Missouri Code of State Regulations › Title 20 - DEPARTMENT OF COMMERCE AND INSURANCE › Division 1140 - Division of Finance › Chapter 11 - Section 500 Companies › Section 20 CSR 1140-11.030 - Licensing and General Provisions

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: Section 500 companies are required by
				  section 408.500.1 to
				  408.506,
				  RSMo, to obtain a license from the director of finance. This rule establishes
				  guidelines concerning licenses, which locations will require a license and
				  other general provisions.
(1)
				License. The license issued by the Division of Finance shall specify the
				location of the section 500 company and shall be prominently displayed therein.
				The license shall not be transferable or assignable except that the company
				named in any original license may obtain a change of address without charge,
				upon approval of the director.
(2)
				Display of Notice. The notice required by section 408.500.4, RSMo shall be
				prominently displayed in the section 500 company office. The notice shall be
				clearly readable from any place in the office where loans are closed and shall
				include the name, address, and telephone number of the Division of
				Finance.
(3) Locations. The conduct
				of other business on the premises will not bar the issuance of a section 500
				company license but the records of the company must be kept strictly separate
				from those of any other enterprise. Further, there should be enough of a
				distinction, through the use of signage or other means, that the customer can
				determine that s/he is dealing with a separate company. Under no circumstances
				will more than one (1) section 500 company license be issued to the same
				address.
(4) Additional Locations.
				Any location at which a section 500 company permits the acceptance or execution
				of any forms or documents relating to section 500 company business shall be
				deemed to be a place of business of the company and shall require a separate
				license.
(5) Contract Copies. A
				section 500 company shall provide the borrower with a copy of the signed
				contract at the time the loan is made and at each renewal. The company shall
				also retain a copy for the borrower's file. Each contract shall contain the
				name and address of the lender and of the borrower.
(6) Interest-Loan Origination Fee-When
				Earned. Section 408.500.5, RSMo provides that a loan repaid by the close of the
				section 500 company's next full business day shall be at no cost to the
				borrower. Section 500 loans which are not so repaid shall bear daily interest
				to be determined by applying the contract rate of interest to the principal
				balance and dividing that result by the number of days in the year. The loan
				origination fee, if permitted by section 408.140.1(1), RSMo is earned at the
				time the loan is made, unless the borrower returns the full principal balance
				by the end of the section 500 company's next full business day. The fee is only
				available on loans with terms of thirty (30) days or longer.
(7) Post-Dated Check. A post-dated check
				shall not be considered security or collateral; provided, however, that no
				post-dated check may bear any date earlier than the due date of the loan. A
				section 500 company shall not accept undated checks, checks that have been
				altered in any manner, or checks that do not bear the signature of the
				borrower. Should any such check be accepted, or should any post-dated check be
				deposited prior to its stated date, the section 500 company shall be barred
				from recovery of any interest or fees on the loan. A section 500 company shall
				not accept more than one (1) post-dated check per loan or renewal. A check left
				with a section 500 company shall be returned to the maker immediately upon
				payment, or renewal, of the loan.
(8) Renewals. The General Assembly has
				clearly indicated its intention that no borrower is to be indebted to a section
				500 company on any particular loan for any great period of time. This is
				evidenced by language that a) requires the borrower to begin reducing the
				principal amount of the loan by not less than five percent (5%) with the first
				renewal, b) limits the number of renewals to six (6), and c) provides for
				seventy-five percent (75%) of the original loan amount as the maximum amount of
				interest and fees that a lender may collect. In determining whether a renewal
				or something else which does not count as a renewal has occurred, the Division
				of Finance will insist upon absolute good faith from its licensees and will
				look to substance rather than form. Generally, if the customer enters the
				office indebted and leaves the office indebted, a renewal will be assumed to
				have taken place unless the loan was paid in full in cash. A section 500
				company is required by section 408.500.7, RSMo to consider, at the inception of
				the loan, the borrower's ability to repay. This requires the section 500
				company to consider the borrower's ability to make the required principal
				reductions when necessary. Exceptions to this requirement may result in
				enforcement as provided in sections 408.500.9 and
				408.500.10,
				RSMo, which may include fines and/or revocation or suspension of the license.
				If a loan is renewed without the required principal reduction, the section 500
				company shall reduce the principal of the loan to an amount that is consistent
				with the requirements of section 408.500.6, RSMo.
(9) Collection by Automated Clearing House
				(ACH). Checks may be presented for collection using an automated clearing
				house; however, a section 500 company shall not use a series of ACH
				transactions to collect a single check. Fees for dishonored ACH transactions
				shall be limited to those for refused instruments.
(10) Receipt for Payments. A receipt shall be
				given for the amount of each payment made in currency.
(11) Penalties. Violations of this rule shall
				be regarded as violations of sections 408.500.1 to
				408.506,
				RSMo and subject to the same penalties as provided in sections 408.500.9 and
				408.500.10,
				RSMo.
*Original authority: 361.105, RSMo 1967, amended 1993,
					 1994, 1995 and 408.500, RSMo 2002.