PRIOR PRINTER'S NOS. 3216, 3511

PRINTER'S NO.  3644

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2191

Session of

2012

  

  

INTRODUCED BY ROSS, BEAR, BARBIN, BOYD, CHRISTIANA, CREIGHTON, DELOZIER, ELLIS, FARRY, GIBBONS, GINGRICH, GROVE, HARHAI, HARHART, HARRIS, HENNESSEY, HICKERNELL, KILLION, KOTIK, MARSICO, MILLARD, MILLER, MILNE, O'NEILL, SAINATO, SAYLOR, SCHRODER, STEPHENS, TAYLOR, TOEPEL, VEREB, VULAKOVICH, DENLINGER, CARROLL AND J. EVANS, MARCH 14, 2012

  

  

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 4, 2012   

  

  

  

AN ACT

  

1

Amending Titles 7 (Banks and Banking) and 18 (Crimes and

2

Offenses) of the Pennsylvania Consolidated Statutes, in Title

3

7, providing for short-term loan protection; and, in Title

4

18, further providing for deceptive or fraudulent business

5

practices and providing for unlicensed short-term lending.

6

The General Assembly of the Commonwealth of Pennsylvania

7

hereby enacts as follows:

8

Section 1.  Title 7 of the Pennsylvania Consolidated Statutes

9

is amended by adding a chapter to read:

10

CHAPTER 51

11

SHORT-TERM LOAN PROTECTION

12

Subchapter

13

A.  Preliminary Provisions

14

B.  Nature and Effect of Short-Term Loans

15

C.  Administrative and Licensure Provisions

16

D.  Miscellaneous Provisions

17

SUBCHAPTER A

 


1

PRELIMINARY PROVISIONS

2

Sec.

3

5101.  Scope of chapter.

4

5102.  Definitions.

5

§ 5101.  Scope of chapter.

6

This chapter relates to consumer short-term loan protection.

7

§ 5102.  Definitions.

8

The following words and phrases when used in this chapter

9

shall have the meanings given to them in this section unless the

10

context clearly indicates otherwise:

11

"Agency."  The Pennsylvania Housing Finance Agency.

12

"Applicant."  A person that applies for a license under this

13

chapter.

14

"Check."  A check as that term is defined in 13 Pa.C.S. §

15

3104(f) (relating to negotiable instrument) which is drawn on a

16

depository institution.

17

"Consumer."  An individual who applies for or is the

18

recipient of a short-term loan.

19

"Deferment period."  The term of a loan or the number of days

20

a licensee agrees to defer depositing or presenting a repayment

21

mechanism, as the context may require.

22

"Department."  The Department of Banking of the Commonwealth.

23

"Depository institution."  A person authorized to accept

24

deposits in accordance with Federal or State law.

25

"Gross monthly income."  Wages or commissions received by a

26

consumer in the 30-day period immediately preceding the date of

27

the consumer's application for a loan or as otherwise determined

28

by the Department of Banking.

29

"Licensee."  A person licensed by the Department of Banking

30

under this chapter.

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1

"Loan."  A short-term loan.

2

"Loan agreement."  A signed written agreement between a  

3

licensee and a consumer.

4

"Person."  An individual, association, joint venture or

5

joint-stock company, partnership, limited liability company,

6

limited partnership, limited partnership association, business

7

corporation or any other group of individuals, however

8

organized.

9

"Repayment mechanism."  Any method agreed to by a consumer

10

which a licensee may use to effect repayment of a loan,

11

including a present-dated or postdated check, electronic debit

12

or assignment of a future deposit.

13

"Short-term lender."  A person who, as principal or agent,

14

markets, negotiates, arranges, places, makes, services, holds or

15

originates short-term loans for consumers for a fee, finance

16

charge or other consideration. The term includes a short-term

17

lender who acquires a short-term loan from another short-term

18

lender by purchase or assignment.

19

"Short-term loan."  A loan or advance of money or credit to a

20

consumer by a short-term lender that, for a fee, finance charge

21

or other consideration, does all of the following:

22

(1)  Accepts a check or other repayment mechanism from

23

the consumer.

24

(2)  Agrees to hold the check or repayment mechanism for

25

a deferment period.

26

(3)  Pays to the consumer a cash advance, a locally

27

cashable check, debit card or money order or credits to the

28

consumer's account the amount of the check less finance

29

charges permitted under section 5113 (relating to authorized

30

finance charges and loan verification costs). The term

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1

includes any arrangement in which a person pays a cash

2

advance to a consumer in return for a repayment mechanism and

3

a fee, finance charge or other consideration.

4

"Short-term loan business."  A person is deemed to be engaged

5

in the short-term loan business in this Commonwealth if that

6

person, in the ordinary course of its business, advertises,

7

causes to be advertised, solicits, negotiates or arranges,

8

offers to make, makes, services or holds a short-term loan in

9

this Commonwealth, whether directly or through any other person

10

acting for his benefit.

11

"Tangible net worth."  Net worth less all of the following:

12

(1)  That portion of assets pledged to secure obligations

13

of any person other than that of the applicant.

14

(2)  Any asset due from officers or stockholders of the

15

applicant or related companies in which the applicant's

16

officers or stockholders have an interest.

17

(3)  That portion of the value of any marketable

18

security, listed or unlisted, not shown at lower of either

19

cost or market.

20

(4)  Any investment shown on the applicant's balance

21

sheet in the applicant's joint ventures, subsidiaries,

22

affiliates or related companies which is greater than the

23

value of the assets at equity.

24

(5)  Goodwill.

25

(6)  The value placed on insurance renewals, property

26

management contract renewals or other similar intangibles of

27

the applicant.

28

(7)  Organization costs of the applicant.

29

(8)  Any real estate held for investment where

30

development will not start within two years from the date of

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1

its initial acquisition.

2

(9)  Any leasehold improvements not being amortized over

3

the lesser of the expected life of the asset or the remaining

4

term of the lease.

5

SUBCHAPTER B

6

NATURE AND EFFECT OF SHORT-TERM LOANS

7

Sec.

8

5111.  License requirements.

9

5112.  Loan agreement requirements.

10

5113.  Authorized finance charges and loan verification costs.

11

5114.  Maximum amount of loans, terms of loans and right of

12

rescission.

13

5115.  Prohibitions.

14

5116.  (Reserved).

15

5117.  Form of loan proceeds.

16

5118.  Endorsement of check.

17

5119.  Redemption of repayment mechanism.

18

5120.  Authorized charge for dishonored repayment mechanisms.

19

5121.  Posting of charges and notice of mandatory extended

20

payment plan.

21

5122.  Notice of assignment or sale of loans.

22

5123.  No criminal culpability.

23

5124.  Unfair or deceptive practices.

24

5125.  Extended payment plan.

25

5126.  Prohibited practices regarding loans.

26

5127.  Commonwealth Consumer Credit Counseling Account.

27

5128.  Licensee duties with respect to military personnel.

28

5129.  Licensee duty to offer credit counseling.

29

5129.1.  Anti-money laundering requirements.

<--

30

§ 5111.  License requirements.

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1

(a)  General rule.--No person may market, service, arrange,

2

make, hold, originate, extend, contract or negotiate, whether

3

electronically or by other means, a short-term loan to an

4

individual who resides in this Commonwealth or, if the person

5

has a place of business in this Commonwealth, to any individual

6

regardless of his residence, without first obtaining a license

7

from the department under this chapter and otherwise complying

8

with all of the provisions of this chapter.

9

(b)  Exemptions.--

10

(1)  Except as provided under paragraph (2), this chapter

11

shall not apply to depository institutions. To the extent

12

permissible under Federal and State law, a depository

13

institution may make short-term loans in accordance with the

14

terms and interest rates, fees and charges authorized by this

15

chapter, but shall not otherwise be subject to this chapter.

16

(2)  A  licensee that is an agent of a depository

17

institution for the purpose of brokering short-term loans

18

made by a depository institution shall be subject to all

19

provisions of this chapter except those provisions related to

20

finance charges and loan terms. This paragraph shall be

21

limited to the brokering of short-term loans that are made

22

and held by a depository institution.

23

§ 5112.  Loan agreement requirements.

24

(a)  General rule.--Each loan shall be documented by a loan

25

agreement which shall contain all of the following:

26

(1)  The name and address of the consumer.

27

(2)  The transaction date and a prominently labeled

28

transaction number.

29

(3)  The amount of the loan or advance.

30

(4)  A statement of the total amount of finance charges

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1

charged, expressed both as a dollar amount and an annual

2

percentage rate.

3

(5)  A specific date for the end of the deferment period

4

or extended payment plan.

5

(6)  The name, address and telephone number of the  

6

licensee and the name and title of the individual employee

7

who signs the loan agreement on behalf of the licensee.

8

(7)  An itemization of the fees to be paid by the

9

consumer.

10

(8)  Disclosures required by the Truth in Lending Act

11

(Public Law 90-321, 15 U.S.C. § 1601 et seq.), regardless of

12

whether the Truth in Lending Act applies to the particular

13

loan.

14

(9)  A clear description of the consumer's payment

15

obligations under the loan and a clear description of the

16

repayment mechanism agreed to by the licensee and the

17

consumer.

18

(10)  A clear description of the consumer's right to 

19

request an extended payment plan under section 5125 (relating

20

to extended payment plan).

21

(11)  Disclosure in boldface print and in at least ten-

22

point type indicating the maximum loan amount and finance

23

charge.

24

(12)  Disclosure in boldface print and in at least ten-

25

point type indicating the restrictions on multiple loans

26

provided for under this chapter.

27

(13)  Disclosure in boldface print and in at least ten-

28

point type indicating the consumer's right of rescission

29

under this chapter. The disclosure of the consumer's right of

30

rescission shall be set forth immediately above the

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1

consumer's signature line and shall state as follows:

2

This transaction is not meant to meet long-term financial

3

needs and should be used only to meet short-term cash

4

needs. You have the right to rescind this transaction at

5

any time before the lender's close of business on the

6

next business day after the transaction date shown above.

7

In order to rescind, you must return all of the loan

8

proceeds you received to the lender. The lender will

9

refund to you all fees if you rescind this transaction.

10

(14)  Any other information as the department may

11

require.

12

(a.1)  Deferment period.--A deferment period may not be less

13

than 14 days or in excess of 60 days and shall include at least

14

one regular installment of income for the consumer. The

15

deferment period shall be calculated from the date of the loan

16

agreement.

17

(b)  Limitations.--A loan agreement, or any other document or

18

instrument signed by the consumer in connection with the loan,

19

shall not contain any of the following:

20

(1)  A mandatory arbitration clause that does not comply

21

with the standards set forth in the statement of principles

22

of the National Consumer Disputes Advisory Committee of the

23

American Arbitration Association in effect on the effective

24

date of this section.

25

(2)  A hold harmless clause for the benefit of the  

26

licensee.

27

(3)  A confession of judgment clause.

28

(4)  A waiver by the consumer of any contractual right or

29

any provision of this chapter.

30

§ 5113.  Authorized finance charges and loan verification costs.

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1

(a)  Authorized finance charges.--A licensee may impose a

2

finance charge for each loan made by the licensee to a consumer

3

which may not exceed .125ยข per $1.00 of the short-term loan. The

4

finance charge shall be deemed fully earned as of the date of

5

the short-term loan transaction, unless the consumer rescinds

6

the loan under section 5114(b) (relating to maximum amount of

7

loans, terms of loans and right of rescission). A licensee may

8

impose only fees and charges authorized under this chapter in

9

connection with a short-term loan.

10

(b)  Verification fee.--A licensee may charge and receive a

11

verification fee in an amount not to exceed $5 for a loan or a

12

renewal made under this chapter. The verification fee shall be

13

used in part to defray the costs of submitting a compliance

14

system inquiry as provided under section 5115 (relating to

15

prohibitions) and for the Commonwealth Consumer Credit

16

Counseling Account under section 5127 (relating to Commonwealth  

17

Consumer Credit Counseling Account).

18

(c)  Required remittance of fees.--

19

(1)  A licensee shall remit all of the following monthly:

20

(i)  Fifty cents per loan transaction to the

21

Commonwealth Consumer Credit Counseling Account for the

22

agency to pay for costs to provide consumer budget and

23

credit counseling.

24

(ii)  A fee up to fifty cents per loan transaction,

25

as determined by the department, to a compliance system

26

provider for the purpose of determining outstanding loans

27

and repayment dates provided under section 5115.

28

(iii)  One dollar and fifty cents per loan

29

transaction, plus any difference in the fee determined by

30

the department for the services of the compliance system

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1

provider provided under section 5115(f)(1) (relating to

2

prohibitions) and the amount established under

3

subparagraph (ii) to the department.

4

(2)  A licensee may not charge a consumer and shall not

5

be required to remit to a compliance system provider any

6

amounts related to the compliance system until the department

7

has selected the compliance system provider as required under

8

section 5115(f)(1). The fees required to be remitted under

9

this subsection may be delivered to and disbursed by the

10

compliance system provider, as determined by the department.

11

§ 5114.  Maximum amount of loans, terms of loans and right of

12

rescission.

13

(a)  General rule.--A  licensee may not make a loan to a

14

consumer in an amount that would result in the consumer having

15

outstanding loans to one or more licensee in excess of the

16

lesser of $1,000 or 25% of the consumer's gross monthly income

17

at any time. The licensee shall maintain records evidencing the

18

consumer's gross monthly income as required under section

19

5136(a)(2) (relating to licensee and compliance system provider

20

requirements).

21

(a.1)  Consumer report.--

22

(1)  A short-term lender may request, at no cost to the

23

consumer, a borrower's consumer report from a consumer

24

reporting agency as part of the short-term lender's

25

underwriting process.

26

(2)  A short-term lender may rely on the consumer report:

27

(i)  As a permissible method of verifying the

28

borrower's monthly gross income in making the short-term

29

loan.

30

(ii)  In underwriting and making subsequent short-

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1

term loans to the same customer if the report was

2

obtained within the previous 12 months.

3

(3)  As used in this subsection, the following words and

4

phrases shall have the meanings given to them in this

5

paragraph unless the context clearly indicates otherwise:

6

"Consumer report."  As defined in 15 U.S.C. § 1681a(d)

7

(relating to definitions; rules of construction).

8

"Consumer reporting agency."  As defined in 15 U.S.C. §

9

1681a(f).

10

(b)  Right to rescind.--

11

(1)  A consumer may rescind a loan before the licensee's 

12

close of business on the next business day immediately

13

following the day on which the loan proceeds were received by

14

the consumer.

15

(2)  In order to rescind a loan, a consumer shall notify

16

the licensee of the consumer's desire to rescind the loan and

17

return to the licensee, at the time of giving notice, the

18

proceeds of the loan received by the consumer from the

19

licensee under section 5117 (relating to form of loan

20

proceeds).

21

(3)  No finance charge or other charge or fee may be

22

charged or collected by the licensee if a loan is rescinded.

23

(4)  Upon rescission of a loan, the licensee shall return

24

to the consumer any check given to the licensee in connection

25

with the loan or shall agree in writing that any other

26

repayment mechanism shall not be utilized.

27

(c)  Completed transaction.--A loan transaction shall be

28

completed when the licensee receives payment in full of the loan

29

or the consumer redeems the repayment mechanism being held by

30

the licensee by paying the full amount represented by the

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1

repayment mechanism to the licensee. The consumer may repay a

2

loan at any office of the original licensee or the assignee of

3

the licensee at the consumer's election.

4

§ 5115.  Prohibitions.

5

(a)  General rule.--A licensee shall not knowingly make a

6

loan to a consumer who has an existing loan with the  licensee 

7

or any other licensee if the aggregate amount of all loans

8

outstanding to the consumer exceeds the maximum amount permitted

9

under section 5114(a) (relating to maximum amount of loans,

10

terms of loans and right of rescission) or who has entered into

11

an extended payment plan under section 5125 (relating to

12

extended payment plan) which has not yet been paid in full. A

13

consumer may not have loans outstanding from more than two  

14

licensees at any one time.

15

(b)  (Reserved).

16

(c)  (Reserved).

17

(d)  Verification.--A consumer shall verify in writing at the

18

time of entering into a loan transaction:

19

(1)  That the consumer does not have a loan outstanding

20

from any licensee, the aggregate amount of all loans which

21

exceeds the maximum loan amount permitted under section

22

5114(a).

23

(2)  That the consumer has not entered into an extended

24

payment plan under section 5125 which has not yet been paid

25

in full.

26

(3)  The date of repayment of the consumer's last loan,

27

if applicable.

28

(e)  Confirmation.--A licensee shall confirm the accuracy of

29

the verification required under subsection (d) by all of the

30

following:

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1

(1)  A query of the licensee's own records.

2

(2)  A query of the compliance system under subsection

3

(f)(1).

4

(f)  Procedure to determine outstanding loans and repayment

5

dates.--

6

(1)  The department shall engage a third-party provider

7

capable of developing, implementing and maintaining a

8

compliance system, at no cost to the department, with real

9

time access for reporting of loan transactions and verifying

10

the information required under subsection (a).

11

(2)  Licensees shall report to the compliance system 

12

information determined by the department to be necessary to

13

verify the number and amount of loans a consumer has

14

outstanding with any licensee, the date of repayment of a

15

consumer's last loan and if a consumer has entered into an

16

extended payment plan.

17

(g)  Prohibited location.--The location of a short-term loan

18

business may not be within 100 1,000 feet of any of the

<--

19

following:

20

(1)  A racetrack or other nonprimary location where

21

thoroughbred or harness horse race meetings are conducted,

22

respectively, with pari-mutuel wagering in accordance with 

23

the act of December 17, 1981 (P.L.435, No.135), known as the

24

Race Horse Industry Reform Act.

25

(2)  A licensed facility at which slot machine gaming is

26

conducted under 4 Pa.C.S. Pt. II (relating to gaming).

27

(3)  A military installation or a facility operated by

28

the United States Department of Veterans Affairs.

29

§ 5116.  (Reserved).

30

§ 5117.  Form of loan proceeds.

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1

(a)  General rule.--A licensee shall disburse the proceeds of

2

a loan to the consumer in the form of an immediately and locally

3

cashable check, money order, cash, debit card or credit to the

4

consumer's account at a depository institution.

5

(b)  Prohibition.--A licensee may not impose a fee for

6

cashing the licensee's check or money order or for otherwise  

7

effecting the disbursement of loan proceeds.

8

(c)  Same day loan.--Upon repayment of a loan, a licensee may

9

not make or offer a loan to the consumer on the same day that

10

the consumer repays the loan.

11

§ 5118.  Endorsement of check.

12

A licensee may not negotiate or present a check for payment

13

of a loan unless the instrument is endorsed with the actual

14

business name or registered fictitious name of the licensee.

15

§ 5119.  Redemption of repayment mechanism.

16

Prior to the licensee's negotiating or presenting a

17

consumer's check or utilizing any other repayment mechanism, the

18

consumer shall have the right to redeem the check or any other

19

repayment mechanism if the consumer pays the full amount of the

20

check or other repayment mechanism to the licensee.

21

§ 5120.  Authorized charge for dishonored repayment mechanisms.

22

(a)  General rule.--If a consumer's repayment mechanism is

23

dishonored due to insufficient funds in the consumer's account,

24

the licensee:

25

(1)  Shall have the right to exercise all civil means

26

authorized by law to collect the face value of the repayment

27

mechanism.

28

(2)  May contract for and collect from the consumer a

29

charge not to exceed $25.

30

(3)  May not collect any other fees as a result of the

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1

dishonor, including damages available under 42 Pa.C.S. § 8304

2

(relating to damages in actions on bad checks).

3

(b)  When charge not allowed.--A charge authorized by this

4

section shall not be allowed:

5

(1)  if the consumer does not receive the loan proceeds

6

from the licensee for any reason; or

7

(2)  if the consumer places a stop-payment order due to

8

forgery or theft.

9

§ 5121.  Posting of charges and notice of mandatory extended

10

payment plan.

11

(a)  Posting of charges.--A licensee shall post, in large

12

type in plain view of the public at any place of business where

13

short-term loans are made, a notice of the finance charges and

14

any related charges, such as the charge for dishonored repayment

15

mechanisms, imposed for loans.

16

(b)  Mandatory notice.--A licensee shall provide to each

17

consumer at the time a loan agreement is signed, and

18

conspicuously display in the lending area of each business

19

location of the licensee, the following notice:

20

Notice:  If you are unable to repay your loan, you are

21

entitled to request an extended payment plan agreement

22

with a fully disclosed rate, term and payment plan.

23

§ 5122.  Notice of assignment or sale of loans.

24

(a)  General rule.--A licensee shall inform a consumer in

25

writing immediately of the name, address and telephone number of

26

the person to whom a loan is assigned or sold. A licensee may

27

only assign or sell a loan to another licensee or to a

28

depository institution.

29

(b)  Notice.--Prior to the assignment or sale of a loan, a  

30

licensee shall provide the following notice to the buyer or

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1

assignee:

2

The repayment mechanism associated with this loan has

3

been given by a consumer to secure a short-term loan

4

transaction under Pennsylvania State law and the assignee

5

or buyer is deemed to have knowledge of and shall be

6

bound by the terms and conditions of the loan agreement

7

between the consumer and the original lender.

8

§ 5123.  No criminal culpability.

9

A consumer shall not be subject to a criminal penalty:

10

(1)  For entering into a loan agreement.

11

(2)  In the event that a consumer's repayment mechanism

12

is dishonored, unless the consumer's account on which the

13

repayment mechanism is drawn is closed by the consumer before

14

the end of the agreed-upon deferment period, in which case

15

the provisions of 18 Pa.C.S. § 4105 (relating to bad checks)

16

or 4106 (relating to access device fraud), as applicable,

17

shall apply.

18

§ 5124.  Unfair or deceptive practices.

19

A person may not engage in unfair or deceptive acts,

20

practices or advertising in connection with a loan. A violation

21

of this section shall be deemed a violation of the act of

22

December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade

23

Practices and Consumer Protection Law.

24

§ 5125.  Extended payment plan.

25

(a)  General rule.--A consumer shall be entitled to an

26

extended payment plan agreement under subsection (b) at least

27

once per year if at any time on or before the loan's due date

28

the consumer declares an inability to repay.

29

(b)  Extended payment plan agreement.--An extended payment

30

plan agreement shall be subject to the following terms:

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1

(1)  The principal balance due under the extended payment

2

plan shall be the outstanding principal balance and finance

3

charge due under the existing loan. The licensee may

4

encourage, but shall not require, the consumer to reduce the

5

balance of the existing loan by paying the licensee cash on

6

the date the consumer enters into the extended payment plan

7

agreement.

8

(2)  The licensee may not impose a finance charge for

9

entering into the extended payment plan. The licensee may

10

impose only the fees and charges authorized in section 5120

11

(relating to authorized charge for dishonored repayment

12

mechanisms) in connection with an extended payment plan.

13

(3)  The extended payment plan agreement shall allow the

14

consumer to pay the sums due under the extended payment plan

15

over at least four 14-day installments. Each installment

16

shall be in an amount arrived at by dividing the total amount

17

outstanding under paragraph (1) to a licensee by the number

18

of 14-day installments of the extended payment plan. If the

19

consumer has loans outstanding to two licensees and is unable

20

to pay both loans, the consumer shall enter into an extended

21

payment plan with each licensee. A consumer may, at any time,

22

partially or entirely pay off an extended payment plan.

23

(4)  A licensee shall report to the compliance system 

24

described in section 5115 (relating to prohibitions) that the

25

consumer is enrolled in an extended payment plan.

26

(5)  Except when the consumer is required to enter into

27

an extended payment plan under the provisions of this

28

chapter, the consumer shall have the same right to rescind an

29

extended payment plan as is provided in section 5114(b)

30

(relating to maximum amount of loans, terms of loans and

- 17 -

 


1

right of rescission) for the rescission of a loan.

2

(c)  Eligibility requirements.--In order to enter into an

3

extended payment plan, a consumer must:

4

(1)  Have obtained a loan from the same licensee, or its

5

assignee, that will enter into the extended payment plan.

6

(2)  Request an extended payment plan prior to or on the

7

due date of the loan.

8

(3)  Reasonably inform the licensee, either orally or in

9

writing, that the consumer requests an extended payment plan.

10

(d)  Prohibition.--During any period in which all or part of

11

an extended payment plan is outstanding and during the seven-day

12

period following a consumer's payment in full of an extended

13

payment plan, no licensee may make or offer to make a short-term 

14

loan to the consumer.

15

§ 5126.  Prohibited practices regarding loans.

16

(a)  Practices.--The following are prohibited regarding

17

loans:

18

(1)  Taking or attempting to take any security other than

19

the consumer's check or other repayment mechanism.

20

(2)  Taking or attempting to take more than a single

21

check or other repayment mechanism from the consumer in

22

connection with a single transaction.

23

(3)  Selling, offering or soliciting any application for

24

credit insurance in connection with a transaction.

25

(4)  Tying a transaction to any other transaction, offer

26

or obligation of the consumer.

27

(5)  Assigning or selling a loan to another person other

28

than in accordance with the provisions of this chapter.

29

(6)  Engaging in any device or subterfuge to evade the

30

requirements of this chapter, including making loans

- 18 -

 


1

disguised as personal property sales and leaseback

2

transactions or disguising loan proceeds as cash rebates for

3

the pretextual installment sale of goods and services.

4

(7)  Failing to collect and provide information regarding

5

the number, total and average transaction amounts and other

6

information the department may request.

7

(8)  Offering, arranging, negotiating, making, holding or

8

acting as an agent or broker for the making of a loan unless

9

the short-term lender complies with all applicable provisions

10

of this chapter.

11

(9)  Altering or deleting the date on any loan agreement

12

or repayment mechanism held by the licensee.

13

(10)  Rolling over, refinancing, extending or

14

consolidating short-term loans except as provided in section 

15

5125 (relating to extended payment plan).

16

(11)  Failing to immediately and accurately report a loan

17

or an extended payment plan to the compliance system provider

18

as required by this chapter or by the department.

19

(12)  Threatening to use or using the criminal process in

20

any state to collect the balance due on a loan.

21

(13)  Depositing a check or otherwise implementing any

22

repayment mechanism prior to the expiration of the agreed-

23

upon deferment period.

24

(b)  Penalty.--In addition to any other penalties provided

25

under law, any transaction in violation of subsection (a) shall

26

be uncollectible and unenforceable.

27

§ 5127.  Commonwealth Consumer Credit Counseling Account.

28

(a)  Establishment.--There is established within the agency a

29

restricted account to be known as the Commonwealth Consumer

30

Credit Counseling Account. Funds collected under section 5113(c)

- 19 -

 


1

(relating to authorized finance charges, origination fees and

2

loan verification costs) shall be deposited into the account.

3

(b)  Designation and approval by the agency.--

4

(1)  The agency shall designate and approve nonprofit

5

credit counseling agencies to be available to assist the

6

agency in implementing the provisions of this chapter related

7

to consumer credit counseling. Nonprofit credit counseling

8

agencies seeking to provide budget and credit counseling to

9

consumers must meet all requirements prescribed by the

10

agency.

11

(2)  The agency shall maintain an up-to-date list of

12

approved nonprofit credit counseling agencies by county and

13

publish the list on the agency's publicly accessible Internet

14

website.

15

(3)  The agency shall allocate quarterly, at its

16

discretion, funds to approved nonprofit credit counseling

17

agencies from the account.

18

(4)  The agency shall pay all costs and expenses for

19

delivery of consumer credit counseling from amounts available

20

in the account.

21

§ 5128.  Licensee duties with respect to military personnel.

22

(a)  Collection activity.--A licensee shall defer collection

23

activity against:

24

(1)  a consumer who is a member of the military that has

25

been deployed to combat or a combat support posting, for the

26

duration of the posting; or

27

(2)  a reserve or National Guard member called to active

28

duty.

29

(b)  Military personnel.--A licensee shall not contact the

30

military chain of command of a consumer who is a member of the

- 20 -

 


1

military in an effort to collect a loan.

2

(c)  Repayment agreement.--A licensee shall honor the terms

3

of any repayment agreement that it has entered into with a

4

consumer who is a member of the military, including any

5

repayment agreement negotiated through military counselors or

6

third-party credit counselors.

7

(d)  Compliance with Federal law.--All licensees must comply

8

with any Federal statutes and provisions regarding military

9

personnel and their dependents.

10

§ 5129.  Licensee duty to offer credit counseling.

11

(a)  General rule.--A licensee shall offer credit counseling

12

at no cost to a borrower from an unaffiliated not-for-profit

13

third party credit counselor approved by the agency to provide

14

credit counseling prior to executing a loan agreement with a

15

borrower.

16

(b)  Borrower acknowledgment.--The licensee shall have the

17

borrower acknowledge the licensee's offer of no-cost credit

18

counseling on a form prescribed by the department, which shall

19

include the following notice:

20

You are entitled to no-cost credit counseling in connection

21

with obtaining this short-term loan. This loan is not meant

22

to meet long-term financial needs and should be used only to

23

meet short-term cash needs. Taking advantage of this no-cost

24

credit counseling could help you avoid the need to seek this

25

kind of loan in the future.

26

§ 5129.1.  Anti-money laundering requirements.

<--

27

A person licensed by the department under this act shall:

28

(1)  Comply with all Federal and State statutes and rules

29

relating to the detection and prevention of money laundering,

30

including 31 CFR §§ 103.20 (relating to reports by money

- 21 -

 


1

services businesses of suspicious transactions), 103.22

2

(relating to reports of transactions in currency), 103.23

3

(relating to reports of transportation of currency or

4

monetary instruments), 103.27 (relating to filing of

5

reports), 103.28 (relating to identification required),

6

103.29 (relating to purchases of bank checks and drafts,

7

cashier's checks, money orders and traveler's checks), 103.33

8

(relating to records to be made and retained by financial

9

institutions), 103.37 (relating to additional records to be

10

made and retained by currency dealers or exchangers) and

11

103.41 (relating to registration of money services

12

businesses).

13

(2)  Maintain an anti-money laundering program in

14

accordance with 31 CFR § 103.125 (relating to anti-money

15

laundering programs for money services businesses). The

16

program must be reviewed and updated as necessary to ensure

17

that it continues to be effective in detecting and deterring

18

money laundering activities in the licensee's short-term loan

19

business.

20

(3)  Comply with United States Treasury Interpretive

21

Release 2004-1.

22

SUBCHAPTER C

23

ADMINISTRATIVE AND LICENSURE PROVISIONS

24

Sec.

25

5131.  Application for license.

26

5132.  Annual license fee.

27

5133.  (Reserved).

28

5134.  Issuance of license.

29

5135.  License duration.

30

5136.  Licensee and compliance system provider requirements.

- 22 -

 


1

5137.  Licensee limitations.

2

5138.  Surrender of license.

3

5139.  Authority of department.

4

5140.  Suspension, revocation or refusal.

5

5141.  Penalties.

<--

6

5141.  Whistleblower protection.

<--

7

5142.  Penalties.

8

§ 5131.  Application for license.

9

(a)  Contents.--An application for a license under this

10

chapter shall be on a form prescribed and provided by the

11

department. The application shall include the name of the

12

applicant, the address of the principal place of business of the

13

applicant and the address or addresses where the applicant's

14

short-term loan business is to be conducted, the full name,

15

official title and business address of each director and

16

principal officer of the short-term loan business and any other

17

information that may be required by the department. An applicant

18

shall demonstrate to the department that policies and procedures

19

have been developed to receive and process consumer inquiries

20

and grievances promptly and fairly.

21

(b)  Duty to update.--All applicants and licensees shall be

22

required to provide the department with written notice of the

23

change in any information contained in an application for a

24

license or for any renewal of a license within ten days of the 

25

applicant or licensee becoming aware of such change.

26

(c)  Financial structure.--

27

(1)  The applicant must establish that the applicant:

28

(i)  has, at the time of application, a minimum

29

tangible net worth of $250,000;

30

(ii)  will at all times maintain the minimum tangible

- 23 -

 


1

net worth required by subparagraph (i); and

2

(iii)  has an otherwise adequate financial structure.

3

(2)  Prior to and as a condition of the issuance of a

4

license, an applicant for a license shall maintain a bond in

5

the amount of $100,000 in a form acceptable to the department

6

from a surety company authorized to do business in this

7

Commonwealth. The bond shall be a penal bond conditioned on

8

compliance by the licensee with this chapter and subject to

9

forfeiture and shall run to the Commonwealth for its use and

10

shall be held by the department for the term of the license.

11

The bond shall also be for the use of any consumer against

12

the licensee for failure to carry out the terms of any loan

13

or extended payment plan. If a consumer is aggrieved, he may,

14

with the written consent of the department, recover the

15

amount by which the consumer is aggrieved from the bond by

16

filing a claim with the surety company or maintaining an

17

action on the bond. In the alternative, an aggrieved consumer

18

may recover the amount by which the consumer is aggrieved by

19

filing a formal complaint against the licensee with the

20

department, which shall adjudicate the matter. Such an

21

adjudication shall be binding upon the surety company and

22

enforceable by the department in Commonwealth Court and by an

23

aggrieved consumer in any court. An aggrieved consumer

24

seeking to recover any amount from a bond that has already

25

been forfeited by the licensee or which the department is in

26

the process of having forfeited may recover payment on such

27

bond if, after filing a petition with the department, the

28

department consents to the requested payment or portion

29

thereof. The department may pay the aggrieved consumer from

30

the bond proceeds recovered by the department in such case.

- 24 -

 


1

Nothing in this paragraph shall be construed as limiting the

2

ability of any court or magisterial district judge to award

3

to any aggrieved consumer other damages, court costs and

4

attorney fees permitted by applicable law, but those claims

5

that are not directly related to the loan or extended payment

6

plan may not be recovered from the proceeds of the bond. The

7

department, in its discretion, may consent to or order pro

8

rata or other recovery on the bond for any aggrieved consumer

9

if claims against the bond may or do exceed its full monetary

10

amount. No bond shall comply with the requirements of this

11

paragraph unless it contains a provision that it shall not be

12

canceled for any cause unless notice of intention to cancel

13

is given to the department at least 30 days before the day

14

upon which cancellation shall take effect. In such event, the

15

licensee shall be required to replace the bond with a bond

16

substantially in the same form as the original bond.

17

Cancellation of the bond shall not invalidate the bond

18

regarding the period of time it was in effect.

19

(d)  License renewals.--Licenses shall be issued for terms of  

20

not more than 14 months and may be renewed by the department

21

upon application by the licensee and the payment of any and all

22

applicable renewal fees. A licensee shall comply with the same

23

requirements for renewal of its license as it did for the

24

issuance of the original license.

25

§ 5132.  Annual license fee.

26

(a)  General rule.--An applicant for a license shall pay to

27

the department at the time an application is filed, and upon

28

filing of each application for renewal thereof, a license fee

29

for the principal place of business of $3,000 and an additional

30

license fee for each branch office of $1,000.

- 25 -

 


1

(b)  Recovery of costs.--No abatement of a license fee shall

2

be made if the license is issued for a period of less than one

3

year. The department shall be entitled to recover any cost of

4

investigation in excess of license or renewal fees from the

5

licensee or from a person who is not licensed under this chapter

6

but who is believed to be engaged in the short-term loan

7

business.

8

§ 5133.  (Reserved).

9

§ 5134.  Issuance of license.

10

(a)  Time limit.--Upon receipt of an application for a

11

license, the department may conduct such investigation as it

12

deems necessary to determine that the applicant and its

13

officers, directors and principals are of good character and

14

ethical reputation. Within 60 days of receipt of a completed

15

application, the department shall:

16

(1)  issue a license; or

17

(2)  refuse to issue a license for any reason which the

18

department may refuse to issue a license under this section

19

or for which the department may suspend, revoke or refuse to

20

renew a license under section 5140 (relating to suspension,

21

revocation or refusal).

22

(b)  Appeal of denial.--If the department refuses to issue a

23

license, it shall notify the applicant in writing of the denial,

24

the reason therefor and the applicant's right to appeal the

25

denial to the Secretary of Banking. The department shall require

26

that an appeal from refusal to approve an application for a

27

license be filed by the applicant within 30 days of notice of

28

refusal.

29

(c)  Contents of license.--Every license issued by the

30

department shall specify:

- 26 -

 


1

(1)  The name and address of the licensee and the address

2

or addresses covered by the license.

3

(2)  The licensee's reference number.

4

(3)  Any other information the department shall require

5

to carry out the purposes of this chapter.

6

(d)  Denial of license due to conviction.--

7

(1)  The department may deny a license if it finds that

8

the applicant or a director, officer, partner, employee or

9

ultimate equitable owner of 10% or more of the applicant has

10

been convicted of a felony or a crime of moral turpitude in

11

any jurisdiction or convicted of a crime which, if committed

12

in this Commonwealth, would constitute a felony or a crime of

13

moral turpitude. For the purposes of this chapter, a person

14

shall be deemed to have been convicted of a crime if the

15

person:

16

(i)  enters a guilty plea or plea of nolo contendere

17

to a criminal charge before a Federal magistrate or a

18

court, unless the guilty plea or plea of nolo contendere

19

is set aside, vacated, reversed or otherwise abrogated by

20

lawful judicial process; or

21

(ii)  is found guilty by the verdict of a jury or the

22

decision or judgment of a Federal magistrate or court,

23

irrespective of pronouncement or suspension of sentence,

24

unless the decision or judgment is set aside, vacated,

25

reversed or otherwise abrogated by lawful judicial

26

process.

27

(2)  A license under this chapter shall be deemed to be a

28

"covered license" within the meaning of section 405 of the

29

act of May 15, 1933 (P.L.565, No.111), known as the

30

Department of Banking Code. The department shall notify a

- 27 -

 


1

licensee if a covered individual who is or will be employed

2

or contracted by the licensee has a criminal background that

3

renders the employee unfit for employment in the short-term 

4

loan business.

5

(e)  Denial of license for other reason.--The department may

6

deny a license or otherwise restrict a license if it finds that

7

the applicant or a director, officer, partner, employee, agent

8

or ultimate equitable owner of 10% or more of the applicant:

9

(1)  has had a license application or license issued by

10

the department or another state business licensing agency 

11

denied, not renewed, suspended or revoked;

12

(2)  is the subject of an order of the department;

13

(3)  has violated or failed to comply with any provisions

14

of this chapter or any regulation or order of the department;

15

(4)  has an outstanding debt to the Commonwealth or any

16

Commonwealth agency; or

17

(5)  does not possess the financial responsibility,

18

character, reputation, integrity and general fitness to

19

command the confidence of the public and to warrant the

20

belief that the short-term loan business will be operated

21

lawfully, honestly, fairly and within the legislative intent

22

of this chapter and in accordance with the general laws of

23

this Commonwealth. For purposes of this paragraph, an

24

applicant is not financially responsible if the applicant has

25

shown a disregard in the management of his or her own

26

financial condition. The factors that the department may

27

consider in making a determination regarding an applicant's

28

financial responsibility shall include:

29

(i)  Current outstanding judgments, other than

30

judgments solely as a result of medical expenses.

- 28 -

 


1

(ii)  Current outstanding tax liens or other

2

government liens and filings.

3

(iii)  Foreclosures within the past three years.

4

(iv)  A pattern of seriously delinquent accounts

5

within the past three years.

6

§ 5135.  License duration.

7

A license issued by the department:

8

(1)  Must be renewed on the license's renewal date of

9

each year upon payment of the annual renewal fee and after

10

the department determines that the licensee is conducting

11

business in accordance with this chapter. No refund of any

12

portion of the license fee shall be made if the license is

13

voluntarily surrendered to the department or suspended or

14

revoked by the department prior to its expiration date.

15

(2)  Shall be invalid if the licensee's authority to

16

conduct business is voided under any law of this Commonwealth

17

or any other state unless the licensee demonstrates that the

18

applicable court or governmental entity was clearly erroneous

19

in voiding the licensee's authority to conduct business.

20

(3)  Is not assignable or transferable by operation of

21

law or otherwise.

22

§ 5136.  Licensee and compliance system provider requirements.

23

(a)  Requirements of a licensee.--A licensee shall do all of

24

the following:

25

(1)  Maintain at its principal place of business within

26

this Commonwealth, or at a place outside this Commonwealth if

27

agreed to by the department, the original, a copy or

28

electronic access to books, accounts, records and documents

29

of the business conducted under the license as prescribed by

30

the department to enable the department to determine whether

- 29 -

 


1

the business of the licensee is being conducted in accordance

2

with this chapter and the orders, regulations and statements

3

of policy issued under this chapter. Instruments, documents,

4

accounts, books and records shall be kept separate and apart

5

from the records of any other business conducted by the

6

licensee and shall be preserved and kept available for

7

investigation or examination by the department for a period

8

determined by the department. The department shall have free

9

access to and authorization to examine records maintained

10

outside this Commonwealth. The costs of the examination,

11

including travel costs, shall be borne by the licensee. The

12

department may deny or revoke the authority to maintain

13

records outside this Commonwealth for good cause in the

14

interest of protection for Commonwealth consumers, including

15

for the licensee's failure to provide books, accounts,

16

records or documents to the department upon request.

17

(2)  Be subject to examination by the department. The

18

department may examine a licensee if the department deems the

19

examination to be necessary or desirable. The cost of the

20

examination shall be borne by the licensee. During an

21

examination, the department shall have free access, during

22

regular business hours, to the licensee's place or places of

23

business in this Commonwealth and to all instruments,

24

documents, accounts, books and records which pertain to a

25

licensee's short-term loan business, whether maintained in or

26

outside this Commonwealth.

27

(3)  Include in all advertisements language indicating

28

that the licensee is licensed by the department.

29

(b)  Requirements of compliance system provider.--Annually,

30

on a date determined by the department, the compliance system 

- 30 -

 


1

provider shall file a report with the department setting forth

2

the information the department requires concerning the short-

3

term loan business conducted by each licensee during the

4

preceding calendar year. The report must be in writing and

5

subject to penalty of perjury on a form provided by the

6

department. If the compliance system provider fails to file the

7

required report in a timely manner, it shall be subject to a

8

penalty of $500 for each day after the report is due until the

9

report is filed. The report shall include:

10

(1)  The total number of short-term loans made during the

11

preceding calendar year.

12

(2)  The minimum, maximum and average dollar amount of

13

short-term loans made during the preceding calendar year.

14

(3)  The average annual percentage rate and the average

15

term of short-term loans made during the preceding calendar

16

year.

17

(4)  The total number of returned checks, the total of

18

checks recovered and the total of checks charged off during

19

the preceding calendar year.

20

(5)  The total number of short-term loans paid in full,

21

the total number of loans which went into default and the

22

total number of loans charged off during the preceding

23

calendar year.

24

(6)  The total number of consumer complaints.

25

(7)  Frequency of repeat use by consumers of postdated or

26

delayed deposit checks.

27

(8)  Verification that the licensee has not used the

28

criminal process or caused the criminal process to be used in

29

the collection of any short-term loan during the preceding

30

calendar year.

- 31 -

 


1

(9)  Information on the number of consumers referred to

2

financial literacy counseling within the preceding calendar

3

year.

4

(10)  Any other information or data the department may

5

require.

6

(c)  Accounting records.--The licensee's accounting records

7

shall be constructed and maintained in compliance with generally

8

accepted accounting principles or as provided by department

9

regulation.

10

(d)  Copies.--If copies of instruments, documents, accounts,

11

books or records are maintained under subsection (a)(2), they

12

may be photostatic, microfilm or electronic copies or copies

13

provided in some other manner approved by the department.

14

(e)  Background checks.--The department shall require a

<--

15

criminal background check for all compliance system providers.

16

§ 5137.  Licensee limitations.

17

A licensee may not do any of the following:

18

(1)  Transact any business under this chapter under any

19

other name or names except those designated in its license. A

20

licensee that changes its name or place or places of business

21

shall immediately notify the department.

22

(2)  Conduct a business other than the short-term loan

23

business licensed by the department under this chapter

24

without at least 30 days' prior written notification to and

25

approval by the department.

26

§ 5138.  Surrender of license.

27

(a)  Authorization.--Upon satisfying the department that all

28

creditors of a licensee have been paid or that other

29

arrangements satisfactory to the creditors and the department

30

have been made, a licensee may voluntarily surrender its license

- 32 -

 


1

to the department by providing written notice that the license

2

is being voluntarily surrendered.

3

(b)  Effect.--Surrender under this section shall not affect

4

the licensee's civil or criminal liability for acts committed.

5

§ 5139.  Authority of department.

6

(a)  General authority.--The department has the following

7

powers and duties:

8

(1)  Examine any instrument, document, account, book,

9

record or file of a licensee or any person having a

10

connection to the licensee or make an investigation necessary

11

to administer this chapter. The costs of the examination

12

shall be borne by the licensee or the entity subject to the

13

examination. Under the authority under this subsection, the

14

department may remove any instrument, document, account,

15

book, record or file of a licensee to a location outside of

16

the licensee's office location.

17

(2)  Conduct an administrative hearing on any matter

18

pertaining to this chapter, issue subpoenas to compel the

19

attendance of witnesses and the production of instruments,

20

documents, accounts, books and records at the hearing.

21

Subpoenaed material may be retained by the department until

22

the completion of all proceedings in connection with the

23

materials. A department official may administer oaths and

24

affirmations to an individual whose testimony is required. If

25

a person fails to comply with a subpoena issued by the

26

department or to testify on a matter concerning which the

27

person may be lawfully interrogated, on application by the

28

department, the Commonwealth Court may issue an order

29

requiring the attendance of the person, the production of

30

instruments, documents, accounts, books or records or the

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1

giving of testimony.

2

(3)  Request and receive information or records,

3

including reports of criminal history record information from

4

any Federal, State, local or foreign government entity

5

regarding an applicant for a license, a licensee or a person

6

related to the business of the applicant or licensee, at a

7

cost to be paid by the applicant or licensee.

8

(4)  Require a person to pay the department's costs

9

incurred while conducting an investigation of the person for

10

purposes of issuance or renewal of a license or for any

11

violation of this chapter.

12

(5)  Promulgate regulations and statements of policy and

13

issue orders as necessary for the proper conduct of the

14

short-term loan business by licensees, the issuance and

15

renewal of licenses and the enforcement of this chapter.

16

(6)  Prohibit or permanently remove an individual

17

responsible for a violation of this chapter from working in

18

the individual's present capacity or in any other capacity

19

related to activities regulated by the department.

20

(7)  Order a person to make restitution for actual

21

damages to consumers caused by any violation of this chapter.

22

(8)  Impose conditions as the department deems

23

appropriate.

24

(b)  Hearings.--A person aggrieved by a decision of the

25

department may appeal the decision of the department to the

26

Secretary of Banking. The appeal shall be conducted under 2

27

Pa.C.S. Ch. 5 Subch. A (relating to practice and procedure of

28

Commonwealth agencies).

29

(c)  Injunctions.--The department may maintain an action for

30

an injunction or other process against a person to restrain the

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1

person from engaging in an activity violating this chapter.

2

(d)  Final orders.--A decision of the secretary shall be a

3

final order of the department and shall be enforceable in a

4

court of competent jurisdiction. The department shall publish

5

the final adjudication issued under this section, subject to

6

redaction or modification to preserve confidentiality.

7

(e)  Appeals.--A person aggrieved by a decision of the

8

Secretary of Banking may appeal the decision under 2 Pa.C.S. Ch.

9

7 Subch. A (relating to judicial review of Commonwealth agency

10

action).

11

§ 5140.  Suspension, revocation or refusal.

12

(a)  Departmental action.--The department may suspend, revoke

13

or refuse to renew a license issued under this chapter if any

14

fact or condition exists or is discovered which, if it had

15

existed or had been discovered at the time of filing of the

16

application for the license, would have warranted the department

17

in refusing to issue the license or if a licensee or director,

18

officer, partner, employee or owner of a licensee has:

19

(1)  Made a material misstatement in any application,

20

report or submission required by this chapter or any

21

department regulation or order.

22

(2)  Failed to comply with or violated this chapter or

23

any regulation or order promulgated or issued under this

24

chapter.

25

(3)  Engaged in dishonest, fraudulent or illegal

26

practices or conduct in a business or unfair or unethical

27

practices or conduct in connection with the short-term loan

28

business.

29

(4)  Been convicted of or pled guilty or nolo contendere

30

to a crime of moral turpitude or a felony.

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1

(5)  Permanently or temporarily been enjoined by a court

2

of competent jurisdiction from engaging in or continuing

3

conduct or a practice involving an aspect of the short-term 

4

loan business.

5

(6)  Become the subject of an order of the department

6

denying, suspending or revoking a license applied for or

7

issued under this chapter.

8

(7)  Become the subject of a United States Postal Service

9

fraud order.

10

(8)  Become the subject of an order of the department

11

denying, suspending or revoking a license under any other law

12

administered by the department.

13

(9)  Demonstrated negligence or incompetence in

14

performing an act for which the licensee is required to hold

15

a license under this chapter.

16

(10)  Failed to comply with the requirements of this

17

chapter to make and keep records prescribed by regulation or

18

order of the department, to produce records required by the

19

department or to file financial reports or other information

20

that the department, by regulation or order, may require.

21

(11)  Become insolvent. For purposes of this paragraph,

22

the term "become insolvent" shall mean that the liabilities

23

of the applicant or licensee exceed the assets of the

24

applicant or licensee or that the applicant or licensee

25

cannot meet the obligations of the applicant or licensee as

26

they mature or is in a financial condition that the applicant

27

or licensee cannot continue in business with safety to the

28

customers of the applicant or licensee.

29

(12)  Failed to comply with the terms of any agreement

30

under which the department authorizes a licensee to maintain

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1

records at a place other than the licensee's principal place

2

of business.

3

(b)  Reinstatement.--The department may reinstate a license

4

which was previously revoked or denied renewal if all of the

5

following exist:

6

(1)  The condition which warranted the original action

7

has been corrected to the department's satisfaction.

8

(2)  The department has reason to believe that the

9

condition is not likely to occur again.

10

(3)  The licensee satisfies all other requirements of

11

this chapter.

12

§ 5141.  Whistleblower protection.

<--

13

(a)  Adverse action prohibited.--No employer may discharge,

14

threaten or otherwise discriminate or retaliate against an

15

employee regarding the employee's compensation, terms,

16

conditions, location or privileges of employment because the

17

employee makes a good faith report or is about to report,

18

verbally or in writing, to the employer or appropriate authority

19

an instance of wrongdoing under section 5128 (relating to

20

licensee duties with respect to military personnel) or any other

21

violation of this chapter.

22

(b)  Remedies.--The remedies, penalties and enforcement

23

procedures for violations of this section shall be as provided

24

in the act of December 12, 1986 (P.L.1559, No.169), known as the

25

Whistleblower Law.

26

(c)  Definitions.--As used in this section, the following

27

words and phrases shall have the meanings given to them in this

28

subsection:

29

"Appropriate authority."  A Federal, State or local

30

government body, agency or organization having jurisdiction over

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1

criminal law enforcement, regulatory violations, professional

2

conduct or ethics, or waste; or a member, officer, agent,

3

representative or supervisory employee of the body, agency or

4

organization. The term includes, but is not limited to, the

5

Office of Attorney General, the Department of the Auditor

6

General, the Treasury Department, the General Assembly and

7

committees of the General Assembly having the power and duty to

8

investigate criminal law enforcement, regulatory violations,

9

professional conduct or ethics or waste.

10

"Employee."  A person who works for a licensee.

11

"Employer."  A licensee.

12

"Good faith report."  A report of conduct that alleges

13

wrongdoing or waste which is made by a person without malice or

14

consideration of personal benefit and which the person has

15

reasonable cause to believe is true.

16

"Public body."  All of the following:

17

(1)  A State officer, agency, department, division,

18

bureau, board, commission, council, authority or other body

19

in the executive branch of State government.

20

(2)  A county, city, township, regional governing body,

21

council, school district, special district or municipal

22

corporation, or a board, department, commission, council or

23

agency.

24

(3)  Any other body which is created by the Commonwealth

25

or a political subdivision authority or which is funded in

26

any amount by or through Commonwealth or political

27

subdivision authority or a member or employee of that body.

28

"Whistleblower."  A person who witnesses or has evidence of

29

wrongdoing or waste while employed and who makes a good faith

30

report of the wrongdoing or waste, verbally or in writing, to

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1

one of the person's superiors, to an agent of the employer or to

2

an appropriate authority.

3

"Wrongdoing."  A violation which is not of a merely technical

4

or minimal nature of a Federal or State statute or regulation,

5

of a political subdivision ordinance or regulation or of a code

6

of conduct or ethics designed to protect the interest of the

7

public or the employer.

8

§ 5141 5142.  Penalties.

<--

9

(a)  Licensees.--A licensee and any director, officer, owner,

10

partner, employee or agent of a licensee that violates this

11

chapter or commits any action which would subject the licensee

12

to sanction under section 5140 (relating to suspension,

13

revocation or refusal) may be fined by the department up to

14

$10,000 for each offense.

15

(b)  Nonlicensees.--A person subject to this chapter and not

16

licensed by the department that violates this chapter or commits

17

an action which would subject a licensee to sanction under

18

section 5140 may be fined by the department up to $10,000 for

19

each offense.

20

SUBCHAPTER D

21

MISCELLANEOUS PROVISIONS

22

Sec.

23

5151.  Applicability.

24

5152.  Preemption.

25

5153.  Report to General Assembly.

26

§ 5151.  Applicability.

27

This chapter shall apply to a loan which:

28

(1)  is made or executed within this Commonwealth; or

29

(2)  is negotiated, offered or otherwise transacted

30

within this Commonwealth or with any resident of this

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1

Commonwealth, in whole or in part, whether by the ultimate

2

lender or any other person.

3

§ 5152.  Preemption.

4

(a)  General rule.--Except as set forth in subsection (b),

5

all of the following apply:

6

(1)  This chapter preempts ordinances, resolutions and

7

regulations imposing reporting requirements, financial or

8

lending activities or other obligations upon persons subject

9

to this chapter.

10

(2)  Political subdivisions are prohibited from enacting

11

and enforcing ordinances, resolutions and regulations

12

expressly pertaining to the facilities of persons subject to

13

this chapter.

14

(b)  Exceptions.--A political subdivision may, under zoning

15

ordinance, require a short-term lender to:

16

(1)  locate within approved residential, industrial,

17

commercial or other zones; and

18

(2)  obtain a zoning permit, pay a zoning fee and undergo

19

an inspection related to zoning.

20

§ 5153.  Report to General Assembly.

21

Three years One year from the effective date of this chapter, 

<--

22

and annually thereafter, the department shall report to the

23

Secretary of the Senate and the Chief Clerk of the House of

24

Representatives on the status of the short-term loan industry.

25

The report shall include:

26

(1)  The number of short-term lenders with active

27

licenses issued by the department and the number of persons

28

employed in this Commonwealth.

29

(2)  A summary of the number of loans issued, the average

30

loan amount and any other information as determined by the

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1

department.

2

(3)  A compilation of aggregate data concerning the

3

short-term lending industry in this Commonwealth as reported

4

to the department under section 5136(b) (relating to licensee

5

and compliance system provider requirements).

6

(4)  Information on consumer complaints. This paragraph

7

includes alleged or confirmed reports of unfair or deceptive

8

trade practices and false, misleading or deceptive

9

advertising.

10

(5)  The effectiveness of the compliance system in

11

providing real-time reporting of loan transactions,

12

verification of consumers' borrowing and repayment history,

13

enrollment in extended payment plans and use of financial

14

literacy programs.

15

(6)  Information on the effectiveness of credit

<--

16

counseling pursuant to section 5129 (relating to licensee

17

duty to offer credit counseling), including all of the

18

following:

19

(i)  Identification by name and address of third-

20

party credit counselors approved by the agency.

21

(ii)  The geographic locations in this Commonwealth

22

where credit counseling is available to consumers.

23

(iii)  Information on the number of consumers who

24

participated in credit counseling, including demographic

25

data associated with such consumers.

26

(iv)  Information on the instructional format used by

27

third-party credit counselors to provide financial and

28

educational credit counseling.

29

(v)  Number of participating third-party certified

30

credit counselors.

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1

(vi)  Identification by licensee of the consumers who

2

participated in credit counseling.

3

(7)  Other information the department deems necessary and

<--

4

appropriate.

5

Section 2.  Section 4107(a) of Title 18 is amended by adding

6

a paragraph to read:

7

§ 4107.  Deceptive or fraudulent business practices.

8

(a)  Offense defined.--A person commits an offense if, in the

9

course of business, the person:

10

* * *

11

(9.1)  violates 7 Pa.C.S. § 5124 (relating to unfair or

12

deceptive practices);

13

* * *

14

Section 3.  Title 18 is amended by adding a section to read:

15

§ 7332.  Unlicensed short-term lending.

16

A person that operates without a license in violation of 7

17

Pa.C.S. § 5111 (relating to license requirements) commits a

18

felony of the third degree.

19

Section 4.  This act shall take effect as follows:

20

(1)  The following provisions of 7 Pa.C.S. shall take

21

effect 30 days after publication by the Department of Banking

22

of a notice in the Pennsylvania Bulletin that the Compliance

23

System described in 7 Pa.C.S. § 5115(f)(1) is operational and

24

ready to begin receiving the information required to be

25

provided to the Compliance System by licensees under 7

26

Pa.C.S. § 5115(f)(2):

27

(i)  Section 5115(e)(2) and (f)(2).

28

(ii)  Section 5125(b)(4).

29

(iii)  Section 5126(a)(11).

30

(2)  This section shall take effect immediately.

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1

(3)  The remainder of this act shall take effect in 60

2

days.

- 43 -