Defines certain terms related to budget planners and regulates the activities of budget planners.

---

S5215B-2011 Actions

• Jun 13, 2012: referred to codes
• Jun 13, 2012: DELIVERED TO ASSEMBLY
• Jun 13, 2012: PASSED SENATE
• Jun 13, 2012: ORDERED TO THIRD READING CAL.1235
• Jun 13, 2012: COMMITTEE DISCHARGED AND COMMITTED TO RULES
• Jun 1, 2012: PRINT NUMBER 5215C
• Jun 1, 2012: AMEND AND RECOMMIT TO FINANCE
• Jan 18, 2012: REPORTED AND COMMITTED TO FINANCE
• Jan 4, 2012: REFERRED TO CONSUMER PROTECTION
• Jun 24, 2011: COMMITTED TO RULES
• Jun 14, 2011: AMENDED ON THIRD READING 5215B
• Jun 14, 2011: ADVANCED TO THIRD READING
• Jun 13, 2011: 2ND REPORT CAL.
• Jun 7, 2011: 1ST REPORT CAL.1060
• Jun 2, 2011: PRINT NUMBER 5215A
• Jun 2, 2011: AMEND AND RECOMMIT TO BANKS
• May 17, 2011: REPORTED AND COMMITTED TO BANKS
• May 3, 2011: REFERRED TO CONSUMER PROTECTION

S5215B-2011 Meetings

Consumer Protection: Jan 18, 2012

S5215B-2011 Calendars

Floor Calendar: Jun 15, 2011 , Floor Calendar: Jun 16, 2011 , Floor Calendar: Jun 17, 2011 , Floor Calendar: Jun 21, 2011 , Floor Calendar: Jun 22, 2011 , Floor Calendar: Jun 23, 2011 , Floor Calendar: Jun 24, 2011

S5215B-2011 Votes

S5215B-2011 Memo

BILL NUMBER:S5215B

TITLE  OF  BILL:    An  act  to amend the general business law and the
banking law, in relation to defining terms related to budget  planning
and regulating the activities of budget planners

PURPOSE:
The  purpose  of  this  bill  is to expand the scope of current law to
require  persons  conducting  debt  settlement  and  debt   management
services to be registered as budget planners under the jurisdiction of
the Department of Financial Regulation and require all budget planners
to  disclose  specific  information  necessary  for  consumers to make
informed decision  regarding  whether  budget  planning  services  are
appropriate  for  them.  The  bill  further  regulates  fees  paid  by
consumers to budget planners.

SUMMARY OF PROVISIONS:
Includes in the  definition  of  budget  planning  those  persons  who
provide  debt  settlement and debt management services and removes the
requirement that all budget planners have not-for-profit tax status.

Adds new definitions of the terms "person", "principal amount  of  the
debt",  "debt  management  plan"  and "debt settlement plan." The bill
requires that persons engaged in the business of budget planning  must
first obtain a license from the superintendent. The bill also provides
exemptions  from  the  license  requirement for: attorneys licensed to
practice law and who don't hold themselves out as budget planners; any
public officer while acting in an official capacity  and  any  persons
acting  under  a court order; persons performing services as part of a
dissolution of a business enterprise; any bank, trust company, savings
bank, savings and loan association or credit union; and  any  attorney
providing legal services under the federal bankruptcy code.

Requires   budget  planners  to  make  four  specific  disclosures  to
consumers including: how long  it  will  take  for  consumers  to  see
results;  how  much  the  services  will  likely  cost;  the  negative
consequences that could result from using debt  relief  services;  and
key  information  about  dedicated  accounts if they choose to require
them.

Prohibits upfront fees to be paid  by  consumers  prior  to  receiving
budget  planning  services.  The bill also establishes a fee structure
that provides a 25 percent cap on fees whether the fees are paid as  a
proportion  to  the  entire debt balance as the individual debt amount
bears to the entire debt amount or as a percentage of the amount saved
as a result of the debt settlement.

The bill requires that if a consumer must establish an account for the
purposes of licensee's fees or the payment of funds to  creditors  the
account  must  be held in an insured financial institution; the debtor
maintains ownership of the funds; if the licensee doesn't  manage  the
account, the manager of the account must not have any affiliation with
the  licensee;  the manager of the account must not give or accept any
compensation in exchange for referrals; and the  debtor  may  withdraw
from the budget plan at any time without penalty and receive all funds


minus  fees  earned  by  the  licensee.  Lastly,  the bill prohibits a
licensee from misrepresenting any material aspect of budget planning.

JUSTIFICATION:
As  the  size  and scope of consumer debt has risen in this country so
has the growth of the debt settlement industry. As more and  more  New
Yorkers  have  become  unable  to  pay their debts, the option of debt
settlement has become even more attractive.

The expansion of this industry, however, has come with  its  share  of
burdens.  Legitimate  debt settlement companies are being tarnished by
the  fraud  and  abuse  that  is  apparent  throughout  the  industry.
Hundreds   of   debt   settlement   companies   are  operating  in  an
under-regulated  environment  and  lack  enforceable   standards   and
regulations,  which  has  eroded  confidence  in debt settlement among
regulators and consumers. For the debt settlement industry  to  remain
relevant  and  succeed  as  an effective option for New Yorkers facing
financial  hardship  over  the  long-term,  the   state   must   adopt
enforceable standards and seek appropriate oversight from regulators.

In October, 2010, the Federal Trade Commission (FTC) amended the Tele-
marketing  Sales  Rule  (TSR)  to  add  specific  provisions  to  curb
deceptive  and  abusive  practices  associated  with  debt  settlement
services. The new rule, however, only applies to for-profit sellers of
debt  relief services and telemarketers for debt settlement companies.
In addition, the new rule does not apply  to  in-person  marketing  of
debt settlement services.

The  new  rule expands the scope of the TSR to cover not only outbound
telemarketing calls but now will cover inbound calls from consumers to
debt settlement companies as well. The rule further makes  it  illegal
to  charge  upfront  fees  and  requires  the  disclosure  of  certain
information before signing people up for  services.  This  bill  would
codify  the  FTC  rules  into  New  York Law strengthening the state's
current budget planner statute and providing necessary protections  to
New York consumers. Furthermore, this bill goes beyond the FTC rule to
cover both for-profit and not-for-profit debt settlement providers and
will  also apply to in-person sales and marketing of services that the
FTC rule fails to provide.

The bill further protects consumers by prohibiting a  debt  settlement
company  from  charging  more  than  twenty-five  percent  of the debt
balance as the individual debt amount bears to the entire debt  amount
or  as  a  percentage  of  the  amount  saved  as  a result ofthe debt
settlement.

In addition to the enhanced consumer  protection  provisions  of  this
bill,  the  legislation  seeks to remedy a long-standing misconception
regarding for-profit debt settlement companies. Current New  York  law
requires "budget planners" to be non-profit organizations. The current
approach  to  regulating  budget  planners by allowing only non-profit
providers to become licensed is based on  the  false  conclusion  that
non-profit  providers offer a better service to consumers than taxable
providers. Taxable and non-profit providers  coexist  and  compete  in
health care, education, utilities and social services across the state
of  New  York.  These services should not be regulated on the basis of
tax status, but  on  the  provider's  qualifications  and  service  to


consumers.  No  state  has  ever  determined  that the tax status of a
legitimate debt settlement provider influences the quality of  service
being offered.

Effective  laws  and  regulations  governing  this  industry will help
ensure that consumers are  sufficiently  protected  when  seeking  the
services  of  debt  settlement providers. Requiring high standards for
providing these services will ensure that only organizations committed
to helping consumers will be permitted to operate.

LEGISLATIVE HISTORY:
New.

FISCAL IMPLICATIONS:
Undetermined.

EFFECTIVE DATE:
This act shall take effect on the 180th day after it shall have become
a law.

S5215B-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                   5215--B
      Cal. No. 1060

                         2011-2012 Regular Sessions

                              I N  SENATE

                                 May 3, 2011
                                 ___________

  Introduced  by  Sens.  GRIFFO, ZELDIN -- read twice and ordered printed,
    and when  printed  to  be  committed  to  the  Committee  on  Consumer
    Protection  -- reported favorably from said committee and committed to
    the Committee on Banks -- committee discharged, bill amended,  ordered
    reprinted  as  amended  and  recommitted to said committee -- reported
    favorably from said committee, ordered to  first  and  second  report,
    ordered  to  a third reading, amended and ordered reprinted, retaining
    its place in the order of third reading

  AN ACT to amend the  general  business  law  and  the  banking  law,  in
    relation  to  defining terms related to budget planning and regulating
    the activities of budget planners

    THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section  1.  Section  455  of  the general business law, as amended by
  chapter 629 of the laws of 2002, subdivisions 1  and  4  as  amended  by
  chapter 456 of the laws of 2006, is amended to read as follows:

    S 455. Definitions. 1. Budget planning, as used in this article, means
  the  making  of  a  contract between a person [or entity] engaged in the
  business of budget planning with a particular debtor whereby THE  DEBTOR
  AGREES  TO  PAY  TO  SUCH  PERSON ANY VALUABLE CONSIDERATION AND (i) the
  debtor agrees to pay a sum or sums of money in any manner  or  form  and
  the  person  [or  entity]  engaged  in  the  business of budget planning
  distributes, or supervises, coordinates or controls the distribution of,
  or has a contractual relationship with another person [or  entity]  that
  distributes,  or  supervises,  coordinates or controls such distribution
  of, the same among certain specified creditors in accordance with a plan
  agreed upon [and]; OR (ii) the [debtor agrees to pay to such  person  or
  entity,  or such other person or entity that distributes, or supervises,
  coordinates or controls such distribution of, a sum or  sums  of  money,
  any  valuable  consideration for such services or for any other services
  rendered in connection therewith.] PERSON ENGAGED  IN  THE  BUSINESS  OF

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD11381-04-1

 S. 5215--B                          2

  BUDGET  PLANNING PROVIDES ADVICE OR SERVICES, OR ACTS AS AN INTERMEDIARY
  BETWEEN OR ON BEHALF OF A DEBTOR AND ONE OR MORE OF THE DEBTOR'S  CREDI-
  TORS,  WHERE THE PRIMARY PURPOSE OF THE ADVICE, SERVICE, OR ACTION IS TO
  OBTAIN  A  SETTLEMENT, ADJUSTMENT, OR SATISFACTION OF THE DEBTOR'S UNSE-
  CURED DEBT TO A CREDITOR IN AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT  OF
  THE DEBT OR IN AN AMOUNT LESS THAN THE CURRENT  OUTSTANDING  BALANCE  OF
  THE DEBT; OR (III) THE PERSON ENGAGED IN THE BUSINESS OF BUDGET PLANNING
  PROVIDES  SERVICES  RELATED TO, OR PROVIDES SERVICES ADVISING, ENCOURAG-
  ING, ASSISTING, OR COUNSELING A DEBTOR  TO,  ACCUMULATE  FUNDS  FOR  THE
  PRIMARY  PURPOSE OF PROPOSING, OBTAINING, OR SEEKING TO OBTAIN A SETTLE-
  MENT, ADJUSTMENT, OR SATISFACTION OF THE DEBTOR'S UNSECURED  DEBT  TO  A
  CREDITOR  IN  AN AMOUNT LESS THAN THE PRINCIPAL AMOUNT OF THE DEBT OR IN
  AN AMOUNT LESS THAN THE CURRENT OUTSTANDING BALANCE OF THE DEBT  TO  PAY
  TO  SUCH  PERSON. For the purposes of this article, a person [or entity]
  shall be considered as engaged in the business of budget planning in New
  York, and subject to this article and the licensing and  other  require-
  ments of article twelve-C of the banking law, if such person [or entity]
  solicits  budget  planning business within this state and, in connection
  with such solicitation, enters into a contract for budget planning  with
  an individual then resident in this state.
    2.  PERSON,  AS  USED  IN  THIS  ARTICLE, MEANS AN INDIVIDUAL, LIMITED
  LIABILITY COMPANY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
    3. Person, as used in this article, shall not include a person [admit-
  ted to practice law in this state.
    3. Entity, as used in this article, shall not include a firm, partner-
  ship, professional  corporation,  or  other  organization,  all  of  the
  members  or  principals  of  which  are admitted to practice law in this
  state.
    4. Person or entity as used in this article shall not include a type B
  not-for-profit corporation as defined in section two hundred one of  the
  not-for-profit  corporation law of this state, or an entity incorporated
  in another state and having a similar not-for-profit  status,]  licensed
  by  the  superintendent[,]  to engage in the business of budget planning
  [as defined in this section] OR EXEMPT FROM LICENSURE AS A BUDGET  PLAN-
  NER UNDER ARTICLE TWELVE-C OF THE BANKING LAW.
    [5. Any attorney licensed to practice law in this state who is engaged
  in budget planning shall (a) negotiate directly with creditors on behalf
  of  the  client; (b) ensure that all moneys received from the client are
  deposited in the attorney's account maintained for client funds; (c) pay
  creditors from such account; and  (d)  offer  budget  planning  services
  through the same legal entity that the attorney uses to practice law.]
    S  2.  Section  456 of the general business law, as amended by chapter
  456 of the laws of 2006, is amended to read as follows:

    S 456. Budget planning prohibited. No person [or entity] shall  engage
  in  the  business  of budget planning as defined in section four hundred
  fifty-five of this article, except as authorized in article twelve-C  of
  the banking law.
    S  3.  Section  457 of the general business law, as amended by chapter
  629 of the laws of 2002, is amended to read as follows:

    S 457. Penalty. Whoever either individually or as officer, director or
  employee of any person[, firm, association or corporation,] violates any
  of the provisions of [the preceding] section FOUR HUNDRED  FIFTY-SIX  OF
  THIS ARTICLE shall be guilty of a misdemeanor for each such violation.
    S  4. Section 579 of the banking law is renumbered section 579-a and a
  new section 579 is added to read as follows:

    S 579. DEFINITIONS. AS USED IN THIS ARTICLE:


 S. 5215--B                          3

    1. "PERSON" MEANS AN INDIVIDUAL, PARTNERSHIP, LIMITED LIABILITY COMPA-
  NY, CORPORATION, ASSOCIATION, OR ANY OTHER LEGAL ENTITY.
    2.  "PRINCIPAL  AMOUNT  OF  THE DEBT" MEANS THE TOTAL AMOUNT OWED BY A
  DEBTOR TO ONE OR MORE CREDITORS FOR A DEBT THAT IS INCLUDED  IN  A  DEBT
  SETTLEMENT PLAN AT THE TIME WHEN THE DEBTOR ENTERS INTO SUCH DSP.
    3.  "DEBT  MANAGEMENT PLAN" OR "DMP" MEANS A CONTRACT BETWEEN A PERSON
  AND A DEBTOR WHEREBY  THE  PERSON  WILL  PROVIDE  BUDGET  PLANNING  THAT
  CONTEMPLATES THAT CREDITORS WILL REDUCE FINANCE CHARGES OR FEES FOR LATE
  PAYMENT, DEFAULT OR DELINQUENCY.
    4.  "DEBT  SETTLEMENT PLAN" OR "DSP" MEANS A CONTRACT BETWEEN A PERSON
  AND A DEBTOR WHEREBY  THE  PERSON  WILL  PROVIDE  BUDGET  PLANNING  THAT
  CONTEMPLATES  THAT CREDITORS WILL SETTLE DEBTS FOR LESS THAN THE PRINCI-
  PAL AMOUNT OF THE DEBT.
    S 5. Section 579-a of the banking law, as amended by  chapter  629  of
  the  laws  of  2002  and  as  renumbered by section four of this act, is
  amended to read as follows:

    S 579-a.  Doing business without license prohibited. [Only  a  type  B
  not-for-profit  corporation as defined in section two hundred one of the
  not-for-profit corporation law of this state, or an entity  incorporated
  in  another state and having a similar not-for-profit status,] NO PERSON
  shall engage in the business of budget planning as defined  in  subdivi-
  sion  one of section four hundred fifty-five of the general business law
  of this state except as authorized by this  article  and  without  first
  obtaining a license from the superintendent, EXCEPT:

    1.  ANY ATTORNEY LICENSED TO PRACTICE LAW IN THIS STATE WHEN ACTING IN
  THE ORDINARY PRACTICE OF LAW AND THROUGH THE ENTITY USED BY THE ATTORNEY
  IN THE ORDINARY PRACTICE OF LAW, AND NOT HOLDING HIMSELF OR HERSELF  OUT
  AS  A BUDGET PLANNER, AND NOT PROVIDING BUDGET PLANNING SERVICES, EXCEPT
  AS INCIDENTAL TO LEGAL REPRESENTATION; OR
    2. ANY PUBLIC OFFICER WHILE ACTING IN AN  OFFICIAL  CAPACITY  AND  ANY
  PERSON ACTING UNDER COURT ORDER; OR
    3. ANY PERSON WHILE PERFORMING SERVICES INCIDENTAL TO THE DISSOLUTION,
  WINDING UP, OR LIQUIDATING OF A PARTNERSHIP, CORPORATION, OR OTHER BUSI-
  NESS ENTERPRISE; OR
    4.  ANY  BANK,  TRUST  COMPANY, SAVINGS BANK, SAVINGS AND LOAN ASSOCI-
  ATION, OR CREDIT UNION, WHETHER INCORPORATED,  CHARTERED,  OR  ORGANIZED
  UNDER THE LAWS OF THIS STATE OR ANY OTHER STATE OR THE UNITED STATES, OR
  ANY  OPERATING  SUBSIDIARY OR AFFILIATE OF ANY SUCH BANK, TRUST COMPANY,
  SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION OR CREDIT  UNION  WHICH  DOES
  NOT  ENGAGE  IN  BUDGET  PLANNING  EXCEPT  AS  INCIDENTAL TO ITS BANKING
  SERVICES; OR
    5. AN ATTORNEY IN PROVIDING INFORMATION, ADVICE,  OR  LEGAL  REPRESEN-
  TATION  WITH RESPECT TO FILING A CASE OR PRECEDING UNDER TITLE 11 OF THE
  UNTIES STATES CODE; OR
    6. SUCH OTHER PERSONS AS MAY BE SPECIFICALLY EXEMPTED  BY  THE  SUPER-
  INTENDENT IN HIS OR HER SOLE DISCRETION AND CONSISTENT WITH THE PURPOSES
  OF THIS ARTICLE AND THE RULES AND REGULATIONS PROMULGATED HEREUNDER.
    S  6.  Subdivision  4 of section 583-a of the banking law, as added by
  chapter 142 of the laws of 1992, is amended to read as follows:

    4. As used in this section[: (a)],  the  term  ["person"  includes  an
  individual, partnership, corporation, association or any other organiza-
  tion,  and  (b)  the  term]  "control" means the possession, directly or
  indirectly, of the power to direct or cause the direction of the manage-
  ment and policies of a licensee, whether through the ownership of voting
  stock of such licensee, the ownership of  voting  stock  of  any  person
  which  possesses  such  power or otherwise. Control shall be presumed to

 S. 5215--B                          4

  exist if any person, directly or indirectly,  owns,  controls  or  holds
  with  power  to  vote  ten per centum or more of the voting stock of any
  licensee or of any person which owns, controls or holds  with  power  to
  vote  ten per centum or more of the voting stock of any licensee, but no
  person shall be deemed to control a licensee solely by reason  of  being
  an  officer  or  director of such licensee or person. The superintendent
  may in his discretion, upon the application of a licensee or any  person
  who,  directly or indirectly, owns, controls or holds with power to vote
  or seeks to own, control or hold with power to vote any voting stock  of
  such  licensee, determine whether or not the ownership, control or hold-
  ing of such voting stock constitutes or would constitute control of such
  licensee for purposes of this section.
    S 7. Sections 584-a and  584-b  of  the  banking  law  are  renumbered
  sections  584-c and 584-d and two new sections 584-a and 584-b are added
  to read as follows:

    S 584-A. DISCLOSURES. BEFORE A DEBTOR SIGNS A CONTRACT WITH A LICENSEE
  FOR BUDGET PLANNING, THE LICENSEE MUST DISCLOSE TRUTHFULLY, IN  A  CLEAR
  AND CONSPICUOUS MANNER, THE FOLLOWING MATERIAL INFORMATION:

    1.  THE  AMOUNT  OF TIME NECESSARY TO ACHIEVE THE REPRESENTED RESULTS,
  AND TO THE EXTENT THAT THE BUDGET  PLANNING  MAY  INCLUDE  A  SETTLEMENT
  OFFER  TO  ANY OF THE DEBTOR'S CREDITORS OR DEBT COLLECTORS, THE TIME BY
  WHICH THE LICENSEE WILL MAKE A BONA FIDE SETTLEMENT  OFFER  TO  EACH  OF
  THEM;
    2.  TO  THE  EXTENT  THAT THE BUDGET PLANNING MAY INCLUDE A SETTLEMENT
  OFFER TO ANY OF THE DEBTOR'S CREDITORS OR DEBT COLLECTORS, THE AMOUNT OF
  MONEY OR THE PERCENTAGE OF EACH OUTSTANDING DEBT THAT  THE  DEBTOR  MUST
  ACCUMULATE BEFORE THE LICENSEE WILL MAKE A BONA FIDE SETTLEMENT OFFER TO
  EACH OF THEM;
    3. TO THE EXTENT THAT ANY ASPECT OF THE BUDGET PLANNING RELIES UPON OR
  RESULTS  IN THE DEBTOR'S FAILURE TO MAKE TIMELY PAYMENTS TO CREDITORS OR
  DEBT COLLECTORS, THAT  THE  USE  OF  THE  BUDGET  PLANNING  WILL  LIKELY
  ADVERSELY AFFECT THE DEBTOR'S CREDITWORTHINESS, MAY RESULT IN THE DEBTOR
  BEING SUBJECT TO COLLECTION ACTIONS OR SUED BY CREDITORS OR DEBT COLLEC-
  TORS,  AND  MAY  INCREASE THE AMOUNT OF MONEY THE DEBTOR OWES DUE TO THE
  ACCRUAL OF FEES AND INTEREST; AND
    4. TO THE EXTENT THAT THE LICENSEE REQUESTS OR REQUIRES THE DEBTOR  TO
  PLACE  FUNDS IN AN ACCOUNT AT AN INSURED FINANCIAL INSTITUTION, THAT THE
  DEBTOR OWNS THE FUNDS HELD IN THE ACCOUNT, THE DEBTOR MAY WITHDRAW  FROM
  THE  BUDGET  PLANNING  AT  ANY  TIME WITHOUT PENALTY, AND, IF THE DEBTOR
  WITHDRAWS, THE DEBTOR MUST RECEIVE ALL FUNDS IN THE ACCOUNT, OTHER  THAN
  FEES  EARNED BY THE LICENSEE, WITHIN SEVEN BUSINESS DAYS OF THE DEBTOR'S
  REQUEST.
    S 584-B. FEES. A LICENSEE SHALL NOT RECEIVE  PAYMENT  OF  ANY  FEE  OR
  CONSIDERATION FOR ANY BUDGET PLANNING UNTIL AND UNLESS:

    1.  THE  LICENSEE  HAS  RENEGOTIATED,  SETTLED,  REDUCED, OR OTHERWISE
  ALTERED THE TERMS OF AT LEAST ONE DEBT PURSUANT  TO  A  DEBT  SETTLEMENT
  PLAN OR DEBT MANAGEMENT PLAN;
    2.  THE  DEBTOR  HAS  MADE  AT LEAST ONE PAYMENT PURSUANT TO THAT DEBT
  SETTLEMENT PLAN OR DEBT MANAGEMENT PLAN; AND
    3. THE FEE OR CONSIDERATION FOR SETTLING EACH INDIVIDUAL DEBT ENROLLED
  IN A DEBT SETTLEMENT PLAN SHALL NOT EXCEED TWENTY-FIVE  PERCENT  OF  THE
  DEBT AT THE TIME IT WAS ENROLLED, AND MUST EITHER:

    (A)  BEAR  THE  SAME  PROPORTIONAL  RELATIONSHIP  TO THE TOTAL FEE FOR
  SETTLING THE ENTIRE DEBT BALANCE AS THE INDIVIDUAL DEBT AMOUNT BEARS  TO
  THE  ENTIRE  DEBT AMOUNT. THE INDIVIDUAL DEBT AMOUNT AND THE ENTIRE DEBT

 S. 5215--B                          5

  AMOUNT ARE THOSE OWED AT THE TIME THE DEBT WAS ENROLLED  IN  THE  BUDGET
  PLANNING; OR
    (B) BE A PERCENTAGE OF THE AMOUNT SAVED AS A RESULT OF THE SETTLEMENT.
  THE  PERCENTAGE CHARGED CANNOT CHANGE FROM ONE INDIVIDUAL DEBT TO ANOTH-
  ER. THE AMOUNT SAVED IS THE DIFFERENCE BETWEEN THE AMOUNT  OWED  AT  THE
  TIME THE DEBT WAS ENROLLED IN THE BUDGET PLANNING AND THE AMOUNT ACTUAL-
  LY PAID TO SATISFY THE DEBT.
    4.  NOTHING  IN  THIS  SECTION  PROHIBITS  REQUESTING OR REQUIRING THE
  DEBTOR TO PLACE FUNDS IN AN ACCOUNT TO BE USED FOR THE  LICENSEE'S  FEES
  AND FOR PAYMENTS TO CREDITORS OR DEBT COLLECTORS, PROVIDED THAT:

    (A)  THE FUNDS ARE HELD IN AN ACCOUNT AT AN INSURED FINANCIAL INSTITU-
  TION;
    (B) THE DEBTOR OWNS THE FUNDS HELD IN THE ACCOUNT AND IS PAID  ACCRUED
  INTEREST ON THE ACCOUNT, IF ANY;
    (C) IF THE LICENSEE DOES NOT ADMINISTER THE ACCOUNT, THE ENTITY ADMIN-
  ISTERING THE ACCOUNT IS NOT OWNED OR CONTROLLED BY, OR IN ANY WAY AFFIL-
  IATED WITH, THE LICENSEE;
    (D)  THE  ENTITY ADMINISTERING THE ACCOUNT DOES NOT GIVE OR ACCEPT ANY
  MONEY OR OTHER COMPENSATION IN EXCHANGE FOR REFERRALS OF BUSINESS BY THE
  LICENSEE; AND
    (E) THE DEBTOR MAY WITHDRAW FROM THE BUDGET PLANNING AT ANY TIME WITH-
  OUT PENALTY, AND MUST RECEIVE ALL FUNDS IN THE ACCOUNT, OTHER THAN  FEES
  EARNED  BY  THE  LICENSEE,  WITHIN  SEVEN  BUSINESS DAYS OF THE DEBTOR'S
  REQUEST.
    S 8. Section 584-d of the banking law, as renumbered by section  seven
  of  this  act,  is  amended  by  adding a new subdivision 3-a to read as
  follows:

    3-A. NO LICENSEE SHALL MISREPRESENT, DIRECTLY OR BY  IMPLICATION,  ANY
  MATERIAL  ASPECT  OF ANY BUDGET PLANNING, INCLUDING, BUT NOT LIMITED TO,
  THE AMOUNT OF MONEY OR THE PERCENTAGE OF THE DEBT AMOUNT THAT  A  DEBTOR
  MAY  SAVE BY USING SUCH SERVICE; THE AMOUNT OF TIME NECESSARY TO ACHIEVE
  THE REPRESENTED RESULTS; THE AMOUNT OF MONEY OR THE PERCENTAGE  OF  EACH
  OUTSTANDING DEBT THAT THE DEBTOR MUST ACCUMULATE BEFORE THE BUDGET PLAN-
  NER  WILL  INITIATE ATTEMPTS WITH THE DEBTOR'S CREDITORS OR DEBT COLLEC-
  TORS OR MAKE A BONA FIDE OFFER TO NEGOTIATE, SETTLE, OR MODIFY THE TERMS
  OF THE DEBTOR'S DEBT; THE EFFECT OF THE SERVICE ON A DEBTOR'S CREDITWOR-
  THINESS; THE EFFECT OF THE SERVICE ON COLLECTION EFFORTS OF THE DEBTOR'S
  CREDITORS OR DEBT COLLECTORS; THE PERCENTAGE OR NUMBER  OF  DEBTORS  WHO
  ATTAIN  THE  REPRESENTED  RESULTS;  AND  WHETHER  THE BUDGET PLANNING IS
  OFFERED OR PROVIDED BY A NON-PROFIT ENTITY.
    S 9. This act shall take effect on the one hundred eightieth day after
  it shall have become a law.