Section 40. Operating requirements

A. A licensee shall continuously maintain the requirements and standards for licensure prescribed in § 6.2-2005 of the Code of Virginia.

B. A licensee shall not provide debt management plan services in connection with a debt management plan that has been set up or established by any other person except a credit counselor that is employed by the licensee.

C. All money received by a licensee for distribution to consumers' creditors shall be deposited by the licensee into a separate trust account with an FDIC-insured depository institution.

1. All money in the trust account shall be deemed to be held in trust for the benefit of consumers who have given their money to the licensee for distribution. Money held in trust is not the property of the licensee or any person acting on the licensee's behalf and shall not be available to creditors of the licensee or any person acting on the licensee's behalf. However, this provision shall not be construed to prevent the recovery of funds by consumers who have given their money to the licensee for distribution provided that the money has not been disbursed to the consumers' creditors.

2. A licensee shall not commingle consumers' funds in a trust account with any of the licensee's operating funds or the funds of any other persons.

3. The provisions of this subsection shall be applicable regardless of whether consumers' funds are received or handled by (i) a licensee or (ii) a third party acting on behalf of a licensee.

D. A licensee shall comply with all federal laws and regulations applicable to the conduct of its business, including but not limited to the Standards for Safeguarding Customer Information (16 CFR Part 314).

E. A licensee shall not sell or otherwise assign a debt management plan to another person unless the purchaser or assignee is also licensed under Chapter 20.

F. On or before entering into a debt management plan, a licensee shall provide a consumer with a written notice in at least 10-point boldface type. The notice shall state the following: "Complaints and Contacting the Bureau of Financial Institutions: For assistance with any complaints you may have against this agency regarding your debt management plan, please contact the Bureau of Financial Institutions at [phone] or on the Internet at http://www.scc.virginia.gov/bfi. Complaints must be filed in writing with the Bureau of Financial Institutions. Complaints should be mailed to the Bureau of Financial Institutions, Attn: Complaints, P.O. Box 640, Richmond, Virginia 23218-0640, or faxed to the Bureau of Financial Institutions, Attn: Complaints at [phone]."

The written notice shall be furnished either as a separate document or included in the debt management plan agreement that is required by subdivision 1 of § 6.2-2014 of the Code of Virginia.

G. A licensee shall not provide any information to the bureau that is false, misleading, or deceptive.

H. A licensee shall not provide any information to a consumer that is false, misleading, or deceptive.

I. A licensee shall not engage in any activity that directly or indirectly results in an evasion of the provisions of Chapter 20 or this chapter.

J. Any person submitting an application to acquire, directly or indirectly, 25% or more of the voting shares of a corporation or 25% or more of the ownership of any other person licensed to conduct business under Chapter 20 shall pay a nonrefundable application fee of $500.

K. Prior to the execution of a debt management plan, a licensee shall provide each consumer with a form that contains the disclosures specified in subdivision A 9 of § 6.2-2005 of the Code of Virginia. The form shall appear in at least 12-point type and be separated from all other papers, documents, or notices obtained or furnished by the licensee. The form shall contain an acknowledgment that is signed and dated by each consumer. The acknowledgment shall appear in at least 14-point boldface type immediately above the consumer's signature line and state the following: "I acknowledge that I have received and signed this form prior to entering into a debt management plan."

L. A licensee shall not (i) allow a third party to provide any debt pooling and distribution services on its behalf or (ii) delegate to a third party any of its responsibilities under a debt management plan whereby the third party obtains control over any money provided by consumers for subsequent distribution to the consumers' creditors, unless:

1. The licensee enters into and maintains a written agreement with the third party whereby the licensee designates or appoints the third party as its agent; and

2. The licensee notifies the bureau in writing and agrees to such conditions relating to its use of such agent as may be prescribed by the bureau.

A licensee that designates or appoints a third party as its agent shall be liable and subject to enforcement action under Chapter 20 for any acts and omissions of the third party that would violate Chapter 20 or this chapter if done directly by the licensee.

M. A person shall remain subject to the provisions of Chapter 20 and this chapter applicable to licensees in connection with all debt management plan agreements that the person executed while licensed under Chapter 20 notwithstanding the occurrence of any of the following events:

1. The person's license is surrendered, suspended, or revoked; or

2. The person ceases offering debt management plans or providing debt pooling and distribution services.

Historical Notes

Derived from Volume 32, Issue 05, eff. December 1, 2015.

Statutory Authority

§§ 6.2-2013 and 12.1-13 of the Code of Virginia.