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Red & Green State Update – June 2, 2011

Statutory and regulatory compliance has always created challenges for any industry as they have created uncertainty and complexity in organizations strategic plans. Debt relief providers constantly have to navigate compliance issues, especially for companies that operate in multiple states. As the TSR has now aged 6 months and states continue to move forward with pending legislation that is even more restrictive here is a look at the next 90 days.

Texas, Indiana, Missouri, Maryland & North Dakota

Whether a debt settlement company viewed the preceding states as Green the color dial is now changing to Red. The combined states have a soon to be effective date that will require Certification, Insurance & Bonding. The passage of new state license requirements creates a potential shift in the company’s policies and offering of services as their national strategy is affected. Preparation time is now limited for company’s not in the know as the new laws impact 14% of the US Population and to continue in these regions will require significant capital and considerable time.

State – Population

Texas – 24,782,302
Indiana – 6,423,113
Maryland – 5,699,478
Missouri – 5,987,580
North Dakota – 646,844
Total – 43,539,317

Compliance officers will have to scramble to ensure their organization is in compliance as the industry has seen in the past failure to comply is a very costly endeavor. Companies that comply will be challenged with poachers that choose continue to operate without out the proper credentials. As seen in 2009, Colorado Attorney General sued against 11 companies that did just that violate the law.

Whether it is an indirect violation by not being informed or having access to the right information the free pass is gone and willful ignorance is a failed defense.

Tip of the Week

A recommendation for a company that would offer services in the State of Washington they would need to do the following with the department of licensing:

  1. As an out of State Corporation (foreign entity) file a Certificate of Authority with the Sec of State. This would qualify the corporation to be recognized by the state of WA and the Sec of State would issue them a UBI #. Once the UBI # was obtained they would then go to step 2 http://www.sos.wa.gov/corps/registration_forms.aspx#FORPROF
  2. Fill out a master application to open a business in the state of WA. Once they hear back from the Sec of State go to step 3. http://www.dol.wa.gov/forms/700028.html
  3. Follow Chapter 18.28 RCW**
    **Chapter 18.28 RCW is what is called a “Private Right of Action”, meaning that no agency oversees the law so if a citizens feels the chapter has been violated they hire a private attorney or the AG might take action if sever.

Scott johnson is with USDRinc which offers a comprehensive software application to help organizations meet statutory and regulatory compliance. The application is designed to be an adjunct to a DS firm’s infrastructure. The software tracks measures and provides timely information regarding compliance challenges to help companies enhance their corporate governess. Visit USDRinc.com for more information and to talk to Scott.

Red & Green State Update - June 2, 2011 by

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  • Steve Rhode

    Thanks for the pat on the back anyway.

  • Scott Johnson

    For those seeking additional information on enforcement type actions the TSR has an extensive list – it starts on page 190 and ends on page 211

    http://www.ftc.gov/os/2010/07/

  • Scott Johnson

    Attorney General announces lawsuit against Orlando law firm engaged in unlawful debt management practices

    http://www.coloradoattorneygen

  • Scott Johnson

    I should have used enforcement action

    In addition, it reached settlements with 11 companies that violated the law. The most common violations were failing to be registered, charging illegal fees and failing to allow consumers to cancel contracts. As a result of these investigations and settlements, debt management companies have refunded $923,370 in program fees to 912 Colorado consumers — an average of over $1,000 per consumer. In addition, some settlements required the companies to pay investigative costs and penalties. The Attorney General’s Office continues to investigate unregistered companies.

    http://www.coloradoattorneygen

  • Regulator

    Oops.  Sorry Scott.  Just seen that you wrote the article – thought it was by Steve Rhode!

  • Regulator

    Quick point Steve.  The Colo AG didn’t sue those 11 companies.  They were just the first of many that entered into a Stipulation with the State of Colorado.  The Colo AG has shown he will sue (Johnson Law Group Florida), but most actions don’t quite go as far as that.

    Love your site though – it’s a wonderful resource for state regulators.

  • Regulator

    Quick point Steve.  The Colo AG didn’t sue those 11 companies.  They were just the first of many that entered into a Stipulation with the State of Colorado.  The Colo AG has shown he will sue (Johnson Law Group Florida), but most actions don’t quite go as far as that.

    Love your site though – it’s a wonderful resource for state regulators.

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