State Regulation:
Iowa
IA ST T. XIII, Subt. 3, Ch.
Chapter 538A. Credit Services Organizations
Iowa Code Annotated Currentness
Title XIII. Commerce [chs. 505-554D]
Subtitle 3. Money and Credit [Chs. 535-541A]
Chapter 538A. Credit Services Organizations (Refs & Annos)
538A.1. Definitions
In this chapter, unless the context otherwise requires:
1. "Buyer" means an individual who is solicited to purchase
or who purchases the services of a credit services
organization.
2. "Consumer reporting agency" has the meaning assigned by
section 603(f), Fair Credit Reporting Act, 15 U.S.C. §
1681a(f) as amended through January 1, 1989.
3. "Extension of credit" means the right to defer payment of
debt or to incur debt and defer its payment offered or
granted primarily for personal, family, or household
purposes.
538A.2. Credit services organization defined--exemptions
1. A credit services organization is a person who, with
respect to the extension of credit by others and in return
for the payment of money or other valuable consideration,
provides, or represents that the person can or will provide,
any of the following services:
a. Improving a buyer's credit record, history, or rating.
b. Providing advice or assistance to a buyer with regard to
paragraph "a".
2. The following are exempt from this chapter:
a. A person authorized to make loans or extensions of credit
under the laws of this state or the United States who is
subject to regulation and supervision of this state or the
United States, or a lender approved by the United States
secretary of housing and urban development for participation
in a mortgage insurance program under the National Housing
Act, 12 U.S.C. § 1701 et seq.
b. A bank or savings and loan association whose deposits or
accounts are eligible for insurance by the federal deposit
insurance corporation or the federal savings and loan
insurance corporation, or successor deposit insurance
entities, or a subsidiary of a bank or savings and loan
association.
c. A credit union doing business in this state.
d. A nonprofit organization exempt from taxation under
section 501(c)(3) of the Internal Revenue Code, as defined
in section 422.3.
e. A person licensed as a real estate broker or salesperson,
under section 543B.20, acting within the course and scope of
that license.
f. A person licensed to practice as an attorney in this
state acting within the course and scope of the person's
practice as an attorney.
g. A broker-dealer registered with the securities and
exchange commission or the commodity futures trading
commission acting within the course and scope of the
regulations of the commission that person is registered
with.
h. A consumer reporting agency.
538A.3. Prohibited conduct
A credit services organization, a salesperson, agent, or
representative of a credit services organization, or an
independent contractor who sells or attempts to sell the
services of a credit services organization shall not:
1. Charge a buyer or receive from a buyer money or other
valuable consideration before completing performance of all
services the credit services organization has agreed to
perform for the buyer, unless the credit services
organization has obtained a bond in accordance with section
538A.4 or established and maintained a surety account at a
federally insured bank or savings and loan association
located in this state in the amount required by section
538A.4, subsection 5.
2. Charge a buyer or receive from a buyer money or other
valuable consideration solely for referral of the buyer to a
retail seller who will or may extend credit to the buyer if
the credit that is or will be extended to the buyer is
substantially the same as that available to the general
public.
3. Make or use a false or misleading representation in the
offer or sale of the services of a credit services
organization.
4. Engage, directly or indirectly, in a fraudulent or
deceptive act, practice, or course of business in connection
with the offer or sale of the services of a credit services
organization.
538A.4. Bond--surety account
1. This section applies to a credit services organization
required by section 538A.3, subsection 1, to obtain a surety
bond or establish a surety account.
2. If a bond is obtained, a copy of it shall be filed with
the secretary of state. If a surety account is established,
notification of the depository, the trustee, and the account
number shall be filed with the secretary of state.
3. If a bond is obtained, the bond shall be executed by a
surety company authorized to do business in this state, and
the bond shall be continuous in nature until canceled by the
surety with not less than thirty days' written notice to
both the credit services organization and to the secretary
of state. The notice shall indicate the surety's intent to
cancel the bond effective on a date at least thirty days
after the date of the notice.
4. The bond or surety account required must be in favor of
the state for the benefit of any person who is damaged by a
violation of this chapter.
5. A person claiming against the bond or surety account for
a violation of this chapter may maintain an action at law
against the credit services organization and against the
surety or trustee. The surety or trustee is liable only for
damages awarded under section 538A.9, subsection 1, and not
the punitive damages permitted under that section. The
aggregate liability of the surety or trustee to all persons
damaged by a credit services organization's violation of
this chapter shall not exceed the amount of the surety
account or bond.
6. The bond or the surety account shall be in an amount of
at least ten thousand dollars.
7. A depository holding money in a surety account under this
chapter shall not convey money in the account to the credit
services organization that established the account or a
representative of the credit services organization unless
the credit services organization or representative presents
a statement issued by the secretary of state indicating that
section 538A.5, subsection 6, has been satisfied in relation
to the account. The secretary of state may conduct
investigations and require submission of information as
necessary to enforce this subsection.
538A.5. Registration
1. A credit services organization shall file a registration
statement with the secretary of state before conducting
business in this state. The registration statement must
contain both of the following:
a. The name and address of the credit services organization.
b. The name and address of any person who directly or
indirectly owns or controls ten percent or more of the
outstanding shares of stock in the credit services
organization.
2. The registration statement must also contain one of the
following:
a. A full and complete disclosure of any litigation or
unresolved complaint filed with a governmental authority of
this state relating to the operation of the credit services
organization.
b. A notarized statement that there has been no litigation
or unresolved complaint filed with a governmental authority
of this state relating to the operation of the credit
services organization.
3. The credit services organization shall update the
statement not later than the ninetieth day after the date on
which a change in the information required in the statement
occurs.
4. A credit services organization registering under this
section shall maintain a copy of the registration statement
in the files of the credit services organization. The credit
services organization shall allow a buyer to inspect the
registration statement on request.
5. The secretary of state may charge each credit services
organization that files a registration statement with the
secretary of state a reasonable fee not to exceed one
hundred dollars to cover the cost of filing. The secretary
of state shall not require a credit services organization to
provide information other than that provided in the
registration statement.
6. The bond or surety account shall be maintained until two
years after the date that the credit services organization
ceases to operate.
538A.6. Disclosure statement
1. Before executing a contract or agreement with a buyer, or
receiving money or other valuable consideration, a credit
services organization shall provide the buyer with a
statement in writing, containing all of the following:
a. A complete and detailed description of the services to be
performed by the credit services organization for the buyer
and the total cost of the services.
b. A statement explaining the buyer's rights to proceed
against the bond or surety account required by section
538A.4.
c. The name and address of the surety company which issued
the bond, or the name and address of the depository and the
trustee, and the account number of the surety account.
2. The credit services organization shall maintain on file
for a period of two years after the date the statement is
provided, an exact copy of the statement, signed by the
buyer, acknowledging receipt of the statement.
538A.7. Form in terms of contract
1. A contract between the buyer and a credit services
organization for the purchase of the services of the credit
services organization must be in writing, dated, signed by
the buyer, and must include all of the following:
a. A conspicuous statement in boldface type, in immediate
proximity to the space reserved for the signature of the
buyer, as follows: "You, the buyer, may cancel this contract
at any time before midnight of the third day after the date
of the transaction. See the attached notice of cancellation
form for an explanation of this right."
b. The terms and conditions of payment, including the total
of all payments to be made by the buyer, whether to the
credit services organization or to another person.
c. A full and detailed description of the services to be
performed by the credit services organization for the buyer,
including all guarantees and all promises of full or partial
refunds, and the estimated date by which the services are to
be performed or estimated length of time for performing the
services.
d. The address of the credit services organization's
principal place of business and the name and address of its
agent in the state authorized to receive service of process.
2. The contract must have attached two easily detachable
copies of the notice of cancellation. The notice must be in
boldface type and in the following form:
Notice of Cancellation
You may cancel this contract, without any penalty or
obligations, within three days after the date the contract
is signed.
If you cancel, any payment made by you under this contract
will be returned within ten days after the date of receipt
by the seller of your cancellation notice.
To cancel this contract, mail or deliver a signed, dated
copy of this cancellation notice or other written notice to:
(name of seller) at (address of seller) (place of business)
not later than midnight (date).
(date)
(Purchaser's signature)
3. The credit services organization shall give to the buyer
a copy of the completed contract and all other documents the
credit services organization requires the buyer to sign at
the time they are signed.
538A.8. Waiver
1. A credit services organization shall not attempt to cause
a buyer to waive a right under this chapter.
2. A waiver by a buyer of any part of this chapter is void.
538A.9. Action for damages
1. A buyer injured by a violation of this chapter may bring
an action for recovery of damages. The damages awarded shall
not be less than the amount paid by the buyer to the credit
services organization, plus reasonable attorney's fees and
court costs.
2. The buyer may also be awarded punitive damages.
538A.10. Injunction
The attorney general or a buyer may bring an action in a
district court to enjoin a violation of this chapter.
538A.11. Statute of limitations
An action shall not be brought under section 538A.9 after
ten years after the date of the execution of the contract
for services to which the action relates.
An action shall not be brought under section 538A.12 after
four years after the date of the execution of the contract
for services to which the action relates.
538A.12. Criminal penalty
A person who violates a provision of this chapter commits a
serious misdemeanor.
538A.13. Burden of proving exemption
In an action under this chapter, the burden of proving an
exemption under section 538A.2, subsection 2, is upon the
person claiming the exemption.
538A.14. Remedies cumulative
The remedies provided by this chapter are in addition to
other remedies provided by law.
Current with immediately eff. Legislation signed as of
5/9/2007 from the 2007 1st Reg. Sess.
END OF DOCUMENT
<Chapter 538A, Credit Services Organizations, Code 1993,
consisting of §§ 538A.1 to 538A.14, was transferred from
Chapter 533C, Credit Services Organizations, Code 1991,
consisting of §§ 533C.1 to 533C.14, by the Code Editor as
part of the Iowa Code Reorganization.>
<Chapter 533C, Credit Service Organizations, Code 1991,
consisting of §§ 533C.1 to 533C.14, was enacted by Acts 1989
(73 G.A.) ch. 183, §§ 1 to 14.>
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