Title 12. Miscellaneous Institutions and Activities — Subtitle 9. Maryland Debt Management Services Act

Resides in the State; and

Is seeking debt management services or has entered into a debt management services agreement.

Seeks to improve the financial literacy of consumers regarding personal finance, budgeting, and credit and debt management; and

Provides counseling tailored to the needs and circumstances of the consumer with regard to options and strategies for addressing the consumer’s debt problems, including:

“Control person” means a person who has the power, directly or indirectly, to direct the management or policies of a licensee or license applicant, whether through ownership of securities, by contract, or otherwise.

“Control person” includes a person who:

The licensee’s legal name; and

Any trade name used by the licensee in accordance with § 2–121 of this article.

A spouse;

A child;

A sibling;

A parent;

A grandparent;

A grandchild;

A stepparent;

A stepchild;

A stepsibling;

An aunt; or

An uncle.

Established in a financial institution that is federally insured;

Separate from the debt management services provider’s operating account;

Designated as a “trust account” or by another appropriate designation indicating that the funds in the account are not the funds of the licensee or its officers, employees, or agents;

Unavailable to creditors of the debt management services provider; and

Used to hold funds paid by consumers to a debt management services provider for disbursement to creditors of the consumers.

An attorney at law;

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:

A person that provides accelerated mortgage payment services, 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;

Is licensed by the Commissioner; and

Does not receive funds from a consumer for the purpose of distributing the funds among the consumer’s creditors in full or partial payment of the consumer’s debts.

$500, if the applicant’s annual gross revenue is not more than $3,000,000;

$1,000, if the applicant’s annual gross revenue is more than $3,000,000 but not more than $6,000,000;

$2,000, if the applicant’s annual gross revenue is more than $6,000,000 but not more than $15,000,000;

$3,000, if the applicant’s annual gross revenue is more than $15,000,000 but not more than $30,000,000; or

$4,000, if the applicant’s annual gross revenue is more than $30,000,000.

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.

Is licensed by the Commissioner under this subtitle; or

Is exempt from licensing under this subtitle.

Obtain and maintain a valid unique identifier issued by NMLS when an account is created with NMLS;

Transfer licensing information to NMLS; and

Pay to the Commissioner a license extension fee calculated in accordance with subsection (d)(5) of this section.

The Commissioner shall establish a time period that is not less than 2 months within which a licensee must transfer licensing information to NMLS.

The time period that the Commissioner establishes under this subsection shall begin on or after July 1, 2017.

At least 30 days before the transfer period begins, the Commissioner shall:

For each licensee that complies with subsection (c) of this section, the term of the licensee’s license shall extend to December 31 of the year in which the license otherwise would have expired.

The license extension fee required under subsection (c)(3) of this section is nonrefundable and, based on the annual license fee, shall be prorated to the number of days between the date the license otherwise would have expired and December 31 of the same year.

On or after July 1, 2017; or

If the Commissioner has not joined NMLS with respect to persons required to be licensed under this subtitle as of July 1, 2017, on or after the date that the Commissioner joins, as specified by the Commissioner by public notice.

The applicant and each of the owners, officers, directors, and principals of the applicant has sufficient experience, character, financial responsibility, and general fitness to:

Each agent acting on behalf of the applicant to manage a trust account required under § 12–917 of this subtitle has sufficient experience, character, financial responsibility, and general fitness to:

The applicant has a net worth computed according to generally accepted accounting principles of at least $50,000, plus an additional net worth of $10,000 for each location at which debt management services will be provided to consumers, up to a maximum of $500,000 as provided in subsection (b) of this section; and

Before providing counseling to a consumer, each debt management counselor employed by the applicant or the applicant’s agent will receive comprehensive training in counseling skills, personal finance, budgeting, and credit and debt management.

The nature and volume of the business or proposed business of the applicant;

The amount, nature, quality, and liquidity of the assets of the applicant;

The amount and nature of the liabilities, including contingent liabilities, of the applicant;

The history of and prospects for the applicant to earn and retain income;

The quality of the operations of the applicant;

The quality of the management of the applicant;

The nature and quality of the person that has control of the applicant; and

Any other factor that the Commissioner considers relevant.

Complete, sign, and submit to the Commissioner an application made under oath in the form, and in accordance with the process, that the Commissioner requires; and

Provide all the information that the Commissioner requests.

The applicant’s legal name and any trade name used by the applicant in accordance with § 2–121 of this article, the applicant’s principal executive office address, and website address, if any, and, if the applicant is not an individual, the name and residence address of each control person, if any;

The address of each additional location, if any, that:

The name and address of each owner, officer, director, and principal of the applicant who is not a control person;

The name, address, and telephone number of the applicant’s resident agent in the State;

A description of the ownership interest of any officer, director, agent, or employee of the applicant in any affiliate or subsidiary of the applicant or in any other business entity that provides any service to the applicant or any consumer relating to the applicant’s debt management services business;

The name and address of any agent acting on behalf of the applicant to manage a trust account required under § 12–917 of this subtitle;

The applicant’s federal employer identification number;

A list of any state in which:

A statement of whether any pending judgment, tax lien, material litigation, or administrative action by any government agency exists against the applicant;

The most recent, unconsolidated financial statement of the applicant that:

If applicable, evidence of nonprofit status under § 501(c) of the Internal Revenue Code;

If the applicant is a corporation, a detailed description of the applicant’s corporate structure, including parent companies, subsidiaries, and affiliates;

The applicant’s business credit report;

Evidence of general liability or fidelity insurance that insures against dishonesty, fraud, theft, or other malfeasance on the part of an employee of the applicant;

A description of the applicant’s consumer education program that is provided to consumers;

A description of the applicant’s financial analysis and initial budget plan, including any form or electronic model, that are used to evaluate the financial condition of consumers;

A copy of the debt management services agreement that the applicant will use in its debt management services business;

A copy of the applicant’s plan to ensure that each debt management counselor is certified by an independent organization within 6 months after the debt management counselor is hired, and that any employee who is a supervisor or manager of a debt management counselor is certified by an independent organization within 3 months after the employee is hired;

The most recent financial statement of each affiliate, subsidiary, or other person that provides services related to debt management services for the applicant or for any consumer;

A copy of each contract or fee–for–service arrangement between the applicant and any person that provides services related to the debt management services business;

A surety bond as required under § 12–914 of this subtitle; and

Any other information that the Commissioner reasonably requires.

If an applicant does not meet the requirements of this subtitle, the Commissioner:

The licensee’s legal name and any trade name used by the licensee in accordance with § 2–121 of this article;

The address of the licensee’s principal executive office; and

The address of each additional location, if any, where the licensee does business and that:

The licensee’s unique identifier; and

A statement advising consumers of the availability of the NMLS Consumer Access website to verify the licensing status of the licensee.

The licensee’s unique identifier;

A link to the NMLS Consumer Access website; and

A notice stating, “The Commissioner of Financial Regulation for the State of Maryland will accept any questions and complaints from Maryland residents regarding (name and unique identifier of the debt management services provider) at (address of Commissioner), phone (toll–free number of the Commissioner)”.

Begin on the date the license is issued; and

Expire on December 31 of the year:

Otherwise is entitled to be licensed;

Pays to the Commissioner the renewal fee established under § 12–904 of this subtitle;

Files with the Commissioner a surety bond renewal certificate or a new surety bond required under § 12–914 of this subtitle; and

Submits to the Commissioner a renewal application in the form, and in accordance with the process, that the Commissioner requires.

A licensee may surrender a license through NMLS in accordance with the process that the Commissioner requires.

With the surrender of a license, a licensee shall provide:

Affect any administrative, civil, or criminal liability of the licensee for acts committed before the license is surrendered;

Affect the surety bond required under § 12–914 of this subtitle; or

Entitle the licensee to the return of any fee paid to the Commissioner under § 12–904 of this subtitle.

The bond shall run to the Commissioner, as obligee, for the benefit of:

The bond shall be:

The liability of the surety:

A claim against the bond may be filed with the surety by:

If the amount of claims under a bond exceeds the amount of the bond, the surety:

The Commissioner may allow the amount of the surety bond to be reduced if the amount of the licensee’s outstanding debt management services liabilities in the State is reduced.

The amount of the surety bond under subsection (b) of this section shall be in an amount of not less than $10,000 and not more than $1,000,000, as determined by the Commissioner for each licensee.

In setting the amount of the surety bond, the Commissioner may consider:

Except for a change of a licensed location made in compliance with subsection (d) of this section, a licensee shall update through NMLS any change in the information required to be included in the licensee’s application under § 12–908(b)(1) of this subtitle at least 30 days before the change is effective.

The licensee shall ensure that, after the change described in this subsection, the licensee will continue to satisfy the surety bond requirement under § 12–914 of this subtitle.

To request approval of a proposed change described in subsection (b) of this section, the licensee shall notify the Commissioner through NMLS of the proposed change and submit any information that the Commissioner requires.

For a proposed change in owner or agent acting on behalf of the licensee to manage a trust account, the Commissioner may determine that the filing of a new application for the issuance of a license is warranted.

Unless the Commissioner notifies the licensee that a different time period is necessary, the Commissioner shall approve or deny a request for a change described in subsection (b) of this section within 60 days after the date the Commissioner receives all information required under paragraph (1) of this subsection.

A licensee may not add, delete, or modify a location required to be listed in NMLS under § 12–911(a)(2) or (3) of this subtitle unless:

The licensee may not do business at a location required to be listed in NMLS by § 12–911(a)(2) or (3) of this subtitle until the location is recorded with the information associated with the licensee’s license in NMLS.

A licensee may not perform debt management services for a consumer unless:

In addition to the requirements under paragraph (1) of this subsection, before providing debt management services for a consumer, a debt management services provider shall provide a written notice to the consumer stating:

Be signed and dated by the licensee and the consumer; and

Include, in at least 12 point type:

Maintain separate records of account for each consumer to whom the licensee is providing debt management services;

Disburse any funds paid by or on behalf of a consumer to the consumer’s creditors within 8 business days after receipt of the funds; and

Except as provided in subsections (g)(3) and (i) of this section, until after the licensee and consumer have executed a debt management services agreement; and

Only as allowed under this section.

A licensee may charge a 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.

Subject to paragraph (2) of this subsection, a licensee may charge a monthly maintenance fee not exceeding $8 for each creditor of a consumer that is listed in the debt management services agreement between the licensee and the consumer.

The total fees charged to a consumer under paragraph (1) of this subsection may not exceed $40 per month.

Prepare a financial analysis or an initial budget plan for the consumer;

Counsel a consumer about debt management;

Provide a consumer with the consumer education program described in the licensee’s license application; or

Rescind a debt management services agreement.

A licensee may not require a voluntary contribution from a consumer for any service provided by the licensee to the consumer.

A licensee may accept a voluntary contribution from a consumer for a debt management service provided by the licensee to the consumer if the aggregate amount of the voluntary contribution and any other fees received by the licensee from the consumer for debt management services does not exceed the total amount the licensee is authorized to charge the consumer under subsections (b) and (c) of this section.

Before providing debt management services to a consumer, a licensee shall provide the consumer a list of services and their charges describing:

A licensee may not, 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.

A licensee may charge a consumer a fee 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 licensee.

In addition to any other right of rescission contained in the debt management services agreement, a consumer may modify or rescind a debt management services agreement if the consumer is notified of a creditor’s nonparticipation under this subsection.

If a creditor that is listed as participating in the debt management services agreement declines to participate in debt management services under the agreement, the licensee shall notify the consumer by certified mail, or other verifiable means approved by the consumer, at least 5 business days before the consumer’s next scheduled payment under the agreement.

The notice shall include:

A consumer who rescinds a debt management services agreement under this subsection is entitled to a refund of all unexpended funds that the consumer has paid to the licensee for the reduction of the consumer’s debt.

The debt management services agreement shall be void; and

The licensee shall return the amount of the unauthorized fees, charges, funds, or payments to the consumer.

The amount of funds received from the consumer for payment to the consumer’s creditors since the last report; and

The amounts and dates of disbursements made to each creditor of the consumer since the last report.

At least once during each calendar quarter; and

On cancellation or termination of the debt management services agreement.

Purchase any debt or obligation of a consumer;

Lend money or provide credit to a consumer;

Obtain a mortgage or other security interest in property owned by a consumer;

Operate as a collection agency, as defined in § 7–101 of the Business Regulation Article;

Structure a debt management services agreement in a manner that would result in a negative amortization of any of the consumer’s debts;

Make any false, misleading, or deceptive representations or omissions of information in connection with the offer, sale, or performance of any service;

Offer, pay, or give a substantial gift, bonus, premium, reward, or other compensation to a person for referring a prospective customer to the licensee;

Offer an incentive, including a gift, bonus, premium, reward, or other compensation, to a consumer for executing a debt management services agreement with the licensee;

Charge for or provide credit insurance;

Compromise any debts of a consumer unless the licensee has obtained the prior written approval of the consumer, and the compromise benefits the consumer;

Enter into a contract or fee–for–service arrangement with a person owned, controlled by, or affiliated with an officer, a director, or an employee of the debt management services provider, or with a relative of an officer, a director, or an employee, that benefits an officer, a director, or an employee of the debt management services provider;

Advertise, display, distribute, broadcast, televise, or otherwise publish debt management service rates, terms, or services in a false, misleading, or deceptive manner;

Pay an incentive to an employee for enrolling a consumer in a debt management services plan or agreement; or

Violate any provision of federal or State law governing debt management services or other related services.

Notwithstanding any other provision of State law, a licensee may not, directly or indirectly, collect any fee for referring, advising, procuring, arranging, or assisting a consumer in obtaining any extension of credit or other consumer service from a lender or service provider if the licensee, or any owner, officer, director, principal, or employee of the licensee, is an owner, partner, director, officer, or employee of the lender or service provider.

This subsection does not prohibit a licensee from referring, advising, procuring, arranging, or assisting a consumer in obtaining any extension of credit or other consumer service from a lender or service provider of which the licensee, or any owner, officer, director, principal, or employee of the licensee, is an owner, partner, director, officer, or employee, if:

On or before April 30 of each year, a licensee shall report to the Commissioner on the debt management services business of the licensee conducted during the preceding calendar year.

The annual report shall be on the form that the Commissioner requires.

The report shall include:

Within 15 days after the occurrence of any of the following events, a licensee shall file a written report with the Commissioner describing the event and its expected impact on the licensee’s activities in the State:

The written report required under paragraph (1) of this subsection shall be sent to the Commissioner by certified mail, return receipt requested, and include details sufficient to identify the event.

A general ledger containing all assets, liability, capital, income, and expense accounts;

Each debt management services agreement between the licensee and a consumer;

Books and records for each consumer with whom the licensee has a debt management services agreement;

Bank statements and bank reconciliation records;

A copy of each written summary required under § 12–916(a)(1)(i)2 of this subtitle; and

A copy of each signed acknowledgment required under § 12–916(a)(1)(i)3 of this subtitle.

Notifies the Commissioner in writing of the location of the books, accounts, and records; and

Makes the books, accounts, and records available at a location in the State, as agreed by the Commissioner and the licensee, within 7 days after a written request for examination by the Commissioner.

Original form; or

Photographic, electronic, or other similar form approved by the Commissioner.

A licensee shall keep all books, accounts, and records relating to a consumer confidential, and may not disclose any information about a consumer except to a duly authorized government official, the consumer, or the consumer’s representative.

A duly authorized government official may disclose information obtained under paragraph (1) of this subsection only in accordance with Title 4 of the General Provisions Article.

A licensee;

A person that is engaged or participating in the business of providing debt management services; and

Any other person that the Commissioner has cause to believe is violating this subtitle or any regulation adopted under this subtitle, whether that person claims to be within or beyond the scope of this subtitle.

Shall be given access to any licensed location or other place of business and all books, papers, records, safes, and vaults of the person under investigation; and

May summon and examine under oath any person whose testimony the Commissioner requires.

If a person fails to comply with a subpoena or summons of the Commissioner under this subtitle or to testify concerning any matter about which the person may be interrogated under this subtitle, the Commissioner may file a petition for enforcement with the circuit court for any county.

On petition by the Commissioner, the court may order the person to attend and testify or produce evidence.

The Commissioner, in lieu of an examination, may accept the examination report of a responsible supervisory agency of another state.

A report accepted under paragraph (1) of this subsection is considered for all purposes as an official report of the Commissioner.

Examine all books, accounts, and records that the Commissioner determines are necessary to conduct a complete examination, including the books, accounts, and records in the possession of a subsidiary, affiliate, or other person that relate to the operation of and services provided by the licensee’s debt management services business; and

Examine under oath any owner, officer, director, principal, and employee of the licensee or any other individual who may provide information on behalf of the licensee.

Fraudulently or deceptively obtains or attempts to obtain a license;

Fraudulently or deceptively uses a license or debt management services license number;

Presents or attempts to present the debt management services license number of another licensee as the applicant’s or licensee’s debt management services license number;

Violates any provision of this subtitle or any regulation adopted under this subtitle;

Is convicted under the laws of the United States or of any state of:

In connection with the provision of debt management services:

Engages in false, misleading, or deceptive advertising; or

Otherwise demonstrates unworthiness, bad faith, dishonesty, or any other quality that indicates that the business of the applicant or licensee has not been or will not be conducted honestly, fairly, and equitably.

The nature of the crime;

The relationship of the crime to the activities authorized by the license;

With respect to a felony, the relevance of the conviction to the fitness and qualification of the applicant or licensee to provide debt management services;

The length of time since the conviction; and

The behavior and activities of the applicant or licensee since the conviction.

Committed a violation of subsection (a) of this section that directly results in property damage or monetary loss by any other person; and

Has not restored the property or money to the person or paid the value of the property to the person.

The Commissioner may enforce the provisions of this subtitle and regulations adopted under this subtitle by:

An order issued under this subsection may apply to a licensee’s agent that violates any provision of this subtitle or the regulations adopted under this subtitle.

If a violator fails to comply with an order issued under paragraph (1)(i) of this subsection, the Commissioner may impose a civil penalty not exceeding $25,000 for each violation from which the violator failed to cease and desist or for which the violator failed to take corrective affirmative action.

The seriousness of the violation;

The good faith of the violator;

The violator’s history of previous violations;

The deleterious effect of the violation on the public;

The assets of the violator; and

Any other factors relevant to the determination of the financial penalty.