An Act To Amend the Maine Consumer Credit Code - Credit Services Organizations
Maine Legislature, Session 122, LD 0686
Committee: Insurance and Financial Services
Sponsors: BROMLEY, GLYNN, MAYO, MITCHELL, FISCHER, MILLETT, MOODY
Amends: 9-A MRSA §1, 9-A MRSA §10

Legislative Document 
No. 686 
S.P.222 
In Senate, February 8,2005 
An Act To Amend the Maine Consumer Credit Code - Credit 
Services Organizations 
Submitted by the Department of Professional and Financial Regulation pursuant to Joint 
Rule 204. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Senator BROMLEY of Cumberland. 
Cosponsored by Representative GLYNN of South Portland and 
JOY 1. O'BRIEN 
Secretary of the Senate 
Senators: MAYO of Sagadahoc, MITCHELL of Kennebec, Representatives: FISCHER of 
Presque Isle, MILLETT of Waterford, MOODY of Manchester. 
PrinIcd on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 9-A MRSA §1-301, sub-§17, as amended by PL 1995, c. 
326, §l, is further amended to read: 
17. 
"Creditor" means a person who both: 
A. 
Regularly 
extends 
credit 
in 
consumer 
credit 
transactions; and 
B. 
Is the person to whom the debt arising from the consumer 
credit transactions is initially payable on the face of the 
evidence of indebtedness or, if there is no such evidence of 
indebtedness, 
by 
agreement. 
Notwithstanding 
the 
previous 
sentence, a person who regularly arranges for the extension 
of consumer credit from persons who are not creditors is a 
creditor 
and, 
in the 
case 
of 
an 
open-end 
credit plan 
involving a credit card, the card issuer and any person who 
honors the credit card and offers a discount that is a 
finance charge are creditors. 
For the purposes of the requirements imposed under section 
8-205, subsection 1, paragraphs E, F, 
G, and subsection 2, 
paragraphs A, B, C, 0, I, K, and Article V~~~ ~, Parts 3 and 
4, the term "creditor" also includes card issuers whether or 
not the amount due is payable by agreement in more than 4 
installments or the payment of a finance charge is or may be 
required, and the administrator shall, by regulation, apply 
these requirements to those card issuers, 
to the extent 
appropriate, even though the requirements are by their terms 
applicable only to creditors offering open-end credit plans. 
A person regularly extends consumer credit only if that person 
extended credit more than 25 times, or more than 5 times for 
transactions secured by a dwelling, in the preceding calendar 
year. If a person did not meet these numerical standards in the 
preceding calendar year, the numerical standards must be applied 
to the current calendar year. 
Notwi thstanding the provisions of this section, any person who 
originates 2 or more high-rate, high-fee mortgages as defined in 
section 8-103, 
SUbsection F-l in any 12-month period or 
any 
person who originates one or more such mortgages through a 
eFeai~ 
seFyiees-e£~aR4sa~ieR loan broker as defined in Article X 10 of 
this Act in any 12-month period is considered a creditor. 
Sec. 2. 9-A MRSA §10-101, as enacted by PL 1989, c. 70, §3, 
is amended to read: 
S 10-101. Short title 
Page l-LR0654(1) 
, 
• 
. 
.. 
This article ssa;!,;!, may be known and Hlay--:ge cited as the 
"Maine Consumer Credit Code -
bl'eEli~--Se-t'-¥i-oe&--G~aR-i-&a1;i-eBs Loan 
Brokers." 
Sec. 3. 9-A MRSA §lO-l02, sub-§l, as amended by PL 2001, c. 
509, §§1 and 2, is further amended to read: 
1. 
"bl'eEli-t;-seHliees-e~'3aBil5at;ieB Loan broker" is defined as 
follows. 
A. 
"bl'eEli-t;-~~i-o&s--9~'3aail5at;ieB Loan broker" means 
any 
person who, with respect to the extension of consumer credit 
by others, provides or offers to provide, in return for the 
separate payment of money or other valuable consideration, 
any of the following services: 
(1) 
Improving a consumer's credit record, history or 
rating; 
(2) 
Arranging for or obtaining an extension of credit 
for a consumer; or 
(3) 
Providing advice or assistance to a consumer with 
respect to subparagraph (1) or (2). 
B. 
"bl'eElit;--sel'viees--EH"'3aBi-l!at;i-eB 
Loan broker" 
does 
not 
include: 
(1) 
A supervised financial organization; 
(2) 
A 
supervised 
lender 
other 
than 
a 
supervised 
financial organization, except that, with respect to 
any transaction in which a supervised lender other than 
a supervised financial organization is acting solely as 
a 
el'eElit;--seFvi-ees--G~aBi-&a1;i-eB loan broker, 
section 
10-302 applies; 
(3) 
A person licensed by the Real Estate Commission to 
the extent that the person is engaged in activities 
regulated by that commission; 
(4) 
A person currently admitted to the practice of law 
in this Stane; 
(5) 
Any nonprofit organization exempt from taxation 
under the United States Internal Revenue Code, Section 
501(c)(3) 
to 
the 
extent 
that 
the 
organization's 
activities are consistent with those set forth in its 
application for tax exemption to the Internal Revenue 
Service; 
(6) 
A consumer reporting agency, 
as defined in the 
Fair Credit Reporting Act, Title 10, chapter 210; 
(7) 
An 
affiliate of 
a 
supervised lender 
when 
the 
affiliate provides services described in paragraph A, 
subparagraph (1), (2) or (3) for or on behalf of that 
supervised 
lender 
and 
when 
the 
affiliate 
is 
not 
compensated by the consumer for those services; 
(8) 
An employee of a supervised lender or an employee 
of 
an 
affiliate 
of 
a 
supervised 
lender 
when 
the 
employee provides services described in paragraph A, 
subparagraph (1), -( 2) or (3) for or on behalf of that 
supervised lender or affiliate and when the employee or 
the affiliate is not compensated by the consumer for 
those services; 
(9) 
A person paid by a supervised lender or a consumer 
to document a loan, attend or conduct a loan closing, 
disburse loan proceeds or record or file loan documents; 
(10) 
A person who performs marketing services for a 
creditor, such as a telemarketer, an advertising agency 
or a mailing house, when the person is not compensated 
by the consumer for those services; 
(11) 
A seller of 
consumer 
goods 
or 
services that 
provides 
services 
described 
in 
paragraph 
A, 
subparagraph (1), (2) or (3) in connection with a sale 
or proposed sale of consumer goods or services by that 
seller when the seller is not compensated by a consumer 
for those services; or 
(12) 
An employee of a seller of consumer goods or 
services that provides services described in paragraph 
A, 
subparagraph (1), 
( 2) or ( 3 ) in connection wi th a 
sale or proposed sale of consumer goods or services by 
that 
seller 
when 
the 
employee 
or 
seller 
is 
not 
compensated by a consumer for those services. 
For the purposes of this paragraph, "affiliate" has the same 
meaning as defined in Title 9-B, section 131, subsection I-A. 
Sec. 4. 9·A MRSA §lO-201, as amended by PL 1993, c. 495, §2, 
is further amended to read: 
SIO-20I. Licensing and biennial relicensinq 
\. 
./ 
" 
A person desiring to engage or continue in business in this 
State as a 
e!'eEl.it--se-i'-v-i-{}&6--e~a:ei,l5ati,e:e loan broker shall apply 
to 
the 
administrator 
for 
!'e~ist!'atie:e 
a 
license 
under 
this 
article on or before January 31st of each even-numbered year. 
The 
application 
must 
be 
in 
a 
form 
prescribed 
by 
the 
administrator. 
The administrator may refuse the application if 
it contains erroneous or incomplete information. 
A 
!'e~ist!'atiea 
license 
may 
not 
be 
issued 
unless 
the 
administrator, 
upon 
investigation, finds that the financial responsibility, character 
and fitness of the applicant, and where applicable, its partners, 
officers or directors, warrant belief that the business will be 
operated honestly and fairly within the purposes of this Title. 
The administrator may adopt rules requiring that applicants, its 
partners, 
officers 
or 
directors 
and 
employees 
of 
applicants 
satisfy initial and continuing educational 
requirements. 
The 
~sonable costs of 
meeti~~ch educational requirements are 
assessed to applicants. 
Rules adopted pursuant to this section 
are routine technical rules pursuant to Title 5, 
chapter 375, 
subchapter 2-A. 
The initial application SRa±± must include 
a:e-~~itia± £ fee 
of 
$699 
$400. 
Aaaaa±--~~~i&t~~~~--sRa±± 
The 
biennial 
relicensing application must include a fee of $*99 $200. 
A licensee may conduct business only at or from a place of 
business for which the licensee holds a license and not under any 
other name than that on the license. 
Sec. 5. 9-A MRSA §lO-202, as amended by PL 1997, c. 727, Pt. 
B, §2l, is further amended to read: 
§10-202. Bond 
Each application must be accompanied by evidence of a surety 
bond, in a form approved by the administrator in the aggregate 
amount of $lQTQQQ $25,000, to run to the State for use by the 
State and any person or persons who may have a cause of action 
against a 
e!'eEl.it-se!'Yiees-e£~aail5atieR loan broker. 
The terms of 
the bond must run concurrent with the period of time during which 
the license wi±±-be is in effect. 
Sec. 6. 9-A MRSA §lO-301, as amended by PL 1993, c. 495, §3, 
is further amended to read: 
§10-301. Escrow of funds 
Each 
e!'eEl.it--&e-r-v-~-e!'~aail5atiea loan broker shall place 
fees from consumers, other than bona fide 3rd-party fees, in an 
escrow 
account 
separate 
from 
any 
operating 
accounts 
of 
the 
business, pending completion of services offered. 
With respect 
to e~egi~-se~viees-e£~aRisa~ieRs loan brokers offering to arrange 
for or obtain extensions of credit for consumers, 
or provide 
advice or assistance ~Re~e~e~ to arrange for or obtain extensions 
of credit, "completion of services offered" means procurement of 
credit under the terms agreed to by the parties. 
Sec. 7. 9-A MRSA §10·302, first" as enacted by PL 1989, c. 70, 
§3, is amended to read: 
Each agreement between 
a 
consumer 
and 
a 
e~egi~--&eFViees 
e~~aRii5a-t-i~-sball loan broker must be in writing, dated r 
and 
signed by the consumer and shall must include the following: 
Sec. 8. 9·A MRSA §10·302, sub.§2, as enacted by PL 1989, c. 
70, §3, is amended to read: 
2. 
The terms and conditions of payment, including the total 
of all payments to be made by the consumer for the service, 
whether to the 
e~egi~--se-r 
....... i-oe&--e~~aRisa~ieR loan broker or to 
some other person: and 
Sec. 9. 9·A MRSA §10·303. first" as enacted by PL 1989, c. 70, 
§3, is amended to read: 
Before any agreement is entered into, or before any money is 
paid by a consumer, whichever occurs first, the 
e~egit,-5e£viees 
e~~aRisa~ieR loan broker shall provide the consumer with written 
disclosure 
of 
material 
consumer 
protections, 
including 
the 
following: 
Sec. 10. 9·A MRSA §10·304, as enacted by PL 1989, c. 70, §3, 
is amended to read: 
§10-304. Advertising 
1. 
Ne--£-r-e-di-t--&&F-..... i-ee-s--e£~aRisa~ieR A loan broker may not 
engage 
in 
this 
State 
in 
false 
or 
misleading 
advertising 
concerning the terms and conditions of any services or assistance 
offered. 
2. 
This 
section 
imposes 
no 
personnel of any medium in which 
through which it is disseminated. 
liability on 
the 
owner 
an advertisement appears 
or 
or 
3. 
A loan broker shall include its license number in all 
print advertising in this State. 
Sec. 11. 9-A MRSA §10-305, as enacted by PL 1989, c. 70, §3, 
is amended to read: 
\ ... 
§lO-305. Rulemaking 
The administrator may adopt reasonable rules pursuant to the 
Maine Administrative Procedure Act, Title 5, chapter 375, and in 
accordance 
with 
this 
article 
governing 
eFeai~---seFviees 
eF~aaiBa~ieas loan brokers. 
Sec. 12. 9-A MRSA §10-306, as enacted by PL 2001, c. 262, Pt. 
A, §3, is amended to read: 
§lO-306. Privacy of consumer financial information 
A eFeai~-seFviees-e£~aaiBatiea loan broker shall comply with 
the provisions of the federal Gramm-Leach-Bliley Act, 15 United 
States Code, 
Section 6801 et seq. 
(1999) 
and the applicable 
implementing federal Privacy of Consumer Information regulations, 
as adopted by the Office of the Comptroller of the Currency, 12 
Code 
of 
Federal 
Regulations, 
Part 
(2001); 
the 
Board 
of 
Governors of the Federal Reserve 
System, 
Code of Federal 
Regulations, 
Part 
(2001); 
the 
Federal 
Deposit 
Insurance 
Corporation, 12 Code of Federal Regulations, Part 332 (2001); the 
Office of Thrift Supervision, 
Code of Federal Regulations, 
Part 573 
(2001); 
the National Credit Union Administration, 
Code of Federal Regulations, Part 716 (2001); the Federal Trade 
Commission, 16 Code of Federal Regulations, Part 313 (2001); or 
the 
Securities 
and 
Exchange 
Commission, 
Code 
of 
Federal 
Regulations, Part 248 (2001), if the eFeai~-seFviees-e£~aHiBa~ieH 
loan broker 
is 
a 
financial 
institution as 
defined in those 
regulations. 
This section is not intended to permit the release 
of health care information except as 
permitted by Title 22, 
section 1711-C or Title 24-A, chapter 24. 
Sec. 13. 9-A MRSA §10-401, as amended by PL 1993, c. 495, §5, 
is further amended to read: 
§lO-40l. Effects of violations on rights of parties 
Any 
eFeai~-~-v-i-G€-6--eF~aHi:Ba~i:eH loan broker that violates 
any 
provision 
of 
this 
Title 
or 
any 
rule 
issued 
by 
the 
administrator, 
or that through 
any unfair, 
unconscionable 
or 
deceptive practice causes actual damage to a consumer, is subject 
to the following: 
1. 
After notice and hearing, a cease and desist order from 
the administrator; 
2. 
After notice and hearing, forfeiture of such portion of 
the required bond as proportionately may make aggrieved parties 
whole; 
3. 
A civil 
action, 
by 
the 
administrator 
through 
the 
Attorney General, after which a court may assess a civil penalty 
of not more than $5,000; 
4. 
A civil action by an aggrieved consumer in which that 
consumer has the right to recover actual damages from the eFeait 
seFviees-e~~aRiBatieR loan broker in an amount determined by the 
court, 
plus 
costs 
of 
the 
action 
together 
with 
reasonable 
attorney's fees; and 
5. 
Revocation, suspension or nonrenewal of its Fe~i6tFatieB 
pYF6yaBt-te-seetieB-6-~g~ license. 
SUMMARY 
This bill changes the title of the Maine Revised Statutes, 
Title 9-A, article 10 from "Maine Consumer Credit Code -
Credit 
Services Organizations" to "Maine Consumer Credit Code 
Loan 
Brokers. " 
It enhances regulation of loan brokers. 
It changes 
references to "credit services organization" to "loan broker," a 
descriptive 
term 
better 
understood 
by 
the 
industry 
and 
consumers. 
It also changes the state application process from a 
registration process to a licensure process and from an annual 
application to 
a 
biennial 
application. 
Because 
the 
current 
$10,000 bond has proven inadequate to cover losses caused by loan 
brokers in several cases in 2004, the bill increases the surety 
bond to $25,000. 
To improve accountability, the bill requires 
that license numbers appear in print advertising placed by a loan 
broker. 
Finally, this bill permits regulators to follow the lead 
of most other states by establishing a 
system of continuing 
education, so that loan brokers will be more knowledgeable in 
serving consumers.