Maryland Credit Repair

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Subtitle 19 – Maryland Credit Services Businesses Act
§ 14-1901. Definitions.

(a) In general.- In this subtitle the following words have the meanings indicated.

(b) Commissioner.- “Commissioner” means the Commissioner of Financial Regulation of the Department of Labor, Licensing, and Regulation.

(c) Consumer.- “Consumer” means any individual who is solicited to purchase or who purchases for personal, family, or household purposes the services of a credit services business.

(d) Consumer reporting agency; consumer report; investigative consumer report; file.- “Consumer reporting agency”, “consumer report”, “investigative consumer report”, and “file” shall have the meaning ascribed to each under § 14-1201 of this title.

(e) Credit services business.-

(1) “Credit services business” means any person who, with respect to the extension of credit by others, sells, provides, or performs, or represents that such person can or will sell, provide, or perform, any of the following services in return for the payment of money or other valuable consideration:

(i) Improving a consumer’s credit record, history, or rating or establishing a new credit file or record;

(ii) Obtaining an extension of credit for a consumer; or

(iii) Providing advice or assistance to a consumer with regard to either subparagraph (i) or (ii) of this paragraph.

(2) “Credit services business” includes a person who sells or attempts to sell written materials containing information that the person represents will enable a consumer to establish a new credit file or record.

(3) “Credit services business” does not include:

(i) Any person authorized to make loans or extensions of credit under the laws of this State or the United States who is actively engaged in the business of making loans or other extensions of credit to residents of this State;

(ii) Any bank, trust company, savings bank, or savings and loan association whose deposits or accounts are eligible for insurance by the Federal Deposit Insurance Corporation or any credit union organized and chartered under the laws of this State or the United States;

(iii) Any nonprofit organization exempt from taxation under § 501 (c)(3) of the Internal Revenue Code (26 U.S.C. § 501 (c)(3));

(iv) Any person licensed as a real estate broker by this State where the person is acting within the course and scope of that license;

(v) Any person licensed as a mortgage lender by this State;

(vi) An individual admitted to the Bar of the Court of Appeals of Maryland when the individual renders services within the course and scope of practice by the individual as a lawyer and does not engage in the credit services business on a regular and continuing basis;

(vii) Any broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission where the broker-dealer is acting within the course and scope of that regulation;

(viii) Any consumer reporting agency as defined in the federal Fair Credit Reporting Act (15 U.S.C. §§ 1681 – 1681t) or in § 14-1201 (e) of this title; or

(ix) An individual licensed by the Maryland Board of Public Accountancy when the individual renders services within the course and scope of practice by the individual as a certified public accountant and does not engage in the credit services business on a regular and continuing basis.

(f) Extension of credit.- “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.

(g) Person.- “Person” includes an individual, corporation, government or governmental subdivision or agency, business trust, statutory trust, estate, trust, partnership, association, 2 or more persons having a joint or common interest, and any other legal or commercial entity.

[1987, ch. 469; 1988, ch. 6, § 1; 1989, ch. 236, § 2; 1991, ch. 628; 1994, ch. 670; 1995, ch. 120, § 19; 1996, ch. 326, § 2; 2005, ch. 25, § 13; 2010, ch. 611, § 2.]

§ 14-1902. Duties.

A credit services business, its employees, and independent contractors who sell or attempt to sell the services of a credit services business shall not:

(1) Receive any money or other valuable consideration from the consumer, unless the credit services business has secured from the Commissioner a license under Title 11, Subtitle 3 of the Financial Institutions Article;

(2) Receive any money or other valuable consideration solely for referral of the consumer to a retail seller or to any other credit grantor who will or may extend credit to the consumer, if the credit extended to the consumer is substantially the same terms as those available to the general public;

(3) Make, or assist or advise any consumer to make, any statement or other representation that is false or misleading, or which by the exercise of reasonable care should be known to be false or misleading, to a consumer reporting agency, government agency, or person to whom the consumer applies or intends to apply for an extension of credit, regarding a consumer’s creditworthiness, credit standing, credit capacity, or true identity;

(4) Make or use any false or misleading representations in the offer or sale of the services of a credit services business;

(5) Engage, directly or indirectly, in any act, practice, or course of business which operates as a fraud or deception on any person in connection with the offer or sale of the services of a credit services business;

(6) Charge or receive any money or other valuable consideration prior to full and complete performance of the services that the credit services business has agreed to perform for or on behalf of the consumer;

(7) Charge or receive any money or other valuable consideration in connection with an extension of credit that, when combined with any interest charged on the extension of credit, would exceed the interest rate permitted for the extension of credit under the applicable title of this article;

(8) Create, assist a consumer to create, or provide a consumer with information on how to create, a new consumer report, credit file, or credit record by obtaining and using a different name, address, telephone number, Social Security number, or employer tax identification number; or

(9) Assist a consumer to obtain an extension of credit at a rate of interest which, except for federal preemption of State law, would be prohibited under Title 12 of this article.

§ 14-1903. Application of subtitle; licenses.

(a) In general.- Notwithstanding any election of law or designation of situs in any contract, this subtitle applies to any contract for credit services if:

(1) The credit services business offers or agrees to sell, provide, or perform any services to a resident of this State;

(2) A resident of this State accepts or makes the offer in this State to purchase the services of the credit services business; or

(3) The credit services business makes any verbal or written solicitation or communication that originates either inside or outside of this State but is received in the State by a resident of this State.

(b) Licenses – Required.- A credit services business is required to be licensed under this subtitle and is subject to the licensing, investigatory, enforcement, and penalty provisions of this subtitle and Title 11, Subtitle 3 of the Financial Institutions Article.

(c) Same – Issuance.- A license required by this subtitle shall be issued by the Commissioner.

(d) Same – Exemptions.- A person not included within the definition of a credit services business as provided in § 14-1901(e)(3) of this subtitle is exempt from licensure requirements under this subtitle.

§ 14-1903.1. Advertisements of credit services business.

A person who advertises a service described in § 14-1901(e)(1) of this subtitle, whether or not a credit services business, shall clearly and conspicuously state in each advertisement the number of:

(1) The license issued under § 14-1903 of this subtitle; or

(2) If not required to be licensed, the exemption provided by the Commissioner.

§ 14-1904. Information statement.

(a) Duty to provide.- Before either the execution of a contract or agreement between a consumer and a credit services business or the receipt by the credit services business of any money or other valuable consideration, the credit services business shall provide the consumer with a written information statement containing all of the information required under § 14-1905 of this subtitle.

(b) Filing.- The credit services business shall maintain on file for a period of 2 years from the date of the consumer’s acknowledgment a copy of the information statement signed by the consumer acknowledging receipt of the information statement.

§ 14-1905. Information to be included in information statement.

(a) In general.- The information statement required under § 14-1904 of this subtitle shall include:

(1) An accurate statement of the consumer’s right to review any file on the consumer maintained by any consumer reporting agency, and the right of the consumer to receive a copy of a consumer report containing all information in that file as provided under the federal Fair Credit Reporting Act (15 U.S.C. § 1681g) and under § 14-1206 of this title;

(2) A statement that a copy of the consumer report containing all information in the consumer’s file will be furnished free of charge by the consumer reporting agency if requested by the consumer within 30 days of receiving a notice of a denial of credit as provided under the federal Fair Credit Reporting Act (15 U.S.C. § 1681j) and under § 14-1209 of this title;

(3) A statement that a nominal charge not to exceed $5 may be imposed on the consumer by the consumer reporting agency for a copy of the consumer report containing all the information in the consumer’s file, if the consumer has not been denied credit within 30 days from receipt of the consumer’s request;

(4) A complete and accurate statement of the consumer’s right to dispute the completeness or accuracy of any item on the consumer contained in any file that is maintained by any consumer reporting agency, as provided under the federal Fair Credit Reporting Act (15 U.S.C. § 1681i) and under § 14-1208 of this title;

(5) A complete and detailed description of the services to be performed by the credit services business for or on behalf of the consumer, and the total amount the consumer will have to pay for the services; and

(6) A statement that accurately reported information may not be permanently removed from the file of a consumer reporting agency.

(b) Additional requirements of licenses.- A credit services business required to obtain a license pursuant to § 14-1902 of this subtitle shall include in the information statement required under § 14-1904 of this subtitle:

(1) A statement of the consumer’s right to file a complaint pursuant to § 14-1911 of this subtitle;

(2) The address of the Commissioner where such complaints should be filed; and

(3) A statement that a bond exists and the consumer’s right to proceed against the bond under the circumstances and in the manner set forth in § 14-1910 of this subtitle.

§ 14-1906. Contract with consumer.

(a) Requirements.- Every contract between a consumer and a credit services business for the purchase of the services of the credit services business shall be in writing, dated, signed by the consumer, and shall include:

(1) A conspicuous statement in size equal to at least 10-point bold type, in immediate proximity to the space reserved for the signature of the consumer as follows:

“You, the buyer, may cancel this contract at any time prior to midnight of the third business day after the date of the transaction. 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 consumer, whether to the credit services business or to some other person;

(3) A complete and detailed description of the services to be performed and the results to be achieved by the credit services business for or on behalf of the consumer, including all guarantees and all promises of full or partial refunds and a list of the adverse information appearing on the consumer’s credit report that the credit services business expects to have modified and the estimated date by which each modification will occur; and (4) The principal business address of the credit services business and the name and address of its agent in this State authorized to receive service of process.

(b) Notice of cancellation form.- The contract shall be accompanied by a form completed in duplicate, captioned “NOTICE OF CANCELLATION”, which shall be attached to the contract and easily detachable, and which shall contain in at least 10-point bold type the following statement:

“NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation, at any time prior to midnight of the third business day after the date the contract is signed.

If you cancel, any payment made by you under this contract will be returned within 10 days following receipt by the seller of your cancellation notice.

To cancel this contract, mail or deliver a signed and dated copy of this
cancellation notice, or any other written notice, to …………………….

(Name of seller)

At …………………………………………………………………

(Address of seller)

…………………………………………………………………..

(Place of business)

Not later than midnight ………………..

(Date)

I hereby cancel this transaction.

……………….. ……………………………………………

(Date) (Buyer’s signature)”

(c) Copies of completed contract and other documents to be given to consumer.- A copy of the completed contract and all other documents the credit services business requires the consumer to sign shall be given by the credit services business to the consumer at the time they are signed.

§ 14-1907. Violations; void contracts; waivers; burden of proof.

(a) Breach of contract.- Any breach by a credit services business of a contract under this subtitle, or of any obligation arising under it, shall constitute a violation of this subtitle.

(b) Void contracts.- Any contract for services from a credit services business that does not comply with the applicable provisions of this subtitle shall be void and unenforceable as contrary to the public policy of this State.

(c) Waivers.-

(1) Any waiver by a consumer of any of the provisions of this subtitle shall be deemed void and unenforceable by a credit services business as contrary to the public policy of this State; and

(2) Any attempt by a credit services business to have a consumer waive rights given by this subtitle shall constitute a violation of this subtitle.

(d) Burden of proof.- In any proceeding involving this subtitle, the burden of proving an exemption or an exception from a definition is upon the person claiming it.

§ 14-1908. Surety bonds – Requirement.

A credit services business is required to obtain a surety bond pursuant to Title 11, Subtitle 3 of the Financial Institutions Article.

§ 14-1909. Same – Issuance.

The surety bond shall be issued by a surety company authorized to do business in this State.

§ 14-1910. Same – Claims against.

(a) Actions.- Any person claiming against the surety bond for a violation of this subtitle may maintain an action against the credit services business and against the surety.

(b) Liability for actual damages.- The surety shall be liable only for actual damages and not for the punitive damages permitted under § 14-1912 of this subtitle.

(c) Aggregate liability.- The aggregate liability of the surety to all persons damaged by a credit services business’s violation of this subtitle may not exceed the amount of the surety bond.

§ 14-1911. Complaints.

(a) Filing.- Any consumer who has reason to believe that this subtitle has been violated by any credit services business or by any other person may file a written complaint setting forth the details of the alleged violation with the Commissioner.

(b) Inspection of books, records, etc., by Commissioner.- After receiving the complaint, the Commissioner may inspect the pertinent books, records, letters and contracts of any credit services business, and of any person who has furnished information to the credit services business relating to the specific written complaint.

(c) Investigation and hearing.- The Commissioner may investigate the complaint and hold a hearing in accordance with Title 10, Subtitle 2 of the State Government Article.

(d) Powers of Commissioner.- The Commissioner may:

(1) Hold a hearing on the complaint at a time and place in this State reasonably convenient to the parties involved;

(2) Subpoena witnesses;

(3) Take depositions of witnesses residing without the State, in the manner provided for witnesses in civil actions in courts of record;

(4) Administer oaths;

(5) Issue orders for compliance with this subtitle; and

(6) Issue cease and desist orders, after finding a pattern and practice of violation of this subtitle.

(e) Notice of complaint and hearing.-

(1) The Commissioner shall give to the credit services business, or the salesperson, agent, representative, or independent contractor acting on behalf of the credit services business against whom a complaint is filed, written notice of the complaint and the time and place of any hearing.

(2) The notice shall:

(i) Be in writing; and

(ii) Be sent by certified mail, to the principal place of business of the credit services business or the principal place of business or residence address of the salesperson, agent, representative, or independent contractor acting on behalf of the credit services business, at least 10 days prior to the date of the hearing.

(f) Cease and desist order.-

(1) If, after the hearing, the Commissioner finds that the credit services business, or the salesperson, agent, representative, or independent contractor acting on behalf of the credit services business, has engaged or is engaging in any act or practice prohibited by this subtitle, the Commissioner shall order the credit services business or the person or both to cease and desist from the act or practice and may order that restitution be paid to an aggrieved consumer.

(2) The order of the Commissioner shall comply with the Administrative Procedure Act.

(g) Finality of order.-

(1) If an appeal is not filed, the order of the Commissioner becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner’s orders.

(2) If an appeal is filed, the order of the Commissioner becomes final after a final decision of a court affirming the order or dismissing the appeal.

(h) Failure to comply with Commissioner’s order.- If a credit services business or any other person fails to comply with any lawful order of the Commissioner pursuant to this subtitle or if any witness fails to appear and testify to any matter regarding which he may be lawfully interrogated, on petition of the Commissioner setting forth the facts, the circuit court of any county shall:

(1) Compel obedience to the requirements of the subpoena or order;

(2) Compel the production of contracts, forms, files, and other evidence; and

(3) Order compliance with any lawful order issued by the Commissioner under the provisions of subsection (d) (5) or (6) of this section.

(i) Failure to comply with court order.- If the credit services business or any other person fails, refuses, or neglects to comply with the order of the court, the court may punish that person for contempt of court.

(j) Applicability of Administrative Procedure Act.- The Administrative Procedure Act, including its provisions for judicial review of a final decision in a contested case, applies to proceedings before the Commissioner pursuant to this subtitle.

§ 14-1912. Failure to comply with requirements.

(a) Willful noncompliance.- Any credit services business which willfully fails to comply with any requirement imposed under this subtitle with respect to any consumer is liable to that consumer in an amount equal to the sum of:

(1) Any actual damages sustained by the consumer as a result of the failure;

(2) A monetary award equal to 3 times the total amount collected from the consumer, as ordered by the Commissioner;

(3) Such amount of punitive damages as the court may allow; and

(4) In the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

(b) Negligent noncompliance.- Any credit services business which is negligent in failing to comply with any requirement imposed under this subtitle with respect to any consumer is liable to that consumer in an amount equal to the sum of:

(1) Any actual damages sustained by the consumer as a result of the failure; and

(2) In the case of any successful action to enforce any liability under this section, the cost of the action together with reasonable attorney’s fees as determined by the court.

§ 14-1913. Limitation of actions for enforcement of liability.

(a) Generally.- An action to enforce any liability created under this subtitle shall be brought within 2 years from the date the violation at issue occurred.

(b) Material and willful misrepresentation.- Where a defendant has materially and willfully misrepresented any information required to be disclosed to a consumer by this subtitle and the information is material to establishing defendant’s liability, the action may be brought at any time within 2 years of the discovery of the misrepresentation.

§ 14-1914. Actions under Consumer Protection Act.

(a) Each sale is offense.- Each sale of the services of a credit services business that violates any provision of this subtitle is an unfair or deceptive trade practice under Title 13 of this article.

(b) Power of Consumer Protection Division to bring proceedings.- If the Division of Consumer Protection of the Office of the Attorney General has reason to believe that any credit services business, or any salesperson, agent, representative, or independent contractor acting on behalf of a credit services business, has violated any provision of this subtitle, the Division may institute a proceeding under Title 13 of this article.

§ 14-1915. Fines and punishments.

(a) Violation of subtitle.- Except as provided in subsection (b) of this section, any person who violates any provision of this subtitle is guilty of a misdemeanor and, on conviction, is subject to a fine not exceeding $5,000 or imprisonment not exceeding 3 years or both, in addition to any civil penalties.

(b) Violation of order of Commissioner or Attorney General.- A person may not be imprisoned for violation of any provision of an order of the Commissioner or of the Attorney General entered pursuant to this subtitle or Title 13 of this article.

§ 14-1916. Short title.

This subtitle may be cited as the “Maryland Credit Services Businesses Act”.