S.Amdt. 3960

SA 3960. Mr. SCHUMER (for himself and Mrs. McCaskill) submitted an
amendment intended to be proposed to amendment SA 3739 proposed by Mr.
Reid (for Mr. Dodd (for himself and Mrs. Lincoln)) to the bill S. 3217,
to promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes; which was ordered to lie on the table; as follows:

On page 1565, after line 23, add the following:

TITLE XIII--REGULATION OF DEBT SETTLEMENT SERVICES

SEC. 1301. AMENDMENT TO CONSUMER CREDIT PROTECTION ACT.

The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.)
is amended by adding at the end the following:

``TITLE X--DEBT SETTLEMENT SERVICES

``SEC. 1001. DEFINITIONS.

``In this title:
``(1) Attorney general of a state.--The term `attorney
general of a State' means the attorney general or other chief
law enforcement officer of a State.
``(2) Commission.--The term `Commission' means the Federal
Trade Commission.
``(3) Consumer.--The term `consumer' means any person.
``(4) Consumer settlement account.--The term `consumer
settlement account' means any account or other means or
device in which payments, deposits, or other transfers from a
consumer are held or transferred to a debt settlement
provider for the accumulation of the consumer's funds in
anticipation of proffering an adjustment or settlement of a
debt or obligation of the consumer to a creditor on behalf of
the consumer.
``(5) Debt settlement program.--The term `debt settlement
program' means the actions and activities undertaken by a
debt settlement provider and a consumer in connection with
the provision of debt settlement service.
``(6) Debt settlement provider.--
``(A) In general.--Except as provided in subparagraph (B),
the term `debt settlement provider' means any person or
entity engaging in, or holding itself out as engaging in, the
business of providing debt settlement services in exchange
for a fee or compensation, or any person who solicits for or
acts on behalf of any person or entity engaging in, or
holding itself out as engaging in, the business of providing
debt settlement services in exchange for any fee or
compensation.
``(B) Exception.--The term `debt settlement provider' does
not include the following:
``(i) An attorney providing a debt settlement service to a
consumer who--

``(I) is licensed to practice law and in good standing in
the jurisdiction where the consumer resides;
``(II) personally provides such service while acting in the
ordinary practice of law;
``(III) puts any advance fee received from the consumer in
a client trust account until earned pursuant to the terms of
a written agreement that details the work to be performed by
the attorney and the fee schedule for the attorney's work;
``(IV) is engaged in the practice of law through the same
business entity ordinarily used by the attorney when
providing legal services that are not part of a debt
settlement service;
``(V) does not share any fee received for the provision of
such service with a person who is not an attorney; and
``(VI) does not provide such service through a partnership,
corporation, association, referral arrangement, or other
entity or arrangement--

``(aa) that is directed or controlled, in whole or in part,
by an individual who is not an attorney;
``(bb) in which an individual who is not an attorney holds
any interest;
``(cc) in which an individual who is not an attorney is a
director or officer thereof or occupies a position of similar
responsibility;
``(dd) in which an individual who is not an attorney has
the right to direct, control, or regulate the professional
judgment of the attorney; or
``(ee) in which an individual who is not an attorney and
who is not under the supervision and control of the attorney
delivers such service or exercises professional judgment with
respect to the provision of such service.
``(ii) Escrow agents, accountants, broker dealers in
securities, or investment advisors in securities, when
acting--

``(I) in the ordinary practice of their professions; and
``(II) through the same entity used in the ordinary
practice of their profession.

``(iii) Any bank, agent of a bank, trust company, savings
and loan association, savings bank, credit union, crop credit
association, development credit corporation, industrial
development corporation, title insurance company, or
insurance company operating or organized under the laws of a
State or the United States.
``(iv) Mortgage servicers (as such term is defined in
section 6(i) of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2605(i)(2))) carrying out mortgage loan
modifications.
``(v) Any person who performs credit services for such
person's employer while receiving a regular salary or wage
when the employer is not engaged in the business of offering
or providing debt settlement service.
``(vi) An organization that is described in section
501(c)(3) and subject to section 501(q) of the Internal
Revenue Code of 1986 and exempt from tax under section 501(a)
of such Code.
``(vii) Public officers while acting in their official
capacities and persons acting under court order.
``(viii) Any person while performing services incidental to
the dissolution, winding up, or liquidating of a partnership,
corporation, or other business enterprise.
``(7) Debt settlement service.--
``(A) In general.--Except as provided in subparagraph (B),
the term `debt settlement service' means--

[[Page S3555]]

``(i) offering to provide advice or service, or to act or
acting as an intermediary between or on behalf of a consumer
and one or more of a consumer's creditors, where the primary
purpose of the advice, service, or action is to obtain a
settlement, adjustment, or satisfaction of the consumer's
debt to a creditor in an amount less than the full amount of
the principal amount of the debt or in an amount less than
the current outstanding balance of the debt; or
``(ii) offering to provide services related to or providing
services advising, encouraging, assisting, or counseling a
consumer to accumulate funds for the primary purpose of
proposing, obtaining, or seeking to obtain a settlement,
adjustment, or satisfaction of the consumer's debt to a
creditor in an amount less than the full amount of the
principal amount of the debt or in an amount less than the
current outstanding balance of the debt.
``(B) Exception.--The term `debt settlement service' does
not include services of an attorney in providing information,
advice, or legal representation with respect to filing a case
or proceeding under title 11, United States Code.
``(8) Enrollment fee.--The term `enrollment fee' means any
fee, obligation, or compensation paid or to be paid by the
consumer to a debt settlement provider in consideration of or
in connection with establishing a contract or other agreement
with a consumer related to the provision of debt settlement
service.
``(9) Maintenance fee.--The term `maintenance fee' means
any fee, obligation, or compensation paid or to be paid by a
consumer on a periodic basis to a debt settlement provider in
consideration of maintaining the relationship and services to
be provided by a debt settlement provider in accordance with
a contract with a consumer related to the provision of debt
settlement service.
``(10) Principal amount of the debt.--The term `principal
amount of the debt' means the total amount or outstanding
balance owed by a consumer to one or more creditors for a
debt that is included in a contract for debt settlement
service at the time when the consumer enters into a contract
for debt settlement service pursuant to section 1002(a).
``(11) Settlement fee.--The term `settlement fee' means any
fee, obligation, or compensation paid or to be paid by a
consumer to a debt settlement provider in consideration of or
in connection with an agreement or other arrangement on the
part of a creditor to accept less than the principal amount
of the debt as satisfaction of the creditor's claim against
the consumer.

``SEC. 1002. REQUIRED ACTS.

``(a) Contract Required.--
``(1) In general.--A debt settlement provider may not
provide a debt settlement service to a consumer or receive
any fee from a consumer for a debt settlement service without
a written contract described in paragraph (2) that is signed
by the consumer.
``(2) Contract contents.--A contract described in this
paragraph is a contract between a debt settlement provider
and a consumer for debt settlement services that includes the
following:
``(A) The name and address of the consumer.
``(B) The date of execution of the contract.
``(C) The legal name of the debt settlement provider,
including any other business names used by the debt
settlement provider.
``(D) The corporate address and regular business address,
including a street address, of the debt settlement provider.
``(E) The license or registration number under which the
debt settlement provider is licensed or registered if the
consumer resides in a State that requires a debt settlement
provider to obtain a license or registration as a condition
of providing debt settlement service in that State.
``(F) The telephone number at which the consumer may speak
with a representative of the debt settlement provider during
normal business hours.
``(G) A complete list of the consumer's accounts, debts,
and obligations covered under the debt settlement service
covered by the contract, including the name of each creditor
and principal amount of each debt.
``(H) A description of the services to be provided by the
debt settlement provider, including the expected timeframe
for settlement for each account, debt, or obligation included
in subparagraph (G).
``(I) A clear and conspicuous itemized list of all fees,
including any enrollment fee and settlement fees to be paid
by the consumer to the debt settlement provider, and the
date, approximate date, or circumstances under which each fee
will become due.
``(J) A clear and conspicuous statement of a good faith
estimate of the total amount of all fees to be collected by
the debt settlement provider from the consumer for the
provision of debt settlement service under the contract.
``(K) A clear and conspicuous statement of the proposed
savings goals for the consumer, stating the amount to be
saved per month or other period, the time period over which
the savings goals extend, and the total amount of the savings
expected to be paid by the consumer pursuant to the terms of
the contract.
``(L) A notice to the consumer that unless the consumer is
insolvent, if a creditor settles a debt for an amount less
than the consumer's current outstanding balance at the time
of settlement, the consumer may incur a tax liability.
``(M) A written notice to the consumer, which includes a
form that the consumer may use and the address to which the
form may be returned to the debt settlement provider, that
the consumer may cancel the contract pursuant to the
provisions of section 1006.
``(N) A written notice to the consumer of the cancellation
and refund rights set forth in section 1006, including notice
of any related rules promulgated by the Commission under
section 1010.
``(b) Notification Required.--A debt settlement provider
shall, before the earlier of the date of entering into a
written contract with a consumer for debt settlement services
or rendering debt settlement services to a consumer, provide
to the consumer in writing the following:
``(1) An individualized financial analysis of the consumer,
including an assessment of the consumer's income, expenses,
and debts.
``(2) A description of the debt settlement service being
offered to the consumer by the debt settlement provider,
including the following:
``(A) A description of the debt settlement program being
offered as part of the service.
``(B) A list of each of the consumer's debts, creditors,
and debt collectors that will be covered under the program.
``(3) A statement containing the following:
``(A) A good-faith estimate of the length of time it will
take to achieve settlement of each debt covered under the
program.
``(B) The specific time by which the debt settlement
service provider will make a bona fide settlement offer to
each creditor and debt collector covered under the program.
``(C) The total amount of debt owed by the consumer to each
creditor covered under the program.
``(D) An estimate of the total and the monthly savings the
consumer will be required to accumulate to complete the
program.
``(4) A clear and conspicuous statement that--
``(A) the consumer remains legally obligated to make
periodic or scheduled payments to creditors while
participating in a debt settlement program; and
``(B) the debt settlement provider will not make any
periodic or scheduled payments to creditors on behalf of the
consumer.
``(5) A clear and conspicuous notice to the consumer that--
``(A) the utilization of debt settlement service may not be
suitable for all consumers;
``(B) the utilization of debt settlement service may
adversely impact the consumer's credit history and credit
score;
``(C) the consumer may inquire about other means of dealing
with indebtedness, including nonprofit credit counseling and
bankruptcy;
``(D) the failure to make periodic or scheduled payments to
a creditor--
``(i) is likely to affect adversely the consumer's
creditworthiness;
``(ii) may result in continued collection activity by
creditors or debt collectors;
``(iii) may result in the consumer being sued by one or
more creditors or debt collectors, and in the garnishment of
the consumer's wages; and
``(iv) may increase the amount of money the consumer owes
to one or more creditors or debt collectors due to the
imposition by the creditor of interest charges, late fees,
and other penalty fees; and
``(E) any savings the consumer realizes from use of a debt
settlement service may be taxable income.
``(c) Determination of Benefit to Consumers Required.--A
debt settlement provider may not enter into a written
contract with a consumer unless the debt settlement provider
makes written determinations, supported by the financial
analysis, that--
``(1) the consumer can reasonably meet the requirements of
the proposed debt settlement program included in the debt
settlement service offered to the consumer, including the
fees and the periodic savings amounts set forth in the
savings goals under the program;
``(2) there is a net tangible financial benefit to the
consumer of entering into the proposed debt settlement
program; and
``(3) the debt settlement program is suitable for the
consumer at the time the contract is to be signed.
``(d) Choice of Language.--If a debt settlement provider
communicates with a consumer primarily in a language other
than English, the debt settlement provider shall furnish to
the consumer a translation of the disclosures and documents
required by this title in that other language.
``(e) Monthly Statements Required.--A debt settlement
provider shall, not less frequently than monthly, provide
each consumer with which it has a contract for the provision
of debt settlement service a statement of account balances,
fees paid, settlements completed, remaining debts, and any
other term considered appropriate by the Commission.

``SEC. 1003. PROHIBITED ACTS.

``(a) Loans.--A debt settlement provider may not make loans
or offer credit or solicit or accept any note, mortgage, or
negotiable instrument other than a check signed by the
consumer and dated no later than the date of signature.
``(b) Confession of Judgment.--A debt settlement provider
may not take any confession of judgment or power of attorney
to confess judgment against the consumer or appear as the
consumer or on behalf of the consumer in any judicial or non-
judicial proceedings.

[[Page S3556]]

``(c) Release or Waiver of Obligation.--A debt settlement
provider may not take any release or waiver of any obligation
to be performed on the part of the debt settlement provider
or any right of the consumer.
``(d) Receipt of Third-Party Compensation.--A debt
settlement provider may not receive any cash, fee, gift,
bonus, premium, reward, or other compensation from any person
other than the consumer explicitly for the provision of debt
settlement service to that consumer, without prior disclosure
of such to the consumer.
``(e) Confidentiality.--In the absence of a subpoena issued
to compel disclosure, a debt settlement provider may not
(without prior written consent of the consumer) disclose to
anyone the name or any personal information of a consumer for
whom the debt settlement provider has provided or is
providing debt settlement service other than to a consumer's
own creditors or the debt settlement provider's agents,
affiliates, or contractors for the purpose of providing debt
or settlement service.
``(f) Misrepresentation, Omission, and False Promises.--A
debt settlement provider may not misrepresent, directly or by
implication, any material fact, make a material omission, or
make a false promise directed to one or more consumers in
connection with the solicitation, offering, contracting or
provision of debt settlement service, including the
following:
``(1) The total costs to purchase, receive, or use the
services, or the nature of the services to be provided.
``(2) Any material restriction, limitation, or condition to
receive the offered debt settlement service.
``(3) Any material aspect of the performance, efficacy,
nature, or central characteristics of the offered debt
settlement service.
``(4) Any material aspect of the nature of terms of the
seller's cancellation policies.
``(5) Any claim of affiliation with, or endorsement or
sponsorship by, any person or government entity.
``(6) Any material aspect of any debt settlement service,
including the following:
``(A) The amount of time necessary to achieve settlement of
all debt.
``(B) The amount of money or the percentage of the debt
amount that the consumer must accumulate before the provider
will initiate attempts with the consumer's creditors or debt
collectors to settle the debt.
``(C) The effect of the service on a consumer's
creditworthiness.
``(D) Whether the provider is a nonprofit or a for-profit
entity.
``(g) Purchasing of Debts.--A debt settlement provider may
not purchase debts or engage in the practice or business of
debt collection.
``(h) Secured Debt.--A debt settlement provider may not
include in a debt settlement agreement any secured debt.
``(i) Unfair or Deceptive Acts or Practices.--A debt
settlement provider may not employ any unfair, or deceptive
act or practice, including the omission of any material
information.
``(j) Limitation on Communication.--A debt settlement
provider may not--
``(1) obtain a power of attorney or other authorization
from a consumer that prohibits or limits the consumer or any
creditor from communication directly with one another; or
``(2) represent, expressly or by implication, that a
consumer cannot or should not contact or communicate with any
creditor.

``SEC. 1004. FEES.

``(a) Types of Fees Permitted.--The types of fees that a
debt settlement provider may charge a consumer are the
following:
``(1) Enrollment fees.
``(2) Settlement fees.
``(b) Types of Fees Prohibited.--All fee types not included
under subsection (a) are prohibited, including maintenance
fees.
``(c) Enrollment Fee Amounts.--The amount of an enrollment
fee charged by a debt settlement provider shall not exceed
the lesser of--
``(1) the amount that is reasonable and commensurate to the
debt settlement service provided to a consumer; and
``(2) $50.
``(d) Debt Settlement Fee Amounts.--The amount of a
settlement fee charged by a debt settlement provider shall
not exceed the lesser of--
``(1) the amount that is reasonable and commensurate to the
debt settlement service provided to a consumer; and
``(2) the amount that is 10 percent of the difference
between--
``(A) the principal amount of that debt; and
``(B) the amount--
``(i) paid by the debt settlement provider to the creditor
pursuant to a settlement negotiated by the debt settlement
provider on behalf of the consumer as full and complete
satisfaction of the creditor's claim with regard to that
debt; or
``(ii) negotiated by the debt settlement provider and paid
by the consumer to the creditor pursuant to a settlement
negotiated by the debt settlement provider on behalf of the
consumer as full and complete satisfaction of the creditor's
claim with regard to that debt.
``(e) Timing of Debt Settlement Fees.--A debt settlement
provider shall not collect any debt settlement fee from a
consumer until--
``(1) a creditor enters into a legally enforceable written
agreement with the consumer, in a form prescribed by the
Commission, to accept funds in a specific dollar amount as
full and complete satisfaction of the creditor's claim with
regard to that debt; and
``(2) those funds are provided--
``(A) by the debt settlement provider on behalf of the
consumer; or
``(B) directly by the consumer to the creditor pursuant to
a settlement negotiated by the debt settlement provider.

``SEC. 1005. CONSUMER SETTLEMENT ACCOUNTS.

``(a) Trust Account Required.--A debt settlement provider
who receives funds from a consumer shall hold all funds
received for a consumer settlement account in a properly
designated trust account in a federally insured depository
institution. Such funds shall remain the property of the
consumer until the debt settlement provider disburses the
funds to a creditor on behalf of the consumer as full or
partial satisfaction of the consumer's debt to the creditor
or the creditor's claim against the consumer.
``(b) Independent Administration of Account.--A debt
settlement provider may not hold funds received for a
consumer settlement account under subsection (a) in an
account administered by an entity that--
``(1) is owned by, controlled by, or in any way affiliated
with the debt settlement service provider; or
``(2) gives or accepts any money or other compensation in
exchange for referrals of business involving the debt
settlement service provider.
``(c) Limitations.--A debt settlement service provider
shall not--
``(1) be named on a consumer's bank account;
``(2) take a power of attorney in a consumer's bank
account;
``(3) create a demand draft on a consumer's bank account;
``(4) exercise any control over any bank account held by or
on behalf of the consumer; or
``(5) obtain any information about a consumer's bank
account from any person other than the consumer, except
information obtained with the consumer's permission from the
consumer's settlement account as necessary to comply with the
requirements of section 1002(e).

``SEC. 1006. CANCELLATION OF CONTRACT.

``(a) In General.--A consumer may cancel a contract with a
debt settlement provider at any time.
``(b) Refunds.--
``(1) Cancellation within 90 days or upon violation of this
title.--If a consumer cancels a contract with a debt
settlement provider not later than 90 days after the date of
the execution of the contract or at any time upon a violation
of a provision of this title by the debt settlement provider,
the debt settlement provider shall refund to the consumer
all--
``(A) fees paid to the debt settlement provider by the
consumer, with the exception of any earned settlement fee;
and
``(B) funds paid by the consumer to the debt settlement
provider that--
``(i) have accumulated in a consumer settlement account;
and
``(ii) the debt settlement provider has not disbursed to
creditors.
``(2) Cancellations after 90 days.--If a consumer cancels a
contract with a debt settlement provider later than 90 days
after the date of the execution of the contract and for any
reason other than for a violation of a provision of this
title by the debt settlement provider, the debt settlement
provider shall refund to the consumer--
``(A) half of all of the fees collected from the consumer,
with the exception of any earned settlement fees; and
``(B) all funds paid by the consumer to the debt settlement
provider that have accumulated in a consumer settlement
account and which the debt service provider has not disbursed
to creditors.
``(3) Timing of refunds.--A debt settlement provider shall
make any refund required under this subsection not later than
5 business days after a notice of cancellation is made on
behalf of the consumer under subsection (d).
``(4) Statement of account.--A debt settlement provider
making a refund to a consumer under this subsection shall
include with such refund a full statement of account showing
the following:
``(A) The fees received by the debt settlement provider
from the consumer.
``(B) The fees refunded to the consumer by the debt
settlement provider.
``(C) The savings of the consumer held by the debt
settlement provider.
``(D) The payments made by the debt settlement provider to
creditors on behalf of the consumer.
``(E) The settlement fees earned, if any, by the debt
settlement provider by settling debt on behalf of the
consumer.
``(F) The savings of the consumer refunded to the consumer
by the debt settlement provider.
``(c) Revocation of Powers of Attorney and Direct Debit
Authorizations.--Upon cancellation of a contract by a
consumer--
``(1) all powers of attorney and direct debit
authorizations granted to the debt settlement provider by the
consumer are revoked and voided; and
``(2) the debt settlement provider shall immediately take
any action necessary to reflect cancellation of the contract,
including notifying the recipient of any direct debit
authorization.
``(d) Notice of Cancellation to Creditors.--Upon the
cancellation of a contract under this section of the Act, the
debt settlement provider shall provide timely notice of

[[Page S3557]]

the cancellation of such contract to each of the creditors
with whom the debt settlement provider has had any prior
communication on behalf of the consumer in connection with
the provision of any debt settlement service.

``SEC. 1007. OBLIGATION OF GOOD FAITH.

``A debt settlement provider shall act in good faith in all
matters under this title.

``SEC. 1008. INVALIDATION OF CONTRACTS.

``(a) Consumer Waivers Invalid.--A waiver by a consumer of
any protection provided or any right of the consumer under
this title--
``(1) is void; and
``(2) may not be enforced by any other person.
``(b) Attempt To Obtain Waiver.--Any attempt by any person
to obtain a waiver from any consumer of any protection
provided by or any right or protection of the consumer or any
obligation or requirement of the debt settlement provider
under this title shall be considered a violation of a
provision of this title.
``(c) Contracts Not in Compliance.--Any contract for a debt
settlement service that does not comply with the provisions
of this title--
``(1) shall be treated as void;
``(2) may not be enforced by any other person; and
``(3) upon notice of a void contract, a refund by the debt
settlement provider to the consumer shall be made as if the
contract had been cancelled as provided in section 1006(b)(1)
of this title.

``SEC. 1009. ADVERTISING, MARKETING, AND COMMUNICATION
PRACTICES.

``A debt settlement provider shall not state or imply
claims, results, or outcomes in any advertising, marketing,
or other communication with consumers that represent or
reflect results or outcomes, including about the percentage
or dollar amount by which debt may be reduced or the amount a
consumer may save or the historical experience of its
customers with respect to debt reduction, that--
``(1) are materially different from the actual average
result or outcome achieved by that debt settlement provider
on all of the debt of consumers who enter the program; or
``(2) are not verified by an independent audit that
documents that the described result or outcome was achieved
for all debt enrolled in the program by at least 80 percent
of the customers who began the service in the most recent 2
calendar year period.

``SEC. 1010. RULEMAKING BY FEDERAL TRADE COMMISSION.

``(a) In General.--Notwithstanding title X of the Restoring
American Financial Stability Act of 2010, the Commission may
prescribe rules with respect to advertising and marketing
practices, record retention, provision of accountings to
consumers, and such other matters as the Commission considers
necessary to improve the consumer experience with debt
settlement providers.
``(b) Debt Relief Service Rules.--
``(1) In general.--Except as provided in paragraph (2), the
Commission may prescribe rules with respect to the providers
of debt relief service not otherwise covered by this title.
``(2) Exception.--Any rule prescribed under paragraph (1)
shall not be applicable to or otherwise include services
provided by those persons or entities identified in section
1001(6)(B) or section 1001(7)(B).
``(3) Debt relief service defined.--In this subsection, the
term `debt relief service' means any service represented,
directly or by implication, to renegotiate, or in any way
alter the terms of payment or other terms of the debt between
a consumer and one or more unsecured creditors or debt
collectors, including a reduction in the balance, interest
rate, or fees owed by a consumer to an unsecured creditor or
debt collector.
``(c) Procedure.--All rulemaking under this title shall be
conducted in accordance with section 553 of title 5, United
States Code, and shall not be subject to other procedures set
forth in section 18 of the Federal Trade Commission Act (15
U.S.C. 57a).

``SEC. 1011. CIVIL LIABILITY.

``(a) Liability Established.--Any debt settlement provider
who fails to comply with any provision of this title with
respect to any consumer shall be liable to such consumer in
an amount equal to the sum of the amounts determined under
each of the following:
``(1) Actual damages.--The greater of--
``(A) the amount of any actual damage sustained by such
consumer as a result of such failure; or
``(B) any amount paid by the consumer to the debt
settlement provider.
``(2) Statutory damages.--An amount determined by the court
of not less than $1,000 nor more than $5,000 per violation.
``(3) Punitive damages.--
``(A) Individual actions.--In the case of any action by an
individual, such additional amount as the court may allow.
``(B) Class actions.--In the case of a class action, the
sum of--
``(i) the aggregate of the amount which the court may allow
for each named plaintiff; and
``(ii) the aggregate of the amount which the court may
allow for each other class member, without regard to any
minimum individual recovery.
``(4) Attorneys' fees.--In the case of any successful
action to enforce any liability under paragraph (1), (2), or
(3), the costs of the action, together with reasonable
attorneys' fees.
``(b) Factors To Be Considered in Awarding Punitive
Damages.--In determining the amount of any liability of any
debt settlement provider under subsection (a)(2), the court
shall consider, among other relevant factors--
``(1) the frequency and persistence of noncompliance by the
debt settlement provider;
``(2) the nature of the noncompliance;
``(3) the extent to which such noncompliance was
intentional; and
``(4) in the case of any class action, the number of
consumers adversely affected.

``SEC. 1012. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

``(a) In General.--Notwithstanding title X of the Restoring
American Financial Stability Act of 2010, the Commission
shall enforce the provisions of this title in the same
manner, by the same means, and with the same jurisdiction,
powers, and duties as though all applicable terms and
provisions of the Federal Trade Commission Act (15 U.S.C. 41
et seq.) were incorporated into and made part of this title.
``(b) Unfair or Deceptive Acts or Practices.--A failure to
comply with a provision of this title or a violation of a
rule prescribed under section 1010 shall be treated as a
violation of a rule defining an unfair or deceptive act or
practice prescribed under section 18(a)(1)(B) of the Federal
Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).

``SEC. 1013. ACTION BY STATES.

``(a) In General.--In any case in which the attorney
general of a State has reason to believe that an interest of
the residents of the State has been or is threatened or
adversely affected by the engagement of any person subject to
a provision of this title or a rule prescribed under section
1010 in a practice that violates such provision or rule, the
State may, as parens patriae, bring a civil action on behalf
of the residents of the State in an appropriate district
court of the United States or other court of competent
jurisdiction--
``(1) to enjoin that practice;
``(2) to enforce compliance with the provision or rule; or
``(3) to obtain damages under section 1011 on behalf of
residents of the State.
``(b) Attorneys' Fees.--In the case of any successful
action under paragraph (1), (2), or (3) of subsection (a),
the attorney general of the State bringing the action shall
be awarded the costs of the action and reasonable attorneys'
fees as determined by the court.
``(c) Rights of Federal Trade Commission.--
``(1) Notice to federal trade commission.--
``(A) In general.--Except as provided in subparagraph (C),
the attorney general of a State shall notify the Federal
Trade Commission in writing of any civil action under
subsection (a), prior to initiating such civil action.
``(B) Contents.--The notice required by subparagraph (A)
shall include a copy of the complaint to be filed to initiate
such civil action.
``(C) Exception.--If it is not feasible for the attorney
general of a State to provide the notice required by
subparagraph (A), the State shall provide notice immediately
upon instituting a civil action under subsection (a).
``(2) Intervention by federal trade commission.--Upon
receiving notice required by paragraph (1) with respect to a
civil action, the Commission may--
``(A) intervene in such action; and
``(B) upon intervening--
``(i) be heard on all matters arising in such civil action;
``(ii) remove the action to the appropriate district court
of the United States; and
``(iii) file petitions for appeal of a decision in such
action.
``(d) Investigatory Powers.--Nothing in this section may be
construed to prevent the attorney general of a State from
exercising the powers conferred on such attorney general by
the laws of such State to conduct investigations or to
administer oaths or affirmations or to compel the attendance
of witnesses or the production of documentary and other
evidence.
``(e) Effect of Action by Federal Trade Commission.--If the
Federal Trade Commission institutes a civil action or an
administrative action to enforce a violation of a provision
of this title or a rule prescribed under section 1010, no
State may, during the pendency of such action, bring a civil
action under subsection (a) against any defendant named in
the complaint of the Commission for violation of a provision
of this title or rule prescribed under section 1010 that is
alleged in such complaint.
``(f) Actions by Other State Officials.--
``(1) In general.--In addition to actions brought by an
attorney general of a State under subsection (a), an action
may be brought by officials in a State who are so authorized.
``(2) Savings provision.--Nothing contained in this section
may be construed to prohibit an authorized official of a
State from proceeding in a court of such State on the basis
of an alleged violation of any civil or criminal statute of
such State.

``SEC. 1014. STATUTE OF LIMITATIONS.

``Any action to enforce any liability under section 1011
may be brought before the later of--
``(1) the end of the 5-year period beginning on the date of
the occurrence of the violation involved; or

[[Page S3558]]

``(2) in any case in which any debt settlement provider has
materially and willfully misrepresented any information that
the debt settlement provider is required, by any provision of
this title, to disclose to any consumer and that is material
to the establishment of the debt settlement provider's
liability to the consumer under this title, the end of the 5-
year period beginning on the date of the discovery by the
consumer of the violation.

``SEC. 1015. RELATION TO STATE LAW.

``This title shall not annul, alter, affect, or exempt any
person subject to the provisions of this title from complying
with the law of any State except to the extent that such law
is inconsistent with any provision of this title, and then
only to the extent of the inconsistency. For purposes of this
section, a State statute, regulation, order, or
interpretation is not inconsistent with the provisions of
this title if the protection such statute, regulation, order,
or interpretation affords any person is greater than the
protection provided under this title and any subsequent
amendments. Nothing in this title shall limit or prohibit a
State from prohibiting or otherwise restricting the provision
of debt settlement services, or imposing and administering a
system of additional requirements, prohibitions,
registration, or licensure.''.

SEC. 1302. INITIAL REGULATIONS.

(a) In General.--Not later than 60 days after the date of
the enactment of this Act, the Federal Trade Commission shall
commence a rulemaking to prescribe the following:
(1) The form of the written notices required under
subparagraphs (M) and (N) of subsection (a)(2) and subsection
(b)(5) of section 1002 of the Consumer Credit Protection Act,
as added by section 1301 of this title.
(2) The form of the statement required under subsection (e)
of such section 1002.
(3) The form for an agreement described in section
1004(e)(1) of such Act.
(b) Deadline.--The Federal Trade Commission shall complete
the rulemaking required by subsection (a) not later than 1
year after the date of the enactment of this Act.
(c) Procedure.--All rulemaking under subsection (a) shall
be conducted in accordance with section 553 of title 5,
United States Code, and shall not be subject to other
procedures set forth in section 18 of the Federal Trade
Commission Act (15 U.S.C. 57a).

SEC. 1303. EFFECTIVE DATE.

Title X of the Consumer Credit Protection Act, as added by
section 1301 of this title, shall take effect on the date
that is 60 days after the date of the enactment of this Act.
______