2017 - Senate Bill 20 - CSO Provisions

Earlier this year, the Kansas Legislature passed, and the governor signed into law, legislation to update the Credit Services Organization Act (CSO Act) (K.S.A. 50-1116 et seq.). The bill, SB 20, takes effect July 1, 2017. Among other provisions, SB 20 updates the laws applicable to all current and future CSOs subject to K.S.A. 50-1116 et seq.

The full text of SB 20 is available at the below link. Please note that Sec. 13 through Sec. 26 of the bill contain the provisions applicable to the CSO Act.

Download Full Text of SB 20 HerePDF Icon

SB 20 makes the following changes to the CSO Act. Changes to existing law are in italics:

K.S.A. 2016 Supp. 50-1117 updates the following definitions:

(d)(2) clarifies that "debt management service" means, among other provisions, "Improving or offering to improve a consumer's credit record, history, rating or score, . . ."

(g) Strikes the term "registrant" and replaces it with "licensee" defined in (g) "Licensee" means a person who is licensed by the commissioner as a credit services organization.

(h) Adds the definition of nationwide mortgage licensing system and registry.

K.S.A. 50-1118(d) amends the license expiration date to April 30 of each year, thus consolidating the renewal application with the annual report requirement (K.S.A. 50-1124(a)). Both are now due April 1.

With respect to preparing an initial budget plan K.S.A. 50-1120 (b)(1)(B) provides that "For purposes of the initial budget plan, the licensee shall include all outstanding debt obligations as listed on the consumer's credit report as well as any debt obligations identified by the consumer;"

K.S.A. 50-1120(c)(1) requires a written debt management services agreement to include "The full legal name, doing business as "dba" name, address and phone number of licensee; (2) the name, address and phone number of the consumer;"

K.S.A. 50-1120(d) All solicitations and published advertisements concerning a credit services organization directed at Kansas residents, including those on the internet or by other electronic means, shall contain the name and license number of the licensee on record with the commissioner. Each licensee shall maintain a record of all solicitations or advertisements for a period of 36 months. For purposes of this subsection, "advertising" does not include business cards or promotional items.

K.S.A. 50-1120(f) No licensee shall conduct credit services organization business in this state using any name other than the name or names stated on its license.

K.S.A. 50-1121(m) Give a reward, bonus, premium, commission or any other consideration for the referral of a consumer to the licensee's credit services organization business and charge the consumer for the amount.

K.S.A. 50-1122(b)(2) disburse any funds paid by or on behalf of a consumer to such consumer's creditors within 20 calendar days after receipt of such funds or the latest date before the consumer would incur any fee, charge or penalty due to delay in payment;

K.S.A. 50-1123(c) provides that as part of a report provided to a consumer at least once every three months who has entered into a debt management services agreement with the licensee, the report shall include, among other provisions in current law the "total payoff amount or an estimated balance due to each creditor on any debt owed by the consumer.

K.S.A. 50-1123(e) amount held in the trust account on behalf of the consumer, or statement that no amount is currently held.

K.S.A. 50-1124(b) provides that a licensee shall file a written report with the commissioner 15 days either before or after an event and its expected impact on the licensee's business. The types of events are expanded to include: a change in the licensee's name or legal entity status, and the addition or loss of any owner, officer, partner or director.

K.S.A. 50-1126 adjusts the fees permitted to be charged by a CSO:

  • A one-time consultation fee not to exceed $75.
  • A monthly fee the lesser of a total maintenance fee of $40 per month (increased from $20 per month), or $5 per month for each creditor of a consumer that is listed in the debt management services agreement.
  • A reasonable fee for providing reverse mortgage counseling, bankruptcy counseling, student loan counseling, other counseling services authorized by the commissioner, an educational program or materials and supplies.
  • A one-time charge of up to $30 for each insufficient payment.
  • A charge of up to $5 to process a payment made by the consumer to the credit services organization through electronic means, if authorized by the consumer. No charge shall be assessed where the consumer has agreed to make all scheduled payments by electronic means.
  • SB 20 also includes language to specifically permit a CSO to waive any fees charged. K.S.A. 50-1126(c) provides "A licensee may waive any of the fees permitted in subsections (b)(1) through (b)(8) if the licensee determines that the consumer is unable to pay the fees."

K.S.A. 50-1128 (2)(i) Makes it optional for a CSO to use the nationwide mortgage licensing system and registry as a channeling agent for providing information to the OSBC. The OSBC does not anticipate requiring use of the NMLS for CSO licensees at this time.

Provides that an additional penalty of up to $10,000 is permitted for a violation of the CSO Act in which the violation is committed against elder or disabled persons as defined in K.S.A. 50-676.

Should you have any questions pertaining to the contents of this communication, please contact Jim Payne, Director of Licensing at (785) 296-1877 or jim.payne@osbckansas.org. You may also contact Mike Enzbrenner, Director of Examinations at (785) 296-1878 or mike.enzbrenner@osbckansas.org.

Please note this should not be construed as legal advice or the creation of an attorney-client relationship. For legal advice regarding the application of Kansas or federal law, please consult with your own counsel.