Bill Text: VA SB33 | 2020 | Regular Session | Comm Sub
Bill Title: Consumer finance companies; loans, licensing.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-02-12 - Left in Commerce and Labor [SB33 Detail]
Download: Virginia-2020-SB33-Comm_Sub.html
Be it enacted by the General Assembly of Virginia:
1. That §§6.2-1500, 6.2-1501, 6.2-1503, 6.2-1505, 6.2-1506, 6.2-1507, 6.2-1509, 6.2-1511, 6.2-1517, 6.2-1518, 6.2-1520, 6.2-1523, 6.2-1524, 6.2-1526 through 6.2-1530, 6.2-1532 through 6.2-1535, 6.2-1537, and 6.2-1543 of the Code of Virginia are amended and reenacted and that the Code of Virginia is amended by adding sections numbered 6.2-1505.1, 6.2-1508.1, 6.2-1513.1, 6.2-1534.1, and 6.2-1537.1 as follows:
§6.2-1500. Definitions.
As used in this chapter, unless the context requires a different meaning:
"Affiliate," for purposes of §6.2-1503, means an entity of which 25 percent or more of the voting shares or ownership interest is held, directly or indirectly, by a company that also owns a bank, savings institution, or credit union.
"Arranging or brokering" means, with respect to consumer finance loans, negotiating, placing, or finding consumer finance loans for consumers, or offering to negotiate, place, or find consumer finance loans for consumers, in return for compensation paid directly by the consumers.
"Consumer finance company" means a person engaged in
the business of making consumer finance loans to individuals for
personal, family, household, or other nonbusiness purposes.
"License" means a single license issued under
this chapter with respect to a single place of business.
"Consumer finance loan" means a loan made or credit extended to an individual for a personal, family, household, or other nonbusiness purpose.
"Depository institution" means a bank, savings institution, or credit union.
"Licensee" means a consumer finance company to which
one or more licenses have a license has been issued by the
Commission pursuant to this chapter.
"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in another person.
"Subsidiary," for purposes of §6.2-1503, means an entity of which 25 percent or more of the voting shares or ownership interest is held, directly or indirectly, by a bank, savings institution, or credit union.
§6.2-1501. License required to engage in making consumer finance loans; exceptions; attempts to evade application of chapter; arranging or brokering consumer finance loans.
A. No person shall engage in the business of making consumer
finance loans to individuals for personal, family, household, or other
nonbusiness purposes, any consumer residing in the Commonwealth and
charge, contract for, or receive, directly or indirectly, on or in connection
with any consumer finance loan interest, charges, compensation,
consideration, or expense that in the aggregate is greater than the interest
permitted by §6.2-303 12 percent per year, whether or not the person
has a location in the Commonwealth, except as provided in and
authorized by accordance with the provisions of this chapter or
Chapter 22 (§6.2-2200 et seq.) and without first having obtained a
license under this chapter from the Commission.
B. Subject to subdivision C 3 and subsection C of §
6.2-1524, the The prohibition in subsection A shall not be construed
to prevent any person, other than a licensee, from making a loan or
extending credit in accordance with the following laws:
1. Making a loan in accordance with Chapter 18 (§
6.2-1800 et seq.), relating to payday lenders;
2. Making a mortgage loan pursuant to §§6.2-325 and
6.2-326 or §§6.2-327 and 6.2-328 in any principal amount Article 4 (§
6.2-309 et seq.) of Chapter 3, relating to mortgage loans, open-end credit
plans, and certain other types of loans or extensions of credit, including
those made by depository institutions and sellers of goods or services;
or
3. Extending credit as described in §6.2-312 in any amount
Chapter 22 (§6.2-2200 et seq.), relating to motor vehicle title lenders;
4. Section 36-55.31, relating to loans by the Virginia Housing Development Authority;
5. Section 38.2-1806, relating to interest chargeable by insurance agents;
6. Chapter 47 (§38.2-4700 et seq.) of Title 38.2, relating to interest chargeable by insurance premium finance companies;
7. Section 54.1-4008, relating to interest chargeable by pawnbrokers;
8. Section 58.1-3018, relating to interest and origination fees payable under third-party tax payment agreements; or
9. Any other laws of the Commonwealth that permit interest to be charged at an annual rate that exceeds 12 percent.
C. The provisions of subsection A shall apply to any person
who seeks to evade its application by any device, subterfuge, or pretense
whatsoever, including:
1. The loan, forbearance, use, or sale of (i) credit, as
guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or
(iv) things in action;
2. The use of collateral or related sales or purchases of
goods or services, or agreements to sell or purchase, whether real or
pretended; receiving or charging compensation for goods or services, whether or
not sold, delivered, or provided; and
3. The real or pretended negotiation, arrangement, or
procurement of a loan through any use or activity of a third person, whether
real or fictitious.
D. No person shall engage in the business of arranging or brokering consumer finance loans for any consumer residing in the Commonwealth, whether or not the person has an office or conducts business at a location in the Commonwealth.
E. The provisions of this chapter, including specifically the licensure requirement in subsection A, shall apply to persons making loans over the Internet to residents of the Commonwealth, whether or not the person making the loans maintains a physical presence in the Commonwealth.
F. Notwithstanding any provision of this title to the contrary, a licensee that makes a motor vehicle title loan as defined in § 6.2-2200 shall make such loan in accordance with the provisions of this chapter relating to consumer finance loans. This subsection shall not apply to a licensee under this chapter that elects to become licensed under Chapter 22 (§ 6.2-2200 et seq.).
§6.2-1503. Applicability of chapter.
This The provisions of this chapter shall not
apply to:
1. Any business transacted by any person under the
authority of and as permitted by any law of the Commonwealth or of the United
States relating to banks, savings institutions, trust companies, building and
loan associations, industrial loan associations, or credit unions;
2. Any bona fide pawnbroking business transacted under a
pawnbroker's license; or
3. Any person operating in accordance with the specific
provisions of any other provision of this title currently in effect or
hereafter enacted any depository institution or any subsidiary or
affiliate thereof that does not elect to become licensed under this chapter.
Electing to become licensed under this chapter, however, shall constitute a
waiver of the benefit of any and all laws of the Commonwealth and other states,
territories, possessions, and districts of the United States and federal laws
preemptive of, or inconsistent with, the provisions of this chapter.
§6.2-1505. Application for license; application fee; investigation of applicants.
A. Application for a license to make consumer finance loans under this chapter shall be in writing, under oath, and in the form prescribed by the Commission.
B. The application shall contain:
1. The name and address of the applicant;
2. If the applicant is a partnership or association, the name and address of each partner or member of the partnership or association;
3. If the applicant is a corporation or limited liability company, the name and address of each senior officer, director, member, registered agent, and principal;
4. If the applicant is a business trust, the name and address of each trustee and beneficiary;
5. The address, with street and number, if any,
addresses of the locations where the business is to be conducted; and
6. Such other information as may be required by the Commission.
C. The application shall be accompanied by payment of an application fee of $500.
§6.2-1505.1. Bond required.
An application for a license under this chapter shall be accompanied by a bond filed with the Commissioner, with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $25,000, or such greater sum as the Commission may require, but not to exceed $500,000. The form of such bond shall be approved by the Commission. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant's or licensee's performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by it in its licensed business, and conducting its licensed business in conformity with this chapter and all applicable laws. Any person who may be damaged by noncompliance of the licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.
§6.2-1506. Investigation of application; review period.
A. Upon the filing of the application and the payment of
the application fee, the Commission The Commissioner shall make such
investigation relative to the application and the requirements provided for
in §6.2-1507 as it deems appropriate as he deems necessary to determine
if the applicant has complied with all applicable provisions of law and
regulations adopted thereunder.
B. The Commission shall grant or deny each application for a license within 60 days from the date the application, together with all required information and the application fee, is filed unless the period is extended by order of the Commission that recites the reasons for the extension.
§6.2-1507. Qualifications.
A. The Upon the filing and investigation of an
application for a license, the Commission shall issue and deliver to the
applicant a license to make consumer finance loans in accordance with
the provisions of this chapter at the location in the Commonwealth
locations specified in the application if it finds:
1. That the financial responsibility, experience, character,
and general fitness of the applicant and its members, senior officers,
directors, and principals are such as to command the confidence of the
public and to warrant belief that this business will be operated
lawfully, honestly, fairly and, efficiently within the
purpose of this chapter, in the public interest, and in accordance with
law;
2. That the applicant has available, for the operation of the
business at the specified location, unencumbered liquid assets of
at least $50,000 if the specified location is in a locality with a
population of more than 20,000, or of at least $25,000 if the per
location is not in a locality with a population of more than 20,000;
and
3. That the applicant has complied with all of the
prerequisites to obtaining the license prescribed by § provisions of §§
6.2-1505 and 6.2-1505.1; and
4. That the applicant will not make loans in accordance with the provisions of this chapter at the same location at which the applicant conducts business under either Chapter 18 (§6.2-1800 et seq.) or Chapter 22 (§ 6.2-2200 et seq.).
B. If the Commission fails to make the findings required by subdivisions A 1, 2, and 3, it shall deny the application for a license and the Commissioner shall notify the applicant of the denial and the reasons for such denial.
B. Notwithstanding the provisions of subsection A, if the
applicant has an existing license at another location in the Commonwealth, the
Commission shall issue and deliver to the applicant a license to make loans in
accordance with the provisions of this chapter at the location specified in the
application if it finds:
1. That the general fitness of the licensee is such as to
command the confidence of the public and to warrant belief that this business
will be operated lawfully, honestly, fairly and efficiently within the purpose
of this chapter; and
2. That the applicant has complied with all of the
prerequisites to obtaining the license prescribed by §6.2-1505.
If the Commission fails to make the findings required by
subdivisions 1 and 2, it shall deny the application for a license.
C. If the Commission denies an application for a license,
it shall notify the applicant of the denial. The Commission shall retain
the application fee shall not be refundable in any event. The fee
shall not be abated by surrender, suspension, or revocation of the license.
§6.2-1508.1. Additional offices; relocation of offices.
A. No licensee shall open an additional office without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commission finds that the applicant does not have the required liquid assets or surety bond or has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been sent by the Commission to the applicant within 30 days of the date the application is received by the Commission.
B. Prior approval of the Commission shall not be required in the event that a licensee needs to temporarily open an office due to a natural disaster or act of God. However, the licensee shall notify the Commission within 10 days of opening the office.
C. A licensee shall notify the Commission in writing within 10 days of relocating any approved office.
§6.2-1509. Contents, posting, transfer, and duration of license.
A. Each license shall contain:
1. The address State the address at which the
business is to be conducted; and
2. The full State fully the name of the licensee
or, if the licensee is a partnership or association, the names of the partners
or members; and
3. If the licensee is a corporation, the date and place of
incorporation as well as any fictitious name by which the licensee is
operating its business.
B. The licensee shall keep post the license
conspicuously posted prominently in its each approved
place of business of the licensee. The licensee shall prominently
disclose on its website the license number assigned by the Commission to the
licensee.
C. The license Licenses shall not be
transferable or assignable, by operation of law or otherwise.
D. Each license shall remain in full force and effect until surrendered, revoked, or suspended as provided by this chapter or by lawful order of the Commission. The surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of the licensee.
§6.2-1511. Suspension or revocation of license.
A. The Commission, upon 10 days' written notice to
the licensee stating the contemplated action and in general the grounds
therefor, and upon reasonable opportunity to be heard, may suspend or
revoke any license issued hereunder if it finds that under this
chapter upon any of the following grounds:
1. The licensee has failed Failure to pay the
annual any fee assessed pursuant to §6.2-1532,
assessment, or expense imposed by this chapter;
2. Failure to comply with any order of the Commission
lawfully made pursuant to and within the authority of this chapter;
2. The licensee, either knowingly or without the exercise
of due care to prevent the same, has violated any 3. Any violation of a provision
of this chapter or any regulation lawfully made adopted by the
Commission under §6.2-1535, or violation of any other law or regulation applicable
to the conduct of the licensee's business; or
3. 4. A course of conduct consisting of the failure
to perform written agreements with borrowers;
5. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;
6. Entry of a judgment against the licensee involving fraud, misrepresentation, or deceit;
7. Entry of a federal or state administrative order against the licensee for violation of any law or any regulation applicable to the conduct of his business;
8. Refusal to permit an investigation or examination by the Commission; or
9. Any fact or condition exists that clearly would
have warranted the Commission to refuse originally to issue the ground
for denial of a license under this chapter.
B. For the purposes of this section, acts of any officer, director, member, partner, trustee, beneficiary, or principal shall be deemed acts of the licensee.
§6.2-1513.1. Procedure for revocation or suspension of license; notice of proposed revocation or suspension.
The Commission shall not revoke or suspend the license of any person licensed under this chapter upon any of the grounds set forth in § 6.2-1511 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the licensee or other address authorized under §12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except on the basis of findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules.
§6.2-1517. Conducting business in accordance with license.
A. Not more than one place of business shall be maintained
under the same license.
B. The Commission may issue more than one license to the
same licensee upon compliance, as to each additional license, with all
applicable provisions of this chapter governing issuance of a single license.
C. No A licensee shall not use any name other than
the legal name or fictitious name set forth on the license issued by the
Commission. A licensee shall not conduct the business of making consumer
finance loans provided for by this chapter under any other name or at
within any place of business within the Commonwealth other than
as is designated in the license issued by the Commission.
§6.2-1518. Other business.
A. A licensee shall not conduct the business of making
consumer finance loans under this chapter within at any
office, suite, room, or other place of business in which where
any other business is solicited or engaged in, or in association or
conjunction with any conducted except the offering and selling of credit
life insurance or credit accident and sickness insurance in accordance with the
provisions of Title 38.2 or such other business, unless the licensee has
first given 30 days' written notice to the Commission as the Commission
determines should be permitted, and subject to such conditions as the
Commission deems necessary and in the public interest. Every notice
shall be accompanied by No such other business shall be allowed except
as permitted by Commission regulation or upon the filing of a written
application with the Commission, payment of a fee of $300, and provision
of such information as the Commission may deem pertinent.
B. Upon receipt of such notice and fee, the Commission may
require the licensee to provide information relating to the other business,
including how and by whom it will be conducted. The Commission shall
grant or deny each application submitted under subsection A within 60 days from
the date the application, together with all required information and the
application fee, is filed unless the period is extended by order of the
Commission that recites the reasons for the extension. The Commission shall
have the authority to investigate the conduct of such other businesses in the
licensee's place of business.
C. The provisions of this section shall not affect (i) any regulations adopted by the Commission prior to July 1, 2000, governing the conduct of other businesses in the place of business designated in a license or (ii) the authority of the Commission to adopt such regulations as the Commission deems necessary.
D. If the Commission finds that the other business (i) is of
such a nature or is being conducted in such a manner as to conceal or
facilitate a violation or evasion of the provisions of this chapter or
regulations adopted pursuant to it; (ii) is contrary to the public interest; or
(iii) is otherwise being conducted in an unlawful manner, the Commission may,
after notice to the licensee and an opportunity for a hearing, prohibit or
limit the conduct of such other business in the place of business designated
in the license.
E. Any authority permission granted under this
section shall remain in full force and effect until surrendered, or until
revoked or suspended by the Commission as provided in this chapter or by lawful
order of the Commission.
F. Except as permitted by Commission regulation or upon Commission approval of a written application filed in accordance with this section, a licensee that conducts the business of making consumer finance loans pursuant to this chapter solely over the Internet shall not offer, sell, or make available any other products or services to Virginia residents.
G. This section shall not apply to any other business that is transacted solely with persons residing outside of the Commonwealth.
§6.2-1520. Rate of interest; amount and term; late charges; processing fees.
A. A licensee may charge and receive interest on
make installment loans of:
1. Not more than $2,500, between $500 and $35,000,
which loans shall have a term of no fewer than six months and no more than 120
months and which shall be repayable in substantially equal consecutive monthly
payments. A licensee may charge and collect interest on a loan made under this
chapter at a single annual rate not to exceed 36 percent; and
2. More than $2,500, at such single annual rate as shall be
stated in the loan contract.
The annual rate of interest shall be charged only upon
principal balances outstanding from time to time. Interest shall not be
charged on an add-on basis and shall not be compounded or paid, deducted
or received in advance but shall be computed and paid only as a
percentage of the unpaid principal. For the purpose of calculating
interest under this section, a year may be any period of time consisting of 360
or 365 days Interest shall be computed on the basis of the number of
days elapsed; however, if part or all of the consideration for a loan contract
is the unpaid principal balance of a prior loan, then the principal amount
payable under the loan contract may include any unpaid interest on the prior
loan that has accrued within 90 days before the making of the new loan contract.
For the purpose of computing interest, a day may equal 1/360th or 1/365th of a
year.
B. A licensee may impose charge a late charge
for failure to make timely payment fee of $20 for any
installment due on a debt, which late charge shall not exceed five percent of
the amount of such installment payment or portion of a payment not
received and applied within 10 days of the contractual due date. The
late charge shall be specified in the loan contract between the lender and the
borrower. For purposes of this section, "timely payment" means
a payment made by the date fixed for payment or within a period of seven
calendar days after such fixed date a late payment fee for any
individual scheduled contractual payment due may be assessed only once. The
late payment fee shall be specified in the contract between the lender and the
borrower.
C. A licensee may charge and receive a loan
processing fee, charged on not to exceed the greater of $75 or five
percent of the principal amount of the loan, for processing the loan
contract provided that the loan processing fee shall in no event exceed
$150. The loan processing fee shall be stated in the loan contract.
Such The loan processing fee shall be deemed to constitute interest
charged on the principal amount of the loan for purposes of determining whether
the interest charged on a loan of not more than $2,500 exceeds the 36
percent annual interest rate limitation imposed by subdivision
subsection A 1. Upon payment of the full amount of principal due
plus accrued interest and any other applicable fees within the first 30 days,
whether through outside funds or a refinancing under a new loan advance, the
borrower shall be entitled to a full rebate of the loan processing fee less
$50. If a loan is refinanced or renewed, a licensee may assess an additional
loan processing fee on the loan no more than once during any 12-month period.
D. A licensee may collect from the borrower the amount of any actual fees necessary to file, record, or release its security interest with any public official or agency of a locality or the Commonwealth as may be required by statute.
§6.2-1523. Additional charges prohibited; exceptions.
In addition to the interest, late charges payment
fees, and loan processing fee permitted under §6.2-1520, no further
or other amount whatsoever for any examination service, brokerage, commission,
fine, notarial fee, or other thing or otherwise shall be directly or indirectly
charged, contracted for, collected, or received, except:
1. Insurance premiums actually paid out by the licensee to any insurance company or agent duly authorized to do business in the Commonwealth or another state for insurance for the protection and benefit of the borrower written in connection with any loan;
2. The actual cost of recordation fees or, on loans over $100, the amount of the lawful premiums, no greater than such fees, actually paid for insurance against the risk of not recording any instrument securing the loan; and
3. A handling fee not to exceed $15 for each check returned to the licensee because the drawer had no account or insufficient funds in the payor bank.
§6.2-1524. Required and prohibited activities and conduct.
A. Each licensee shall maintain at all times the minimum
unencumbered liquid assets prescribed by this chapter for each license,
either (i) in liquid form available for the operation of the business at the
location specified in each license or (ii) actually used, whether pledged or
not, in the conduct of the business at the location specified in each license
§6.2-1507.
B. A licensee or other person subject to this chapter shall not advertise, display, distribute or broadcast, or cause or permit to be advertised, displayed, distributed or broadcast, in any manner whatsoever, any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for loans made under this chapter. The Commission may require that charges or rates of charge, if stated by a licensee, be stated fully and clearly in such manner as it deems necessary to prevent misunderstanding by prospective borrowers. The Commission may permit or require licensees to refer in their advertising to the fact that their business is under state supervision, subject to conditions imposed by it to prevent false, misleading, or deceptive impression as to the scope or degree of protection provided by this chapter.
C. A licensee shall not take a lien upon real estate as security for any loan made under the provisions of this chapter, except a lien arising upon rendition of a judgment. Any lien taken in violation of this subsection shall be void.
D. A licensee shall, at the time any loan is made, deliver to the borrower, or if there are two or more borrowers to one of them, a statement disclosing (i) the names and addresses of the licensee and of the principal debtor on the loan contract, and (ii) a statement in compliance with Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).
E. A licensee shall give the borrower a receipt for all cash payments. The Commission may specify the form and content of such receipts in keeping with the intent and purpose of this chapter.
F. A licensee shall permit payment to be made in advance in whole, or in part equal to one or more full installments. The licensee may apply the payment first to any amounts that are due and unpaid at the time of such payment.
G. A licensee shall, upon repayment of the loan in full, (i) mark plainly every obligation and security other than a security agreement executed by the borrower with the word "Paid" or "Canceled," (ii) mark satisfied any judgment, (iii) restore any pledge, (iv) cancel and return any note and any assignment given by the borrower to the licensee, and (v) release any security agreement or other form of security instrument that no longer secures an outstanding loan between the borrower and the licensee.
H. In the event of collection by foreclosure sale or otherwise, a licensee shall pay and return to the borrower, or to another person entitled thereto, any surplus arising after the payment of the expenses of collection, sale or foreclosure and satisfaction of the debt.
I. A licensee shall not take any confession of judgment or any power of attorney running to himself or to any third person to confess judgment or to appear for the borrower in a judicial proceeding. Any such confession of judgment or power of attorney to confess judgment shall be void.
J. A licensee shall not take any note, promise to pay, or instrument of security in which blanks are left to be filled in after execution, or that does not give the amount of the loan, a clear description of the installment payments required, and the rate of interest charged. A licensee may also include the disclosures required by Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026) in the note, promise to pay, or instrument of security.
K. Every loan contract shall be in writing, be signed by the
borrower, and provide for repayment of the amount loaned in substantially equal
monthly installments of principal and interest. Nothing contained in this
chapter shall prevent (i) a loan being considered a new loan because the
proceeds of the loan are used to pay an existing loan contract or (ii) a
licensee from entering into a loan contract providing for an odd first payment
period of up to 45 days and an odd first payment greater than other monthly
payments because of such odd first payment period.
§6.2-1526. Wage assignments.
A. A valid assignment or order for the payment of future salary, wages, commissions, or other compensation for services may be given as security for a loan made by any licensee, notwithstanding the provisions of any other law to the contrary.
B. No assignment of, or order for payment of, any salary,
wages, commissions, or other compensation for services, earned or to be earned,
given to secure any loan made by any licensee shall be valid unless:
1. The amount of the loan is paid to the borrower
simultaneously with its execution; and
2. The the assignment or order is in writing,
signed in person by the borrower, and not by an attorney, or if the borrower is
married unless it is signed in person by both husband and wife
spouses, and not by an attorney. Written assent of a spouse shall not be
required when husband and wife the spouses have been living
separate and apart for a period of at least five months prior to the giving of
the assignment or order. The provisions of this section are in addition to, and
not in derogation of, the general statutes pertaining to the subject.
C. Under the assignment or order, an amount equal to not more than 10 percent of the borrower's salary, wages, commissions, or other compensation for services shall be collectible from the employer of the borrower by the licensee at the time of each payment to the borrower of the salary, wages, commission, or other compensation for services, from the time that a copy of the assignment, verified by the oath of the licensee or his agent, together with a similarly verified statement of the amount unpaid upon the loan and a printed copy of this section, is served upon the employer.
§6.2-1527. Liens on household furniture.
No chattel mortgage or other lien on household furniture then in
the possession and use of the borrower given to secure any loan made by a
licensee shall be valid unless it complies with applicable federal law and is
in writing, signed in person by the borrower, and not by an attorney, or
if the borrower is married unless it is signed in person by both
husband and wife spouses, and not by an attorney. Written assent of
a spouse shall not be required when a husband and wife the spouses
have been living separate and apart for a period of at least five months prior
to the giving of the mortgage or lien.
§6.2-1528. Exemptions unimpaired.
A. Nothing in this chapter shall have the effect of impairing any rights on the part of anyone as to exemptions under the poor debtors law or under any other applicable exemption law now in effect or hereafter enacted.
B. The provisions of subdivision subsection B
2 of §6.2-1526 and §6.2-1527 are in addition to, and not in derogation
of, the general statutes pertaining to the subject.
§6.2-1529. Collection of loans made outside Commonwealth.
A. No loan made outside the Commonwealth for which greater rates of interest, consideration or charges than are permitted by the law applicable to such loan in the state in which the loan was made, have been charged, contracted for, or received shall be collected in the Commonwealth. Every person in any way participating in an effort to enforce the collection of such loan in the Commonwealth shall be subject to the provisions of this chapter.
B. The prohibition in subsection A shall not apply to loans that are made by a licensee in accordance with the provisions of this chapter.
§6.2-1530. Investigations and examinations.
A. For the purpose of discovering violations of this
chapter or securing information lawfully required under it, the The
Commission, by its designated officers and employees, may at any time
as often as it deems necessary investigate and examine, insofar as
they pertain to any business for which a license is required by this chapter,
the loans, books, accounts, affairs, business, premises, and
records of any person who:
1. Is engaged, or appears to the Commission to be engaged,
in a business for which the person is licensed or required to be
licensed and supervised under this chapter;
2. Advertises for, solicits, or holds itself out as willing
to make loans subject to the provisions of this chapter; or
3. The Commission has reason to believe is violating any
provision of this chapter, whether such person shall act or claim to act under
or without the authority of this chapter, or as principal, agent, broker, or
otherwise or any person who may be violating §6.2-1501. Examinations of
licensees shall be conducted at least once in each three-year period.
B. In furtherance the course of the
such an investigation the Commission shall:
1. Have and be given free or examination, the
owners, members, officers, directors, partners, trustees, beneficiaries, and
employees of such person being investigated or examined, upon demand of the
person making such investigation or examination, shall afford full access
to the offices, places of business, books, papers, accounts, records, files,
safes, and vaults of all such persons; and
2. Have and information that the person making such
investigation or examination deems necessary. Any person making such
investigation or examination shall have authority to compel the
production of papers and objects of all kinds, to require attendance of
witnesses, to administer oaths, and to examine under oath any person
whose testimony may be required relative to any such loans or business or to
the subject matter of the investigation examination or hearing all of
the aforementioned persons.
C. Before making an investigation as provided for in this
section as to any person who is neither licensed nor an applicant for a license
under this chapter, an order shall be entered by the Commission. The order
shall specifically direct the investigation to be made, command submission by
the person whose business is to be investigated, and set forth all other
details the Commission finds necessary. The Commission shall not enter such an
order except upon (i) at least one affidavit, which may be given by an employee
of the Commission or by any other person, (ii) documentary data, (iii)
admissions of the person to be investigated, or (iv) any combination of the
foregoing, satisfactorily establishing, prima facie, facts sufficient to
warrant the investigation provided for by subsection A. If the person involved
consents to the investigation, the foregoing requirements may be dispensed with
and the investigation may be made upon direction of the Commission or the
Commissioner.
D. No criminal prosecution or action for the imposition of
any penalty or forfeiture provided for by this chapter may be maintained
against a person not a licensee or an applicant for a license under this
chapter who is investigated following entry of an order as provided in
subsection C. This subsection shall not:
1. Prevent prosecution for the violation of any other
criminal law or of any other law providing for penalty or forfeiture; and
2. Provide immunity from prosecution for any officer,
agent, or employee of the person whose business is investigated.
E. If the Commission compels a person not a licensee or an
applicant for a license under this chapter to give verbal testimony, the person
so compelled to testify shall not be subject to criminal prosecution or the
imposition of any penalty or forfeiture in connection with the subject matter
as to which such testimony is compelled.
F. The immunities provided pursuant to subsections D and E
shall not impair (i) any civil right of action, not involving penalty or
forfeiture, of any person and (ii) the authority of the Attorney General to
institute and prosecute a proceeding for injunctive relief as provided for in §
6.2-1537. Any facts discovered and disclosures made in the course of any
investigation following entry of an order as provided in subsection C or verbal
testimony compelled as provided in subsection E shall be available in any
proceeding involving any civil right of action or for obtaining an injunction
under this chapter against the person so investigated or so compelled to
testify.
C. A licensee shall furnish promptly by mail or otherwise such facts and statements in connection with its business transacted pursuant to this chapter that the Commission may request from time to time.
§6.2-1532. Fees for examination, supervision and regulation.
A. To defray the costs of its examination,
supervision, and regulation of licensed consumer finance companies,
every licensee under this chapter shall pay an annual fee to be
calculated in accordance with a schedule set by the Commission. The
Through December 31, 2020, the schedule shall bear a reasonable
relationship to the total assets, including loans under this chapter and other
loans, of various licensees and their affiliates doing business in
authorized approved consumer finance company offices, to the
actual cost of their respective examinations, and to other factors
relating to their supervision and regulation. Beginning January 1, 2021, the
schedule shall bear a reasonable relationship to the business volume of such
licensees, the actual cost of their respective examinations, and other factors
relating to their supervision and regulation. Fees shall be assessed
pursuant to this section on or before May 1 of every calendar year
through 2021 and on or before September 15 of every calendar year thereafter,
based on the schedule in effect for the preceding calendar year. All such
fees shall be paid by the licensees to the State Treasurer on or before June 1
following each assessment made through 2021, and on or before October 15
following each assessment made in 2022 and thereafter.
B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee under this chapter at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission, within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision, and regulation, or shall pay at a reasonable per diem rate approved by the Commission.
§6.2-1533. Books, accounts, and records; pledge or deposit of notes and securities.
A. Each licensee shall maintain in its authorized
consumer finance company office, or at such other place within or outside the
Commonwealth as the Commission may approve, approved offices such
books, accounts, and records as the Commission may reasonably require to
determine whether the licensee is complying with the provisions of this chapter
and with regulations adopted in furtherance thereof. Such books, accounts,
and records shall be maintained in paper form or, with the Commission's approval,
in any electronic format available for examination on the basis of computer
printed reproduction, video display, or other medium. Any books, accounts, and
records not maintained in paper form shall be convertible into clearly legible
paper documents within a reasonable time. Every licensee shall preserve the
books, accounts, and Such records relating to consumer finance
loans shall be retained for at least three years after making the
final entry payment is made on any consumer finance loan
recorded therein. Such books, accounts, and records shall be maintained
apart and separate from any other business in which the licensee is involved.
B. If any note or security taken under this chapter shall
be pledged as collateral or deposited within or outside the Commonwealth, the
licensee shall notify promptly the Commission in writing of the identity and
location of the person holding such paper. Prior approval of the Commission
shall not be required. Any pledged or deposited paper shall be subject to examination
by the Commission in accordance with subsection C as fully as if maintained in
an approved location.
C. All books, accounts, and records shall be subject to
examination by the Commission. If such books, accounts, and records are
examined outside the Commonwealth, all reasonable costs associated with such
examination shall be paid by the licensee.
§6.2-1534. Annual reports.
Each licensee shall annually, on or before April 1, file a
report with the Commission giving Commissioner containing such
relevant information as the Commissioner may reasonably be
required require concerning its business and operations during the
preceding calendar year as to each authorized approved consumer
finance company office. Reports shall be made under oath and shall be in the
form prescribed by the Commission Commissioner.
§6.2-1534.1. Other reporting requirements.
A. A licensee shall file a report with the Commissioner within 15 days following the occurrence of any of the following:
1. The filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;
2. The institution of administrative or regulatory proceedings against the licensee by any governmental authority;
3. Any felony indictments of the licensee or any of its members, partners, directors, officers, or principals;
4. Any felony conviction of the licensee or any of its members, partners, directors, officers, or principals; and
5. Such other event as the Commission may prescribe by regulation.
B. The report required by subsection A shall be in writing and describe the event and its expected impact on the business of the licensee.
C. Every licensee shall notify the Commissioner, in writing and within 10 days, of (i) the closing of any business location and (ii) the name, address, and position of each new senior officer, member, partner, or director. The licensee also shall provide such other information with respect to any such event as the Commissioner may reasonably require.
§6.2-1535. Regulations.
The Commission shall adopt such regulations as it deems
appropriate to effect the purposes of this chapter. Before adopting any such
regulation, the Commission shall give reasonable notice of its content and
shall afford interested parties an opportunity to be heard, in accordance with
the Commission's Rules. A copy of each regulation and order adopting it shall
be mailed sent to all licensees at least 10 days before the
effective date thereof.
§6.2-1537. Authority of Attorney General; impoundment of property and receivership.
A. Whenever the Attorney General has reasonable cause to believe that (i) any person, not licensed under this chapter, is violating, has violated, is threatening to violate or intends to violate any provision of this chapter or any order or regulation lawfully made pursuant to the authority of this chapter and (ii) the facts justify it, the Attorney General shall institute and prosecute a lawsuit for monetary or injunctive relief or both in the Circuit Court of the City of Richmond, in the name of the Commonwealth. The court may grant monetary relief or may enjoin and restrain or both any such person from engaging in or continuing any such violation or from doing any act or acts in furtherance thereof. In any such suit a decree or order may be entered awarding such monetary relief or preliminary or final injunctive relief as may be deemed proper.
B. In addition to all other means provided by law for the enforcement of an award of monetary relief, a temporary restraining order, temporary injunction, or final injunction, the court may impound, and appoint a receiver for, (i) the property and business of the defendant, including books, papers, documents, and records pertaining thereto, (ii) so much thereof as the court deems reasonably necessary to prevent further violation of this chapter through or by means of the use of such property and business, or (iii) so much thereof as is necessary to identify borrowers who have been damaged and the amount of their damages, and to refund the amount of any such damages to the borrowers pursuant to subsection C. The receiver, when appointed and qualified, shall have such powers and duties as to custody, collection, administration, payment of debts and liquidation of the property and business as from time to time are conferred upon him by the court.
C. The Attorney General may seek and the circuit court may order or decree such other relief allowed by law, including restitution to the extent available to borrowers under §6.2-1541.
D. In any action brought by the Attorney General by virtue of the authority granted in this section, the Attorney General shall be entitled to seek attorney fees and costs.
E. Nothing in this section shall be construed to preclude any person who suffers a loss as a result of a violation of §6.2-1501 from maintaining an action to recover damages or restitution under §6.2-1541.
F. No individual shall be entitled to refuse to testify in a suit brought under this section because the person's testimony would tend to incriminate such person or subject the individual to penalty or forfeiture. If called to testify by the Commonwealth or by the court trying the case, the individual may not thereafter be prosecuted for any crime or subjected to any penalty or forfeiture growing out of the transaction concerning which the individual testifies.
G. Whenever the Attorney General has reasonable cause to believe that any person has engaged in, or is engaging in, any violation of this chapter or any order or regulation lawfully made pursuant to the authority of this chapter, the Attorney General is empowered to issue a civil investigative demand. The provisions of §59.1-9.10 shall apply, mutatis mutandis, to civil investigative demands issued pursuant to this section.
§6.2-1537.1. Cease and desist orders.
If the Commission determines that any person has violated any provision of this chapter or any regulation adopted by the Commission pursuant thereto, or violated any other law or regulation applicable to the conduct of a licensee's business, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under §12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at such hearing. Such hearing shall be conducted in accordance with the Commission's Rules. The Commission may enforce compliance with any order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.
§6.2-1543. Civil penalties.
The Commission may impose a civil penalty not exceeding
$10,000 upon any licensee person who it determines, in proceedings
conducted in accordance with the Commission's Rules, has violated any provision
of this chapter or of any regulation or order of the Commission, either
knowingly or without the exercise of due care to prevent the violation. In any
proceeding under this section, a licensee shall not be penalized for any act or
omission done in reasonable reliance on any regulation, order, letter, or other
written directive or request of the Commission.
2. That §§6.2-1502, 6.2-1508, 6.2-1512, 6.2-1513, 6.2-1516, 6.2-1519, 6.2-1531, 6.2-1538, and 6.2-1539 of the Code of Virginia are repealed.
3. That any person not licensed under Chapter 15 (§6.2-1500 et seq.) of Title 6.2 of the Code of Virginia who will be required to be licensed when the provisions of the first and second enactments of this act become effective shall apply for a license on or before October 1, 2020. Any license issued by the State Corporation Commission to any such person prior to January 1, 2021, shall become effective on January 1, 2021.
4. That every person licensed under Chapter 15 (§6.2-1500 et seq.) of Title 6.2 of the Code of Virginia prior to January 1, 2021, shall, on or before January 1, 2021, (i) file a surety bond with the Commissioner of Financial Institutions that meets the requirements of §6.2-1505.1 of the Code of Virginia, as created by this act, and (ii) submit proof to the Commissioner of Financial Institutions that such person has available for the operation of its business the unencumbered liquid assets prescribed by §6.2-1507 of the Code of Virginia, as amended by this act.
5. That nothing contained in this act shall prohibit the collection of any outstanding loan or extension of credit made under Chapter 15 (§6.2-1500 et seq.) of Title 6.2 of the Code of Virginia, as in effect prior to the effective date of this act; however, no additional extensions of credit or advances that violate the provisions of this act shall be made under such a loan agreement on or after the effective date of the first enactment of this act.
6. That the provisions of the first and second enactments of this act shall become effective on January 1, 2021.
