C.R.S.
Section 5-19-228
Prohibited acts and practices
(a)
A provider may not, directly or indirectly:(1)
Misappropriate or misapply money held in trust;(2)
Settle a debt on behalf of an individual without the individual’s agreement to the settlement terms pursuant to a settlement agreement or other valid contractual agreement executed by the individual;(3)
Exercise or attempt to exercise a power of attorney after an individual has terminated an agreement;(4)
Initiate a transfer from an individual’s account at a bank or with another person unless the transfer is:(A)
A return of money to the individual; or(B)
Before termination of an agreement, properly authorized by the agreement and this part 2, and for:(i)
Payment to one or more creditors pursuant to a plan; or(ii)
Payment of a fee;(5)
Offer a gift or bonus, premium, reward, or other compensation to an individual for executing an agreement;(6)
Offer, pay, or give a gift or bonus, premium, reward, or other compensation to a person for referring a prospective customer, except for a sales lead, if the person making the referral has a financial interest in the outcome of debt-management services provided to the customer, unless neither the provider nor the person making the referral communicates to the prospective customer the identity of the source of the referral;(7)
Receive a bonus, commission, or other benefit for referring an individual to a person;(8)
Structure a plan in a manner that would result in a negative amortization of any of an individual’s debts, unless a creditor that is owed a negatively amortizing debt agrees to refund or waive the finance charge upon payment of the principal amount of the debt;(9)
Compensate its employees on the basis of a formula that incorporates the number of individuals the employee induces to enter into agreements;(10)
Settle a debt or lead an individual to believe that a payment to a creditor is in settlement of a debt to the creditor unless, at the time of settlement, the individual receives a certification by the creditor that the payment is in full settlement of the debt;(11)
Make a representation that:(A)
The provider will furnish money to pay bills or prevent attachments;(B)
Payment of a certain amount will permit satisfaction of a certain amount or range of indebtedness; or(C)
Participation in a plan will or may prevent litigation, collection activity, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment;(12)
Misrepresent that it is authorized or competent to furnish legal advice or perform legal services;(13)
Represent that it is a not-for-profit entity unless it is organized and properly operating as a not-for-profit under the law of the state in which it was formed or that it is a tax-exempt entity unless it has received certification of tax-exempt status from the federal internal revenue service; except that, if the provider represents that it is a not-for-profit entity and the provider does not have tax-exempt status under section 501 (c) (3) of the federal “Internal Revenue Code of 1986”, as amended, the provider shall state, in a clear and conspicuous manner and in close proximity to the representation: “We are not an educational, charitable, or religious organization granted tax-exempt status by the Internal Revenue Service.”(14)
Take a confession of judgment or power of attorney to confess judgment against an individual;(15)
Employ an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information; or(16)
Advise, encourage, or suggest to the individual not to make a payment to creditors under the plan.(b)
If a provider furnishes debt-management services to an individual, the provider may not, directly or indirectly:(1)
Purchase a debt or obligation of the individual;(2)
Receive from or on behalf of the individual:(A)
A promissory note or other negotiable instrument other than a check or a demand draft; or(B)
A post-dated check or demand draft;(3)
Lend money or provide credit to the individual, except as a deferral of a settlement fee at no additional expense to the individual;(4)
Obtain a mortgage or other security interest from any person in connection with the services provided to the individual;(5)
Except as permitted by federal law, disclose the identity or identifying information of the individual or the identity of the individual’s creditors, except to:(A)
The administrator, upon proper demand;(B)
A creditor of the individual, to the extent necessary to secure the cooperation of the creditor in a plan; or(C)
The extent necessary to administer the plan;(6)
Except as otherwise provided in section 5-19-223 (d)(2), provide the individual less than the full benefit of a compromise of a debt arranged by the provider;(7)
Charge the individual for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the internet, or any other matter not directly related to debt-management services or educational services concerning personal finance; or(8)
Furnish legal advice or perform legal services, unless the person furnishing that advice to or performing those services for the individual is licensed to practice law.(c)
This part 2 does not authorize any person to engage in the practice of law.(d)
A provider may 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 lender or service provider, except for educational or counseling services required in connection with a government-sponsored program.(e)
Unless a person supplies goods, services, or facilities generally and supplies them to the provider at a cost no greater than the cost the person generally charges to others, a provider may not purchase goods, services, or facilities from the person if an employee or a person that the provider should reasonably know is an affiliate of the provider:(1)
Owns more than ten percent of the person; or(2)
Is an employee or affiliate of the person.
Source:
Section 5-19-228 — Prohibited acts and practices, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-05.pdf (accessed Oct. 20, 2023).
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