AB 350 Summary

• Enacts the Debt Settlement Services Act, requiring debt settlement providers to obtain licenses from the Commissioner of Corporations beginning January 1, 2012, with a $1,000 investigation fee, variable application fee, and $50,000 surety bond.

• Mandates providers conduct financial analysis and deliver written disclosures in 12-point type to individuals before they enter agreements, including warnings about credit impacts, continued creditor charges, and tax consequences of debt forgiveness.

• Prohibits providers from engaging in specified practices including acquiring unauthorized powers of attorney, making false representations about guaranteed results, requiring ancillary services, and holding individual funds in trust.

• Authorizes the Commissioner to enforce the act through cease and desist orders, restitution, citations with administrative penalties up to $2,500 per violation, and civil actions; allows individuals to sue providers for compensatory damages and attorney's fees.

• Requires annual reporting by licensees to the Commissioner containing information about total debt, number of individuals served, debts settled, and fees collected in the previous calendar year.