CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Assembly Bill No. 2524Introduced by Assembly Member WicksFebruary 19, 2020 An act to amend Sections 12002.1, 12100, 12314, 12316, and 12319 of, to add Sections 12330.1 and 12405 to, and to repeal Sections 12200.1 and 12200.3 of, the Financial Code, relating to financial institutions. LEGISLATIVE COUNSEL'S DIGESTAB 2524, as introduced, Wicks. Proraters.Existing law, the Check Sellers, Bill Payers and Proraters Law, prohibits a person from engaging in the business of receiving money or evidences thereof for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor without first obtaining a license from the Commissioner of Business Oversight. The law authorizes the commissioner, upon a reasonable opportunity to be heard, to suspend or revoke a license issued under the law for specified reasons, including that the licensee has violated those provisions.Existing law provides certain exemptions, including the services of a person licensed to practice law in this state, when the person renders services in the course of the persons practice as an attorney-at-law, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter.This bill would, instead, exempt from these provisions, an attorney or a law firm when services rendered by the attorney or law firm do not result in charges or costs regulated by the law, the fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller, and the attorney or law firm does not conduct a specified amount of debt settlement business.Existing law prohibits the commissioner from issuing a license to a corporation that is not organized under the laws of this state for the purpose of conducting those activities. The law also prohibits a licensee from conducting those activities outside of the state.This bill would repeal those prohibitions.Existing law prohibits the total charges received by a prorater, or any other person for the proraters services, from exceeding in the aggregate 12% for the first $3,000, 11% for the next $2,000, and 10% for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. The law also authorizes other charges, including an origination fee of a sum not to exceed $50, as specified.This bill would, instead, prohibit the total charges described above from exceeding 5% of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount and would repeal the authorizations for other charges described above. The bill would also prohibit the total monthly payment by a debtor into a debt settlement trust account from exceeding 10% of a debtors monthly net income, as specified.Existing law voids a contract with the debtor if a prorater contracts for, receives, or makes any charge in excess of the maximum permitted by the law, except as the result of an accidental and bona fide error, and requires the prorater to return to the debtor all charges received from the debtor.This bill would, similarly, void the contract if a debtor is sued by a creditor for a debt that is included in the contract with the prorator.Existing law requires a contract between a prorater and a debtor to contain specified information, including every debt to be prorated with the creditors name and disclose the total of all those debts.The bill would require that a contract between a debtor and a prorater comply with other requirements and contain additional disclosures, including that despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated. The bill would authorize a debtor to bring a civil action, as specified, for a violation of those contractual disclosure and other requirements. The bill would also require a prorater to make a specified annual report to the department and would require the commissioner to suspend the license of a prorater during any period of noncompliance with that reporting requirement.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 12002.1 of the Financial Code is amended to read:12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.SEC. 2. Section 12100 of the Financial Code is amended to read:12100. This division does not apply to any of the following:(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(c) Attorneys and law firms that meet all of the following criteria:(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.(3) Either of the following is true:(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.(l) Any transaction of the type described in Section 1854.1.SEC. 3. Section 12200.1 of the Financial Code is repealed.12200.1.A license to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor (except a business agent or special prorater), or to accept, without direct compensation, money for the purpose of forwarding it to others in payment of utility bills, shall only be issued to a corporation organized under the laws of this State for that purpose.SEC. 4. Section 12200.3 of the Financial Code is repealed.12200.3.No licensee under this division shall engage in the business of selling checks, drafts, or money orders, or other commercial paper serving the same purpose or receiving money for the purpose of paying bills, invoices, or accounts of an obligor (except as business agent, or special or general prorater) or accepting money for the purpose of forwarding it to others in payment of bills at any location outside of the State of California nor shall any such licensee have agencies engaging in any such business at any location outside of the State of California.SEC. 5. Section 12314 of the Financial Code is amended to read:12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.(c)A fee not to exceed one dollar ($1) on other recurring obligations.When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.(2) For purposes of this subdivision, monthly net income shall not include either of the following:(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.SEC. 6. Section 12316 of the Financial Code is amended to read:12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.SEC. 7. Section 12319 of the Financial Code is amended to read:12319. Every contract between a prorater and a debtor shall: do all of the following:(a) Begin with a cautionary disclosure that contains all of the following information:(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.(2) The number of months estimated to settle all debts.(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.(4) The debtor is still required to pay all bills unless the creditor states otherwise.(5) If the debtor stops paying any creditor, any of the following may occur:(A) Creditors may still try to collect.(B) Creditors may sue.(C) The debtors wages may be garnished or bank accounts levied.(D) The debtors credit score may be negatively impacted.(a)(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.(b)(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.(c)(d) Disclose in precise terms the rate and amount of the proraters charge; charge.(d)(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.(e)(f) Disclose the name and address of the prorater and of the debtor; debtor.(f)(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.(i) Comply with all applicable requirements of Section 1632 of the Civil Code.(j) Disclose the sources of income that are exempt from collection under California law.SEC. 8. Section 12330.1 is added to the Financial Code, to read:12330.1. (a) A prorater shall annually report to the department all of the following information:(1) The total number of enrolled consumers.(2) The average and median number of enrolled debts per consumer.(3) The average and median principal amount of debt at time of enrollment.(4) The total number of debts enrolled.(5) The percentage of savings between settlement amount and initial enrolled debt amount.(6) The average length of a debt settlement contract.(7) The average and median length of time it takes for an enrolled debt to be settled.(8) The percentage of debtors who successfully complete the contract.(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.(11) The annual net income of consumers who have enrolled and sources of income.(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.(13) The average and median payment amount by debtor to the settlement account.(14) The total number of debts enrolled that are transferred in ownership during the enrollment.(15) What percentage of debt enrolled is original creditor versus debt buyer.(16) The total amount of fees paid to debt settlement company.(17) The total number of creditors who filed a lawsuit during the terms of the contract.(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:(1) The average and median length of time it takes for an enrolled account to settle.(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.SEC. 9. Section 12405 is added to the Financial Code, immediately following Section 12404, to read:12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.(2) Compensatory damages from any injuries caused by the violation.(3) Reasonable attorneys fees and costs.(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.
CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Assembly Bill No. 2524Introduced by Assembly Member WicksFebruary 19, 2020 An act to amend Sections 12002.1, 12100, 12314, 12316, and 12319 of, to add Sections 12330.1 and 12405 to, and to repeal Sections 12200.1 and 12200.3 of, the Financial Code, relating to financial institutions. LEGISLATIVE COUNSEL'S DIGESTAB 2524, as introduced, Wicks. Proraters.Existing law, the Check Sellers, Bill Payers and Proraters Law, prohibits a person from engaging in the business of receiving money or evidences thereof for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor without first obtaining a license from the Commissioner of Business Oversight. The law authorizes the commissioner, upon a reasonable opportunity to be heard, to suspend or revoke a license issued under the law for specified reasons, including that the licensee has violated those provisions.Existing law provides certain exemptions, including the services of a person licensed to practice law in this state, when the person renders services in the course of the persons practice as an attorney-at-law, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter.This bill would, instead, exempt from these provisions, an attorney or a law firm when services rendered by the attorney or law firm do not result in charges or costs regulated by the law, the fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller, and the attorney or law firm does not conduct a specified amount of debt settlement business.Existing law prohibits the commissioner from issuing a license to a corporation that is not organized under the laws of this state for the purpose of conducting those activities. The law also prohibits a licensee from conducting those activities outside of the state.This bill would repeal those prohibitions.Existing law prohibits the total charges received by a prorater, or any other person for the proraters services, from exceeding in the aggregate 12% for the first $3,000, 11% for the next $2,000, and 10% for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. The law also authorizes other charges, including an origination fee of a sum not to exceed $50, as specified.This bill would, instead, prohibit the total charges described above from exceeding 5% of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount and would repeal the authorizations for other charges described above. The bill would also prohibit the total monthly payment by a debtor into a debt settlement trust account from exceeding 10% of a debtors monthly net income, as specified.Existing law voids a contract with the debtor if a prorater contracts for, receives, or makes any charge in excess of the maximum permitted by the law, except as the result of an accidental and bona fide error, and requires the prorater to return to the debtor all charges received from the debtor.This bill would, similarly, void the contract if a debtor is sued by a creditor for a debt that is included in the contract with the prorator.Existing law requires a contract between a prorater and a debtor to contain specified information, including every debt to be prorated with the creditors name and disclose the total of all those debts.The bill would require that a contract between a debtor and a prorater comply with other requirements and contain additional disclosures, including that despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated. The bill would authorize a debtor to bring a civil action, as specified, for a violation of those contractual disclosure and other requirements. The bill would also require a prorater to make a specified annual report to the department and would require the commissioner to suspend the license of a prorater during any period of noncompliance with that reporting requirement.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION
Assembly Bill
No. 2524
Introduced by Assembly Member WicksFebruary 19, 2020
Introduced by Assembly Member Wicks
February 19, 2020
An act to amend Sections 12002.1, 12100, 12314, 12316, and 12319 of, to add Sections 12330.1 and 12405 to, and to repeal Sections 12200.1 and 12200.3 of, the Financial Code, relating to financial institutions.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 2524, as introduced, Wicks. Proraters.
Existing law, the Check Sellers, Bill Payers and Proraters Law, prohibits a person from engaging in the business of receiving money or evidences thereof for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor without first obtaining a license from the Commissioner of Business Oversight. The law authorizes the commissioner, upon a reasonable opportunity to be heard, to suspend or revoke a license issued under the law for specified reasons, including that the licensee has violated those provisions.Existing law provides certain exemptions, including the services of a person licensed to practice law in this state, when the person renders services in the course of the persons practice as an attorney-at-law, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter.This bill would, instead, exempt from these provisions, an attorney or a law firm when services rendered by the attorney or law firm do not result in charges or costs regulated by the law, the fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller, and the attorney or law firm does not conduct a specified amount of debt settlement business.Existing law prohibits the commissioner from issuing a license to a corporation that is not organized under the laws of this state for the purpose of conducting those activities. The law also prohibits a licensee from conducting those activities outside of the state.This bill would repeal those prohibitions.Existing law prohibits the total charges received by a prorater, or any other person for the proraters services, from exceeding in the aggregate 12% for the first $3,000, 11% for the next $2,000, and 10% for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. The law also authorizes other charges, including an origination fee of a sum not to exceed $50, as specified.This bill would, instead, prohibit the total charges described above from exceeding 5% of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount and would repeal the authorizations for other charges described above. The bill would also prohibit the total monthly payment by a debtor into a debt settlement trust account from exceeding 10% of a debtors monthly net income, as specified.Existing law voids a contract with the debtor if a prorater contracts for, receives, or makes any charge in excess of the maximum permitted by the law, except as the result of an accidental and bona fide error, and requires the prorater to return to the debtor all charges received from the debtor.This bill would, similarly, void the contract if a debtor is sued by a creditor for a debt that is included in the contract with the prorator.Existing law requires a contract between a prorater and a debtor to contain specified information, including every debt to be prorated with the creditors name and disclose the total of all those debts.The bill would require that a contract between a debtor and a prorater comply with other requirements and contain additional disclosures, including that despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated. The bill would authorize a debtor to bring a civil action, as specified, for a violation of those contractual disclosure and other requirements. The bill would also require a prorater to make a specified annual report to the department and would require the commissioner to suspend the license of a prorater during any period of noncompliance with that reporting requirement.
Existing law, the Check Sellers, Bill Payers and Proraters Law, prohibits a person from engaging in the business of receiving money or evidences thereof for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor without first obtaining a license from the Commissioner of Business Oversight. The law authorizes the commissioner, upon a reasonable opportunity to be heard, to suspend or revoke a license issued under the law for specified reasons, including that the licensee has violated those provisions.
Existing law provides certain exemptions, including the services of a person licensed to practice law in this state, when the person renders services in the course of the persons practice as an attorney-at-law, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter.
This bill would, instead, exempt from these provisions, an attorney or a law firm when services rendered by the attorney or law firm do not result in charges or costs regulated by the law, the fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller, and the attorney or law firm does not conduct a specified amount of debt settlement business.
Existing law prohibits the commissioner from issuing a license to a corporation that is not organized under the laws of this state for the purpose of conducting those activities. The law also prohibits a licensee from conducting those activities outside of the state.
This bill would repeal those prohibitions.
Existing law prohibits the total charges received by a prorater, or any other person for the proraters services, from exceeding in the aggregate 12% for the first $3,000, 11% for the next $2,000, and 10% for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. The law also authorizes other charges, including an origination fee of a sum not to exceed $50, as specified.
This bill would, instead, prohibit the total charges described above from exceeding 5% of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount and would repeal the authorizations for other charges described above. The bill would also prohibit the total monthly payment by a debtor into a debt settlement trust account from exceeding 10% of a debtors monthly net income, as specified.
Existing law voids a contract with the debtor if a prorater contracts for, receives, or makes any charge in excess of the maximum permitted by the law, except as the result of an accidental and bona fide error, and requires the prorater to return to the debtor all charges received from the debtor.
This bill would, similarly, void the contract if a debtor is sued by a creditor for a debt that is included in the contract with the prorator.
Existing law requires a contract between a prorater and a debtor to contain specified information, including every debt to be prorated with the creditors name and disclose the total of all those debts.
The bill would require that a contract between a debtor and a prorater comply with other requirements and contain additional disclosures, including that despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated. The bill would authorize a debtor to bring a civil action, as specified, for a violation of those contractual disclosure and other requirements. The bill would also require a prorater to make a specified annual report to the department and would require the commissioner to suspend the license of a prorater during any period of noncompliance with that reporting requirement.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 12002.1 of the Financial Code is amended to read:12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.SEC. 2. Section 12100 of the Financial Code is amended to read:12100. This division does not apply to any of the following:(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(c) Attorneys and law firms that meet all of the following criteria:(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.(3) Either of the following is true:(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.(l) Any transaction of the type described in Section 1854.1.SEC. 3. Section 12200.1 of the Financial Code is repealed.12200.1.A license to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor (except a business agent or special prorater), or to accept, without direct compensation, money for the purpose of forwarding it to others in payment of utility bills, shall only be issued to a corporation organized under the laws of this State for that purpose.SEC. 4. Section 12200.3 of the Financial Code is repealed.12200.3.No licensee under this division shall engage in the business of selling checks, drafts, or money orders, or other commercial paper serving the same purpose or receiving money for the purpose of paying bills, invoices, or accounts of an obligor (except as business agent, or special or general prorater) or accepting money for the purpose of forwarding it to others in payment of bills at any location outside of the State of California nor shall any such licensee have agencies engaging in any such business at any location outside of the State of California.SEC. 5. Section 12314 of the Financial Code is amended to read:12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.(c)A fee not to exceed one dollar ($1) on other recurring obligations.When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.(2) For purposes of this subdivision, monthly net income shall not include either of the following:(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.SEC. 6. Section 12316 of the Financial Code is amended to read:12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.SEC. 7. Section 12319 of the Financial Code is amended to read:12319. Every contract between a prorater and a debtor shall: do all of the following:(a) Begin with a cautionary disclosure that contains all of the following information:(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.(2) The number of months estimated to settle all debts.(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.(4) The debtor is still required to pay all bills unless the creditor states otherwise.(5) If the debtor stops paying any creditor, any of the following may occur:(A) Creditors may still try to collect.(B) Creditors may sue.(C) The debtors wages may be garnished or bank accounts levied.(D) The debtors credit score may be negatively impacted.(a)(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.(b)(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.(c)(d) Disclose in precise terms the rate and amount of the proraters charge; charge.(d)(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.(e)(f) Disclose the name and address of the prorater and of the debtor; debtor.(f)(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.(i) Comply with all applicable requirements of Section 1632 of the Civil Code.(j) Disclose the sources of income that are exempt from collection under California law.SEC. 8. Section 12330.1 is added to the Financial Code, to read:12330.1. (a) A prorater shall annually report to the department all of the following information:(1) The total number of enrolled consumers.(2) The average and median number of enrolled debts per consumer.(3) The average and median principal amount of debt at time of enrollment.(4) The total number of debts enrolled.(5) The percentage of savings between settlement amount and initial enrolled debt amount.(6) The average length of a debt settlement contract.(7) The average and median length of time it takes for an enrolled debt to be settled.(8) The percentage of debtors who successfully complete the contract.(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.(11) The annual net income of consumers who have enrolled and sources of income.(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.(13) The average and median payment amount by debtor to the settlement account.(14) The total number of debts enrolled that are transferred in ownership during the enrollment.(15) What percentage of debt enrolled is original creditor versus debt buyer.(16) The total amount of fees paid to debt settlement company.(17) The total number of creditors who filed a lawsuit during the terms of the contract.(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:(1) The average and median length of time it takes for an enrolled account to settle.(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.SEC. 9. Section 12405 is added to the Financial Code, immediately following Section 12404, to read:12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.(2) Compensatory damages from any injuries caused by the violation.(3) Reasonable attorneys fees and costs.(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 12002.1 of the Financial Code is amended to read:12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.
SECTION 1. Section 12002.1 of the Financial Code is amended to read:
### SECTION 1.
12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.
12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.
12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.
12002.1. A prorater is a person who, for compensation, engages in whole or in part in the business of receiving or soliciting money or evidences thereof thereof, or processing payment for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.
SEC. 2. Section 12100 of the Financial Code is amended to read:12100. This division does not apply to any of the following:(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(c) Attorneys and law firms that meet all of the following criteria:(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.(3) Either of the following is true:(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.(l) Any transaction of the type described in Section 1854.1.
SEC. 2. Section 12100 of the Financial Code is amended to read:
### SEC. 2.
12100. This division does not apply to any of the following:(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(c) Attorneys and law firms that meet all of the following criteria:(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.(3) Either of the following is true:(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.(l) Any transaction of the type described in Section 1854.1.
12100. This division does not apply to any of the following:(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(c) Attorneys and law firms that meet all of the following criteria:(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.(3) Either of the following is true:(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.(l) Any transaction of the type described in Section 1854.1.
12100. This division does not apply to any of the following:(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(c) Attorneys and law firms that meet all of the following criteria:(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.(3) Either of the following is true:(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.(l) Any transaction of the type described in Section 1854.1.
12100. This division does not apply to any of the following:
(a) Any person, or his or her the persons authorized agent, doing business under license and authority of the Commissioner of Financial Institutions Business Oversight under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).
(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any travelers check, as defined in Section 1852, which is issued by the person.
(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.
(c)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, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.
(c) Attorneys and law firms that meet all of the following criteria:
(1) The services rendered by the attorney or law firm do not result in charges or costs regulated by this division.
(2) The fees and disbursements are not charges or costs shared, directly or indirectly, with the prorater or check seller.
(3) Either of the following is true:
(A) In the prior year, the attorney or law firm engaged less than ____ clients in debt settlement services.
(B) Fifty percent or less of the total number of client engagement of the attorney or law firm involves debt settlement services.
(d) Any transaction in which money or other property is paid to a joint control agent for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.
(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.
(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.
(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she the person is licensed under that part.
(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditors committee.
(i) 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 the persons practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.
(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.
(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency travelers check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency travelers check.
(l) Any transaction of the type described in Section 1854.1.
SEC. 3. Section 12200.1 of the Financial Code is repealed.12200.1.A license to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor (except a business agent or special prorater), or to accept, without direct compensation, money for the purpose of forwarding it to others in payment of utility bills, shall only be issued to a corporation organized under the laws of this State for that purpose.
SEC. 3. Section 12200.1 of the Financial Code is repealed.
### SEC. 3.
12200.1.A license to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor (except a business agent or special prorater), or to accept, without direct compensation, money for the purpose of forwarding it to others in payment of utility bills, shall only be issued to a corporation organized under the laws of this State for that purpose.
A license to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor (except a business agent or special prorater), or to accept, without direct compensation, money for the purpose of forwarding it to others in payment of utility bills, shall only be issued to a corporation organized under the laws of this State for that purpose.
SEC. 4. Section 12200.3 of the Financial Code is repealed.12200.3.No licensee under this division shall engage in the business of selling checks, drafts, or money orders, or other commercial paper serving the same purpose or receiving money for the purpose of paying bills, invoices, or accounts of an obligor (except as business agent, or special or general prorater) or accepting money for the purpose of forwarding it to others in payment of bills at any location outside of the State of California nor shall any such licensee have agencies engaging in any such business at any location outside of the State of California.
SEC. 4. Section 12200.3 of the Financial Code is repealed.
### SEC. 4.
12200.3.No licensee under this division shall engage in the business of selling checks, drafts, or money orders, or other commercial paper serving the same purpose or receiving money for the purpose of paying bills, invoices, or accounts of an obligor (except as business agent, or special or general prorater) or accepting money for the purpose of forwarding it to others in payment of bills at any location outside of the State of California nor shall any such licensee have agencies engaging in any such business at any location outside of the State of California.
No licensee under this division shall engage in the business of selling checks, drafts, or money orders, or other commercial paper serving the same purpose or receiving money for the purpose of paying bills, invoices, or accounts of an obligor (except as business agent, or special or general prorater) or accepting money for the purpose of forwarding it to others in payment of bills at any location outside of the State of California nor shall any such licensee have agencies engaging in any such business at any location outside of the State of California.
SEC. 5. Section 12314 of the Financial Code is amended to read:12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.(c)A fee not to exceed one dollar ($1) on other recurring obligations.When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.(2) For purposes of this subdivision, monthly net income shall not include either of the following:(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.
SEC. 5. Section 12314 of the Financial Code is amended to read:
### SEC. 5.
12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.(c)A fee not to exceed one dollar ($1) on other recurring obligations.When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.(2) For purposes of this subdivision, monthly net income shall not include either of the following:(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.
12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.(c)A fee not to exceed one dollar ($1) on other recurring obligations.When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.(2) For purposes of this subdivision, monthly net income shall not include either of the following:(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.
12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.(c)A fee not to exceed one dollar ($1) on other recurring obligations.When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.(2) For purposes of this subdivision, monthly net income shall not include either of the following:(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.
12314. (a) The total charges received by a prorater, or any other person for the proraters services, may shall not exceed in the aggregate twelve percent (12%) for the first three thousand dollars ($3,000), eleven percent (11%) for the next two thousand dollars ($2,000), and ten percent (10%) for any of the remaining payments distributed by a prorater to the creditors of a debtor, except for payments made on recurrent obligations. Recurring obligations shall be defined for the purpose of this section as follows: current rent payments, current utility payments, current telephone bills, current alimony payments, current monthly insurance premium payments, and payments made on obligations which are secured by a first mortgage or first deed of trust on real property. five percent of the savings from a completed settlement, calculated as the difference between the amount of debt at enrollment and the settlement amount.
(a)Notwithstanding the provisions of Section 12315, upon compliance with the provisions of Sections 12315.1, and 12320, an origination fee of a sum not to exceed fifty dollars ($50) may be charged;
(b)A fee not to exceed four dollars ($4) per disbursement on recurring obligations, consisting of current rent payments or obligations which are secured by a first mortgage or first trust deed on real property, may be charged.
(c)A fee not to exceed one dollar ($1) on other recurring obligations.
When a debtor has not canceled or defaulted on the performance of his contract with the prorater within 12 months after execution of the prorate contract, the prorater shall refund any origination fee charged to the debtor. At least once each month the prorater shall pay not less than 70 percent of all funds received from the debtor to the creditors of the debtor.
(b) (1) The total monthly payment by a debtor into a debt settlement trust account shall not exceed 10 percent of the debtors monthly net income.
(2) For purposes of this subdivision, monthly net income shall not include either of the following:
(A) A benefit received pursuant to Division 9 (commencing with Section 10000) of the Welfare and Institutions Code.
(B) Any income exempt from the enforcement of judgments, as described in the Judicial Council of California Form EJ-155 Exemptions from the Enforcement of Judgments.
SEC. 6. Section 12316 of the Financial Code is amended to read:12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.
SEC. 6. Section 12316 of the Financial Code is amended to read:
### SEC. 6.
12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.
12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.
12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.
12316. (a) If a prorater contracts for, receives receives, or makes any charge in excess of the maximum permitted by this division, except as the result of an accidental and bona fide error, the proraters contract with the debtor shall be void void, and the prorater shall return to the debtor all charges received from the debtor.
(b) If a debtor is sued by a creditor for a debt that is included in the contract with the prorator, the proraters contract with the debtor shall be void, and the prorater shall return to the debtor all charges received from the debtor for all debts placed with the prorater for settlement.
SEC. 7. Section 12319 of the Financial Code is amended to read:12319. Every contract between a prorater and a debtor shall: do all of the following:(a) Begin with a cautionary disclosure that contains all of the following information:(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.(2) The number of months estimated to settle all debts.(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.(4) The debtor is still required to pay all bills unless the creditor states otherwise.(5) If the debtor stops paying any creditor, any of the following may occur:(A) Creditors may still try to collect.(B) Creditors may sue.(C) The debtors wages may be garnished or bank accounts levied.(D) The debtors credit score may be negatively impacted.(a)(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.(b)(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.(c)(d) Disclose in precise terms the rate and amount of the proraters charge; charge.(d)(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.(e)(f) Disclose the name and address of the prorater and of the debtor; debtor.(f)(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.(i) Comply with all applicable requirements of Section 1632 of the Civil Code.(j) Disclose the sources of income that are exempt from collection under California law.
SEC. 7. Section 12319 of the Financial Code is amended to read:
### SEC. 7.
12319. Every contract between a prorater and a debtor shall: do all of the following:(a) Begin with a cautionary disclosure that contains all of the following information:(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.(2) The number of months estimated to settle all debts.(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.(4) The debtor is still required to pay all bills unless the creditor states otherwise.(5) If the debtor stops paying any creditor, any of the following may occur:(A) Creditors may still try to collect.(B) Creditors may sue.(C) The debtors wages may be garnished or bank accounts levied.(D) The debtors credit score may be negatively impacted.(a)(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.(b)(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.(c)(d) Disclose in precise terms the rate and amount of the proraters charge; charge.(d)(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.(e)(f) Disclose the name and address of the prorater and of the debtor; debtor.(f)(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.(i) Comply with all applicable requirements of Section 1632 of the Civil Code.(j) Disclose the sources of income that are exempt from collection under California law.
12319. Every contract between a prorater and a debtor shall: do all of the following:(a) Begin with a cautionary disclosure that contains all of the following information:(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.(2) The number of months estimated to settle all debts.(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.(4) The debtor is still required to pay all bills unless the creditor states otherwise.(5) If the debtor stops paying any creditor, any of the following may occur:(A) Creditors may still try to collect.(B) Creditors may sue.(C) The debtors wages may be garnished or bank accounts levied.(D) The debtors credit score may be negatively impacted.(a)(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.(b)(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.(c)(d) Disclose in precise terms the rate and amount of the proraters charge; charge.(d)(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.(e)(f) Disclose the name and address of the prorater and of the debtor; debtor.(f)(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.(i) Comply with all applicable requirements of Section 1632 of the Civil Code.(j) Disclose the sources of income that are exempt from collection under California law.
12319. Every contract between a prorater and a debtor shall: do all of the following:(a) Begin with a cautionary disclosure that contains all of the following information:(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.(2) The number of months estimated to settle all debts.(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.(4) The debtor is still required to pay all bills unless the creditor states otherwise.(5) If the debtor stops paying any creditor, any of the following may occur:(A) Creditors may still try to collect.(B) Creditors may sue.(C) The debtors wages may be garnished or bank accounts levied.(D) The debtors credit score may be negatively impacted.(a)(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.(b)(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.(c)(d) Disclose in precise terms the rate and amount of the proraters charge; charge.(d)(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.(e)(f) Disclose the name and address of the prorater and of the debtor; debtor.(f)(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.(i) Comply with all applicable requirements of Section 1632 of the Civil Code.(j) Disclose the sources of income that are exempt from collection under California law.
12319. Every contract between a prorater and a debtor shall: do all of the following:
(a) Begin with a cautionary disclosure that contains all of the following information:
(1) Despite the best efforts of the prorater, there is no guarantee that any particular debt or all debt will be reduced or eliminated.
(2) The number of months estimated to settle all debts.
(3) The conditions that the debtor must satisfy before the prorater will make a settlement offer to a creditor or take other action with respect to the creditor.
(4) The debtor is still required to pay all bills unless the creditor states otherwise.
(5) If the debtor stops paying any creditor, any of the following may occur:
(A) Creditors may still try to collect.
(B) Creditors may sue.
(C) The debtors wages may be garnished or bank accounts levied.
(D) The debtors credit score may be negatively impacted.
(a)
(b) List every debt to be prorated with the creditors name and disclose the total of all such debts; those debts.
(b)
(c) Provide payments reasonably within the ability of the debtor to pay in precise terms; terms.
(c)
(d) Disclose in precise terms the rate and amount of the proraters charge; charge.
(d)
(e) Disclose the approximate number and amount of installments required to pay the debts in full; full.
(e)
(f) Disclose the name and address of the prorater and of the debtor; debtor.
(f)
(g) Contain such other provision other provisions or disclosures as the commissioner shall determine is are necessary for the protection of the debtor and the proper conduct of business by a prorater.
(h) Disclose the telephone number at which the debtor may speak with a representative of the prorater during normal business hours.
(i) Comply with all applicable requirements of Section 1632 of the Civil Code.
(j) Disclose the sources of income that are exempt from collection under California law.
SEC. 8. Section 12330.1 is added to the Financial Code, to read:12330.1. (a) A prorater shall annually report to the department all of the following information:(1) The total number of enrolled consumers.(2) The average and median number of enrolled debts per consumer.(3) The average and median principal amount of debt at time of enrollment.(4) The total number of debts enrolled.(5) The percentage of savings between settlement amount and initial enrolled debt amount.(6) The average length of a debt settlement contract.(7) The average and median length of time it takes for an enrolled debt to be settled.(8) The percentage of debtors who successfully complete the contract.(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.(11) The annual net income of consumers who have enrolled and sources of income.(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.(13) The average and median payment amount by debtor to the settlement account.(14) The total number of debts enrolled that are transferred in ownership during the enrollment.(15) What percentage of debt enrolled is original creditor versus debt buyer.(16) The total amount of fees paid to debt settlement company.(17) The total number of creditors who filed a lawsuit during the terms of the contract.(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:(1) The average and median length of time it takes for an enrolled account to settle.(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.
SEC. 8. Section 12330.1 is added to the Financial Code, to read:
### SEC. 8.
12330.1. (a) A prorater shall annually report to the department all of the following information:(1) The total number of enrolled consumers.(2) The average and median number of enrolled debts per consumer.(3) The average and median principal amount of debt at time of enrollment.(4) The total number of debts enrolled.(5) The percentage of savings between settlement amount and initial enrolled debt amount.(6) The average length of a debt settlement contract.(7) The average and median length of time it takes for an enrolled debt to be settled.(8) The percentage of debtors who successfully complete the contract.(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.(11) The annual net income of consumers who have enrolled and sources of income.(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.(13) The average and median payment amount by debtor to the settlement account.(14) The total number of debts enrolled that are transferred in ownership during the enrollment.(15) What percentage of debt enrolled is original creditor versus debt buyer.(16) The total amount of fees paid to debt settlement company.(17) The total number of creditors who filed a lawsuit during the terms of the contract.(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:(1) The average and median length of time it takes for an enrolled account to settle.(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.
12330.1. (a) A prorater shall annually report to the department all of the following information:(1) The total number of enrolled consumers.(2) The average and median number of enrolled debts per consumer.(3) The average and median principal amount of debt at time of enrollment.(4) The total number of debts enrolled.(5) The percentage of savings between settlement amount and initial enrolled debt amount.(6) The average length of a debt settlement contract.(7) The average and median length of time it takes for an enrolled debt to be settled.(8) The percentage of debtors who successfully complete the contract.(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.(11) The annual net income of consumers who have enrolled and sources of income.(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.(13) The average and median payment amount by debtor to the settlement account.(14) The total number of debts enrolled that are transferred in ownership during the enrollment.(15) What percentage of debt enrolled is original creditor versus debt buyer.(16) The total amount of fees paid to debt settlement company.(17) The total number of creditors who filed a lawsuit during the terms of the contract.(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:(1) The average and median length of time it takes for an enrolled account to settle.(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.
12330.1. (a) A prorater shall annually report to the department all of the following information:(1) The total number of enrolled consumers.(2) The average and median number of enrolled debts per consumer.(3) The average and median principal amount of debt at time of enrollment.(4) The total number of debts enrolled.(5) The percentage of savings between settlement amount and initial enrolled debt amount.(6) The average length of a debt settlement contract.(7) The average and median length of time it takes for an enrolled debt to be settled.(8) The percentage of debtors who successfully complete the contract.(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.(11) The annual net income of consumers who have enrolled and sources of income.(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.(13) The average and median payment amount by debtor to the settlement account.(14) The total number of debts enrolled that are transferred in ownership during the enrollment.(15) What percentage of debt enrolled is original creditor versus debt buyer.(16) The total amount of fees paid to debt settlement company.(17) The total number of creditors who filed a lawsuit during the terms of the contract.(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:(1) The average and median length of time it takes for an enrolled account to settle.(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.
12330.1. (a) A prorater shall annually report to the department all of the following information:
(1) The total number of enrolled consumers.
(2) The average and median number of enrolled debts per consumer.
(3) The average and median principal amount of debt at time of enrollment.
(4) The total number of debts enrolled.
(5) The percentage of savings between settlement amount and initial enrolled debt amount.
(6) The average length of a debt settlement contract.
(7) The average and median length of time it takes for an enrolled debt to be settled.
(8) The percentage of debtors who successfully complete the contract.
(9) The percentage of debtors who are current on payments on the enrolled debt at time of enrollment.
(10) The average and median increase in the balance of growth of enrolled debt during enrollment to be calculated by subtracting the initial enrolled debt amount from the ending debt amount at the time of settlement or account closure.
(11) The annual net income of consumers who have enrolled and sources of income.
(12) If the debtor defaulted or canceled the contract before settlement, the average number of monthly payments made before default.
(13) The average and median payment amount by debtor to the settlement account.
(14) The total number of debts enrolled that are transferred in ownership during the enrollment.
(15) What percentage of debt enrolled is original creditor versus debt buyer.
(16) The total amount of fees paid to debt settlement company.
(17) The total number of creditors who filed a lawsuit during the terms of the contract.
(b) The commissioner shall suspend the license of a prorater during any period of noncompliance with subdivision (a).
(c) The commissioner may grant a two-month extension if the prorater requests, in writing, an extension no earlier than two months and no later than one month before the original due date of the reporting. The commissioner shall not grant a request for an extension made after the deadline.
(d) Pursuant to Section 12400, the commissioner may revoke the license of any prorater who fails to disclose factual information in its advertising and communication to debtors regarding any of the following:
(1) The average and median length of time it takes for an enrolled account to settle.
(2) That enrolled debts may be delinquent and go unpaid while the debtor makes initial deposits into the debt settlement account and that this will result in negative credit reporting for the debtor.
(3) That the debtor may be sued by creditors of any enrolled debt while the debt is enrolled.
SEC. 9. Section 12405 is added to the Financial Code, immediately following Section 12404, to read:12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.(2) Compensatory damages from any injuries caused by the violation.(3) Reasonable attorneys fees and costs.(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.
SEC. 9. Section 12405 is added to the Financial Code, immediately following Section 12404, to read:
### SEC. 9.
12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.(2) Compensatory damages from any injuries caused by the violation.(3) Reasonable attorneys fees and costs.(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.
12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.(2) Compensatory damages from any injuries caused by the violation.(3) Reasonable attorneys fees and costs.(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.
12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.(2) Compensatory damages from any injuries caused by the violation.(3) Reasonable attorneys fees and costs.(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.
12405. (a) A debtor who is a party to a contract that does not comply with the requirements of Section 12319 may bring a civil action against the person responsible for the violation. A debtor who brings a civil action pursuant to this section may recover all of the following:
(1) Civil penalties in an amount to be determined by the court of no less than one thousand dollars ($1,000) and no more than five thousand dollars ($5,000) per violation.
(2) Compensatory damages from any injuries caused by the violation.
(3) Reasonable attorneys fees and costs.
(b) An action brought pursuant to this section shall be commenced within four years of the date on which a contract in violation of Section 12319 was executed.