CORRECTIVE REPRINT

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

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

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

Offenses) of the Pennsylvania Consolidated Statutes, in Title

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

18, further providing for deceptive or fraudulent business

practices and providing for unlicensed short-term lending.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 7 of the Pennsylvania Consolidated Statutes

is amended by adding a chapter to read:

CHAPTER 51

SHORT-TERM LOAN PROTECTION

Subchapter

A.  Preliminary Provisions

B.  Nature and Effect of Short-Term Loans

C.  Administrative and Licensure Provisions

D.  Miscellaneous Provisions

SUBCHAPTER A

PRELIMINARY PROVISIONS

Sec.

5101.  Scope of chapter.

5102.  Definitions.

§ 5101.  Scope of chapter.

This chapter relates to consumer short-term loan protection.

§ 5102.  Definitions.

The following words and phrases when used in this chapter

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

context clearly indicates otherwise:

"Agency."  The Pennsylvania Housing Finance Agency.

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

chapter.

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

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

depository institution.

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

recipient of a short-term loan.

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

a licensee agrees to defer depositing or presenting a repayment

mechanism, as the context may require.

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

"Depository institution."  A person authorized to accept

deposits in accordance with Federal or State law.

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

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

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

by the Department of Banking.

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

under this chapter.

"Loan."  A short-term loan.

"Loan agreement."  A signed written agreement between a  

licensee and a consumer.

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

joint-stock company, partnership, limited liability company,

limited partnership, limited partnership association, business

corporation or any other group of individuals, however

organized.

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

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

including a present-dated or postdated check, electronic debit

or assignment of a future deposit.

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

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

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

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

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

lender by purchase or assignment.

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

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

or other consideration, does all of the following:

(1)  Accepts a check or other repayment mechanism from

the consumer.

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

a deferment period.

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

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

consumer's account the amount of the check less finance

charges permitted under section 5113 (relating to authorized

finance charges and loan verification costs). The term

includes any arrangement in which a person pays a cash

advance to a consumer in return for a repayment mechanism and

a fee, finance charge or other consideration.

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

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

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

causes to be advertised, solicits, negotiates or arranges,

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

this Commonwealth, whether directly or through any other person

acting for his benefit.

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

(1)  That portion of assets pledged to secure obligations

of any person other than that of the applicant.

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

applicant or related companies in which the applicant's

officers or stockholders have an interest.

(3)  That portion of the value of any marketable

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

cost or market.

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

sheet in the applicant's joint ventures, subsidiaries,

affiliates or related companies which is greater than the

value of the assets at equity.

(5)  Goodwill.

(6)  The value placed on insurance renewals, property

management contract renewals or other similar intangibles of

the applicant.

(7)  Organization costs of the applicant.

(8)  Any real estate held for investment where

development will not start within two years from the date of

its initial acquisition.

(9)  Any leasehold improvements not being amortized over

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

term of the lease.

SUBCHAPTER B

NATURE AND EFFECT OF SHORT-TERM LOANS

Sec.

5111.  License requirements.

5112.  Loan agreement requirements.

5113.  Authorized finance charges and loan verification costs.

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

rescission.

5115.  Prohibitions.

5116.  (Reserved).

5117.  Form of loan proceeds.

5118.  Endorsement of check.

5119.  Redemption of repayment mechanism.

5120.  Authorized charge for dishonored repayment mechanisms.

5121.  Posting of charges and notice of mandatory extended

payment plan.

5122.  Notice of assignment or sale of loans.

5123.  No criminal culpability.

5124.  Unfair or deceptive practices.

5125.  Extended payment plan.

5126.  Prohibited practices regarding loans.

5127.  Commonwealth Consumer Credit Counseling Account.

5128.  Licensee duties with respect to military personnel.

5129.  Licensee duty to offer credit counseling.

5129.1.  Anti-money laundering requirements.

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§ 5111.  License requirements.

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

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

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

individual who resides in this Commonwealth or, if the person

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

regardless of his residence, without first obtaining a license

from the department under this chapter and otherwise complying

with all of the provisions of this chapter.

(b)  Exemptions.--

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

shall not apply to depository institutions. To the extent

permissible under Federal and State law, a depository

institution may make short-term loans in accordance with the

terms and interest rates, fees and charges authorized by this

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

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

institution for the purpose of brokering short-term loans

made by a depository institution shall be subject to all

provisions of this chapter except those provisions related to

finance charges and loan terms. This paragraph shall be

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

and held by a depository institution.

§ 5112.  Loan agreement requirements.

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

agreement which shall contain all of the following:

(1)  The name and address of the consumer.

(2)  The transaction date and a prominently labeled

transaction number.

(3)  The amount of the loan or advance.

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

charged, expressed both as a dollar amount and an annual

percentage rate.

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

or extended payment plan.

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

licensee and the name and title of the individual employee

who signs the loan agreement on behalf of the licensee.

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

consumer.

(8)  Disclosures required by the Truth in Lending Act

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

whether the Truth in Lending Act applies to the particular

loan.

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

obligations under the loan and a clear description of the

repayment mechanism agreed to by the licensee and the

consumer.

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

request an extended payment plan under section 5125 (relating

to extended payment plan).

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

point type indicating the maximum loan amount and finance

charge.

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

point type indicating the restrictions on multiple loans

provided for under this chapter.

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

point type indicating the consumer's right of rescission

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

rescission shall be set forth immediately above the

consumer's signature line and shall state as follows:

This transaction is not meant to meet long-term financial

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

needs. You have the right to rescind this transaction at

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

next business day after the transaction date shown above.

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

proceeds you received to the lender. The lender will

refund to you all fees if you rescind this transaction.

(14)  Any other information as the department may

require.

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

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

one regular installment of income for the consumer. The

deferment period shall be calculated from the date of the loan

agreement.

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

instrument signed by the consumer in connection with the loan,

shall not contain any of the following:

(1)  A mandatory arbitration clause that does not comply

with the standards set forth in the statement of principles

of the National Consumer Disputes Advisory Committee of the

American Arbitration Association in effect on the effective

date of this section.

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

licensee.

(3)  A confession of judgment clause.

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

any provision of this chapter.

§ 5113.  Authorized finance charges and loan verification costs.

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

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

which may not exceed $0.125 per $1.00 of the short-term loan.

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

of the short-term loan transaction, unless the consumer rescinds

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

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

impose only fees and charges authorized under this chapter in

connection with a short-term loan.

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

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

renewal made under this chapter. The verification fee shall be

used in part to defray the costs of submitting a compliance

system inquiry as provided under section 5115 (relating to

prohibitions) and for the Commonwealth Consumer Credit

Counseling Account under section 5127 (relating to Commonwealth  

Consumer Credit Counseling Account).

(c)  Required remittance of fees.--

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

(i)  Fifty cents per loan transaction to the

Commonwealth Consumer Credit Counseling Account for the

agency to pay for costs to provide consumer budget and

credit counseling.

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

as determined by the department, to a compliance system

provider for the purpose of determining outstanding loans

and repayment dates provided under section 5115.

(iii)  One dollar and fifty cents per loan

transaction, plus any difference in the fee determined by

the department for the services of the compliance system

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

prohibitions) and the amount established under

subparagraph (ii) to the department.

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

be required to remit to a compliance system provider any

amounts related to the compliance system until the department

has selected the compliance system provider as required under

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

this subsection may be delivered to and disbursed by the

compliance system provider, as determined by the department.

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

rescission.

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

consumer in an amount that would result in the consumer having

outstanding loans to one or more licensee in excess of the

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

at any time. The licensee shall maintain records evidencing the

consumer's gross monthly income as required under section

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

requirements).

(a.1)  Consumer report.--

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

consumer, a borrower's consumer report from a consumer

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

underwriting process.

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

(i)  As a permissible method of verifying the

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

loan.

(ii)  In underwriting and making subsequent short-

term loans to the same customer if the report was

obtained within the previous 12 months.

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

phrases shall have the meanings given to them in this

paragraph unless the context clearly indicates otherwise:

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

(relating to definitions; rules of construction).

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

1681a(f).

(b)  Right to rescind.--

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

close of business on the next business day immediately

following the day on which the loan proceeds were received by

the consumer.

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

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

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

proceeds of the loan received by the consumer from the

licensee under section 5117 (relating to form of loan

proceeds).

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

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

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

to the consumer any check given to the licensee in connection

with the loan or shall agree in writing that any other

repayment mechanism shall not be utilized.

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

completed when the licensee receives payment in full of the loan

or the consumer redeems the repayment mechanism being held by

the licensee by paying the full amount represented by the

repayment mechanism to the licensee. The consumer may repay a

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

the licensee at the consumer's election.

§ 5115.  Prohibitions.

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

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

or any other licensee if the aggregate amount of all loans

outstanding to the consumer exceeds the maximum amount permitted

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

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

an extended payment plan under section 5125 (relating to

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

consumer may not have loans outstanding from more than two  

licensees at any one time.

(b)  (Reserved).

(c)  (Reserved).

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

time of entering into a loan transaction:

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

from any licensee, the aggregate amount of all loans which

exceeds the maximum loan amount permitted under section

5114(a).

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

payment plan under section 5125 which has not yet been paid

in full.

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

if applicable.

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

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

following:

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

(2)  A query of the compliance system under subsection

(f)(1).

(f)  Procedure to determine outstanding loans and repayment

dates.--

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

capable of developing, implementing and maintaining a

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

time access for reporting of loan transactions and verifying

the information required under subsection (a).

(2)  Licensees shall report to the compliance system 

information determined by the department to be necessary to

verify the number and amount of loans a consumer has

outstanding with any licensee, the date of repayment of a

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

extended payment plan.

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

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

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following:

(1)  A racetrack or other nonprimary location where

thoroughbred or harness horse race meetings are conducted,

respectively, with pari-mutuel wagering in accordance with 

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

Race Horse Industry Reform Act.

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

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

(3)  A military installation or a facility operated by

the United States Department of Veterans Affairs.

§ 5116.  (Reserved).

§ 5117.  Form of loan proceeds.

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

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

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

consumer's account at a depository institution.

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

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

effecting the disbursement of loan proceeds.

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

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

the consumer repays the loan.

§ 5118.  Endorsement of check.

A licensee may not negotiate or present a check for payment

of a loan unless the instrument is endorsed with the actual

business name or registered fictitious name of the licensee.

§ 5119.  Redemption of repayment mechanism.

Prior to the licensee's negotiating or presenting a

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

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

repayment mechanism if the consumer pays the full amount of the

check or other repayment mechanism to the licensee.

§ 5120.  Authorized charge for dishonored repayment mechanisms.

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

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

the licensee:

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

authorized by law to collect the face value of the repayment

mechanism.

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

charge not to exceed $25.

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

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

(relating to damages in actions on bad checks).

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

section shall not be allowed:

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

from the licensee for any reason; or

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

forgery or theft.

§ 5121.  Posting of charges and notice of mandatory extended

payment plan.

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

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

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

any related charges, such as the charge for dishonored repayment

mechanisms, imposed for loans.

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

consumer at the time a loan agreement is signed, and

conspicuously display in the lending area of each business

location of the licensee, the following notice:

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

entitled to request an extended payment plan agreement

with a fully disclosed rate, term and payment plan.

§ 5122.  Notice of assignment or sale of loans.

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

writing immediately of the name, address and telephone number of

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

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

depository institution.

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

licensee shall provide the following notice to the buyer or

assignee:

The repayment mechanism associated with this loan has

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

transaction under Pennsylvania State law and the assignee

or buyer is deemed to have knowledge of and shall be

bound by the terms and conditions of the loan agreement

between the consumer and the original lender.

§ 5123.  No criminal culpability.

A consumer shall not be subject to a criminal penalty:

(1)  For entering into a loan agreement.

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

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

repayment mechanism is drawn is closed by the consumer before

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

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

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

shall apply.

§ 5124.  Unfair or deceptive practices.

A person may not engage in unfair or deceptive acts,

practices or advertising in connection with a loan. A violation

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

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

Practices and Consumer Protection Law.

§ 5125.  Extended payment plan.

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

extended payment plan agreement under subsection (b) at least

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

the consumer declares an inability to repay.

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

plan agreement shall be subject to the following terms:

(1)  The principal balance due under the extended payment

plan shall be the outstanding principal balance and finance

charge due under the existing loan. The licensee may

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

balance of the existing loan by paying the licensee cash on

the date the consumer enters into the extended payment plan

agreement.

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

entering into the extended payment plan. The licensee may

impose only the fees and charges authorized in section 5120

(relating to authorized charge for dishonored repayment

mechanisms) in connection with an extended payment plan.

(3)  The extended payment plan agreement shall allow the

consumer to pay the sums due under the extended payment plan

over at least four 14-day installments. Each installment

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

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

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

consumer has loans outstanding to two licensees and is unable

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

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

partially or entirely pay off an extended payment plan.

(4)  A licensee shall report to the compliance system 

described in section 5115 (relating to prohibitions) that the

consumer is enrolled in an extended payment plan.

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

an extended payment plan under the provisions of this

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

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

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

right of rescission) for the rescission of a loan.

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

extended payment plan, a consumer must:

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

assignee, that will enter into the extended payment plan.

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

due date of the loan.

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

writing, that the consumer requests an extended payment plan.

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

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

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

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

loan to the consumer.

§ 5126.  Prohibited practices regarding loans.

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

loans:

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

the consumer's check or other repayment mechanism.

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

check or other repayment mechanism from the consumer in

connection with a single transaction.

(3)  Selling, offering or soliciting any application for

credit insurance in connection with a transaction.

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

or obligation of the consumer.

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

than in accordance with the provisions of this chapter.

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

requirements of this chapter, including making loans

disguised as personal property sales and leaseback

transactions or disguising loan proceeds as cash rebates for

the pretextual installment sale of goods and services.

(7)  Failing to collect and provide information regarding

the number, total and average transaction amounts and other

information the department may request.

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

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

the short-term lender complies with all applicable provisions

of this chapter.

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

or repayment mechanism held by the licensee.

(10)  Rolling over, refinancing, extending or

consolidating short-term loans except as provided in section 

5125 (relating to extended payment plan).

(11)  Failing to immediately and accurately report a loan

or an extended payment plan to the compliance system provider

as required by this chapter or by the department.

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

any state to collect the balance due on a loan.

(13)  Depositing a check or otherwise implementing any

repayment mechanism prior to the expiration of the agreed-

upon deferment period.

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

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

be uncollectible and unenforceable.

§ 5127.  Commonwealth Consumer Credit Counseling Account.

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

restricted account to be known as the Commonwealth Consumer

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

(relating to authorized finance charges, origination fees and

loan verification costs) shall be deposited into the account.

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

(1)  The agency shall designate and approve nonprofit

credit counseling agencies to be available to assist the

agency in implementing the provisions of this chapter related

to consumer credit counseling. Nonprofit credit counseling

agencies seeking to provide budget and credit counseling to

consumers must meet all requirements prescribed by the

agency.

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

approved nonprofit credit counseling agencies by county and

publish the list on the agency's publicly accessible Internet

website.

(3)  The agency shall allocate quarterly, at its

discretion, funds to approved nonprofit credit counseling

agencies from the account.

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

delivery of consumer credit counseling from amounts available

in the account.

§ 5128.  Licensee duties with respect to military personnel.

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

activity against:

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

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

duration of the posting; or

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

duty.

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

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

military in an effort to collect a loan.

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

of any repayment agreement that it has entered into with a

consumer who is a member of the military, including any

repayment agreement negotiated through military counselors or

third-party credit counselors.

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

with any Federal statutes and provisions regarding military

personnel and their dependents.

§ 5129.  Licensee duty to offer credit counseling.

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

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

third party credit counselor approved by the agency to provide

credit counseling prior to executing a loan agreement with a

borrower.

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

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

counseling on a form prescribed by the department, which shall

include the following notice:

You are entitled to no-cost credit counseling in connection

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

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

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

credit counseling could help you avoid the need to seek this

kind of loan in the future.

§ 5129.1.  Anti-money laundering requirements.

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A person licensed by the department under this act shall:

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

relating to the detection and prevention of money laundering,

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

services businesses of suspicious transactions), 103.22

(relating to reports of transactions in currency), 103.23

(relating to reports of transportation of currency or

monetary instruments), 103.27 (relating to filing of

reports), 103.28 (relating to identification required),

103.29 (relating to purchases of bank checks and drafts,

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

(relating to records to be made and retained by financial

institutions), 103.37 (relating to additional records to be

made and retained by currency dealers or exchangers) and

103.41 (relating to registration of money services

businesses).

(2)  Maintain an anti-money laundering program in

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

laundering programs for money services businesses). The

program must be reviewed and updated as necessary to ensure

that it continues to be effective in detecting and deterring

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

business.

(3)  Comply with United States Treasury Interpretive

Release 2004-1.

SUBCHAPTER C

ADMINISTRATIVE AND LICENSURE PROVISIONS

Sec.

5131.  Application for license.

5132.  Annual license fee.

5133.  (Reserved).

5134.  Issuance of license.

5135.  License duration.

5136.  Licensee and compliance system provider requirements.

5137.  Licensee limitations.

5138.  Surrender of license.

5139.  Authority of department.

5140.  Suspension, revocation or refusal.

5141.  Penalties.

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5141.  Whistleblower protection.

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5142.  Penalties.

§ 5131.  Application for license.

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

chapter shall be on a form prescribed and provided by the

department. The application shall include the name of the

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

applicant and the address or addresses where the applicant's

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

official title and business address of each director and

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

information that may be required by the department. An applicant

shall demonstrate to the department that policies and procedures

have been developed to receive and process consumer inquiries

and grievances promptly and fairly.

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

required to provide the department with written notice of the

change in any information contained in an application for a

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

applicant or licensee becoming aware of such change.

(c)  Financial structure.--

(1)  The applicant must establish that the applicant:

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

tangible net worth of $250,000;

(ii)  will at all times maintain the minimum tangible

net worth required by subparagraph (i); and

(iii)  has an otherwise adequate financial structure.

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

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

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

from a surety company authorized to do business in this

Commonwealth. The bond shall be a penal bond conditioned on

compliance by the licensee with this chapter and subject to

forfeiture and shall run to the Commonwealth for its use and

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

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

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

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

with the written consent of the department, recover the

amount by which the consumer is aggrieved from the bond by

filing a claim with the surety company or maintaining an

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

may recover the amount by which the consumer is aggrieved by

filing a formal complaint against the licensee with the

department, which shall adjudicate the matter. Such an

adjudication shall be binding upon the surety company and

enforceable by the department in Commonwealth Court and by an

aggrieved consumer in any court. An aggrieved consumer

seeking to recover any amount from a bond that has already

been forfeited by the licensee or which the department is in

the process of having forfeited may recover payment on such

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

department consents to the requested payment or portion

thereof. The department may pay the aggrieved consumer from

the bond proceeds recovered by the department in such case.

Nothing in this paragraph shall be construed as limiting the

ability of any court or magisterial district judge to award

to any aggrieved consumer other damages, court costs and

attorney fees permitted by applicable law, but those claims

that are not directly related to the loan or extended payment

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

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

rata or other recovery on the bond for any aggrieved consumer

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

amount. No bond shall comply with the requirements of this

paragraph unless it contains a provision that it shall not be

canceled for any cause unless notice of intention to cancel

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

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

licensee shall be required to replace the bond with a bond

substantially in the same form as the original bond.

Cancellation of the bond shall not invalidate the bond

regarding the period of time it was in effect.

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

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

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

applicable renewal fees. A licensee shall comply with the same

requirements for renewal of its license as it did for the

issuance of the original license.

§ 5132.  Annual license fee.

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

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

filing of each application for renewal thereof, a license fee

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

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

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

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

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

investigation in excess of license or renewal fees from the

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

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

business.

§ 5133.  (Reserved).

§ 5134.  Issuance of license.

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

license, the department may conduct such investigation as it

deems necessary to determine that the applicant and its

officers, directors and principals are of good character and

ethical reputation. Within 60 days of receipt of a completed

application, the department shall:

(1)  issue a license; or

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

department may refuse to issue a license under this section

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

renew a license under section 5140 (relating to suspension,

revocation or refusal).

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

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

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

denial to the Secretary of Banking. The department shall require

that an appeal from refusal to approve an application for a

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

refusal.

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

department shall specify:

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

or addresses covered by the license.

(2)  The licensee's reference number.

(3)  Any other information the department shall require

to carry out the purposes of this chapter.

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

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

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

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

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

any jurisdiction or convicted of a crime which, if committed

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

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

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

person:

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

to a criminal charge before a Federal magistrate or a

court, unless the guilty plea or plea of nolo contendere

is set aside, vacated, reversed or otherwise abrogated by

lawful judicial process; or

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

decision or judgment of a Federal magistrate or court,

irrespective of pronouncement or suspension of sentence,

unless the decision or judgment is set aside, vacated,

reversed or otherwise abrogated by lawful judicial

process.

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

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

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

Department of Banking Code. The department shall notify a

licensee if a covered individual who is or will be employed

or contracted by the licensee has a criminal background that

renders the employee unfit for employment in the short-term 

loan business.

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

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

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

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

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

the department or another state business licensing agency 

denied, not renewed, suspended or revoked;

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

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

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

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

Commonwealth agency; or

(5)  does not possess the financial responsibility,

character, reputation, integrity and general fitness to

command the confidence of the public and to warrant the

belief that the short-term loan business will be operated

lawfully, honestly, fairly and within the legislative intent

of this chapter and in accordance with the general laws of

this Commonwealth. For purposes of this paragraph, an

applicant is not financially responsible if the applicant has

shown a disregard in the management of his or her own

financial condition. The factors that the department may

consider in making a determination regarding an applicant's

financial responsibility shall include:

(i)  Current outstanding judgments, other than

judgments solely as a result of medical expenses.

(ii)  Current outstanding tax liens or other

government liens and filings.

(iii)  Foreclosures within the past three years.

(iv)  A pattern of seriously delinquent accounts

within the past three years.

§ 5135.  License duration.

A license issued by the department:

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

each year upon payment of the annual renewal fee and after

the department determines that the licensee is conducting

business in accordance with this chapter. No refund of any

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

voluntarily surrendered to the department or suspended or

revoked by the department prior to its expiration date.

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

conduct business is voided under any law of this Commonwealth

or any other state unless the licensee demonstrates that the

applicable court or governmental entity was clearly erroneous

in voiding the licensee's authority to conduct business.

(3)  Is not assignable or transferable by operation of

law or otherwise.

§ 5136.  Licensee and compliance system provider requirements.

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

the following:

(1)  Maintain at its principal place of business within

this Commonwealth, or at a place outside this Commonwealth if

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

electronic access to books, accounts, records and documents

of the business conducted under the license as prescribed by

the department to enable the department to determine whether

the business of the licensee is being conducted in accordance

with this chapter and the orders, regulations and statements