BILL NUMBER: AB 350 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 14, 2010
AMENDED IN SENATE APRIL 5, 2010
AMENDED IN SENATE JUNE 23, 2009
AMENDED IN SENATE JUNE 18, 2009
AMENDED IN ASSEMBLY JUNE 1, 2009
AMENDED IN ASSEMBLY MARCH 31, 2009
INTRODUCED BY Assembly Member Lieu
(Coauthor: Senator Florez)
FEBRUARY 19, 2009
An act to add Division 21 (commencing with Section 60000) to the
Financial Code, relating to debt.
LEGISLATIVE COUNSEL'S DIGEST
AB 350, as amended, Lieu. Debt management and settlement.
Existing law, the Check Sellers, Bill Payers and Proraters Law,
provides for licensure and regulation by the Commissioner of
Corporations of persons engaged in, among other activities, the
business of receiving money as an agent of the obligor for the
purpose of paying bills, invoices, or accounts for the obligor.
This bill would enact the Debt Settlement Services Act and would,
commencing January 1, 2012, provide for the licensing and regulation
by the commissioner of providers, defined as persons who
that provide, offer to provide, or agree to
provide debt settlement services, as defined, directly or through
others. The bill would require a provider to submit specified fees
and an application, signed under penalty of perjury, for licensure
with the commissioner. An applicant, and any person who signs an
application on behalf of an applicant, who knowingly misrepresents or
submits any material matter that is false, or a person who otherwise
willfully violates a provision of the act, would be guilty of a
misdemeanor. The bill would specify the conditions under which the
commissioner may issue or deny licensure as a provider and would
require a provider to satisfy certain requirements before entering
into an agreement with an individual for the provision of debt
settlement services, including providing specified disclosures. The
bill would require an agreement for debt settlement services to
contain specified terms and would impose limits on the fees
charged by providers. The bill would prohibit providers
from engaging in specified practices. The bill would require a
provider to submit annual reports to the commissioner containing
specified information relating to its business in the previous
calendar year. The bill would authorize the commissioner to take
enforcement actions against a provider for violations of the bill's
provisions and would also authorize an injured individual to recover
specified damages from a provider that violates the bill's
provisions. The bill would enact other related provisions.
Because the bill would create a new crime, and expand the scope of
the crime of perjury, it would impose a state-mandated local
program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Division 21 (commencing with Section 60000) is added to
the Financial Code, to read:
DIVISION 21. DEBT SETTLEMENT SERVICES ACT
CHAPTER 1. SHORT TITLE
60000. This division shall be known and may be cited as the Debt
Settlement Services Act.
CHAPTER 2. DEFINITIONS
60001. As used in this division, the following definitions shall
apply:
(a) "Agreement" means an agreement between a provider and an
individual for the performance of debt settlement services.
(b) "Applicant" means any person who submits an application to the
department for the purpose of seeking licensure to become a debt
settlement provider.
(c) "Commissioner" means the Commissioner of Corporations.
(d) "Concessions" means assent to repayment of an unsecured debt
on terms more favorable to an individual than the terms of the
contract between the individual and a creditor.
(e) "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management or policies
of a licensee, whether through the ownership of voting securities, by
contract, or otherwise. Control shall be presumed to exist if any
person or persons, directly or indirectly, owns, controls, holds with
the power to vote, or holds proxies representing, 10 percent or more
of the voting securities or other interest of any other licensee.
(f) "Debt settlement program" or "program" means a program or
strategy in which a provider furnishes debt settlement services.
(g) "Debt settlement services" means acting or offering to act as
an intermediary between an individual and one or more creditors of
the individual for the purpose of adjusting, settling, discharging,
reaching a compromise on, or obtaining a concession on the individual'
s unsecured debt or other unsecured obligation, where the
primary purpose of the action is to obtain a settlement or
satisfaction of the individual's debt in an amount less than the full
principal amount of the debt, in return for a fee or other
consideration , without receiving money from the individual
for distribution to the individual's creditors. .
(h) "Department" means the Department of Corporations.
(i) "Financial analysis" means the review of an individual's
budget and income and expenses in order to make a determination about
the individual's qualification for a provider's debt settlement
program. Based on the financial analysis pursuant to Section
60016, the provider shall make a determination as described in
paragraph (3) of subdivision (a) of Section 60016.
(j) "Good faith" means honesty in fact and the observance of
reasonable standards of fair dealing.
(k) "Licensee" means any person licensed pursuant to this
division. "Licensee" does not include an employee regularly employed
by a licensee at the licensee's place of business.
(l) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited liability company, association,
joint venture, or any other legal or commercial entity. The term does
not include a public corporation, government, or governmental
subdivision, agency, or instrumentality.
(m) "Principal amount of the debt" means the amount of a debt at
the time of the execution of the agreement.
(n) "Provider" means a person that provides, offers to provide, or
agrees to provide debt settlement services directly or through
others. "Provider" does not include either of the following:
(1) The services of a person licensed to practice law in this
state, when the person renders services in the course of his or her
practice as an attorney-at-law in an attorney-client relationship.
(2) The services of a person licensed as a certified public
accountant or a public accountant in this state, when the person
renders services in the course of his or her practice as a certified
public accountant or a public accountant.
(3) A family member of an individual that negotiates financial
concessions, with or without compensation, from the creditors of the
individual.
(o) "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
CHAPTER 3. GENERAL PROVISIONS
60002. This division shall not apply to the following persons or
their employees when the person or the employee is engaged in the
regular course of the person's business or profession:
(a) A judicial officer, a person acting under an order of a court
or an administrative agency, or an assignee for the benefit of
creditors.
(b) A financial institution under state or federal law, which is
limited to the following:
(1) Any bank or its agent, trust company, insurance company, or
industrial loan company doing business under the authority of or in
accordance with a license, certificate, or charter issued by the
United States or any state, district, territory, or commonwealth of
the United States that is authorized to transact business in this
state.
(2) A federally chartered savings and loan association, federal
savings bank, or federal credit union that is authorized to transact
business in this state.
(3) A savings and loan association, savings bank, or credit union
organized under the laws of this or any other state that is
authorized to transact business in this state.
(4) A person engaged solely in business, commercial, or
agricultural mortgage lending.
(5) A wholly owned service corporation of a savings and loan
association or savings bank organized under the laws of this state or
the wholly owned service corporation of a federally chartered
savings and loan association or savings bank that is authorized to
transact business in this state.
(b) A bank or bank holding company, or the subsidiary, agent, or
affiliate of either, or a credit union or other financial institution
licensed under state or federal law.
(c) A California licensed title insurer or escrow company in good
standing that provides bill paying services if the person does not
provide debt settlement services.
(d) Financial planning services provided in a financial
planner-client relationship by a member of a financial planning
profession whose members the commissioner determines are licensed
under Chapter 3 (commencing with Section 25230) of Part 3 of Division
4 of the Corporations Code.
(e) A person licensed or registered to originate loans secured by
real property when debt settlement services are provided in the
course of a loan origination.
(f) A nonprofit community service organization that fulfills the
requirements of Section 12104 and is exempt from the requirements of
Division 3 (commencing with Section 12000).
60003. All fees collected by the commissioner pursuant to this
division shall be deposited in the State Treasury to the credit of
the State Corporations Fund. The administration of this division
shall be supported out of the State Corporations Fund upon
appropriation by the Legislature.
60004. The commissioner may adopt general rules and regulations
and specific rulings, demands, orders, and findings necessary to
administer, implement, and enforce this division in accordance with
the provisions of the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code).
CHAPTER 4. LICENSING
60005. (a) No person shall offer or provide debt settlement
services to an individual who it reasonably should know resides in
this state at the time it agrees to provide the services, unless the
provider is licensed under this division.
(b) The commissioner shall maintain and publicize a list of the
names of all licensed providers, which shall be published by the
commissioner within 180 days of the operative date of this division.
60006. (a) An application for licensure as a provider shall be
accompanied by all of the following:
(1) The sum of one thousand dollars ($1,000) as a fee for
investigating the application, the sum of not less than one thousand
dollars ($1,000) as an application fee, subject to adjustment under
Section 60007, and the cost of fingerprint processing. The
investigation fee and application fee are not refundable. Unused
application fee funds shall be used to cover the cost of the program.
(2) Evidence of a surety bond in the amount of fifty thousand
dollars ($50,000), which shall be maintained by the provider during
the term of the license.
(3) Financial statements prepared in accordance with generally
accepted accounting principles and reviewed by an independent,
third-party licensed accountant.
(b) As a substitute for the bond required in paragraph (2) of
subdivision (a), a licensee may file either of the following with the
commissioner in the same amount required under paragraph (2) of
subdivision (a):
(1) An irrevocable letter of credit, issued or confirmed by a bank
approved by the administrator, payable upon presentation of a
certificate by the administrator stating that the provider or its
agent has not complied with this division.
(2) Bonds or other obligations of the United States or guaranteed
by the United States or bonds or other obligations of this state or a
political subdivision of this state, to be deposited and maintained
with a bank approved by the administrator for this purpose.
(c) Upon licensure as a provider, the bond required under this
section shall be payable to the commissioner and issued by an insurer
authorized to do business in this state. A copy of the bond,
including any and all riders and endorsements executed subsequent to
the effective date of the bond, shall be filed with the commissioner
for review and approval within 10 days of execution. The bond shall
be used for the recovery of losses or damages incurred by individuals
as the result of a licensee's noncompliance with the requirements of
this division or for the recovery of expenses, fines, and fees
levied by the commissioner, a district attorney, city attorney, or
the Attorney General.
(d) The bond required under this section shall remain in force and
effect until the surety is released from liability by the
commissioner, or until the bond is canceled by the surety.
(e) A licensee shall maintain a minimum net worth of one hundred
thousand dollars ($100,000) at all times as evidenced by the
financial statement.
(f) A licensee shall annually file financial statements along with
the annual report to the commissioner required under Section
60029.5.
60007. (a) The commissioner shall set an annual deadline for the
submission of applications for licensure. Notwithstanding paragraph
(1) of subdivision (a) of Section 60006, the commissioner shall set,
prior to the annual application deadline, based on its estimates of
the cost of administering the program and the estimated number of
license applicants, an application fee. Sixty days after the
licensing deadline for the initial license, the commissioner shall
determine, if necessary, a surcharge to cover the estimated costs for
the remainder of the year, plus any deficit, if any, from the year
prior, for administering this division. The surcharge shall be
charged as a pro rata share to each applicant granted a license
during that year based on the number of active enrolled California
residents in that licensee's debt settlement program, with a
reasonable minimum and maximum charge as determined by the
commissioner.
(b) The commissioner shall notify each licensee by mail of the
amount of the surcharge assessed against it and that the amount shall
be paid within 30 days thereafter. If the licensee fails to pay the
assessment on or before the 30th day upon which payment is due, the
commissioner may by order summarily suspend or revoke the license
issued to the licensee. In the levying and collection of the
assessment, a licensee shall neither be assessed for, nor be
permitted to pay less than, one thousand dollars ($1,000) per year.
(c) Any applicant that files its application after the deadline
shall be charged the initial application fee plus the pro rata
surcharge specified in subdivision (a), and the application fee for
that applicant shall not be adjusted to account for any partial year.
60008. Every application for licensure shall be signed by the
applicant and shall declare, under penalty of perjury, as true any
material matter submitted on the application for licensure. Any
applicant, and any person who signs an application on behalf of an
applicant, who knowingly misrepresents or submits any material matter
that is false is guilty of a misdemeanor. The application form shall
contain a statement informing the applicant that a false or
dishonest answer to a question may be grounds for denial or
subsequent suspension or revocation of the applicant's license. An
application for licensure shall be in a form prescribed by the
commissioner and, at a minimum, shall include the following:
(a) The applicant's name, principal business address and telephone
number, and all other business addresses in this state, e-mail
addresses, and Internet Web site addresses.
(b) All names under which the applicant conducts a debt settlement
business or a business for which licensure by the Department of
Corporations is required.
(c) The address of each location in this state at which the
applicant shall provide debt settlement services or a statement that
the applicant will have no such location.
(d) The name of each executive officer and director of the
applicant and each person that owns or controls, directly or
indirectly, at least 10 percent or more of the outstanding equity
interests of the applicant and any other information necessary for
the investigation pursuant to Section 60008.5.
(e) A statement describing, to the extent it is known or should be
known by the applicant, any material civil or criminal judgment
relating to financial fraud or misuse and any material administrative
or enforcement action by a governmental agency relating to financial
fraud or misuse in any jurisdiction against the applicant, any of
its officers, directors, owners, employees, or agents.
(f) At the applicant's expense, pursuant to the process in Section
60009, the results of a national criminal history records check,
including fingerprints, provided pursuant to the Federal Bureau of
Investigation appropriation of Title II of Public Law 92-544 (28
U.S.C. Sec. 534) conducted within the immediately preceding 12
months, covering every executive officer of the applicant. The
commissioner shall be the authorized agency to receive information
regarding the results of the national criminal history records check
under Title II of Public Law 92-544 (28 U.S.C. Sec. 534).
(g) Disclosure of common ownership by any person owning or
controlling, directly or indirectly, 10 percent or more of the
outstanding interests or equity securities in the applicant by the
following persons:
(1) Any person who advertises any service to assist consumers with
reducing or eliminating debt.
(2) Any person who provides banking or similar depository services
to consumers of debt settlement services providers.
(3) Any person, other than individuals employed by the applicant,
with whom the applicant contracts to provide debt settlement
services, or parts thereof, to consumers.
(h) An authorization for disclosure of financial records of the
applicant pursuant to Section 7473 of the Government Code.
(i) The name and contact information of the risk manager for
individual complaints as provided in Section 60026.
(j) A sample agreement and disclosures used by the applicant.
(k) Any other information that the commissioner reasonably
requires to determine whether to issue a license.
60008.5. (a) Upon filing the application and payment of fees
pursuant to paragraph (1) of subdivision (a) of Section 60006 and
approval of the bond pursuant to Section 60006, the commissioner
shall investigate and examine the following:
(1) The background and experience of the applicant and of the
partners or members owning or controlling, directly or indirectly, 10
percent or more of the outstanding interests if the applicant is a
partnership, association, or limited liability company.
(2) The background and experience of the applicant and officers,
directors, and persons owning or controlling, directly or indirectly,
10 percent or more of the outstanding equity securities or interests
if the applicant is a corporation, trust, or association, including
an unincorporated organization.
(b) If the commissioner determines that the applicant has
satisfied the provisions of this division and does not find facts
constituting reasons for denial as specified in Section 60011, the
commissioner shall issue and deliver a license to the applicant to
engage in business in accordance with the provisions of this
division.
60009. (a) An applicant for licensure shall provide to the
commissioner, and the commissioner shall submit to the Department of
Justice, fingerprint images and related information required by the
Department of Justice of all applicants for licensure for purposes of
obtaining information as to the existence and content of a record of
state or federal convictions and state or federal arrests and also
information as to the existence and content of a record of state or
federal arrests for which the Department of Justice establishes that
the person is free on bail or on his or her own recognizance pending
trial or appeal.
(b) When received, the Department of Justice shall forward to the
Federal Bureau of Investigation requests for federal summary criminal
history information received pursuant to this section. The
Department of Justice shall review the information returned from the
Federal Bureau of Investigation and compile and disseminate a
response to the Commissioner of Corporations.
(c) The Department of Justice shall provide state and federal
responses to the commissioner pursuant to paragraph (1) of
subdivision (p) of Section 11105 of the Penal Code.
(d) The commissioner may request from the Department of Justice
subsequent arrest notification service, as provided pursuant to
Section 11105.2 of the Penal Code, for a person described in
subdivision (a).
(e) The Department of Justice shall charge a fee, to be paid by an
applicant for licensure, that is sufficient to cover the cost of
processing the request described in this section.
(f) All proprietary and personal information, including, but not
limited to, financial statements, sample agreements, fee schedules,
and home addresses supplied to the commissioner in connection with
the application for licensure shall be held confidential by the
commissioner.
60010. An applicant or licensed provider shall notify the
department in writing at least 10 days prior to any change in the
information specified in paragraph (2) of subdivision (a) of, or in
subdivision (b) of, Section 60006 or in subdivision (a), (b), or (c)
of Section 60008, or within 14 days after any change in the
information specified in subdivision (d) , (e), (g), or (h) of
Section 60008, or any other information as required, by rule, by the
commissioner.
60011. (a) Except as otherwise provided in subdivisions (b) and
(c), the commissioner shall issue a certificate of licensure as a
provider to a person that complies with this division.
(b) The commissioner may deny licensure for any of the following:
(1) An application that contains any omission or false statement
of material fact or is incomplete.
(2) The applicant, an officer, director, general partner, member,
or person owning or controlling, directly or indirectly, 10 percent
or more of the outstanding interests or equity securities of the
applicant has been convicted of or pleaded nolo contendere to a
crime, or suffered a civil judgment or any administrative judgment by
any public agency involving a finding of fraud, deceit, or
dishonesty or has violated state or federal securities or consumer
protection laws, or any regulatory scheme of the state or has been
convicted of any other offense reasonably related to the
qualifications, functions, or duties of a person engaged in the
business in accordance with the provisions of this division.
(3) An applicant or any officer, director, general partner,
member, or person owning or controlling, directly or indirectly, 10
percent or more of the outstanding interests or equity securities of
the applicant has made any false statement or representation to the
commissioner.
(4) An applicant is or becomes insolvent.
(5) An applicant refuses to reasonably comply with an
investigation or examination of the debt settlement service provider
by the commissioner.
(6) An applicant has improperly withheld, misappropriated, or
converted funds received in the course of doing business.
(7) An applicant has used fraudulent, coercive, or dishonest
practices, or demonstrated incompetence regarding debt settlement
services, or financial irresponsibility in this state or elsewhere.
(8) An applicant has shown to have engaged in a pattern of failing
to perform services promised.
(9) An applicant or any officer, director, or general partner,
member, or person owning or controlling, directly or indirectly, 10
percent or more of the outstanding interests or equity securities of
the applicant has violated any provision of this division or the
rules or any order thereunder or any similar regulatory scheme of the
state or a foreign jurisdiction.
(c) The commissioner shall deny licensure if the application is
not accompanied by the fee established by the commissioner.
(d) The application shall be considered withdrawn within the
meaning of this section if the applicant fails to respond to a
written notification of a deficiency in the application within 90
days of the date of the notification.
60012. (a) The commissioner shall approve or deny an initial
license as a provider within 60 days after the receipt of a complete
application, the receipt of criminal history background information
from the Department of Justice, and the payment of required fees.
Within 30 calendar days after denying an application, the
commissioner, in a record, shall inform the applicant of the reasons
for the denial.
(b) If the commissioner denies an application for licensure as a
provider or does not act on an application within the time prescribed
in subdivision (a), the applicant may appeal and request a hearing
pursuant to the California Administrative Procedure Act (Chapter 4.5
(commencing with Section 11400) of Part 1 of Division 3 of Title 2 of
the Government Code).
60013. A license is not transferable or assignable without the
consent of the commissioner.
60013.5. No licensee shall provide debt settlement services in
this state under any other name, or through an Internet Web site
address other than those named in the license or except pursuant to a
currently effective written order of the commissioner authorizing
the other name or Internet Web site address.
60014. A person or entity licensed as a provider under this
division shall be exempt from the requirements of Division 3
(commencing with Section 12000), except to the extent the person is
performing services and activities governed by Section 12000 that do
not constitute providing debt settlement services.
60014.5. In any proceeding under this division, the burden of
proving an exemption or exception is upon the person claiming it.
CHAPTER 5. REGULATIONS REGULATION
60015. A provider that is required to be licensed under this
division shall maintain a toll-free communication system, staffed at
a level that reasonably permits an individual to speak to a customer
service representative, as appropriate, during ordinary business
hours.
60015.5. (a) Every provider that offers a debt settlement program
to an individual shall have reasonable grounds to believe that the
individual is qualified for the debt settlement program and can
reasonably meet the requirements of the program on the basis of
information furnished by the individual after reasonable inquiry
concerning the individual's financial situation and needs, including
a financial analysis pursuant to Section 60016, and any other
information known by the provider.
(b) In the furtherance of subdivision (a), and pursuant to a
written policy, a provider shall consult with the individual and
consider the following:
(1) Whether the individual's monthly income exceeds basic living
expenses by an amount that permits the individual to meet the savings
goals of the program.
(2) Whether the individual's creditors are likely to agree to the
settlement of the individual's debts.
(3) Whether the individual is current or delinquent on debts.
(4) Any other consideration required by rule of the commissioner.
60016. (a) Before an individual assents to an agreement to engage
in a program, the provider shall do all of the following:
(1) Prepare and provide in not less than 12-point type a written
financial analysis specific to the individual. The financial analysis
shall be written in plain language and delivered to the individual
prior to the individual assenting to the agreement.
(2) Provide in not less than 12-point type a written good faith
estimate of the length of time it will take to complete the program
and a statement of the total amount of debt owed to each creditor
included in the program. The estimate shall include a statement of
the monthly savings goals for the individual that are necessary to
complete the program.
(3) Based upon the completed financial analysis, make a
determination supported by the financial analysis that the individual
is qualified and suitable for a debt settlement program
and that the individual can reasonably meet the requirements of the
program pursuant to Section 60015.5.
(4) Inform the individual in not less than 12-point type writing
of all of the following:
(A) The name and business address of the provider.
(B) That some programs are not suitable for some individuals.
(C) That the conduct of a program may negatively affect the
individual's credit rating or credit scores.
(D) That creditors may continue to charge interest, late fees,
over the limit fees, and other fees and nonpayment of debt may lead
creditors to increase finance and other charges or undertake
collection activity, including
litigation and garnishment of wages.
(E) That unless the individual is insolvent, if a creditor settles
for less than the full amount of the debt, the program may result in
the creation of taxable income to the individual, even though the
individual does not receive any money.
(F) That specific results cannot be predicted or guaranteed.
(G) That a program requires an individual to meet certain savings
goals in order to maximize settlement results.
(H) That a provider, who is not otherwise authorized or
professionally licensed, does not provide accounting or legal advice
to individuals.
(I) That a provider does not receive compensation from an
individual's creditors, banks, or third-party collection agencies.
(J) That a provider cannot force negotiations or settlements with
creditors but will advocate solely on behalf of an individual.
(K) That if an individual terminates an agreement pursuant to
paragraph (1) of subdivision (b) of Section 60019, no additional fees
will be due.
(L) That the use of debt settlement services may not stop a
creditor from filing or pursuing a lawsuit against an individual.
(M) That the consumer may owe fees upon signing an agreement
whether or not any debts are reduced under the program.
(b) The provider shall insert the following statement, in not less
than 12-point type, in its debt settlement program agreements:
"Complaints related to this agreement may be directed to the
Department of Corporations by calling (866) ASK-CORP or by logging on
to their Internet Web site at www.corp.ca.gov."
60016.5. If a provider receives money from the individual for
distribution to the individual's creditors, all of the following
provisions apply:
(a) The money received from the individual for distribution to the
individual's creditors shall not be commingled with the provider's
funds and shall be deposited in an FDIC-insured trust account.
(b) The commissioner may, by rule, require providers that receive
money from the individual for distribution to the individual's
creditors to obtain a fidelity bond in an amount deemed adequate by
the commissioner.
(c) The provider shall act in a fiduciary capacity to the
individual with respect to the individual's funds deposited in the
trust account.
(d) The individual shall not incur an additional charge for the
establishment and maintenance of the trust account.
(e) At any time prior to the transmission of funds in the trust
account to the individual's creditors, the individual may require the
return of the funds to himself or herself.
(f) Paragraph (4) of subdivision (a), and paragraphs (5) and (11)
of subdivision (b), of Section 60025 shall not apply.
60017. (a) For purposes of this section, the following
definitions apply:
(1) "Consumer" means an individual who seeks or obtains goods or
services that are used primarily for personal, family, or household
purposes.
(2) "Federal act" means the Electronic Signatures in the Global
and National Commerce Act (15 U.S.C. Sec.7001 et seq.).
(b) A provider may satisfy the requirements of Section 60016,
60019, 60020, or 60024 by means of the Internet or other electronic
means if the provider obtains a consumer's consent in the manner
provided by Section 101(c)(1) of the federal act (15 U.S.C. Sec. 7001
(c)(1)).
(c) The disclosures and materials required by Section 60016,
60019, 60020, or 60024 shall be presented in a form that is capable
of being printed and accurately reproduced for later reference.
(d) With respect to disclosure by means of an Internet Web site,
the disclosure of the information required by subdivision (a) of
Section 60016 shall appear on one or more screens that satisfy all of
the following:
(1) The screen contains no other information.
(2) An individual shall be able to see the screen before
proceeding to assent to formation of a program.
(3) The individual has not been required to submit personal
information, including information regarding debts, prior to
accessing the disclosures.
(e) At the time of providing the materials and agreement required
by subdivision (a) of Section 60016, Section 60019, and Section
60024, a provider shall inform the individual, pursuant to Section
60020, that upon electronic, telephonic, or written request, it will
send the individual a written copy of the materials, and shall comply
with a request as provided in subdivision (f).
(f) If a provider is requested, before the expiration of 90 days
after a program is completed or terminated, to send a written copy of
the materials required by subdivisions (b) and (c) of Section 60016,
Section 60019, and Section 60024, the provider shall send them,
pursuant to Section 60020, at no charge within three business days
after the request, but the provider shall not be required to comply
with a request more than once per calendar month. If a request is
made more than 90 days after a program is completed or terminated,
the provider shall send within a reasonable time a written copy of
the materials requested.
60018. A provider shall maintain an Internet Web site and shall
disclose all of the following on the home page of its Internet Web
site or on a page that is clearly and conspicuously connected to the
home page by a link that clearly reveals its contents:
(a) Its name, business address, telephone number, and e-mail
address, if any.
(b) Its license number under this division and a link to the
department's Internet Web site.
(c) All other disclosures required by law.
60019. (a) An agreement under this division shall satisfy all of
the following requirements:
(1) Be in writing, dated, and signed by the individual.
(2) Include the name of the individual and the address where the
individual resides.
(3) Include the name, business address, and telephone number of
the provider and, if this does not include a street address in
California, the name and address of its California agent for service
of process.
(4) Be delivered to the individual immediately upon formation of
the agreement. For purposes of this paragraph, delivery of an
electronic record occurs when it is sent to the individual and made
available in a format in which the individual may retrieve, save, and
print, and the individual is notified that it is available.
(5) Include all disclosures required under Section 60016.
(6) Disclose all of the following:
(A) The list required under subdivision (a) of Section 60016.
(B) The amount, and method of determining the amount, of all fees,
individually itemized, to be paid by the individual.
(C) How the provider will comply with its obligations under
subdivision (a) of Section 60024.
(D) That the individual may contact the Department of Corporations
with any questions or complaints regarding the provider.
(7) Display the following provisions, which shall appear
prominently and clearly on the front page:
(A) The total amount of the debt brought into the program.
(B) The setup fee amount to be paid by the individual, if any.
(C) The monthly fee to be paid by the individual, if any,
including an explanation of how this amount will be collected from
the individual.
(D) The estimated number of months for which a monthly fee is
required by the agreement.
(E) An estimate of the total amount of fees reasonably anticipated
to be paid by the individual over the term of the agreement, as
applicable.
(F) The total amount of fees that may be charged under the
contract.
(b) An agreement under this division shall provide the following:
(1) That the individual has a right to terminate the agreement at
any time by giving the provider written or electronic notice.
Termination of the agreement becomes effective immediately upon
receipt by the provider, at which time all powers of attorney granted
by the individual to the provider are revoked and ineffective.
(2) That the individual can cancel an agreement and receive a full
refund of any moneys paid to the provider before midnight of the
fifth business day after the individual assents to it. Notice of
cancellation is effective upon proof of sending the notice prior to
the deadline. Upon cancellation the provider shall refund all fees no
later than 10 business days from the date of cancellation.
(3) That any power of attorney only authorizes the provider, as
reasonably necessary, to communicate with creditors for the purposes
of negotiating settlement offers and to initiate transfer of funds in
accordance with Section 60025.
(4) That the provider shall notify the individual within three
business days after learning of a creditor's decision to cease final
negotiation with the provider. This notification shall include
both all of the following:
(A) The identity of the creditor.
(B) The right of the individual to modify or terminate the
agreement.
(C) The terms and conditions of the agreement modification
process.
(c) An agreement shall not do any of the following:
(1) Provide for application of the law of any jurisdiction other
than this state.
(2) Except as permitted by the California Arbitration Act (Title 9
(commencing with Section 1280) of Part 3 of the Code of Civil
Procedure), contain a provision that modifies or limits otherwise
available forums or procedural rights, including the right to trial
by jury, that are generally available to the individual under law
other than as provided in this division.
(3) Contain a provision that restricts the individual's remedies
under this division or under another law of this state.
(4) Contain a provision that does any of the following:
(A) Limits or releases the liability of any person for not
performing the agreement or for violating this division.
(B) Indemnifies any person for liability arising under the
agreement or this division.
(C) Require the individual to be responsible for payment of
attorney's fees of the provider.
(5) Contain a hold harmless clause excusing a provider's duties
under this division.
(6) Contain assignment of, or order for payment of, wages or other
assignment of compensation for services.
(7) Contain an acceleration provision not authorized under this
division.
(8) Contain an unconscionable provision.
(d) All rights and obligations specified in subdivision (b) exist
even if not provided in the agreement. A provision in an agreement
that violates subdivision (b) or (c) is void.
60020. If a provider communicates with an individual primarily in
a language other than English, the provider shall furnish a
translation into the other language of the disclosures and documents
required by this division.
60021. (a) A provider may charge one of the following, the terms
of which shall be clearly disclosed in the agreement:
(1) With respect to an agreement that provides for a flat fee,
total fees shall not exceed 18 percent of the principal amount of the
debt enrolled in the debt settlement program which shall be
collected at a rate of no more than 1 percent of the principal amount
of debt per month, or if the program is less than 18 months in
length, in equal monthly payments for the term of the program. The
debtor may voluntarily accelerate or prepay any unpaid installment
payment of fees, and the provider may collect fees on a pro rata
basis once the provider has finalized settlements from any creditors.
(2) With respect to agreements in which fees are calculated as a
percentage of the amount saved by an individual, a provider may
charge the following:
(A) A fee for consultation, obtaining a credit report, and setting
up an account, in an amount not exceeding the lesser of four hundred
dollars ($400) or 4 percent of the debt in the program at the
inception of the program or a higher amount set forth in regulation.
(B) A monthly service fee, not to exceed fifty dollars ($50)
total, or a higher amount authorized by the commissioner, in any
month.
(C) A settlement fee that shall not exceed 30 percent of the
excess of the outstanding amount of each debt over the amount
actually paid to the creditor, as calculated at the time of
settlement. Settlement fees authorized under subparagraph (B) shall
become billable only as debts are settled.
(D) A provider shall not impose or receive fees under both
subparagraphs (A) and (B).
(b) A provider shall not impose, directly or indirectly, a fee or
other charge on an individual or receive money from or on behalf of
an individual for debt settlement services except as permitted by
this section.
(c) A provider shall not impose charges or receive payment for
debt settlement services until the provider and the individual have
signed an agreement that complies with Sections 60016, 60019, and
60020.
(d) If a payment to a provider by an individual under this
division is dishonored, a provider may impose a reasonable charge on
the individual, not to exceed fifteen dollars ($15). Any charge
pursuant to this subdivision shall be limited to one per payment due.
60022. (a) If a provider imposes a fee or other charge or
receives money or other payments not authorized by Section 60021, the
agreement is void and the individual may recover as provided in
Section 60032.
(b)
60022. If a provider is not licensed as required by
this division when an individual assents to an agreement, the
agreement shall be void.
(c) If an agreement
is void pursuant to subdivision (a) or (b), void and
the provider shall not have a claim against the individual for
breach of contract or for restitution.
(d) Subdivision (a) shall not apply to an error in computation in
the amount of an authorized fee if the provider makes whatever
adjustments in the account are necessary to correct the error within
14 days of knowledge of the error.
60023. If an individual who has entered into a fee agreement
fails for 60 days to pay fees required by the agreement, a provider
may terminate the agreement on the 60th day if a 30-day notice and
opportunity to cure has been provided. The provider may not earn
additional fees or charge an individual a termination fee on or after
termination.
60024. (a) A provider shall provide the accounting required by
subdivision (b), as follows:
(1) Upon settlement of a debt.
(2) Within five business days after a request by an individual,
but the provider shall not be required to comply with more than one
request in any calendar month.
(3) Upon cancellation or termination of an agreement.
(b) A provider, in a record, shall provide the following to each
individual for whom it has established a program if a creditor has
agreed to accept as payment in full an amount less than the principal
amount of the debt owed by the individual:
(1) The total amount and terms of the settlement.
(2) The amount of the debt when the individual assented to the
program.
(3) The amount of the debt when the creditor agreed to the
settlement.
(4) The fee, and the calculation of the fee, if any, charged to
the individual based on a percentage of the settlement of debt or
based on a percentage of the savings realized by the individual.
(c) A provider shall maintain records for each individual for whom
it provides debt settlement services for five years after the final
payment made by the individual. A provider shall produce a copy of
those records and provide them to the individual within a reasonable
time after a request for the records. The provider may use electronic
or other means of storage of the records.
(d) A provider shall provide the individual with a copy of the
written documentation from the creditor of a debt that has been
successfully settled, when available to the provider.
(e) A provider that receives an individual's monthly billing
statements from the individual's creditor shall provide the
individual with monthly statements of the individual's outstanding
debt.
60025. (a) A provider shall not, directly or indirectly, do any
of the following:
(1) Exercise or attempt to exercise a power of attorney not
authorized by the agreement.
(2) Acquire any power of attorney other than to authorize the
provider, as reasonably necessary, to communicate with creditors for
the purposes of negotiating settlement offers and to initiate
transfer of funds in accordance with this division.
(3) Exercise or attempt to exercise a power of attorney after an
agreement has been cancelled or terminated.
(4) Initiate a transfer of funds to or from an individual's bank
or other financial institution, unless the transfer is one of the
following:
(A) A return of money to the individual.
(B) Before termination of an agreement, properly authorized by the
agreement and this division, and in compliance with other rules and
law governing direct debits to an individual's account, for payment
of a fee.
(C) A transaction that has been expressly approved in writing, or
recorded statement, by the individual after the transaction has been
presented to the individual for approval.
(5) Settle a debt or lead an individual to believe that a payment
to a creditor is in settlement of a debt to the creditor unless, at
the time of settlement, the individual or provider receives a
certification or confirmation by the creditor that the payment is in
full settlement, or is part of a payment plan that is in full
settlement, of the debt.
(6) Make a representation that:
(A) The provider will furnish money to pay bills or prevent
attachments.
(B) Payment of a certain amount will guarantee satisfaction of a
certain amount or range of indebtedness.
(C) Participation in a program will or may prevent litigation,
garnishment, attachment, repossession, foreclosure, eviction, or loss
of employment.
(7) Represent that it is a not-for-profit entity unless it is
organized and properly operating as a not-for-profit entity under the
law of the state in which it was formed or that it is a tax-exempt
entity unless it has received certification of tax-exempt status from
the Internal Revenue Service.
(8) Employ an unconscionable or deceptive act or practice,
including the omission of any material information.
(9) Fail to respond to and research any complaint initiated by an
individual within 20 days of receipt of the complaint and resolve
each complaint in a prompt and reasonable manner.
(10) Require an individual participating in a debt settlement
program to utilize additional ancillary services.
(11) Receive financial incentives or additional compensation based
on the outcome of the debt settlement program in excess of the fee
cap.
(12) Pay referral fees to creditors or potential creditors who
refer new clients to the provider.
(b) If a provider furnishes debt settlement services to an
individual, the provider may not, directly or indirectly, do any of
the following:
(1) Purchase a debt or obligation of the individual.
(2) Receive from or on behalf of the individual either of the
following:
(A) A promissory note or other negotiable instrument other than a
check.
(B) A postdated check.
(3) Lend money or provide credit to the individual, except as a
deferral of a fee at no additional expense to the individual, or
advance a settlement payment for the individual at no additional
expense to the individual.
(4) Obtain a mortgage or other security interest from any person
in connection with the services provided to the individual.
(5) Force or otherwise require an individual to deposit his or her
funds into a specific financial institution. A provider must also
state to the individual that the individual is free to choose any
FDIC-insured or NCUA-insured financial institution. However, this
shall not prevent a provider from furnishing the individual with a
list of FDIC-insured or NCUA-insured financial institutions from
which the individual may choose or explaining the benefits of using
any particular financial institution.
(6) Except as permitted by federal and California law, disclose
the identity or identifying information of the individual or the
identity of the individual's creditors, except to:
(A) The commissioner.
(B) A creditor of the individual, to the extent necessary to
secure the cooperation of the creditor in a program.
(C) The extent necessary to administer the program.
(7) Except as otherwise provided in Section 60021,
provide Provide the individual less than the
full benefit of a compromise of a debt arranged by the provider.
(8) Charge the individual for or provide credit or other
insurance, coupons for goods or services, membership in a club,
access to computers or the Internet, or any other matter not directly
related to debt settlement services or educational services
concerning personal finance.
(9) Furnish legal advice or perform legal services, unless the
person furnishing that advice to or performing those services for the
individual is licensed to practice law.
(10) Advise individuals to stop payment on any of the accounts.
(11) Hold an individual's funds in trust.
(12) Include in any debt settlement services agreement any secured
debt.
(13) Engage in the business of debt collection on behalf of an
individual's creditor.
(14) Engage in the business of debt buying for an individual
represented by the provider.
(c) This division does not authorize any person to engage in the
practice of law.
60026. (a) Each provider shall establish an internal formal
complaint policy that creates a process for the provider to receive,
review, and address or resolve formal complaints internally. The
availability of this process shall be communicated in writing to
individuals enrolled in the provider's program. This policy shall
include a provision that individuals who file a formal complaint
shall receive a response from the provider within 20 days from the
provider's receipt of the complaint. The provider shall maintain a
file for each formal complaint that documents the complaint, its
handling, and the resolution, if any, of the complaint and the
provider shall disclose the file to the commissioner upon request.
(b) Every provider shall have an employee to review internal
complaints pursuant to the process set forth in this section.
60027. No later than 30 days after a provider has been served
with notice of a civil action for violation of this division by or on
behalf of an individual who resides in this state at either the time
of an agreement or the time the notice is served, the provider shall
notify the commissioner in a record that it has been sued.
60028. (a) Any advertising Advertising
concerning debt settlement services shall not contain any
false, misleading, or deceptive statement or omit to state any fact
necessary to make the statements made, in light of circumstances
under which they are made, not false, misleading, or deceptive.
No advertising may contain claims about the success of debt
settlement services unless those claims are verified by an
independent third party.
(b) No advertising shall be used after its use has been
disapproved by the commissioner and the licensee is notified in
writing of the disapproval.
(c) The commissioner may require licensees to maintain a file of
all advertising copy for a period of 90 days from the date of its
use. The file shall be available to the commissioner upon request.
(d) No licensee shall place an advertisement disseminated
primarily in this state for debt settlement services unless the
licensee discloses in the printed text of the advertisement, or the
oral text in the case of a radio or television advertisement, that
the licensee is licensed by the department pursuant to this division.
60029. (a) Each licensee shall keep and use books, accounts, and
records in accordance with generally accepted accounting practices
and good business practice that will enable the commissioner to
determine if the licensee is complying with the provisions of this
division and with the rules and regulations promulgated by the
commissioner. Each licensee shall maintain any other records as
required by the commissioner.
(b) The commissioner may act on his or her own initiative or in
response to complaints and may receive complaints, take action to
obtain voluntary compliance with this division, refer cases to the
Attorney General, or any other law enforcement agency, and seek or
provide remedies as provided in this division.
(c) For the purpose of discovering violations of this division or
securing information required by the commissioner in the
administration and enforcement of this division, the commissioner may
investigate and examine at any time, but not less than once every
four years, in this state or elsewhere, by subpoena, report, or
otherwise, the activities, books, accounts, and records of a person
that provides or offers to provide debt settlement services, or a
person to which a provider has delegated its obligations under an
agreement or under this division, to determine compliance with this
division. For the purposes of examination, the commissioner and the
commissioner's representatives shall have access to the offices and
places of business, books, accounts, papers, records, and files of
all these persons. Information that identifies individuals who have
agreements with the provider shall not be disclosed to the public. In
connection with the investigation, the commissioner may do either of
the following:
(1) Charge the person or provider the reasonable expenses
necessarily incurred to conduct the examination. The commissioner may
maintain an action for the recovery of expenses in any court of
competent jurisdiction.
(2) Require or permit a person to file a statement under oath as
to all the facts and circumstances of a matter to be investigated.
(d) For the purpose of any investigation or proceeding under this
law, the commissioner or any officer designated by the commissioner
may administer oaths and affirmations, subpoena witnesses, compel
their attendance, take
evidence, and require the production of any books, papers,
correspondence, memoranda, agreements, or other documents or records
that the commissioner deems relevant or material to the inquiry. If
the books, records, and supporting data are located out of this state
they shall be made available for examination by the commissioner in
this state within 10 days after a written demand.
(e) A provider shall maintain all records for five years following
the last entry on a debt settlement transaction and shall enable the
commissioner to review the recordkeeping and reconcile each
individual debt settlement transaction with documentation maintained
in the individual's debt settlement file records. Failure to keep the
records for five years following the last entry shall authorize the
commissioner to assess and collect a penalty of up to ten thousand
dollars ($10,000) for each year that the records are not kept.
(f) The commissioner may enter into cooperative arrangements with
any other federal or state agency having authority over providers and
may exchange with any of those agencies information about a
provider, including information obtained during an examination of the
provider.
60029.5. (a) On or before March 15 of each year, beginning March
2012, each licensee shall file an annual report with the commissioner
pursuant to procedures that the commissioner shall establish by
rule. The licensee shall submit with the annual report a declaration
that conforms to Section 2015.5 of the Code of Civil Procedure, is
executed by an official authorized by the licensee, and that states
that the licensee complies with this section. The specific
proprietary business information contained in the licensee's
annual report shall be kept confidential pursuant to Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code and any regulations adopted thereunder. For the
previous calendar year, the report shall include the following:
(1) The total amount of debt for all individuals for whom a
licensee is providing debt settlement services, as of December 31.
(2) The total principal amount of debt of all individuals that
entered into agreements.
(3) The total number of individuals that entered into agreements.
(4) The total number of individuals with outstanding debt
settlement service agreements in California.
(5) The total number of debts settled by the provider.
(6) The total dollar amount of debts settled by the provider, as
follows:
(A) The dollar amount of the settled debt, as of the establishment
of the program.
(B) The dollar amount of the settled debt at the time of
settlement, without debtor concessions.
(C) The dollar amount of the settled debt with debtor concessions.
(7) The total amount of fees collected from California
individuals.
(8) Any other information required by rule.
(b) The commissioner shall prepare an annual consolidated report
of the reports submitted by licensees pursuant to subdivision (a) and
shall make the consolidated report available to the public.
60029.9. (a) It is unlawful for any person to knowingly alter,
destroy, mutilate, conceal, cover up, falsify, or make a false entry
in any record, document, or tangible object with the intent to
impede, obstruct, or influence the administration or enforcement of
any provision of this division.
(b) It is unlawful for any person to knowingly make an untrue
statement or omit to state a fact necessary in order to make the
statements made, in the light of the circumstances under which they
were made, not misleading to the commissioner during the course of
licensing, investigation, or examination, with the intent to impede,
obstruct, or influence the administration or enforcement of any
provision of this division.
60030. (a) The commissioner may enforce this division and rules
adopted under this division by taking one or more of the following
actions:
(1) Ordering a provider or any person to desist and refrain from
engaging in debt settlement services or from further violating this
division.
(2) Ordering a provider or any person that has caused a violation
to correct the violation, including making restitution of money or
property to a person aggrieved by a violation.
(3) Issuing a citation to a provider or any person in writing,
describing with particularity the basis of the citation. Each
citation may contain an order to desist and refrain and may include
any other orders, such as an assessment of an administrative penalty
pursuant to paragraph (4).
(4) Imposing an administrative penalty not exceeding two thousand
five hundred dollars ($2,500) for each violation on a provider or a
person that has caused a violation.
(5) Prosecuting a civil action to do either or both of the
following:
(A) Enforce an order.
(B) Obtain restitution or an injunction or other equitable relief,
or both.
(b) Any person who knowingly violates or authorizes, directs, or
aids in the violation of a final order issued under paragraph (1) or
(2) of subdivision (a) shall be liable for a civil penalty not
exceeding ten thousand dollars ($10,000) for each violation, which
shall be assessed and recovered in a civil action brought in the name
of the people of the State of California by the commissioner in any
court of competent jurisdiction.
(c) The commissioner may recover the reasonable costs of enforcing
this division under subdivisions (a) and (b), including attorney's
fees based on the hours reasonably expended and the hourly rates for
attorneys of comparable experience in the community.
(d) In determining the amount of a penalty to impose under
subdivision (a) or (b), the commissioner shall consider the
seriousness of the violation, the good faith of the violator, any
previous violations by the violator, the deleterious effect of the
violation on the public, the net worth of the violator, and any other
factor the commissioner considers relevant to the determination of
the civil penalty.
(e) After the exhaustion of the review procedures provided for in
this section, the commissioner may apply to the appropriate superior
court for a judgment in the amount of the administrative penalty,
cost, fee, or any forfeiture of charge or fee in connection with the
transaction and order compelling the cited person to comply with the
order of the commissioner. The application, which shall include a
certified copy of the final order of the commissioner, shall
constitute a sufficient showing to warrant the issuance of the
judgment and order.
60030.5. (a) Whenever the commissioner believes from evidence
satisfactory to the commissioner that any person has violated or is
about to violate a provision of this division, or a provision of any
order, license, decision, demand, requirement, or any regulation
adopted pursuant to this division, the commissioner may, in the
commissioner's discretion, bring an action in the name of the people
of the State of California against that person to enjoin that person
from continuing that violation or doing any act in furtherance of the
violation or to enforce compliance with this law or any rule or
order thereunder. Upon a proper showing, a permanent or preliminary
injunction, restraining order, or writ of mandate shall be granted
and a receiver, monitor, conservator, or other designated fiduciary
or officer of the court may be appointed for the defendant or the
defendant's assets, or any other ancillary relief may be granted as
appropriate. A receiver, monitor, conservator, or other designated
fiduciary or officer of the court appointed by the superior court
pursuant to this section may, with the approval of the court,
exercise any or all of the powers of the defendant's officers,
directors, partners, trustees, or persons who exercise similar powers
and perform similar duties, including the filing of a petition for
bankruptcy. No action at law or in equity may be maintained by any
party against the commissioner, or a receiver, monitor, conservator,
or other designated fiduciary or officer of the court, by reason of
their exercising these powers or performing these duties pursuant to
the order of, or with the approval of, the superior court.
(b) If the commissioner determines that it is in the public
interest, the commissioner may include in any action authorized by
subdivision (a) a claim for ancillary relief, including, but not
limited to, a claim for restitution, disgorgement, or damages on
behalf of the persons injured by the act or practice constituting the
subject matter of the action. The commissioner may include in any
action authorized by subdivision (a) a claim for costs, including
reasonable attorney's fees and expenses, and the court shall have
jurisdiction to award that relief and any other additional relief.
60031. (a) In this section, "insolvent" means any of the
following:
(1) The inability to pay debts in the ordinary course of business
other than as a result of good faith dispute.
(2) Being unable to pay debts as they become due.
(3) Being insolvent within the meaning of the federal bankruptcy
law (11 U.S.C. Sec. 101 et seq.).
(b) The commissioner may suspend or revoke a provider's license
if:
(1) A fact or condition exists that, if it had existed when the
licensee applied for licensure as a provider, would have been a
reason for denying the license.
(2) The provider or an officer, director, general partner,
manager, or person owning or controlling, directly or indirectly, 10
percent or more of the outstanding interests or equity securities of
the provider has committed a material violation of this division or a
rule or order of the commissioner or any similar regulatory scheme
of this state or a foreign jurisdiction, or has caused material
damage to individuals who have agreements with the provider or to the
public.
(3) The provider is insolvent.
(4) The provider or an employee or affiliate of the provider has
refused to permit the commissioner to make an examination authorized
by this division, failed to comply with paragraph (2) of subdivision
(b) of Section 60029 within 15 days after request, or made a material
misrepresentation or omission in complying with paragraph (2) of
subdivision (b) of Section 60029.
(5) The provider has not responded within a reasonable time and in
an appropriate manner to communications from the commissioner.
(6) The provider or an officer, director, general partner,
manager, or person owning or controlling, directly or indirectly, 10
percent or more of the outstanding interests or equity securities of
the provider has been convicted of or pleaded nolo contendere to any
crime, or has been held liable in any civil action by final judgment,
or any administrative judgment by any public agency, if that crime
or civil or administrative judgment involved any offense involving
dishonesty, fraud, or deceit, or any other offense reasonably related
to the qualifications, functions, or duties of the licensed
activity.
(7) The provider has failed to comply with any demand, ruling, or
requirement of the commissioner made pursuant to and within the
authority of this division.
(c) If the commissioner suspends or revokes a provider's license,
the provider may appeal and request a hearing pursuant to the
California Administrative Procedure Act (Chapter 4.5 (commencing with
Section 11400) of Part 1 of Division 3 of Title 2 of the Government
Code).
(d) A provider shall not knowingly permit a person suspended or
barred under this section from engaging in any business activity
requiring a license under this division on the premises where the
provider is conducting business.
60032. (a) If an agreement is void pursuant to subdivision (a) or
(b) of Section 60022, the individual may recover in a civil action
all money paid by or on behalf of the individual pursuant to the
agreement, in addition to the recovery under subdivision (b).
(b) An individual with respect to whom a provider violates this
division may recover the following in a civil action from the
provider and any person that caused the violation:
(1) Compensatory damages for injury caused by the violation.
(2) Reasonable attorney's fees and costs.
60033. If an act or practice of a provider violates both this
division and Chapter 5 (commencing with Section 17200) of Part 2 of
Division 7 of the Business and Professions Code, an individual may
not recover under both for the same act or practice.
60034. (a) An action brought under this division shall be
commenced within three years after the latest of one of the
following:
(1) The last transmission of money to a provider by or on behalf
of the individual.
(2) The date on which the individual discovered or reasonably
should have discovered the facts giving rise to the individual's
claim.
(b) The period prescribed in paragraph (2) of subdivision (a)
shall be tolled during any period during which the provider or, if
different, the defendant has materially misrepresented information
required by this division to be disclosed to the individual, if the
information so misrepresented is material to the establishment of the
liability of the defendant under this division.
60035. This division shall not apply to a debt settlement
agreement between an individual and a provider for the performance of
debt settlement services that was entered into prior to the
operative date of this division.
60037. Any person, including a partner or officer of an entity
that is a licensee, who willfully violates any provision of this
division or who willfully violates any rule or order adopted pursuant
to this division, shall, upon conviction, be punished by a fine of
not more than ten thousand dollars ($10,000), or by imprisonment in a
county jail for not more than one year, or by both that fine and
imprisonment.
60038. A provider shall act in good faith in all matters under
this division.
60038.5. After an examination, investigation, or hearing under
this division, if the commissioner deems it of public interest or
advantage, the commissioner may certify a record to the proper
prosecuting official of the city, county, or city and county in which
the act complained of, examined, or investigated occurred. The data
and records shall be kept confidential pursuant to Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code and any regulations adopted thereunder.
60038.9. The rights, remedies, and penalties established by this
division are cumulative to the rights, remedies, or penalties
established under other laws. It is not necessary to exhaust
administrative remedies in order to pursue the civil remedies
provided for in this division. As applied to the penalties for acts
in violation of this division, the remedies provided by this division
are not exclusive and may be sought and employed in any combination
to enforce the provisions of this division.
60039. This division shall become operative on January 1, 2012.
CHAPTER 6. MISCELLANEOUS
60050. The provisions of this division are severable. If any
provision of this division or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SEC. 2. The Legislature finds and declares that Section 1 of this
act imposes a limitation on the public's right of access to the
meetings of public bodies or the writings of public officials and
agencies within the meaning of Section 3 of Article I of the
California Constitution. Pursuant to that constitutional provision,
the Legislature makes the following findings to demonstrate the
interest protected by this limitation and the need for protecting
that interest:
In order to allow the Department of Corporations to fully
accomplish their goals, it is imperative to protect the interests of
those persons submitting information to the department to ensure that
any personal or sensitive business information that this act
requires those persons to submit is protected as confidential
information.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.