CHAPTER 15. CREDIT SERVICES ORGANIZATIONS
IC 24-5-15
Chapter 15. Credit Services Organizations
IC 24-5-15-1
"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.
As added by P.L.142-1990, SEC.1.
IC 24-5-15-2
"Credit services organization" 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) Obtaining a lower interest rate for:
(A) a consumer loan; or
(B) a residential mortgage loan;
to which the buyer is a debtor or a prospective debtor.
(5) Providing debt settlement services on behalf of a buyer.
(6) Providing advice or assistance to a buyer concerning the
services described in subdivisions (1) through (5).
(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 Indiana.
(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 practice of law in Indiana if the
person is acting within the course and scope of the person's
practice as an attorney.
(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.)).
(9) A loan servicer acting on behalf of the holder of:
(A) a consumer loan; or
(B) a residential mortgage loan.
(10) A debt management company (as defined in
IC 28-1-29-1(2)).
As added by P.L.142-1990, SEC.1. Amended by P.L.8-1991, SEC.7;
P.L.79-1998, SEC.27; P.L.171-2006, SEC.1; P.L.114-2010, SEC.13.
IC 24-5-15-2.5
"Debt settlement services" defined
Sec. 2.5. As used in this chapter, "debt settlement services" means
any of the following services that a person performs, offers to
perform, or represents, either directly or by implication, that the
person will perform with respect to a debt between a buyer and one
(1) or more unsecured creditors or debt collectors:
(1) A renegotiation of the debt.
(2) A settlement of the debt.
(3) An alteration of the terms of payment or other terms of the
debt, including a reduction in the balance, interest rate, or fees
owed by the buyer to the creditor or debt collector.
As added by P.L.114-2010, SEC.14.
IC 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.
As added by P.L.142-1990, SEC.1. Amended by P.L.171-2006,
SEC.2.
IC 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.
As added by P.L.142-1990, SEC.1.
IC 24-5-15-5
Deceptive acts
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 Indiana; or
(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.
As added by P.L.142-1990, SEC.1. Amended by P.L.171-2006,
SEC.3.
IC 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:
(A) at no charge at the times and under the circumstances set
forth in 15 U.S.C. 1681j; and
(B) for a minimal charge at any other time as provided by 15
U.S.C. 1681j(f).
(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.
As added by P.L.142-1990, SEC.1. Amended by P.L.114-2010,
SEC.15.
IC 24-5-15-7
Contract between consumer and credit services organization;
notice of cancellation form
Sec. 7. (a) Except as provided in subsection (d), 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 Indiana authorized to receive service of
process.
(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.
(d) If a contract is subject to this chapter and to IC 24-5.5, IC 24-5.5-4 applies to the contract.
As added by P.L.142-1990, SEC.1. Amended by P.L.209-2007, SEC.1.
IC 24-5-15-8
Surety bond or irrevocable letter of credit; filing with attorney
general
Sec. 8. (a) Before doing business in Indiana, a credit services
organization must:
(1) obtain a surety bond in the amount of twenty-five thousand
dollars ($25,000), issued by a surety company authorized to do
business in Indiana in favor of the state for the benefit of a
person that is damaged by a violation of this chapter; and
(2) file a copy of the surety bond obtained under subdivision (1)
with the attorney general.
(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. A credit services organization that obtains an irrevocable
letter of credit under this subsection must file a copy of the
irrevocable letter of credit with the attorney general before doing
business in Indiana.
As added by P.L.142-1990, SEC.1. Amended by P.L.171-2006,
SEC.4; P.L.114-2010, SEC.16.
IC 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.
As added by P.L.142-1990, SEC.1.
IC 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.
As added by P.L.142-1990, SEC.1.
IC 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 Marion County.
As added by P.L.142-1990, SEC.1.