State Regulation:
Kansas
Note: Kansas is an exception to the states because it had a
pre-existing law (dating back at least to 1992) but recently
repealed that law in favor of the new text below in 2004
(the text of the bill enacting this change is also below).
I do not know the reason for the change or why the state
took action despite the then-existing federal regulatory
scheme.
KS ST § 50-1116
50-1116. Kansas credit services organization act; citation;
scope.
Current through End of 2006 Reg. Sess.
K.S.A. § 50-1116
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1116. Kansas credit services organization act; citation;
scope.
(a) K.S.A. 50-1116 through 50-1135, and amendments thereto,
shall be known and may be cited as the Kansas credit
services organization act.
(b) Any person licensed to practice law in this state acting
within the course and scope of such person's practice as an
attorney shall be exempt from the provisions of this act.
K.S.A. § 50-1117
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1117. Same; definitions.
Definitions as used in this act: (a) 'Commissioner' means
the state bank commissioner.
(b) 'Consumer' means an individual who is a resident of this
state.
(c) 'Credit services organization' means a person who
engages in, or holds out to the public as willing to engage
in, the business of debt management services for a fee,
compensation or gain, or in the expectation of a fee,
compensation or gain.
(d) 'Debt management service' means:
(1) Receiving or offering to receive funds from a consumer
for the purpose of distributing the funds among such
consumer's creditors in full or partial payment of such
consumer's debts;
(2) improving or offering to improve a consumer's credit
record, history or rating; or
(3) negotiating or offering to negotiate to defer or reduce
a consumer's obligations with respect to credit extended by
others.
(e) 'Insolvent' means a person whose debts exceed their
assets.
(f) 'Person' means any individual, corporation, partnership,
association, unincorporated organization or other form of
entity, however organized, including a nonprofit entity.
(g) 'Related interest' means a person:
(1) With respect to an individual who is:
(A) The spouse of the individual;
(B) a brother, brother-in-law, sister, sister-in-law of the
individual;
(C) an ancestor or lineal descendant of the individual or
the individual's spouse; and
(D) any other relative, by blood, adoption or marriage, of
the individual or such individual's spouse who shares the
same residence with the individual.
(2) With respect to a corporation, partnership, association,
unincorporated organization or other form of entity, however
organized, including a nonprofit entity, which is:
(A) Directly or indirectly controlling, controlled by or
under common control by a person; or
(B) an officer or director of a person or a person
performing similar functions.
(h) 'Registrant' means a person who is registered by the
commissioner as a credit services organization.
(i) 'Trust account' means an account established by the
applicant or registrant in a federally insured financial
institution used to hold funds paid by consumers to a credit
services organization for disbursement to creditors of
consumers that is designated as a trust account or other
appropriate designation indicating the funds in the account
are:
(1) Not funds of the applicant or registrant or its owners,
officers or employees; and
(2) unavailable to creditors of the applicant or registrant.
K.S.A. § 50-1118
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1118. Same; registration required to conduct credit
services organization business; application.
(a) No person shall engage in, or hold such person out as
willing to engage in any credit services organization
business with a resident of this state without first
obtaining registration from the commissioner. Any person
required to be registered as a credit services organization
shall submit to the commissioner an application for
registration on forms prescribed and provided by the
commissioner. The application for registration shall
include:
(1) The applicant's name, business address, telephone number
and website address, if any;
(2) the name and address of each owner, officer, director,
member or partner of the applicant;
(3) a description of the ownership interest of any officer,
director, member, partner, agent or employee of the
applicant in any affiliate or subsidiary of the applicant or
in any other entity that provides any service to the
applicant or any consumer relating to the applicant's credit
services organization business;
(4) a description of the applicant's consumer education
program; and
(5) any other information the commissioner may deem
necessary to evaluate the financial responsibility and
condition, character, qualifications and fitness of the
applicant.
(b) Each application for registration shall be accompanied
by a nonrefundable fee of $100. The amount of the
registration fee may be increased by rules and regulations
adopted by the commissioner.
(c) The application shall be approved and a nontransferable
and non-assignable registration shall be issued to the
applicant provided:
(1) The commissioner has received the complete application
and fee required by this section; and
(2) the commissioner determines the financial responsibility
and condition, character, qualifications and fitness of the
applicant warrants a belief that the business of the
applicant will be conducted competently, honestly, fairly
and in accordance with all applicable state and federal
laws.
(d) Each credit services organization registration issued
under this section shall expire on June 30 of each year. A
registration shall be renewed by filing with the
commissioner, at least 30 days prior to the expiration of
the registration, a complete renewal application, containing
information the commissioner requires to determine the
existence and effect of any material changes from the
information contained in the applicant's original
application, annual reports or prior renewal applications.
Each renewal shall be accompanied by a nonrefundable renewal
fee which shall be established by rules and regulations of
the commissioner.
(e) If the commissioner fails to issue a registration within
60 days after a filed application is deemed complete by the
commissioner, the applicant may make written request for
hearing. The commissioner shall conduct a hearing in
accordance with the Kansas administrative procedure act.
K.S.A. § 50-1119
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1119. Same; bond; requirements.
Each applicant or registrant shall file with the
commissioner a surety bond in a form acceptable to the
commissioner. The surety bond shall be issued by a surety or
insurance company authorized to conduct business in this
state, securing the applicant's or registrant's faithful
performance of all duties and obligations of a registrant.
The surety bond shall:
(a) Be payable to the office of the state bank commissioner;
(b) provide that the bond may not be terminated without 30
days prior written notice to the commissioner;
(c) provide that the bond shall not expire for two years
after the date of surrender, revocation or expiration of the
applicant's or registrant's registration, whichever shall
first occur;
(d) be available for:
(1) The recovery of expenses, fines and fees levied by the
commissioner under this act; and
(2) payment of losses or damages which are determined by the
commissioner to have been incurred by any consumer as a
result of the applicant's or registrant's failure to comply
with the requirements of this act; and
(e) the amount of the bond shall be $25,000. The amount of
the bond may be increased up to $1,000,000, as further
defined by rules and regulations adopted by the
commissioner.
K.S.A. § 50-1120
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1120. Same; duties of registrant.
No credit services organization shall engage in debt
management services unless:
(a) The registrant provides the consumer with a credit
education program designed to improve the financial literacy
of the consumer.
(b) The registrant has:
(1) (A) Taken reasonable steps to identify all creditors of
a consumer; and
(B) prepared and provided to the consumer a written
financial analysis of and initial budget plan for all of the
consumer's debt obligations which indicates the consumer can
reasonably meet the requirements set forth in the budget
plan; and
(2) provided to the consumer a list of each creditor the
registrant reasonably expects:
(A) To participate in the plan; and
(B) not to participate in the plan.
(c) The registrant and the consumer have entered into a
written debt management services agreement and a copy of the
signed agreement has been provided to the consumer by the
registrant. Such agreement shall be in at least 12 point
type, signed and dated by the consumer and registrant and
include:
(1) The name, address, and phone number of the consumer and
the registrant;
(2) a description of the debt management services to be
provided to the consumer and an itemization of any fees to
be charged to the consumer;
(3) a notice of the consumer's right to rescind the debt
management services agreement at any time by giving written
notice of rescission to the registrant;
(4) a schedule of payments, including the amount and due
date of each payment, that the consumer must make to the
registrant for disbursement to such consumer's creditors;
(5) a list of each participating creditor of the consumer to
which payments will be made by the registrant under the debt
management services agreement. The listing shall include
the:
(A) Amount owed to each creditor;
(B) amount of each payment;
(C) date on which each payment will be made; and
(D) anticipated payoff date for each creditor;
(6) the name of each creditor that the registrant reasonably
expects not to participate in the debt management plan;
(7) a disclosure that the registrant also may receive
compensation from the consumer's creditors for providing
debt management services to the consumer;
(8) a disclosure that the registrant may not, as a condition
of entering into a debt management services agreement,
require a consumer to purchase any other product or service,
nor solicit or offer to sell any other product or service to
the consumer during the term of the debt management services
agreement;
(9) a disclosure that the registrant may not require a
voluntary contribution from a consumer for any service
provided by the registrant to the consumer;
(10) a disclosure that, by executing the debt management
services agreement, the consumer authorizes any financial
institution in which the registrant has established a trust
account for the deposit of the consumer's funds to disclose
to the commissioner any financial records relating to the
trust account during the course of any investigation or
examination by the commissioner; and
(11) the following notice: 'The Kansas Office of the State
Bank Commissioner will accept questions and complaints from
consumers regarding (name and registration number of
registrant) at 700 SW Jackson, Suite 300, Topeka, Kansas,
66603, or by calling toll-free 1-877-387-8523'.
K.S.A. § 50-1121
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1121. Same; prohibited acts.
No person required to be registered under this act shall:
(a) Delay payment of a consumer's debt for the purpose of
increasing interest, costs, fees or charges payable by the
consumer.
(b) Make any misrepresentation of any material fact or false
promise intended to:
(1) Influence, persuade or induce a consumer to enter into a
debt management services agreement; or
(2) cause or contribute to any misrepresentation by any
other person acting on such person's behalf.
(c) Make or use any false or misleading representation in
the offer or sale of the services of a debt management
services agreement or credit services organization business,
including, but not limited to, guaranteeing to 'erase bad
credit' or words to that effect unless the representation
clearly discloses that guaranteed action can be done only if
the consumer's credit history is inaccurate or obsolete.
(d) Engage, directly or indirectly, in any fraudulent or
deceptive act, practice or course of business in connection
with the offer or sale of the services of a credit services
organization.
(e) Make, or advise a consumer to make, any statement with
respect to a consumer's credit worthiness, credit standing
or credit capacity that is false or misleading, or that
should be known by the exercise of reasonable care to be
false or misleading, to a consumer reporting agency or to a
person who has extended credit to a consumer or to whom a
consumer is applying for an extension of credit.
(f) Advertise or cause to be advertised, in any manner
whatsoever, the services of a credit services organization
to Kansas consumers without first obtaining proper
registration from the commissioner.
(g) Receive compensation for rendering debt management
services where the person has otherwise acted as a creditor
for the consumer.
(h) Transfer, assign or attempt to transfer or assign, a
registration to any other person.
(i) Conduct credit services organization activities using
any name other than the name or names approved by the
commissioner.
(j) Operate as a collection agency.
(k) Receive or charge any fee in the form of a promissory
note or other promise to pay.
(l) Accept or receive any reward, bonus, premium, commission
or any other consideration for referring a consumer to any
person or related interest.
(m) Give a reward, bonus, premium, commission or any other
consideration for the referral of a consumer to the
registrant's credit services organization business.
(n) Lend money or provide credit to a consumer.
(o) Obtain a mortgage or other security interest in real or
personal property owned by a consumer.
(p) Structure a debt management services agreement in any
manner that would result in a negative amortization of any
of the consumer's debts.
(q) Charge for or provide credit insurance.
(r) Purchase any debt or obligation of a consumer.
(s) Use any communication which simulates in any manner a
legal or judicial process, or which gives the false
appearance of being authorized, issued or approved by a
government, governmental agency or attorney-at-law.
(t) While operating as a registrant, or a director, manager
or officer of such registrant or any related interest of
such registrant, be a director, manager, officer, owner or
related interest of any creditor or a subsidiary of any such
creditor, that is receiving or will receive payments from
the registrant on behalf of a consumer with whom the
registrant has entered into a debt management services
agreement.
(u) Attempt to cause a consumer to waive or agree to forego
rights or benefits under this act.
K.S.A. § 50-1122
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1122. Same; registrant's duties regarding certain funds
paid to registrant.
(a) Within four calendar days after receipt of any funds
paid to the registrant by or on behalf of a consumer for
disbursement to such consumer's creditors, a registrant
shall deposit such funds in a trust account established for
the benefit of consumers.
(b) A registrant shall:
(1) Maintain separate records of account for each consumer
to whom the registrant provides debt management services;
(2) disburse any funds paid by or on behalf of a consumer to
such consumer's creditors within 10 calendar days after
receipt of such funds;
(3) correct any misdirected payments resulting from an error
by the registrant;
(4) reimburse the consumer for any actual fees or other
charges imposed by a creditor as a result of the
misdirection; and
(5) disburse a consumer's funds from the trust account only
to such consumer's creditors or back to the consumer.
(c) If a consumer rescinds the debt management services
agreement, all funds held in the trust account on behalf of
such consumer shall be refunded to the consumer within 10
calendar days from receipt of rescission by the registrant.
(d) A registrant shall not commingle any trust account
established for the benefit of consumers with any operating
accounts of the registrant or its related interests.
K.S.A. § 50-1123
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1123. Same; registrant's report to consumer; required
contents.
A registrant shall provide a report at least once every
three months to each consumer who has entered into a debt
management services agreement with the registrant. The
report shall include the:
(a) Total amount received from the consumer to date;
(b) total amount paid to each creditor to date;
(c) total amount any creditor has agreed to accept as
payment in full on any debt owed by the consumer;
(d) any fees paid to the registrant by the consumer; and
(e) any amount held in the trust account on behalf of the
consumer.
K.S.A. § 50-1124
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1124. Same; registrant's report to state bank
commissioner; when required; contents.
(a) On or before March 1, of each year, each registrant
shall file with the commissioner an annual report relating
to credit services organization business conducted by the
registrant during the preceding calendar year. The annual
report shall be on a form prescribed by the commissioner.
(b) Within 15 calendar days after the occurrence of any of
the following events, a registrant shall file a written
report with the commissioner describing the event and its
expected impact on the registrant's business:
(1) The filing for bankruptcy or reorganization by the
registrant;
(2) the institution of a revocation, suspension or other
proceeding against the registrant by a governmental
authority that is related to the registrant's credit
services organization business in any state; and
(3) a felony conviction of the registrant or any of its
owners, officers, principals, directors, partners, members
or debt management counselors.
(c) If a registrant fails to make any report required by
this section to the commissioner, the commissioner may
require the registrant to pay a late penalty of $100 for
each day the report is overdue.
K.S.A. § 50-1125
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1125. Same; records; retention; inspection.
(a) Each registrant shall maintain and preserve complete and
adequate business records including a general ledger
containing all assets, liabilities, capital, income and
expense accounts for a period of five years.
(b) Each registrant shall maintain and preserve complete and
adequate records of each debt management services agreement
during the term of the agreement and for a period of five
years from the date of cancellation or completion of the
agreement with each consumer. Such records shall contain all
consumer information including, but not limited to, the debt
management services agreement and any extensions thereto,
payments, disbursements, charges and correspondence.
(c) If the registrant's records are located outside this
state, the registrant shall provide the records to the
commissioner within three calendar days or, at the
commissioner's discretion, pay reasonable and necessary
expenses for the commissioner or commissioner's designee to
examine them at the place where they are maintained.
K.S.A. § 50-1126
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1126. Same; fees charged by registrant; when allowed.
(a) No registrant shall impose any fees or other charges on
a consumer, or receive any funds or other payments from a
consumer or another person on behalf of a consumer:
(1) Except as provided in paragraph (5) of subsection (b),
until after the registrant and consumer have executed a debt
management services agreement; and
(2) except as allowed under this section, or as permitted by
rule and regulation adopted by the commissioner.
(b) A registrant may:
(1) Charge a one-time consultation fee not exceeding $50.
The cost of a credit report on a consumer shall be paid from
the consultation fee paid by the consumer;
(2) charge and collect monthly the lesser of a total
maintenance fee of $20 per month, or $5 per month for each
creditor of a consumer that is listed in the debt management
services agreement between the registrant and the consumer;
(3) collect from or on behalf of a consumer the funds for
disbursement to creditors that the consumer has agreed to
pay to the registrant under the debt management services
agreement;
(4) accept a voluntary contribution from a consumer for a
debt management service provided by the registrant to the
consumer if the aggregate amount of the voluntary
contribution and any other fees received by the registrant
from the consumer does not exceed the total amount the
registrant is authorized to charge the consumer under
paragraphs (1) and (2) of this subsection;
(5) charge the consumer, if provided to the consumer, a fee,
not to exceed $50, for a counseling session, an educational
program, or materials and supplies if the consumer does not
enter into a debt management services agreement with the
registrant; and
(6) accept fee payments from a consumer's creditors for debt
management services rendered to a consumer, provided the
consumer's creditor does not assess the fee to the consumer.
(c) No registrant shall:
(1) Charge a fee to a consumer, if the consumer enters into
a debt management services agreement with the registrant,
to:
(A) Prepare a financial analysis or an initial budget plan
for the consumer;
(B) counsel a consumer about debt management;
(C) provide a consumer with the consumer education program
described in the registrant's application to engage in
business as a credit services organization; or
(D) rescind a debt management services agreement.
(2) Require a voluntary contribution from a consumer for any
service provided by the registrant to the consumer.
(3) As a condition of entering into a debt management
services agreement, require a consumer to purchase for a fee
a counseling session, an educational program or materials
and supplies.
(d) If a registrant imposes any fee or other charge or
receives any funds or other payments not authorized under
this section, except as a result of an accidental and bona
fide error:
(1) The debt management services agreement shall be void;
and
(2) the registrant shall return the amount of the
unauthorized fees, charges, funds or payments to the
consumer.
K.S.A. § 50-1127
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1127. Same; denial, suspension, revocation or refusal to
renew registration; notice.
The commissioner may deny, suspend, revoke or refuse to
renew a registration issued pursuant to this act, and
amendments thereto, if the commissioner finds, after notice
and opportunity for a hearing conducted in accordance with
the provisions of the Kansas administrative procedure act,
that:
(a) The applicant or registrant has repeatedly or willfully
violated any provision of this act, any rule and regulation
promulgated thereunder or any order lawfully issued by the
commissioner pursuant to this act;
(b) the applicant or registrant has failed to file and
maintain the surety bond required under this act;
(c) the applicant or registrant is insolvent;
(d) the applicant or registrant has filed with the
commissioner any document or statement containing any false
representation of a material fact or omitting to state a
material fact;
(e) the applicant, registrant or any officer, director,
member, owner, partner, principal or debt management
counselor thereof has been convicted of any crime;
(f) the applicant or registrant fails to keep and maintain
sufficient records to permit an audit satisfactorily
disclosing to the commissioner the applicant's or
registrant's compliance with the provision of this act;
(g) the applicant, registrant or an employee of the
applicant or registrant has been the subject of any
disciplinary action by the commissioner or any other state
or federal regulatory agency;
(h) a final judgment has been entered against the applicant
or registrant in a civil action and the commissioner finds
the conduct on which the judgment is based indicates that it
would be contrary to the public interest to permit such
person to be registered;
(i) the applicant or registrant has engaged in any deceptive
business practice;
(j) facts or conditions exist which would have justified the
denial of the registration or renewal had such facts or
conditions existed or been known to exist at the time the
application for registration or renewal was made; or
(k) the applicant or registrant has refused to furnish
information required by the commissioner within a reasonable
period of time as established by the commissioner.
K.S.A. § 50-1128
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1128. Same; state bank commissioner; powers and duties.
This act shall be administered by the commissioner. In
addition to other powers granted by this act, the
commissioner, within the limitations provided by law, may
exercise the following powers:
(a) Adopt, amend and revoke rules and regulations as
necessary to carry out the intent and purpose of this act.
(b) Make any investigation and examination of the
registrant's operations, books and records as the
commissioner deems necessary:
(1) For the protection of the public;
(2) to determine whether any registration should be granted,
denied or revoked;
(3) to determine whether any person has violated or is about
to violate any provision of this act, any rule and
regulation promulgated thereunder or any order issued
thereunder; or
(4) to aid in the enforcement of this act.
(c) For examination purposes the commissioner, or the
commissioner's designee, shall have free and reasonable
access to the offices, places of business and all records of
the registrant and the registrant's related interests that
relate to the debt management or credit services
organization business. The commissioner may designate
persons, including comparable officials of the state in
which the records are located, to inspect the records on the
commissioner's behalf.
(d) Charge reasonable costs, including a per diem and actual
travel and lodging expenses, of investigation,
administration or examination to be paid by the applicant or
registrant under investigation, examination or requiring
administrative action, and maintain an action in any court
to recover such costs.
(e) To order any registrant or person to cease any activity
or practice which the commissioner deems to be deceptive,
dishonest, or a violation of this act, or of other state or
federal law, or unduly harmful to the interests of the
public.
(f) Exchange any information regarding the administration of
this act with any agency of the United States or any state
which regulates the applicant or registrant or administers
statutes, rules and regulations or programs related to debt
management or credit services organization laws. The
commissioner may release examination reports and
correspondence regarding the reports in connection with a
disciplinary proceeding conducted by the commissioner, a
liquidation proceeding or a criminal investigation or
proceeding. Additionally, the commissioner may furnish to
federal or other state regulatory agencies or any officer or
examiner thereof, a copy of any or all examination reports
and correspondence regarding the reports made by the
commissioner or the commissioner's designees.
(g) Disclose to any person or entity that an applicant's or
registrant's application or registration has been denied,
suspended, revoked or refused renewal.
(h) Require or permit any person to file a written
statement, under oath or otherwise as the commissioner may
direct, setting forth all the facts and circumstances
concerning any apparent violation of this act, any rule and
regulation promulgated hereunder, or any order issued
pursuant to this act.
(i) Receive, as a condition in settlement of any
investigation or examination, a payment designated for
consumer education to be expended for such purpose as
directed by the commissioner.
(j) Delegate the authority to sign any orders, official
documents or papers issued under or related to this act to
the deputy of consumer and mortgage lending in the office of
the state bank commissioner.
(k) Require fingerprinting of any registrant, agent acting
on behalf of a registrant or other person as deemed
appropriate by the commissioner, or the commissioner's
designee. The commissioner, or commissioner's designee, may
submit such fingerprints to the Kansas bureau of
investigation, federal bureau of investigation or other law
enforcement agency for the purposes of verifying the
identity of such persons and obtaining records of their
criminal arrests and convictions.
(l) Charge, establish and collect from registrants such fees
as are necessary and in such amounts as the commissioner may
determine to be sufficient to meet the expense requirements
of the commissioner in administering this act.
(m) Seize and distribute a registrant's trust account funds
to protect consumers and the public interest.
(n) For the purpose of any examination, investigation or
proceeding under this act, the commissioner or the
commissioner's designee may administer oaths and
affirmations, subpoena witnesses, compel such witnesses'
attendance, adduce evidence and require the production of
any matter which is relevant to the examination or
investigation, including the existence, description, nature,
custody, condition and location of any books, documents or
other tangible things and the identity and location of
persons having knowledge of relevant facts, or any other
matter reasonably calculated to lead to the discovery of
relevant information or items.
K.S.A. § 50-1129
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1129. Same; cease and desist orders; civil fines.
(a) If the commissioner determines after notice and
opportunity for a hearing pursuant to the Kansas
administrative procedure act that any person has engaged, is
engaging or is about to engage in any act or practice
constituting a violation of any provision of this act or any
rule and regulation promulgated or order issued thereunder,
the commissioner by order may require any or all of the
following:
(1) That the person cease and desist from the unlawful act
or practice;
(2) that the person pay a fine not to exceed $10,000 per
incident for the unlawful act or practice;
(3) that the person take such affirmative action as in the
judgment of the commissioner will carry out the purposes of
this act; or
(4) that the person be barred from subsequently applying for
registration under this act.
(b) If the commissioner makes written findings of fact that
the public interest will be irreparably harmed by delay in
issuing an order under subsection (a), the commissioner may
issue an emergency cease and desist order.
(1) Such emergency order, even when not an order within the
meaning of K.S.A. 77-502, and amendments thereto, shall be
subject to the same procedures as an emergency order issued
under K.S.A. 77-536, and amendments thereto.
(2) Upon the entry of such an emergency order, the
commissioner shall promptly notify the person subject to the
order that it has been entered, of the reasons, and that a
hearing will be held upon written request by the person.
(3) If the person requests a hearing, or in the absence of
any request, if the commissioner determines that a hearing
should be held, the matter will be set for a hearing which
shall be conducted in accordance with the provisions of the
Kansas administrative procedure act. Upon completion of the
hearing the commissioner shall, by written findings of fact
and conclusions of law vacate, modify or make permanent the
emergency order.
(4) If no hearing is requested and none is ordered by the
commissioner, the emergency order shall remain in effect
until such order is modified or vacated by the commissioner.
K.S.A. § 50-1130
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1130. Same; subpoenas.
(a) In case of contumacy by, or refusal to obey a subpoena
issued to any person, any court of competent jurisdiction,
upon application by the commissioner, may issue to that
person an order requiring the person to appear before the
commissioner, or the officer designated by the commissioner,
there, to produce documentary evidence if so ordered or to
give evidence touching the matter under investigation or in
question. Any failure to obey the order of the court may be
punished by the court as a contempt of court.
(b) No person shall be excused from attending and testifying
or from producing any document or record before the
commissioner or in obedience to the subpoena of the
commissioner or the commissioner's designee, or in any
proceeding instituted by the commissioner, on the ground
that the testimony or evidence, documentary or otherwise,
required of the person may tend to incriminate the person or
subject the person to a penalty or forfeiture. No individual
may be prosecuted or subjected to any penalty or forfeiture
for or on account of any transaction, matter or thing
concerning which such person is compelled, after claiming
privilege against self-incrimination, to testify or produce
evidence, documentary or otherwise, except that the
individual so testifying shall not be exempt from
prosecution and punishment for perjury committed in so
testifying.
K.S.A. § 50-1131
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1131. Same; criminal penalty.
Any person violating the provisions of this act or any rule
and regulation promulgated thereunder upon conviction shall
be guilty of a class B nonperson misdemeanor.
K.S.A. § 50-1132
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1132. Same; construction; application of consumer
protection act.
Any violation of this act or any rule and regulation
promulgated thereunder is a deceptive act or practice under
the Kansas consumer protection act. Any remedy provided by
this act shall be construed to be in addition to other
remedy provided by the Kansas consumer protection act.
K.S.A. § 50-1133
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1133. Same; private remedies.
(a) Any consumer injured by a violation of this act or any
rule and regulation promulgated thereunder may bring an
action for recovery of damages. The damages awarded may not
be less than the amount paid by the consumer to the credit
services organization plus reasonable attorney fees and
court costs.
(b) The consumer may also be awarded punitive damages.
K.S.A. § 50-1134
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1134. Same; injunction.
The commissioner, attorney general, county or district
attorney or a consumer may bring an action in a district
court to enjoin any violation of this act or any rule and
regulation promulgated thereunder.
K.S.A. § 50-1135
KANSAS STATUTES ANNOTATED
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
KANSAS CREDIT SERVICES ORGANIZATION ACT
50-1135. Same; fees collected by commissioner.
All fees collected by the commissioner pursuant to this act
shall be subject to the provisions of K.S.A. 75-1308 and
amendments thereto.
KS ST § 21-4402
21-4402. Debt adjusting.
Current through End of 2006 Reg. Sess.
K.S.A. § 21-4402
KANSAS STATUTES ANNOTATED
CHAPTER 21.--CRIMES AND PUNISHMENTS
KANSAS CRIMINAL CODE (ARTICLES 31 TO 47)
PART II.--PROHIBITED CONDUCT
ARTICLE 44.--CRIMES AFFECTING BUSINESS
21-4402. Debt adjusting.
(a) Debt adjusting is engaging in the business of making
contracts, express or implied, with a debtor whereby the
debtor agrees to pay a certain amount of money periodically
to the person engaging in the debt adjusting business who
shall for a consideration distribute the same among certain
specified creditors.
(b) The provisions of this act shall not apply to those
situations involving debt adjusting, as defined here, which
is incidental to the lawful practice of law in this state or
to any person registered as a credit services organization
under the Kansas credit services organization act.
(c) Debt adjusting is a class B nonperson misdemeanor.
KS LEGIS 22 (2004)
KANSAS 2004 SESSION LAWS REGULAR SESSION
Ch. 22 (S.B. 509)
2004 Kansas Laws Ch. 22 (S.B. 509)
KANSAS 2004 SESSION LAWS
REGULAR SESSION
Copr. © West Group 2004. All rights reserved.
Additions are indicated by Text; deletions by
Text. Changes in tables are made but not highlighted.
Ch. 22 (S.B. 509)
West's No. 14
DEBT--MANAGEMENT SERVICES
AN ACT concerning debt management services; enacting the
Kansas credit services organization act; amending K.S.A.
21-4402 and K.S.A. 2003 Supp. 75- 1308 and repealing the
existing sections; also repealing K.S.A. 50-1101, 50- 1102,
50-1103, 50-1104, 50-1105, 50-1106, 50-1107, 50-1108,
50-1109, 50-1110, 50-1111, 50-1112, 50-1113, 50-1114 and
50-1115.
Be it enacted by the Legislature of the State of Kansas :
New Section 1. (a) Sections 1 through 20, and amendments
thereto, shall be known and may be cited as the Kansas
credit services organization act.
(b) Any person licensed to practice law in this state acting
within the course and scope of such person's practice as an
attorney shall be exempt from the provisions of this act.
New Sec. 2. Definitions as used in this act: (a)
"Commissioner" means the state bank commissioner.
(b) "Consumer" means an individual who is a resident of this
state.
(c) "Credit services organization" means a person who
engages in, or holds out to the public as willing to engage
in, the business of debt management services for a fee,
compensation or gain, or in the expectation of a fee,
compensation or gain.
(d) "Debt management service" means:
(1) Receiving or offering to receive funds from a consumer
for the purpose of distributing the funds among such
consumer's creditors in full or partial payment of such
consumer's debts;
(2) improving or offering to improve a consumer's credit
record, history or rating; or
(3) negotiating or offering to negotiate to defer or reduce
a consumer's obligations with respect to credit extended by
others.
(e) "Insolvent" means a person whose debts exceed their
assets.
(f) "Person" means any individual, corporation, partnership,
association, unincorporated organization or other form of
entity, however organized, including a nonprofit entity.
(g) "Related interest" means a person:
(1) With respect to an individual who is:
(A) The spouse of the individual;
(B) a brother, brother-in-law, sister, sister-in-law of the
individual;
(C) an ancestor or lineal descendant of the individual or
the individual's spouse; and
(D) any other relative, by blood, adoption or marriage, of
the individual or such individual's spouse who shares the
same residence with the individual.
(2) With respect to a corporation, partnership, association,
unincorporated organization or other form of entity, however
organized, including a nonprofit entity, which is:
(A) Directly or indirectly controlling, controlled by or
under common control by a person; or
(B) an officer or director of a person or a person
performing similar functions.
(h) "Registrant" means a person who is registered by the
commissioner as a credit services organization.
(i) "Trust account" means an account established by the
applicant or registrant in a federally insured financial
institution used to hold funds paid by consumers to a credit
services organization for disbursement to creditors of
consumers that is designated as a trust account or other
appropriate designation indicating the funds in the account
are:
(1) Not funds of the applicant or registrant or its owners,
officers or employees; and
(2) unavailable to creditors of the applicant or registrant.
New Sec. 3. (a) No person shall engage in, or hold such
person out as willing to engage in any credit services
organization business with a resident of this state without
first obtaining registration from the commissioner. Any
person required to be registered as a credit services
organization shall submit to the commissioner an application
for registration on forms prescribed and provided by the
commissioner. The application for registration shall
include:
(1) The applicant's name, business address, telephone number
and website address, if any;
(2) the name and address of each owner, officer, director,
member or partner of the applicant;
(3) a description of the ownership interest of any officer,
director, member, partner, agent or employee of the
applicant in any affiliate or subsidiary of the applicant or
in any other entity that provides any service to the
applicant or any consumer relating to the applicant's credit
services organization business;
(4) a description of the applicant's consumer education
program; and
(5) any other information the commissioner may deem
necessary to evaluate the financial responsibility and
condition, character, qualifications and fitness of the
applicant.
(b) Each application for registration shall be accompanied
by a nonrefundable fee of $100. The amount of the
registration fee may be increased by rules and regulations
adopted by the commissioner.
(c) The application shall be approved and a nontransferable
and nonassignable registration shall be issued to the
applicant provided:
(1) The commissioner has received the complete application
and fee required by this section; and
(2) the commissioner determines the financial responsibility
and condition, character, qualifications and fitness of the
applicant warrants a belief that the business of the
applicant will be conducted competently, honestly, fairly
and in accordance with all applicable state and federal
laws.
(d) Each credit services organization registration issued
under this section shall expire on June 30 of each year. A
registration shall be renewed by filing with the
commissioner, at least 30 days prior to the expiration of
the registration, a complete renewal application, containing
information the commissioner requires to determine the
existence and effect of any material changes from the
information contained in the applicant's original
application, annual reports or prior renewal applications.
Each renewal shall be accompanied by a nonrefundable renewal
fee which shall be established by rules and regulations of
the commissioner.
(e) If the commissioner fails to issue a registration within
60 days after a filed application is deemed complete by the
commissioner, the applicant may make written request for
hearing. The commissioner shall conduct a hearing in
accordance with the Kansas administrative procedure act.
New Sec. 4. Each applicant or registrant shall file with the
commissioner a surety bond in a form acceptable to the
commissioner. The surety bond shall be issued by a surety or
insurance company authorized to conduct business in this
state, securing the applicant's or registrant's faithful
performance of all duties and obligations of a registrant.
The surety bond shall:
(a) Be payable to the office of the state bank commissioner;
(b) provide that the bond may not be terminated without 30
days prior written notice to the commissioner;
(c) provide that the bond shall not expire for two years
after the date of surrender, revocation or expiration of the
applicant's or registrant's registration, whichever shall
first occur;
(d) be available for:
(1) The recovery of expenses, fines and fees levied by the
commissioner under this act; and
(2) payment of losses or damages which are determined by the
commissioner to have been incurred by any consumer as a
result of the applicant's or registrant's failure to comply
with the requirements of this act; and
(e) the amount of the bond shall be $25,000. The amount of
the bond may be increased up to $1,000,000, as further
defined by rules and regulations adopted by the
commissioner.
New Sec. 5. No credit services organization shall engage in
debt management services unless:
(a) The registrant provides the consumer with a credit
education program designed to improve the financial literacy
of the consumer.
(b) The registrant has:
(1) (A) Taken reasonable steps to identify all creditors of
a consumer; and
(B) prepared and provided to the consumer a written
financial analysis of and initial budget plan for all of the
consumer's debt obligations which indicates the consumer can
reasonably meet the requirements set forth in the budget
plan; and
(2) provided to the consumer a list of each creditor the
registrant reasonably expects:
(A) To participate in the plan; and
(B) not to participate in the plan.
(c) The registrant and the consumer have entered into a
written debt management services agreement and a copy of the
signed agreement has been provided to the consumer by the
registrant. Such agreement shall be in at least 12 point
type, signed and dated by the consumer and registrant and
include:
(1) The name, address, and phone number of the consumer and
the registrant;
(2) a description of the debt management services to be
provided to the consumer and an itemization of any fees to
be charged to the consumer;
(3) a notice of the consumer's right to rescind the debt
management services agreement at any time by giving written
notice of rescission to the registrant;
(4) a schedule of payments, including the amount and due
date of each payment, that the consumer must make to the
registrant for disbursement to such consumer's creditors;
(5) a list of each participating creditor of the consumer to
which payments will be made by the registrant under the debt
management services agreement. The listing shall include
the:
(A) Amount owed to each creditor;
(B) amount of each payment;
(C) date on which each payment will be made; and
(D) anticipated payoff date for each creditor;
(6) the name of each creditor that the registrant reasonably
expects not to participate in the debt management plan;
(7) a disclosure that the registrant also may receive
compensation from the consumer's creditors for providing
debt management services to the consumer;
(8) a disclosure that the registrant may not, as a condition
of entering into a debt management services agreement,
require a consumer to purchase any other product or service,
nor solicit or offer to sell any other product or service to
the consumer during the term of the debt management services
agreement;
(9) a disclosure that the registrant may not require a
voluntary contribution from a consumer for any service
provided by the registrant to the consumer;
(10) a disclosure that, by executing the debt management
services agreement, the consumer authorizes any financial
institution in which the registrant has established a trust
account for the deposit of the consumer's funds to disclose
to the commissioner any financial records relating to the
trust account during the course of any investigation or
examination by the commissioner; and
(11) the following notice: "The Kansas Office of the State
Bank Commissioner will accept questions and complaints from
consumers regarding (name and registration number of
registrant) at 700 SW Jackson, Suite 300, Topeka, Kansas,
66603, or by calling toll-free 1-877-387-8523".
New Sec. 6. No person required to be registered under this
act shall: (a) Delay payment of a consumer's debt for the
purpose of increasing interest, costs, fees or charges
payable by the consumer.
(b) Make any misrepresentation of any material fact or false
promise intended to:
(1) Influence, persuade or induce a consumer to enter into a
debt management services agreement; or
(2) cause or contribute to any misrepresentation by any
other person acting on such person's behalf.
(c) Make or use any false or misleading representation in
the offer or sale of the services of a debt management
services agreement or credit services organization business,
including, but not limited to, guaranteeing to "erase bad
credit" or words to that effect unless the representation
clearly discloses that guaranteed action can be done only if
the consumer's credit history is inaccurate or obsolete.
(d) Engage, directly or indirectly, in any fraudulent or
deceptive act, practice or course of business in connection
with the offer or sale of the services of a credit services
organization.
(e) Make, or advise a consumer to make, any statement with
respect to a consumer's credit worthiness, credit standing
or credit capacity that is false or misleading, or that
should be known by the exercise of reasonable care to be
false or misleading, to a consumer reporting agency or to a
person who has extended credit to a consumer or to whom a
consumer is applying for an extension of credit.
(f) Advertise or cause to be advertised, in any manner
whatsoever, the services of a credit services organization
to Kansas consumers without first obtaining proper
registration from the commissioner.
(g) Receive compensation for rendering debt management
services where the person has otherwise acted as a creditor
for the consumer.
(h) Transfer, assign or attempt to transfer or assign, a
registration to any other person.
(i) Conduct credit services organization activities using
any name other than the name or names approved by the
commissioner.
(j) Operate as a collection agency.
(k) Receive or charge any fee in the form of a promissory
note or other promise to pay.
(l) Accept or receive any reward, bonus, premium, commission
or any other consideration for referring a consumer to any
person or related interest.
(m) Give a reward, bonus, premium, commission or any other
consideration for the referral of a consumer to the
registrant's credit services organization business.
(n) Lend money or provide credit to a consumer.
(o) Obtain a mortgage or other security interest in real or
personal property owned by a consumer.
(p) Structure a debt management services agreement in any
manner that would result in a negative amortization of any
of the consumer's debts.
(q) Charge for or provide credit insurance.
(r) Purchase any debt or obligation of a consumer.
(s) Use any communication which simulates in any manner a
legal or judicial process, or which gives the false
appearance of being authorized, issued or approved by a
government, governmental agency or attorney-at-law.
(t) While operating as a registrant, or a director, manager
or officer of such registrant or any related interest of
such registrant, be a director, manager, officer, owner or
related interest of any creditor or a subsidiary of any such
creditor, that is receiving or will receive payments from
the registrant on behalf of a consumer with whom the
registrant has entered into a debt management services
agreement.
(u) Attempt to cause a consumer to waive or agree to forego
rights or benefits under this act.
New Sec. 7. (a) Within four calendar days after receipt of
any funds paid to the registrant by or on behalf of a
consumer for disbursement to such consumer's creditors, a
registrant shall deposit such funds in a trust account
established for the benefit of consumers.
(b) A registrant shall:
(1) Maintain separate records of account for each consumer
to whom the registrant provides debt management services;
(2) disburse any funds paid by or on behalf of a consumer to
such consumer's creditors within 10 calendar days after
receipt of such funds;
(3) correct any misdirected payments resulting from an error
by the registrant;
(4) reimburse the consumer for any actual fees or other
charges imposed by a creditor as a result of the
misdirection; and
(5) disburse a consumer's funds from the trust account only
to such consumer's creditors or back to the consumer.
(c) If a consumer rescinds the debt management services
agreement, all funds held in the trust account on behalf of
such consumer shall be refunded to the consumer within 10
calendar days from receipt of rescission by the registrant.
(d) A registrant shall not commingle any trust account
established for the benefit of consumers with any operating
accounts of the registrant or its related interests.
New Sec. 8. A registrant shall provide a report at least
once every three months to each consumer who has entered
into a debt management services agreement with the
registrant. The report shall include the:
(a) Total amount received from the consumer to date;
(b) total amount paid to each creditor to date;
(c) total amount any creditor has agreed to accept as
payment in full on any debt owed by the consumer;
(d) any fees paid to the registrant by the consumer; and
(e) any amount held in the trust account on behalf of the
consumer.
New Sec. 9. (a) On or before March 1, of each year, each
registrant shall file with the commissioner an annual report
relating to credit services organization business conducted
by the registrant during the preceding calendar year. The
annual report shall be on a form prescribed by the
commissioner.
(b) Within 15 calendar days after the occurrence of any of
the following events, a registrant shall file a written
report with the commissioner describing the event and its
expected impact on the registrant's business:
(1) The filing for bankruptcy or reorganization by the
registrant;
(2) the institution of a revocation, suspension or other
proceeding against the registrant by a governmental
authority that is related to the registrant's credit
services organization business in any state; and
(3) a felony conviction of the registrant or any of its
owners, officers, principals, directors, partners, members
or debt management counselors.
(c) If a registrant fails to make any report required by
this section to the commissioner, the commissioner may
require the registrant to pay a late penalty of $100 for
each day the report is overdue.
New Sec. 10. (a) Each registrant shall maintain and preserve
complete and adequate business records including a general
ledger containing all assets, liabilities, capital, income
and expense accounts for a period of five years.
(b) Each registrant shall maintain and preserve complete and
adequate records of each debt management services agreement
during the term of the agreement and for a period of five
years from the date of cancellation or completion of the
agreement with each consumer. Such records shall contain all
consumer information including, but not limited to, the debt
management services agreement and any extensions thereto,
payments, disbursements, charges and correspondence.
(c) If the registrant's records are located outside this
state, the registrant shall provide the records to the
commissioner within three calendar days or, at the
commissioner's discretion, pay reasonable and necessary
expenses for the commissioner or commissioner's designee to
examine them at the place where they are maintained.
New Sec. 11. (a) No registrant shall impose any fees or
other charges on a consumer, or receive any funds or other
payments from a consumer or another person on behalf of a
consumer:
(1) Except as provided in paragraph (5) of subsection (b),
until after the registrant and consumer have executed a debt
management services agreement; and
(2) except as allowed under this section, or as permitted by
rule and regulation adopted by the commissioner.
(b) A registrant may:
(1) Charge a one-time consultation fee not exceeding $50.
The cost of a credit report on a consumer shall be paid from
the consultation fee paid by the consumer;
(2) charge and collect monthly the lesser of a total
maintenance fee of $20 per month, or $5 per month for each
creditor of a consumer that is listed in the debt management
services agreement between the registrant and the consumer;
(3) collect from or on behalf of a consumer the funds for
disbursement to creditors that the consumer has agreed to
pay to the registrant under the debt management services
agreement;
(4) accept a voluntary contribution from a consumer for a
debt management service provided by the registrant to the
consumer if the aggregate amount of the voluntary
contribution and any other fees received by the registrant
from the consumer does not exceed the total amount the
registrant is authorized to charge the consumer under
paragraphs (1) and (2) of this subsection;
(5) charge the consumer, if provided to the consumer, a fee,
not to exceed $50, for a counseling session, an educational
program, or materials and supplies if the consumer does not
enter into a debt management services agreement with the
registrant; and
(6) accept fee payments from a consumer's creditors for debt
management services rendered to a consumer, provided the
consumer's creditor does not assess the fee to the consumer.
(c) No registrant shall:
(1) Charge a fee to a consumer, if the consumer enters into
a debt management services agreement with the registrant,
to:
(A) Prepare a financial analysis or an initial budget plan
for the consumer;
(B) counsel a consumer about debt management;
(C) provide a consumer with the consumer education program
described in the registrant's application to engage in
business as a credit services organization; or
(D) rescind a debt management services agreement.
(2) Require a voluntary contribution from a consumer for any
service provided by the registrant to the consumer.
(3) As a condition of entering into a debt management
services agreement, require a consumer to purchase for a fee
a counseling session, an educational program or materials
and supplies.
(d) If a registrant imposes any fee or other charge or
receives any funds or other payments not authorized under
this section, except as a result of an accidental and bona
fide error:
(1) The debt management services agreement shall be void;
and
(2) the registrant shall return the amount of the
unauthorized fees, charges, funds or payments to the
consumer.
New Sec. 12. The commissioner may deny, suspend, revoke or
refuse to renew a registration issued pursuant to this act,
and amendments thereto, if the commissioner finds, after
notice and opportunity for a hearing conducted in accordance
with the provisions of the Kansas administrative procedure
act, that:
(a) The applicant or registrant has repeatedly or willfully
violated any provision of this act, any rule and regulation
promulgated thereunder or any order lawfully issued by the
commissioner pursuant to this act;
(b) the applicant or registrant has failed to file and
maintain the surety bond required under this act;
(c) the applicant or registrant is insolvent;
(d) the applicant or registrant has filed with the
commissioner any document or statement containing any false
representation of a material fact or omitting to state a
material fact;
(e) the applicant, registrant or any officer, director,
member, owner, partner, principal or debt management
counselor thereof has been convicted of any crime;
(f) the applicant or registrant fails to keep and maintain
sufficient records to permit an audit satisfactorily
disclosing to the commissioner the applicant's or
registrant's compliance with the provision of this act;
(g) the applicant, registrant or an employee of the
applicant or registrant has been the subject of any
disciplinary action by the commissioner or any other state
or federal regulatory agency;
(h) a final judgment has been entered against the applicant
or registrant in a civil action and the commissioner finds
the conduct on which the judgment is based indicates that it
would be contrary to the public interest to permit such
person to be registered;
(i) the applicant or registrant has engaged in any deceptive
business practice;
(j) facts or conditions exist which would have justified the
denial of the registration or renewal had such facts or
conditions existed or been known to exist at the time the
application for registration or renewal was made; or
(k) the applicant or registrant has refused to furnish
information required by the commissioner within a reasonable
period of time as established by the commissioner.
New Sec. 13. This act shall be administered by the
commissioner. In addition to other powers granted by this
act, the commissioner, within the limitations provided by
law, may exercise the following powers:
(a) Adopt, amend and revoke rules and regulations as
necessary to carry out the intent and purpose of this act.
(b) Make any investigation and examination of the
registrant's operations, books and records as the
commissioner deems necessary:
(1) For the protection of the public;
(2) to determine whether any registration should be granted,
denied or revoked;
(3) to determine whether any person has violated or is about
to violate any provision of this act, any rule and
regulation promulgated thereunder or any order issued
thereunder; or
(4) to aid in the enforcement of this act.
(c) For examination purposes the commissioner, or the
commissioner's designee, shall have free and reasonable
access to the offices, places of business and all records of
the registrant and the registrant's related interests that
relate to the debt management or credit services
organization business. The commissioner may designate
persons, including comparable officials of the state in
which the records are located, to inspect the records on the
commissioner's behalf.
(d) Charge reasonable costs, including a per diem and actual
travel and lodging expenses, of investigation,
administration or examination to be paid by the applicant or
registrant under investigation, examination or requiring
administrative action, and maintain an action in any court
to recover such costs.
(e) To order any registrant or person to cease any activity
or practice which the commissioner deems to be deceptive,
dishonest, or a violation of this act, or of other state or
federal law, or unduly harmful to the interests of the
public.
(f) Exchange any information regarding the administration of
this act with any agency of the United States or any state
which regulates the applicant or registrant or administers
statutes, rules and regulations or programs related to debt
management or credit services organization laws. The
commissioner may release examination reports and
correspondence regarding the reports in connection with a
disciplinary proceeding conducted by the commissioner, a
liquidation proceeding or a criminal investigation or
proceeding. Additionally, the commissioner may furnish to
federal or other state regulatory agencies or any officer or
examiner thereof, a copy of any or all examination reports
and correspondence regarding the reports made by the
commissioner or the commissioner's designees.
(g) Disclose to any person or entity that an applicant's or
registrant's application or registration has been denied,
suspended, revoked or refused renewal.
(h) Require or permit any person to file a written
statement, under oath or otherwise as the commissioner may
direct, setting forth all the facts and circumstances
concerning any apparent violation of this act, any rule and
regulation promulgated hereunder, or any order issued
pursuant to this act.
(i) Receive, as a condition in settlement of any
investigation or examination, a payment designated for
consumer education to be expended for such purpose as
directed by the commissioner.
(j) Delegate the authority to sign any orders, official
documents or papers issued under or related to this act to
the deputy of consumer and mortgage lending in the office of
the state bank commissioner.
(k) Require fingerprinting of any registrant, agent acting
on behalf of a registrant or other person as deemed
appropriate by the commissioner, or the commissioner's
designee. The commissioner, or commissioner's designee, may
submit such fingerprints to the Kansas bureau of
investigation, federal bureau of investigation or other law
enforcement agency for the purposes of verifying the
identity of such persons and obtaining records of their
criminal arrests and convictions.
(l) Charge, establish and collect from registrants such fees
as are necessary and in such amounts as the commissioner may
determine to be sufficient to meet the expense requirements
of the commissioner in administering this act.
(m) Seize and distribute a registrant's trust account funds
to protect consumers and the public interest.
(n) For the purpose of any examination, investigation or
proceeding under this act, the commissioner or the
commissioner's designee may administer oaths and
affirmations, subpoena witnesses, compel such witnesses'
attendance, adduce evidence and require the production of
any matter which is relevant to the examination or
investigation, including the existence, description, nature,
custody, condition and location of any books, documents or
other tangible things and the identity and location of
persons having knowledge of relevant facts, or any other
matter reasonably calculated to lead to the discovery of
relevant information or items.
New Sec. 14. (a) If the commissioner determines after notice
and opportunity for a hearing pursuant to the Kansas
administrative procedure act that any person has engaged, is
engaging or is about to engage in any act or practice
constituting a violation of any provision of this act or any
rule and regulation promulgated or order issued thereunder,
the commissioner by order may require any or all of the
following:
(1) That the person cease and desist from the unlawful act
or practice;
(2) that the person pay a fine not to exceed $10,000 per
incident for the unlawful act or practice;
(3) that the person take such affirmative action as in the
judgment of the commissioner will carry out the purposes of
this act; or
(4) that the person be barred from subsequently applying for
registration under this act.
(b) If the commissioner makes written findings of fact that
the public interest will be irreparably harmed by delay in
issuing an order under subsection (a), the commissioner may
issue an emergency cease and desist order.
(1) Such emergency order, even when not an order within the
meaning of K.S.A. 77-502, and amendments thereto, shall be
subject to the same procedures as an emergency order issued
under K.S.A. 77-536, and amendments thereto.
(2) Upon the entry of such an emergency order, the
commissioner shall promptly notify the person subject to the
order that it has been entered, of the reasons, and that a
hearing will be held upon written request by the person.
(3) If the person requests a hearing, or in the absence of
any request, if the commissioner determines that a hearing
should be held, the matter will be set for a hearing which
shall be conducted in accordance with the provisions of the
Kansas administrative procedure act. Upon completion of the
hearing the commissioner shall, by written findings of fact
and conclusions of law vacate, modify or make permanent the
emergency order.
(4) If no hearing is requested and none is ordered by the
commissioner, the emergency order shall remain in effect
until such order is modified or vacated by the commissioner.
New Sec. 15. (a) In case of contumacy by, or refusal to obey
a subpoena issued to any person, any court of competent
jurisdiction, upon application by the commissioner, may
issue to that person an order requiring the person to appear
before the commissioner, or the officer designated by the
commissioner, there, to produce documentary evidence if so
ordered or to give evidence touching the matter under
investigation or in question. Any failure to obey the order
of the court may be punished by the court as a contempt of
court.
(b) No person shall be excused from attending and testifying
or from producing any document or record before the
commissioner or in obedience to the subpoena of the
commissioner or the commissioner's designee, or in any
proceeding instituted by the commissioner, on the ground
that the testimony or evidence, documentary or otherwise,
required of the person may tend to incriminate the person or
subject the person to a penalty or forfeiture. No individual
may be prosecuted or subjected to any penalty or forfeiture
for or on account of any transaction, matter or thing
concerning which such person is compelled, after claiming
privilege against self-incrimination, to testify or produce
evidence, documentary or otherwise, except that the
individual so testifying shall not be exempt from
prosecution and punishment for perjury committed in so
testifying.
New Sec. 16. Any person violating the provisions of this act
or any rule and regulation promulgated thereunder upon
conviction shall be guilty of a class B nonperson
misdemeanor.
New Sec. 17. Any violation of this act or any rule and
regulation promulgated thereunder is a deceptive act or
practice under the Kansas consumer protection act. Any
remedy provided by this act shall be construed to be in
addition to other remedy provided by the Kansas consumer
protection act.
New Sec. 18. (a) Any consumer injured by a violation of this
act or any rule and regulation promulgated thereunder may
bring an action for recovery of damages. The damages awarded
may not be less than the amount paid by the consumer to the
credit services organization plus reasonable attorney fees
and court costs.
(b) The consumer may also be awarded punitive damages.
New Sec. 19. The commissioner, attorney general, county or
district attorney or a consumer may bring an action in a
district court to enjoin any violation of this act or any
rule and regulation promulgated thereunder.
New Sec. 20. All fees collected by the commissioner pursuant
to this act shall be subject to the provisions of K.S.A.
75-1308 and amendments thereto.
Sec. 21. K.S.A. 21-4402 is hereby amended to read as
follows:
<< KS ST § 21-4402 >>
21-4402. (a) Debt adjusting is engaging in the business of
making contracts, express or implied, with a debtor whereby
the debtor agrees to pay a certain amount of money
periodically to the person engaging in the debt adjusting
business who shall for a consideration distribute the same
among certain specified creditors.
(b) The provisions of this act shall not apply to those
situations involving debt adjusting, as defined here, which
is incidental to the lawful practice of law in this state or
to any person registered as a credit services organization
under the Kansas credit services organization act.
(c) Debt adjusting is a class B nonperson misdemeanor.
Sec. 22. K.S.A. 2003 Supp. 75-1308 is hereby amended to read
as follows:
<< KS ST § 75-1308 >>
75-1308. The commissioner shall keep a record of all fees
collected by the commissioner, together with a record of all
expenses incurred in the administration of programs for the
regulation of banks and trust companies regulated by the
division of banking and in the administration of programs
for the regulation of regulated by the division of consumer
and mortgage lending. The bank commissioner shall remit all
moneys received by or for the commissioner from such fees to
the state treasurer in accordance with the provisions of
K.S.A. 75-4215, and amendments thereto. Upon receipt of each
such remittance, the state treasurer shall deposit the
entire amount in the state treasury. Twenty percent of each
such deposit shall be credited to the state general fund and
the balance shall be credited to the bank commissioner fee
fund. All expenditures from the bank commissioner fee fund
shall be made in accordance with appropriation acts upon
warrants of the director of accounts and reports issued
pursuant to vouchers approved by the bank commissioner or by
a person or persons designated by the commissioner.
<< Repealed: KS ST §§ 50-1101; 50-1102; 50-1103; 50-1104;
50-1105; 50-
1106; 50-1107; 50-1108; 50-1109; 50-1110; 50-1111; 50-1112;
50-1113; 50-
1114; 50-1115 >>
Sec. 23. K.S.A. 21-4402, 50-1101, 50-1102, 50-1103, 50-1104,
50-1105, 50- 1106, 50-1107, 50-1108, 50-1109, 50-1110,
50-1111, 50-1112, 50-1113, 50-1114 and 50-1115 and K.S.A.
2003 Supp. 75-1308 are hereby repealed.
Sec. 24. This act shall take effect and be in force from and
after its publication in the statute book.
Approved March 29, 2004
KS LEGIS 22 (2004)
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