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 whois solicited to purchase or who purchases the services of a creditservices 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 byanother person, sells, provides, performs, or represents that theperson can or will sell, provide, or perform, in return for the paymentof money or other valuable consideration, any of the followingservices:
(1) Improving a buyer's credit record, credit history, or creditrating.
(2) Obtaining an extension of credit for a buyer.
(3) Obtaining a delay or forbearance of a buyer's obligationunder 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 theservices described in subdivisions (1) through (5).
(b) The term "credit services organization" does not include anyof the following:
(1) A person authorized to make loans or extensions of creditunder state or federal laws that is subject to regulation andsupervision under state or federal laws, or a lender approved bythe United States Secretary of Housing and Urban Developmentfor participation in a mortgage insurance program under thefederal National Housing Act (12 U.S.C. 1701 et seq.).
(2) A bank or savings association or a subsidiary of a bank orsavings association that has deposits or accounts that areeligible for insurance by the Federal Deposit InsuranceCorporation.
(3) A credit union doing business in Indiana.
(4) A nonprofit organization exempt from taxation underSection 501(c)(3) of the Internal Revenue Code.
(5) A person licensed as a real estate broker under IC 25-34.1if the person is acting within the course and scope of theperson's license.
(6) A person admitted to the practice of law in Indiana if theperson is acting within the course and scope of the person's
practice as an attorney.
(7) A broker-dealer registered with the Securities and ExchangeCommission or the Commodity Futures Trading Commission ifthe broker-dealer is acting within the course and scope of thebroker-dealer's regulation.
(8) A consumer reporting agency (as defined in the Federal FairCredit 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 inIC 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" meansany of the following services that a person performs, offers toperform, or represents, either directly or by implication, that theperson 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 thedebt, including a reduction in the balance, interest rate, or feesowed 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 theright to: (1) defer payment of debt offered or granted primarily forpersonal, family, or household purposes;
(2) incur debt and defer payment of the debt offered or grantedprimarily 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, acorporation, 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 considerationbefore the complete performance of services that a creditservices organization has agreed to perform for or on behalf ofa consumer, unless the credit services organization has undersection 8 of this chapter:
(A) obtained a surety bond issued by a surety companyadmitted to do business in Indiana; or
(B) established an irrevocable letter of credit.
(2) To charge or receive money or other valuable considerationto refer a buyer to a retail seller that will or may extend creditto the buyer if the extension of credit is made upon substantiallythe same terms as those available to the general public.
(3) To make or to advise a buyer to make a statement withrespect to the buyer's creditworthiness, credit standing, or creditcapacity that is:
(A) false or misleading; or
(B) that should be known by the exercise of reasonable careto be false or misleading;
to a consumer reporting agency or to a person that has extendedcredit to the buyer or to whom the buyer is applying for anextension of credit.
(4) To make or use a false or misleading representation in anoffer to sell or a sale of the services of a credit servicesorganization, including:
(A) guaranteeing to "erase bad credit" or using words to thateffect unless the representation clearly discloses that this canbe done only if a person's credit history is inaccurate orobsolete;
(B) guaranteeing an extension of credit regardless of thebuyer's previous credit history unless the representationclearly discloses the eligibility requirements for obtainingthe extension of credit; or
(C) requiring a buyer to waive a right protected by a state orfederal law.
(5) To take a power of attorney from a buyer for any purposeother 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 orreceiving money or other valuable consideration, a credit servicesorganization must provide the buyer with a written statement thatcontains the following:
(1) A complete and detailed description of the services to beperformed by the credit services organization for the buyer andthe total cost of the services.
(2) A statement explaining the buyer's right to proceed againstthe 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 theaccount number of the surety account;
required under section 8 of this chapter.
(4) A complete and accurate statement of the buyer's right toreview any file on the buyer maintained by a consumerreporting agency as provided under the Fair Credit ReportingAct (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 setforth in 15 U.S.C. 1681j; and
(B) for a minimal charge at any other time as provided by 15U.S.C. 1681j(f).
(6) A complete and accurate statement of the buyer's right todispute the completeness or accuracy of an item contained in afile on the buyer maintained by a consumer reporting agency.
(7) A statement that accurate information cannot bepermanently removed from the files of a consumer reportingagency.
(8) A complete and accurate statement indicating whenconsumer information becomes obsolete and when consumerreporting agencies are prevented from issuing reportscontaining obsolete information.
(9) A complete and accurate statement of the availability ofnonprofit 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 contractbetween a consumer and a credit services organization concerningthe purchase of the services of the credit services organization mustbe in writing, be dated and signed by both the consumer and thecredit services organization, and include all of the following:
(1) A statement in at least 10 point boldface type in immediateproximity to the space reserved for the signature of the buyerthat reads:
"You, the buyer, may cancel this contract at any time beforemidnight of the third business day after the date of thetransaction. See the attached notice of cancellation form foran explanation of this right.".
(2) The terms and conditions of payment, including the totalamount of all payments to be made by the buyer to the creditservices organization or to another person.
(3) A complete and detailed description of the services to beperformed and the results to be achieved by the credit services
organization for or on behalf of the buyer, including allguarantees and all promises of full or partial refunds and a listof the adverse information appearing on the consumer's creditreport that the credit services organization expects to havemodified and the estimated date by which each modificationwill occur.
(4) The principal business address of the credit servicesorganization and the name and address of the credit servicesorganization's agent in Indiana authorized to receive service ofprocess.
(b) A contract shall be accompanied by two (2) copies of a formcaptioned "NOTICE OF CANCELLATION" attached to the contractand that contains the following statement in at least 10 point boldfacetype:
NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation, atany time before midnight of the third business day after the date thecontract is signed.
If you cancel, any payment made by you under this contract will bereturned within ten days following receipt by the seller of yourcancellation 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 thecompleted contract and all other documents required by the creditservices organization to the buyer at the time the contract and thedocuments 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 attorneygeneral
Sec. 8. (a) Before doing business in Indiana, a credit servicesorganization must:
(1) obtain a surety bond in the amount of twenty-five thousanddollars ($25,000), issued by a surety company authorized to dobusiness in Indiana in favor of the state for the benefit of aperson 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 requirementunder subsection (a) and, instead of the bond, accept an irrevocableletter of credit for an equivalent amount issued in favor of the statefor the benefit of a person that is damaged by a violation of thischapter. A credit services organization that obtains an irrevocableletter of credit under this subsection must file a copy of theirrevocable letter of credit with the attorney general before doingbusiness 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 servicesorganization's violation of this chapter may:
(1) bring an action to recover the greater of two (2) times theamount of actual damages or one thousand dollars ($1,000) andattorney's fees; and
(2) bring an action against the bond or irrevocable letter ofcredit required under section 8 of this chapter to recover anamount 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 orcredit 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 deceptiveact that is actionable by the attorney general under IC 24-5-0.5-4 andis subject to the penalties and remedies available to the attorneygeneral under IC 24-5-0.5. An action by the attorney general forviolations of this chapter may be brought in the circuit or superiorcourt of Marion County.
As added by P.L.142-1990, SEC.1.