Chapter 15. Credit Services Organizations
Title 24. Trade Regulation
Article
5. Consumer Sales
Chapter 15. Credit Services Organizations
24-5-1 5-1
"Buyer" defined
Sec. 1. As used in this chapter, "buyer" means an
individual who is solicited to purchase or who purchases the services of a
credit services organization.
24-5-15-2 "Credit
services orga
nization" defined
Sec. 2. (a) As used in this chapter, "credit services
organization" means a person that, with respect to the extension of credit
by another person, sells, provides, performs, or represents that the person can
or will sell, provide, or perform, in return for the payment of money or other
valuable consideration, any of the following services:
(1) Improving a buyer's credit record, credit history, or credit rating.
(2) Obtaining an extension of credit for a buyer.
(3) Obtaining a delay or forbearance of a buyer's obligation under
a mortgage.
(4) Providing advice or assistance to a buyer concerning the
services described in subdivision (1), (2), or (3).
(b) The term "credit services organization" does not
include any of the following:
(1) A person authorized to make loans or extensions of credit under state or federal laws that is subject to regulation and supervision under state or federal laws, or a lender approved by the United States Secretary of Housing and Urban Development for participation in a mortgage insurance program under the federal National Housing Act (12 U.S.C. 1701 et seq.).
(2) A bank or savings
association or a subsidiary of a bank or savings association that has deposits
or accounts that are eligible for insurance by the Federal Deposit Insurance
Corporation.
(3) A credit union doing
business in
(4) A nonprofit organization
exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.
(5) A person licensed as a real
estate broker under IC 25-34.1 if the person is acting within the course and
scope of the person's license.
(6) A person admitted to the pr
actice of law in
(7) A broker-dealer registered
with the Securities and Exchange Commission or the Commodity Futures Trading
Commission if the broker-dealer is acting within the course and scope of the
broker-dealer's regulation.
(8) A consumer reporting agency
(as defined in the Federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.)).
24-5-15-3
"Extension of credit" defined
Sec. 3. As used in this chapter, "extension of credit"
means the right to:
(1) defer payment of debt offered or granted primarily for personal, family, or household purposes;
(2) incur debt and defer payment of the debt offered or granted
primarily for personal, family, or household purposes; or
(3) delay or avoid foreclosure on a buyer's residence.
24-5-15-4
"Person" defined
Sec. 4. As used in this chapter, "person" means an
individual, a corporation, a partnership, a joint venture, or any other entity.
Sec. 5. The following are deceptive acts:
(1) To charge or receive money or other valuable consideration before the complete performance of services that a credit services organization has agreed to perform for or on behalf of a consumer, unless the credit services organization has under section 8 of this chapter:
(A) obtained a surety bond
issued by a surety company admitted to do business in
(B) established an irrevocable
letter of credit.
(2) To charge or receive money or other valuable consideration to
refer a buyer to a retail seller that will or may extend credit to the buyer if
the extension of credit is made upon substantially the same terms as those
available to the general public.
(3) To make or to advise a buyer to make a statement with respect
to the buyer's creditworthiness, credit standing, or credit capacity that is:
(A) false or misleading; or
(B) that should be known by the exercise of
reasonable care to be false or misleading;
to a consumer reporting agency or to a person that has extended
credit to the buyer or to whom the buyer is applying for an extension of
credit.
(4) To make or use a false or misleading representation in an
offer to sell or a sale of the services of a credit services organization,
including:
(A) guaranteeing to "erase
bad credit" or using words to that effect unless the representation
clearly discloses that this can be done only if a person's credit history is
inaccurate or obsolete;
(B) guaranteeing an extension
of credit regardless of the buyer's previous credit history unless the
representation clearly discloses the eligibility requirements for obtaining the
extension of credit; or
(C) requiring a buyer to waive
a right protected by a state or federal law.
(5) To take a power of attorney from a buyer for any purpose other
than inspecting documents as provided by law.
24-5-15-6 Written
statement provided by credit services organization
Sec. 6. Before executing a contract or agreement with a buyer or
receiving money or other valuable consideration, a credit services organization
must provide the buyer with a written statement that contains the following:
(1) A complete and detailed description of the services to be performed by the credit services organization for the buyer and the total cost of the services.
(2) A statement explaining the buyer's right to proceed against
the bond or surety account required under section 8 of this chapter.
(3) The name and address of
the:
(A) surety company that issued
a bond; or
(B) depository and the trustee
of a surety account and the account number of the surety account;
required under section 8 of this chapter.
(4) A
complete and accurate statement of the buyer's right to review any file on the
buyer maintained by a consumer reporting agency as provided under the Fair
Credit Reporting Act (15 U.S.C. 1681 et seq.).
(5) A statement that the buyer's file is available for review:
been denied; and
(B) for a minimal charge at any
other time.
(6) A
complete and accurate statement of the buyer's right to dispute the
completeness or accuracy of an item contained in a file on the buyer maintained
by a consumer reporting agency.
(7) A
statement that accurate information cannot be permanently removed from the
files of a consumer reporting agency.
(8) A
complete and accurate statement indicating when consumer information becomes
obsolete and when consumer reporting agencies are prevented from issuing
reports containing obsolete information.
(9) A
complete and accurate statement of the availability of nonprofit credit
counseling services.
24-5-15-7 Contract
between consumer and credit services organization; notice of cancellation form
Sec. 7. (a) A contract between a consumer and a credit services
organization concerning the purchase of the services of the credit services
organization must be in writing, be dated and signed by both the consumer and
the credit services organization, and include all of the following:
(1) A statement in at least 10 point boldface type in immediate proximity to the space reserved for the signature of the buyer that reads:
"You, the buyer, may cancel this contract at any time before
midnight of the third business day after the date of the transaction. See the
attached notice of cancellation form for an explanation of this right.".
(2) The terms and conditions of
payment, including the total amount of all payments to be made by the buyer to
the credit services organization or to another person.
(3) A complete and detailed
description of the services to be performed and the results to be achieved by
the credit services organization for or on behalf of the
buyer, including all guarantees and all promises of full or partial refunds and
a list of the adverse information appearing on the consumer's credit report
that the credit services organization expects to have modified and the
estimated date by which each modification will occur.
(4) The principal business
address of the credit services organization and the name and address of the
credit services organization's agent in
(b) A contract shall be accompanied by two (2) copies of a form
captioned "NOTICE OF CANCELLATION" attached to the contract and that
contains the following statement in at least 10 point boldface type:
NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation, at any time
before midnight of the third business day after the date the contract is
signed. If you cancel, any payment made by you under this contract will be
returned within ten days following receipt by the seller of your cancellation
notice, or any other written notice, to _____________________________________
(name of seller)
_______________________________________________________________________________
(address of seller) (place of business)
not later than midnight _______________________________________________________
(date)
"I hereby cancel this transaction". ___________________________________________
(date)
_______________________________________________________________________________
(buyer's signature)
(c) A credit services organization shall give a copy of the
completed contract and all other documents required by the credit services
organization to the buyer at the time the contract and the documents are
signed.
24-5-15-8 Surety bond
requirement
Sec. 8. (a) Before doing
business in
(b) The attorney general
may waive the bonding requirement under subsection (a) and, instead of the
bond, accept an irrevocable letter of credit for an equivalent amount issued in
favor of the state for the benefit of a person that is damaged by a violation
of this chapter.
24-5-15-9 Damage
claims; alternative actions
Sec. 9. A person that is damaged by a credit services
organization's violation of this chapter may:
(1) bring an action to recover the greater of two (2) times the amount of actual damages or one thousand dollars ($1,000) and attorney's fees; and
(2)
bring an action against the bond or irrevocable letter of credit required under
section 8 of this chapter to recover an amount equal to the person's actual
damages.
24-5-15-10 Waiver of
provisions
Sec. 10. A waiver of the provisions of this chapter by a buyer or
credit services organization is void.
24-5-15-11 Violations;
penalties; court jurisdiction
Sec. 11. A person who violates
this chapter commits a deceptive act that is actionable by the attorney general
under IC 24-5-0.5-4 and is subject to the penalties and remedies available to the attorney general
under IC 24-5-0.5. An action by the attorney general for violations of this
chapter may be brought in the circuit or superior court of
Current through the 2007 Public Laws approved and effective
through April 27, 2007.
END OF DOCUMENT
Case Law
I identified no significant cases construing the act.