In this subtitle the following words have the meanings indicated. “Consumer” means an individual who: Resides in the State; and Is seeking debt settlement services or has entered into a debt settlement services agreement in connection with debts that are consumer debts, as defined in § 13–101 of the Commercial Law Article. “Debt management services” has the meaning stated in § 12–901 of this title. “Debt settlement services” means any service or program represented, directly or by implication, to renegotiate, settle, reduce, or in any way alter the terms of payment or other terms of a debt between a consumer and one or more unsecured creditors or debt collectors, including a reduction in the balance, interest rate, or fees owed by a consumer to an unsecured creditor or debt collector. “Debt settlement services” does not include debt management services. “Debt settlement services agreement” means a written contract, plan, or agreement between a debt settlement services provider and a consumer for the performance of debt settlement services. “Debt settlement services fee” means a fee charged to a consumer by a debt settlement services provider for providing debt settlement services for a consumer. “Debt settlement services provider” means a person that provides or offers to provide debt settlement services for a consumer regardless of whether the person provides the debt settlement services on a for–profit or not–for–profit basis. “Dedicated account” means an account described in § 12–1010(d) of this subtitle. “Offer, provide, or attempt to provide debt settlement services” means providing debt settlement services: To consumers through any means, including telephone telemarketing, Internet solicitation, and face–to–face meetings; and On an intrastate or interstate basis. “Principal amount of the debt” means the amount of a debt at the time the debt is included in a debt settlement services agreement. “Registrant” means a person registered under this subtitle to provide debt settlement services. “Student education loan” has the meaning stated in § 2–104.1(a) of this article. “Unique identifier” means a number or another identifier assigned by NMLS.

Subject to subsection (b) of this section, the provisions of this subtitle are in addition to and not in substitution for any other provision of law. A person who periodically receives funds from consumers to be used in connection with providing debt settlement services is not engaged in providing debt management services, and is not subject to Subtitle 9 of this title, if the person: Complies with the requirements of this subtitle; Negotiates to settle a consumer’s debts by reducing the principal amount of the debts owed; and Makes no more than six settlement payments for each debt; and Establishes a dedicated account that: Is separate from any trust account established by the person under § 12–917 of this title; and Is not established solely for the purpose of holding consumer funds to be disbursed to the debt settlement services provider for fees.

This subtitle does not apply to: The following persons when engaged in the regular course of their respective businesses and professions: An attorney at law who is admitted to the Maryland Bar while the attorney at law is providing professional legal services in an attorney–client relationship; An escrow agent; A certified public accountant; A banking institution, other–state bank, national banking association, credit union, or savings and loan association; A person that: Provides a bill payer service, as defined in § 12–401 of this title; Does not initiate any contract with individual creditors of a debtor to compromise a debt or arrange a new payment schedule; and Does not provide any debt counseling services; A person that provides an accelerated mortgage payment service, as defined in § 12–401 of this title; A title insurer, title insurance agency, or abstract company; or A judicial officer or a person acting under a court order; A person while performing services incidental to the dissolution, winding up, or liquidation of a partnership, corporation, or other business enterprise; A trade or mercantile association acting in the course of arranging the adjustment of debts with a business establishment; A mortgage lender, as defined in § 11–501 of this article: That is licensed by the Commissioner; and While engaged in the mortgage lending business, as defined in § 11–501 of this article; or An employee of a mortgage lender; or A collection agency, as defined in § 7–101 of the Business Regulation Article: That is licensed by the State Collection Agency Licensing Board; and While engaged in the collection agency business, as defined in § 7–101 of the Business Regulation Article.

A person may not offer, provide, or attempt to provide debt settlement services unless the person: Is registered with the Commissioner under this subtitle; or Is exempt from registration under this subtitle. During the time period established by the Commissioner under subsection (c) of this section, each registrant shall: Obtain and maintain a valid unique identifier issued by NMLS when an account is created with NMLS; and Transfer registration information to NMLS. The Commissioner shall establish a time period that is not less than 2 months within which a registrant must transfer registration information to NMLS. The time period that the Commissioner establishes under this subsection shall begin on or after July 1, 2019. At least 30 days before the transfer period begins, the Commissioner shall: Notify registrants of the transfer period; and Provide instructions for the transfer of registration information to NMLS. Subject to subsection (b) of this section, an applicant for the issuance of a registration or a renewal of a registration shall apply for the initial registration or the renewal of the registration through NMLS: On or after July 1, 2019; or If the Commissioner has not joined NMLS with respect to persons required to be registered under this subtitle as of July 1, 2019, on or after the date that the Commissioner joins, as specified by the Commissioner by public notice.

To carry out the provisions of this subtitle, the Commissioner may: Adopt regulations; Enter into cooperative and information sharing agreements with any federal or State regulatory agency having authority over debt settlement services providers; and Exchange information about a debt settlement services provider, including information obtained during an examination, with any federal or State regulatory agency having authority over the debt settlement services provider.

A person registering as a debt settlement services provider with the Commissioner under this subtitle shall pay to the Commissioner a nonrefundable fee in the amount of: $400 for the issuance of a registration under this subtitle; and $400 for the renewal of a registration under this subtitle. In addition to the registration fee required under subsection (a) of this section, a registrant for the issuance of a registration or a renewal of a registration shall pay to NMLS any fees that NMLS imposes in connection with the issuance of the registration or the renewal of the registration.

All revenue received for the registration of persons under this subtitle and, except as provided in subsection (b) of this section, any other fee, examination assessment, or revenue received by the Commissioner under this subtitle shall be: Credited to the Non–Depository Special Fund established under § 2–120 of this article; and Used in accordance with § 2–120(d) of this article. Notwithstanding subsection (a) of this section, the Commissioner shall pay all fines and penalties collected by the Commissioner under this subtitle into the General Fund of the State.

To apply for a registration, an applicant shall submit to the Commissioner an application on the form that the Commissioner provides. The application shall include: The applicant’s legal name, trade name, if any, main office address, telephone number, electronic mail address, if any, and website address, if any; The name, address, and telephone number of the applicant’s designated contact for receipt of complaints; The name, address, and telephone number of the applicant’s resident agent in the State; and Any other information that the Commissioner reasonably requires.

A registration issued under this subtitle expires on December 31 of each year. On or after November 1 of the year in which a registration expires, the registration may be renewed for an additional 1–year term if the registrant: Otherwise is entitled to be registered; Pays to the Commissioner the renewal fee established under § 12–1006 of this subtitle; Submits to the Commissioner a renewal application on the form that the Commissioner requires; and Pays to NMLS any fees that NMLS imposes in connection with the renewal of the registration.

Except as allowed under this subtitle, a registrant may not offer, provide, or attempt to provide debt settlement services in the State. A registrant may charge a consumer a debt settlement services fee as provided under this section. A registrant may not: Charge a consumer a fee for consultation or for obtaining a consumer’s credit report; or Require a voluntary contribution from a consumer for any service provided by the registrant. Except as provided under subsection (d) of this section, a registrant may not charge a consumer a debt settlement services fee until after: A debt settlement services agreement has been executed between the registrant and the consumer; The registrant has renegotiated, settled, reduced, or otherwise altered the terms of at least one individual debt specified in the debt settlement services agreement; and The consumer has made at least one payment in accordance with the debt settlement services agreement. Subsection (c) of this section does not prohibit a registrant from requesting or requiring a consumer to deposit funds in an account to be used for debt settlement services fees and for payments to creditors or debt collectors in connection with a debt settlement services agreement, provided that: The funds are held in an account at an insured financial institution, as defined in § 1–101 of this article; The consumer owns the funds held in the account, including any accrued interest; The financial institution or entity administering the account is not owned or controlled by, or in any way affiliated with, the registrant; The financial institution or entity administering the account does not pay or accept any money or other compensation in exchange for referrals of business involving the registrant, but may charge account related fees; and If the consumer requests to withdraw from the debt settlement services agreement, within 7 days after the consumer’s request, all funds in the account, including accrued interest, less any debt settlement services fees earned by the registrant in compliance with this section, are paid to the consumer. Subject to paragraph (2) of this subsection, for each individual debt, a debt settlement services fee shall: Bear the same proportional relationship to the debt settlement services fee for settling the total debt as the individual debt amount bears to the total debt; or Be calculated as a percentage of the amount by which the principal amount of the debt exceeds the amount paid to the creditor or debt collector to settle the debt. The percentage charged under paragraph (1)(ii) of this subsection shall be the same for each individual debt. A registrant shall allow a consumer to withdraw from a debt settlement services agreement at any time. If a consumer withdraws from the debt settlement services agreement, the registrant: May not charge the consumer a penalty; and May collect debt settlement services fees earned by the registrant in compliance with this section.

A registrant may not misrepresent any material aspect of any debt settlement service.

A debt settlement services agreement shall: Be signed and dated by the registrant and the consumer; and Include, in at least 12 point type: The name, address, and telephone number of the consumer; The name, address, and telephone number of the registrant; A description of the debt settlement services to be provided to the consumer; Any debt settlement services fees to be charged to the consumer; and A statement that the registrant may not: Charge the consumer a fee for consultation or for obtaining a consumer’s credit report; or Require a voluntary contribution from the consumer for any service provided by the registrant; The identity of each individual creditor or debt collector whose debts are included in the debt settlement services agreement and the principal amount of the debt owed to each individual creditor or debt collector; The principal amount of the total debt included in the debt settlement services agreement; A good faith estimate of the amount of time necessary to achieve the represented results; To the extent that the debt settlement services may include a debt settlement offer to any of the consumer’s creditors or debt collectors, a good faith estimate of: The time by which the registrant will make a bona fide debt settlement offer to each of them; and The amount of money or percentage of each debt that the consumer must accumulate before the registrant will make a bona fide debt settlement offer to each of them; A statement that: The consumer may withdraw from the debt settlement services agreement at any time; and If a consumer withdraws from the debt settlement services agreement, the registrant: May not charge a penalty; and May collect debt settlement services fees earned by the registrant; For a debt settlement services agreement for student education loan debt relief, a statement in substantially the following form: “(Name of company) is a private company, and is not affiliated with the United States Department of Education or any other academic entity or governmental agency. (Name of company) is not a lender, guarantor, or servicer of federal student loans. You can apply for consolidation and other repayment plans without paid assistance through the United States Department of Education. More information is available on the Department’s website or through your federal student loan servicer. You can find out who your servicer is through the United States Department of Education.”; If the registrant requests or requires the consumer to deposit funds in a dedicated account, a statement that: The consumer owns the funds held in the account, including any accrued interest; and If the consumer requests to withdraw from the debt settlement services agreement, within 7 days after the request, all funds in the account, including accrued interest, less any debt settlement services fees earned by the registrant in compliance with § 12–1010 of this subtitle, must be paid to the consumer; and A statement that the consumer may be required to pay taxes on the amount by which the consumer’s debt is reduced. The disclosures required under subsection (a)(2)(vii) through (xii) of this section shall be provided to the consumer in a clear and conspicuous manner in the debt settlement services agreement.

A debt settlement services provider engaged in student education loan debt relief may not: Advise, expressly or by implication, that a consumer stop making payments or stop communicating with the consumer’s student loan servicer; or Access or obtain a consumer’s student aid information in violation of federal law.

An advertisement for debt settlement services shall include clearly and conspicuously a disclosure that, to the extent that any aspect of the debt settlement services relies on or results in the consumer’s failure to make timely payments to the consumer’s creditors or debt collectors, the use of the debt settlement services: Will likely adversely affect the consumer’s creditworthiness; May result in the consumer being subject to collections or being sued by creditors or debt collectors; and May increase the amount of money the consumer owes due to the accrual of fees and interest by creditors or debt collectors. An advertisement for debt settlement services for student education loan debt relief shall include clearly and conspicuously a disclosure in substantially the following form: “(Name of company) is a private company, and is not affiliated with the United States Department of Education or any other academic entity or governmental agency. (Name of company) is not a lender, guarantor, or servicer of federal student loans. You can apply for consolidation and other repayment plans without paid assistance through the United States Department of Education. More information is available on the Department’s website or through your federal student loan servicer. You can find out who your servicer is through the United States Department of Education.”.

A registrant that establishes a dedicated account in accordance with § 12–1010(d) of this subtitle shall file a surety bond with the Commissioner at the time the dedicated account is established. The bond shall run to the Commissioner, as obligee, for the benefit of: The State; and Any consumer who is injured by a violation of this subtitle committed by a registrant. The bond shall be: In the amount of $50,000; Issued by a surety company that: Is authorized to do business in the State; and Holds a certificate of authority issued by the Maryland Insurance Commissioner; and Conditioned that the registrant shall comply with all State and federal laws and regulations governing the business of providing debt settlement services. The liability of the surety: Shall be continuous; May not be aggregated or cumulative, whether or not the bond is renewed, continued, replaced, or modified; May not be determined by adding together the penal sum of the bond, or any part of the penal sum of the bond, in existence at any two or more points in time; Shall be considered to be one continuous obligation, regardless of increases or decreases in the penal sum of the bond; May not be affected by: The insolvency or bankruptcy of the registrant; Any misrepresentation, breach of warranty, failure to pay a premium, or any other act or omission of the registrant or an agent of the registrant; or The suspension of the registrant’s registration; May not require an administrative enforcement action by the Commissioner as a prerequisite to liability; and Shall continue for 3 years after the later of the date on which: The bond is canceled; or The registrant, for any reason, ceases to be registered. A bond may be canceled by the surety or the registrant by giving notice of cancellation to the Commissioner. Notice under subparagraph (i) of this paragraph shall: Be in writing; and Be sent by certified mail, return receipt requested. A cancellation of a bond under this paragraph is not effective until 90 days after receipt of a notice of cancellation by the Commissioner. A claim against the bond may be filed with the surety by: A claimant; or The Commissioner for the benefit of a claimant or the State. If the amount of claims against a bond exceeds the amount of the bond, the surety: Shall pay the amount of the bond to the Commissioner for pro rata distribution to claimants; and Is relieved of liability under the bond. If the penal amount of a bond is reduced by payment of a claim or judgment, the registrant shall file a new or additional bond with the Commissioner. A penalty imposed against a registrant under § 2–115(b) of this article or § 13–410 of the Commercial Law Article may be collected and paid from the proceeds of a bond required under this section.

On or before March 15 of each year, a registrant shall report to the Commissioner on the debt settlement services business of the registrant conducted during the preceding calendar year. The annual report shall be on the form that the Commissioner requires.

A violation of this subtitle is: An unfair or deceptive trade practice within the meaning of Title 13 of the Commercial Law Article; and Subject to the enforcement and penalty provisions of Title 13 of the Commercial Law Article.

This subtitle may be cited as the Maryland Debt Settlement Services Act.