H. B. 2756
(By Delegates Swartzmiller,
G. White and H. White)
[Introduced January 29, 2003; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact sections one and three, article three,
chapter thirty-two-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to further
amend said chapter by adding thereto a new article, designated
article four, all relating to deferred deposit loans
generally; creating the deferred deposit loan act; defining
certain terms; providing for the licensing of deferred deposit
lenders; investigations by the commissioner of banking; denial
of license; requiring specific information regarding location,
records and annual reports of licensees; prohibiting certain
types of advertising by licensees; transaction documentation
and notice to consumers required; finance charged allowed;
loan amount limited to five hundred dollars; limiting deferred
deposit loans to one renewal; form of proceeds; required
endorsement; right of redemptions; dishonored charges; required posting of charges; assignment or sale of
instruments; grounds for suspension or revocation of license;
penalties; notice of refusal, suspension or revocation;
hearing; judicial review, actions to enjoin violations; voided
loans; applicability of the act; and unfair or deceptive
Be it enacted by the Legislature of West Virginia:
That sections one and three, article three, chapter
thirty-two-a of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted; and that
said chapter be further amended by adding thereto a new article,
designated article four, 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 check cashed.
(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 such merchant obtains
a deferred deposit lender license under the provisions of article
four of this chapter.
(c) No 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 such 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 title.
This act 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 eleven of
(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 the following:
(A) Any person who offers or makes a deferred deposit loan,
who arranges a deferred deposit loan for a third party, or who acts as an agent for a third party, regardless of whether the third
party is exempt from licensing under this article or whether
approval, acceptance or ratification by the third party is
necessary to create a legal obligation for the third party.
(B) Notwithstanding the foregoing, a state or federally
chartered bank, saving and loan association or credit union shall
not be considered a lender for purposes of this article and shall
be specifically exempt from the provisions of this article so long
as all of the following are satisfied:
(i) It initially advances the loan proceeds to the customer;
(ii) It does not sell, assign or transfer in the aggregate a
preponderant economic interest in the deferred deposit transactions
to the arranger, agent or assistant, or an affiliate or subsidiary
of the state or federally chartered bank, saving and loan
association, or credit union, unless selling, assigning or
transferring a preponderant economic interest is permitted by the
primary regulator of the state or federally chartered bank, saving
and loan association or credit union; and
(iii) It develops the deferred deposit loan program on its
(c) If a lender, as defined in paragraph (A) of this
provision, offers, arranges, acts as an agent for or assists a
state or federally chartered bank, saving and loan association or
credit union in any way in the making of a deferred deposit loan and the state or federally chartered bank, saving and loan
association, or credit union meets the standards set forth in
paragraph (B) of this provision, the lender shall comply with all
other provisions in this article to the extent they are not
preempted by other state or federal laws.
(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.
§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 every member thereof, and if a corporation, of each
officer, director and owner of ten percent or more of the capital
(2) The addresses of the location of the business to be
(3) Such other information concerning the financial
responsibility, background, experience and activities of the
applicant and its members, officers, directors and principals as
the commissioner may require.
(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, up to a maximum of two hundred fifty
thousand dollars computed according to generally accepted
accounting principles as shown by the most recent audited financial
statement filed with and satisfactory to the commissioner;
(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, up to a maximum of two hundred fifty
thousand dollars, 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 four 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 audited net
worth computed according to generally accepted accounting
principles required for each licensed location by the provisions of
section four 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 four 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 application.
§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. Licenses are not transferable or assignable. No
licensee may offer a franchise under that license to another
(b) No licensee shall open an additional office or relocate
any place of business without prior approval of the commissioner.
Applications for such 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 dollar 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 four 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, such 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 license 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 is 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 thereof.
§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 charged expressed both as a dollar amount and an
annual percentage rate. In addition, the written agreement shall
include all disclosures required by rules promulgated by the
commissioner of banking therefor. The written agreement shall set
a date, not more than forty days after the loan transaction date,
upon which the instrument may be deposited or negotiated.
§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.
Such charge shall be considered fully earned as of the date of the
transaction. The lender shall charge only those charges authorized
in this article in connection with a deferred deposit loan.
§32A-4-12. Maximum loan amount - Right to rescind.
(1) A lender may not lend an amount greater than five hundred
dollars nor may 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.
(2) A consumer may rescind the deferred deposit loan on or
before the close of the next business day following the loan
§32A-4-13. Multiple outstanding transactions.
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 or
before the close of the next business day following this
(1) A deferred deposit loan shall not be renewed more than
once. After such renewal, the consumer shall pay the debt in cash
or its equivalent. If the consumer does not pay the debt, then the
lender may deposit the consumer's instrument.
(2) Upon renewal of a deferred deposit loan, the lender may assess additional finance charges not to exceed eighteen percent of
the amount loaned.
(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-4-16. 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 such 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-4-17. 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-4-18. Redemption of instrument.
Prior to the lender negotiating or presenting the instrument,
the consumer may 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.
§32A-4-19. 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 shall have 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 of 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, such 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-4-20. 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 such deferred deposit loans.
§32A-4-21. 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-4-22. 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 the 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 audited 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
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 individual
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 such licensee's license
has been revoked on more than one occasion and in such 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 foregoing, nothing in this section
interferes 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-4-23. 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 such 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 shall
be the duty of the licensee to comply with any such order: (i)
Immediately if the license was suspended either following a hearing
or for failure to keep the bond required by the provisions of
section four of this article in full force and effect; or otherwise
(ii) following expiration of the period provided in section
twenty-four of this article in which such licensee, if not
previously provided the opportunity to a hearing on the matter, may
demand a hearing before the commissioner without such demand having
been timely made.
§32A-4-24. 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 shall
stay or suspend 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 section four of
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 such
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 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 subpoena duces tecum apply to subpoenas and subpoenas
duces tecum issued for the purpose of a hearing hereunder.
(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-five of
§32A-4-25. 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-four 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 such 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-4-26. 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 such
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 shall be 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-4-27. 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, such 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 against public policy and
(c) Any loan transaction in violation of this article shall be
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-4-28. Applicability of other provisions of this article.
The provisions of this article apply to a lender unless such
provisions are inconsistent with other provisions of state law.
§32A-4-29. 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, chapter sixty-one of
§32A-4-30. 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 provide for the
licensing of deferred deposit lenders. Under the bill, a deferred
deposit loan is defined as a consumer loan whereby the lender, for
a fee accepts a dated instrument from the consumer and agrees to
hold the instrument for a period of time before cashing it and pays
the consumer the amount of the instrument less finance charges. The bill limits to five hundred dollars the amount of any
instrument involved in a deferred deposit loan.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
§32A-4 is new; therefore, strike-throughs and underscoring
have been omitted.