Source: http://register.dls.virginia.gov/details.aspx?id=4383
Timestamp: 2019-03-20 09:39:21
Document Index: 321398636

Matched Legal Cases: ['§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 1601', 'art 1026', '§ 1691', 'art 1002', 'art 314', '§ 6', '§ 6', '§ 6', '§ 6', 'in fine', 'art 1026', '§ 6', '§ 6', '§ 6', '§ 6', '§ 1692', '§ 6', '§ 59', '§ 6', '§ 6']

Vol. 30 Iss. 17 (Final Regulation) 10VAC5-200, Payday Lending April 21, 2014
Title of Regulation: 10VAC5-200. Payday Lending (amending 10VAC5-200-10, 10VAC5-200-20, 10VAC5-200-35, 10VAC5-200-50, 10VAC5-200-60, 10VAC5-200-80, 10VAC5-200-110; adding 10VAC5-200-85, 10VAC5-200-113).
Statutory Authority: §§ 6.2-1815 and 12.1-13 of the Code of Virginia.
Effective Date: May 1, 2014.
The amendments to the regulations governing payday lenders define the terms "prepaid card" and "short-maturity loan," as well as prohibit licensed payday lenders (licensees) from obtaining an agreement from a borrower that gives the licensee or a third party the authority to prepare a check that is drawn on the borrower's deposit account. The amendments also (i) require licensees and former licensees to maintain their contact information with the Bureau of Financial Institutions until they have no outstanding payday loans, (ii) require licensees to dispose of records containing consumers' personal financial information in a secure manner, (iii) specify additional events that require licensees to file a written report with the bureau, (iv) update the text of the payday lending pamphlet to reflect other amendments to 10VAC5-200, (v) prescribe disclosure requirements for licensees' advertisements, (vi) identify the circumstances under which the Commissioner of Financial Institutions shall deem a licensee or former licensee to have ceased business for purposes of authorizing the database provider to administratively close any outstanding loan in the database, (vii) eliminate several obsolete provisions relating to the payday lending database, (viii) clarify that certain payday lending data is not confidential and may be furnished by the database provider to the public, (ix) clarify that a licensee is permitted to print a replacement security check for a borrower at such time that the borrower makes a payment on an extended payment plan or an extended term loan, and (x) add "print media proofs" to the advertising retention requirements. Various technical and other clarifying amendments are also included.
AT RICHMOND, MARCH 25, 2014
CASE NO. BFI-2013-00070
Ex Parte: In re: Payday Lending
On September 3, 2013, the State Corporation Commission ("Commission") entered an Order to Take Notice of a proposal by the Bureau of Financial Institutions ("Bureau") to amend the Commission's regulations governing licensed payday lenders, which are set forth in Chapter 200 of Title 10 of the Virginia Administrative Code, 10 VAC 5-200-10 et seq. The Order to Take Notice and proposed regulations were published in the Virginia Register of Regulations on September 23, 2013, posted on the Commission's website, and sent to all licensed payday lenders and other interested parties. Licensees and other interested parties were afforded the opportunity to file written comments or request a hearing on or before October 25, 2013.
Comments on the proposed regulations were filed by Carla Stone Witzel, Esquire, of Gordon Feinblatt, LLC; Meade Spotts, Esquire, of Spotts Fain PC; and David B. Irvin, Senior Assistant Attorney General, of the Office of the Attorney General. The Commission did not receive any requests for a hearing.
Ms. Witzel indicated in her comments that the proposed addition of "debit card" to the definition of "good funds instrument" in 10 VAC 5-200-10 and to the payday lending pamphlet text in 10 VAC 5-200-80 conflicts with the prohibition against electronically debiting a borrower's deposit account or otherwise obtaining any funds from a borrower by electronic means. Accordingly, Ms. Witzel recommended that the Commission add an exception for debit cards to 10 VAC 5-200-20 H.1
Also, in 10 VAC 5-200-20 H, Mr. Spotts suggested that licensees should be permitted to print a check on behalf of a borrower, at the borrower's request, at such time as the borrower makes a partial payment, or a payment on an extended payment plan or an extended term loan. These checks would be drawn on the borrower's deposit account and would replace the original security check, so that the security check held by the licensee would reflect the borrower's reduced loan balance.
Mr. Irvin recommended deleting the words "following the expiration of any applicable record retention periods" from 10 VAC 5-200-20 P and adding a sentence which provides that a licensee or former licensee must abide by the record retention requirements set forth in § 6.2-1809 of the Code of Virginia. In 10 VAC 5-200-85 B, Mr. Irvin proposed adding a requirement that any mailing sent by a licensee to a consumer contain the name and address of the payday lender as set forth in the license issued by the Commission in the space for a return address on the outside of the envelope. Mr. Irvin also proposed adding "print media proofs" to 10 VAC 5-200-85 E.
The Bureau considered the comments filed and responded to them in its Statements of Position, which the Bureau filed with the Clerk of the Commission on February 12, 2014. Based on its responses, the Bureau stated that it is amenable to (1) adding language in 10 VAC 5-200-20 H that clarifies that a licensee is permitted to print a replacement security check for a borrower at such time that the borrower makes a payment on an extended payment plan or an extended term loan; (2) deleting the words "following the expiration of any applicable record retention periods" from the first sentence of 10 VAC 5-200-20 P; and (3) adding "print media proofs" to 10 VAC 5-200-85 E. Apart from also adding language to the text of the payday lending pamphlet in 10 VAC 5-200-80 to reflect the changes made to 10 VAC 5-200-20 H, the Bureau otherwise recommended that the Commission adopt the proposed regulations as proposed.
NOW THE COMMISSION, having considered the proposed regulations, the comments filed, the Bureau's Statements of Position, the record herein, and applicable law, concludes that the proposed regulations should be modified to incorporate certain suggestions that were made by commenters and the Bureau. The Commission further concludes that the proposed regulations, as modified, should be adopted with an effective date of May 1, 2014, so that licensees have a reasonable period of time in which to implement the amendments to the regulations.
(1) The proposed regulations, as modified herein and attached hereto, are adopted effective May 1, 2014.
AN ATTESTED COPY hereof, together with a copy of the attached regulations, shall be sent by the Clerk of the Commission to the Commission's Office of General Counsel and the Commissioner of Financial Institutions, who shall forthwith send a copy of this Order, together with a copy of
the attached regulations, to all licensed payday lenders and such other interested parties as he may designate.
1 We considered Ms. Witzel's comment and agree with the Bureau that adding "debit card" to the definition of "good funds instrument" in 10 VAC 5-200-10 does not conflict with the prohibition in 10 VAC 5-200-20 H. A borrower that uses a debit card to make a payment on a payday loan initiates the financial transaction, as opposed to the licensee initiating the payment and debiting the borrower's deposit account or otherwise obtaining funds from the borrower by electronic means.
10VAC5-200-10. Definitions.
"Act" means Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia.
"Business day" for purposes of clause 1 (vi) of § 6.2-1816 of the Code of Virginia and this chapter means a day on which the licensee's office is open for business as posted as required by subsection A of 10VAC5-200-70.
"Duplicate original" for purposes of subdivision 2 of § 6.2-1816 of the Code of Virginia and this chapter means an exact copy of a signed original, an exact copy with signatures created by the same impression as the original, or an exact copy bearing an original signature.
"Good funds instrument" for purposes of clause 1 (vi) of § 6.2-1816 of the Code of Virginia and this chapter means a certified check, cashier's check, money order or, if the licensee is equipped to handle such payments, payment effected by use of a credit card, prepaid card, or debit card.
"Liquid assets" for purposes of the Act and this chapter means cash on hand and in depository institutions, money market funds, commercial paper, and treasury bills.
"Member of the military services of the United States" for purposes of the Act and this chapter means a regular or reserve member of the United States Army, Navy, Marine Corps, Air Force, Coast Guard, or National Guard serving on active duty under a call or order that does not specify a period of 30 days or fewer.
"Other dependent of a member of the military services of the United States" for purposes of the Act and this chapter means (i) an individual under the age of 18 whose mother or father is a member of the military services of the United States or (ii) an individual for whom a member of the military services of the United States provided more than one-half of the individual's financial support for 180 days immediately preceding the date the individual applied for a payday loan.
"Prepaid card" for purposes of the Act and this chapter means a card with a network logo (e.g., Visa, MasterCard, American Express, or Discover) that is used by a cardholder to access money that has been loaded onto the card in advance.
"Short-maturity loan," as used in the definition of "payday loan" in § 6.2-1800 of the Code of Virginia, means a loan with a term not exceeding 120 days.
"Small," as used in the definition of "payday loan" in § 6.2-1800 of the Code of Virginia, means $2,500 or less.
B. Other terms used in this chapter shall have the meaning set forth in § 6.2-1800.
10VAC5-200-20. Requirements for licensees; operating rules; acquisitions.
A. A licensee shall maintain unencumbered liquid assets per place of business in Virginia of at least $25,000 at all times. The bureau may require submission of proof of maintenance of such liquid assets at any time minimum liquid assets required to be maintained pursuant to this subsection shall be separate and apart from, and in addition to, any minimum liquid assets that the licensee is required to maintain in connection with any other business conducted in the same office.
B. Any person submitting an application to acquire, directly or indirectly, 25% or more of the voting shares of a corporation or 25% or more of the ownership of any other person licensed to conduct business under the Act shall pay a nonrefundable application fee of $500.
C. Each original license shall be prominently posted in each place of business of the licensee. In order for a licensee to receive a replacement or reissued license, a licensee shall pay a fee of $50 per place of business to the commission. Licenses will only be replaced or reissued if the licensee is in compliance with all laws and regulations applicable to the conduct of the licensee's business.
D. If a person has filed a bond with the bureau, as required by § 6.2-1804 of the Code of Virginia, such bond shall be retained by the bureau notwithstanding the occurrence of any of the following events:
2. The person ceases engaging in business as a payday lender.
E. Upon becoming licensed, a licensee shall give written notice to the bureau of its commencement of business within 10 days thereafter.
F. For purposes of clause 1 (v) of § 6.2-1816 of the Code of Virginia, the number of days in a borrower's pay cycle and the corresponding minimum loan term shall be determined by a licensee in accordance with the following:
1. If a borrower is paid on a weekly or more frequent basis, there are seven days in the borrower's pay cycle and the minimum loan term shall be 14 days.
2. If a borrower is paid on a biweekly basis, there are 14 days in the borrower's pay cycle and the minimum loan term shall be 28 days.
3. If a borrower is paid on a semimonthly basis, there are 15 days in the borrower's pay cycle and the minimum loan term shall be 31 days.
4. If a borrower is paid on a monthly basis, there are 30 days in the borrower's pay cycle and the minimum loan term shall be 62 days.
5. If a borrower is paid either (i) less frequently than monthly, or (ii) on an irregular basis (but less frequently than weekly), there are 30 days in the borrower's pay cycle and minimum loan term shall be 62 days.
G. A licensee shall retain supporting documentation for a borrower's pay cycle in each loan file, which may consist of (i) a copy of a borrower's pay stub or similar periodic earnings statement that clearly reflects the borrower's pay cycle, or (ii) a representation by the borrower in the written loan application.
H. A licensee shall not (i) electronically debit a borrower's deposit account or otherwise obtain any funds from a borrower by electronic means, including the use of the Automated Clearing House network, electronic funds transfers, electronic check conversions, or re-presented check entries; or (ii) obtain any agreement from a borrower that gives the licensee or a third party the authority to create or otherwise prepare a check that is drawn upon the borrower's account at a depository institution. [ However, this subsection shall not be construed to prohibit a licensee from printing a replacement security check on behalf of a borrower, at the borrower's request, at such time that the borrower is present in the licensed office and makes a payment on an extended payment plan or an extended term loan. A replacement security check shall be (i) dated as of the date the loan or final installment is due, (ii) issued for the remaining amount owed to the licensee, (iii) manually signed by the borrower, and (iv) exchanged for the check that was previously held as security. ]
I. With the exception of the check given by a borrower to a licensee as security for a payday loan, a licensee shall not collect or receive from a borrower any interest or fees permitted by § 6.2-1817 of the Code of Virginia, either in whole or in part, prior to the date of loan maturity unless the borrower is voluntarily making a full or partial prepayment pursuant to 10VAC5-200-40. If a borrower enters into an extended payment plan or extended term loan, a licensee shall not collect or receive any interest or fees, either in whole or in part, prior to the due date of a scheduled installment unless the borrower is voluntarily making a payment in advance.
J. The amount of the check given by a borrower to a licensee as security for a payday loan shall not exceed the sum of the principal amount advanced to the borrower and the interest and fees permitted by § 6.2-1817 of the Code of Virginia. If a borrower enters into an extended payment plan at the time a loan is obtained, the amount of the check shall not include any interest.
K. Upon satisfaction of a loan or upon learning that a loan has been satisfied, a licensee shall attach to each loan agreement either (i) a copy of the signed and dated receipt for the payment that satisfied the loan or (ii) if a judgment was obtained and satisfied, a copy of the judgment marked satisfied.
L. Except as otherwise provided in subdivision B 2 of 10VAC5-200-33 or subdivision D 1 of 10VAC5-200-35, the check used to secure a payday loan shall be dated as of the date the loan is due. A licensee shall not deposit or otherwise present for payment a check given as security for a loan, including an extended term loan or a loan that a borrower elected to repay by means of an extended payment plan, prior to the date stated on the face of the check. A licensee shall not require or accept multiple checks or any additional or alternative security in connection with a payday loan.
M. If a borrower (i) cancels a loan in accordance with subsection G of 10VAC5-200-40, or (ii) repays a loan in full with cash or [ a ] good funds instrument and not with the check securing the loan, the licensee shall immediately return the check given as security for the loan to the borrower.
N. A licensee or former licensee shall provide the following information to the bureau within 10 days after such person's license is surrendered or revoked or the licensed business is otherwise closed: (i) the names, addresses, telephone numbers, fax numbers, and email addresses of a designated contact person, the person responsible for updating information in the payday lending database, and the person who consumers may contact to make payment arrangements for outstanding payday loans; (ii) the location of the licensee's or former licensee's payday loan records; and (iii) any additional information that the bureau may reasonably require. A licensee or former licensee shall maintain current information with the bureau until the licensee or former licensee has no outstanding payday loans.
O. A person shall remain subject to the provisions of the Act and this chapter applicable to licensees in connection with all payday loans that the person made while licensed as a payday lender notwithstanding the occurrence of any of the following events:
2. The person ceases making payday loans.
P. If a licensee or former licensee disposes of records containing a consumer's personal financial information, [ following the expiration of any applicable record retention periods ] such records shall be shredded, incinerated, or otherwise disposed of in a secure manner. A licensee or former licensee may arrange for service from a business record destruction vendor.
Q. Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the Commissioner of Financial Institutions describing the event and its expected impact, if any, on the activities of the licensee in Virginia:
4. Any local, state, or federal governmental authority (i) revokes or suspends the licensee's payday lender license, deferred presentment license, or similar license; (ii) takes formal administrative, regulatory, or enforcement action against the licensee relating to its payday lending, deferred presentment, or similar business; or (iii) takes any other action against the licensee relating to its payday lending, deferred presentment, or similar business where the total amount of restitution or other payment from the licensee exceeds $20,000. A licensee shall not be required to provide the Commissioner of Financial Institutions with information about such event to the extent that such disclosure is prohibited by the laws of another state.
5. Based on allegations by any local, state, or federal governmental authority that the licensee violated any law or regulation applicable to the conduct of its licensed payday lending, deferred presentment, or similar business, the licensee enters into, or otherwise agrees to the entry of, a settlement or consent order, decree, or agreement with or by such governmental authority.
6. The licensee surrenders its license to engage in payday lending, deferred presentment, or similar business in another state in lieu of threatened or pending license revocation, license suspension, or other administrative, regulatory, or enforcement action.
7. The licensee is denied a license to engage in payday lending, deferred presentment, or similar business in another state.
R. Pursuant to subsection B of § 6.2-1801 of the Code of Virginia, a licensee shall not make a payday loan that has been arranged or brokered by another person. This provision shall not be construed to prohibit a licensee from originating payday loans through its own employees.
S. A licensee shall comply with all federal laws and regulations applicable to the conduct of its business, including but not limited to the Truth in Lending Act (15 USC § 1601 et seq.), Regulation Z (12 CFR Part 1026), the Equal Credit Opportunity Act (15 USC § 1691 et seq.), Regulation B (12 CFR Part 1002), and the Standards for Safeguarding Customer Information (16 CFR Part 314).
T. A licensee shall not obtain or receive a personal identification number (PIN) for a credit card, prepaid card, debit card, or any other type of card in connection with a payday loan transaction.
U. A licensee shall not provide any information to a borrower or prospective borrower that is false, misleading, or deceptive.
V. A licensee shall not engage in any activity that directly or indirectly results in an evasion of the provisions of the Act or this chapter.
10VAC5-200-35. Five payday loans within 180 days.
A. A borrower obtaining a fifth payday loan within any rolling 180-day period may elect, at the option of the borrower, (i) to repay the loan through an extended payment plan, unless the borrower previously elected an extended payment plan within the preceding 12 months, or (ii) to obtain the loan in the form of an extended term loan.
B. If a borrower does not obtain an extended payment plan or extended term loan in connection with his fifth payday loan in 180 days, the borrower shall not be eligible for another payday loan until 45 days after the date the fifth payday loan is paid or otherwise satisfied in full.
C. If a borrower previously obtained an extended payment plan within the preceding 12-month period, the borrower shall not be eligible to repay a fifth payday loan obtained in any rolling 180-day period by means of an extended payment plan. However, if an eligible borrower elects to repay a fifth payday loan obtained in any rolling 180-day period by means of an extended payment plan, the provisions of 10VAC5-200-33 shall apply. A borrower who elects to repay such loan by means of an extended payment plan shall not be eligible for another payday loan until 90 days after the borrower has repaid or satisfied in full the balance of the loan.
D. The following provisions shall apply to extended term loans.
1. An extended term loan is a payday loan, as this term is defined in § 6.2-1800 of the Code of Virginia. As with other payday loans, an extended term loan shall be secured by a check that does not exceed the sum of the principal amount advanced to the borrower and the interest and fees permitted by § 6.2-1817 of the Code of Virginia. The check used to secure an extended term loan shall be dated as of the date the final installment is due. A licensee shall not require or accept multiple checks or any additional or alternative security in connection with an extended term loan. A borrower shall have the option of exchanging security checks with a licensee at the time the borrower makes a payment on an extended term loan. If a borrower wishes to exchange security checks, a licensee shall upon receipt of the payment return the check held as security to the borrower and the borrower shall deliver to the licensee a replacement security check, dated as of the date the final installment is due, for the remaining amount owed to the licensee.
2. If an eligible borrower elects an extended term loan, a licensee shall permit the borrower to repay the amount owed in four equal installments over a term of 60 days. The dollar amount of each installment shall be the same and the installment due dates shall be spread out evenly over the term of the extended term loan (i.e., an installment shall be due every 15 days).
3. The terms of an extended term loan shall be set forth in a written agreement signed and dated by the borrower. An eligible borrower may elect the extended term loan option only on the date a payday loan is made.
4. A borrower who obtains an extended term loan shall not be eligible for another payday loan during the longer of 90 days following the date the extended term loan is paid or otherwise satisfied in full, or 150 days following the date the extended term loan is obtained. Subject to one of the applicable waiting periods associated with a fifth loan in any rolling 180-day period, a borrower may be eligible for consecutive extended term loans or multiple extended term loans in any rolling 12-month period.
5. A licensee shall immediately give a borrower receipts, signed and dated by the licensee, for all payments made in connection with an extended term loan. The receipts shall also state the loan balance due after each payment.
6. A licensee shall retain the written and signed extended term loan agreement and provide the borrower with a duplicate original. A licensee shall also retain copies of receipts provided in accordance with subdivision 5 of this subsection. Upon full repayment or satisfaction of an extended term loan, a licensee shall mark the original extended term loan agreement with the word "paid" or "canceled," return it to the borrower, and retain a copy in its loan records.
E. A licensee shall provide notice to borrowers of the potential availability of the extended term loan option in accordance with the provisions of this subsection.
1. A licensee shall conspicuously post in each licensed location a written notice in at least 24-point bold type informing borrowers that they may be eligible to obtain an extended term loan. The minimum size for such written notice shall be 24 inches by 18 inches.
2. The title of the written notice, which shall appear in at least 48-point bold type, shall be "NOTICE – EXTENDED TERM LOANS AVAILABLE TO BORROWERS OBTAINING A FIFTH PAYDAY LOAN WITHIN 180 DAYS."
The Payday Loan Act Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia gives borrowers obtaining their fifth payday loan within 180 days the option to receive it in the form of an extended term loan. An extended term loan is a payday loan under which you are permitted to repay the amount you owe in four equal installments spread out evenly over a term of 60 days. You may obtain an extended term loan even if you previously obtained another extended term loan or an extended payment plan. If you want an extended term loan, you must choose this option on the date you obtain the payday loan. When you make a payment on an extended term loan, you will have the option of providing a replacement security check for the remaining amount you owe. Please be advised that if you obtain an extended term loan, you will not be permitted to get another payday loan from any lender for a period of 90 days after you fully repay or satisfy the extended term loan or 150 days after you obtain the extended term loan (whichever is longer). However, even if you do not choose an installment payment arrangement, you will still be unable to obtain another payday loan from any lender for a period of 45 days after you fully repay or satisfy your fifth payday loan.
4. If the payday lending database referred to in 10VAC5-200-110 advises a licensee that an applicant is eligible for an extended term loan, the licensee shall immediately provide oral notice to the applicant that (i) the applicant is eligible to obtain an extended term loan; (ii) information about extended term loans may be found on the poster in the licensee's office or in the "Borrower Rights and Responsibilities" pamphlet; and (iii) the licensee is available to answer any questions that the applicant may have about extended term loans. When providing this notice, the licensee shall also direct the applicant to the specific locations of both the poster referred to in subdivision 1 of this subsection and the section of the pamphlet entitled "Five Payday Loans within 180 days." In addition, if the payday lending database advises a licensee that an applicant is eligible for an extended payment plan, the licensee shall also comply with subdivision C 4 of 10VAC5-200-33.
F. Payday loans made prior to January 1, 2009, shall not be considered for purposes of determining how many loans a borrower obtained in any rolling 180-day period.
10VAC5-200-50. Responding to requests from the Bureau of Financial Institutions; providing false, misleading, or deceptive information.
A. When the bureau requests a written response, books, records, documentation, or other information from a licensee in connection with the bureau's investigation, enforcement, or examination of compliance with applicable laws, the licensee shall deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the bureau's request. If no time period is specified, a written response as well as any requested books, records, documentation, or information shall be delivered by the licensee to the bureau not later than 30 days from the date of such request. In determining the specified time period for responding to the bureau and when considering a request for an extension of time to respond, the bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation, or information, and such other factors as the bureau determines to be relevant under the circumstances.
C. Requests made by the bureau pursuant to subsection A are deemed to be in furtherance of the bureau's investigation and examination authority provided for in § 6.2-1813 of the Code of Virginia. Failure to comply with subsection A or any violation of subsection B may result in fines civil penalties, license suspension, or license revocation.
10VAC5-200-60. Posting of charges.
A. A licensee shall conspicuously post in its licensed location a schedule of payments, fees and interest charges, with examples using (i) a $300 loan payable in 14 days; (ii) a $300 loan payable in 30 days; (iii) a $300 loan payable in 31 days; (iv) a $300 loan payable in 62 days; (v) a $300 loan payable through an extended payment plan that is elected on the date the loan is obtained; (vi) a $300 loan payable through an extended payment plan that is elected on the 15th day of a 31-day term; and (vii) (v) a $300 extended term loan. A licensee may post additional examples when posting the information required by this subsection.
B. A licensee shall display its fees and interest charges not only as a dollar amount, but also as an Annual Percentage Rate, which shall be stated using this term, calculated in accordance with Federal Reserve Board Regulation Z (12 CFR 226.1 et seq. Part 1026).
The required text of the payday lending pamphlet referred to in 10VAC5-200-30 is as follows:
Please take the time to carefully review the information contained in this pamphlet. It is designed to advise you of your rights and responsibilities in connection with obtaining a payday loan in Virginia under the Payday Loan Act, § 6.1-444 et seq. Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia. If you have any questions about payday lending or want additional information, you may contact the Virginia State Corporation Commission's Bureau of Financial Institutions toll-free at (800) 552-7945 or on the Internet at http://www.scc.virginia.gov/bfi. The Bureau of Financial Institutions has available a "Consumer Guide to Payday Lending" that may be viewed at this website or obtained by calling the toll-free telephone number listed above.
In General: You are responsible for evaluating whether a payday loan is right for you. Alternatives may include among other things less expensive short-term financing from another financial institution, family, or friends, a cash advance on a credit card, an account with overdraft protection, or a loan repayable over several months.
Advertisements: A lender is prohibited from sending you an envelope or other written material that gives the false impression that it is an official communication from a governmental entity, unless it is required by the United States Postal Service.
Notice from Lender: The lender is required to provide you with a clear and conspicuous printed notice advising you that a payday loan is not intended to meet long-term financial needs and that you should use a payday loan only to meet occasional or unusual short-term cash needs.
Information from Lender: Virginia law prohibits the lender from providing you with any false, misleading, or deceptive information.
Payday Lending Database: Before making a payday loan to you, a lender is required by Virginia law to access a database that contains detailed information about payday loans made to Virginia residents by all lenders licensed to do business in Virginia. The database will inform the lender whether you are eligible for a payday loan. The Bureau of Financial Institutions is unable to advise you of your eligibility for a payday loan. If you are ineligible for a payday loan, the lender will provide you with the toll-free telephone number of the database provider, which you can use to find out the specific reason for your ineligibility. To enable the lender to check the database, you will be required to provide the lender with a written loan application and your original driver's license or identification card issued by a state driver's licensing authority (e.g., Department of Motor Vehicles for the Commonwealth of Virginia). If you wish to obtain a payday loan but do not have a driver's license or identification card, you will need to obtain a driver's license or identification card from the driver's licensing authority in your home state.
It is important to note that the previous or outstanding payday loans referred to above include loans made by the same lender as well as any other lender conducting payday lending business in Virginia.
Prohibition on Loans to Members of the Military and their Spouses and Dependents: Virginia law prohibits lenders from making payday loans to members of the military services of the United States as well as their spouses and dependents. If you are a regular or reserve member of the United States Army, Navy, Marine Corps, Air Force, Coast Guard, or National Guard serving on active duty under a call or order that does not specify a period of 30 days or fewer, the lender is prohibited from making a payday loan to you. The lender is also prohibited from making a loan to you if (i) you are married to such a member, (ii) you are less than 18 years old and the son or daughter of such a member, or (iii) more than one-half of your financial support for the past 180 days was provided by such a member.
Limitations on Security Interest / Prohibition on Obtaining Funds Electronically / Obtaining PINs: The lender cannot require you to provide more than one check as security for any payday loan. The check must be dated as of the date your loan is due. The lender cannot require you to provide any security for your payday loan other than a check payable to the lender. The lender is also prohibited from electronically debiting your deposit account or obtaining any of your funds by electronic means. The lender also cannot obtain any agreement from you that gives the lender or a third party the authority to prepare a check that is drawn upon your deposit account. Additionally, the lender is prohibited from obtaining or receiving a personal identification number (PIN) for a credit card, prepaid card, debit card, or any other type of card in connection with your loan.
One Loan at a Time / $500 Maximum: The lender cannot have more than one loan outstanding to you at any one time. If you currently have an outstanding payday loan from any lender, you cannot obtain another payday loan. The maximum loan amount is $500.
Minimum Loan Term: Under Virginia law, your loan term must be at least twice as long as your pay cycle. For example, if you are paid on a weekly basis, your minimum loan term would be 14 days.
Fees, Charges, and Interest: The lender is permitted to charge you (i) interest at a simple annual rate of 36%, (ii) a loan fee not exceeding 20% of the amount of money advanced to you (i.e., $20 per $100 advanced), and (iii) a verification fee not exceeding $5.00. For example, if the lender advances you $300 for 31 days, the lender may charge you up to $9.30 interest, a loan fee of $60, and a verification fee of $5.00 for a total of $74.30. If the lender advances you $300 for 62 days, the lender may charge you up to $18.60 interest, a loan fee of $60, and a verification fee of $5.00 for a total of $83.60. Other than the specific fees and costs discussed in the section of this pamphlet entitled "Failure to Repay" (see below), no additional amounts may be directly or indirectly charged, contracted for, collected, received, or recovered by the lender.
You will receive your loan proceeds in the form of either cash or a check from the lender. The lender cannot charge you a fee for cashing their check. Similarly, a check casher affiliated with the lender cannot charge you a fee for cashing the lender's check.
Written Agreement: The lender must provide you with a written loan agreement, which must be signed by both you and an authorized representative of the lender. The loan agreement is a binding, legal document that requires you to repay the loan. Make sure you read the entire loan agreement carefully before signing and dating it. The lender must provide you with a duplicate original of the loan agreement at the time of your loan transaction. If any provision of your loan agreement violates the Payday Loan Act (§ 6.1-444 et seq. Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia) Virginia, the provision will not be enforceable against you.
Extended Payment Plans: Under Virginia law eligible borrowers have the option of repaying a payday loan by means of an extended payment plan. You may only obtain an extended payment plan once in any rolling 12-month period (even if you obtain loans from different lenders or locations). You may obtain an extended payment plan at any time on or after the date that you received your loan through the date that your loan is due to be repaid.
Under an extended payment plan, you are permitted to repay the amount you owe in at least four equal installments spread out evenly over a term of at least 60 days. You will not be charged any additional interest or fees in connection with an extended payment plan, and interest will not accrue during the term of an extended payment plan.
If you obtain an extended payment plan, you will not be able to get another payday loan from any lender for a period of 90 days after you fully repay or satisfy the extended payment plan.
Five Payday Loans within 180 Days: If you are obtaining a fifth payday loan within a rolling 180-day period, you have the option to (i) repay the fifth loan through an extended payment plan, unless you previously obtained an extended payment plan within the preceding 12 months, or (ii) obtain the loan in the form of an extended term loan.
You do not have to choose either one of these options. However, even if you do not obtain an extended payment plan or extended term loan, you will not be able to obtain another payday loan from any lender for a period of 45 days after you fully repay or satisfy your fifth payday loan.
Extended payment plans are discussed above. If you are eligible to repay your fifth payday loan by means of an extended payment plan and choose to do so, you will not be able to obtain another payday loan from any lender for a period of 90 days after you fully repay or satisfy the extended payment plan.
An extended term loan is a payday loan under which you are permitted to repay the amount you owe in four equal installments spread out evenly over a term of 60 days. You may obtain an extended term loan even if you previously obtained another extended term loan or an extended payment plan. If you want an extended term loan, you must choose this option on the date you obtain the payday loan. If you obtain an extended term loan, you will not be able to get another payday loan from any lender for a period of 90 days after you fully repay or satisfy the extended term loan or 150 days after you obtain the extended term loan (whichever is longer).
Other Businesses: A lender is prohibited by statute from engaging in other businesses, besides check cashing, unless permitted by order of the State Corporation Commission. A lender is also prohibited by statute from selling you any type of insurance coverage.
Loans for Other Products & Services: You are prohibited from using any of the money from your payday loan to purchase any other product or service sold at the lender's business location.
Right to Cancel: You have the right to cancel your loan at any time prior to the close of business on the next day the lender is open following the date your loan is made by paying the lender the amount advanced to you in cash, certified check, cashier's check, money order or, if the lender is equipped to handle such payments, by using a credit card, prepaid card, or debit card.
Partial Payments and Prepayments: You have the right to make partial payments (in increments of not less than $5.00) on your payday loan at any time prior to its specified due date without penalty. If you make a partial payment, the total interest and loan fee you pay will be reduced (unless you have an extended payment plan or extended term loan -- see "Payments on Extended Payment Plans and Extended Term Loans" below). You have the right to receive signed, dated receipts for each payment made along with a statement of the balance remaining on your payday loan. You also have the right to prepay your loan in full before its specified due date without penalty by paying the lender in cash, certified check, cashier's check, money order or, if the lender is equipped to handle such payments, by use of a credit card, prepaid card, or debit card, the amount of money advanced to you as well as any accrued and unpaid interest and fees.
Payments on Extended Payment Plans and Extended Term Loans: You have the right to prepay an extended payment plan or extended term loan without penalty. However, unless it results in the prepayment in full of an extended payment plan or extended term loan, a partial payment, excess payment, installment payment, or other payment you give to the lender in advance of the date the funds are due does not result in either a change to your payment schedule or a pro-rata adjustment of the total interest, if any, or loan fee that you will be required to pay. Payments you make on an extended payment plan or extended term loan are first applied to any past due installment and then to your next regularly scheduled installment. The lender must give you receipts, signed and dated by the lender, for all payments you make on an extended payment plan or extended term loan. When you make a payment on an extended payment plan or extended term loan, you have the option to give the lender a replacement security check for the remaining amount you owe. [ At your request, the lender may print a replacement security check on your behalf when you are in the lender's office and make a payment on an extended payment plan or extended term loan. ]
Lender to Return Original Loan Agreement: Upon repayment of your loan in full, the lender must mark your original loan agreement with the word "paid" or "canceled" and return it to you. If you obtained an extended payment plan, the lender is also required to mark your original extended payment plan document with the word "paid" or "canceled" and return it to you.
Lender to Return Security Check: If you cancel your loan (see "Right to Cancel" above) or repay it in full with cash or by certified check, cashier's check, money order or, if the lender is equipped to handle such payments, by using a credit card, prepaid card, or debit card, the lender must immediately return the check you gave as security for the loan.
No Rollovers, Extensions, Etc.: The lender cannot refinance, renew, extend, or rollover your payday loan.
Failure to Repay: Pay back your loan! Know when your payment is due and be sure to repay your loan on time and in full. You are responsible for having sufficient funds in your checking account on the due date of your loan so that your check does not bounce if the lender deposits it in his account. If you do not repay your loan by the specified due date, the lender may begin accruing interest on the principal amount of your loan at a maximum rate of 6.0% per year.
In collecting or attempting to collect a payday loan, the lender is required to comply with the restrictions and prohibitions applicable to debt collectors contained in the Fair Debt Collection Practices Act, 15 USC § 1692 et seq., regarding harassment or abuse, false or misleading misrepresentations, and unfair practices in collections. The lender is also prohibited from threatening or beginning criminal proceedings against you if a check you provide to the lender bounces. If a lender knowingly violates this prohibition, the lender is required to pay you a civil monetary penalty equal to three times the amount of the dishonored check.
If you cannot or do not repay the loan: (i) the lender is permitted to recover from you any fee charged to the lender (maximum of $25) as a result of your check being returned due to your account being closed by you or containing insufficient funds, or if you stopped payment on your check; and (ii) if the lender seeks and obtains judgment against you as a result of your returned check, the lender may obtain court costs and reasonable attorney's fees (total may not exceed $250) if such costs and fees are awarded by the court.
The lender cannot file or initiate a legal proceeding against you until 60 days after the date that you default on a payday loan, including a default under an extended payment plan or extended term loan. During this 60-day period the lender may voluntarily enter into a repayment arrangement with you.
Legal Action Against Lender: You have the right to bring a civil action against the lender if you suffer a loss as a result of the lender violating any provision of the Payday Loan Act Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia. If you are successful in your civil action, you have the right to be reimbursed for reasonable attorney's fees, expert witness fees, and court costs you have incurred in connection with your civil action. Losses suffered as the result of the lender's violation of the Payday Loan Act Chapter 18 of Title 6.2 of the Code of Virginia may also be pursued under the Virginia Consumer Protection Act (§ 59.1-196 et seq. of the Code of Virginia), which in some cases permits consumers to recover actual and punitive damages.
Complaints and Contacting the Bureau of Financial Institutions: For assistance with any complaints you may have against a payday lender, please contact the Bureau of Financial Institutions toll free at (800) 552-7945 or on the Internet at http://www.scc.virginia.gov/bfi. Complaints must be filed in writing with the Bureau of Financial Institutions and include copies of supporting documentation. Complaints should be mailed to Bureau of Financial Institutions, Attn: Complaints, P.O. Box 640, Richmond, Virginia 23218-0640, or faxed to Bureau of Financial Institutions, Attn: Complaints, at (804) 371-9416.
E. Every licensee shall retain for at least three years after it is last published, delivered, transmitted, or made available, an example of every advertisement used, including but not limited to solicitation letters, [ print media proofs, ] commercial scripts, and recordings of all radio and television broadcasts, but excluding copies of Internet web pages.
C. Prior After receiving a completed written loan application but prior to making a payday loan, a licensee shall transmit the following information to the database for purposes of determining whether an applicant is eligible for a payday loan. The licensee shall obtain the applicant information required by this subsection in accordance with the provisions of subsection D of this section.
D. 1. A licensee shall obtain the information required by subdivisions C 4, 5, 6, and 7, and 8 of this section directly from the applicant's unexpired original driver's license or identification card issued by a state driver's licensing authority (e.g., Department of Motor Vehicles for the Commonwealth of Virginia), regardless of whether the information on the driver's license or identification card is still accurate. A licensee shall not accept photocopies, facsimiles, or other reproductions of a driver's license or identification card.
c. If a licensee makes a payday loan pursuant to subdivision L 3 of this section subsection, then the licensee shall transmit to the database the information required by this section no later than the time the licensee closes for business on the date that the database becomes accessible to the licensee, via either the Internet or the database provider's alternative means of database access.
N. By the close of business on each business day, a licensee shall transmit to the database the total daily number (even if 0) of individuals who were unable to obtain payday loans from the licensee because they are members of the military services of the United States or the spouses or other dependents of members of the military services of the United States. If the licensee is unable to access the database due to technical problems beyond the licensee's control, then the licensee shall transmit to the database the information required by this subsection no later than the time the licensee closes for business on the next business day that the licensee is able to access the database. The licensee shall also document in its records the technical problems it experienced and the date and time that it sought to transmit the information to the database.
O. N. A licensee shall have limited access to the information contained in the database. The database shall only provide a licensee with the following information: (i) whether an applicant is eligible for a new payday loan; (ii) if an applicant is ineligible for a new payday loan, the general reason for the ineligibility (e.g., the database may state that the applicant has an outstanding payday loan but it shall not furnish any details regarding the outstanding loan); and (iii) if an applicant is eligible for a new payday loan, whether the applicant is also eligible for an extended payment plan or extended term loan. The database shall also permit a licensee to access information that the licensee is required to transmit to the database provided that such access is for the sole purpose of verifying, updating, or correcting the information. Except as otherwise provided in this subsection or 10VAC5-200-113, a licensee shall be prohibited from accessing or otherwise obtaining any information contained in or derived from the database.
P. O. If the Commissioner of Financial Institutions determines that a licensee or former licensee has ceased business but still has one or more outstanding payday loans that cannot be repaid due to the licensee's or former licensee's closure, the Commissioner of Financial Institutions may authorize the database provider to mark administratively close the outstanding loans as satisfied in the database in order to enable the affected borrowers to obtain payday loans in the future. A licensee or former licensee shall be deemed by the Commissioner of Financial Institutions to have ceased business if it (i) fails to respond to the bureau after two written requests mailed to the address on file with the bureau or (ii) fails to maintain its contact information in accordance with subsection N of 10VAC5-200-20.
Q. P. 1. Except as provided in subsection F of 10VAC5-200-35, payday Payday loans made on or after October 1, 2008, and prior to January 1, 2009, that remain remained outstanding on January 1, 2009, shall be considered for purposes of determining a borrower's eligibility for a payday loan. Accordingly, on or before January 1, 2009, a licensee shall transmit the following information to the database in connection with every payday loan made on or after October 1, 2008, that will or may be outstanding as of January 1, 2009:
a. Name of licensee and license number.
b. Office location of licensee.
c. First and last name or identification number of employee entering information into the database.
d. Borrower's first and last name.
e. Last four digits of borrower's driver's license number or identification card number.
f. Borrower's address.
g. Borrower's date of birth.
h. Date loan funds were disbursed.
i. Date loan is due.
2. A licensee shall obtain and retain the borrower information required by this subsection in accordance with the provisions of subsection D of this section.
3. 2. For every payday loan made on or after October 1, 2008, that remains remained outstanding as of January 1, 2009, a licensee shall (i) transmit to the database all applicable information required by subsection J of this section within the time prescribed therein or January 1, 2009, whichever is later and (ii) retain the photocopies specified in subdivision D 2 of this section in accordance with § 6.2-1809 of the Code of Virginia.
10VAC5-200-113. Limited disclosure of data from payday lending database.
A. Pursuant to § 6.2-1810 of the Code of Virginia, the information contained in the payday lending database is confidential. However, provided that it does not directly or indirectly identify or pertain to any specific borrowers, licensees, or loan transactions, aggregate data and data that is otherwise derived from information contained in the database is not confidential and may be furnished by the database provider to the public. The database provider may charge and collect a fee to defray the cost of compiling and furnishing such data.
B. The database provider shall notify the bureau prior to furnishing data pursuant to this section.
VA.R. Doc. No. R14-3844; Filed March 27, 2014, 4:43 p.m.