House Bill 2529 History
H. B. 2529
(By Delegate R. M. Thompson)
February 21, 2005
; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §32A-3-1 and §32A-3-3 of the Code of
West Virginia, 1931, as amended; and to amend said code by
adding thereto a new article, designated §32A-4-1, §32A-4-2,
§32A-4-3, §32A-4-4, §32A-4-5, §32A-4-6, §32A-4-7, §32A-4-8,
§32A-4-9, §32A-4-10, §32A-4-11, §32A-4-12, §32A-4-13,
§32A-4-14, §32A-4-15, §32A-4-16, §32A-4-17, §32A-4-18,
§32A-4-19, §32A-4-20, §32A-4-21, §32A-4-22, §32A-4-23,
§32A-4-24, §32A-4-25, §32A-4-26, §32A-4-27, §32A-4-28,
§32A-4-29, §32A-4-30 and §32A-4-31, all relating to the
deferred deposit loan act.
Be it enacted by the Legislature of West Virginia:
That §32A-3-1 and §32A-3-3 of the Code of West Virginia, 1931,
as amended, be amended and reenacted; and that said code be amended
by adding thereto a new article, designated §32A-4-1, §32A-4-2,
§32A-4-3, §32A-4-4, §32A-4-5, §32A-4-6, §32A-4-7, §32A-4-8, §32A-4-9, §32A-4-10, §32A-4-11, §32A-4-12, §32A-4-13, §32A-4-14,
§32A-4-15, §32A-4-16, §32A-4-17, §32A-4-18, §32A-4-19, §32A-4-20,
§32A-4-21, §32A-4-22, §32A-4-23, §32A-4-24, §32A-4-25, §32A-4-26,
§32A-4-27, §32A-4-28, §32A-4-29, §32A-4-30 and §32A-4-31, all to
read as follows:
ARTICLE 3. CHECK CASHING.
§32A-3-1. Check cashing permitted.
(a) A merchant primarily in the business of making retail
consumer sales may offer check cashing services at its stores to
accommodate its customers in the course of said business, and may
collect a fee for the service, if the check cashing service and any
fees charged are incidental to the main business of the merchant.
Except as set forth in subsection (b) of this section, the term
"check cashing services" does not include a transaction where a
customer presents a check for the exact amount of a purchase. Fees
charged in connection with check cashing services may not exceed
the greater of one dollar, or one percent of the face value of the
(b) Merchants may not, in connection with providing check
cashing services, agree to hold checks submitted to them for
deposit at a later date for the purpose of providing a loan of
money and deriving profit therefrom, unless the merchant obtains a
deferred deposit lender license under the provisions of article
four of this chapter.
(c) No check cashing license is required as a condition for a
merchant providing check cashing services in conformity with
subsections (a) and (b) of this section.
(d) Where a merchant derives more than five percent of his or
her gross revenues from cashing checks, the check cashing services
are not considered incidental to the main business of the merchant,
and the merchant is required to be licensed under article two of
(e) Persons holding a license pursuant to article two of this
chapter may in conjunction with their licensed business, or other
lawful business, engage in the business of check cashing in West
Virginia. Fees charged for check cashing services by a licensee
under article two of this chapter shall be posted and conform to
those permitted merchants under this section. No licensee may in
connection with providing check cashing services agree to hold
checks submitted to it for deposit at a later date for the purpose
of providing a loan of money and deriving profit therefrom, unless
the person also holds a deferred deposit lender license under
article four of this chapter.
(f) Federally-insured depository institutions, foreign bank
agencies and governmental entities exempt from licensure as money
transmitters under this chapter are exempt from the provisions of
this article. Other financial institutions licensed by and under
the jurisdiction of the Commissioner of Banking may upon written approval engage in the check cashing business permitted merchants
under this article.
(g) Except as provided or allowed by this article, no person
may engage in the check cashing business. As used in this article
the term "check cashing business" means any person who engages in
the business of cashing checks, including drafts, money orders or
other instruments for the transmission or payment of money for a
fee. However, the term "check" as used in this article does not
include a travelers check or a foreign denomination check.
§32A-3-3. Violations and penalties.
(a) The charging of fees for check cashing services in excess
of those permitted under this article gives rise to a cause of
action by the injured party to recover twice the actual damages
suffered by reason of the violation.
(b) The charging of fees for check cashing services in
violation of the provisions of
subsections subsection (b) or (e),
section one of this article, prohibiting lending through a check
cashing transaction without first obtaining a deferred deposit
lender license under article four of this chapter, constitutes
prohibited finance charges, and gives rise to a cause of action by
the party upon whom the charge was imposed to recover all fees paid
and all actual damages suffered by reason of the violation. Where
the transaction is of an amount and for purposes that would
constitute a consumer loan, the conduct of impermissible check cashing services is considered an unfair and deceptive act and may
be subject to provisions and penalties set forth in chapter
forty-six-a of this code.
(c) Engaging in the check cashing business without the license
required by this article or article four of this chapter gives rise
to a cause of action by the injured party to recover all fees paid
and all actual damages suffered by reason of the violation.
(d) Actions brought under this article by customers for
recovery of actual damages shall be brought within one year of the
occurrence of the transaction.
ARTICLE 4. DEFERRED DEPOSIT LOANS.
§32A-4-1. Authority to make loans.
No person may engage in the business of making deferred
deposit loans except in accordance with the provisions of this
article and without having first obtained a license under this
article from the Commissioner.
§32A-4-2. Short article.
This article may be cited as the "Deferred Deposit Loan Act."
As used in this article:
(1) "Commissioner" means the Commissioner of Banking of West
Virginia or his or her designated representative.
(2) "Consumer" means a person other than an organization who
is the buyer, lessee or debtor to whom credit is granted in a consumer credit transaction.
(3) "Deferred deposit loan" means a consumer loan whereby the
lender, for a fee, finance charge or other consideration, does the
(a) Accepts a dated instrument from the consumer;
(b) Agrees to hold the instrument for a period of time prior
to negotiation or deposit of the instrument; and
(c) Pays to the consumer, credits to the consumer's account or
pays to another person on the consumer's behalf the amount of the
instrument, less finance charges permitted by section five of this
(4) "Instrument" means a personal check or authorization to
transfer or withdraw funds from an account signed by the consumer
and made payable to a person subject to this article.
(5) "Lender" means a person licensed to engage in the business
of providing deferred deposit loan services under this article.
(6) "Loan amount" means the amount financed as defined in
regulation Z of the federal "Truth In Lending Act," 12 C.F.R.
226.18 (b), as amended, or as supplemented by, if applicable.
§32A-4-4. Application for license; form; content; fee.
(a) An application for a license under this article shall be
submitted in writing, under oath and on a form as prescribed by the
(b) The application shall set forth:
(1) The full name and address of the applicant, and if the
applicant is a partnership, limited liability company or
association, of each member with an ownership interest of ten
percent or more thereof, and if a corporation, of each officer,
director and owner of ten percent or more of the capital stock
(2) The addresses of the locations of the business to be
(3) Any other information concerning the financial
responsibility, background and experience of the applicant and its
members, officers, directors and principals as the Commissioner may
(c) At the time of making application for a deferred deposit
lender license, the applicant shall:
(1) If a foreign corporation, submit a certificate from the
Secretary of State certifying that the applicant is registered with
the Secretary of State to transact business in this state;
(2) Submit proof that he or she has available for the
operation of the business at the locations specified in the
application a minimum net worth of at least twenty-five thousand
dollars per licensed location, computed according to generally
accepted account principles as shown by the most recent audited
financial statement filed with and satisfactory to the
(3) File with the Commissioner a bond in favor of the state
for the benefit of consumers in the amount of twenty-five thousand
dollars per licensed location, in a form and with conditions as the
Commissioner may prescribe, and executed by a surety company
authorized to do business in this state;
(4) Pay to the Commissioner a license fee of one thousand
dollars plus the actual cost of fingerprint processing, per
(5) Submit a full and complete disclosure of any litigation or
unresolved complaint filed by a governmental authority or class
action lawsuit on behalf of consumers relating to the operation of
the license applicant.
§32A-4-5. Refusal or issuance of license.
(a) Upon the filing of an application for a deferred deposit
lender license and full compliance with section two of this
article, the Commissioner shall investigate the applicant and
relevant facts regarding the application. Upon the basis of the
application and all other information before the Commissioner, he
or she shall make and enter an order denying the application and
refusing the license sought if the Commissioner finds that:
(1) The financial responsibility, character, reputation,
experience and general fitness of the applicant and its members,
senior officers, directors, principals and employees reasonably
warrants the belief that the business will not be operated lawfully and properly, in the public interest and in accordance with law;
(2) The applicant does not have available the net worth
computed according to generally accepted accounting principles
required for each licensed location by the provisions of section
two of this article;
(3) The applicant has done any act or has failed or refused to
perform any duty or obligation for which the license sought could
be suspended or revoked were it then issued and outstanding.
Otherwise, the Commissioner shall issue to the applicant a
deferred deposit lender license which shall entitle the applicant
to engage in the business of deferred deposit lending during the
period, unless sooner revoked, for which the license is issued.
(b) Every application for a deferred deposit lender license
shall be passed upon and the license issued or refused within
ninety days after the applicant has fully complied with the
provisions of section two of this article. Whenever an application
for a license under this article is denied and the license sought
is refused, which refusal has become final, the Commissioner shall
retain all fees to cover administrative costs of processing the
§32A-4-6. Licenses; place of business; changes.
(a) Each license shall state the location at which the
business is to be conducted and the full name of the licensee.
Each license shall be prominently displayed in each place of business of the licensee. The licensee's master license number
shall be displayed on all advertising and any printed documents or
disclosures created by the applicant for distribution to a
consumer. No license is transferable or assignable. No licensee
may offer a franchise under that license to another person.
(b) No licensee may open an additional office or relocate any
place of business without prior approval of the Commissioner.
Applications for approval shall be made in writing thirty days
prior to any change on a form provided by the Commissioner and
shall be accompanied by a payment of a one hundred fifty dollars
nonrefundable application fee.
(c) Every license issued under this article shall, unless
sooner suspended or revoked, expire on the thirtieth day of June of
each odd numbered year and any license may be renewed in the same
manner, for the same license fee or fees specified above and upon
the same basis as an original license is issued in accordance with
the provisions of section five of this article. All applications
for the renewal of licenses shall be filed with the Commissioner at
least ninety days before the expiration thereof.
§32A-4-7. Records and annual reports; examination of records;
(a) Every licensee shall maintain at each branch location or
at a central location known to the Commissioner the books, accounts
and records of that branch relating to all transactions within this article as are necessary to enable the Commissioner to enforce the
provisions of this article. A licensee shall keep its business
books, accounts and records in accordance with generally accepted
accounting principles and maintain business records for thirty-six
months after the date of final entry.
(b) Each licensee shall file with the Commissioner on or
before the fifteenth day of August of each year a report under oath
or affirmation concerning his or her business and operations in
this state for the preceding fiscal year in the form prescribed by
(c) The Commissioner may, at his or her discretion, make or
cause to be made an examination of the books, accounts and records
of every location licensed under this article for the purpose of
determining whether each licensee is complying with the provisions
hereof and for the purpose of verifying each licensee's annual
report. The licensee shall bear the cost of any on-site
examination made pursuant to this article at a rate of fifty
dollars for each examiner hour expended, together with all
reasonable and necessary travel expenses incurred in connection
with the examination.
(d) The Commissioner may enter into cooperative, coordinating
and information-sharing agreements with any other agency
supervising deferred deposit lenders.
§32A-4-8. Advertising requirements.
It shall be unlawful and an unfair trade practice for any
person to cause to be placed before the public in this state,
directly or indirectly, any false, misleading or deceptive
advertising matter pertaining to a deferred deposit lending
transaction: Provided, That this section does not apply to the
owner, publisher, operator or employees of any publication or radio
or television station which disseminates such advertising matter
without actual knowledge of the false or misleading character
§32A-4-9. Written agreement requirements.
Each deferred deposit loan transaction and renewal shall be
documented by a written agreement signed by both the lender and
consumer. The written agreement shall contain the name of the
consumer, the transaction date, the amount of the instrument, the
annual percentage rate charged and a statement of the total amount
of finance charges expressed both as a dollar amount and an annual
percentage rate. In addition, the written agreement shall include
all disclosures required by federal and state law. The written
agreement shall set a date, not more than forty-five days after the
loan transaction date, upon which the instrument may be deposited
§32A-4-10. Notice to consumers.
A lender shall provide the following notice in a prominent
place on each loan agreement in at least ten-point type:
"A deferred deposit loan is not intended to meet long-term
financial needs. A deferred deposit loan should be used only to
meet short-term cash needs. Renewing the deferred deposit loan
rather than paying the debt in full will require additional finance
§32A-4-11. Authorized finance charge.
A lender may charge a finance charge for each deferred deposit
loan that may not exceed eighteen percent of the amount loaned.
This charge is considered fully earned as of the date of the
transaction. The lender may charge only those charges authorized
in this article in connection with a deferred deposit loan.
§32A-4-12. Maximum loan amount - Right to rescind.
(a) A lender may not lend an amount greater than five hundred
dollars nor shall the amount financed exceed five hundred dollars
at any time to a consumer. No instrument held as a result of a
deferred deposit loan may exceed five hundred ninety dollars.
(b) A consumer has the right to rescind the deferred deposit
loan on or before the close of the next business day following the
by prepay to the lender the amount financed in
§32A-4-13. Multiple outstanding transactions.
(a) No deferred deposit loan may be for a term in excess of
forty-five days or less than seven days.
(b) A lender may not allow any consumer to have multiple transactions involving more than two checks outstanding at any time
from the lender, including the current transaction. The aggregate
amount of all deferred deposit loans outstanding from the lender
for a particular consumer at any given time, may not exceed five
hundred dollars, exclusive of the fees allowed by this article.
(c) A deferred deposit lender may not enter into a deferred
deposit transaction with a consumer if the deferred deposit loan
will cause the consumer to exceed the limits set forth in this
article; or if the consumer is currently in a repayment plan, as
provided in section sixteen of this article, with that lender or
with any other lender, or within fourteen days of the completion of
the repayment plan.
(d) (1) A deferred deposit loan may not be renewed more than
once. After a renewal, the consumer shall pay the debt in cash or
its equivalent. If the consumer does not pay the debt in full by
the due date, then the lender may deposit or negotiate the
(2) Upon renewal of a deferred deposit loan, the lender may
assess additional finance charges not to exceed eighteen percent of
the loan amount. A deferred deposit lender may not redeem, extend
or otherwise consolidate a deferred deposit agreement with the
proceeds of another deferred deposit transaction made by the same
or an affiliated deferred deposit lender. However, this section
does not prohibit a deferred deposit lender from providing an additional advance to a consumer so long as the advance does not
cause the consumer to exceed the limits set forth in this article.
(3) A transaction is completed when the lender presents the
instrument for payment, debits the consumer's checking account or
the consumer redeems the instrument by paying the full amount of
the instrument to the holder. Once the consumer has completed the
deferred deposit transaction, the consumer may enter into a new
deferred deposit agreement with the lender.
§32A-4-14. Multiple outstanding transactions notice.
A lender shall provide the following notice in a prominent
place on each deferred deposit loan agreement in at least ten-point
"State law prohibits deferred deposit loans exceeding five
hundred ninety dollars total debt from a deferred deposit lender.
Exceeding this amount may create financial hardships for you and
your family. You have the right to rescind this transaction on or
before the close of the next business day following this
§32A-4-15. Database verification.
(1) On or before the thirty-first day of December, two
thousand four, the Commissioner may contract with a third-party to
develop, implement and maintain a database, with real-time access
through an internet connection, in accordance with the provisions
of this section. The database must be accessible to the Commissioner and the licensee to ensure compliance with this
article. The Commissioner shall implement a database based on an
assessment of cost of service and an ability to perform the
reporting requirements of this article. The Commissioner shall
give strong consideration to the database's ability to provide
access to additional credit information relevant to the borrower's
ability to pay. The Commissioner may adopt procedures to
administer and enforce the provisions of this section and to ensure
that the database is used by licensees in accordance with this
section. The database shall be available to the Commissioner at
(2) The database must be able to do the following:
(a) Check the borrower's social security number and report to
the licensee if any social security number is invalid, has been
issued within the past five years prior to the date of submission,
represents a deceased person or if the social security number was
issued to someone other than the borrower.
(b) Validate whether a new deferred presentment transaction
may be extended to the borrower based on this article, including
whether a customer is presently in a repayment plan with any
licensed lender or has concluded a repayment plan within the last
(c)Provide information necessary to ensure licensee
compliance with the federal Office of Foreign Asset Control requirements.
(d) Provide access to the database twenty-four hours a day,
seven days a week.
(e) The Commissioner shall give strong consideration to the
database's ability to provide access to additional credit
information relevant to the borrower's ability to pay. This
additional data can be made available to the deferred presentment
providers at their option and sole expense. This additional data
(i) Past performance data on deferred presentment transactions
the customer has secured within or outside of the state;
(ii) Inquiry information from deferred presentment providers
outside the state that would indicate deferred presentment
transactions outside the state may have been secured by the
(iii) Access to other performance information about the
customer in relation to other subprime industries.
(3) The Commissioner shall maintain investigative and
enforcement responsibility for violations of this section and may
not delegate this responsibility to any third-party provider.
(4) A licensee may charge a customer any database verification
fee imposed by the database provider and approved by the
Commissioner to pay the costs required to validate whether a
deferred presentment transaction may be extended to the borrower pursuant to this article. Licensees may rely on the information
contained in the database as accurate and are not subject to any
administrative penalty or civil liability as a result of relying on
inaccurate information contained in the database.
(5) The licensee must verify the following information:
(a) Prior to the implementation of the statewide common
database, the licensee shall maintain an intracompany database and
shall verify that a consumer does not have multiple transactions
involving more than two checks outstanding at any time from the
lender, including the current transaction and that the aggregate
amount of all deferred deposit loans outstanding from the lender for
a particular consumer at any given time does not exceed five hundred
dollars, exclusive of the fees allowed by this article.
(b) Upon full implementation of the statewide common database,
the licensee shall access the database established pursuant to this
(6) Before entering into each deferred deposit transaction, a
licensee shall submit the required borrower data in the format the
Commissioner reasonably requires, including the borrower's name,
social security number, address, amount of the transaction,
borrower check number, date of the transaction, maturity date of
the transaction and any other information reasonably required by
(7) Prior to implementation of the database or during times when the database is generally unavailable to licensees due to
technical problems, a licensee may rely upon the written
verification of the borrower in a statement provided in
substantially the following form in at least ten-point type as
"I am not presently in a repayment plan with any licensed
lender nor have I concluded a repayment plan with any licensed
lender within the last fourteen days."
Upon full implementation of the database, a licensee will
enter any transactions conducted during a period when the database
is unavailable to the licensee within twenty-four hours of the
transaction or as soon as practical after the database is again
available. The licensee will indicate that the transaction was
conducted during a period when the database was unavailable.
(8)Any deferred deposit loan that has been fully paid and
satisfied shall be designated as a closed transaction in the
database immediately, but in no event later than eleven fifty-nine
P. M. on the day the loan was fully paid and satisfied. Failure to
report the successful completion of the repayment plan in a timely
manner will result in an automatic civil administrative penalty of
one hundred dollars for each day that the licensee fails to
indicate in the database that the loan has been paid. A licensee
is not subject to civil administrative penalties in the event
updates to the database are not possible due to circumstances beyond the licensee's control, including the database temporarily
experiencing technical problems.
(9) Inquiries to the database by licensees shall only state
that a person is eligible or ineligible for a new deferred deposit
loan together with a description of the reason for the
determination. Only information previously registered and recorded
by the licensee on the database is made available to the licensee
by the database or the Commissioner. Only the person seeking the
deferred deposit loan may make a direct inquiry to the designated
third-party provider to request a more detailed explanation of a
particular transaction that was the basis for the database's
ineligibility determination. Any information regarding any
person's transactional history is confidential pursuant to this
section, and is not a public record or subject to public
§32A-4-16. Repayment plan.
(a)For purposes of complying with this code section,
"consecutive transaction" means a deferred deposit loan transaction
that is entered into within three days of a previously terminated
transaction with the same lender.
(b) After a series of a deferred deposit loan transaction and
three consecutive deferred deposit loan transactions, then during
the fourth consecutive deferred deposit loan transaction in a
series or any later consecutive deferred deposit loan in the same series, a consumer may declare to a lender or lenders the inability
to repay the outstanding deferred deposit loan transaction or
transactions not later than one day prior to the respective due
dates of each outstanding deferred deposit loan transaction. The
notice must be made in writing and must be provided to the lender,
at the lender's place of business. Upon receipt of the consumer's
written notice of inability to repay, the lender must refinance the
remaining balance owed by the consumer at the time of the request.
The loan must be rescheduled for no less than four installments, in
substantially equal amounts, set up to coincide with the dates that
the consumer is regularly scheduled to receive income.
Notwithstanding the foregoing, the minimum period between
installment payments shall be fourteen days, and the maximum term
of the installment period may not exceed ninety days.
(c)The lender may impose an additional fee not to exceed
eighteen percent of the loan amount in conjunction with a loan
converted to installments under this section.
(d) The lender must conspicuously display in bold type a
notice to the public in the lending area of each licensed location,
the following statement:
"NOTICE: If you are unable to pay your deferred deposit loan,
you may be entitled to request a repayment of the deferred deposit
loan in installments. If you elect this option, you must notify
the lender not later than one day prior to the maturity date of the deferred deposit loan. The notice must be made in writing and must
be provided to the lender at the lender's place of business. You
may be charged an additional fee or finance charge when the
deferred deposit loan is rescheduled in installments. If the
lender refuses to provide this option under the stipulations above,
you should contact the West Virginia Commissioner of Banking at
(e) The customer may not enter into a deferred deposit loan
transaction with any lender during the term of the payment plan.
After payment in full of a deferred deposit loan that is scheduled
to be repaid in installments, the lender may not enter into another
deferred deposit loan agreement with the same debtor within
fourteen days of the date the loan is completed.
(f) Upon submission by a lender of the required consumer
information to the database, as provided in section fifteen of this
article, the database shall notify the lender: (i) Whether the
lender may extend a loan to a consumer and the allowable amount of
the loan, pursuant to the provisions of this article; (ii) whether
the consumer is entitled to a repayment plan under this section and
if so entitled, will instruct lender to provide the consumer with
the notice required in subsection (d) of this section; and/or (iii)
whether the consumer is presently in a repayment plan with one or
more other lenders and therefore prohibited from obtaining any
additional deferred deposit loan.
§32A-4-17. Form of loan proceeds.
A lender may pay the proceeds from a deferred deposit loan to
the consumer in the form of a business instrument, money order or
cash, or by way of an electronic transfer of proceeds to the
customer's checking account or to a stored value card or debit
card. The consumer may not be charged an additional finance charge
or fee for cashing the lender's business instrument.
§32A-4-18. Endorsement of instrument.
A lender may not negotiate or present an instrument for
payment unless the instrument is endorsed with the actual business
name of the lender.
§32A-4-19. Redemption of instrument.
Prior to the lender negotiating or presenting the instrument,
the consumer has the right to redeem any instrument held by a
lender as a result of a deferred deposit loan if the consumer pays
the full amount of the instrument to the lender in cash or other
immediately available funds.
§32A-4-20. Authorized dishonored instrument charge.
If an instrument held by a lender as a result of a deferred
deposit loan is returned to the lender from a payor financial
institution due to insufficient funds, a closed account or a
stop-payment order, the lender has the right to exercise all civil
means authorized by law to collect the face value of the
instrument; except that the provisions and remedies of article three, chapter sixty-one, are not applicable to any deferred deposit
loan. In addition, the lender may contract for and collect a
returned instrument charge, not to exceed fifteen dollars, plus
court costs and reasonable attorney fees as awarded by a court and
incurred as a result of the default. However, attorney fees may
not exceed the loan amount. The lender may not collect any other
fees as a result of default. A returned instrument charge is not
allowed if the loan proceeds instrument is dishonored by the
financial institution or the consumer places a stop-payment order
due to forgery or theft.
§32A-4-21. Posting of charges.
Any lender offering a deferred deposit loan shall post at any
place of business where deferred deposit loans are made a notice of
the charges imposed for deferred deposit loans.
§32A-4-22. Notice on assignment or sale of instruments.
Prior to sale or assignment of instruments held by the lender
as a result of a deferred deposit loan, the lender shall place a
notice on the instrument in at least ten-point type to read:
"This is a deferred deposit loan instrument."
§32A-4-23. Grounds for suspension or revocation of license;
reinstatement of license; penalties.
(a) The Commissioner may suspend or revoke any license issued
under this article if he or she finds that the licensee or any
owner, director, officer, member, partner, stockholder, employee or agent of the licensee:
(1) Has knowingly violated any provision of this article or
any order, decision or rule of the Commissioner lawfully made
pursuant to the authority of this article; or
(2) Has knowingly made any material misstatement in the
application for the license; or
(3) Does not have available or has not continuously maintained
the net worth required by the provisions of section four of this
article, calculated according to generally accepted accounting
(4) Has failed or refused to keep the bond required by section
four of this article in full force and effect, if applicable; or
(5) In the case of a foreign corporation, does not remain
qualified to do business in this state; or
(6) Has committed any fraud or engaged in any dishonest
activities with respect to the deferred deposit loan business in
this state or failed to disclose any of the material particulars of
any loan transaction in this state to anyone entitled to the
(7) This section does not limit any right the consumer may
have to bring an action for a violation of section one hundred
four, article six, chapter forty-six-a of this code in an
The Commissioner may also suspend or revoke the license of a licensee if he or she finds the existence of any ground upon which
the license could have been refused or any ground which would be
cause for refusing a license to the licensee were he or she then
applying for the same. The Commissioner may also suspend or revoke
the license of a licensee pursuant to his or her authority under
section thirteen, article two, chapter thirty-one-a of this code.
(b) The suspension or revocation of the license of any
licensee does not impair or affect the obligation of any
preexisting lawful loan between the licensee and any obligor.
(c) The Commissioner shall reinstate a suspended license, or
issue a new license to a licensee whose license has been revoked,
if the grounds upon which any license was suspended or revoked have
been eliminated or corrected and the Commissioner is satisfied that
the grounds are not likely to recur, unless the licensee's license
has been revoked on more than one occasion and in the event, the
Commissioner may reinstate the suspended license or issue a new
license in his or her reasonable discretion.
(d) In addition to the authority conferred under this section,
the Commissioner may impose a fine or penalty not exceeding one
thousand dollars upon any licensee required to be licensed under
this article who the Commissioner determines has violated any of
the provisions of this chapter. For the purposes of this section,
each separate violation is subject to the fine or penalty herein
prescribed and each day after the date of notification, excluding Sundays and holidays, that an unlicensed person engages in the
business or holds himself or herself out to the general public as
a deferred deposit lender constitutes a separate violation.
(e) Notwithstanding the forgoing, nothing in this section
shall interfere with the right of a state or federally chartered
bank, savings and loan association, or credit union to offer the
deferred deposit loan product through a third party agent.
§32A-4-24. Notice of refusal, or suspension or revocation, of
license; relinquishing license.
(a) Whenever the Commissioner refuses to issue a license, or
suspends or revokes a license, he or she shall make and enter an
order to that effect and shall cause a copy of the order to be
served in person or by certified mail, return receipt requested or
in any other manner in which process in a civil action in this
state may be served, on the applicant or licensee, as the case may
(b) Whenever a license is suspended or revoked, the
Commissioner shall in the order of suspension or revocation direct
the licensee to return to the Commissioner its license. It is the
duty of the licensee to comply with any order: (i) Immediately for
failure to keep the bond required by the provisions of section four
of this article in full force and effect or if the license was
suspended following a nonappealable final order issued by the
hearing examiner; or otherwise (ii) following expiration of the period provided in section twenty-five of this article in which the
licensee, if not previously provided the opportunity to a hearing
on the matter, may demand a hearing before the Commissioner without
a demand having been timely made.
(c) The Commissioner may promulgate rules that require the
licensee or the database provider to close all transactions on the
database, relating to a licensee, whenever a license is suspended
or revoked, following a nonappealable final order issued by the
hearing examiner, or otherwise, as provided in this article.
§32A-4-25. Hearing before Commissioner; provisions pertaining to
(a) Any applicant or licensee, as the case may be, adversely
affected by an order made and entered by the Commissioner in
accordance with the provisions of this article, if not previously
provided the opportunity to a hearing on the matter, may, in
writing demand a hearing before the Commissioner. The
Commissioner shall appoint a hearing examiner to conduct the
hearing and prepare a recommended decision. The written demand for
a hearing must be filed with the Commissioner within thirty days
after the date upon which the applicant or licensee was served with
a copy of the order. The timely filing of a written demand for
hearing stays or suspends execution of the order in question,
pending a final determination, except for an order suspending a
license for failure of the licensee to maintain the bond required by this article in full force and effect. If a written demand is
timely filed as aforesaid, the aggrieved party is entitled to a
hearing as a matter of right.
(b) All of the pertinent provisions of article five, chapter
twenty-nine-a of this code apply to and govern the hearing and the
administrative procedures in connection with and following the
hearing, with like effect as if the provisions of the article were
set forth in extenso in this subsection.
(c) For the purpose of conducting any such hearing hereunder,
the appointed hearing examiner may issue subpoenas and subpoenas
duces tecum in accordance with the provisions of section one,
article five, chapter twenty-nine-a of this code. All subpoenas
and subpoenas duces tecum are issued and served in the manner,
within the time and for the fees and shall be enforced, as
specified in the section, and all of the section provisions dealing
with subpoenas and subpoenas duces tecum shall apply to subpoenas
and subpoenas duces tecum issued for the purpose of a hearing
(d) Any hearing shall be held within thirty days after the
date upon which the Commissioner received the timely written demand
therefor unless there is a postponement or continuance. The
hearing examiner may postpone or continue any hearing on his or her
own motion or for good cause shown upon the application of the
aggrieved party. At any hearing, the aggrieved party may represent himself or herself or be represented by any attorney-at-law
admitted to practice before any circuit court of this state.
(e) After the hearing and consideration of all of the
testimony, evidence and record in the case, the hearing examiner
shall make and enter an order affirming, modifying or vacating the
Commissioner's earlier order, or shall make and enter an order as
is considered appropriate, meet and proper. The order shall be
accompanied by findings of fact and conclusions of law as specified
in section three, article five, chapter twenty-nine-a of this code
and a copy of the order and accompanying findings and conclusions
shall be served upon the aggrieved party and his or her attorney of
record, if any, in person or by certified mail, return receipt
requested, or in any other manner in which process in a civil
action in this State may be served. The order of the hearing
examiner is final unless vacated or modified on judicial review
thereof in accordance with the provisions of section twenty-six of
§32A-4-26. Judicial review.
(a) Any person adversely affected by a final order made and
entered by the hearing examiner after hearing held in accordance
with the provisions of section twenty-five of this article is
entitled to judicial review thereof. All of the pertinent
provisions of section four, article five, chapter twenty-nine-a of
this code apply to and govern a review with like effect as if the provisions of said section were set forth in extenso in this
(b) The judgment of the circuit court is final unless
reversed, vacated or modified on appeal to the Supreme Court of
Appeals in accordance with the provisions of section one, article
six, chapter twenty-nine-a of this code.
§32A-4-27. Actions to enjoin violations.
(a) Whenever it appears to the Commissioner that any person
has been or is violating or is about to violate any provision of
this article, any rules of the Commissioner or any final order of
the Commissioner, the Commissioner may apply in the name of the
state, to the circuit court of the county in which the violation or
violations, or any part thereof, has occurred, is occurring or is
about to occur, or the judge thereof in vacation, for an injunction
against such person and any other persons who have been, are or are
about to be, involved in, or in any way participating in, any
practices, acts or omissions, so in violation, enjoining the person
or persons from any violation or violations.
(b) Upon application by the Commissioner as aforesaid and upon
a showing by the Commissioner that the practice, act or omission to
be enjoined will result in irreparable harm and that no remedy at
law is available, the circuit courts of this state may by mandatory
or prohibitory injunction compel compliance with the provisions of
this article, any rules of the Commissioner and all final orders of the Commissioner. The court may issue a temporary injunction in
any case pending a decision on the merits of any application filed.
(c) The judgment of the circuit court upon any application
permitted by the provisions of this section is final unless
reversed, vacated or modified on appeal to the Supreme Court of
Appeals. Any such appeal shall be sought in the manner and within
the time provided by law for appeals from circuit courts in other
§32A-4-28. Loans made in violation of this article void;
agreements to waive article void.
(a) If any deferred deposit loan is made in willful violation
of the provisions of this article, except as a result of a bona
fide error, the loan may be canceled by a court of competent
(b) Subject to the provisions of subsection (c) of this
section in which a licensed lender and consumer may enter into an
arbitration agreement, any other agreement whereby the consumer
waives the benefits of this article is considered to be against
public policy and void.
(c) Any loan transaction in violation of this article is
subject to an action, which may be brought in a circuit court
having jurisdiction, by the consumer seeking damages, reasonable
attorneys fees and costs: Provided, That nothing in this section
prohibits a licensed lender from entering into an arbitration agreement whereby the lender and consumer agree to waive their
right to file a lawsuit and proceed in court to have a jury trial
to resolve their disputes, and instead agree to submit their
dispute to an arbitrator for a decision.
§32A-4-29. Applicability of other provisions of this article.
The provisions of this article apply to a lender unless these
provisions are inconsistent with other provisions of state law.
§32A-4-30. Criminal culpability.
A consumer may not be subject to any criminal penalty for
entering into a deferred deposit loan agreement. A consumer may
not be subject to any criminal penalty in the event the instrument
is dishonored, unless the consumer had no account with drawee at
the time the instrument was made, drawn, negotiated or delivered,
subject to the provisions of article three of chapter sixty-one.
§32A-4-31. Unfair or deceptive practices.
No person may engage in unfair or deceptive acts, practices or
advertising in connection with a deferred deposit loan.
NOTE: The purpose of this bill is to establish the deferred
deposit loan act.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
Article §32A-4a-1 is new therefore, strike-throughs and
underscoring have been omitted.