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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session


Posted: December 3, 2012 10:32 AM
From: Senator Kim L. Ward
To: All Senate members
Subject: Memo #6 – Debt Settlement Services Act
I plan to re-introduce Senate Bill 1193 of last session, which corrects a flaw in Act 117 of 2008 (the Debt Management Services Act) which resulted in a lawsuit against the Department of Banking regarding its ability to license and regulate the debt settlement industry in Pennsylvania.

Over the past few years, there has been much action at the federal level regarding the regulation of the debt settlement industry. The Federal Trade Commission adopted amendments to the Federal Telemarketing Sales Rule to prohibit debt settlement companies from collecting advance fees when negotiating agreements with creditors. The Rule also requires debt relief companies to make specific disclosures to consumers; prohibit them from making misrepresentations; and extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.

The legislation would adopt the provisions of the final Rule, which took effect in October 2010, but address a glaring oversight of the Rule. It would cover providers not regulated by the Telemarketing Sales Rule including those not engaged in telemarketing, not engaged in interstate commerce and nonprofits. In addition, it would require debt settlement providers that negotiate debt settlement agreements on behalf of Pennsylvanians to obtain a license in Pennsylvania. Further, the legislation will also fix a flaw in Act 117 of 2008 by providing the Department of Banking the statutory framework to investigate, license, and regulate those companies providing debt settlement service in Pennsylvania.

Previous co-sponsors of this legislation were Senators: D. WHITE, MENSCH, HUGHES, WAUGH, SOLOBAY, SCHWANK, ERICKSON, RAFFERTY, TARTAGLIONE and BRUBAKER.

If you have any questions regarding this legislation, please do not hesitate to contact my office at 717-787-6063

Introduced as SB622