Passed by the Senate March 3, 2012 YEAS 45   BRAD OWEN ________________________________________ President of the Senate Passed by the House March 1, 2012 YEAS 97   FRANK CHOPP ________________________________________ Speaker of the House of Representatives | I, Thomas Hoemann, Secretary of the Senate of the State of Washington, do hereby certify that the attached is ENGROSSED SENATE BILL 6155 as passed by the Senate and the House of Representatives on the dates hereon set forth. THOMAS HOEMANN ________________________________________ Secretary | |
Approved March 19, 2012, 2:09 p.m. CHRISTINE GREGOIRE ________________________________________ Governor of the State of Washington | March 19, 2012 Secretary of State State of Washington |
State of Washington | 62nd Legislature | 2012 Regular Session |
Read first time 01/12/12. Referred to Committee on Financial Institutions, Housing & Insurance.
AN ACT Relating to third-party account administrators; amending RCW 18.28.010 and 18.28.080; adding new sections to chapter 19.230 RCW; and creating a new section.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 18.28.010 and 1999 c 151 s 101 are each amended to
read as follows:
Unless a different meaning is plainly required by the context, the
following words and phrases as hereinafter used in this chapter shall
have the following meanings:
(1) "Debt adjusting" means the managing, counseling, settling,
adjusting, prorating, or liquidating of the indebtedness of a debtor,
or receiving funds for the purpose of distributing said funds among
creditors in payment or partial payment of obligations of a debtor.
(2) "Debt adjuster", which includes any person known as a debt
pooler, debt manager, debt consolidator, debt prorater, or credit
counselor, is any person engaging in or holding himself or herself out
as engaging in the business of debt adjusting for compensation. The
term shall not include:
(a) Attorneys-at-law, escrow agents, accountants, broker-dealers in
securities, or investment advisors in securities, while performing
services solely incidental to the practice of their professions;
(b) Any person, partnership, association, or corporation doing
business under and as permitted by any law of this state or of the
United States relating to banks, consumer finance businesses, consumer
loan companies, trust companies, mutual savings banks, savings and loan
associations, building and loan associations, credit unions, crop
credit associations, development credit corporations, industrial
development corporations, title insurance companies, ((or)) insurance
companies, or third-party account administrators;
(c) Persons who, as employees on a regular salary or wage of an
employer not engaged in the business of debt adjusting, perform credit
services for their employer;
(d) Public officers while acting in their official capacities and
persons acting under court order;
(e) Any person while performing services incidental to the
dissolution, winding up or liquidation of a partnership, corporation,
or other business enterprise;
(f) Nonprofit organizations dealing exclusively with debts owing
from commercial enterprises to business creditors;
(g) Nonprofit organizations engaged in debt adjusting and which do
not assess against the debtor a service charge in excess of fifteen
dollars per month.
(3) "Debt adjusting agency" is any partnership, corporation, or
association engaging in or holding itself out as engaging in the
business of debt adjusting.
(4) "Financial institution" means any person doing business under
the laws of any state or the United States relating to commercial
banks, bank holding companies, savings banks, savings and loan
associations, trust companies, or credit unions.
(5) "Third-party account administrator" means an independent entity
that holds or administers a dedicated bank account for fees and
payments to creditors, debt collectors, debt adjusters, or debt
adjusting agencies in connection with the renegotiation, settlement,
reduction, or other alteration of the terms of payment or other terms
of a debt.
Sec. 2 RCW 18.28.080 and 1999 c 151 s 102 are each
amended to
read as follows:
(1) By contract a debt adjuster may charge a reasonable fee for
debt adjusting services. The total fee for debt adjusting services,
including, but not limited to, any fee charged by a financial
institution or a third-party account administrator, may not exceed
fifteen percent of the total debt listed by the debtor on the contract.
The fee retained by the debt adjuster from any one payment made by or
on behalf of the debtor may not exceed fifteen percent of the payment.
The debt adjuster may make an initial charge of up to twenty-five
dollars which shall be considered part of the total fee. If an initial
charge is made, no additional fee may be retained which will bring the
total fee retained to date to more than fifteen percent of the total
payments made to date. No fee whatsoever shall be applied against rent
and utility payments for housing.
In the event of cancellation or default on performance of the
contract by the debtor prior to its successful completion, the debt
adjuster may collect in addition to fees previously received, six
percent of that portion of the remaining indebtedness listed on said
contract which was due when the contract was entered into, but not to
exceed twenty-five dollars.
(2) A debt adjuster shall not be entitled to retain any fee until
notifying all creditors listed by the debtor that the debtor has
engaged the debt adjuster in a program of debt adjusting.
(3) The department of financial institutions has authority to
enforce compliance with this section.
NEW SECTION. Sec. 3 A new section is added to chapter 19.230 RCW
to read as follows:
(1) A third-party account administrator must be licensed as a money
transmitter under this chapter and comply with the following additional
requirements:
(a) A debtor's funds must be held in an account at an insured
financial institution;
(b) A debtor owns the funds held in the account and must be paid
accrued interest on the account, if any;
(c) A third-party account administrator may not be owned or
controlled by, or in any way affiliated with, a debt adjuster;
(d) A third-party account administrator may not give or accept any
money or other compensation in exchange for referrals of business
involving a debt adjuster;
(e) A debtor may withdraw from the service provided by a third-party account administrator at any time without penalty and must
receive all funds in the account, other than funds earned by a debt
adjuster in compliance with chapter 18.28 RCW, within seven business
days of the debtor's request; and
(f) A contract between a third-party account administrator and a
debtor must disclose in precise terms the rate and amount of all
charges and fees. In addition, the contract must include a statement
that is substantially similar to the following: "Under the Washington
Debt Adjusting Act, the total fees you are charged for debt adjusting
services may not exceed fifteen percent of the total amount of debt you
listed on your contract with the debt adjuster. This includes fees
charged by a debt adjuster, a third-party account administrator, and a
financial institution." The disclosures required by this subsection
(1)(f) must be on the front page of the contract and must be in at
least twelve-point type.
(2) The legislature finds and declares that any violation of this
section substantially affects the public interest and is an unfair and
deceptive act or practice and unfair method of competition in the
conduct of trade or commerce as set forth in RCW 19.86.020. In
addition to all remedies available in chapter 19.86 RCW, a person
injured by a violation of this section may bring a civil action to
recover the actual damages proximately caused by a violation of this
section, or one thousand dollars, whichever is greater.
(3) For purposes of this section and section 4 of this act:
(a) "Debt adjuster" has the same meaning as defined in RCW
18.28.010;
(b) "Third-party account administrator" means an independent entity
that holds or administers a dedicated bank account for fees and
payments to creditors, debt collectors, debt adjusters, or debt
adjusting agencies in connection with the renegotiation, settlement,
reduction, or other alteration of the terms of payment or other terms
of a debt. "Third-party account administrator" does not include an
entity that is otherwise exempt from this chapter under RCW 19.230.020.
NEW SECTION. Sec. 4 A new section is added to chapter 19.230 RCW
to read as follows:
(1) A third-party account administrator shall maintain the
following records for at least five years:
(a) All contracts the third-party account administrator has entered
into with debtors and debt adjusters;
(b) Account statements identifying and itemizing deposits,
transfers, disbursements, and fees; and
(c) Any other records required in rule by the director.
(2) All records maintained by the third-party account administrator
are open to inspection by the director or the director's designee.
NEW SECTION. Sec. 5 (1) Any person or entity that provides debt
adjusting services, as defined in RCW 18.28.010, in this state shall
provide the following information to the department of financial
institutions by September 1, 2012:
(a) The percentage of Washington debtors for whom the debt adjuster
provides or provided debt adjusting services in the previous three
years who canceled, terminated, or otherwise stopped using the debt
adjuster's services without settlement of all of the debtor's debts;
(b) The total fees collected from Washington debtors during the
previous three years; and
(c) For each debtor for whom the debt adjuster provides debt
adjusting services:
(i) The number of debts included in the contract between the debt
adjuster and the debtor;
(ii) The principal amount of each debt at the time the contract was
signed;
(iii) Whether each debt is active, terminated, or settled;
(iv) If a debt has been settled, the settlement amount of the debt
and the savings amount; and
(v) The total fees charged to the debtor and how the fees were
calculated.
(2) The department of financial institutions shall submit a report
to the appropriate committees of the legislature summarizing the
information received under subsection (1) of this section by December
1, 2012.
NEW SECTION. Sec. 6 If any provision of this act or its
application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other
persons or circumstances is not affected.