE NUMBER.
    22             (IV)  A LIST OF CURRENT LICENSEES.
    23         (10)  EXCEPT FOR THE INFORMATION SPECIFIED IN SECTION
    24     5(7), MAKE THE INFORMATION COLLECTED UNDER SECTION 5
    25     AVAILABLE TO THE PUBLIC UPON REQUEST TO THE DEPARTMENT
    26     PURSUANT TO THE ACT OF FEBRUARY 14, 2008 (P.L.6, NO.3), KNOWN
    27     AS THE RIGHT-TO-KNOW LAW.
    28  Section 18.  Administrative proceedings.
    29     (a)  Hearings.--A person aggrieved by a decision of the
    30  department may appeal the decision to the secretary. The appeal
    20080H2294B4525                 - 31 -     

     1  shall be conducted under 2 Pa.C.S. Ch. 5 Subch. A (relating to
     2  practice and procedure of Commonwealth agencies).
     3     (b)  Injunctions.--The department may maintain an action for
     4  an injunction or other process against a person to restrain or
     5  prevent the person from violating this act.
     6     (c)  Final orders.--
     7         (1)  A decision of the secretary shall be a final order
     8     of the department and shall be enforceable in a court of
     9     competent jurisdiction.
    10         (2)  The department may publish final adjudications
    11     issued under this section, subject to redaction or
    12     modification to preserve confidentiality.
    13     (d)  Appeals.--A person aggrieved by a decision of the
    14  secretary may appeal the decision under 2 Pa.C.S. Ch. 7 Subch. A
    15  (relating to judicial review of Commonwealth agency action).
    16  Section 19.  Banking Department Fund.
    17     All fees or penalties collected by the department under this
    18  act shall be deposited into the Banking Department Fund.
    19  Section 20.  Transition.
    20     A person who provides debt management services before the
    21  effective date of this section and, WHO IS NOT THEN ACTING IN     <--
    22  VIOLATION OF 18 PA.C.S. § 7312 (RELATING TO DEBT POOLING) AND
    23  WHO seeks to continue providing such services must submit an
    24  application for a license under this act within 45 days of the
    25  effective date of this section. The applicant may continue to
    26  provide debt management services provisionally, according to the
    27  requirements of this act, while the department processes the
    28  application for licensure.
    29  SECTION 21.  EXEMPTION FROM OTHER STATUTES.                       <--
    30     A LICENSEE UNDER THIS ACT SHALL NOT BE SUBJECT TO THE
    20080H2294B4525                 - 32 -     

     1  PROVISIONS OF THE ACT OF SEPTEMBER 2, 1965 (P.L.490, NO.249),
     2  REFERRED TO AS THE MONEY TRANSMISSION BUSINESS LICENSING LAW, TO
     3  THE EXTENT THAT THE LICENSEE TRANSMITS MONEY PURSUANT TO THE
     4  TERMS OF A DEBT MANAGEMENT SERVICES OR DEBT SETTLEMENT SERVICES
     5  AGREEMENT.
     6  SECTION 48.  APPLICABILITY.
     7     THE PROVISIONS OF THIS ACT SHALL APPLY TO:
     8         (1)  ANY DEBT MANAGEMENT SERVICES AGREEMENT OR DEBT
     9     SETTLEMENT SERVICES AGREEMENT WHICH IS:
    10             (I)  NEGOTIATED, OFFERED OR OTHERWISE TRANSACTED
    11         WITHIN THIS COMMONWEALTH, IN WHOLE OR IN PART, WHETHER BY
    12         THE LICENSEE OR ANY OTHER PERSON;
    13             (II)  MADE OR EXECUTED WITHIN THIS COMMONWEALTH AFTER
    14         THE EFFECTIVE DATE OF THIS ACT; OR
    15             (III)  NOTWITHSTANDING THE PLACE OF EXECUTION,
    16         ENTERED INTO WITH A RESIDENT OF THIS COMMONWEALTH.
    17         (2)  ANY PERSON WHO ENGAGES IN DEBT MANAGEMENT SERVICES
    18     OR DEBT SETTLEMENT SERVICES IN THIS COMMONWEALTH.
    19  Section 49.  Repeal.
    20     The act of December 16, 1992 (P.L.1144, No.150), known as the
    21  Credit Services Act, is repealed insofar as it is inconsistent
    22  with this act.
    23  Section 50.  Effective date.
    24     This act shall take effect in 60 120 days.                     <--




    C4L12DMS/20080H2294B4525        - 33 -
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