Debt Counseling, Debt Consolidation, and Debt Settlement Practices Improvement Act of 2003 - Prohibits an organization that engages in debt counseling, debt consolidation, or debt settlement from engaging in specified unfair and deceptive practices including: (1) unreasonable disclosure of information to third parties regarding amounts owed by any consumer; (2) undisclosed relationship between a debt counseling organization and a debt consolidation or debt settlement organization; (3) diversion of periodic payments from creditor to debt settlement organization; and (4) payment in advance of full performance of service.
Requires a written, dated contract signed by the consumer as a prerequisite to services provided by any organization offering debt counseling, debt consolidation, or debt settlement.
Prescribes contract terms. Establishes the consumer right to cancel such contract.
Declares void and unenforceable any waiver by the consumer of the protections of this Act.
Requires registration with the Secretary of the Treasury of any debt counseling, debt consolidation, or debt settlement organization.
Establishes civil liability for non-compliance with this Act.
Grants the Federal Trade Commission and the States enforcement powers to implement this Act.
Prohibits any requirement or prohibition from being imposed under the laws of any State with respect to any subject matter regulated under this Act.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3331 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 3331
To amend the Consumer Credit Protection Act to protect consumers from
unfair and deceptive practices by organizations providing debt
counseling, debt consolidation, or debt settlement services, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 17, 2003
Ms. Carson of Indiana (for herself, Mr. Owens, Mr. Lipinski, Mrs.
Napolitano, Mrs. Jones of Ohio, Mr. Ryan of Ohio, Mr. Davis of
Illinois, Mr. Hinchey, Mr. Thompson of Mississippi, Ms. Lee, and Mr.
Sanders) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Consumer Credit Protection Act to protect consumers from
unfair and deceptive practices by organizations providing debt
counseling, debt consolidation, or debt settlement services, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Debt Counseling, Debt Consolidation,
and Debt Settlement Practices Improvement Act of 2003''.
SEC. 2. DEBT COUNSELING, DEBT CONSOLIDATION, AND DEBT SETTLEMENT
PRACTICES.
The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is
amended by adding at the end the following new title:
``TITLE X--DEBT COUNSELING, DEBT CONSOLIDATION, AND DEBT SETTLEMENT
PRACTICES
``SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.
``(a) Short Title.--This title may be cited as the ``Debt
Counseling, Debt Consolidation, and Debt Settlement Practices Act''.
``(b) Table of Contents.--The table of contents for this title is
as follows:
``TITLE X--DEBT COUNSELING, DEBT CONSOLIDATION, AND DEBT SETTLEMENT
PRACTICES
``Sec. 1001. Short title; table of contents.
``Sec. 1002. Definitions.
``Sec. 1003. Prohibited practices.
``Sec. 1004. Debt counseling, debt consolidation, or debt
settlement organization contracts.
``Sec. 1005. Right to cancel contract.
``Sec. 1006. Noncompliance with this title.
``Sec. 1007. Registration of organization.
``Sec. 1008. Civil liability.
``Sec. 1009. Administrative enforcement.
``Sec. 1010. Statute of limitations.
``Sec. 1011. Relation to State law.
``Sec. 1012. Effective date.
``SEC. 1002. DEFINITIONS.
``For purposes of this title, the following definitions shall
apply:
``(1) Commission.--The term `Commission' means the Federal
Trade Commission.
``(2) Consumer.--The term `consumer' means an individual.
``(3) Creditor.--The term `creditor' has the same meaning
as in section 103.
``(4) Debt consolidation.--The term `debt consolidation'
means a transaction involving a loan or other extension of
credit to a consumer for a purpose that at least includes the
repayment in full of 2 or more existing loans or extensions of
credit to the consumer, without regard to whether any of such
existing loans or extensions of credit is in troubled
condition.
``(5) Debt consolidation organization.--The term `debt
consolidation organization'--
``(A) means any person who uses any instrumentality
of interstate commerce or the mails to sell, provide,
or perform (or represent that such person can or will
sell, provide, or perform) any service, in return for
the payment of money or other valuable consideration,
for the express or implied purpose of--
``(i) engaging in a debt consolidation
transaction with a consumer; or
``(ii) providing any advice or assistance
to any consumer with regard to any activity or
service which results in or may result in a
debt consolidation transaction;
``(B) includes any nonprofit organization which is
exempt from taxation under section 501(c)(3) of the
Internal Revenue Code of 1986 other than an
organization described in subparagraph (C); and
``(C) does not include--
``(i) any creditor, with respect to any
consumer, to the extent the creditor is
assisting the consumer to restructure any debt
owed by the consumer to the creditor;
``(ii) any depository institution (as that
term is defined in section 3 of the Federal
Deposit Insurance Act) or any Federal or State
credit union (as those terms are defined in
section 101 of the Federal Credit Union Act),
or any affiliate or subsidiary of such a
depository institution or credit union;
``(iii) any government-sponsored enterprise
(as defined in section 1404(e)(1) of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989);
``(iv) any attorney at law, if providing
debt counseling, debt consolidation, or debt
settlement services are incidental to, and not
the principal business of, the practice of such
attorney;
``(v) any certified public accountant, if
providing debt counseling, debt consolidation,
or debt settlement services are incidental to,
and not the principal business of, the
accounting practice of such accountant;
``(vi) any title insurer or abstract
company, while doing escrow business; or
``(vii) a judicial officer or person acting
under court order.
``(6) Debt counseling organization.--The term `debt
counseling organization' means any person who--
``(A) uses any instrumentality of interstate
commerce or the mails to provide education, counseling
to individuals or groups, or debt management services
to help consumers manage money and credit; and
``(B) is not a debt consolidation organization or a
debt settlement organization.
``(7) Debt settlement.--The term `debt settlement' means
any action or negotiation initiated or taken by or on behalf of
any consumer with any creditor of the consumer for the purpose
of obtaining debt forgiveness of a portion of the credit
extended by the creditor to the consumer, or troubled debt
restructuring on terms that are more favorable to the consumer.
``(8) Debt settlement organization.--The term `debt
settlement organization'--
``(A) means any person who uses any instrumentality
of interstate commerce or the mails to sell, provide,
or perform (or represent that such person can or will
sell, provide, or perform) any service, in return for
the payment of money or other valuable consideration,
for the express or implied purpose of--
``(i) providing any debt settlement service
to, for, or on behalf of a consumer; or
``(ii) providing any advice or assistance
to any consumer with regard to any activity or
service described in clause (i);
``(B) includes any nonprofit organization which is
exempt from taxation under section 501(c)(3) of the
Internal Revenue Code of 1986 other than an
organization described in subparagraph (C); and
``(C) does not include--
``(ii) any creditor, with respect to any
consumer, to the extent the creditor is
assisting the consumer to restructure any debt
owed by the consumer to the creditor;
``(iii) any depository institution (as that
term is defined in section 3 of the Federal
Deposit Insurance Act) or any Federal or State
credit union (as those terms are defined in
section 101 of the Federal Credit Union Act),
or any affiliate or subsidiary of such a
depository institution or credit union;
``(iv) any attorney at law, if providing
debt counseling, debt consolidation, or debt
settlement services are incidental to, and not
the principal business of, the practice of such
attorney;
``(v) any certified public accountant, if
providing debt counseling, debt consolidation,
or debt settlement services are incidental to,
and not the principal business of, the
accounting practice of such accountant;
``(vi) any title insurer or abstract
company, while doing escrow business; or
``(vii) a judicial officer or person acting
under court order.
``SEC. 1003. PROHIBITED PRACTICES.
``(a) In General.--A debt counseling organization, a debt
consolidation organization and a debt settlement organization may not--
``(1) unreasonably disclose information to third parties
regarding amounts owed by any consumer;
``(2) make any fraudulent, deceptive, or misleading
representation to obtain information about any consumer, to
solicit business with any consumer, or in connection with
providing services for or on behalf of any consumer;
``(3) use any unconscionable means to obtain a contract
with any consumer collect or attempt to collect a debt owed to
the seller;
``(4) advertise, announce, solicit, or otherwise represent
as free or available without charge (including by use of other
words of similar meaning) any debt counseling, debt
consolidation, or debt settlement service for which the
organization charges the consumer or receives consideration
from a third party (including a related party); or
``(5) engage in any unfair or deceptive act or practice in
connection with any debt counseling, debt consolidation, or
debt settlement service provided to any consumer, in offering
or establishing any term or condition in any contract with a
consumer for providing any such service, or any advertisement
or solicitation relating to any such service.
``(b) Undisclosed Relationship Between a Debt Counseling
Organization and a Debt Consolidation or Debt Settlement
Organization.--No debt counseling organization may offer any service to
any consumer, or provide any advice or referral to any consumer, with
respect to any debt consolidation organization or any debt settlement
organization of which the debt counseling organization is an affiliate,
for which it is an agent, or with which the debt counseling
organization has an on-going business relationship or any reciprocal
referral agreement, unless the debt counseling organization--
``(1) fully discloses, orally and in writing, the existence
of the affiliation, agency, or business relationship or
reciprocal referral agreement to the consumer;
``(2) fully discloses, orally and in writing, the detail of
the financial relationship between the debt counseling
organization and the debt consolidation or debt settlement
organization, including the extent to which the debt counseling
organization benefits financially from any services or advice
provided by the counseling organization to the consumer that
results in any debt consolidation or debt settlement contract,
agreement, or transaction between the consumer and the debt
consolidation or debt settlement organization; and
``(3) such other information as the Commission may require
in regulations.
``(c) Diversion of Periodic Payments From Creditor to Debt
Settlement Organization.--
``(1) Offer or advice to consumer.--No debt counseling
organization, debt consolidation organization, or debt
settlement organization may suggest or advise any consumer to
stop making any payment or any portion of any payment, whether
periodic or otherwise, due from the consumer to any creditor
under the terms of a loan or extension of credit from the
creditor to the consumer for the purpose of facilitating debt
settlement negotiations with such creditor by or on behalf of
the consumer, unless the organization provides full written
disclosure to the consumer, and obtains a signed statement from
the consumer that the consumer has read and understood the
disclosure, that--
``(A) such action is or may be a violation of the
terms of the agreement between the consumer and the
creditor if the creditor has not agreed in writing to a
new payment arrangement;
``(B) the failure to make timely payments on any
loan or extension of credit in accordance with the
terms of the contract--
``(i) will be, or is likely to be, reported
as a late payment or a nonpayment to a consumer
reporting agency;
``(ii) will, or is likely to have, an
adverse effect on the creditworthiness of the
consumer such that the consumer may have
difficulty obtaining credit; and
``(C) if the consumer has not missed or failed to
make payments to the creditor, such action may not be
necessary in order for the consumer to obtain debt
settlement from the creditor.
``(2) Acceptance of payments diverted from a creditor.--No
debt settlement organization may accept or hold any payments
from a consumer intended for a creditor after a settlement has
been reached between the creditor and the debt settlement
organization beyond a reasonable amount of time necessary
solely for payment-processing purposes.
``(d) Payment in Advance.--
``(1) In general.--No debt counseling organization, debt
consolidation organization, or debt settlement organization may
collect any payment from a consumer prior to the payment being
earned as specifically defined in the contract between the
parties.
``(2) Full or final payment.--No debt counseling
organization, debt consolidation organization, or debt
settlement organization may charge or receive full or final
payment for the performance of any service which such
organization has agreed to perform for any consumer before such
service is fully performed by both parties in accordance with
the contract between the parties.
``SEC. 1004. DEBT COUNSELING, DEBT CONSOLIDATION, OR DEBT SETTLEMENT
ORGANIZATION CONTRACTS.
``(a) Written Contracts Required.--No services that require any
payment, voluntary donation, fee, or other consideration may be
provided by any debt counseling organization, debt consolidation
organization, or debt settlement organization for any consumer unless a
written and dated contract (for the purchase of such services) which
meets the requirements of subsection (b) has been signed by the
consumer.
``(b) Terms and Conditions of Contract.--No contract referred to in
subsection (a) meets the requirements of this subsection unless such
contract includes (in writing)--
``(1) the terms and conditions of payment, including--
``(A) a reasonable estimate of all payments and
fees to be made by the consumer to the debt counseling
organization, debt consolidation organization, or debt
settlement organization or to any other person over the
term of the contract, including a maximum amount; and
``(B) the amount of any monthly or other periodic
payment required under the contract to any such
organization or other person, the number of such
monthly or other periodic payments, and the terms
applicable with respect to such payments and any late
payment of, or default on, any such amount;
``(2) a full and detailed description of the services to be
performed by the debt counseling organization, debt
consolidation organization, or debt settlement organization for
the consumer, including--
``(A) all guarantees of performance; and
``(B) an estimate of--
``(i) the date by which the performance of
the services (to be performed by the
organization or any other person) will be
complete; or
``(ii) the length of the period necessary
to perform such services;
``(3) the name and principal business address of the debt
counseling organization, debt consolidation organization, or
debt settlement organization;
``(4) a conspicuous statement in bold face type, in
immediate proximity to the space reserved for the consumer's
signature on the contract, which reads as follows: ``You may
cancel this contract without penalty or obligation at any time
before midnight of the 3rd business day after the date on which
you signed the contract. See the attached notice of
cancellation form for an explanation of this right.''; and
``(5) no charges or fees may be imposed by the debt
counseling organization, debt consolidation organization, or
debt settlement organization for any activities or services
undertaken on behalf of the consumer by the organization before
the end of the 3-business-day period beginning on the date the
contract is signed, if the consumer exercises the right to
cancel the contract before the end of such period.
``SEC. 1005. RIGHT TO CANCEL CONTRACT.
``(a) In General.--Any consumer may cancel any contract with any
debt counseling organization, debt consolidation organization, or debt
settlement organization without penalty or obligation by notifying the
organization of the consumer's intention to do so at any time
before midnight of the 3rd business day which begins after the date on
which the contract or agreement between the consumer and the
organization is executed or would, but for this subsection, become
enforceable against the parties.
``(b) Cancellation Form and Other Information.--Each contract shall
be accompanied by a form, in duplicate, which has the heading `Notice
of Cancellation' and contains in bold face type the following
statement:
`You may cancel this contract, without any penalty or
obligation, at any time before midnight of the 3rd day which
begins after the date the contract is signed by you.
`To cancel this contract, mail or deliver in person a
signed, dated copy of this cancellation notice, or any other
written notice to [ name of debt counseling organization, debt
consolidation organization, or debt settlement organization ]
at [ address of such organization ] before midnight on [ date ]
`I hereby cancel this transaction,
[ date ]
[ purchaser's signature ].'.
``(c) Consumer Copy of Contract Required.--Any consumer who enters
into any contract with any debt counseling organization, debt
consolidation organization, or debt settlement organization shall be
given, by the organization--
``(1) a copy of the completed contract and the disclosure
statement required under section 1004; and
``(2) a copy of any other document the organization
requires the consumer to sign,
at the time the contract or the other document is signed.
``(d) Retention of Contract Records.--Any debt counseling
organization, debt consolidation organization, and debt settlement
organization shall maintain a copy of the contract signed by the
consumer for not less than 3 years after the date the services provided
under the contract have been fully performed, together with the
complete name, address, and phone number of the consumer at the time
the contract became effective.
``SEC. 1006. NONCOMPLIANCE WITH THIS TITLE.
``(a) Consumer Waivers Invalid.--Any waiver by any consumer of any
protection provided by or any right of the consumer under this title--
``(1) shall be treated as void; and
``(2) may not be enforced by any Federal or State court or
any other person.
``(b) Attempt To Obtain Waiver.--Any attempt by any person to
obtain a waiver from any consumer of any protection provided by or any
right of the consumer under this title shall be treated as a violation
of this title.
``(c) Contracts Not in Compliance.--Any contract for services which
does not comply with the applicable provisions of this title--
``(1) shall be treated as void; and
``(2) may not be enforced by any Federal or State court or
any other person.
``SEC. 1007. REGISTRATION OF ORGANIZATION.
``Any person who owns or controls a debt counseling organization,
debt consolidation organization, or debt settlement organization shall
register the organization (whether or not the organization is licensed
as a debt counseling organization, debt consolidation organization, or
debt settlement organization in any State) with the Secretary of the
Treasury not later than the end of the 180-day period beginning on the
later of--
``(A) the date of enactment of the Debt Counseling,
Debt Consolidation, and Debt Settlement Practices
Improvement Act of 2003; or
``(B) the date on which the organization is
established.
``(2) Form and manner of registration.--Subject to the
requirements of subsection (b), the Secretary of the Treasury
shall prescribe, by regulation, the form and manner for
registering a debt counseling organization, debt consolidation
organization, or debt settlement organization pursuant to
paragraph (1) which may be consistent with the registration
requirements for money transmitting businesses under section
5130 of title 31, United States Code.
``(3) Organizations remain subject to state law.--This
section shall not be construed as superseding any requirement
of State law relating to debt counseling organizations, debt
consolidation organizations, or debt settlement organizations
operating in such State, except to the extent provided in
section 1011.
``(4) False and incomplete information.--The filing of
false or materially incomplete information in connection with
the registration of a debt counseling organization, debt
consolidation organization, or debt settlement organization
shall be considered as a failure to comply with the
requirements of this section.
``(b) Contents of Registration.--The registration of a debt
counseling organization, debt consolidation organization, or debt
settlement organization under subsection (a) shall include the
following information:
``(1) The name and location of the organization.
``(2) The name and address of each person who--
``(A) owns or controls the organization;
``(B) is a director or officer of the organization;
or
``(C) otherwise participates in the conduct of the
affairs of the organization.
``(3) Such other information as the Federal Trade
Commission may require.
``(c) Civil Penalty for Failure To Comply With Registration
Requirements.--
``(1) In general.--Any person who fails to comply with any
requirement of this section or any regulation prescribed under
this section shall be liable to the United States for a civil
penalty of $5,000 for each such violation.
``(2) Continuing violation.--Each day a violation described
in paragraph (1) continues shall constitute a separate
violation for purposes of such paragraph.
``(3) Assessments.--Any penalty imposed under this
subsection shall be assessed and collected by the Secretary of
the Treasury in the manner provided in section 5321 of title
31, United States Code.
``SEC. 1008. CIVIL LIABILITY.
``(a) Liability Established.--Any person who fails to comply with
any provision of this title with respect to any other person shall be
liable to such person in an amount equal to the sum of the amounts
determined under each of the following paragraphs:
``(1) Actual damages.--The greater of--
``(A) the amount of any actual damage sustained by
such person as a result of such failure; or
``(B) any amount paid by the person to the debt
counseling organization, debt consolidation
organization, or debt settlement organization.
``(2) General damages.--
``(A) Individual actions.--In the case of any
action by an individual, such additional amount as the
court may allow.
``(B) Class actions.--In the case of a class
action, the sum of--
``(i) the aggregate of the amount which the
court may allow for each named plaintiff; and
``(ii) the aggregate of the amount which
the court may allow for each other class
member, without regard to any minimum
individual recovery.
``(3) Attorneys' fees.--In the case of any successful
action to enforce any liability under paragraph (1) or (2), the
costs of the action, together with reasonable attorneys' fees.
``(b) Factors To Be Considered in Awarding General Damages.--In
determining the amount of any liability of any debt counseling
organization, debt consolidation organization, or debt settlement
organization under subsection (a)(2), the court shall consider, among
other relevant factors--
``(1) the frequency and persistence of noncompliance by the
organization;
``(2) the nature of the noncompliance;
``(3) the extent to which such noncompliance was
intentional; and
``(4) in the case of any class action, the number of
consumers adversely affected.
``SEC. 1009. ADMINISTRATIVE ENFORCEMENT.
``(a) Federal Trade Commission.--
``(1) In general.--Except as provided in subsection (b),
compliance with the requirements imposed under this title with
respect to debt counseling organizations, debt consolidation
organizations, and debt settlement organizations shall be
enforced under the Federal Trade Commission Act by the Federal
Trade Commission.
``(2) Violations of this title treated as violations of
federal trade commission act.--
``(A) In general.--For the purpose of the exercise
by the Federal Trade Commission of the Commission's
functions and powers under the Federal Trade Commission
Act, any violation of any requirement or prohibition
imposed under this title with respect to debt
counseling organizations, debt consolidation
organizations, and debt settlement organizations shall
constitute an unfair or deceptive act or practice in
commerce in violation of section 5(a) of the Federal
Trade Commission Act.
``(B) Enforcement authority under other law.--All
functions and powers of the Federal Trade Commission
under the Federal Trade Commission Act shall be
available to the Commission to enforce compliance with
this title by any person subject to enforcement by the
Federal Trade Commission pursuant to this subsection,
including the power to enforce the provisions of this
title in the same manner as if the violation had been a
violation of any Federal Trade Commission trade
regulation rule, without regard to whether the debt
counseling organization, debt consolidation
organization, or debt settlement organization--
``(i) is engaged in commerce; or
``(ii) meets any other jurisdictional tests
in the Federal Trade Commission Act.
``(b) Civil Penalties.--
``(1) Penalty authorized.--The Federal Trade Commission may
impose a civil penalty on any debt counseling organization,
debt consolidation organization, or debt settlement
organization that violates any provision of this title other
than section 1007.
``(2) Maximum amount limitation.--The amount of any civil
money penalty imposed under paragraph (1) shall not exceed--
``(A) in the case of any person who knowingly or
recklessly violates this title, the greater of--
``(i) the amount (not to exceed $100,000)
of the debt of the consumer that was subject to
debt counseling, debt consolidation, or debt
settlement; or
``(ii) $25,000; and
``(B) in the case of any person who negligently
violates this title, $2000.
``(3) Continuing violations.--Each day a violation
continues under this title shall be treated as a separate
violation.
``(4) Time limitations for assessments and commencement of
civil actions.--
``(A) Assessments.--The Federal Trade Commission
may assess a civil penalty under this subsection at any
time before the end of the 6-year period beginning on
the date of the violation with respect to which the
penalty is assessed.
``(B) Civil actions.--The Commission may commence a
civil action to recover a civil penalty assessed under
this subsection at any time before the end of the 2-
year period beginning on the date the penalty was
assessed in any court with jurisdiction.
``(5) Criminal penalty not exclusive of civil penalty.--A
civil money penalty may be imposed under this subsection with
respect to any violation of this title (other than section
1007) notwithstanding the fact that a criminal penalty is
imposed with respect to the same violation.
``(6) Pattern of negligent activity.--If any debt
counseling organization, debt consolidation organization, or
debt settlement organization engages in a pattern of negligent
violations of any provision of this title (other than section
1007), or any regulation prescribed under this title, the
Federal Trade Commission may, in addition to any penalty
imposed under paragraph (2)(B) with respect to any such
violation, impose a civil money penalty of not more than
$50,000 on such organization.
``(7) Procedural provisions.--
``(A) Authority to modify or remit penalty.--The
Federal Trade Commission may compromise, modify, or
remit any penalty which the Commission may assess or
has already assessed under this subsection.
``(B) Mitigating factors.--In determining the
amount of any penalty imposed under this subsection,
the Commission shall take into account the
appropriateness of the penalty with respect to--
``(i) the size of financial resources and
good faith of the organization charged;
``(ii) the gravity of the violation;
``(iii) the history of previous violations;
and
``(iv) such other matters as justice may
require.
``(C) Appropriateness of penalty not reviewable.--
In any civil action under paragraph (4)(B), the
validity and appropriateness of the penalty shall not
be subject to review.
``(D) Disbursement.--All penalties collected under
authority of this paragraph shall be deposited into the
Treasury.
``(E) Regulations.--The Federal Trade Commission
shall prescribe regulations, after notice and
opportunity for a hearing under section 553 of title 5,
United States Code, establishing such procedures as may
be necessary to carry out this subsection.
``(c) State Action for Violations.--
``(1) Authority of states.--In addition to such other
remedies as are provided under State law, whenever the chief
law enforcement officer of a State, or an official or agency
designated by a State, has reason to believe that any person
has violated or is violating this title, the State--
``(A) may bring an action to enjoin such violation;
``(B) may bring an action on behalf of its
residents to recover damages for which the person is
liable to such residents under section 409 as a result
of the violation; and
``(C) in the case of any successful action under
subparagraph (A) or (B), shall be awarded the costs of
the action and reasonable attorney fees as determined
by the court.
``(2) Rights of commission.--
``(A) Notice to commission.--The State shall serve
prior written notice of any civil action under
paragraph (1) upon the Federal Trade Commission and
provide the Commission with a copy of its complaint,
except in any case where such prior notice is not
feasible, in which case the State shall serve such
notice immediately upon instituting such action.
``(B) Intervention.--The Commission shall have the
right--
``(i) to intervene in any action referred
to in subparagraph (A);
``(ii) upon so intervening, to be heard on
all matters arising in the action; and
``(iii) to file petitions for appeal.
``(3) Investigatory powers.--For purposes of bringing any
action under this subsection, nothing in this subsection shall
prevent the chief law enforcement officer, or an official or
agency designated by a State, from exercising the powers
conferred on the chief law enforcement officer or such official
by the laws of such State to conduct investigations or to
administer oaths or affirmations or to compel the attendance of
witnesses or the production of documentary and other evidence.
``(4) Limitation.--Whenever the Federal Trade Commission
has instituted a civil action for violation of this title, no
State may, during the pendency of such action, bring an action
under this section against any defendant named in the complaint
of the Commission for any violation of this title that is
alleged in that complaint.
``SEC. 1010. STATUTE OF LIMITATIONS.
``(a) In General.--Any action to enforce any liability under this
title may be brought before the end of the 5-year period beginning on
the date on which the occurrence of the violation is discovered or
reasonably should have been discovered by the exercise of due
diligence.
``(b) Willful Misrepresentation.--The limitations period prescribed
in subsection (a) shall be tolled during any period during which a
defendant has materially and willfully misrepresented any information
required under this title to be disclosed to an individual, and the
information so misrepresented is material to the establishment of the
liability of the defendant to that individual under this title.''.
``SEC. 1011. RELATION TO STATE LAW.
``No requirement or prohibition may be imposed under the laws of
any State with respect to any subject matter regulated under this
title.
``SEC. 1012. EFFECTIVE DATE.
``This title shall apply after the end of the 6-month period
beginning on the date of the enactment of the Debt Counseling, Debt
Consolidation, and Debt Settlement Practices Improvement Act of 2003,
except with respect to contracts entered into by a debt counseling
organization, debt consolidation organization, or debt settlement
organization before the end of such period.''.
SEC. 3. STUDY OF DEBT CONSOLIDATION AND DEBT SETTLEMENT INDUSTRY.
(a) Study Required.--The Federal Trade Commission and the Board of
Governors of the Federal Reserve System shall jointly conduct a study
of--
(1) the benefits and detrimental effects of the activities
of debt consolidation organizations and debt settlement
organizations for consumers and creditors generally, and the
economy, including the extent to which such activities have
contributed to a substantial decline in the total amount of
household debt and the average amount of debt per household;
and
(2) the extent to which such organizations are affiliates
of creditors, or maintain formal or informal relationships with
1 or more creditors in providing debt consolidation or debt
settlement services.
(b) Report.--Before the end of the 1-year period beginning on the
date of the enactment of this Act, the Federal Trade Commission and the
Board of Governors of the Federal Reserve System shall jointly submit a
report to the Congress containing the findings and conclusions of the
Commission and the Board pursuant to the study conducted pursuant to
subsection (a), together with such recommendations for legislative or
administrative action as the Commission and the Board may determine to
be appropriate.
(c) Definitions.--For purposes of this section, the terms
``creditor'', ``debt consolidation organization'', and ``debt
settlement organization'' have the same meaning as in the amendment
made by section 2.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
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