Bill Text: IA SF272 | 2019-2020 | 88th General Assembly | Enrolled
Bill Title: A bill for an act relating to the provision of debt management services in connection with educational loans, and making penalties applicable. (Formerly SSB 1066.) Effective date: 07/01/2020.
Spectrum: Committee Bill
Status: (Passed) 2020-06-18 - Signed by Governor. S.J. 862. [SF272 Detail]
Download: Iowa-2019-SF272-Enrolled.html
Senate
File
272
-
Enrolled
Senate
File
272
AN
ACT
RELATING
TO
THE
PROVISION
OF
DEBT
MANAGEMENT
SERVICES
IN
CONNECTION
WITH
EDUCATIONAL
LOANS,
AND
MAKING
PENALTIES
APPLICABLE.
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
Section
1.
Section
533A.1,
subsection
2,
Code
2019,
is
amended
by
adding
the
following
new
paragraph:
NEW
PARAGRAPH
.
e.
Serving
as
an
intermediary
between
a
debtor
and
one
or
more
creditors
or
loan
servicers
of
the
debtor
for
the
purpose
of
seeking
modification
of
the
terms
of
an
educational
loan.
Sec.
2.
Section
533A.1,
Code
2019,
is
amended
by
adding
the
following
new
subsections:
NEW
SUBSECTION
.
5A.
“Educational
loan”
means
the
same
as
defined
in
section
261F.1.
NEW
SUBSECTION
.
8A.
“Loan
servicer”
means
a
person
who
is
engaged
in
the
direct
collection
of
payments
on
a
loan
from
Senate
File
272,
p.
2
the
debtor
or
holds
the
right
to
undertake
direct
collection
of
payments
on
a
loan
from
the
debtor,
including
but
not
limited
to
receiving
scheduled
periodic
payments
from
the
debtor
pursuant
to
the
terms
of
the
loan
or
holding
the
right
to
service
the
loan,
such
as
by
contracting
with
or
otherwise
arranging
for
another
person
to
service
the
loan.
Sec.
3.
NEW
SECTION
.
533A.8A
Educational
loan
debt
management
services
——
contract
requirements
——
prohibitions
——
remedies.
1.
In
addition
to
any
other
requirements
applicable
to
a
licensee
pursuant
to
this
chapter,
a
licensee
who
is
engaged
primarily
in
the
business
of
debt
management
in
connection
with
educational
loans,
as
described
in
section
533A.1,
subsection
2,
paragraph
“e”
,
shall
do
so
in
accordance
with
this
section.
The
provisions
of
this
section
are
not
exclusive
and
do
not
relieve
persons
or
a
contract
from
compliance
with
other
applicable
law.
2.
A
licensee
shall
not
receive
any
compensation
for
providing
educational
loan
debt
management
services
until
after
the
licensee
has
fully
performed
all
services
that
the
licensee
contracted
to
perform
or
represented
the
licensee
would
perform,
and
shall
not
request
any
payment
from
the
debtor
or
require
the
debtor
to
provide
payment
to
any
third
party
prior
to
fully
performing
all
services.
3.
a.
A
debtor
has
an
unconditional
right
to
cancel
a
contract
with
a
licensee
for
educational
loan
debt
management
services
at
any
time
prior
to
midnight
of
the
third
business
day
following
the
date
a
contract
which
complies
with
this
section
is
signed
and
executed.
b.
Cancellation
of
a
contract
occurs
when
the
debtor
delivers,
by
any
means,
written
notice
of
cancellation
to
the
address
specified
in
the
contract.
Notice
of
cancellation,
if
delivered
by
mail,
is
effective
when
deposited
in
the
mail
properly
addressed
with
postage
prepaid.
Notice
of
cancellation
delivered
by
electronic
mail
is
effective
upon
transmission.
Notice
of
cancellation
delivered
personally
is
effective
upon
delivery.
Notice
of
cancellation
given
by
the
debtor
need
not
take
the
particular
form
as
provided
in
the
Senate
File
272,
p.
3
contract
and,
however
expressed,
is
effective
if
the
notice
of
cancellation
indicates
the
intention
of
the
debtor
not
to
be
bound
by
the
contract.
4.
A
contract
to
provide
debt
management
services
in
connection
with
an
educational
loan
shall
be
written
in
clear,
understandable
language,
shall
clearly
and
conspicuously
set
forth
any
and
all
terms,
restrictions,
and
conditions
governing
the
contract,
and
shall
describe
fully
and
in
detail
all
services
that
the
licensee
contracts
to
perform
for
the
debtor.
The
contract
shall
be
dated
and
signed
by
the
debtor.
The
contract
shall
set
forth
information
required
in
this
section
in
at
least
ten
point
type.
The
following
shall
be
included
in
the
contract:
a.
The
licensee’s
name,
the
licensee’s
electronic
mail
address,
and
the
physical
address
of
the
licensee’s
place
of
business
to
which
the
notice
of
cancellation
is
to
be
mailed
or
otherwise
delivered.
A
post
office
box
does
not
constitute
a
physical
address.
A
post
office
box
may
be
designated
for
delivery
by
mail
only
if
it
is
accompanied
by
a
physical
address
at
which
the
notice
could
be
delivered
by
a
method
other
than
mail.
b.
A
disclosure
statement
in
substantially
the
following
form
shall
appear
in
at
least
fourteen
point
boldface
type
immediately
above
the
place
where
the
debtor
is
to
sign:
You,
the
debtor,
may
cancel
this
contract
at
any
time
prior
to
midnight
of
the
third
business
day
after
the
contract
is
signed
and
executed.
See
the
attached
notice
of
cancellation
form
for
an
explanation
of
this
right.
c.
A
completed,
easily
detachable
form
in
duplicate,
captioned
“notice
of
cancellation”,
as
an
attachment,
in
at
least
fourteen
point
boldface
type,
containing
the
following
statement
in
substantially
the
following
form
and
language:
NOTICE
OF
CANCELLATION
........
(date
contract
is
signed
and
executed)
You,
the
debtor,
may
cancel
this
contract
without
any
penalty
or
obligation,
within
three
business
days
from
the
above
date.
To
cancel
this
contract,
you
may
use
any
of
the
following
Senate
File
272,
p.
4
methods:
(1)
send
by
postal
mail
or
otherwise
deliver
a
signed
and
dated
copy
of
this
cancellation
notice,
or
any
other
written
notice
of
cancellation,
to
(physical
address
of
licensee’s
place
of
business);
or
(2)
send
by
electronic
mail
a
notice
of
cancellation
to
(licensee’s
electronic
mail
address).
No
later
than
midnight
of
(date).
I
hereby
cancel
this
contract.
......
(date)
............
(debtor’s
signature)
d.
A
disclosure
statement
in
substantially
the
following
form
shall
appear
in
at
least
fourteen
point
boldface
type
immediately
above
the
“Notice
of
Cancellation”
form
described
in
paragraph
“c”
:
NOTICE
REQUIRED
BY
IOWA
LAW
(Insert
name
of
licensee)
or
anyone
working
for
(insert
name
of
licensee)
CANNOT
take
payment
directly
from
you
or
require
you
to
pay
for
or
finance
its
services
through
a
third
party
until
(insert
name
of
licensee)
has
fully
performed
each
and
every
service
that
(insert
name
of
licensee)
contracted
to
perform
or
represented
that
(insert
name
of
licensee)
would
perform.
5.
A
licensee
who
is
engaged
primarily
in
the
business
of
debt
management
in
connection
with
educational
loans
shall
not
do
any
of
the
following:
a.
Claim,
demand,
charge,
collect,
or
receive
compensation
until
after
the
licensee
has
fully
performed
each
and
every
service
the
licensee
contracted
to
perform
or
represented
the
licensee
would
perform.
b.
Execute
a
contract
with
a
debtor
for
educational
loan
debt
management
services
in
violation
of
this
section.
c.
Receive
consideration
from
any
third
party
in
connection
with
services
rendered
to
a
debtor
unless
the
consideration
is
first
fully
disclosed
to
the
debtor.
d.
Prohibit
or
impede
a
debtor
from
contacting
any
creditor,
lender,
loan
servicer,
government
entity,
attorney,
counselor,
individual,
or
company
that
may
seek
to
help
the
debtor.
Any
such
provision
is
void
and
unenforceable.
Senate
File
272,
p.
5
e.
Access
or
obtain
a
debtor’s
federal
student
aid
information
in
violation
of
federal
law.
f.
Compensate
employees,
including
independent
contractors,
based
on
the
number
of
debtors
recruited
by
the
employees
or
enrolled
in
particular
programs,
or
provide
compensation
to
employees
on
any
other
commission-based
system.
g.
Pay
or
offer
to
pay
any
compensation,
bonus,
gift,
commission,
or
other
consideration
to
any
person
for
the
referral
of
a
debtor
to
the
licensee’s
business.
h.
Accept
or
receive
any
compensation,
bonus,
gift,
commission,
or
other
consideration
for
service
to
the
debtor
from
any
person
other
than
the
debtor,
the
debtor’s
representative,
or
any
third
party
providing
financing
that
is
otherwise
in
compliance
with
the
requirements
of
this
section.
i.
Disclose
any
information
regarding
a
debtor
to
anyone
other
than
law
enforcement,
government
entities,
loan
servicers,
creditors
of
the
debtor,
or
as
required
by
law.
j.
Disclose
any
information
regarding
the
creditor
of
a
debtor
to
anyone
other
than
the
debtor,
the
debtor’s
representative,
or
as
required
by
law.
6.
a.
A
violation
of
this
section
is
an
unlawful
practice
pursuant
to
section
714.16,
and
all
remedies
of
section
714.16
are
available
for
such
an
action.
A
private
cause
of
action
brought
under
this
section
by
a
debtor
is
in
the
public
interest.
A
debtor
may
bring
an
action
against
a
licensee
for
a
violation
of
this
section.
If
the
court
finds
that
the
licensee
violated
this
section,
the
court
shall
award
the
debtor
actual
damages,
appropriate
equitable
relief,
and
the
costs
of
the
action,
and
shall
award
reasonable
fees
to
the
debtor’s
attorney.
b.
The
rights
and
remedies
provided
in
paragraph
“a”
are
cumulative
to,
and
not
a
limitation
of,
any
other
rights
and
remedies
provided
by
law.
Any
action
brought
by
a
person
other
than
the
attorney
general
or
the
superintendent
pursuant
to
this
section
must
be
commenced
within
four
years
from
the
date
of
the
alleged
violation.
c.
Notwithstanding
any
other
provision
of
this
section,
an
action
shall
not
be
brought
on
the
basis
of
a
violation
of
this
section,
except
by
a
debtor
against
whom
the
violation
was
Senate
File
272,
p.
6
committed
or
by
the
attorney
general
or
superintendent.
This
limitation
does
not
apply
to
administrative
action
by
either
the
attorney
general
or
the
superintendent.
______________________________
CHARLES
SCHNEIDER
President
of
the
Senate
______________________________
PAT
GRASSLEY
Speaker
of
the
House
I
hereby
certify
that
this
bill
originated
in
the
Senate
and
is
known
as
Senate
File
272,
Eighty-eighth
General
Assembly.
______________________________
W.
CHARLES
SMITHSON
Secretary
of
the
Senate
Approved
_______________,
2020
______________________________
KIM
REYNOLDS
Governor