SB498: relative to the regulation of debt adjustment services.

CHAPTER 230

SB 498-FN – FINAL VERSION

01/22/04 0104s

22Apr2004… 1046h

05/25/04 1602eba

2004 SESSION

04-3219

06/09

SENATE BILL 498-FN

AN ACT relative to the regulation of debt adjustment services.

SPONSORS: Sen. Flanders, Dist 7; Rep. Hunt, Ches 28

COMMITTEE: Banks

ANALYSIS

This bill provides for the regulation of debt adjustment services by the banking department.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

01/22/04 0104s

22Apr2004… 1046h

05/25/04 1602eba

04-3219

06/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Four

AN ACT relative to the regulation of debt adjustment services.

Be it Enacted by the Senate and House of Representatives in General Court convened:

230:1 Regulation of Debt Adjustment Services. RSA 399-D is repealed and reenacted to read as follows:

CHAPTER 399-D

DEBT ADJUSTMENT SERVICES

399-D:1 Scope. For purposes of this chapter, debt adjustment services are conducted in this state whenever services are performed in this state or on behalf of a person located in this state.

399-D:2 Definitions. In this chapter:

I. “Branch office” means a business location within this state of a person required to be licensed under this chapter. Branch office does not include a person’s principal office location.

II. “Commissioner” means the bank commissioner.

III. “Creditor” means a person who regularly extends credit that is subject to an interest or other charge or is payable, by written agreement, in more than 4 installments.

IV. “Debt adjustment” means receiving, for a fee or compensation and as agent of a debtor, money or evidences thereof for the purpose of distributing such money or evidences thereof among creditors in full or partial payment of obligations of the debtor.

V. “Debtor” means a person who owes or is obligated to another or others.

VI. “Licensee” means a person duly licensed by the commissioner under the provisions of this chapter.

VII. “Person” means an individual, corporation, partnership, limited liability company, association, joint stock company, trust, unincorporated organization, or any other entity.

VIII. “Principal office” means the main office location of a person required to be licensed under this chapter.

399:D:3 License Required.

I. Any person that, in its own name or on behalf of other persons, engages in the business of debt adjustment in this state or with persons located in this state shall be required to obtain a license from the banking department. Persons subject to this chapter shall be responsible for the supervision of their employees, agents, and branch offices.

II. The fact that a person is licensed or registered in the state of New Hampshire under this chapter does not constitute a finding that the commissioner has passed in any way upon the merits or qualifications of such person or that the commissioner has recommended or given approval to any person. It is unlawful to make, or cause to be made, to any prospective purchaser, customer, or client any representation inconsistent with the provisions of this paragraph.

399-D:4 Exceptions. The provisions of this chapter shall not apply to the following:

I. Any attorney admitted to the practice of law in this state, when engaged in such practice.

II. Any bank, fiduciary, or financing or lending institution authorized to transact business in this state, which performs debt adjustment in the regular course of its principal business.

III. Any title insurance or abstract company authorized to transact business in this state, while doing an escrow business.

IV. Any person acting pursuant to any law of this state or of the United States or acting under the order of a court.

V. Any employee of a licensee when acting in the regular course of employment.

399-D:5 License Application; Requirements; Investigation.

I. No person shall engage in the business of debt adjustment without a license issued in accordance with the provisions of this chapter. Any person desiring to obtain such license shall file with the commissioner a verified application in writing, under oath, setting forth, if a sole proprietorship, the name and address of the person, the name under which he or she is doing business and the exact location and address of his or her office; if a corporation, partnership, association, limited liability company, or other entity, the name, exact office location and address of the corporation, partnership, association, limited liability company or other entity, the exact office location of each of its New Hampshire branch offices, and the names and addresses of all officers, directors, partners, and owners thereof.

II. To be considered for licensing, each person, firm, or corporation desiring to obtain such a license shall file with the banking department one verified application prescribed by the bank commissioner. At a minimum, the application shall be in writing, setting forth the primary business address of the applicant, the address of its principal office and all branch offices located or to be located within the state, and a list of the principal owners, officers, and directors of the applicant. Each application shall designate the name and address of the manager or person in charge at each licensed location and shall contain other information required by rules under this chapter. The applicant shall submit any other information that the bank commissioner may require. In addition:

(a) Each application shall be accompanied by a current financial statement, certified

by a certified public accountant or a public accountant, a nonrefundable license fee of $100 for each office, and an investigation fee of $50.

(b) Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the bank commissioner, consumer credit administration division.

(c) Each licensee shall furnish with the application a blank copy of the contract intended for use between the licensee and the debtor and shall notify the commissioner of all changes and amendments thereto.

(d) Each license issued under this chapter shall expire on December 31 next following its issuance unless sooner surrendered, revoked, or suspended, but may be renewed as provided in this chapter.

(e) The application shall state that the names provided under paragraph I of this section include all persons, firms, or corporations who have a financial interest, directly or indirectly, in such business.

III. Every applicant for licensing under this chapter shall file with the commissioner, in such form as the commissioner prescribes by rule, irrevocable consent appointing the commissioner to receive service of any lawful process in any non-criminal suit, action, or proceeding against the applicant or the applicant’s successor, executor, or administrator which arises under this chapter or under any rule or order under this chapter after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. When any person, including a nonresident of this state, engages in conduct prohibited or made actionable by this chapter or by any rule or order under this chapter, and such person has not filed a consent to service of process under this section and personal jurisdiction over such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to such person’s appointment of the commissioner to receive service of any lawful process. Service may be made by leaving a copy of the process in the office of the commissioner along with $5, but is not effective unless:

(a) The plaintiff, who may be the attorney general in a suit, action, or proceeding instituted by him or her, immediately sends a notice of the service and a copy of the process by registered mail to the defendant or respondent at the person’s last address on file with the commissioner; and

(b) The plaintiff’s affidavit of compliance with this paragraph is filed in the case on or before the return day of the process or within such further time as the court allows.

IV. Upon the applicant’s filing of the complete application and payment of the required fee, the commissioner shall have, in accordance with RSA 541-A:29, up to 120 days to investigate and determine whether the applicant’s financial resources, experience, personnel, and record of past or proposed conduct warrant the public’s confidence and the issuance of a license.

399-D:6 Bond of Applicant.

I. Each applicant shall submit to the commissioner, with his or her application for a license, a bond, in such form as the commissioner shall prescribe, in the amount of $25,000. The applicant shall be the obligor in such bond and an insurance company authorized to transact the business of fidelity and surety insurance in this state shall be the surety.

II. The bond shall run to the state of New Hampshire for the use of the state and of any person or persons who may have a cause of action by virtue of the activities of the applicant in debt adjustment. The bond shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this chapter and any regulation, order, or directive issued hereunder, and he or she will well and faithfully perform the obligations and duties of all debt adjustment contracts into which he or she may enter, and will well and faithfully account for all funds entrusted to him or her by a debtor.

III. Each bond shall remain in effect until the surety is released from liability by the commissioner, or until the bond is canceled by the surety. Any surety may cancel a bond upon 30 days’ written notice to the commissioner, but no such cancellation shall affect any liability which arises prior to the termination of such 30-day period. Upon the cancellation of a bond by a surety, the licensee shall file a new bond with the commissioner or the license shall be automatically suspended at the end of such 30-day period.

IV. Any debtor who may be damaged by the neglect, default, or wrongful act of a licensee or his or her agent may proceed on such bond against the obligor or surety thereon, or both, to recover damages. Any licensee, upon his or her own motion, may be made a party to any such action.

399-D:7 License Grant.

I. If the commissioner determines that the applicant meets the requirements of this chapter, the commissioner shall issue a license or licenses permitting the applicant to engage in the business of debt adjustment in accordance with the laws of this state.

II. No license shall be issued to any person whose principal place of business is located outside of this state, unless the person designates an agent residing within this state for service of process.

III. Any license fee required by this chapter shall be paid before a license shall become effective.

IV. Each license issued under the provisions of this chapter shall state the name and address of the principal office of the licensee and, if the license is a branch office license, the name and address of the branch office location for which the license is issued.

V. If a licensee is a person other than a natural person, the license issued to it shall entitle all officers, directors, members, partners, trustees, and employees of the licensed corporation, partnership, entity, or trust to engage in the business of debt adjustment; provided, that one officer, director, member, partner, employee, or trustee of such person shall be designated in the license application as the individual to be contacted under the provisions of this chapter.

VI. If the licensee is a natural person, the license shall entitle all employees of the licensee to engage in the business of debt adjustment. For purposes of this paragraph, employee shall not include an independent contractor.

VII. A license issued under this chapter shall not be transferable or assignable between persons without the prior approval of the commissioner.

399-D:8 License Denial; Appeal.

I. Applicants may appeal a license denial in accordance with RSA 541-A and rules of the commissioner adopted thereunder.

II. Applicants may petition the banking department for a rehearing in accordance with RSA 541 if the decision in an appeal conducted pursuant to paragraph I affirms a denial of a license application.

399-D:9 License Term; Renewal.

I. Each license shall remain in force until it has been surrendered, revoked, suspended, or expires in accordance with the provisions of this chapter. Each license shall expire on December 31 of each calendar year.

II. If a person holds a valid license under this section and is in compliance with this chapter and the rules thereunder, the licensee may renew the license by paying the required fee to the banking department on or before December 1 for the ensuing year that begins on January 1. Failure to renew the license shall result in the license terminating on December 31.

III. A renewal fee of $100 for the principal office license and for each branch office license shall be submitted with the application for license renewal.

IV. No application for renewal shall be denied without reasonable cause and the right of appeal pursuant to RSA 541-A and RSA 541.

399-D:10 License Posting; Change of Location.

I. It shall be unlawful to engage in the business of debt adjustment without a conspicuously posted license in the licensee’s principal place of business within this state and in each of the licensee’s branch offices within this state.

II. No licensee shall change his or her location unless authorized by the commissioner.

399-D:11 Advertising.

I. No person shall advertise, print, display, publish, distribute, broadcast, or permit to be advertised, printed, displayed, published, distributed, or broadcast in any manner whatsoever, any statement or representation with regard to the rates, terms, or conditions for debt adjustment under the provisions of this chapter which is false, misleading, or deceptive. Any reference to the amount of a debt shall refer to the original principal amount. Any statement of the amount of an installment, or the rate or amount of interest charges required for any debt, shall comply with the provisions of the federal Consumer Credit Protection Act, 15 U.S.C. 1601 et seq.

II. The banking department may review advertising files during the course of any examination or investigation undertaken in accordance with this chapter.

399-D:12 Trade Name. No licensee shall conduct the business of a debt adjuster under a trade name or other name which is different from the name stated in its principal office license or branch office license without immediately notifying the commissioner, who shall amend the license accordingly.

399-D:13 License Denial, Revocation, or Suspension.

I. The commissioner may issue an order requiring a person to whom any license has been granted to show cause why the license should not be revoked. The order shall give reasonable notice of the opportunity for a hearing and shall state the reasons for the issuance of the order. The commissioner may by order summarily postpone or suspend any license pending final determination of any order to show cause, or of any other proceeding under this section, provided the commissioner finds that the public interest would be irreparably harmed by delay in issuing such order. Upon the entry of the order, the commissioner shall promptly notify the applicant or licensee that it has been entered and of the reasons for the order and that within 10 days after receipt of a written request the matter will be scheduled for hearing. Delivery of such order shall be by hand or registered mail at the principal office of the licensee. If the person fails to request a hearing or respond to the show cause order within 30 calendar days of receipt of the order, the person shall be deemed to be in default, and the penalties requested shall be imposed. The commissioner may by order, after notice and opportunity for hearing, assess penalties and deny, refuse to renew, suspend, or revoke a license if it is in the public interest and the applicant or licensee, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the applicant or licensee: (a) Has violated any provision of this chapter or rules thereunder;

(b) Has not met the standards established in this chapter;

(c) Has filed an application for licensing which as of its effective date, or as of any date after the filing in the case of an order denying of the filing, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;

(d) Has made a false or misleading statement to the commissioner or in any reports to the commissioner;

(e) Has made fraudulent misrepresentations, or has circumvented or concealed, through whatever subterfuge or device, any of the material particulars or the nature thereof required to be stated or furnished to a person under the provisions of this chapter;

(f) Has failed to supervise its agents, managers, or employees;

(g) Is the subject of an order entered within the past 5 years by this state, any other state, or federal regulator denying, suspending, or revoking licenses or registration;

(h) Is permanently, preliminarily, or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of debt adjustment or collection activities;

(i) Is not qualified on the basis of such factors as experience, knowledge, and financial integrity;

(j) Has engaged in dishonest or unethical practices in the conduct of the business of debt adjustment;

(k) Has violated applicable federal laws or regulations thereunder;

(l) Has been convicted of a crime involving moral turpitude;

(m) Has maintained a continuous course of unfair conduct;

(n) Is insolvent, or has filed in bankruptcy or receivership, or made assignments for the benefit of creditors; or

(o) For other good cause shown.

II. The banking department may, upon due notice and opportunity for a hearing, suspend any license for a period not exceeding 30 days, pending investigation by the banking department.

III. Any license revocation, license suspension, or unfavorable action by the banking department on a license shall comply with the provisions of RSA 541-A:30.

IV. An aggrieved licensee may, pursuant to RSA 541-A:30 and RSA 541, appeal unfavorable action by the banking department.

V. The banking department may take action for immediate suspension of a license, pursuant to RSA 541-A:30, III.

VI. If a licensee is a partnership, association, corporation, or entity however organized, it shall be sufficient cause for the suspension or revocation of a license that any officer, director, or trustee of a licensed association or corporation or any member of a licensed partnership has so acted or failed to act on behalf of said licensee as would be cause for suspending or revoking a license to such party as an individual. Each licensee shall be responsible for supervision of its branch offices and for the acts of any or all of its employees while acting as its agent if such licensee, after actual knowledge of said acts, retained the benefits, proceeds, profits, or advantages accruing from said acts or otherwise ratified said acts.

VII. If the commissioner finds that any licensee or applicant for license is no longer in existence or has ceased to do business as a debt adjuster, or cannot be located after reasonable search, the commissioner may by order revoke the license or deny the application. The commissioner may deem abandoned and withdraw any application for licensure made pursuant to this chapter, if the applicant fails to respond in writing within 180 days to a written request from the commissioner requesting a response. Such request shall be sent via certified mail to the last known address of the applicant that is on file with the commissioner.

399-D-14 Fees of Licensee.

I. The fees of the licensee shall be agreed upon in advance and stated in the contract, and provision for settlement in case of cancellation or prepayment shall be clearly stated in the contract. Fees shall be amortized equally each month over the length of the contract and no licensee shall be entitled to any fee until the contract has been in full force for 30 days and thereafter the monthly amortized amount may be applied to charges at 30-day intervals, while the contract is in full force and effect, except in the event of prepayment or cancellation. No licensee shall be entitled to any fee against the debtor, upon any contract, until the debt adjustment program is arranged and approved by the debtor. A contract shall not be effective until a debtor has made a payment to the licensee for distribution to his creditors. The licensee may request a deposit not to exceed $25 upon the signing of the contract. Said deposit shall be held in escrow by the licensee. In the event that the debtor fulfills the conditions of the contract, the deposit shall be returned. In the event that the debtor fails to make payment in accordance with the contract for a period in excess of 60 days, the deposit shall be forfeited.

II. A licensee shall not receive any fee unless he or she has the written consent of such number of creditors as hold obligations representing at least 25 percent of the total amount of indebtedness and 25 percent of the total number of the creditors listed in the licensee’s contract with the debtor, or unless a like number of creditors have accepted a distribution of payment. Creditors or their attorneys shall have access to all records relative to such consent for verification.

III. The fees received by a licensee shall be based on the amount required to pay indebtedness and shall not exceed:

(a) 10 percent when the plan of payment is for a period of 10 months or less;

(b) 12 percent when the plan of payment is for a period of more than 10 months but less than 18 months; and

(c) 15 percent when the plan of payment is for a period of 18 months or more.

IV. In the event of prepayment of the listed debts, or cancellation by the debtor upon 30 days’ written notice to the licensee, or cancellation by the licensee after willful default for more than 30 days by the debtor, and if the licensee has performed all of the services required by this chapter and by the terms of the contract, the licensee shall be entitled to a cancellation charge which is 5 percent of that portion of the agreed service charge which is due and unpaid for the unexpired term of the contract as of the time of such prepayment or cancellation, but in no event more than $50. Within 10 days of cancellation, the licensee shall notify the creditors of the debtor or their attorneys in writing of the cancellations.

399-D:15 Licensee’s Duties.

I. Each licensee shall:

(a) Keep complete and adequate records during the term of the contract and for a period of 7 years from the date of cancellation or completion of the contract with each debtor. The records shall contain complete and accurate information regarding the contract, payments, disbursements and charges, and shall be open to inspection by the commissioner and the commissioner’s duly appointed agents during normal business hours.

(b) Make remittances to creditors within 10 days after receipt of any funds, less prorated fees, unless the reasonable payment of one or more of the debtor’s obligations requires that such funds be held for a longer period to accumulate a sum certain.

(c) Furnish the debtor with a written statement of his or her account every 90 days, and at the termination or cancellation of the contract and with a verbal accounting at any time the debtor may request it during normal business hours.

II. No licensee shall accept an account unless a written and thorough budget analysis indicates that the debtor can reasonably meet the requirements indicated by the budget analysis.

III. No licensee shall enter into a contract for a longer period of time than is reasonable and consistent with the budget analysis, unless a written statement by the debtor specifically indicates the debtor’s desire to make lower payments over the extended period, at a greater fee, as provided in RSA 399-D:14, III.

IV. If a compromise of a debt is arranged by the licensee with any one or more creditors, the debtor shall have the full benefit of such compromise.

V. A licensee shall submit written notification to the banking department of the name and address, and such other information as the commissioner may require by rule, of each new stockholder or other person owning 10 percent or more of the licensee, and of each new member, partner or trustee of the licensee, no later than 30 days after the change.

VI. Licensees shall provide written notice to the commissioner of any proposed change in location or proposed closing of any licensed office no later than 10 business days before the effective date of such change of location or closing.

VII. Persons licensed under this chapter are under a continuing obligation to update information on file with the commissioner. If any information filed with the commissioner becomes materially inaccurate, the licensee shall promptly submit to the commissioner an amendment to its application records that will correct the information on file with the commissioner. An amendment shall be considered to be filed promptly if the amendment is filed within 30 days of the event that required the filing of the amendment.

VIII. Persons subject to or licensed under this chapter shall abide by applicable federal laws, and regulations including the federal Truth in Lending Act, and the laws, orders, and rules of this state. Any violation of such law, rule, or order shall be a violation of this chapter.

399-D:16 Prohibited Acts. No licensee shall:

I. Purchase from a creditor any obligation of a debtor.

II. Operate as a collection agent and as a licensee for the same debtor’s account.

III. Execute any contract or agreement to be signed by the debtor unless the contract or agreement is fully and completely filled in and finished.

IV. Receive or charge any fee in the form of a promissory note or other promise to pay, or receive or accept any wage assignment, mortgage or other security for any fee, either as real or personal property.

V. Pay any bonus or other consideration to any person for the referral of a debtor to his or her business or accept or receive any bonus, commission, or other consideration for referring any debtor to any person for any reason.

VI. Advertise, display, distribute, broadcast or televise, or permit to be displayed, advertised, distributed, broadcasted or televised, his or her services, rates, or terms in any manner whatsoever which makes any false, misleading, or deceptive statement or representation with regard to the services to be performed by the licensee or the charges to be made therefor.

399-D:17 Licensee not to Perform Legal Services or be Associated with Attorney. Nothing contained in this chapter shall be construed to authorize any licensee to engage in and no licensee shall engage in the practice of law; offer to perform or perform any legal service; or offer to give, or give any legal advice. No licensee shall by any means represent or imply that he or she is authorized or competent to furnish legal advice or perform legal services; assume authority on behalf of any creditor or debtor or accept a power of attorney authorizing him or her to employ or terminate the services of an attorney or to arrange the terms of, or compensate for, such services; communicate with any debtor or creditor or any other person in the name of an attorney or upon the stationery of an attorney; prepare any form or instrument which only an attorney is authorized to prepare; be associated, directly or indirectly, with any attorney; borrow money from or pledge assets to any attorney; or refer any debtor to any particular attorney.

399-D:18 License Surrender.

I. A licensee who ceases to engage in the business of a debt adjuster at any time during a license year for any cause, including but not limited to bankruptcy, license revocation, or voluntary dissolution, shall surrender such license in person or by registered or certified mail to the bank commissioner within 15 calendar days of such cessation, and shall cause to be published in a newspaper of general circulation in the licensee’s market area a notice to such effect. The bank commissioner shall adopt rules, in accordance with RSA 541-A, relative to such notice.

II. Failure to comply with the provisions of this chapter and rules or orders adopted under this section, shall be cause for denial of future license applications and the imposition of penalties under RSA 399-D:24.

III. Withdrawal of the surrendered license shall become effective 30 days after receipt by the commissioner of the license or within such shorter period of time as the commissioner may determine, unless a revocation or suspension proceeding is pending when the withdrawal is filed or a proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within 30 days after the license is surrendered. If a proceeding is pending or instituted, the withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines. If no proceeding is pending or instituted and the withdrawal automatically becomes effective, the commissioner may nevertheless institute a revocation or suspension proceeding under RSA 399-D:13 within one year after the withdrawal became effective and enter a revocation or suspension order as of the last date on which the license was effective.

399-D:19 Consumer Inquiries.

I. Consumer complaints naming licensees under this chapter, which are filed in writing with the office of the commissioner, shall be forwarded via certified or registered mail to the licensee for response within 10 days of receipt by the department. Licensees shall, within 30 days after receipt of such complaint, send a written acknowledgment thereof to the consumer and the banking department. Not later than 60 days following receipt of such complaint, the licensee shall conduct an investigation of the complaint and either:

(a) Make appropriate corrections in the account of the consumer and transmit to the consumer and the banking department written notification of such corrections, including documentary evidence thereof; or

(b) Transmit a written explanation or clarification to the consumer and the banking department which sets forth, to the extent applicable, the reasons why the licensee believes its actions are correct, including copies of documentary evidence thereof.

II. A licensee who fails to respond to consumer complaints within the time prescribed by this section shall pay to the commissioner the sum of $50 for each day such response is overdue. For purposes of this section, the date of transmission shall be the date such response is received by the commissioner.

III.(a) Licensees which, because of extenuating circumstances beyond the control of the licensee, are unable to comply with the time limits prescribed in this section, may make written request to the commissioner for a waiver of such time frames. Waivers shall not be granted or considered unless the request for the waiver:

(1) Is received by the banking department within 50 days following the licensee’s receipt of the complaint.

(2) Specifies the reason for the request.

(3) Specifies a date certain by which the licensee shall comply with the provisions of this section.

(b) Requests for waivers shall be either granted or denied within 5 days of receipt by the banking department.

IV. In any investigation to determine whether a person has violated or is about to violate this chapter or any rule or order under this chapter, upon the commissioner’s finding that the person violated this chapter or a rule or order under this chapter, or that the person charged with the violation is in default, the commissioner shall be entitled to recover the cost of the investigation, in addition to any other penalty provided for under this chapter.

399-D:20 Contract with Debtor. Each licensee shall make a written contract with a debtor, and immediately furnish the debtor with a true copy thereof. Such contract shall set forth the complete list of the debtor’s obligations to be adjusted, a complete list of the creditors holding such obligations, the total charges agreed upon for the services of the licensee and the beginning and expiration date of the contract. No licensee shall enter into a contract in which the debtor’s obligations will not be discharged within 24 months, exclusive of contractual debts which exceed the 24-month period.

399-D:21 Separate Bank Account for Benefit of Creditors; Books and Records.

I. Each licensee shall maintain a separate bank account for the benefit of debtors in which all payments received from debtors for the benefit of creditors shall be deposited within 24 hours of receipt thereof and in which all payments shall remain until a remittance is made to either a debtor or a creditor.

II. Books and Records:

(a) Every licensee shall keep and use in his or her business, books, accounts, and records which will enable the commissioner to determine whether such licensee is complying with the provisions of this chapter and with the regulations of the commissioner.

(b) Every licensee shall preserve such books, accounts, and records for at least 7 years after making the final entry on any transaction recorded therein.

399-D:22 Examinations and Investigations.

I. The commissioner shall examine the condition and affairs of each licensee at least every 18 months.

II. The banking department may examine the business affairs of any licensee or any other person, whether licensed or not, as it deems necessary to determine compliance with this chapter and the rules adopted under it and with the federal acts and regulations to which it is subject, including the Consumer Credit Protection Act, 15 U.S.C. 1601 et seq. In determining compliance, the banking department may examine the books, accounts, records, files, and other documents or matters of any licensee or person. The banking department shall have the power to subpoena witnesses and administer oaths in any adjudicative proceedings, and to compel, by subpoena duces tecum, the production of all books, records, files, and other documents and materials relevant to its investigation.

III. For the purpose of discovering violations of this chapter, the banking department may examine the records of any licensee and of any person by whom a debt adjustment contract is made,

whether such person shall be licensed to act, or claim to act, as principal, agent, or other representative, or under, or without the authority of this chapter; and for that purpose, the banking department shall have access to the books, papers, records, files, and vaults of all such persons. The banking department shall also have authority to examine, under oath, all persons whose testimony it may require relative to such contracts or business.

IV. The licensee shall maintain such records as will enable the banking department to determine whether the licensee’s business is in compliance with the provisions of this chapter and the rules adopted under it, with the provisions of applicable federal laws and regulations. The affairs and records of every licensee shall be subject at any time to such periodic, special, regular, or other examination by the banking department, with or without notice to the licensee. All books, papers, files, related material, and records of assets of the licensee shall be subject to the banking department’s examination. Such records shall be maintained and made available for examination at the licensee’s principal office or its branch office location or the office of its New Hampshire agent for a period of at least 7 years, the last 3 years of which must be in a readily accessible location.

V. Licensees that maintain their files in another state are required to return such files to their New Hampshire office or if there is no office in New Hampshire, to the office of their New Hampshire agent as named in the license application as amended. Such licensees are required to return all files and records no later than 21 calendar days after being requested to do so by the banking department.

VI. Any agent of the banking department may make a thorough examination into the business affairs of each licensee and shall report any violations of law, rule, or standard business practice to the banking department.

VII. The expense of such examination shall be chargeable to and paid by the licensee. The procedure for such payment shall be the same as for payments by institutions for the cost of examinations under RSA 383:11.

VIII. Every person being examined and all of the officers, directors, employees, agents, and representatives of such person shall make freely available to the commissioner or his or her examiners, the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination and shall facilitate the examination.

IX. Upon receipt of a written report of examination, the licensee shall have 30 days or such additional reasonable period as the commissioner for good cause may allow, within which to review the report, recommend any changes and set forth in writing the remedial course of action which the licensee will pursue to correct any reported deficiencies outlined in the report.

X. If so requested by the person examined, within the period allowed in paragraph IX, or if deemed advisable by the commissioner without such request, the commissioner shall hold a closed hearing relative to the report and shall not file the report in the department until after such closed hearing and issuance of his or her order thereon. If no such closed hearing has been requested or held, the examination report, with such modifications, if any, as the commissioner deems proper, shall be accepted by the commissioner and filed upon expiration of the review period provided for in paragraph IX. The report shall be accepted and filed within 6 months after the final hearing thereon.

XI. All reports pursuant to this section shall be absolutely privileged and although filed in the department as provided in paragraph X shall nevertheless not be for public inspection. The comments and recommendations of the examiner shall also be deemed confidential information and shall not be available for public inspection.

399-D:23 Violations.

I. The banking department may issue and serve upon any licensee or person over whom it has jurisdiction a complaint setting forth charges whenever the department is of the opinion that the licensee or person is violating or has violated any provision of this chapter or any rule or order under this chapter.

II. The banking department may issue a cease and desist order against any licensee or person who it has reasonable cause to believe is in violation of the provisions of this chapter or any rule or order under this chapter. Delivery of such order shall be by hand or registered mail at the principal office of the licensee or other person. The order shall be calculated to give reasonable notice of the rights of the person to request a hearing on the order and shall state the reasons for the entry of the order. A hearing shall be held not later than 10 days after the request for such hearing is received by the commissioner within 20 days after the date of the hearing the commissioner shall issue a further order vacating the cease and desist order or making it permanent. All hearings shall comply with RSA 541-A. If the person to whom a cease and desist order is issued fails to appear at the hearing after being duly notified, such person shall be found in default, and the proceeding may be determined against him or her upon consideration of the cease and desist order, the allegations of which may be found to be true. If the person to whom a cease and desist order is issued fails to request a hearing within 30 calendar days of receipt of such order, then such person shall likewise be found in default, and the order shall, on the thirty-first day, become permanent, and shall remain in full force and effect until modified or vacated by the commissioner, for good cause shown.

399-D:24 Penalty.

I. A person who violates any provision of this chapter shall be guilty of a misdemeanor for each violation if a natural person, or guilty of a felony if any other person.

II. Any person who knowingly violates any rule or order of the commissioner may, upon notice and opportunity for hearing, except where another penalty is expressly provided, be subject to suspension or revocation of any registration or license, or imposition of an administrative fine not to exceed $2,500 for each violation in lieu of or in addition to suspension or revocation. Each of the acts specified shall constitute a separate violation.

III. Any person who negligently violates any rule or order of the commissioner may, upon notice and opportunity for hearing, except where another penalty is expressly provided, be subject to suspension, revocation, or denial of any registration or license, including the forfeiture of any application fee, or the imposition of an administrative fine not to exceed $1,500 for each violation, in lieu of or in addition to suspension or revocation. Each of the acts specified shall constitute a separate violation.

IV. Any person who, either knowingly or negligently, violates any provision of this chapter may, upon notice and opportunity for hearing, and in addition to any such other penalty provided for by law, be subject to suspension, revocation, or denial of any registration or license, including forfeiture of any application fee, or an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and each such administrative action or fine may be imposed in addition to any criminal or civil penalties imposed.

V. Every person who directly or indirectly controls a person liable under this section, every partner, principal executive officer or director of such person, every person occupying a similar status or performing a similar function, every employee of such person who materially aids in the act constituting the violation, and every licensee or person acting as a common law agent who materially aids in the acts constituting the violation, either knowingly or negligently, may, upon notice and opportunity for hearing, and in addition to any other penalty provided for by law, be subject to suspension, revocation, or denial of any registration or license, including the forfeiture of any application fee, or the imposition of an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and such administrative action or fine may be imposed in addition to any criminal or civil penalties imposed. No person shall be liable under this paragraph who shall sustain the burden of proof that such person did not know, and in the exercise of reasonable care could not have known, of the existence of facts by reason of which the liability is alleged to exist.

399-D:25 Rulemaking.

I. Pursuant to RSA 541-A, the commissioner may adopt rules necessary to the administration and enforcement of this chapter. Such rules shall be consistent with the provisions of this chapter, and may include, but shall not be limited to, the following:

(a) The application form for licensees.

(b) The form of license issued to licensees.

(c) Annual reports.

(d) Personal disclosure statements.

II. The commissioner may prepare, alter, or withdraw such forms as are necessary to comply with the provisions of this title.

III. The commissioner may issue, amend, or rescind such orders as are reasonably necessary to carry out the provisions of this chapter.

IV. The commissioner may, for good cause shown, abate all or a portion of delinquency penalties assessed under this chapter.

V. All actions taken by the commissioner pursuant to this chapter shall be taken only when the commissioner finds such action necessary or appropriate to the public interest or for the protection of consumers and consistent with the purposes fairly intended by the policy and provisions of this chapter.

399-D:26 Reference to Bond or State Approval Prohibited. No licensee shall use, attempt to use, or make reference to, either directly or indirectly, any word or phrase which states or implies that he or she is bonded, approved, bonded by the state, or approved by the state.

399-D:27 Records and Filings.

I. A document is filed when it is received by the commissioner. If any filing deadline date falls on a weekend or on a New Hampshire state or federal legal holiday, the due date shall be automatically extended to the next business day following such weekend or holiday.

II. Electronic filings are filed when received by the commissioner, are prima facie evidence that a filing has been duly authorized and made by the signatory on the application or document, are admissible in any civil or administrative proceeding under this chapter, and are admissible in evidence in accordance with the rules of superior court in any action brought by the attorney general under this chapter.

III. A licensee may maintain its records in electronic format if, upon request, the licensee provides the commissioner with:

(a) A full explanation of the programming of any data storage or communications systems in use.

(b) Information from any books, records, electronic data processing systems, computers or any other information storage system in the form requested by the commissioner.

399-D:28 Reporting and Recordkeeping Requirements.

I.(a) Each licensee shall file, under oath, an annual report with the commissioner on or before February 1 of each year concerning its business and operations for the preceding calendar year or license period ending December 31 in the form prescribed by the commissioner. A separate annual report shall be filed for each type of license held by the licensee.

(b) A person who surrenders, withdraws, or does not renew a license shall file the annual report, as required in subparagraph I(a), notwithstanding the fact that such person is not licensed on the date that the report is due.

(c) Each licensee shall also file, under oath, its financial statement with the commissioner within 60 days from the date of its fiscal year end. The financial statement shall be prepared in accordance with generally accepted accounting principles and shall include a balance sheet, income statement, statement of changes in owners’ equity, a cash flow statement, and note disclosures. If the financial statement is not audited, a certification statement shall be attached and signed by a duly authorized officer of the licensee. The certification statement shall state that the financial statement is true and accurate to the best of the officer’s belief and knowledge.

II. The commissioner shall publish an analysis of the information required in the licensee’s annual report as part of the commissioner’s annual report.

III. Any licensee failing to file either the annual report or the financial statement required by this section within the time prescribed shall pay to the commissioner a penalty of $25 for each calendar day the annual report or financial statement is overdue up to a maximum penalty of $2,500 per report or statement, and shall be subject to suspension or revocation of its license.

IV. In addition to the annual report and financial statement required by this section, the commissioner may require such regular or special reports as the commissioner deems necessary to the proper supervision of licensees under this chapter.

V. A licensee who files an annual report under this section which fails to disclose or materially misstates debt contracts made during the reporting year may, in addition to any other penalty provided by law and after notice and opportunity for hearing pursuant to RSA 541-A, be subject to a fine of not more than $1,000 and to license revocation or suspension.

VI. Each licensee shall keep and use such books and accounting records as are in accord with sound and accepted accounting practices and which enable the commissioner to determine whether the licensee is complying with this chapter.

230:2 Effective Date. This act shall take effect 90 days after its passage.

(Approved: June 11, 2004)

(Effective Date: September 9, 2004)