§ 13-11-23 — Prohibited acts and practices

1. A provider directly or indirectly may not:
a. Misappropriate or misapply money held in trust;

b. Settle a debt on behalf of an individual for more than fifty percent of the principal
amount of the debt owed a creditor, unless the individual assents to the
settlement after the creditor has assented;
c. Take a power of attorney that authorizes the provider to settle a debt;
d. Exercise or attempt to exercise a power of attorney after an individual has
terminated a contract;
e. Initiate a transfer from an individual's account at a bank or with another person
unless the transfer is:
(1) A return of money to the individual; or
(2) Before termination of a contract, properly authorized by the contract and this
chapter, and for:
(a) Payment to one or more creditors pursuant to a plan; or
(b) Payment of a fee;
f. Offer a gift or bonus, premium, reward, or other compensation to an individual for
executing a contract;
g. Offer, pay, or give a gift or bonus, premium, reward, or other compensation to a
person for referring a prospective customer, 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;
h. Receive a bonus, commission, or other benefit for referring an individual to a
person;
i. 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;
j. Compensate the provider's employees on the basis of a formula that incorporates
the number of individuals the employee induces to enter contracts;
k. 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 or is part of a payment plan, the terms of which are included in the
certification, that upon completion, will lead to full settlement of the debt;
l. Make a representation that:
(1) The provider will furnish money to pay bills or prevent attachments;
(2) Payment of a certain amount will permit satisfaction of a certain amount or
range of indebtedness; or
(3) Participation in a plan will or may prevent litigation, garnishment,
attachment, repossession, foreclosure, eviction, or loss of employment;
m. Misrepresent that the provider is authorized or competent to furnish legal advice
or perform legal services;
n. Represent that it is a not-for-profit entity unless the provider 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 the provider has received
certification of tax-exempt status from the internal revenue service;
o. Take a confession of judgment or power of attorney to confess judgment against
an individual; or
p. Employ an unfair, unconscionable, or deceptive act or practice, including the
knowing omission of any material information.
2. If a provider furnishes debt-management services to an individual, the provider may
not, directly or indirectly:
a. Purchase a debt or obligation of the individual;
b. Receive from or on behalf of the individual:
(1) A promissory note or other negotiable instrument other than a check or a
demand draft; or

(2) A postdated check or demand draft;
c. Lend money or provide credit to the individual, except as a deferral of a
settlement fee at no additional expense to the individual;
d. Obtain a mortgage or other security interest from any person in connection with
the services provided to the individual;
e. 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:
(1) The commissioner, upon proper demand;
(2) A creditor of the individual, to the extent necessary to secure the
cooperation of the creditor in a plan; or
(3) The extent necessary to administer the plan;
f. Except as otherwise provided in section 13-11-21, provide the individual less than
the full benefit of a compromise of a debt arranged by the provider;
g. 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
h. 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
in this state.
3. This chapter does not authorize any person to engage in the practice of law.
4. 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.
5. 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:
a. Owns more than ten percent of the person; or
b. Is an employee or affiliate of the person.