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had a pre-existing law (dating back at least to 1992) but recently repealed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.
Current through End of 2006 Reg. Sess.
K.S.A. § 50-1116
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
50-1116.
(a) K.S.A. 50-1116 through 50-1135, and
amendments thereto, shall be known and may be cited as the
(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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
K.S.A. § 50-1119
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
(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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
(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
(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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
(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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
K.S.A. § 50-1133
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 50.--UNFAIR TRADE AND CONSUMER PROTECTION
ARTICLE 11.--CREDIT SERVICES ORGANIZATIONS
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
CHAPTER 21.--CRIMES AND PUNISHMENTS
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
(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 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.
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
New Section 1. (a) Sections 1 through 20, and amendments thereto,
shall be known and may be cited as the
(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
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
(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
(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
(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
(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
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
(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)
END OF DOCUMENT
Case Law
I identified no significant cases construing the act.