§ 19-14.8-28 - Prohibited acts and practices.
SECTION 19-14.8-28
§ 19-14.8-28 Prohibited acts andpractices. – (a) A provider may not, directly or indirectly:
(1) Misappropriate or misapply money held in trust;
(2) Settle a debt on behalf of an individual for more thanfifty percent (50%) of the principal amount of the debt owed a creditor, unlessthe individual assents to the settlement after the creditor has assented;
(3) Take a power of attorney that authorizes it to settle adebt, unless the power of attorney expressly limits the providers authority tosettle debts for not more than fifty percent (50%) of the principal amount ofthe debt owed a creditor;
(4) Exercise or attempt to exercise a power of attorney afteran individual has terminated an agreement;
(5) Initiate a transfer from an individuals account at a bankor with another person unless the transfer is:
(A) A return of money to the individual; or
(B) Before termination of an agreement, properly authorizedby the agreement and this chapter, and for:
(i) Payment to one or more creditors pursuant to a plan; or
(ii) Payment of a fee;
(6) Offer a gift or bonus, premium, reward, or othercompensation to an individual for executing an agreement;
(7) Offer, pay, or give a gift or bonus, premium, reward, orother compensation to a person for referring a prospective customer, if theperson making the referral has a financial interest in the outcome ofdebt-management services provided to the customer, unless neither the providernor the person making the referral communicates to the prospective customer theidentity of the source of the referral;
(8) Receive a bonus, commission, or other benefit forreferring an individual to a person;
(9) Structure a plan in a manner that would result in anegative amortization of any of an individual's debts, unless a creditor thatis owed a negatively amortizing debt agrees to refund or waive the financecharge upon payment of the principal amount of the debt;
(10) Compensate its employees on the basis of a formula thatincorporates the number of individuals the employee induces to enter intoagreements;
(11) Settle a debt or lead an individual to believe that apayment to a creditor is in settlement of a debt to the creditor unless, at thetime of settlement, the individual receives a certification by the creditorthat the payment is in full settlement of the debt;
(12) Make a representation that:
(A) The provider will furnish money to pay bills or preventattachments;
(B) Payment of a certain amount will permit satisfaction of acertain amount or range of indebtedness; or
(C) Participation in a plan will or may prevent litigation,garnishment, attachment, repossession, foreclosure, eviction, or loss ofemployment;
(13) Misrepresent that it is authorized or competent tofurnish legal advice or perform legal services;
(14) Represent that it is a not-for-profit entity unless itis organized and properly operating as a not-for-profit under the law of thestate in which it was formed or that it is a tax-exempt entity unless it hasreceived certification of tax-exempt status from the Internal Revenue Service;
(15) Take a confession of judgment or power of attorney toconfess judgment against an individual; or
(16) Employ an unfair, unconscionable, or deceptive act orpractice, including the knowing omission of any material information.
(b) If a provider furnishes debt-management services to anindividual, the provider may not, directly or indirectly:
(1) Purchase a debt or obligation of the individual;
(2) Receive from or on behalf of the individual:
(A) A promissory note or other negotiable instrument otherthan a check or a demand draft; or
(B) A post-dated check or demand draft;
(3) Lend money or provide credit to the individual, except asa deferral of a settlement fee at no additional expense to the individual;
(4) Obtain a mortgage or other security interest from anyperson in connection with the services provided to the individual;
(5) Except as permitted by federal law, disclose the identityor identifying information of the individual or the identity of theindividual's creditors, except to:
(A) The director, upon proper demand;
(B) A creditor of the individual, to the extent necessary tosecure the cooperation of the creditor in a plan; or
(C) The extent necessary to administer the plan;
(6) Except as otherwise provided in subsection 19-14.8-23(f),provide the individual less than the full benefit of a compromise of a debtarranged by the provider;
(7) Charge the individual for or provide credit or otherinsurance, coupons for goods or services, membership in a club, access tocomputers or the Internet, or any other matter not directly related todebt-management services or educational services concerning personal finance; or
(8) Furnish legal advice or perform legal services, unlessthe person furnishing that advice to or performing those services for theindividual is licensed to practice law.
(c) This chapter does not authorize any person to engage inthe practice of law.
(d) A provider may not receive a gift or bonus, premium,reward, or other compensation, directly or indirectly, for advising, arranging,or assisting an individual in connection with obtaining, an extension of creditor other service from a lender or service provider, except for educational orcounseling services required in connection with a government-sponsored program.
(e) Unless a person supplies goods, services, or facilitiesgenerally and supplies them to the provider at a cost no greater than the costthe person generally charges to others, a provider may not purchase goods,services, or facilities from the person if an employee or a person that theprovider should reasonably know is an affiliate of the provider:
(1) Owns more than ten percent (10%) of the person; or
(2) Is an employee or affiliate of the person.