1. 1 Applicability. Any Applicant that states on its Application that it intends to charge Deposits or collect Prepayments or that does in fact require a Deposit or collects a Prepayment, shall post a copy of a Customer Payments Bond with the Commission, in addition to any Integrity Bond that may be required or submitted and shall submit the certification described in this section. Any Applicant that states on its Application that it does not intend to charge Deposits or collect Prepayments and that does not in fact require a Deposit or collect any Prepayment will not be required to post a Customer Payments Bond or provide the certification described below. Any Licensee that charges a Deposit or collects a Prepayment without posting the required Customer Payments Bond may be subject to suspension, revocation, or other action against its license, as well as be held liable for restitution to any Customers who paid such Deposits or Prepayments. Any Licensee requiring, charging, collecting or holding Deposits, or Prepayments may not request a return of a current Customer Payments Bond or waiver of the requirements for a future Customer Payments Bond, unless and until the Licensee returns the Deposits or Prepayments to its Customers.

4604.2 Procedure for Determining Amount of a Customer Payments Bond.

(a) Initial Bond: Before accepting any Deposits or Prepayments, a Licensee shall post a copy of an initial Customer Payments Bond of fifty thousand dollars ($50,000).

(b) Six Month Certification: Within six (6) months after the initial copy of the Customer Payments Bond is posted, the Licensee shall provide the Commission with any appropriate confidentiality designations: (1) a certification, subject to review by the Commission, of the amount of the Deposits and Prepayments held by the Licensee; and (2) a copy of a Customer Payments Bond in an amount that is at least equal to the amount reflected in that certification.

(c) Annual Certification: By December 31st of each year, the Licensee shall provide to the Commission with any appropriate confidentiality designations: (1) certification of the amount of the Deposits and Prepayments held by the Licensee; and (2) a copy of a Customer Payments Bond in an amount that is at least equal to the amount reflected in that certification.

4604.3 Form of the Bond. Any Applicant or Licensee required to provide a bond under

this section shall provide a bond issued by a company authorized to do business in the District of Columbia in a form required by the Commission. The Applicant shall file a copy of this bond, with a notarized verification page from the issuer, as part of its application for a license. At a minimum, the bond form shall:

(a) Designate the Commission as the sole beneficiary of the bond;

(b) Be continuous in nature. If a Licensee seeks to cease providing the bond it shall seek approval from the Commission at least sixty (60) days prior to the time it wants to discontinue maintaining the bond;

(c) Cover payment of all the Licensee's District of Columbia Deposits and Prepayments of the Licensee that occurred while the bond was in force as identified by the Commission under these regulations; and

(d) State that the proceeds of the bond shall be paid or disbursed as directed by the Commission.

4604.4 Commission Verification. Each Licensee shall provide appropriate certification, at the intervals discussed in §4604.2, of funds collected by the Licensee for Prepayments and/or Deposits. Each Licensee shall certify the amount of funds held for Deposits and Prepayments through a notarized statement, subject to verification by the Commission. The certification and any audit by the Commission will verify the year to date collections and balances of Prepayments and Deposits as of a specific date and will be used to verify whether the Licensee has the appropriate amount of Customer Payments Bond coverage. The Commission reserves the right, in its sole discretion, to order the Licensee to have a Certified Public Accountant review such balances, should conditions warrant such a review.

4604.5 Bond Foreclosure. The Commission may foreclose upon any bond posted with the Commission when, in the Commission's discretion, foreclosure is necessary to ensure the fair and lawful treatment of the Licensee's Customers to ensure that Deposits and Prepayments collected by a Licensee from a Customer will be repaid to the Customer. In order to draw funds on this Bond, the Commission shall issue an order stating that the Licensee is financially insolvent or unable to meet its obligations as for restitution to any Licensee's Customer who paid such Deposit or Prepayment.

SOURCE: Final Rulemaking published at 65 DCR 9970 (September 28, 2018 – Vol. I); as amended by Final Rulemaking published at 71 DCR 007434 (June 28, 2024).