Senate Commerce Committee Statement to Senate, No. 1310 — State of New Jersey (June 10, 2024)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1310 with committee amendments, State of New Jersey, dated June 10, 2024, reporting the bill favorably. As amended, the bill allows certain for-profit debt adjustment companies to do business in the State if the company does not receive or hold consumer funds and is regulated by the Federal Trade Commission under the "Telemarketing Sales Rule." The statement says current "debt adjusters law," administered by the Department of Banking and Insurance, permits only nonprofit agencies to operate debt adjustment services. For-profit debt adjusters would generally follow the same rules, with exceptions for the salary certification and bonding requirements, and the commissioner could set maximum fees.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
1310

with
committee amendments

STATE
OF NEW JERSEY

DATED: JUNE
10, 2024

The Senate Commerce Committee reports favorably and
with committee amendments Senate Bill No. 1310.

As
amended, this bill allows certain for-profit debt adjustment companies to
conduct business in the State. A debt adjuster is a person or entity who: acts
or offers to act for a consideration as an intermediary between a debtor and
his creditors for the purpose of settling, compounding, or otherwise altering
the terms of payment of any debts of the debtor; or receives money or other
property from the debtor, or on behalf of the debtor, for payment to, or
distribution among, the creditors of the debtor.

Under
New Jersey’s current “debt adjusters law,” which is administered and enforced
by the Department of Banking and Insurance, only nonprofit social service
agencies and nonprofit consumer credit counseling agencies may operate debt
adjustment services in the State.

The
bill would create an exception to the current law to allow for-profit debt
adjustment companies to conduct business in the State provided the company (1)
does not receive or hold, actually or constructively, consumer funds; and (2)
is regulated by the Federal Trade Commission pursuant to the commission’s
“Telemarketing Sales Rule.”

The
bill would generally subject for-profit debt adjuster companies to the same
rules and restrictions as non-profit entities licensed to operate debt
adjustment services, but with certain exceptions. Under the bill, a for-profit
debt adjuster would not be required to provide a certification about salaries
and expenses as part of its annual audit. The commissioner would be authorized
to establish maximum fees that may be charged by for-profit debt adjusters. The
bill further provides that the provisions of the debt adjuster act are only
applicable to for-profit debt adjusters to the extent that they do not conflict
with the federal “Telemarketing Sales Rule.”

The
bill would provide that for-profit debt adjusters are not subject to the
bonding requirements that apply to nonprofit social service agencies and
nonprofit consumer credit counseling agencies that perform debt adjuster
services in the State.

The
bill also requires for-profit debt adjuster licensees that enter into an
agreement with a debtor to disclose certain information to the debtor.

Lastly,
the bill clarifies language about persons engaged in the practice of law that
are not deemed to be debt adjusters.

This bill was prefiled for introduction in the
2024-2025 session pending technical review. As reported, the bill includes the
changes required by technical review, which has been performed.

COMMITTEE AMENDMENTS

The committee amended the
bill to add a requirement that for-profit debt adjuster licensees that enter into an agreement with a
debtor disclose certain information to the debtor.

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