Chapter 4712: OHIO CREDIT SERVICES ORGANIZATION ACT

4712.01 Credit services organization act definitions.

As used in sections 4712.01 to 4712.14 of the Revised Code:

(A) "Buyer" means an individual who is solicited to purchase or who purchases the services of a credit services organization for purposes other than obtaining a business loan as described in division (B)(6) of section 1343.01 of the Revised Code.

(B) "Consumer reporting agency" has the same meaning as in the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 1681a , as amended.

(C)

(1) "Credit services organization" means any person that, in return for the payment of money or other valuable consideration readily convertible into money for the following services, sells, provides, or performs, or represents that the person can or will sell, provide, or perform, one or more of the following services:

(a) Improving a buyer's credit record, history, or rating;

(b) Obtaining an extension of credit by others for a buyer;

(c) Providing advice or assistance to a buyer in connection with division (C)(1)(a) or (b) of this section;

(d) Removing adverse credit information that is accurate and not obsolete from the buyer's credit record, history, or rating;

(e) Altering the buyer's identification to prevent the display of the buyer's credit record, history, or rating.

(2) "Credit services organization" does not include any of the following:

(a) A person that makes or collects loans, to the extent these activities are subject to licensure or registration by this state;

(b) A mortgage broker, as defined in section 1322.01 of the Revised Code, that holds a valid certificate of registration under sections 1322.01 to 1322.12 of the Revised Code;

(c) A lender approved by the United States secretary of housing and urban development for participation in a mortgage insurance program under the "National Housing Act," 48 Stat. 1246 (1934), 12 U.S.C.A. 1701 , as amended;

(d) A bank, savings bank, or savings and loan association, or a subsidiary or an affiliate of a bank, savings bank, or savings and loan association. For purposes of division (C)(2)(d) of this section, "affiliate" has the same meaning as in division (A) of section 1101.01 of the Revised Code and "bank," as used in division (A) of section 1101.01 of the Revised Code, is deemed to include a savings bank or savings and loan association.

(e) A credit union organized and qualified under Chapter 1733. of the Revised Code or the "Federal Credit Union Act," 84 Stat. 994 (1970), 12 U.S.C.A. 1751 , as amended;

(f) A budget and debt counseling service, as defined in division (D) of section 2716.03 of the Revised Code, provided that the service is a nonprofit organization exempt from taxation under section 501(c)(3) of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 501 , as amended, and that the service is in compliance with Chapter 4710. of the Revised Code;

(g) A consumer reporting agency that is in substantial compliance with the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 1681a , as amended.

(h) A mortgage banker;

(i) Any political subdivision, or any governmental or other public entity, corporation, or agency, in or of the United States or any state of the United States;

(j) A college or university, or controlled entity of a college or university, as defined in section 1713.05 of the Revised Code;

(k) A motor vehicle dealer licensed pursuant to Chapter 4517. of the Revised Code acting within the scope and authority of that license or a motor vehicle auction owner licensed pursuant to Chapters 4517. and 4707. of the Revised Code acting within the scope and authority of that license;

(l) An attorney at law admitted to the practice of law in this state who offers, provides, or performs a legal service that is privileged by reason of the attorney-client relationship, provided that the service is not a service described in division (C)(1)(b) or (e) of this section.

(D) "Extension of credit" means the right to defer payment of debt, or to incur debt and defer its payment, offered or granted primarily for personal, family, or household purposes. "Extension of credit" does not include a mortgage.

(E) "Mortgage" means any indebtedness secured by a deed of trust, security deed, or other lien on real property.

(F) "Mortgage banker" means any person that makes, services, or buys and sells mortgage loans and is approved by the United States department of housing and urban development, the United States department of veterans affairs, the federal national mortgage association, or the federal home loan mortgage corporation.

(G) "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section 1181.21 of the Revised Code.

Cite as R.C. § 4712.01

Amended by 129th General AssemblyFile No.127, HB 487, §101.01, eff. 9/10/2012.

Effective Date: 05-02-2002

4712.02 Certificate of registration.

(A) A credit services organization shall file a registration application with, and receive a certificate of registration from, the division of financial institutions before conducting business in this state. The registration application shall be accompanied by a one-hundred-dollar fee and shall contain all of the following information:

(1) The name and address of the credit services organization;

(2) The name and address of any person that directly or indirectly owns or controls ten per cent or more of the outstanding shares of stock in the organization;

(3) Either of the following:

(a) A full and complete disclosure of any litigation commenced against the organization or unresolved complaint that relates to the operation of the organization and that is filed with the attorney general, the secretary of state, or any other governmental authority of the United States, this state, or any other state of the United States;

(b) A notarized statement stating that no litigation has been commenced and no unresolved complaint relating to the operation of the organization has been filed with the attorney general, the secretary of state, or any other governmental authority of the United States, this state, or any other state of the United States.

(4) Any other information required at any time by the division.

(B)

(1) Except as otherwise provided in division (B)(2) of this section, each credit services organization shall notify the division in writing within thirty days after the date of a change in the information required by division (A) of this section.

(2) Each organization shall notify the division in writing no later than thirty days prior to any change in the information required by division (A)(1) or (2) of this section and shall receive approval from the division before making any such change.

(C)

(1) A credit services organization shall attach both of the following to the registration application submitted pursuant to division (A) of this section:

(a) A copy of the contract that the organization intends to execute with its customers;

(b) Evidence of the bond required under section 4712.06 of the Revised Code.

(2) Any modification made to the contract described in division (C)(1)(a) of this section shall be filed with the division prior to its use by the organization.

(D) Each credit services organization registering under this section shall maintain a copy of the registration application in its files. The organization shall allow a buyer to inspect the registration application upon request.

(E) Each nonresident credit services organization registering under this section shall designate and maintain a resident of this state as the organization's statutory agent for purposes of receipt of service of process.

(F) If, in order to issue a certificate of registration to a credit services organization, investigation by the division outside this state is necessary, the division may require the organization to advance sufficient funds to pay the actual expenses of the investigation.

(G) Each credit services organization registering under this section shall use no more than one fictitious or trade name.

(H)

(1) A certificate of registration issued by the division pursuant to this section shall expire annually on the thirtieth day of April.

(2) A credit services organization may renew its certificate of registration by filing with the division a renewal application accompanied by a one-hundred-dollar renewal fee.

(I) All money collected by the division pursuant to this section shall be deposited by it in the state treasury to the credit of the consumer finance fund.

(J)

(1) No credit services organization shall fail to comply with division (A) of this section.

(2) No credit services organization shall fail to comply with division (B), (D), (E), (F), or (G) of this section.

Cite as R.C. § 4712.02

Effective Date: 09-26-1996

4712.03 Suspension, revocation or refusal of certificate of registration.

After notice and a hearing conducted in accordance with Chapter 119. of the Revised Code, the superintendent of financial institutions may suspend, revoke, or refuse to issue or renew a certificate of registration if any of the following conditions applies to the applicant for registration or registrant:

(A) The applicant or registrant obtained a certificate of registration through any false or fraudulent representation or made any substantial misrepresentation in any registration application.

(B) The applicant or registrant made false promises through advertising or other means or engaged in a continued course of misrepresentations.

(C) The applicant or registrant violated any provision of Chapter 1345. or sections 4712.01 to 4712.14 of the Revised Code or the rules adopted thereunder.

(D) The applicant or registrant was convicted, in a court of competent jurisdiction of this state or any other state, of a felony or any criminal offense involving fraud, or failed to notify the division of financial institutions of any such conviction.

(E) The applicant or registrant engaged in conduct that constituted improper, fraudulent, or dishonest dealings.

Cite as R.C. § 4712.03

Effective Date: 09-26-1996

4712.04 Providing buyer with written statement of rights.

(A) Before executing a contract or agreement with a buyer or receiving money or other valuable consideration, a credit services organization shall provide the buyer with a written statement containing all of the following information:

(1) A complete and detailed description of the services to be performed by the organization for the buyer and the total cost of the services;

(2) A statement explaining the buyer's rights against the surety bond required pursuant to section 4712.06 of the Revised Code;

(3) The name and address of the surety company that issued the surety bond;

(4) A complete and accurate statement of the availability of nonprofit budget and debt counseling services.

(B) The written statement required under division (A) of this section shall be printed in at least ten-point boldface type and shall include the following statement or any alternative statement prescribed by the division of financial institutions:

"Credit Reporting Practices Rights of Consumers Under Ohio and Federal Law Under the federal Fair Credit Reporting Act, you have all of the following legal rights: You have a right to obtain a copy of your credit report from a consumer reporting agency. You may be charged a reasonable fee. However, there is no fee if you have been turned down within the preceding sixty days for credit, employment, insurance, or a rental dwelling because of information in your credit report. The consumer reporting agency must provide someone to help you interpret the information in your credit file. You have a right to dispute inaccurate information by contacting the consumer reporting agency directly. However, neither you nor any credit services organization has the right to have accurate, current, and verifiable information removed from your consumer reporting agency report. The consumer reporting agency must remove accurate, negative information from your report only if it is more than seven years old. Bankruptcy information can be reported for ten years. Accurate information cannot be permanently removed from the files of a consumer reporting agency. Credit reporting agencies are required to follow reasonable procedures to ensure that creditors report information accurately. However, mistakes may occur. You may, on your own, notify a consumer reporting agency in writing that you dispute the accuracy of information in your credit file. The consumer reporting agency then must reinvestigate and modify or remove inaccurate information. The consumer reporting agency must not charge any fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the consumer reporting agency. If reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the consumer reporting agency to keep in your file, explaining why you think the record is inaccurate. The consumer reporting agency must include your statement about disputed information in any reports it issues about you. Under Ohio law, you have a right to sue a credit services organization that violates the Ohio Credit Services Organization Act. This law prohibits deceptive practices by credit services organizations and gives you a right to cancel your contract for any reason within three business days from the date you signed it."

(C) The credit services organization shall maintain a copy of the statement, signed by the buyer, acknowledging receipt of the statement. The copy shall be maintained in the organization's files for at least two years after the date on which the statement is provided to the buyer.

(D) The credit services organization, in a timely manner, shall notify each buyer of all substantive changes in the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 1681a , and shall provide each buyer with copies of those changes.

(E) No credit services organization shall fail to comply with this section.

Cite as R.C. § 4712.04

Effective Date: 09-26-1996

4712.05 Contents and execution of contract.

(A) Each contract between the buyer and a credit services organization for the purchase of the services of the organization shall be in writing, dated and signed by the buyer, and shall include all of the following:

(1) A statement, in type that is boldfaced, capitalized, underlined, or otherwise conspicuously set out from surrounding written material and that is in immediate proximity to the space reserved for the signature of the buyer, as follows:

"If you, the buyer, have been denied credit within the last sixty days, you may obtain a free copy of the consumer credit report from the consumer reporting agency. You also have the right to dispute inaccurate information in a report. You may cancel this contract at any time before midnight of the third business day after the date you signed it. See the attached notice of cancellation form for an explanation of this right."

(2) The terms and conditions of payment, including the total of all payments to be made by the buyer, whether to the credit services organization or to another person;

(3) A full and detailed description of the services to be performed for the buyer by the credit services organization, including all guarantees and all promises of full or partial refunds, and the estimated length of time, not exceeding sixty days or any shorter time period prescribed by the superintendent of financial institutions, for performing the services;

(4) The address of the credit services organization's principal place of business and the name and address of its agent in this state authorized to receive service of process;

(5) With respect to the previous calendar year or the time period during which the credit services organization has been in business, whichever is shorter, the percentage of the organization's customers for whom the organization has fully and completely performed the services the organization agreed to perform for the buyer.

(B) The contract shall have attached two easily detachable copies of a notice of cancellation. The notice shall be in boldface type and in the following form:

"Notice of Cancellation You may cancel this contract, without any penalty or obligation, within three business days after the date the contract is signed. To cancel this contract, mail or deliver a signed, dated copy of this cancellation notice, or other written notice, to:

________________ at _____________________________________________________

(Name of Seller) (Address of Seller)

(Place of Business) Not later than midnight ______________________________________________ (Date) I hereby cancel this transaction. Dated: __________________ ____________________________________________ (Buyer's Signature)"

(C) The credit services organization, at the time of signing, shall give to the buyer a copy of the completed contract and all other documents the organization requires the buyer to sign.

(D) No credit services organization shall breach a contract described in this section or fail to comply with any obligation arising from such a contract.

(E) No credit services organization shall fail to comply with division (A), (B), or (C) of this section.

Cite as R.C. § 4712.05

Effective Date: 09-26-1996

4712.06 Surety bond.

(A) No credit services organization shall conduct business in this state unless the organization has obtained a surety bond issued by a surety company authorized to do business in this state and all of the following conditions are met:

(1) A copy of the bond is filed with the division of financial institutions.

(2) The bond is in favor of any person, and of the state for the benefit of any person, that is injured by any violation of sections 4712.01 to 4712.14 of the Revised Code.

(3) The bond is in the amount of fifty thousand dollars.

(4) The bond is maintained and in effect for at least two years after the date on which the credit services organization ceases to conduct business in this state.

(B) Any person claiming against the bond for a violation of sections 4712.01 to 4712.14 of the Revised Code may maintain an action at law against the credit services organization and against the surety company. However, the surety company is liable only for damages awarded under division (A)(2) of section 4712.10 of the Revised Code and not for punitive damages awarded under division (A)(3) of section 4712.10 of the Revised Code. The aggregate liability of the surety company to all persons injured by a credit services organization's violation of sections 4712.01 to 4712.14 of the Revised Code shall not exceed the amount of the bond.

Cite as R.C. § 4712.06

Effective Date: 09-26-1996

4712.07 Prohibited acts.

No credit services organization, salesperson, agent, or representative of a credit services organization, or independent contractor that sells or attempts to sell the services of a credit services organization shall do any of the following:

(A) Charge or receive directly or indirectly from a buyer money or other consideration readily convertible into money until all services the organization has agreed to perform for the buyer are completed within the time periods described in division (A)(3) of section 4712.05 of the Revised Code.

(B) Charge or receive directly or indirectly from a buyer money or other consideration readily convertible into money for the referral of the buyer to a person that makes an extension of credit or to a consumer reporting agency, except when credit has actually been extended as a result of that referral;

(C) Make or use a false or misleading representation in the offer or sale of the services of the organization, including either of the following:

(1) Guarantying or otherwise stating that the organization is able to delete an adverse credit history, unless the representation clearly discloses that this can be done only if the credit history is inaccurate or obsolete;

(2) Guarantying or otherwise stating that the organization is able to obtain an extension of credit regardless of the buyer's previous credit problems or credit history, unless the representation clearly discloses the eligibility requirements for obtaining an extension of credit.

(D) Engage, directly or indirectly, in an unconscionable, unfair, or deceptive act or practice, as those terms are used and defined in Chapter 1345. of the Revised Code, in connection with the offer or sale of the services of a credit services organization;

(E)

(1) Make or advise a buyer to make a false or misleading statement concerning the buyer's creditworthiness, identification, credit standing, or credit capacity to any of the following:

(a) A consumer reporting agency;

(b) A person that has made an extension of credit to the buyer;

(c) A person to which the buyer is applying for an extension of credit.

(2) Division (E)(1) of this section applies to any statement that the organization, salesperson, agent, representative, or independent contractor knows or should know to be false or misleading through the exercise of reasonable care.

(F) Advertise or cause to be advertised, in any manner, the services of a credit services organization without being registered with the division of financial institutions;

(G) Fail to maintain a statutory agent as required under division (E) of section 4712.02 of the Revised Code;

(H) Transfer or assign a certificate of registration issued by the division pursuant to section 4712.02 of the Revised Code;

(I) Submit the buyer's disputes to a consumer reporting agency without the buyer's knowledge as evidenced by positive identification, including the buyer's correct current residence address, and written authorization personally signed by the buyer;

(J) Fail to maintain, for a period of time as determined by the superintendent of financial institutions, all of the following:

(1) A log of all contracts;

(2) Copies of each contract;

(3) Documentation that substantiates the validity of the representation made pursuant to division (A)(5) of section 4712.05 of the Revised Code;

(4) Any other record specified by the superintendent.

(K) Contact a consumer reporting agency, by telephone or otherwise, for the purpose of submitting or obtaining information relative to any buyer, and state or imply that he or she is the buyer or the buyer's attorney, guardian, or other legal representative;

(L) Engage, directly or indirectly, in any fraudulent or deceptive act, practice, or course of business in connection with the offer or sale of the services of a credit services organization.

Cite as R.C. § 4712.07

Effective Date: 09-26-1996

4712.08 Prohibiting fraudulent activities.

No credit services organization shall do any of the following:

(A) Obtain a certificate of registration through any false or fraudulent representation or make any substantial misrepresentation in any registration application;

(B) Make false promises through advertising or other means in the conduct of its business or engage in a continued course of misrepresentations in the conduct of its business;

(C) Engage in conduct that constitutes improper, fraudulent, or dishonest dealings in the conduct of its business;

(D) Fail to notify the division of financial institutions if the credit services organization is convicted, in a court of competent jurisdiction of this state or any other state, of a felony or any criminal offense involving fraud.

Cite as R.C. § 4712.08

Effective Date: 09-26-1996

4712.09 Waiving rights.

(A) No credit services organization shall cause or attempt to cause a buyer to waive a right under sections 4712.01 to 4712.14 of the Revised Code.

(B) Any waiver by a buyer of a right under sections 4712.01 to 4712.14 of the Revised Code is void.

Cite as R.C. § 4712.09

Effective Date: 04-16-1993

4712.10 Action for recovery of damages.

(A)

(1) A buyer injured by a violation of sections 4712.01 to 4712.14 of the Revised Code may bring an action for recovery of damages.

(2) Damages awarded under division (A)(1) of this section shall not be less than the amount paid by the buyer to the credit services organization, plus reasonable attorney's fees and court costs.

(3) The buyer may be awarded punitive damages.

(4) No action shall be brought under division (A)(1) of this section after four years after the date of the execution of the contract for services to which the action relates.

(B)

(1) The division of financial institutions, the attorney general, or a buyer may bring an action to enjoin a violation of sections 4712.01 to 4712.14 of the Revised Code.

(2) The division may initiate criminal proceedings under sections 4712.01 to 4712.14 of the Revised Code by presenting any evidence of criminal violations to the prosecuting attorney of the county in which the offense may be prosecuted. If the prosecuting attorney does not prosecute the violations, or at the request of the prosecuting attorney, the division shall present any evidence of criminal violations to the attorney general, who may proceed in the prosecution with all the rights, privileges, and powers conferred by law on prosecuting attorneys, including the power to appear before grand juries and to interrogate witnesses before such grand juries. These powers of the attorney general shall be in addition to any other applicable powers of the attorney general.

(C) The remedies provided by this section are in addition to any other remedy provided by law.

(D) In any proceeding or action brought under sections 4712.01 to 4712.14 of the Revised Code, the burden of proving an exemption under those sections is on the person claiming the benefit of the exemption.

(E) No person shall be deemed to violate sections 4712.01 to 4712.14 of the Revised Code with respect to any act taken or omission made in reliance on a written notice, written interpretation, or written report from the superintendent of financial institutions, unless there is a subsequent amendment to those sections, or the rules promulgated thereunder, that affects the superintendent's notice, interpretation, or report.

Cite as R.C. § 4712.10

Effective Date: 09-26-1996

4712.11 Violating consumer sales practices act.

(A) A violation of division (J) of section 4712.02 , division (E) of section 4712.04 , division (D) or (E) of section 4712.05 , division (A) of section 4712.06 , section 4712.07 or 4712.08 , or division (A) of section 4712.09 of the Revised Code is deemed to be an unfair or deceptive act or practice in violation of section 1345.02 of the Revised Code.

Cite as R.C. § 4712.11

Effective Date: 04-16-1993

4712.12 Investigating violations - injunctions.

(A) The division of financial institutions may investigate alleged violations of sections 4712.01 to 4712.14 of the Revised Code, or the rules adopted thereunder, or complaints concerning any such violation. The division may make application to the court of common pleas for an order enjoining any such violation and, upon a showing by the division that a person has committed, or is about to commit, such a violation, the court shall grant an injunction, restraining order, or other appropriate relief.

(B) In conducting any investigation pursuant to this section, the division may compel, by subpoena, witnesses to testify in relation to any matter over which it has jurisdiction, and may require the production of any book, record, or other document pertaining to such matter. If a person fails to file any statement or report, obey any subpoena, give testimony, produce any book, record, or other document as required by such a subpoena, or permit photocopying of any book, record, or other document subpoenaed, the court of common pleas of any county in this state, upon application made to it by the division, shall compel obedience by attachment proceedings for contempt, as in the case of disobedience of the requirements of a subpoena issued from the court or a refusal to testify therein.

(C) If the division determines that a person is engaged in, or is believed to be engaged in, activities that may constitute a violation of sections 4712.01 to 4712.14 of the Revised Code, the division may, after notice and a hearing conducted in accordance with Chapter 119. of the Revised Code, issue a cease and desist order. Such an order shall be enforceable in the court of common pleas.

Cite as R.C. § 4712.12

Effective Date: 09-26-1996

4712.13 Disclosing certificate of registration number.

A credit services organization shall disclose in any printed or published advertisement relating to the credit services organization's services, the number designated on the certificate of registration that is issued to the credit services organization by the division of financial insitutions under sections 4712.01 to 4712.14 of the Revised Code. No credit services organization shall fail to comply with this section.

Cite as R.C. § 4712.13

Effective Date: 09-26-1996

4712.14 Administrative rules.

The superintendent of financial institutions may adopt, in accordance with Chapter 119. of the Revised Code, reasonable rules to carry out the purposes of sections 4712.01 to 4712.14 of the Revised Code.

Cite as R.C. § 4712.14

Effective Date: 09-26-1996

4712.15 Compliance with law regarding sanctions for human trafficking.

The superintendent of financial institutions shall comply with section 4776.20 of the Revised Code.

Cite as R.C. § 4712.15

Added by 129th General AssemblyFile No.169, HB 247, §1, eff. 3/22/2013.

4712.99 Penalty.

Whoever violates division (J) of section 4712.02 , division (E) of section 4712.04 , division (D) or (E) of section 4712.05 , division (A) of section 4712.06 , section 4712.07 or 4712.08 , or division (A) of section 4712.09 of the Revised Code is guilty of a felony of the fifth degree.

Cite as R.C. § 4712.99

Effective Date: 07-01-1996