Virginia Administrative Code › Title 10 - FINANCE AND FINANCIAL INSTITUTIONS › Agency 5 - STATE CORPORATION COMMISSION › Chapter 200 - SHORT-TERM LENDING › Section 10VAC5-200-80 - Short-term lending pamphlet text

Current through Register Vol. 40, No. 24, July 15, 2024
The required text of the short-term lending pamphlet referred
				  to in
				  10VAC5-200-30
				  is as follows:
PAYDAY LENDING IN THE COMMONWEALTH OF
				  VIRGINIA
BORROWER RIGHTS AND RESPONSIBILITIES
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 short-term loan in Virginia
				  under Chapter 18 (§
									6.2-1800
				  et seq.) of Title 6.2 of the Code of Virginia. If you have any questions about
				  short-term 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 at scc.virginia.gov.
In General:
You are responsible for evaluating
				  whether a short-term loan is right for you. Alternatives may include among
				  other things less expensive short-term financing from another financial
				  institution, family, friends, or a cash advance on a credit card.
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:
Virginia law prohibits the
				  lender from providing you with any false, misleading, or deceptive
				  information.
Information from Lender:
Before making a
				  short-term loan to you, a lender is required by Virginia law to access a
				  database that will inform the lender whether you are eligible for a short-term
				  loan. The Bureau of Financial Institutions is unable to advise you of your
				  eligibility for a short-term loan. If you are ineligible, 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 signed and dated loan application and the original or a copy of your
				  current 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).
Verification of Income:
Before making a
				  short-term loan to you, a lender must make a reasonable attempt to verify and
				  document your income.
Prohibition on Loans to Members of the Military and
				  their Spouses and Dependents:
Virginia law prohibits lenders from making
				  short-term 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 short-term
				  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/Obtaining PINs:
The lender may require you to provide one or more checks as security for your
				  short-term loan. The check or checks must be dated no earlier than the date of
				  the first required loan payment shown in your loan agreement. The lender cannot
				  require you to provide any security for your short-term loan other than one or
				  more checks payable to the lender. 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 $2,500 Maximum:
Virginia law prohibits you from having more than one short-term loan
				  outstanding at any one time. If you have a short-term loan or a motor vehicle
				  title loan from any lender that is licensed to make these types of loans, then
				  you are prohibited from obtaining a short-term loan. The maximum loan amount is
				  $2,500.
Loan Term:
Under Virginia law, your loan term
				  cannot be more than 24 months. Your loan term also cannot be less than four
				  months unless your total monthly payment will not exceed the greater of (i)
				  5.0% of your verified gross monthly income or (ii) 6.0% of your verified net
				  monthly income.
Fees, Charges, and Interest:
Your loan is
				  payable in substantially equal installments of principal, fees, and interest
				  combined. The lender is permitted to charge you (i) interest at a simple annual
				  rate not to exceed 36%; and (ii) a monthly maintenance fee that does not exceed
				  the lesser of $25 or 8.0% of your originally contracted loan amount, provided
				  that the maintenance fee is not added to your loan balance on which interest is
				  charged. For example, if the lender advances you $500 and your loan is
				  repayable in five substantially equal monthly installments, the lender may
				  charge you interest totaling $45.90 and monthly maintenance fees totaling $125
				  for a combined total cost of $170.90. If the lender advances you $1,000 and
				  your loan is repayable in 10 substantially equal monthly installments, the
				  lender may charge you interest totaling $172.30 and monthly maintenance fees
				  totaling $250 for a combined total cost of $422.30. Other than the specific
				  fees and costs discussed in this section and 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. Note that if your originally contracted loan amount is $1,500 or less,
				  the lender cannot charge or receive from you a total amount of fees and charges
				  greater than 50% of your loan amount. If your loan amount is more than $1,500,
				  the total amount of fees and charges cannot exceed 60% of your loan
				  amount.
In addition to interest and the monthly maintenance fee, the
				  lender may charge you a deposit item return fee for the actual amount incurred
				  by the lender, not to exceed $25, if your check or electronic payment is
				  returned unpaid because the account on which it was drawn was closed by you or
				  contained insufficient funds, or you stopped payment on the check or electronic
				  payment. If you make a payment more than seven calendar days after its due
				  date, the lender may also impose a late charge of up to 5.0% of the amount of
				  the payment, but not to exceed $20.
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, an affiliate of the lender or a person in the lender's
				  office cannot charge you a fee for cashing the lender's check.
The fees, charges, and interest mentioned in this section may
				  not be charged, collected, or received unless they are included in your written
				  loan agreement.
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 copy of the signed loan agreement at the time of your loan
				  transaction. If any provision of your loan agreement violates Chapter 18
				  (§
									6.2-1800
				  et seq.) of Title 6.2 of the Code of Virginia, the provision will not be
				  enforceable against you.
Loans for Other Products & and Services:
You
				  are prohibited from using any of the money from your short-term loan to
				  purchase any other product or service sold (i) at the lender's business
				  location, or (ii) on or through the lender's website or mobile
				  application.
Right to Cancel or Rescind:
You have the right
				  to cancel or rescind your short-term loan at any time prior to 5 p.m. of the
				  third business day immediately following the day you entered into the loan
				  agreement by returning the loan proceeds check or 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, debit card, or the Automated Clearing House system. If you timely cancel
				  or rescind your loan, the lender must mark your original loan agreement with
				  the word "canceled" and return it to you along with any check that you provided
				  as security for the loan.
Payments and Prepayments:
The lender is required
				  to accept any loan payment that you or another person acting on your behalf
				  make provided that the payment is in the form of 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, debit card, or the Automated
				  Clearing House system. The lender is required to credit your loan account on
				  the date that the lender receives your payment. You have the right to receive
				  dated receipts for each payment made along with a statement of the balance
				  remaining on your loan. If you have authorized electronic payments for your
				  loan, you have the right to remove your authorization at any time. If the
				  lender presents your check, negotiable order of withdrawal, share draft, or
				  other negotiable instrument for payment and it is dishonored for any reason and
				  returned to the lender, then the lender is prohibited from presenting it for
				  payment again unless the lender obtains a new written authorization from you to
				  present the previously returned item. Similarly, if the lender attempts on two
				  consecutive occasions to transfer or withdraw funds electronically from your
				  account and both attempts fail, then the lender is prohibited from making an
				  additional attempt unless the lender obtains a new written authorization from
				  you to transfer or withdraw funds electronically from your account. You also
				  have the right to prepay your loan in full before its maturity 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, debit card, or the Automated Clearing House system, the
				  remaining outstanding balance as well as any accrued and unpaid interest and
				  fees. If you prepay your loan in full or your loan is refinanced with another
				  short-term loan, the lender must refund to you a prorated portion of fees and
				  charges, except for any deposit item return fees and late charges, based on a
				  ratio of the number of days the loan was outstanding and the number of days for
				  which the loan was originally contracted. The lender must provide you with the
				  refund in the form of cash or a business check as soon as reasonably possible
				  but no later than two business days after receiving payment from you.
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.
Lender to Return Security Check:
If your loan is
				  secured by a check and you cancel or rescind your loan (see "Right to Cancel or
				  Rescind" above) or repay it in full, the lender must immediately return the
				  check you gave as security for the loan.
Failure to Repay:
Pay back your loan! Know when
				  your payments are due and be sure to repay your loan on time and in full. If
				  you fail to make a payment on your loan in accordance with your loan agreement,
				  the loan agreement may permit the lender to terminate your loan in advance of
				  the maturity date and demand repayment of the entire outstanding balance along
				  with prorated interest and fees earned up to the date of termination. However,
				  at least 10 days after your payment was due, the lender must provide you with
				  written notice that it is terminating your loan.
In collecting or attempting to collect a short-term 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 or if you
				  fail to pay any amount owed according to your loan agreement.
If you default on your loan, the lender may bring a civil
				  action against you 60 days or more after the date that you default. 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 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
				  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
				  short-term lender, please contact the Bureau of Financial Institutions toll
				  free at (800) 552-7945 or at scc.virginia.gov. Complaints must be filed in
				  writing with the Bureau of Financial Institutions and include copies of
				  supporting documentation.
Statutory Authority: §§
											6.2-1815 and
					 12.1-13
					 of the Code of Virginia.