Senate Commerce Committee Statement to Senate, No. 2989 — State of New Jersey (December 19, 2022)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 2989, State of New Jersey, dated December 19, 2022, reporting the bill favorably. The bill would allow certain for-profit debt adjustment companies to conduct business in the State; under the current "debt adjusters law," administered by the Department of Banking and Insurance, only nonprofit social service agencies and nonprofit consumer credit counseling agencies may do so. The exception applies if the company does not receive consumer funds and is regulated by the Federal Trade Commission under the "Telemarketing Sales Rule." The commissioner could set maximum fees, and for-profit debt adjusters would not be subject to the bonding requirements for nonprofits or to a certification about salaries and expenses in the annual audit.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
2989

STATE
OF NEW JERSEY

DATED: DECEMBER
19, 2022

The Senate Commerce Committee reports favorably Senate
Bill No. 2989.

This bill would allow certain for-profit debt
adjustment companies to conduct business in the State. A debt adjuster means 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” at
16 C.F.R. 310.4.

The
bill would provide that for-profit debt adjusters shall not be 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.

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