Source: http://register.dls.virginia.gov/details.aspx?id=2762
Timestamp: 2019-08-18 19:51:38
Document Index: 781968453

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Vol. 28 Iss. 20 (Final Regulation) 10VAC5-200, Payday Lending June 04, 2012
Titles of Regulations: 10VAC5-190. Common Trust Funds (amending 10VAC5-190-10).
10VAC5-200. Payday Lending (amending 10VAC5-200-10, 10VAC5-200-20, 10VAC5-200-30, 10VAC5-200-35, 10VAC5-200-40, 10VAC5-200-50, 10VAC5-200-70, 10VAC5-200-75, 10VAC5-200-110, 10VAC5-200-115, 10VAC5-200-120).
Agency Contact: Todd Rose, Senior Counsel, General Counsel's Office, State Corporation Commission, P.O. Box 640, Richmond, VA 23218, telephone (804) 371-9107, FAX (804) 371-9211, or email todd.rose@scc.virginia.gov.
Several chapters of Title 10 of the Virginia Administrative Code pertaining to Finance and Financial Institutions are updated to replace references to Title 6.1 of the Code of Virginia with references to Title 6.2 of the Code of Virginia to reflect the recodification of Title 6.1 of the Code of Virginia in the fall of 2010.
10VAC5-190-10. Definition of terms.
"Common trust fund" shall have the meaning set forth in § 6.1-30.1 6.2-1009 of the Code of Virginia.
"Common trust fund" will be equivalent in meaning to the term "collective investment fund" used in the regulations of the Comptroller of the Currency (12 CFR 9.18) and will include the following types of fund: (i) a fund maintained by a bank exclusively for the collective investment and re-investment of moneys contributed thereto by the bank in its capacity as trustee, executor, administrator, guardian, or custodian under a uniform gifts-to-minors act, and (ii) a fund consisting solely of assets of retirement, pensions, profit-sharing, stock-bonus, or other such trusts.
Funds described in (i) above will be referred to herein as "fiduciary funds," and funds described in (ii) will be called "employee benefit trusts."
"Act" means the Payday Loan Act (§ 6.1-444 et seq. of the Code of Virginia) 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 § 6.1-459 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 § 6.1-459 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 § 6.1-459 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.
"Small," as used in the definition of "payday loan" in § 6.1-444 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 § 6.1-444 of the Act 6.2-1800.
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.
D. If a person has filed a bond with the bureau, as required by § 6.1-448 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:
F. For purposes of clause 1 (v) of § 6.1-459 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:
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 § 6.1-460 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 § 6.1-460 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.
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 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.
10VAC5-200-30. Notice and payday lending pamphlet.
A. Before entering into a payday loan transaction, a licensee shall provide each prospective borrower with a pamphlet which explains the borrower's rights and responsibilities. This pamphlet shall use the exact language appearing in the "Payday Lending Pamphlet" set forth in 10VAC5-200-80. The form shall be printed or typed without alteration separate from all other papers or documents obtained by the licensee in type of size not less than that known as 12 point. The title of the pamphlet ("Payday Lending in the Commonwealth of Virginia-Borrower Rights and Responsibilities") and the headings for the individual sections of the pamphlet (e.g., "In General," "Notice from Lender," "Limitations on Security Interest," etc.) shall be in bold-face print or type.
B. Prior to furnishing a prospective borrower with a loan application or receiving any information relating to loan qualification, a licensee shall provide each prospective borrower with a printed notice which states the following: "WARNING: A payday loan is not intended to meet long-term financial needs. It is recommended that you use a payday loan only to meet occasional or unusual short-term cash needs."
1. The notice and acknowledgement shall be printed or typed on 8-1/2 x 11 paper without alteration, be separate from all other papers or documents obtained by the licensee, and be in type not less than that known as 24 point. The notice must also contain an acknowledgement stating the following: "I acknowledge that I have received a copy of this notice and the pamphlet entitled "Payday Lending in the Commonwealth of Virginia-Borrower Rights and Responsibilities."
2. The notice must be signed and dated by each prospective borrower. A duplicate original of the acknowledged notice shall be kept in the separate loan file maintained with respect to the loan for the period specified in § 6.1-453 6.2-1809 of the Code of Virginia.
1. An extended term loan is a payday loan, as this term is defined in § 6.1-444 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 § 6.1-460 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.
The Payday Loan Act 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.
B. For purposes of the Act and this chapter, the interest and loan fee permitted by subsections A and B of § 6.1-460 6.2-1817 of the Code of Virginia shall be deemed accrued on a straight line basis over the term of a payday loan. A licensee shall calculate interest charges using either a 360-day year or a 365-day year. The verification fee permitted by subsection C of § 6.1-460 6.2-1817 of the Code of Virginia shall be deemed accrued in full at the time a payday loan is made.
10VAC5-200-50. Responding to requests from the Bureau of Financial Institutions.
B. 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 § 6.1-456 6.2-1813 of the Code of Virginia. Failure to comply with subsection A may result in fines, license suspension, or license revocation.
E. A licensee shall report, in accordance with § 6.1-455 6.2-1812 of the Code of Virginia, the institution of an action against the licensee under the Virginia Consumer Protection Act (§ 59.1-196 et seq. of the Code of Virginia) by the Attorney General or any other governmental authority.
10VAC5-200-75. Annual reporting requirements.
When making the annual report required by § 6.1-454 6.2-1811 of the Code of Virginia, in addition to other information required by the commissioner, licensees shall provide the following data:
1. The total number and dollar amount of payday loans made.
2. The total number of individual borrowers to whom loans were made.
3. The minimum, maximum, and average dollar amount of payday loans made.
4. The average annual percentage rate, and range of annual percentage rates, charged on payday loans made.
5. The average number of days, and the range of number of days, of the term of payday loans made.
6. The total number and dollar amount of borrower checks returned unpaid by the drawee depository institution.
7. The total number and dollar amount of returned checks ultimately paid.
8. The total number and dollar amount of returned checks charged off as uncollectible.
9. The total number and dollar amount of returned check fees collected from borrowers whose checks are returned for insufficient funds.
10. The total number of individual borrowers against whom lawsuits were instituted.
11. The number of individual borrowers who received more than one loan but less than 13 loans, and the number of individual borrowers who received 13 loans or more.
A. This section sets forth the rules applicable to the payday lending database referred to in § 6.1-453.1 6.2-1810 of the Code of Virginia.
C. 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 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.
2. If a payday loan (including an extended term loan or a loan that a borrower elected to repay by means of an extended payment plan) is repaid or otherwise satisfied in full, (i) the date of repayment or satisfaction, and (ii) the total net dollar amount ultimately paid by the borrower in connection with the loan (i.e., principal amount of loan plus all fees and charges received or collected pursuant to §§ 6.1-460 6.2-1817 and 6.1-461 6.2-1818 of the Code of Virginia, less any amount refunded to the borrower as a result of overpayment).
c. If a licensee makes a payday loan pursuant to subdivision L 3 of this section, 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.
O. 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, a licensee shall be prohibited from accessing or otherwise obtaining any information contained in or derived from the database.
P. If the Commissioner of Financial Institutions determines that a licensee has ceased business but still has one or more outstanding payday loans that cannot be repaid due to the licensee's closure, the Commissioner of Financial Institutions may authorize the database provider to mark the outstanding loans as satisfied in the database in order to enable the affected borrowers to obtain payday loans in the future.
Q. 1. Except as provided in subsection F of 10VAC5-200-35, payday loans made on or after October 1, 2008, and prior to January 1, 2009, that remain 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:
3. For every payday loan made on or after October 1, 2008, that remains outstanding as of January 1, 2009, a licensee shall 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.
10VAC5-200-115. Database inquiry fee.
Pursuant to subdivision B 4 of § 6.1-453.1 6.2-1810 of the Code of Virginia, a licensed payday lender shall pay a database inquiry fee to the database provider in connection with every payday loan consummated by the licensee. The amount of the database inquiry fee shall not exceed $5.00 per loan, which shall be remitted by each licensee directly to the database provider on a weekly basis.
10VAC5-200-120. Enforcement.
A. Failure to comply with any provision of the Act or this chapter may result in fines, license suspension, or license revocation.
B. Pursuant to § 6.1-467 6.2-1824 of the Code of Virginia, a licensee shall be subject to a separate fine of up to $1,000 for every violation of the Act, this chapter, or other law or regulation applicable to the conduct of the licensee's business. If a licensee violates any provision of the Act, this chapter, or other law or regulation applicable to the conduct of the licensee's business in connection with multiple loans or borrowers, the licensee shall be subject to a separate fine for each loan or borrower. For example, if a licensee makes five loans and the licensee violates two provisions of this chapter that are applicable to the five loans, the licensee shall be subject to a maximum fine of $10,000.
C. If a licensee (i) fails to transmit information to the payday lending database in accordance with the Act or 10VAC5-200-110, (ii) transmits incorrect information to the database, or (iii) transmits information to the database in an untimely manner, the licensee shall be subject to a separate fine under § 6.1-467 6.2-1824 of the Code of Virginia for each item of data that is omitted, incorrect, or untimely. For example, if a licensee makes three loans and fails to transmit two items of information to the database in connection with each of the three loans, the licensee shall be subject to a maximum fine of $6,000.
VA.R. Doc. No. R12-2586; Filed May 3, 2012, 3:06 p.m.