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California AB 350 Still Alive to Regulate Debt Management and Debt Settlement

I was just checking on the status of California Assembly Bill 350 and found that it is still in process and was amended in the Senate on June 14, 2010.

You will find the latest draft below.

California AB 350 Still Alive to Regulate Debt Management and Debt Settlement
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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 ofCorporations of persons engaged in, among other activities, thebusiness of receiving money as an agent of the obligor for thepurpose 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 regulationby the commissioner of providers, defined as persons who that provide, offer to provide, or agree toprovide debt settlement services, as defined, directly or throughothers. The bill would require a provider to submit specified feesand an application, signed under penalty of perjury, for licensurewith the commissioner. An applicant, and any person who signs anapplication on behalf of an applicant, who knowingly misrepresents orsubmits any material matter that is false, or a person who otherwisewillfully violates a provision of the act, would be guilty of amisdemeanor. The bill would specify the conditions under which thecommissioner may issue or deny licensure as a provider and wouldrequire a provider to satisfy certain requirements before enteringinto an agreement with an individual for the provision of debtsettlement services, including providing specified disclosures. Thebill would require an agreement for debt settlement services tocontain specified terms and would impose limits on the feescharged by providers. The bill would prohibit providersfrom engaging in specified practices. The bill would require aprovider to submit annual reports to the commissioner containingspecified information relating to its business in the previouscalendar year. The bill would authorize the commissioner to takeenforcement actions against a provider for violations of the bill’sprovisions and would also authorize an injured individual to recoverspecified damages from a provider that violates the bill’sprovisions. The bill would enact other related provisions.

Because the bill would create a new crime, and expand the scope ofthe crime of perjury, it would impose a state-mandated localprogram.

The California Constitution requires the state to reimburse localagencies and school districts for certain costs mandated by thestate. Statutory provisions establish procedures for making thatreimbursement.

This bill would provide that no reimbursement is required by thisact 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 tothe 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 DebtSettlement Services Act.

CHAPTER 2. DEFINITIONS
60001. As used in this division, the following definitions shallapply:

(a) “Agreement” means an agreement between a provider and anindividual for the performance of debt settlement services.

(b) “Applicant” means any person who submits an application to thedepartment for the purpose of seeking licensure to become a debtsettlement provider.

(c) “Commissioner” means the Commissioner of Corporations.

(d) “Concessions” means assent to repayment of an unsecured debton terms more favorable to an individual than the terms of thecontract between the individual and a creditor.

(e) “Control” means the possession, direct or indirect, of thepower to direct or cause the direction of the management or policiesof a licensee, whether through the ownership of voting securities, bycontract, or otherwise. Control shall be presumed to exist if anyperson or persons, directly or indirectly, owns, controls, holds withthe power to vote, or holds proxies representing, 10 percent or moreof the voting securities or other interest of any other licensee.

(f) “Debt settlement program” or “program” means a program orstrategy in which a provider furnishes debt settlement services.

(g) “Debt settlement services” means acting or offering to act asan intermediary between an individual and one or more creditors ofthe 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 theprimary purpose of the action is to obtain a settlement orsatisfaction of the individual’s debt in an amount less than the fullprincipal amount of the debt, in return for a fee or otherconsideration , without receiving money from the individualfor distribution to the individual’s creditors.
.
(h) “Department” means the Department of Corporations.

(i) “Financial analysis” means the review of an individual’sbudget and income and expenses in order to make a determination aboutthe individual’s qualification for a provider’s debt settlementprogram. Based on the financial analysis pursuant to Section60016, the provider shall make a determination as described inparagraph (3) of subdivision (a) of Section 60016.

(j) “Good faith” means honesty in fact and the observance ofreasonable standards of fair dealing.

(k) “Licensee” means any person licensed pursuant to thisdivision. “Licensee” does not include an employee regularly employedby 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 doesnot include a public corporation, government, or governmentalsubdivision, agency, or instrumentality.

(m) “Principal amount of the debt” means the amount of a debt atthe time of the execution of the agreement.

(n) “Provider” means a person that provides, offers to provide, oragrees to provide debt settlement services directly or throughothers. “Provider” does not include either of the following:

(1) The services of a person licensed to practice law in thisstate, when the person renders services in the course of his or herpractice as an attorney-at-law in an attorney-client relationship.

(2) The services of a person licensed as a certified publicaccountant or a public accountant in this state, when the personrenders services in the course of his or her practice as a certifiedpublic accountant or a public accountant.

(3) A family member of an individual that negotiates financialconcessions, with or without compensation, from the creditors of theindividual.
(o) “Record” means information that is inscribed on a tangiblemedium or that is stored in an electronic or other medium and isretrievable in perceivable form.

CHAPTER 3. GENERAL PROVISIONS
60002. This division shall not apply to the following persons ortheir employees when the person or the employee is engaged in theregular course of the person’s business or profession:

(a) A judicial officer, a person acting under an order of a courtor an administrative agency, or an assignee for the benefit ofcreditors.

(b) A financial institution under state or federal law, which islimited to the following:

(1) Any bank or its agent, trust company, insurance company, orindustrial loan company doing business under the authority of or inaccordance with a license, certificate, or charter issued by theUnited States or any state, district, territory, or commonwealth ofthe United States that is authorized to transact business in thisstate.

(2) A federally chartered savings and loan association, federalsavings bank, or federal credit union that is authorized to transactbusiness in this state.

(3) A savings and loan association, savings bank, or credit unionorganized under the laws of this or any other state that isauthorized to transact business in this state.

(4) A person engaged solely in business, commercial, oragricultural mortgage lending.

(5) A wholly owned service corporation of a savings and loanassociation or savings bank organized under the laws of this state orthe wholly owned service corporation of a federally charteredsavings and loan association or savings bank that is authorized totransact business in this state.

(b) A bank or bank holding company, or the subsidiary, agent, oraffiliate of either, or a credit union or other financial institutionlicensed under state or federal law.

(c) A California licensed title insurer or escrow company in goodstanding that provides bill paying services if the person does notprovide debt settlement services.

(d) Financial planning services provided in a financialplanner-client relationship by a member of a financial planningprofession whose members the commissioner determines are licensedunder Chapter 3 (commencing with Section 25230) of Part 3 of Division4 of the Corporations Code.

(e) A person licensed or registered to originate loans secured byreal property when debt settlement services are provided in thecourse of a loan origination.
(f) A nonprofit community service organization that fulfills therequirements of Section 12104 and is exempt from the requirements ofDivision 3 (commencing with Section 12000).
60003. All fees collected by the commissioner pursuant to thisdivision shall be deposited in the State Treasury to the credit ofthe State Corporations Fund. The administration of this divisionshall be supported out of the State Corporations Fund uponappropriation by the Legislature.
60004. The commissioner may adopt general rules and regulationsand specific rulings, demands, orders, and findings necessary toadminister, implement, and enforce this division in accordance withthe provisions of the Administrative Procedure Act (Chapter 3.5(commencing with Section 11340) of Part 1 of Division 3 of Title 2 ofthe Government Code).

CHAPTER 4. LICENSING
60005.

(a) No person shall offer or provide debt settlementservices to an individual who it reasonably should know resides inthis state at the time it agrees to provide the services, unless theprovider is licensed under this division.

(b) The commissioner shall maintain and publicize a list of thenames of all licensed providers, which shall be published by thecommissioner 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 forinvestigating the application, the sum of not less than one thousanddollars ($1,000) as an application fee, subject to adjustment underSection 60007, and the cost of fingerprint processing. Theinvestigation fee and application fee are not refundable. Unusedapplication fee funds shall be used to cover the cost of the program.

(2) Evidence of a surety bond in the amount of fifty thousanddollars ($50,000), which shall be maintained by the provider duringthe term of the license.

(3) Financial statements prepared in accordance with generallyaccepted accounting principles and reviewed by an independent,third-party licensed accountant.

(b) As a substitute for the bond required in paragraph (2) ofsubdivision (a), a licensee may file either of the following with thecommissioner in the same amount required under paragraph (2) ofsubdivision (a):

(1) An irrevocable letter of credit, issued or confirmed by a bankapproved by the administrator, payable upon presentation of acertificate by the administrator stating that the provider or itsagent has not complied with this division.

(2) Bonds or other obligations of the United States or guaranteedby the United States or bonds or other obligations of this state or apolitical subdivision of this state, to be deposited and maintainedwith a bank approved by the administrator for this purpose.

(c) Upon licensure as a provider, the bond required under thissection shall be payable to the commissioner and issued by an insurerauthorized to do business in this state. A copy of the bond,including any and all riders and endorsements executed subsequent tothe effective date of the bond, shall be filed with the commissionerfor review and approval within 10 days of execution. The bond shallbe used for the recovery of losses or damages incurred by individualsas the result of a licensee’s noncompliance with the requirements ofthis division or for the recovery of expenses, fines, and feeslevied by the commissioner, a district attorney, city attorney, orthe Attorney General.

(d) The bond required under this section shall remain in force andeffect until the surety is released from liability by thecommissioner, or until the bond is canceled by the surety.

(e) A licensee shall maintain a minimum net worth of one hundredthousand dollars ($100,000) at all times as evidenced by thefinancial statement.

(f) A licensee shall annually file financial statements along withthe annual report to the commissioner required under Section60029.5.

60007.

(a) The commissioner shall set an annual deadline for thesubmission 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 ofthe cost of administering the program and the estimated number oflicense applicants, an application fee. Sixty days after thelicensing deadline for the initial license, the commissioner shalldetermine, if necessary, a surcharge to cover the estimated costs forthe remainder of the year, plus any deficit, if any, from the yearprior, for administering this division. The surcharge shall becharged as a pro rata share to each applicant granted a licenseduring that year based on the number of active enrolled Californiaresidents in that licensee’s debt settlement program, with areasonable minimum and maximum charge as determined by thecommissioner.

(b) The commissioner shall notify each licensee by mail of theamount of the surcharge assessed against it and that the amount shallbe paid within 30 days thereafter. If the licensee fails to pay theassessment on or before the 30th day upon which payment is due, thecommissioner may by order summarily suspend or revoke the licenseissued to the licensee. In the levying and collection of theassessment, a licensee shall neither be assessed for, nor bepermitted to pay less than, one thousand dollars ($1,000) per year.

(c) Any applicant that files its application after the deadlineshall be charged the initial application fee plus the pro ratasurcharge specified in subdivision (a), and the application fee forthat applicant shall not be adjusted to account for any partial year.

60008.

Every application for licensure shall be signed by theapplicant and shall declare, under penalty of perjury, as true anymaterial matter submitted on the application for licensure. Anyapplicant, and any person who signs an application on behalf of anapplicant, who knowingly misrepresents or submits any material matterthat is false is guilty of a misdemeanor. The application form shallcontain a statement informing the applicant that a false ordishonest answer to a question may be grounds for denial orsubsequent suspension or revocation of the applicant’s license. Anapplication for licensure shall be in a form prescribed by thecommissioner and, at a minimum, shall include the following:

(a) The applicant’s name, principal business address and telephonenumber, and all other business addresses in this state, e-mailaddresses, and Internet Web site addresses.

(b) All names under which the applicant conducts a debt settlementbusiness or a business for which licensure by the Department ofCorporations is required.

(c) The address of each location in this state at which theapplicant shall provide debt settlement services or a statement thatthe applicant will have no such location.

(d) The name of each executive officer and director of theapplicant and each person that owns or controls, directly orindirectly, at least 10 percent or more of the outstanding equityinterests of the applicant and any other information necessary forthe investigation pursuant to Section 60008.5.

(e) A statement describing, to the extent it is known or should beknown by the applicant, any material civil or criminal judgmentrelating to financial fraud or misuse and any material administrativeor enforcement action by a governmental agency relating to financialfraud or misuse in any jurisdiction against the applicant, any ofits officers, directors, owners, employees, or agents.

(f) At the applicant’s expense, pursuant to the process in Section60009, the results of a national criminal history records check,including fingerprints, provided pursuant to the Federal Bureau ofInvestigation appropriation of Title II of Public Law 92-544 (28U.S.C. Sec. 534) conducted within the immediately preceding 12months, covering every executive officer of the applicant. Thecommissioner shall be the authorized agency to receive informationregarding the results of the national criminal history records checkunder Title II of Public Law 92-544 (28 U.S.C. Sec. 534).

(g) Disclosure of common ownership by any person owning orcontrolling, directly or indirectly, 10 percent or more of theoutstanding interests or equity securities in the applicant by thefollowing persons:

(1) Any person who advertises any service to assist consumers withreducing or eliminating debt.

(2) Any person who provides banking or similar depository servicesto consumers of debt settlement services providers.

(3) Any person, other than individuals employed by the applicant,with whom the applicant contracts to provide debt settlementservices, or parts thereof, to consumers.

(h) An authorization for disclosure of financial records of theapplicant pursuant to Section 7473 of the Government Code.

(i) The name and contact information of the risk manager forindividual complaints as provided in Section 60026.

(j) A sample agreement and disclosures used by the applicant.
(k) Any other information that the commissioner reasonablyrequires to determine whether to issue a license.

60008.5.

(a) Upon filing the application and payment of feespursuant to paragraph (1) of subdivision (a) of Section 60006 andapproval of the bond pursuant to Section 60006, the commissionershall investigate and examine the following:

(1) The background and experience of the applicant and of thepartners or members owning or controlling, directly or indirectly, 10percent or more of the outstanding interests if the applicant is apartnership, 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 interestsif the applicant is a corporation, trust, or association, includingan unincorporated organization.

(b) If the commissioner determines that the applicant hassatisfied the provisions of this division and does not find factsconstituting reasons for denial as specified in Section 60011, thecommissioner shall issue and deliver a license to the applicant toengage in business in accordance with the provisions of thisdivision.

60009.

(a) An applicant for licensure shall provide to thecommissioner, and the commissioner shall submit to the Department ofJustice, fingerprint images and related information required by theDepartment of Justice of all applicants for licensure for purposes ofobtaining information as to the existence and content of a record ofstate or federal convictions and state or federal arrests and alsoinformation as to the existence and content of a record of state orfederal arrests for which the Department of Justice establishes thatthe person is free on bail or on his or her own recognizance pendingtrial or appeal.

(b) When received, the Department of Justice shall forward to theFederal Bureau of Investigation requests for federal summary criminalhistory information received pursuant to this section. TheDepartment of Justice shall review the information returned from theFederal Bureau of Investigation and compile and disseminate aresponse to the Commissioner of Corporations.

(c) The Department of Justice shall provide state and federalresponses to the commissioner pursuant to paragraph (1) ofsubdivision (p) of Section 11105 of the Penal Code.

(d) The commissioner may request from the Department of Justicesubsequent arrest notification service, as provided pursuant toSection 11105.2 of the Penal Code, for a person described insubdivision (a).

(e) The Department of Justice shall charge a fee, to be paid by anapplicant for licensure, that is sufficient to cover the cost ofprocessing the request described in this section.

(f) All proprietary and personal information, including, but notlimited to, financial statements, sample agreements, fee schedules,and home addresses supplied to the commissioner in connection withthe application for licensure shall be held confidential by thecommissioner.

60010.

An applicant or licensed provider shall notify thedepartment in writing at least 10 days prior to any change in theinformation specified in paragraph (2) of subdivision (a) of, or insubdivision (b) of, Section 60006 or in subdivision (a), (b), or (c)of Section 60008, or within 14 days after any change in theinformation specified in subdivision (d) , (e), (g), or (h) ofSection 60008, or any other information as required, by rule, by thecommissioner.

60011. (a) Except as otherwise provided in subdivisions (b) and(c), the commissioner shall issue a certificate of licensure as aprovider 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 statementof material fact or is incomplete.

(2) The applicant, an officer, director, general partner, member,or person owning or controlling, directly or indirectly, 10 percentor more of the outstanding interests or equity securities of theapplicant has been convicted of or pleaded nolo contendere to acrime, or suffered a civil judgment or any administrative judgment byany public agency involving a finding of fraud, deceit, ordishonesty or has violated state or federal securities or consumerprotection laws, or any regulatory scheme of the state or has beenconvicted of any other offense reasonably related to thequalifications, functions, or duties of a person engaged in thebusiness 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, 10percent or more of the outstanding interests or equity securities ofthe applicant has made any false statement or representation to thecommissioner.

(4) An applicant is or becomes insolvent.

(5) An applicant refuses to reasonably comply with aninvestigation or examination of the debt settlement service providerby the commissioner.

(6) An applicant has improperly withheld, misappropriated, orconverted funds received in the course of doing business.

(7) An applicant has used fraudulent, coercive, or dishonestpractices, or demonstrated incompetence regarding debt settlementservices, or financial irresponsibility in this state or elsewhere.

(8) An applicant has shown to have engaged in a pattern of failingto perform services promised.

(9) An applicant or any officer, director, or general partner,member, or person owning or controlling, directly or indirectly, 10percent or more of the outstanding interests or equity securities ofthe applicant has violated any provision of this division or therules or any order thereunder or any similar regulatory scheme of thestate or a foreign jurisdiction.

(c) The commissioner shall deny licensure if the application isnot accompanied by the fee established by the commissioner.

(d) The application shall be considered withdrawn within themeaning of this section if the applicant fails to respond to awritten notification of a deficiency in the application within 90days of the date of the notification.

60012.

(a) The commissioner shall approve or deny an initiallicense as a provider within 60 days after the receipt of a completeapplication, the receipt of criminal history background informationfrom the Department of Justice, and the payment of required fees.Within 30 calendar days after denying an application, thecommissioner, in a record, shall inform the applicant of the reasonsfor the denial.

(b) If the commissioner denies an application for licensure as aprovider or does not act on an application within the time prescribedin subdivision (a), the applicant may appeal and request a hearingpursuant to the California Administrative Procedure Act (Chapter 4.5(commencing with Section 11400) of Part 1 of Division 3 of Title 2 ofthe Government Code).

60013.

A license is not transferable or assignable without theconsent of the commissioner.

60013.5.

No licensee shall provide debt settlement services inthis state under any other name, or through an Internet Web siteaddress other than those named in the license or except pursuant to acurrently effective written order of the commissioner authorizingthe other name or Internet Web site address.

60014.

A person or entity licensed as a provider under thisdivision shall be exempt from the requirements of Division 3(commencing with Section 12000), except to the extent the person isperforming services and activities governed by Section 12000 that donot constitute providing debt settlement services.

60014.5.

In any proceeding under this division, the burden ofproving an exemption or exception is upon the person claiming it.

CHAPTER 5.
REGULATIONS
REGULATION

60015.

A provider that is required to be licensed under thisdivision shall maintain a toll-free communication system, staffed ata level that reasonably permits an individual to speak to a customerservice representative, as appropriate, during ordinary businesshours.

60015.5.

(a) Every provider that offers a debt settlement programto an individual shall have reasonable grounds to believe that theindividual is qualified for the debt settlement program and canreasonably meet the requirements of the program on the basis ofinformation furnished by the individual after reasonable inquiryconcerning the individual’s financial situation and needs, includinga financial analysis pursuant to Section 60016, and any otherinformation known by the provider.

(b) In the furtherance of subdivision (a), and pursuant to awritten policy, a provider shall consult with the individual andconsider the following:

(1) Whether the individual’s monthly income exceeds basic livingexpenses by an amount that permits the individual to meet the savingsgoals of the program.

(2) Whether the individual’s creditors are likely to agree to thesettlement 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 engagein a program, the provider shall do all of the following:

(1) Prepare and provide in not less than 12-point type a writtenfinancial analysis specific to the individual. The financial analysisshall be written in plain language and delivered to the individualprior to the individual assenting to the agreement.

(2) Provide in not less than 12-point type a written good faithestimate of the length of time it will take to complete the programand a statement of the total amount of debt owed to each creditorincluded in the program. The estimate shall include a statement ofthe monthly savings goals for the individual that are necessary tocomplete the program.

(3) Based upon the completed financial analysis, make adetermination supported by the financial analysis that the individualis qualified and suitable for a debt settlement programand that the individual can reasonably meet the requirements of theprogram pursuant to Section 60015.5.

(4) Inform the individual in not less than 12-point type writingof 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 theindividual’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 leadcreditors to increase finance and other charges or undertakecollection activity, including litigation and garnishment of wages.

(E) That unless the individual is insolvent, if a creditor settlesfor less than the full amount of the debt, the program may result inthe creation of taxable income to the individual, even though theindividual does not receive any money.

(F) That specific results cannot be predicted or guaranteed.

(G) That a program requires an individual to meet certain savingsgoals in order to maximize settlement results.

(H) That a provider, who is not otherwise authorized orprofessionally licensed, does not provide accounting or legal adviceto individuals.

(I) That a provider does not receive compensation from anindividual’s creditors, banks, or third-party collection agencies.

(J) That a provider cannot force negotiations or settlements withcreditors but will advocate solely on behalf of an individual.

(K) That if an individual terminates an agreement pursuant toparagraph (1) of subdivision (b) of Section 60019, no additional feeswill be due.

(L) That the use of debt settlement services may not stop acreditor from filing or pursuing a lawsuit against an individual.

(M) That the consumer may owe fees upon signing an agreementwhether or not any debts are reduced under the program.

(b) The provider shall insert the following statement, in not lessthan 12-point type, in its debt settlement program agreements:
“Complaints related to this agreement may be directed to theDepartment of Corporations by calling (866) ASK-CORP or by logging onto their Internet Web site at www.corp.ca.gov.”

60016.5.

If a provider receives money from the individual fordistribution to the individual’s creditors, all of the followingprovisions apply:

(a) The money received from the individual for distribution to theindividual’s creditors shall not be commingled with the provider’sfunds and shall be deposited in an FDIC-insured trust account.

(b) The commissioner may, by rule, require providers that receivemoney from the individual for distribution to the individual’screditors to obtain a fidelity bond in an amount deemed adequate bythe commissioner.

(c) The provider shall act in a fiduciary capacity to theindividual with respect to the individual’s funds deposited in thetrust account.

(d) The individual shall not incur an additional charge for theestablishment and maintenance of the trust account.

(e) At any time prior to the transmission of funds in the trustaccount to the individual’s creditors, the individual may require thereturn 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 followingdefinitions apply:

(1) “Consumer” means an individual who seeks or obtains goods orservices that are used primarily for personal, family, or householdpurposes.

(2) “Federal act” means the Electronic Signatures in the Globaland 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 electronicmeans if the provider obtains a consumer’s consent in the mannerprovided 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 capableof 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) ofSection 60016 shall appear on one or more screens that satisfy all ofthe following:

(1) The screen contains no other information.

(2) An individual shall be able to see the screen beforeproceeding to assent to formation of a program.

(3) The individual has not been required to submit personalinformation, including information regarding debts, prior toaccessing the disclosures.

(e) At the time of providing the materials and agreement requiredby subdivision (a) of Section 60016, Section 60019, and Section60024, a provider shall inform the individual, pursuant to Section60020, that upon electronic, telephonic, or written request, it willsend the individual a written copy of the materials, and shall complywith a request as provided in subdivision (f).

(f) If a provider is requested, before the expiration of 90 daysafter a program is completed or terminated, to send a written copy ofthe 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 daysafter the request, but the provider shall not be required to complywith a request more than once per calendar month. If a request ismade more than 90 days after a program is completed or terminated,the provider shall send within a reasonable time a written copy ofthe materials requested.

60018.

A provider shall maintain an Internet Web site and shalldisclose all of the following on the home page of its Internet Website or on a page that is clearly and conspicuously connected to thehome page by a link that clearly reveals its contents:

(a) Its name, business address, telephone number, and e-mailaddress, if any.

(b) Its license number under this division and a link to thedepartment’s Internet Web site.

(c) All other disclosures required by law.
60019. (a) An agreement under this division shall satisfy all ofthe following requirements:

(1) Be in writing, dated, and signed by the individual.

(2) Include the name of the individual and the address where theindividual resides.

(3) Include the name, business address, and telephone number ofthe provider and, if this does not include a street address inCalifornia, the name and address of its California agent for serviceof process.

(4) Be delivered to the individual immediately upon formation ofthe agreement. For purposes of this paragraph, delivery of anelectronic record occurs when it is sent to the individual and madeavailable in a format in which the individual may retrieve, save, andprint, 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 undersubdivision (a) of Section 60024.

(D) That the individual may contact the Department of Corporationswith any questions or complaints regarding the provider.

(7) Display the following provisions, which shall appearprominently 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 fromthe individual.

(D) The estimated number of months for which a monthly fee isrequired by the agreement.

(E) An estimate of the total amount of fees reasonably anticipatedto be paid by the individual over the term of the agreement, asapplicable.

(F) The total amount of fees that may be charged under thecontract.

(b) An agreement under this division shall provide the following:

(1) That the individual has a right to terminate the agreement atany time by giving the provider written or electronic notice.Termination of the agreement becomes effective immediately uponreceipt by the provider, at which time all powers of attorney grantedby the individual to the provider are revoked and ineffective.

(2) That the individual can cancel an agreement and receive a fullrefund of any moneys paid to the provider before midnight of thefifth business day after the individual assents to it. Notice ofcancellation is effective upon proof of sending the notice prior tothe deadline. Upon cancellation the provider shall refund all fees nolater than 10 business days from the date of cancellation.

(3) That any power of attorney only authorizes the provider, asreasonably necessary, to communicate with creditors for the purposesof negotiating settlement offers and to initiate transfer of funds inaccordance with Section 60025.

(4) That the provider shall notify the individual within threebusiness days after learning of a creditor’s decision to cease finalnegotiation 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 theagreement.

(C) The terms and conditions of the agreement modificationprocess.

(c) An agreement shall not do any of the following:

(1) Provide for application of the law of any jurisdiction otherthan this state.

(2) Except as permitted by the California Arbitration Act (Title 9(commencing with Section 1280) of Part 3 of the Code of CivilProcedure), contain a provision that modifies or limits otherwiseavailable forums or procedural rights, including the right to trialby jury, that are generally available to the individual under lawother than as provided in this division.

(3) Contain a provision that restricts the individual’s remediesunder 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 notperforming the agreement or for violating this division.

(B) Indemnifies any person for liability arising under theagreement or this division.

(C) Require the individual to be responsible for payment ofattorney’s fees of the provider.

(5) Contain a hold harmless clause excusing a provider’s dutiesunder this division.

(6) Contain assignment of, or order for payment of, wages or otherassignment of compensation for services.

(7) Contain an acceleration provision not authorized under thisdivision.

(8) Contain an unconscionable provision.

(d) All rights and obligations specified in subdivision (b) existeven if not provided in the agreement. A provision in an agreementthat violates subdivision (b) or (c) is void.
60020. If a provider communicates with an individual primarily ina language other than English, the provider shall furnish atranslation into the other language of the disclosures and documentsrequired by this division.

60021.

(a) A provider may charge one of the following, the termsof 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 thedebt enrolled in the debt settlement program which shall becollected at a rate of no more than 1 percent of the principal amountof debt per month, or if the program is less than 18 months inlength, in equal monthly payments for the term of the program. Thedebtor may voluntarily accelerate or prepay any unpaid installmentpayment of fees, and the provider may collect fees on a pro ratabasis once the provider has finalized settlements from any creditors.

(2) With respect to agreements in which fees are calculated as apercentage of the amount saved by an individual, a provider maycharge the following:

(A) A fee for consultation, obtaining a credit report, and settingup an account, in an amount not exceeding the lesser of four hundreddollars ($400) or 4 percent of the debt in the program at theinception 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 anymonth.

(C) A settlement fee that shall not exceed 30 percent of theexcess of the outstanding amount of each debt over the amountactually paid to the creditor, as calculated at the time ofsettlement. Settlement fees authorized under subparagraph (B) shallbecome billable only as debts are settled.

(D) A provider shall not impose or receive fees under bothsubparagraphs (A) and (B).

(b) A provider shall not impose, directly or indirectly, a fee orother charge on an individual or receive money from or on behalf ofan individual for debt settlement services except as permitted bythis section.
(c) A provider shall not impose charges or receive payment fordebt settlement services until the provider and the individual havesigned an agreement that complies with Sections 60016, 60019, and60020.
(d) If a payment to a provider by an individual under thisdivision is dishonored, a provider may impose a reasonable charge onthe individual, not to exceed fifteen dollars ($15). Any chargepursuant to this subdivision shall be limited to one per payment due.

60022.

(a) If a provider imposes a fee or other charge orreceives money or other payments not authorized by Section 60021, theagreement is void and the individual may recover as provided inSection 60032.
(b) If a provider is not licensed as required bythis division when an individual assents to an agreement, the agreement shall be void.

(c) If an agreementis void pursuant to subdivision (a) or (b), void and the provider shall not have a claim against the individual forbreach of contract or for restitution.

(d) Subdivision (a) shall not apply to an error in computation inthe amount of an authorized fee if the provider makes whateveradjustments in the account are necessary to correct the error within14 days of knowledge of the error.

60023.

If an individual who has entered into a fee agreementfails for 60 days to pay fees required by the agreement, a providermay terminate the agreement on the 60th day if a 30-day notice andopportunity to cure has been provided. The provider may not earnadditional fees or charge an individual a termination fee on or aftertermination.

60024. (a) A provider shall provide the accounting required bysubdivision (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 onerequest in any calendar month.

(3) Upon cancellation or termination of an agreement.

(b) A provider, in a record, shall provide the following to eachindividual for whom it has established a program if a creditor hasagreed to accept as payment in full an amount less than the principalamount 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 theprogram.

(3) The amount of the debt when the creditor agreed to thesettlement.

(4) The fee, and the calculation of the fee, if any, charged tothe individual based on a percentage of the settlement of debt orbased on a percentage of the savings realized by the individual.

(c) A provider shall maintain records for each individual for whomit provides debt settlement services for five years after the finalpayment made by the individual. A provider shall produce a copy ofthose records and provide them to the individual within a reasonabletime after a request for the records. The provider may use electronicor other means of storage of the records.

(d) A provider shall provide the individual with a copy of thewritten documentation from the creditor of a debt that has beensuccessfully settled, when available to the provider.

(e) A provider that receives an individual’s monthly billingstatements from the individual’s creditor shall provide theindividual with monthly statements of the individual’s outstandingdebt.

60025.

(a) A provider shall not, directly or indirectly, do anyof the following:

(1) Exercise or attempt to exercise a power of attorney notauthorized by the agreement.

(2) Acquire any power of attorney other than to authorize theprovider, as reasonably necessary, to communicate with creditors forthe purposes of negotiating settlement offers and to initiatetransfer of funds in accordance with this division.

(3) Exercise or attempt to exercise a power of attorney after anagreement has been cancelled or terminated.

(4) Initiate a transfer of funds to or from an individual’s bankor other financial institution, unless the transfer is one of thefollowing:

(A) A return of money to the individual.

(B) Before termination of an agreement, properly authorized by theagreement and this division, and in compliance with other rules andlaw governing direct debits to an individual’s account, for paymentof a fee.

(C) A transaction that has been expressly approved in writing, orrecorded statement, by the individual after the transaction has beenpresented to the individual for approval.

(5) Settle a debt or lead an individual to believe that a paymentto a creditor is in settlement of a debt to the creditor unless, atthe time of settlement, the individual or provider receives acertification or confirmation by the creditor that the payment is infull settlement, or is part of a payment plan that is in fullsettlement, of the debt.

(6) Make a representation that:

(A) The provider will furnish money to pay bills or preventattachments.

(B) Payment of a certain amount will guarantee satisfaction of acertain amount or range of indebtedness.

(C) Participation in a program will or may prevent litigation,garnishment, attachment, repossession, foreclosure, eviction, or lossof employment.

(7) Represent that it is a not-for-profit entity unless it isorganized and properly operating as a not-for-profit entity under thelaw of the state in which it was formed or that it is a tax-exemptentity unless it has received certification of tax-exempt status fromthe 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 anindividual within 20 days of receipt of the complaint and resolveeach complaint in a prompt and reasonable manner.

(10) Require an individual participating in a debt settlementprogram to utilize additional ancillary services.

(11) Receive financial incentives or additional compensation basedon the outcome of the debt settlement program in excess of the feecap.

(12) Pay referral fees to creditors or potential creditors whorefer new clients to the provider.

(b) If a provider furnishes debt settlement services to anindividual, the provider may not, directly or indirectly, do any ofthe following:

(1) Purchase a debt or obligation of the individual.

(2) Receive from or on behalf of the individual either of thefollowing:

(A) A promissory note or other negotiable instrument other than acheck.

(B) A postdated check.

(3) Lend money or provide credit to the individual, except as adeferral of a fee at no additional expense to the individual, oradvance a settlement payment for the individual at no additionalexpense to the individual.

(4) Obtain a mortgage or other security interest from any personin connection with the services provided to the individual.

(5) Force or otherwise require an individual to deposit his or herfunds into a specific financial institution. A provider must alsostate to the individual that the individual is free to choose anyFDIC-insured or NCUA-insured financial institution. However, thisshall not prevent a provider from furnishing the individual with alist of FDIC-insured or NCUA-insured financial institutions fromwhich the individual may choose or explaining the benefits of usingany particular financial institution.

(6) Except as permitted by federal and California law, disclosethe identity or identifying information of the individual or theidentity of the individual’s creditors, except to:

(A) The commissioner.

(B) A creditor of the individual, to the extent necessary tosecure 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 thefull benefit of a compromise of a debt arranged by the provider.

(8) Charge the individual for or provide credit or otherinsurance, coupons for goods or services, membership in a club,access to computers or the Internet, or any other matter not directlyrelated to debt settlement services or educational servicesconcerning personal finance.

(9) Furnish legal advice or perform legal services, unless theperson furnishing that advice to or performing those services for theindividual 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 secureddebt.

(13) Engage in the business of debt collection on behalf of anindividual’s creditor.

(14) Engage in the business of debt buying for an individualrepresented by the provider.

(c) This division does not authorize any person to engage in thepractice of law.
60026. (a) Each provider shall establish an internal formalcomplaint policy that creates a process for the provider to receive,review, and address or resolve formal complaints internally. Theavailability of this process shall be communicated in writing toindividuals enrolled in the provider’s program. This policy shallinclude a provision that individuals who file a formal complaintshall receive a response from the provider within 20 days from theprovider’s receipt of the complaint. The provider shall maintain afile for each formal complaint that documents the complaint, itshandling, and the resolution, if any, of the complaint and theprovider shall disclose the file to the commissioner upon request.

(b) Every provider shall have an employee to review internalcomplaints pursuant to the process set forth in this section.

60027.

No later than 30 days after a provider has been servedwith notice of a civil action for violation of this division by or onbehalf of an individual who resides in this state at either the timeof an agreement or the time the notice is served, the provider shallnotify the commissioner in a record that it has been sued.

60028.

(a) Any advertising concerning debt settlement services shall not contain anyfalse, misleading, or deceptive statement or omit to state any factnecessary to make the statements made, in light of circumstancesunder which they are made, not false, misleading, or deceptive.No advertising may contain claims about the success of debtsettlement services unless those claims are verified by anindependent third party.

(b) No advertising shall be used after its use has beendisapproved by the commissioner and the licensee is notified inwriting of the disapproval.

(c) The commissioner may require licensees to maintain a file ofall advertising copy for a period of 90 days from the date of itsuse. The file shall be available to the commissioner upon request.

(d) No licensee shall place an advertisement disseminatedprimarily in this state for debt settlement services unless thelicensee discloses in the printed text of the advertisement, or theoral text in the case of a radio or television advertisement, thatthe licensee is licensed by the department pursuant to this division.

60029.

(a) Each licensee shall keep and use books, accounts, andrecords in accordance with generally accepted accounting practicesand good business practice that will enable the commissioner todetermine if the licensee is complying with the provisions of thisdivision and with the rules and regulations promulgated by thecommissioner. Each licensee shall maintain any other records asrequired by the commissioner.

(b) The commissioner may act on his or her own initiative or inresponse to complaints and may receive complaints, take action toobtain voluntary compliance with this division, refer cases to theAttorney General, or any other law enforcement agency, and seek orprovide remedies as provided in this division.

(c) For the purpose of discovering violations of this division orsecuring information required by the commissioner in theadministration and enforcement of this division, the commissioner mayinvestigate and examine at any time, but not less than once everyfour years, in this state or elsewhere, by subpoena, report, orotherwise, the activities, books, accounts, and records of a personthat provides or offers to provide debt settlement services, or aperson to which a provider has delegated its obligations under anagreement or under this division, to determine compliance with thisdivision. For the purposes of examination, the commissioner and thecommissioner’s representatives shall have access to the offices andplaces of business, books, accounts, papers, records, and files ofall these persons. Information that identifies individuals who haveagreements with the provider shall not be disclosed to the public. Inconnection with the investigation, the commissioner may do either ofthe following:

(1) Charge the person or provider the reasonable expensesnecessarily incurred to conduct the examination. The commissioner maymaintain an action for the recovery of expenses in any court ofcompetent jurisdiction.

(2) Require or permit a person to file a statement under oath asto all the facts and circumstances of a matter to be investigated.

(d) For the purpose of any investigation or proceeding under thislaw, the commissioner or any officer designated by the commissionermay administer oaths and affirmations, subpoena witnesses, compeltheir attendance, takeevidence, and require the production of any books, papers,correspondence, memoranda, agreements, or other documents or recordsthat the commissioner deems relevant or material to the inquiry. Ifthe books, records, and supporting data are located out of this statethey shall be made available for examination by the commissioner inthis state within 10 days after a written demand.

(e) A provider shall maintain all records for five years followingthe last entry on a debt settlement transaction and shall enable thecommissioner to review the recordkeeping and reconcile eachindividual debt settlement transaction with documentation maintainedin the individual’s debt settlement file records. Failure to keep therecords for five years following the last entry shall authorize thecommissioner to assess and collect a penalty of up to ten thousanddollars ($10,000) for each year that the records are not kept.

(f) The commissioner may enter into cooperative arrangements withany other federal or state agency having authority over providers andmay exchange with any of those agencies information about aprovider, including information obtained during an examination of theprovider.

60029.5.

(a) On or before March 15 of each year, beginning March2012, each licensee shall file an annual report with the commissionerpursuant to procedures that the commissioner shall establish byrule. The licensee shall submit with the annual report a declarationthat conforms to Section 2015.5 of the Code of Civil Procedure, isexecuted by an official authorized by the licensee, and that statesthat the licensee complies with this section. The specificproprietary business information contained in the licensee’sannual report shall be kept confidential pursuant to Chapter 3.5(commencing with Section 6250) of Division 7 of Title 1 of theGovernment Code and any regulations adopted thereunder. For theprevious calendar year, the report shall include the following:

(1) The total amount of debt for all individuals for whom alicensee is providing debt settlement services, as of December 31.

(2) The total principal amount of debt of all individuals thatentered into agreements.

(3) The total number of individuals that entered into agreements.

(4) The total number of individuals with outstanding debtsettlement 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, asfollows:

(A) The dollar amount of the settled debt, as of the establishmentof the program.

(B) The dollar amount of the settled debt at the time ofsettlement, without debtor concessions.

(C) The dollar amount of the settled debt with debtor concessions.

(7) The total amount of fees collected from Californiaindividuals.

(8) Any other information required by rule.

(b) The commissioner shall prepare an annual consolidated reportof the reports submitted by licensees pursuant to subdivision (a) andshall 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 entryin any record, document, or tangible object with the intent toimpede, obstruct, or influence the administration or enforcement ofany provision of this division.

(b) It is unlawful for any person to knowingly make an untruestatement or omit to state a fact necessary in order to make thestatements made, in the light of the circumstances under which theywere made, not misleading to the commissioner during the course oflicensing, investigation, or examination, with the intent to impede,obstruct, or influence the administration or enforcement of anyprovision of this division.

60030.

(a) The commissioner may enforce this division and rulesadopted under this division by taking one or more of the followingactions:

(1) Ordering a provider or any person to desist and refrain fromengaging in debt settlement services or from further violating thisdivision.

(2) Ordering a provider or any person that has caused a violationto correct the violation, including making restitution of money orproperty 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. Eachcitation may contain an order to desist and refrain and may includeany other orders, such as an assessment of an administrative penaltypursuant to paragraph (4).

(4) Imposing an administrative penalty not exceeding two thousandfive hundred dollars ($2,500) for each violation on a provider or aperson that has caused a violation.

(5) Prosecuting a civil action to do either or both of thefollowing:

(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, oraids in the violation of a final order issued under paragraph (1) or(2) of subdivision (a) shall be liable for a civil penalty notexceeding ten thousand dollars ($10,000) for each violation, whichshall be assessed and recovered in a civil action brought in the nameof the people of the State of California by the commissioner in anycourt of competent jurisdiction.

(c) The commissioner may recover the reasonable costs of enforcingthis division under subdivisions (a) and (b), including attorney’sfees based on the hours reasonably expended and the hourly rates forattorneys of comparable experience in the community.

(d) In determining the amount of a penalty to impose undersubdivision (a) or (b), the commissioner shall consider theseriousness of the violation, the good faith of the violator, anyprevious violations by the violator, the deleterious effect of theviolation on the public, the net worth of the violator, and any otherfactor the commissioner considers relevant to the determination ofthe civil penalty.

(e) After the exhaustion of the review procedures provided for inthis section, the commissioner may apply to the appropriate superiorcourt for a judgment in the amount of the administrative penalty,cost, fee, or any forfeiture of charge or fee in connection with thetransaction and order compelling the cited person to comply with theorder of the commissioner. The application, which shall include acertified copy of the final order of the commissioner, shallconstitute a sufficient showing to warrant the issuance of thejudgment and order.

60030.5.

(a) Whenever the commissioner believes from evidencesatisfactory to the commissioner that any person has violated or isabout to violate a provision of this division, or a provision of anyorder, license, decision, demand, requirement, or any regulationadopted pursuant to this division, the commissioner may, in thecommissioner’s discretion, bring an action in the name of the peopleof the State of California against that person to enjoin that personfrom continuing that violation or doing any act in furtherance of theviolation or to enforce compliance with this law or any rule ororder thereunder. Upon a proper showing, a permanent or preliminaryinjunction, restraining order, or writ of mandate shall be grantedand a receiver, monitor, conservator, or other designated fiduciaryor officer of the court may be appointed for the defendant or thedefendant’s assets, or any other ancillary relief may be granted asappropriate. A receiver, monitor, conservator, or other designatedfiduciary or officer of the court appointed by the superior courtpursuant 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 powersand perform similar duties, including the filing of a petition forbankruptcy. No action at law or in equity may be maintained by anyparty against the commissioner, or a receiver, monitor, conservator,or other designated fiduciary or officer of the court, by reason oftheir exercising these powers or performing these duties pursuant tothe order of, or with the approval of, the superior court.

(b) If the commissioner determines that it is in the publicinterest, the commissioner may include in any action authorized bysubdivision (a) a claim for ancillary relief, including, but notlimited to, a claim for restitution, disgorgement, or damages onbehalf of the persons injured by the act or practice constituting thesubject matter of the action. The commissioner may include in anyaction authorized by subdivision (a) a claim for costs, includingreasonable attorney’s fees and expenses, and the court shall havejurisdiction to award that relief and any other additional relief.

60031.

(a) In this section, “insolvent” means any of thefollowing:

(1) The inability to pay debts in the ordinary course of businessother 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 bankruptcylaw (11 U.S.C. Sec. 101 et seq.).

(b) The commissioner may suspend or revoke a provider’s licenseif:

(1) A fact or condition exists that, if it had existed when thelicensee applied for licensure as a provider, would have been areason for denying the license.

(2) The provider or an officer, director, general partner,manager, or person owning or controlling, directly or indirectly, 10percent or more of the outstanding interests or equity securities ofthe provider has committed a material violation of this division or arule or order of the commissioner or any similar regulatory schemeof this state or a foreign jurisdiction, or has caused materialdamage to individuals who have agreements with the provider or to thepublic.

(3) The provider is insolvent.

(4) The provider or an employee or affiliate of the provider hasrefused to permit the commissioner to make an examination authorizedby this division, failed to comply with paragraph (2) of subdivision(b) of Section 60029 within 15 days after request, or made a materialmisrepresentation or omission in complying with paragraph (2) ofsubdivision (b) of Section 60029.

(5) The provider has not responded within a reasonable time and inan 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, 10percent or more of the outstanding interests or equity securities ofthe provider has been convicted of or pleaded nolo contendere to anycrime, or has been held liable in any civil action by final judgment,or any administrative judgment by any public agency, if that crimeor civil or administrative judgment involved any offense involvingdishonesty, fraud, or deceit, or any other offense reasonably relatedto the qualifications, functions, or duties of the licensedactivity.

(7) The provider has failed to comply with any demand, ruling, orrequirement of the commissioner made pursuant to and within theauthority of this division.

(c) If the commissioner suspends or revokes a provider’s license,the provider may appeal and request a hearing pursuant to theCalifornia Administrative Procedure Act (Chapter 4.5 (commencing withSection 11400) of Part 1 of Division 3 of Title 2 of the GovernmentCode).

(d) A provider shall not knowingly permit a person suspended orbarred under this section from engaging in any business activityrequiring a license under this division on the premises where theprovider 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 actionall money paid by or on behalf of the individual pursuant to theagreement, in addition to the recovery under subdivision (b).

(b) An individual with respect to whom a provider violates thisdivision may recover the following in a civil action from theprovider 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 thisdivision and Chapter 5 (commencing with Section 17200) of Part 2 ofDivision 7 of the Business and Professions Code, an individual maynot recover under both for the same act or practice.

60034.

(a) An action brought under this division shall becommenced within three years after the latest of one of thefollowing:

(1) The last transmission of money to a provider by or on behalfof the individual.

(2) The date on which the individual discovered or reasonablyshould have discovered the facts giving rise to the individual’sclaim.

(b) The period prescribed in paragraph (2) of subdivision (a)shall be tolled during any period during which the provider or, ifdifferent, the defendant has materially misrepresented informationrequired by this division to be disclosed to the individual, if theinformation so misrepresented is material to the establishment of theliability of the defendant under this division.

60035.

This division shall not apply to a debt settlementagreement between an individual and a provider for the performance ofdebt settlement services that was entered into prior to theoperative date of this division.

60037.

Any person, including a partner or officer of an entitythat is a licensee, who willfully violates any provision of thisdivision or who willfully violates any rule or order adopted pursuantto this division, shall, upon conviction, be punished by a fine ofnot more than ten thousand dollars ($10,000), or by imprisonment in acounty jail for not more than one year, or by both that fine andimprisonment.

60038.

A provider shall act in good faith in all matters underthis division.

60038.5.

After an examination, investigation, or hearing underthis division, if the commissioner deems it of public interest oradvantage, the commissioner may certify a record to the properprosecuting official of the city, county, or city and county in whichthe act complained of, examined, or investigated occurred. The dataand records shall be kept confidential pursuant to Chapter 3.5(commencing with Section 6250) of Division 7 of Title 1 of theGovernment Code and any regulations adopted thereunder.

60038.9.

The rights, remedies, and penalties established by thisdivision are cumulative to the rights, remedies, or penaltiesestablished under other laws. It is not necessary to exhaustadministrative remedies in order to pursue the civil remediesprovided for in this division. As applied to the penalties for actsin violation of this division, the remedies provided by this divisionare not exclusive and may be sought and employed in any combinationto 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 anyprovision of this division or its application is held invalid, thatinvalidity shall not affect other provisions or applications that canbe given effect without the invalid provision or application. SEC. 2. The Legislature finds and declares that Section 1 of thisact imposes a limitation on the public’s right of access to themeetings of public bodies or the writings of public officials andagencies within the meaning of Section 3 of Article I of theCalifornia Constitution. Pursuant to that constitutional provision,the Legislature makes the following findings to demonstrate theinterest protected by this limitation and the need for protectingthat interest:

In order to allow the Department of Corporations to fullyaccomplish their goals, it is imperative to protect the interests ofthose persons submitting information to the department to ensure thatany personal or sensitive business information that this actrequires those persons to submit is protected as confidentialinformation. SEC. 3. No reimbursement is required by this act pursuant toSection 6 of Article XIII B of the California Constitution becausethe only costs that may be incurred by a local agency or schooldistrict will be incurred because this act creates a new crime orinfraction, eliminates a crime or infraction, or changes the penaltyfor a crime or infraction, within the meaning of Section 17556 of theGovernment Code, or changes the definition of a crime within themeaning of Section 6 of Article XIII B of the CaliforniaConstitution.

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