Skip to main content

Search

Federal Deception Law: 2.2.3 Substantive Scope of FTC Rulemaking

The FTC Act gives the FTC authority to adopt rules defining unfair or deceptive acts or practices in or affecting interstate commerce.36 In order to declare an act unfair, the FTC must find that it causes or is likely to cause substantial injury to consumers that is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.37 This standard is discussed in detail in NCLC’s Unfair and Deceptive Acts and Practices.

Federal Deception Law: 2.2.5 FTC Remedies for TRR Violations

The FTC may institute a civil action in federal court for TRR violations.63 The court in such an action has authority to grant consumer redress, including rescission or reformation of contracts, refund of money or return of property, damages, and public notification of the rule violation, but not punitive damages.64 There is a three-year statute of limitations.65

Federal Deception Law: 2.2.6 CFPB Remedies

The Consumer Financial Protection Bureau (CFPB) has authority to take action to prevent a person covered by the CFPB’s authority from committing an unfair or deceptive or abusive act or practice (UDAAP).72 This CFPB authority, and CFPB remedies to enforce this authority, are examined in Chapter 3, infra.

Federal Deception Law: I.1 Introduction

This appendix summarizes state debt relief statutes, and in particular state statutes that regulate debt-management plans, debt settlement, debt adjusting, debt pooling, and similar services. Appx. I.2, infra, summarizes the Uniform Debt-Management Services Act, a model act adopted in seven states.

Federal Deception Law: I.2.1 Introduction

The Uniform Law Commission (also known as the National Conference of Commissioners on Uniform State Laws) first adopted the Uniform Debt-Management Services Act in 2005.

Federal Deception Law: I.2.2 The Uniform Debt-Management Services Act (2011)

Scope & Key Definitions: Services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions, defined as assent to repayment of a debt on terms more favorable to the individual than the terms of the contract between the individual and the creditor. § 2.

Federal Deception Law: Arizona

Ariz. Rev. Stat. Ann. §§ 6-701 to 6-716

Administrator: Department of Insurance and Financial Institutions. § 6-101.

Scope & Key Definitions: Debt-management Companies: entities that, for compensation, engage in the business of receiving money or evidences thereof, in this state or from a resident of this state, as an agent of a debtor for the purpose of distribution to his creditors in payment or partial payment of his obligations. § 6-701.

Federal Deception Law: Arkansas

Ark. Code Ann. §§ 5-63-301 to 5-63-305

Administrator: Violations of this criminal statute may be prosecuted by attorney general or district attorney.

Scope & Key Definitions: Offering or contracting, for consideration, to receive money from debtor for distribution to creditors or act as an intermediary between debtor and creditors to negotiate settlement or alteration of terms of payment of debt. § 5-63-301.

Federal Deception Law: Colorado

This statute is based upon the 2008 version of the Uniform Debt-Management Services Act, summarized at Appx. I.2, supra, with variations as noted below.

Colo. Rev. Stat. §§ 5-19-201 to 5-19-242. This statute will sunset on September 1, 2024.

Administrator: Assistant Attorney General, designated by Attorney General to administer this statute. § 5-19-202.

Federal Deception Law: Connecticut

Connecticut has two statutes.

Conn. Gen. Stat. §§ 36a-655 to 36a-665. Note that this statute has been found to be unconstitutional to the extent that it permits the Banking Commissioner to regulate the practice of law.4

Administrator: Banking Commissioner. § 36a-2.

Federal Deception Law: Delaware

This statute is based upon the 2008 version of the Uniform Debt-Management Services Act, summarized at Appx. I.2, supra, with variations as noted below.

Del. Code Ann. tit. 6, §§ 2401A to 2439A

Administrator: Attorney General.

Scope & Key Definitions: Substantially similar to uniform act. § 2402A.

Federal Deception Law: Florida

Fla. Stat. §§ 817.801 to 817.806

Administrator: Not specified (criminal statute).

Scope & Key Definitions: Credit counseling: confidential money management, debt reduction or financial education services. Debt management: for a fee, seeking to effect the adjustment, compromise or discharge of unsecured debt, or receiving from debtor money or things of value for disbursement to creditors. § 817.801.

Federal Deception Law: Georgia

Ga. Code Ann. §§ 18-5-1 to 18-5-5

Administrator: Attorney General.

Scope & Key Definitions: Debt adjusting. For a fee, seeking to effect adjustment, compromise or discharge of a debt, or receiving funds from debtor for distribution to creditors. § 18-5-1.

Exceptions: Debt adjusting in the practice of law. Fannie Mae or Freddie Mac; regulated financial institutions. § 18-5-3.

Federal Deception Law: Hawaii

Haw. Rev. Stat. §§ 446-1 to 446-4

Administrator: Not specified (criminal statute).

Scope and Key Definitions: Debt adjustment: for profit, engages in the business of acting as an intermediary between a debtor and the debtor’s creditors for the purpose of settling, compromising, or in any way altering the terms of payment of any debts of the debtor and who

Federal Deception Law: Idaho

The debt-management provisions are part of a statute regulating collection agencies, debt counselors, credit counselors, and credit repair organizations.

Idaho Code §§ 26-2221 to 26-2251

Administrator: Department of Finance.

Federal Deception Law: Illinois

Illinois has two statutes, one for credit counselling and debt management and one for debt settlement.

205 Ill. Comp. Stat. §§ 665/2 to 665/22 (credit counseling and debt management)

Administrator: Secretary of Financial and Professional Regulation.

Federal Deception Law: Indiana

Indiana has two statutes, one covering budget counseling and debt management, and one covering debt settlement.

Ind. Code §§ 28-1-29-0.5 to 28-1-29-18 (budget counseling and debt management)

Administrator: Department of Financial Institutions.

Federal Deception Law: Kansas

Kansas has two statutes, a credit services organizations statute and a criminal statute forbidding debt adjusting by anyone except licensed CSOs and attorneys.

Kan. Stat. Ann. § 21-6502 (criminal statute)

Administrator: Not specified.

Scope & Key Definitions: Criminal statute, which forbids debt adjusting: for consideration, receiving funds from debtor and making distributions among specified creditors.

Federal Deception Law: Kentucky

Ky. Rev. Stat. Ann. §§ 380.010 to 380.990 (West)

Administrator: Attorney General.

Scope & Key Definitions: Debt adjusting, budget counseling, debt management, debt modification or settlement, debt pooling, offering for a fee to serve as an intermediary between debtor and creditors, receive money to disburse to creditors, or seek adjustment, compromise, settlement, modification or discharge of debt. Foreclosure prevention explicitly included. § 380.010

Federal Deception Law: Louisiana

Louisiana has two statutes, a credit services act and a criminal statute forbidding unlicensed for-profit debt adjusting.

La. Stat. Ann. § 14:331 (criminal statute)

Administrator: Not specified.

Scope & Key Definitions: Criminal statute forbidding for-profit debt adjusting. For a fee, taking funds for disbursement to debtor’s creditors, or seeking to effect the adjustment, compromise or discharge of debt.

Federal Deception Law: Maine

Maine has two statutes, a debt-management services statute and criminal statute forbidding unregistered debt management. In addition, its debt collection practices act makes an exception for certain credit counseling organizations.

Me. Stat. tit. 17, §§ 701 to 703 (criminal statute)

Administrator: Not specified.

Scope & Key Definitions: Criminal statute, forbidding budget planning, making a contract with debtor pursuant to which debtor makes periodic payments to planner, who distributes the funds among specified creditors. § 702.

Federal Deception Law: Maryland

Maryland has two statutes, debt management and debt settlement.

Md. Code Ann., Fin. Inst. §§ 12-901 to 12-931 (West) (debt management)

Administrator: Commissioner of Financial Regulation in the Department of Labor, Licensing and Regulation. § 1-101.

Scope & Key Definitions: Debt Management. Receiving funds from a consumer for distribution to creditors in full or partial payment of debts. § 12-901(g).