CS for SB 1702 Summary

• Creates the "Debt Relief Services Act" (Part II, Chapter 559) establishing registration requirements for debt relief organizations offering debt management, debt settlement, or credit counseling services effective April 1, 2011.

• Requires debt relief organizations to register with the Office of Financial Regulation, pay a $1,000 registration fee, submit to criminal background checks for applicants and control persons, obtain a surety bond of $100,000-$1 million, and maintain annual financial audits.

• Prohibits debt relief organizations from charging upfront fees before service contracts, limits setup fees to $50, caps annual credit counseling fees at $120, caps debt management service fees at 7.5% of payments or enrolled debt, and caps debt settlement fees at 40% of savings realized (but not exceeding 20% of enrolled debt).

• Requires written service contracts to include financial analysis, detailed service descriptions, payment terms, 5-business-day cancellation rights with full refund, and specific consumer warnings about contacting creditors directly before using debt relief services.

• Establishes Office of Financial Regulation enforcement authority including complaint investigation, subpoena power, cease-and-desist orders, and administrative penalties up to $25,000 per violation; makes providing debt relief services without registration a third-degree felony.