                                 CODE OF VIRGINIA

LICENSEES PROVIDING DEBT SETTLEMENT SERVICES; PROHIBITED AND REQUIRED BUSINESS
METHODS (§ 6.2-2040)

Each licensee engaged in the business of providing or offering to provide debt
settlement services to any consumer shall comply with the following
requirements:

1. Each debt settlement services agreement shall be evidenced by a written
agreement, which shall be maintained in either a hard copy, including a faxed
copy, or electronic version and which shall be signed by the consumer and a
person authorized by the licensee to sign such agreements and dated the same day
the debt settlement services agreement is executed by the consumer. The
agreement may be signed by the parties either originally or by electronic
signature. The agreement shall set forth, at a minimum, (i) the name and address
of both the consumer and the licensee; (ii) a full description of all services
to be performed for the consumer by the licensee; (iii) a clear explanation,
highlighted in bold type, of the costs to the consumer; (iv) a statement that
the debt settlement services agreement may be terminated for any reason by the
consumer and that the consumer has no obligation to continue the arrangement
unless satisfied with the services provided; (v) an explanation of the method of
dispute resolution under the agreement; (vi) an explanation of the obligations
of the consumer and the licensee that are subject to the agreement; and (vii)
notification of privacy policies in compliance with state and federal laws and
regulations.

2. A licensee shall give to the consumer a duplicate original of the agreement
executed by the consumer and licensee upon full execution.

3. A licensee shall not request or receive payment or other compensation for any
debt settlement services until and unless:
			a. The licensee has negotiated, settled, reduced, or otherwise altered the
terms of at least one debt pursuant to a debt settlement services agreement it
executed with a consumer; and
			b. The consumer has made at least one payment to a creditor following the
licensee&#8217;s negotiation, settlement, reduction, or other alteration of at
least one debt owned by the consumer to that creditor.

4. Prior to the execution of a debt settlement services agreement with a
consumer, a licensee shall disclose to the consumer in writing, and retain a
copy of, the following:
			a. The amount of time necessary to achieve the represented results and, to
the extent that the services may include a settlement offer to any of the
customer&#8217;s creditors or debt collectors, the time by which the licensee
will make a bona fide settlement offer to each of them;
			b. To the extent that the services may include a settlement offer to any of
the customer&#8217;s creditors or debt collectors, the amount of money or the
percentage of each outstanding debt that the customer must accumulate before the
licensee will make a bona fide settlement offer to each of them; and
			c. To the extent that any aspect of the debt settlement services relies upon
or results in the consumer&#8217;s failure to make timely payments to creditors
or debt collectors, that the use of the debt settlement services will likely
adversely affect the consumer&#8217;s creditworthiness, may result in the
consumer being subject to collections or sued by creditors or debt collectors,
and may increase the amount of money the consumer owes due to the accrual of
fees and interest.

5. A licensee shall not require a consumer to execute a power of attorney, as
defined in &#xA7; 64.2-1600, as a condition of receiving debt settlement
services.

6. A licensee shall not require a consumer to open an account, as defined in
&#xA7; 6.2-604, as a condition of receiving debt settlement services. A licensee
may request that a consumer open an account in connection with its provision of
debt settlement services, provided that:
			a. The consumer&#8217;s funds are held in an account at an FDIC-insured
financial institution;
			b. The consumer owns the funds held in the account and is paid accrued
interest on the account, if any;
			c. The entity administering the account is not owned or controlled by, or in
any way affiliated with, the debt settlement services provider;
			d. The entity administering the account does not give or accept any money or
other compensation in exchange for referrals of business involving the debt
settlement services provider; and
			e. The consumer may withdraw from the debt settlement services at any time
without penalty and must receive all funds in the account, other than the fee
earned by the debt settlement services provider for completed services, if any,
subject to the limitations imposed in &#xA7; 6.2-2041.

7. A licensee shall not receive a gift or bonus, premium, reward, or other
compensation, directly or indirectly, for advising, arranging, or assisting an
individual in connection with obtaining an extension of credit or other service
from a creditor, except for educational or counseling services required in
connection with a government-sponsored program.

HISTORY: 2020, c. 785.