1Amending Titles 7 (Banks and Banking) and 18 (Crimes and
2Offenses) of the Pennsylvania Consolidated Statutes,
3providing for micro loan reform and imposing penalties;
4further providing for deceptive or fraudulent business
5practices; and providing for unlicensed short-term lending.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Part II of Title 7 of the Pennsylvania
9Consolidated Statutes is amended by adding a chapter to read:




13A. Preliminary Provisions

14B. Consumer Protections

15C. Nature of Loans

16D. Administrative and Licensure Provisions

17E. Miscellaneous Provisions




15101. Scope of chapter.

25102. Definitions.

3§ 5101. Scope of chapter.

4This chapter relates to micro loan reform.

5§ 5102. Definitions.

6The following words and phrases when used in this chapter
7shall have the meanings given to them in this section unless the
8context clearly indicates otherwise:

9"Agency." The Pennsylvania Housing Finance Agency.

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

12"Check." A check as that term is defined in 13 Pa.C.S. §
133104(f) (relating to negotiable instrument) which is drawn on a
14depository institution.

15"Consecutive short-term loan." The application by a consumer
16for and approval by a licensee of a short-term loan no earlier
17than one business day nor more than two business days after the
18payment by the consumer of a previous short-term loan, whether
19from the same or a different licensee.

20"Consumer." An individual who applies for or is the
21recipient of a short-term loan.

22"Deferment period." The term of a loan or the number of days
23a licensee agrees to defer depositing or presenting a repayment
24mechanism, as the context may require.

25"Department." The Department of Banking and Securities of
26the Commonwealth.

27"Depository institution." A person authorized to accept
28deposits in accordance with Federal or State law.

29"Extended short-term loan." A loan made by a licensee which
30has all of the requirements of a short-term loan except that:

1(1) its deferment period is not less than 60 days nor
2more than 120 days; and

3(2) its repayment schedule is of equal amounts and
4periods and consistent with the consumer's regular
5installment of income.

6"Gross monthly income." Wages or commissions received by a
7consumer in the 30-day period immediately preceding the date of
8the consumer's application for a loan or as otherwise determined
9by the Department of Banking and Securities.

10"Licensee." A person licensed by the Department of Banking
11and Securities under this chapter.

12"Loan agreement." A signed written agreement between a
13licensee and a consumer.

14"Person." An individual, association, joint venture or
15joint-stock company, partnership, limited liability company,
16limited partnership, limited partnership association, business
17corporation or any other group of individuals, however

19"Repayment mechanism." A method agreed to by a consumer
20which a licensee may use to effect repayment of a loan,
21including a present-dated or postdated check, electronic debit
22or assignment of a future deposit.

23"Secretary." The Secretary of Banking and Securities.

24"Short-term lender." A person who, as principal or agent,
25markets, negotiates, arranges, places, makes, services, holds or
26originates short-term loans for consumers for a fee, finance
27charge or other consideration. The term includes a short-term
28lender who acquires a short-term loan from another short-term
29lender by purchase or assignment.

30"Short-term loan." As follows:

1(1) A loan or advance of money or credit to a consumer
2by a short-term lender that, for a fee, finance charge or
3other consideration, does all of the following:

4(i) Accepts a check or other repayment mechanism
5from the consumer.

6(ii) Agrees to hold the check or repayment mechanism
7for a deferment period.

8(iii) Pays to the consumer a cash advance, a locally
9cashable check, debit card or money order or credits to
10the consumer's account the amount of the check less
11finance charges permitted under Subchapter C (relating to
12nature of loans).

13(2) The term includes an arrangement in which a person
14pays a cash advance to a consumer in return for a repayment
15mechanism and a fee, finance charge or other consideration.

16"Short-term loan business." A person is deemed to be engaged
17in the short-term loan business in this Commonwealth if that
18person, in the ordinary course of its business, advertises,
19causes to be advertised, solicits, negotiates or arranges,
20offers to make, makes, services or holds a short-term loan in
21this Commonwealth, whether directly or through another person
22acting for his benefit.

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

24(1) The portion of assets pledged to secure obligations
25of a person other than that of the applicant.

26(2) An asset due from officers or stockholders of the
27applicant or related companies in which the applicant's
28officers or stockholders have an interest.

29(3) The portion of the value of a marketable security,
30listed or unlisted, not shown at lower of either cost or

1market value.

2(4) An investment shown on the applicant's balance sheet
3in the applicant's joint ventures, subsidiaries, affiliates
4or related companies which is greater than the value of the
5assets at equity.

6(5) Goodwill.

7(6) The value placed on insurance renewals, property
8management contract renewals or other similar intangibles of
9the applicant.

10(7) Organization costs of the applicant.

11(8) Real estate held for investment where development
12will not start within two years from the date of its initial

14(9) Leasehold improvements not being amortized over the
15lesser of the expected life of the asset or the remaining
16term of the lease.




205111. License requirements.

215112. Loan agreement requirements.

225113. Sole allowable interest charge.

235114. Limitation on repayment terms.

245115. Prohibition on rollover loans.

255116. Maximum number and amount of loans, use of consumer
26report, right of rescission and prohibition on same-
27day loans.

285117. Licensee duty to offer credit counseling.

295118. Commonwealth Consumer Credit Counseling Account.

305119 Verification of compliance with regulatory terms and


25120. Verification fee.

35121. Establishment and operation of compliance system.

45122. Licensee duties with respect to military personnel.

55123. Form of loan proceeds.

65124. Endorsement of check.

75124.1. Redemption of repayment mechanism.

85125. Posting of charges.

95126. Notice of assignment or sale of loans.

105127. Criminal culpability.

115128. Unfair or deceptive practices.

125128.1. Extended payment plan.

135129. Prohibited practices regarding loans.

145130. Anti-money laundering requirements.

15§ 5111. License requirements.

16(a) General rule.--No person may market, service, arrange,
17make, hold, originate, extend, contract or negotiate, whether
18electronically or by other means, loans established under this
19chapter to an individual who resides in this Commonwealth or, if
20the person has a place of business in this Commonwealth, to an
21individual regardless of his residence, without first obtaining
22a license from the department under this chapter and otherwise
23complying with all of the provisions of this chapter.

24(b) Exemptions.--

25(1) Except as provided under paragraph (2), the
26requirements to verify compliance and collect and remit the
27verification fee established under sections 5119 (relating to
28verification of compliance with regulatory terms and
29conditions) and 5120 (relating to verification fee) shall
30apply to depository institutions. A depository institution

1may make short-term loans in accordance with the terms and
2interest rates, fees and charges permissible under Federal or
3State law.

4(2) A licensee that is an agent of a depository
5institution for the purpose of brokering short-term loans
6made by a depository institution shall be subject to the
7provisions of this chapter except for provisions related to
8finance charges and loan terms. This paragraph shall apply to
9the brokering of short-term loans that are made and held by a
10depository institution.

11§ 5112. Loan agreement requirements.

12(a) General rule.--Each loan, regardless of the term of that
13loan, shall be documented by a loan agreement which shall
14contain all of the following:

15(1) The name and address of the consumer.

16(2) The transaction date and a prominently labeled
17transaction number.

18(3) The amount of the loan or advance.

19(4) A statement of the total amount of finance charges
20charged, expressed both as a dollar amount and an annual
21percentage rate.

22(5) A specific date for the end of the deferment period
23or extended payment plan.

24(6) The name, address and telephone number of the
25licensee and the name and title of the individual employee
26who signs the loan agreement on behalf of the licensee.

27(7) An itemization of the fees to be paid by the

29(8) Disclosures required under the Truth in Lending Act
30(Public Law 90-321, 15 U.S.C. § 1601 et seq.).

1(9) A clear description of the consumer's payment
2obligations under the loan, a clear description of the
3repayment mechanism agreed to by the licensee and the
4consumer and a clear description of the consumer's right to
5request an extended payment plan under section 5128.1
6(relating to extended payment plan).

7(10) Disclosure in boldface print and in at least ten-
8point type indicating the loan amount and finance charge.

9(11) Disclosure in boldface print and in at least ten-
10point type indicating the restrictions on loans provided for
11under this chapter.

12(12) Disclosure in boldface print and in at least ten-
13point type indicating the consumer's right of rescission
14under this chapter. The disclosure of the consumer's right of
15rescission shall be set forth immediately above the
16consumer's signature line and shall state as follows:

17This transaction is not meant to meet long-term
18financial needs and should be used only to meet
19short-term cash needs. You have the right to rescind
20this transaction at any time before the lender's
21close of business on the next business day after the
22transaction date shown above. In order to rescind,
23you must return all of the loan proceeds you received
24to the lender. The lender will refund to you all fees
25if you rescind this transaction.

26(14) Any other information as the department may

28(b) Limitations.--A loan agreement, or any other document or
29instrument signed by the consumer in connection with the loan,
30may not contain any of the following:

1(1) A mandatory arbitration clause that does not comply
2with the standards set forth in the statement of principles
3of the National Consumer Disputes Advisory Committee of the
4American Arbitration Association in effect on the effective
5date of this section.

6(2) A hold harmless clause for the benefit of the

8(3) A confession of judgment clause.

9(4) A waiver by the consumer of any contractual right or
10any provision of this chapter.

11§ 5113. Sole allowable interest charge.

12Notwithstanding the term of or another provision applicable
13to the categories of loans authorized under this chapter, a
14licensee may charge and receive on each loan interest at a
15simple annual rate that does not exceed 28% per year. The
16interest on the short-term loan shall be calculated in
17compliance with 15 U.S.C. § 1606 (relating to determination of
18annual percentage rate). The finance charge shall be deemed
19fully earned as of the date of the short-term loan transaction,
20unless the consumer rescinds the loan under section 5116
21(relating to maximum number and amount of loans, use of consumer
22report, right of rescission and prohibition on same-day loans).

23§ 5114. Limitation on repayment terms.

24Loans under this chapter shall have, as far as is
25practicable, repayment terms of substantially equal installment
26amounts and time periods. A loan to a consumer whose repayment
27period spans multiple regular occurrences of income shall be
28entitled to repayment over substantially equal time periods and
29for substantially equal amounts consistent with those
30occurrences of income. Loans in excess of 30 days shall not have

1a single balloon payment.

2§ 5115. Prohibition on rollover loans.

3Notwithstanding the term or another provision applicable to
4the categories of loans authorized under this chapter, a
5licensee may not offer a consumer a loan whose purpose is to
6fund the repayment of a prior unpaid loan received from that

8§ 5116. Maximum number and amount of loans, use of consumer
9report, right of rescission and prohibition on same-
10day loans.

11(a) General rule.--A licensee may not make a short-term or
12extended short-term loan to a consumer in an amount that would
13result in the consumer having more than one outstanding loan to
14a single or to multiple licensees at a time. The amount of a
15short-term or extended short-term loan may not be in excess of
16the lesser of $1,000 or 25% of the consumer's gross monthly
17income at any time. A licensee shall maintain records evidencing
18the consumer's gross monthly income as required under section
195141(a)(1) (relating to licensee and compliance system provider

21(b) Consumer report.--

22(1) A short-term lender may request, at no cost to the
23consumer, a borrower's consumer report from a consumer
24reporting agency as part of the short-term lender's
25underwriting process.

26(2) A short-term lender may rely on the consumer report:

27(i) As a permissible method of verifying the
28borrower's monthly gross income in making the short-term

30(ii) In underwriting and making subsequent short-

1term loans to the same customer if the report was
2obtained within the previous 12 months.

3(3) As used in this subsection, the following words and
4phrases shall have the meanings given to them in this
5paragraph unless the context clearly indicates otherwise:

6"Consumer report." As defined in 15 U.S.C. §
71681a(d) (relating to definitions; rules of

9"Consumer reporting agency." As defined in 15 U.S.C.
10§ 1681a(f).

11(c) Right to rescind.--

12(1) A consumer may rescind a loan before the licensee's
13close of business on the next business day immediately
14following the day on which the loan proceeds were received by
15the consumer.

16(2) In order to rescind a loan, a consumer shall notify
17the licensee of the consumer's desire to rescind the loan and
18return to the licensee, at the time of giving notice, the
19proceeds of the loan received by the consumer from the
20licensee under section 5123 (relating to form of loan

22(3) No finance charge or other charge or fee may be
23charged or collected by the licensee if a loan is rescinded.

24(4) Upon rescission of a loan, the licensee shall return
25to the consumer any check given to the licensee in connection
26with the loan or shall agree in writing that any other
27repayment mechanism shall not be utilized.

28(d) Completed transaction.--A loan transaction shall be
29completed when the licensee receives payment in full of the loan
30or the consumer redeems the repayment mechanism being held by

1the licensee by paying the full amount represented by the
2repayment mechanism to the licensee. The consumer may repay a
3loan at an office of the original licensee or the assignee of
4the licensee at the consumer's election.

5(e) Same-day loan.--Upon repayment of a loan, a licensee may
6not make or offer a loan to the consumer on the same day that
7the consumer repays the loan.

8§ 5117. Licensee duty to offer credit counseling.

9(a) General rule.--Notwithstanding the term of the loan
10involved, a licensee shall deliver written notice that advises
11the consumer that the consumer is entitled to credit counseling
12at no cost to the consumer from an unaffiliated third party
13credit counselor approved by the agency to provide credit
14counseling prior to executing a loan agreement with the

16(b) Consumer acknowledgment.--The licensee shall have the
17consumer acknowledge the licensee's delivery of the notice of
18availability of no-cost credit counseling on a form prescribed
19by the department, which shall include the following notice:

20You are entitled to no-cost credit counseling in
21connection with obtaining this short-term loan. This loan
22is not meant to meet long-term financial needs and should
23be used only to meet short-term cash needs. Taking
24advantage of this no-cost credit counseling could help
25you avoid the need to seek this kind of loan in the

27§ 5118. Commonwealth Consumer Credit Counseling Account.

28(a) Establishment.--There is established within the agency a
29restricted account to be known as the Commonwealth Consumer
30Credit Counseling Account. Funds collected under section

15120(b)(i) (relating to verification fee) shall be deposited
2into the account.

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

4(1) The agency shall designate and approve credit
5counseling agencies to be available to assist the agency in
6implementing the provisions of this chapter related to
7consumer credit counseling. Credit counseling agencies
8seeking to provide budget and credit counseling to consumers
9must meet the requirements prescribed by the agency.

10(2) The agency shall maintain an up-to-date list of
11approved credit counseling agencies by county and publish the
12list on the agency's publicly accessible Internet website.

13(3) The agency shall allocate quarterly, at its
14discretion, funds to approved credit counseling agencies from
15the account.

16(4) The agency shall pay all costs and expenses for
17delivery of consumer credit counseling from amounts available
18in the account.

19§ 5119. Verification of compliance with regulatory terms and

21(a) Consumer compliance.--In order to insure compliance with
22the terms and conditions of this chapter and any subsequent
23rules and regulations established by the department, a consumer
24shall verify in writing at the time of entering into a loan

26(1) The number of loans the consumer has outstanding
27from any licensee.

28(2) The date of repayment of the consumer's last loan,
29if applicable.

30(3) That the consumer has not entered into an extended

1payment plan under section 5128.1 (relating to extended
2payment plan).

3(b) Verification of confirmation.--A licensee shall confirm
4the accuracy of the verification required under subsection (a)
5by all of the following:

6(1) A query of the licensee's own records.

7(2) A query of the compliance system established under
8section 5121 (relating to establishment and operation of
9compliance system).

10§ 5120. Verification fee.

11(a) Authority.--In addition to the interest authorized under
12this chapter, a licensee may charge and receive a verification
13fee in an amount not to exceed $5 for a loan made under this
14chapter. The verification fee shall be used in part to defray
15the costs of submitting a compliance system inquiry as provided
16under section 5119 (relating to verification of compliance with
17regulatory terms and conditions), for the Commonwealth Consumer
18Credit Counseling Account under section 5118 (relating to
19Commonwealth Consumer Credit Counseling Account), for the
20regulatory expenses of the department and for the costs accrued
21by licensees related to compliance verification.

22(b) Required remittance of fees.--

23(1) A licensee shall remit all of the following on a
24monthly basis:

25(i) Fifty cents per loan transaction to the
26Commonwealth Consumer Credit Counseling Account for the
27agency to pay for costs to provide consumer budget and
28credit counseling.

29(ii) A fee up to 50¢ per loan transaction, as
30determined by the department, to a compliance system

1provider for the purpose of determining outstanding loans
2and repayment dates provided under section 5119.

3(iii) One dollar and fifty cents per loan
4transaction, plus any difference in the fee determined by
5the department for the services of the compliance system
6provider provided under section 5121 (relating to
7establishment and operation of compliance system).

8§ 5121. Establishment and operation of compliance system.

9(a) Provider.--The department shall engage a third party
10provider capable of developing, implementing and maintaining a
11compliance system, at no cost to the department, with real time
12access for reporting of loan transactions and verifying the
13information required under subsection (b).

14(b) Duty.--Licensees shall enter into the compliance system
15information determined by the department to be necessary to
16verify the number and amount of loans a consumer has outstanding
17with any licensee, the date of repayment of a consumer's last
18loan and if a consumer has met the eight successful short-term
19loan restrictions established under this chapter.

20§ 5122. Licensee duties with respect to military personnel.

21(a) Primacy of Federal military lending law.--A licensee may
22not offer a loan under this chapter to a member of the military
23on active duty, a reserve or National Guard member called to
24active duty or their eligible family members that is not in
25accordance with 10 U.S.C. § 987 (relating to terms of consumer 
26credit extended to members and dependents: limitations) and 32 
27CFR Pt. 232 (relating to limitations on terms of consumer credit 
28extended to service members and dependents) and any Federal law 
29or regulation enacted on or after the effective date of this 
30section relating to the extension of consumer credit to active

1military service members and dependents.

2(b) Universal application.--Subsection (a) shall apply to
3loans offered under this chapter, notwithstanding the active
4duty service member's or dependent's domicile or permanent home
5of record.

6(c) Identification of and disclosure to covered military
7personnel.--All licensees shall be required to ascertain and
8document whether a borrower is a member of the military on
9active duty, a member of the United States Army Reserve or
10National Guard called to active duty or an eligible family
11member before proceeding with a loan. If the identification is
12established and a licensee is willing to offer a loan, the loan
13must include a disclosure, in writing, to the potential borrower
14of the effect of the provisions of 10 U.S.C. § 987 and 32 CFR
15Pt. 232. The disclosure must be made in ten-point type and shall

17If you are a member of the military on active duty, a member
18of the United States Army Reserve or National Guard, or an
19eligible family member, the loans offered by this licensee
20are covered by Federal law. As such, a loan offered to you
21must meet the requirements of Federal law and regulations
22applicable to active duty military personnel, including:

23(1) a rate which, including all fees and charges
24which in total does not exceed 36% APR;

25(2) a prohibition on the use of your personal check
26or other access to your bank accounts, your personal
27vehicle or your military allotment as security for the

29(3) a prohibition on the use of prepayment
30penalties, rollovers, renewals or refinancing unless the

1refinancing lowers your total cost; and

2(4) a prohibition on any requirement that you sign
3away your legal rights to recourse as a condition of
4receiving the loan.

5(d) Veteran disclosure.--All licensees shall be required to
6ascertain and document whether a borrower is a veteran of
7military service. If a borrower is a veteran, the licensee shall
8provide the borrower a written disclosure in ten-point type. The
9disclosure shall be in addition to all other applicable
10disclosures required under this chapter and shall state:

11As a veteran of the armed forces you can receive assistance
12from programs established specifically to help you. You may:

13(1) obtain financial assistance from Army Emergency
14Relief, the Navy and Marine Corps Relief Society, the Air
15Force Aid Society, Coast Guard Mutual Aid or other
16military aid societies and assistance organizations;

17(2) request free legal advice regarding an
18application for credit from a military service legal
19assistance office or financial counseling from a consumer
20credit counselor; and

21(3) apply for financial assistance from the
22Veterans' Emergency Assistance Program by contacting the
23Pennsylvania Department of Military and Veterans Affairs
24at 1-800-547-2838.

25(e) Collection activity.--A licensee shall defer collection
26activity against:

27(1) a consumer who is a member of the military that has
28been deployed to combat or a combat support posting, for the
29duration of the posting; or

30(2) a reserve or National Guard member called to active


2(f) Military chain of command.--A licensee may not contact
3the military chain of command of a consumer who is a member of
4the military in an effort to collect a loan.

5(g) Repayment agreement.--A licensee shall honor the terms
6of a repayment agreement that it has entered into with a
7consumer who is a member of the military, including a repayment
8agreement negotiated through military counselors or third-party
9credit counselors.

10§ 5123. Form of loan proceeds.

11(a) General rule.--A licensee shall disburse the proceeds of
12a loan to the consumer in the form of an immediately and locally
13cashable check, money order, cash, debit card or credit to the
14consumer's account at a depository institution.

15(b) Prohibition.--A licensee may not impose a fee for
16cashing the licensee's check or money order or for otherwise
17effecting the disbursement of loan proceeds.

18§ 5124. Endorsement of check.

19A licensee may not negotiate or present a check for payment
20of a loan unless the instrument is endorsed with the actual
21business name or registered fictitious name of the licensee.

22§ 5124.1. Redemption of repayment mechanism.

23Prior to the licensee's negotiating or presenting a
24consumer's check or utilizing any other repayment mechanism, the
25consumer shall have the right to redeem the check or any other
26repayment mechanism if the consumer pays the full amount of the
27check or other repayment mechanism to the licensee.

28§ 5125. Posting of charges.

29(a) Finance charges.--A licensee shall post, in large type
30in plain view of the public at a place of business where short-

1term loans are made, a notice of the finance charges and any
2related charges, such as the charge for dishonored repayment
3mechanisms, imposed for loans.

4(b) Mandatory notice.--A licensee shall provide to each
5consumer at the time a loan agreement is signed, and
6conspicuously display in the lending area of each business
7location of the licensee, the following notice:

8NOTICE: If you are unable to repay your short term loan,
9you are entitled to request an extended payment plan
10agreement with a fully disclosed rate, term and payment

12§ 5126. Notice of assignment or sale of loans.

13(a) General rule.--A licensee shall inform a consumer in
14writing immediately of the name, address and telephone number of
15the person to whom a loan is assigned or sold. A licensee may
16assign or sell a loan to another licensee or to a depository

18(b) Notice.--Prior to the assignment or sale of a loan, a
19licensee shall provide the following notice to the buyer or

21The repayment mechanism associated with this loan has
22been given by a consumer to secure a short-term loan
23transaction under Pennsylvania State law and the assignee
24or buyer is deemed to have knowledge of and shall be
25bound by the terms and conditions of the loan agreement
26between the consumer and the original lender.

27§ 5127. Criminal culpability.

28A consumer shall not be subject to a criminal penalty:

29(1) For entering into a loan agreement.

30(2) If a consumer's repayment mechanism is dishonored,

1unless the consumer's account on which the repayment
2mechanism is drawn is closed by the consumer before the end
3of the agreed-upon deferment period. If the consumer's
4account on which the repayment mechanism is drawn is closed
5by the consumer before the end of the agreed-upon deferment
6period, 18 Pa.C.S. § 4105 (relating to bad checks) or 4106
7(relating to access device fraud), as applicable, shall

9§ 5128. Unfair or deceptive practices.

10A person may not engage in unfair or deceptive acts,
11practices or advertising in connection with a loan. A violation
12of this section shall be deemed a violation of the act of
13December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade
14Practices and Consumer Protection Law.

15§ 5128.1. Extended payment plan.

16(a) General rule.--A consumer of a short-term loan shall be 
17entitled to an extended payment plan agreement under subsection 
18(b) at least once per year if at any time on or before the 
19loan's due date the consumer declares an inability to repay.

20(b) Extended payment plan agreement.--An extended payment
21plan agreement shall be subject to the following terms:

22(1) The principal balance due under the extended payment 
23plan shall be the outstanding principal balance and finance 
24charge due under the existing loan. The licensee may 
25encourage, but shall not require, the consumer to reduce the 
26balance of the existing loan by paying the licensee cash on 
27the date the consumer enters into the extended payment plan 

29(2) The licensee may not impose a finance charge for 
30entering into the extended payment plan.

1(3) The extended payment plan agreement shall allow the 
2consumer to pay the sums due under the extended payment plan 
3over at least four 14-day installments. Each installment 
4shall be in an amount arrived at by dividing the total amount 
5outstanding under paragraph (1) to a licensee by the number 
6of 14-day installments of the extended payment plan.

7(4) A licensee shall report to the compliance system 
8described in section 5115 (relating to prohibition on 
9rollover loans) that the consumer is enrolled in an extended 
10payment plan.

11(5) Except when the consumer is required to enter into
12an extended payment plan under the provisions of this
13chapter, the consumer shall have the same right to rescind an
14extended payment plan as is provided in section 5116(c)
15(relating to maximum number and amount of loans, use of
16consumer report, right of rescission and prohibition on same-
17day loans) for the rescission of a loan.

18(c) Eligibility requirements.--In order to enter into an
19extended payment plan, a consumer must:

20(1) Have obtained a loan from the same licensee, or its 
21assignee, that will enter into the extended payment plan.

22(2) Request an extended payment plan prior to or on the 
23due date of the loan.

24(3) Reasonably inform the licensee, either orally or in 
25writing, that the consumer requests an extended payment plan.

26(d) Prohibition.--During any period in which all or part of
27an extended payment plan is outstanding and during the seven-day
28period following a consumer's payment in full of an extended
29payment plan, no licensee may make or offer to make a short-term
30loan to the consumer.

1§ 5129. Prohibited practices regarding loans.

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

4(1) Taking or attempting to take a security other than
5the consumer's check or other repayment mechanism.

6(2) Taking or attempting to take more than a single
7check or other repayment mechanism from the consumer in
8connection with a single transaction.

9(3) Selling, offering or soliciting an application for
10credit insurance in connection with a transaction.

11(4) Tying a transaction to another transaction, offer or
12obligation of the consumer.

13(5) Assigning or selling a loan to another person other
14than in accordance with this chapter.

15(6) Engaging in a device or subterfuge to evade the
16requirements of this chapter, including making loans
17disguised as personal property sales and leaseback
18transactions or disguising loan proceeds as cash rebates for
19the pretextual installment sale of goods and services.

20(7) Failing to collect and provide information regarding
21the number, total and average transaction amounts and other
22information the department may request.

23(8) Offering, arranging, negotiating, making, holding or
24acting as an agent or broker for the making of a loan, unless
25the short-term lender complies with all applicable provisions
26of this chapter.

27(9) Altering or deleting the date on a loan agreement or
28repayment mechanism held by the licensee.

29(10) Rolling over, refinancing, extending or
30consolidating short-term loans.

1(11) Failing to immediately and accurately report a loan
2or an extended payment plan to the compliance system provider
3as required by this chapter or by the department.

4(12) Threatening to use or using the criminal process in
5any state to collect the balance due on a loan.

6(13) Depositing a check or otherwise implementing a
7repayment mechanism prior to the expiration of the agreed-
8upon deferment period.

9(b) Penalty.--In addition to any other penalties provided
10under law, a transaction in violation of subsection (a) shall be
11uncollectible and unenforceable.

12§ 5130. Anti-money laundering requirements.

13A person licensed by the department under this chapter shall:

14(1) Comply with all Federal and State statutes and rules
15relating to the detection and prevention of money laundering,
16including 31 CFR §§ 103.20 (relating to reports by money
17services businesses of suspicious transactions), 103.22
18(relating to reports of transactions in currency), 103.23
19(relating to reports of transportation of currency or
20monetary instruments), 103.27 (relating to filing of
21reports), 103.28 (relating to identification required),
22103.29 (relating to purchases of bank checks and drafts,
23cashier's checks, money orders and traveler's checks), 103.33
24(relating to records to be made and retained by financial
25institutions), 103.37 (relating to additional records to be
26made and retained by currency dealers or exchangers) and
27103.41 (relating to registration of money services

29(2) Maintain an anti-money laundering program in
30accordance with 31 CFR § 103.125 (relating to anti-money

1laundering programs for money services businesses). The
2program must be reviewed and updated as necessary to ensure
3that it continues to be effective in detecting and deterring
4money laundering activities in the licensee's short-term loan

6(3) Comply with United States Treasury Interpretive
7Release 2004-1.




115131. Short-term loans.

125132. Extended short-term loans.

135133. Micro loan program.

145134. Authorized charges for late payments.

155135. Authorized charges for dishonored repayment mechanisms.

16§ 5131. Short-term loans.

17(a) General rule.--A licensee may approve a short-term loan
18to a consumer consistent with this chapter, except that no
19licensee or combination of licensees may approve more than eight
20consecutive short-term loans to an individual consumer. After
21eight consecutive short-term loans, a licensee must offer the
22consumer an extended short-term loan as provided under section
235132 (relating to extended short-term loans). If the consumer
24refuses the offer of the extended short-term loan, the consumer
25shall not be eligible for additional short-term loans from a
26licensee for a period equal to the combined length of the
27previous short-term loans or 90 days, whichever is less.

28(b) Additional authorized charges.--A licensee may impose
29the following charges in conjunction with the application for
30and approval of a short-term loan:

1(1) An application fee not to exceed 5% of the loan
2amount may be charged by a licensee for each loan

4(2) A processing fee not to exceed 5% of the loan amount
5may be charged by a licensee for each short-term loan
6approved for a consumer.

7(c) Authorized deferment period.--The deferment period for a
8short-term loan may not be less than 14 days or in excess of 60
9days and shall include at least one regular installment of
10income for the consumer. The deferment period shall be
11calculated from the date of the loan agreement.

12§ 5132. Extended short-term loans.

13(a) General rule.--At any time, but no later than the
14successful satisfaction of eight consecutive short-term loans by
15a consumer, whether from a single or multiple licensees, a
16licensee may offer a consumer an extended short-term loan.
17Extended short-term loans shall meet all of the requirements of
18this chapter but may not have deferment periods of less than 61
19business days or in excess of 120 business days and shall
20contain more than one regular installment of income for the
21consumer. The deferment period shall be calculated from the date
22of the loan agreement.

23(b) Additional authorized charges.--A licensee may impose
24the following charges in conjunction with the application for
25and approval of an extended short-term loan:

26(1) An application fee not to exceed 5% of the loan
27amount or $25, whichever is more, may be charged by a
28licensee for each loan application.

29(2) A processing fee not to exceed 5% of the loan amount
30or $25, whichever is more, may be charged by a licensee for

1each short-term loan approved for a consumer.

2§ 5133. Micro loan program.

3(a) General rule.--If a consumer has successfully satisfied
4an extended short-term loan, a licensee may offer a consumer a
5micro loan. A micro loan shall meet the requirements of this
6chapter, except that a micro loan may:

7(1) have a deferment period of up to 52 weeks; and

8(2) include a repayment amount which may not exceed 25%
9of the gross monthly income of a consumer.

10(b) Annual fee.--In addition to the application and
11processing fees allowed for extended short-term loans, a
12licensee may charge an annual fee not to exceed $95 to a
13consumer prior to an application for a micro loan whose term is
14at least 52 weeks in duration.

15§ 5134. Authorized charges for late payments.

16(a) General rule.--Each contract shall include a specific
17date on which a payment must be made by the consumer. If the
18consumer repays a loan three or more days after the contracted
19repayment date, the licensee shall be entitled to charge a late
20payment penalty of $25. The penalty may be levied once for a
21payment repaid late.

22(b) Penalty for subsequent repayments.--If a consumer repays
23a loan three or more days after the contracted repayment date
24and the late repayment occurs on a separate loan from the same
25licensee but less than three months after another late payment,
26the licensee shall be entitled to charge a late payment penalty
27of $35 on the late repayment and any subsequent late repayments.

28§ 5135. Authorized charges for dishonored repayment mechanisms.

29(a) General rule.--If a consumer's repayment mechanism is
30dishonored due to insufficient funds in the consumer's account,

1the licensee:

2(1) Shall have the right to exercise all civil means
3authorized by law to collect the face value of the repayment

5(2) May contract for and collect from the consumer a
6charge not to exceed $25.

7(b) Charge not allowed.--A charge authorized under this
8section shall not be allowed:

9(1) if the consumer does not receive the loan proceeds
10from the licensee for any reason; or

11(2) if the consumer places a stop-payment order due to
12forgery or theft.




165136. Application for license.

175137. Annual license fee.

185138. Adjustment of fees.

195139. Issuance of license.

205140. License duration.

215141. Licensee and compliance system provider requirements.

225142. Licensee limitations.

235143. Surrender of license.

245144. Authority of department.

255145. Suspension, revocation or refusal.

265146. Whistleblower protection.

275147. Penalties.

28§ 5136. Application for license.

29(a) Contents.--An application for a license under this
30chapter shall be on a form prescribed and provided by the

1department. The application shall include the name of the
2applicant, the address of the principal place of business of the
3applicant and the address or addresses where the applicant's
4short-term loan business is to be conducted, the full name,
5official title and business address of each director and
6principal officer of the short-term loan business and any other
7information that may be required by the department. An applicant
8shall demonstrate to the department that policies and procedures
9have been developed to receive and process consumer inquiries
10and grievances promptly and fairly.

11(b) Duty to update.--All applicants and licensees shall be
12required to provide the department with written notice of the
13change in information contained in an application for a license
14or for a renewal of a license within ten days of the applicant
15or licensee becoming aware of the change.

16(c) Financial structure.--

17(1) The applicant must establish that the applicant:

18(i) has, at the time of application, a minimum
19tangible net worth of $250,000;

20(ii) will at all times maintain the minimum tangible
21net worth required under subparagraph (i); and

22(iii) has an otherwise adequate financial structure.

23(2) The following shall apply:

24(i) Prior to and as a condition of the issuance of a
25license, an applicant for a license shall maintain a bond
26in the amount of $100,000 in a form acceptable to the
27department from a surety company authorized to do
28business in this Commonwealth.

29(ii) The bond shall be:

30(A) a penal bond conditioned on compliance by

1the licensee with this chapter and subject to

3(B) for the use of:

4(I) the Commonwealth; and

5(II) a consumer against the licensee for
6failure to carry out the terms of any loan or
7extended payment plan; and

8(C) held by the department for the term of the

10(iii) If a consumer is aggrieved, the consumer may:

11(A) with the written consent of the department,
12recover the amount by which the consumer is aggrieved
13from the bond by filing a claim with the surety
14company or maintaining an action on the bond; or

15(B) recover the amount by which the consumer is
16aggrieved by filing a formal complaint against the
17licensee with the department, which shall adjudicate
18the matter.

19(iv) An adjudication under subparagraph (iii)(B)
20shall be binding upon the surety company and enforceable
21by the department in Commonwealth Court and by an
22aggrieved consumer in any court.

23(v) An aggrieved consumer seeking to recover an
24amount from a bond that has already been forfeited by the
25licensee or which the department is in the process of
26having forfeited may recover payment on the bond if,
27after filing a petition with the department, the
28department consents to the requested payment or portion
29of the payment. The department may pay the aggrieved
30consumer from the bond proceeds recovered by the

1department under this subparagraph.

2(vi) Nothing under this paragraph shall be construed
3as limiting the ability of a court or magisterial
4district judge to award to an aggrieved consumer other
5damages, court costs and attorney fees permitted by
6applicable law, except that claims that are not directly
7related to the loan or extended payment plan may not be
8recovered from the proceeds of the bond.

9(vii) The department may consent to or order pro
10rata or other recovery on the bond for any aggrieved
11consumer if claims against the bond may or do exceed its
12full monetary amount.

13(viii) A bond shall not be in compliance with this
14paragraph unless it contains a provision that it may not
15be canceled for a cause unless notice of intention to
16cancel is given to the department at least 30 days before
17the day upon which cancellation takes effect. If a bond
18is to be canceled, a licensee shall replace the bond with
19a bond substantially in the same form as the original
20bond. Cancellation of a bond shall not invalidate the
21bond regarding the period of time it was in effect.

22(d) License renewals.--Licenses shall be issued for terms of
23not more than 14 months and may be renewed by the department
24upon application by the licensee and the payment of any and all
25applicable renewal fees. A licensee shall comply with the same
26requirements for renewal of its license as it did for the
27issuance of the original license.

28§ 5137. Annual license fee.

29(a) General rule.--An applicant for a license shall pay to
30the department at the time an application is filed, and upon

1filing of each application for renewal, a license fee for the
2principal place of business of $3,000 and an additional license
3fee for each branch office of $1,000.

4(b) Recovery of costs.--No abatement of a license fee may be
5made if the license is issued for a period of less than one
6year. The department shall be entitled to recover a cost of
7investigation in excess of license or renewal fees from the
8licensee or from a person who is not licensed under this chapter
9but who is believed to be engaged in the short-term loan

11§ 5138. Adjustment of fees.

12The secretary may adjust upward fees established under this
13chapter if there is an upward adjustment in the Consumer Price
14Index for that year. The authorized adjustment shall be for the
15same percentage that the Consumer Price Index increases.

16§ 5139. Issuance of license.

17(a) Time limit.--Upon receipt of an application for a
18license, the department may conduct an investigation to
19determine that the applicant and its officers, directors and
20principals are of good character and ethical reputation. Within
2160 days of receipt of a completed application, the department

23(1) issue a license; or

24(2) refuse to issue a license for:

25(i) a reason which the department may refuse to
26issue a license under this section; or

27(ii) which the department may suspend, revoke or
28refuse to renew a license under section 5145 (relating to
29suspension, revocation or refusal).

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

1license, it shall notify the applicant in writing of the denial,
2the reason for the denial and the applicant's right to appeal
3the denial to the secretary. The department shall require that
4an appeal from refusal to approve an application for a license
5be filed by the applicant within 30 days of notice of refusal.

6(c) Contents of license.--Every license issued by the
7department shall specify:

8(1) The name and address of the licensee and the address
9or addresses covered by the license.

10(2) The licensee's reference number.

11(3) Any other information the department shall require
12to carry out the purposes of this chapter.

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

14(1) The department may deny a license if it finds that
15the applicant or a director, officer, partner, employee or
16ultimate equitable owner of 10% or more of the applicant has
17been convicted of a felony or a crime of moral turpitude in
18any jurisdiction or convicted of a crime which, if committed
19in this Commonwealth, would constitute a felony or a crime of
20moral turpitude. For the purposes of this chapter, a person
21shall be deemed to have been convicted of a crime if the

23(i) enters a guilty plea or plea of nolo contendere
24to a criminal charge before a Federal magistrate or a
25court, unless the guilty plea or plea of nolo contendere
26is set aside, vacated, reversed or abrogated by lawful
27judicial process; or

28(ii) is found guilty by the verdict of a jury or the
29decision or judgment of a Federal magistrate or court,
30notwithstanding pronouncement or suspension of sentence,

1unless the decision or judgment is set aside, vacated,
2reversed or otherwise abrogated by lawful judicial

4(2) A license under this chapter shall be deemed to be a
5"covered license" within the meaning of section 405 of the
6act of May 15, 1933 (P.L.565, No.111), known as the
7Department of Banking and Securities Code. The department
8shall notify a licensee if a covered individual who is or
9will be employed or contracted by the licensee has a criminal
10background that renders the employee unfit for employment in
11the short-term loan business.

12(e) Denial of license for other than conviction.--The
13department may deny a license or restrict a license if it finds
14that the applicant or a director, officer, partner, employee,
15agent or ultimate equitable owner of 10% or more of the

17(1) has had a license application or license issued by
18the department or another State business licensing agency
19denied, not renewed, suspended or revoked;

20(2) is the subject of an order of the department;

21(3) has violated or failed to comply with a provision of
22this chapter or a regulation or order of the department;

23(4) has an outstanding debt to the Commonwealth or any
24Commonwealth agency; or

25(5) does not possess the financial responsibility,
26character, reputation, integrity and general fitness to
27command the confidence of the public and to warrant the
28belief that the short-term loan business will be operated
29lawfully, honestly, fairly and within the legislative intent
30of this chapter and in accordance with the general laws of

1this Commonwealth. For purposes of this paragraph, an
2applicant is not financially responsible if the applicant has
3shown a disregard in the management of his or her own
4financial condition. The factors that the department may
5consider in making a determination regarding an applicant's
6financial responsibility shall include:

7(i) Current outstanding judgments, other than
8judgments solely as a result of medical expenses.

9(ii) Current outstanding tax liens or other
10government liens and filings.

11(iii) Foreclosures within the past three years.

12(iv) A pattern of seriously delinquent accounts
13within the past three years.

14§ 5140. License duration.

15A license issued by the department:

16(1) Must be renewed on the license's renewal date of
17each year upon payment of the annual renewal fee and after
18the department determines that the licensee is conducting
19business in accordance with this chapter. No refund of a
20portion of the license fee shall be made if the license is
21voluntarily surrendered to the department or suspended or
22revoked by the department prior to its expiration date.

23(2) Shall be invalid if the licensee's authority to
24conduct business is voided under a law of this Commonwealth
25or an other state unless the licensee demonstrates that the
26applicable court or governmental entity was clearly erroneous
27in voiding the licensee's authority to conduct business.

28(3) Is not assignable or transferable by operation of
29law or otherwise.

30§ 5141. Licensee and compliance system provider requirements.

1(a) Requirements of a licensee.--A licensee shall do all of
2the following:

3(1) Maintain at its principal place of business within
4this Commonwealth, or at a place outside this Commonwealth if
5agreed to by the department, the original, a copy or
6electronic access to books, accounts, records and documents
7of the business conducted under the license as prescribed by
8the department to enable the department to determine whether
9the business of the licensee is being conducted in accordance
10with this chapter and the orders, regulations and statements
11of policy issued under this chapter. Instruments, documents,
12accounts, books and records shall be kept separate and apart
13from the records of any other business conducted by the
14licensee and shall be preserved and kept available for
15investigation or examination by the department for a period
16determined by the department. The department shall have free
17access to and authorization to examine records maintained
18outside this Commonwealth. The costs of the examination,
19including travel costs, shall be borne by the licensee. The
20department may deny or revoke the authority to maintain
21records outside this Commonwealth for good cause in the
22interest of protection for Commonwealth consumers, including
23for the licensee's failure to provide books, accounts,
24records or documents to the department upon request.

25(2) Be subject to examination by the department. The
26department may examine a licensee if the department deems the
27examination to be necessary or desirable. The cost of the
28examination shall be borne by the licensee. During an
29examination, the department shall have free access, during
30regular business hours, to the licensee's place or places of

1business in this Commonwealth and to all instruments,
2documents, accounts, books and records which pertain to a
3licensee's short-term loan business, whether maintained in or
4outside this Commonwealth.

5(3) Include in all advertisements language indicating
6that the licensee is licensed by the department.

7(b) Requirements of compliance system provider.--Annually,
8on a date determined by the department, the compliance system
9provider shall file a report with the department setting forth
10the information the department requires concerning the short-
11term loan business conducted by each licensee during the
12preceding calendar year. The report must be in writing and
13subject to penalty of perjury on a form provided by the
14department. If the compliance system provider fails to file the
15required report in a timely manner, it shall be subject to a
16penalty of $500 for each day after the report is due until the
17report is filed. The report shall include:

18(1) The total number of short-term loans made during the
19preceding calendar year.

20(2) The minimum, maximum and average dollar amount of
21short-term loans made during the preceding calendar year.

22(3) The average annual percentage rate and the average
23term of short-term loans made during the preceding calendar

25(4) The total number of returned checks, the total of
26checks recovered and the total of checks charged off during
27the preceding calendar year.

28(5) The total number of short-term loans paid in full,
29the total number of loans which went into default and the
30total number of loans charged off during the preceding

1calendar year.

2(6) The total number of consumer complaints.

3(7) Frequency of repeat use by consumers of postdated or
4delayed deposit checks.

5(8) Verification that the licensee has not used the
6criminal process or caused the criminal process to be used in
7the collection of any short-term loan during the preceding
8calendar year.

9(9) Information on the number of consumers referred to
10financial literacy counseling within the preceding calendar

12(10) Any other information or data the department may

14(c) Accounting records.--The licensee's accounting records
15shall be constructed and maintained in compliance with generally
16accepted accounting principles or as provided by department

18(d) Copies.--Copies of instruments, documents, accounts,
19books or records maintained under subsection (a)(2) may be
20photostatic, microfilm or electronic copies or copies provided
21in some other manner approved by the department.

22(e) Background check.--The department shall require a
23criminal background check for all compliance system providers.

24§ 5142. Licensee limitations.

25A licensee may not do any of the following:

26(1) Transact business under this chapter under another
27name except for a name designated in its license. A licensee
28that changes its name or place of business shall immediately
29notify the department.

30(2) Conduct a business other than the short-term loan

1business licensed by the department under this chapter
2without at least 30 days' prior written notification to and
3approval by the department.

4§ 5143. Surrender of license.

5(a) Authorization.--Upon satisfying the department that all
6creditors of a licensee have been paid or that other
7arrangements satisfactory to the creditors and the department
8have been made, a licensee may voluntarily surrender its license
9to the department by providing written notice that the license
10is being voluntarily surrendered.

11(b) Effect.--Surrender under this section shall not affect
12the licensee's civil or criminal liability for acts the licensee

14§ 5144. Authority of department.

15(a) General authority.--The department shall have the
16following powers and duties:

17(1) Examine an instrument, document, account, book,
18record or file of a licensee or a person having a connection
19to the licensee or make an investigation necessary to
20administer this chapter. The cost of the examination shall be
21borne by the licensee or the entity subject to the
22examination. Under the authority under this subsection, the
23department may remove an instrument, document, account, book,
24record or file of a licensee to a location outside of the
25licensee's office location.

26(2) Conduct an administrative hearing on a matter
27pertaining to this chapter, issue subpoenas to compel the
28attendance of witnesses and the production of instruments,
29documents, accounts, books and records at the hearing.
30Subpoenaed material may be retained by the department until

1the completion of all proceedings in connection with the
2materials. A department official may administer oaths and
3affirmations to an individual whose testimony is required. If
4a person fails to comply with a subpoena issued by the
5department or to testify on a matter concerning which the
6person may be lawfully interrogated, on application by the
7department, the Commonwealth Court may issue an order
8requiring the attendance of the person, the production of
9instruments, documents, accounts, books or records or the
10giving of testimony.

11(3) Request and receive information or records,
12including reports of criminal history record information from
13any Federal, State, local or foreign government entity
14regarding an applicant for a license, a licensee or a person
15related to the business of the applicant or licensee, at a
16cost to be paid by the applicant or licensee.

17(4) Require a person to pay the department's costs
18incurred while conducting an investigation of the person for
19purposes of issuance or renewal of a license or for any
20violation of this chapter.

21(5) Promulgate regulations and statements of policy and
22issue orders as necessary for the proper conduct of the
23short-term loan business by licensees, the issuance and
24renewal of licenses and the enforcement of this chapter.

25(6) Prohibit or permanently remove an individual
26responsible for a violation of this chapter from working in
27the individual's present capacity or in any other capacity
28related to activities regulated by the department.

29(7) Order a person to make restitution for actual
30damages to consumers caused by any violation of this chapter.

1(8) Impose conditions as the department deems

3(b) Hearings.--A person aggrieved by a decision of the
4department may appeal the decision of the department to the
5secretary. The appeal shall be conducted under 2 Pa.C.S. Ch. 5
6Subch. A (relating to practice and procedure of Commonwealth

8(c) Injunctions.--The department may maintain an action for
9an injunction or other process against a person to restrain the
10person from engaging in an activity violating this chapter.

11(d) Final orders.--A decision of the secretary shall be a
12final order of the department and shall be enforceable in a
13court of competent jurisdiction. The department shall publish
14the final adjudication issued under this section, subject to
15redaction or modification to preserve confidentiality.

16(e) Appeals.--A person aggrieved by a decision of the
17secretary may appeal the decision under 2 Pa.C.S. Ch. 7 Subch. A
18(relating to judicial review of Commonwealth agency action).

19§ 5145. Suspension, revocation or refusal.

20(a) Departmental action.--The department may suspend, revoke
21or refuse to renew a license issued under this chapter if a fact
22or condition exists or is discovered which, if it had existed or
23had been discovered at the time of filing of the application for
24the license, would have warranted the department in refusing to
25issue the license or if a licensee or director, officer,
26partner, employee or owner of a licensee has:

27(1) Made a material misstatement in an application,
28report or submission required by this chapter, department
29regulation or order.

30(2) Failed to comply with or violated this chapter or a

1regulation or order promulgated or issued under this chapter.

2(3) Engaged in dishonest, fraudulent or illegal
3practices or conduct in a business or unfair or unethical
4practices or conduct in connection with the short-term loan

6(4) Been convicted of or pled guilty or nolo contendere
7to a crime of moral turpitude or a felony.

8(5) Permanently or temporarily been enjoined by a court
9of competent jurisdiction from engaging in or continuing
10conduct or a practice involving an aspect of the short-term
11loan business.

12(6) Become the subject of an order of the department
13denying, suspending or revoking a license applied for or
14issued under this chapter.

15(7) Become the subject of a United States Postal Service
16fraud order.

17(8) Become the subject of an order of the department
18denying, suspending or revoking a license under any other law
19administered by the department.

20(9) Demonstrated negligence or incompetence in
21performing an act for which the licensee is required to hold
22a license under this chapter.

23(10) Failed to comply with the requirements of this
24chapter to make and keep records prescribed by regulation or
25order of the department, to produce records required by the
26department or to file financial reports or other information
27that the department, by regulation or order, may require.

28(11) Become insolvent. For purposes of this paragraph,
29the term "become insolvent" shall mean that the liabilities
30of the applicant or licensee exceed the assets of the

1applicant or licensee or that the applicant or licensee
2cannot meet the obligations of the applicant or licensee as
3they mature or is in a financial condition that the applicant
4or licensee cannot continue in business with safety to the
5customers of the applicant or licensee.

6(12) Failed to comply with the terms of any agreement
7under which the department authorizes a licensee to maintain
8records at a place other than the licensee's principal place
9of business.

10(b) Reinstatement.--The department may reinstate a license
11which was previously revoked or denied renewal if all of the
12following exist:

13(1) The condition which warranted the original action
14has been corrected to the department's satisfaction.

15(2) The department has reason to believe that the
16condition is not likely to occur again.

17(3) The licensee satisfies all other requirements of
18this chapter.

19§ 5146. Whistleblower protection.

20(a) Adverse action prohibited.--An employer may not
21discharge, threaten, discriminate or retaliate against an
22employee regarding the employee's compensation, terms,
23conditions, location or privileges of employment because the
24employee makes a good faith report or is about to report,
25verbally or in writing, to the employer or appropriate authority
26an instance of wrongdoing under section 5128 (relating to unfair
27or deceptive practices) or another violation of this chapter.

28(b) Remedies.--The remedies, penalties and enforcement
29procedures for violations of this section shall be as provided
30in the act of December 12, 1986 (P.L.1559, No.169), known as the

1Whistleblower Law.

2(c) Definitions.--As used in this section, the following
3words and phrases shall have the meanings given to them in this

5"Appropriate authority." As follows:

6(1) Any of the following:

7(i) a Federal, State or local government body,
8agency or organization having jurisdiction over criminal
9law enforcement, regulatory violations, professional
10conduct or ethics or waste; or

11(ii) a member, officer, agent, representative or
12supervisory employee of the body, agency or organization.

13(2) The term includes the Office of Attorney General,
14the Department of the Auditor General, the Treasury
15Department, the General Assembly and committees of the
16General Assembly having the power and duty to investigate
17criminal law enforcement, regulatory violations,
18professional conduct or ethics or waste.

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

20"Employer." A licensee.

21"Good faith report." A report of conduct that alleges
22wrongdoing or waste which is made by a person without malice or
23consideration of personal benefit and which the person has
24reasonable cause to believe is true.

25"Public body." All of the following:

26(1) A State officer, agency, department, division,
27bureau, board, commission, council, authority or other body
28in the executive branch of State government.

29(2) A county, city, township, regional governing body,
30council, school district, special district or municipal

1corporation, or a board, department, commission, council or

3(3) Any body other than one listed under paragraphs (1)
4and (2) which is created by the Commonwealth or a political
5subdivision authority or which is funded in an amount by or
6through the Commonwealth or a political subdivision authority
7or a member or employee of that body.

8"Whistleblower." A person who witnesses or has evidence of
9wrongdoing or waste while employed and who makes a good faith
10report of the wrongdoing or waste, verbally or in writing, to
11one of the person's superiors, to an agent of the employer or to
12an appropriate authority.

13"Wrongdoing." A violation which is not of a merely technical
14or minimal nature of a Federal or State statute or regulation,
15of a political subdivision ordinance or regulation or of a code
16of conduct or ethics designed to protect the interest of the
17public or the employer.

18§ 5147. Penalties.

19(a) Licensee.--A licensee and a director, officer, owner,
20partner, employee or agent of a licensee that violates this
21chapter or commits an action which would subject the licensee to
22sanction under section 5145 (relating to suspension, revocation
23or refusal) may be fined by the department up to $10,000 for
24each offense.

25(b) Nonlicensee.--A person subject to this chapter and not
26licensed by the department that violates this chapter or commits
27an action which would subject a licensee to sanction under
28section 5145 may be fined by the department up to $10,000 for
29each offense.




35151. Applicability.

45152. Preemption.

55153. Prohibited location.

65154. Report to General Assembly.

7§ 5151. Applicability.

8This chapter shall apply to a loan which:

9(1) is made or executed within this Commonwealth; or

10(2) is negotiated, offered or transacted within this
11Commonwealth or with a resident of this Commonwealth, in
12whole or in part, by the ultimate lender or another person.

13§ 5152. Preemption.

14(a) General rule.--Except as provided under subsection (b),
15the following shall apply:

16(1) This chapter shall preempt an ordinance, resolution
17or regulation imposing reporting requirements, financial or
18lending activities or other obligations upon a person subject
19to this chapter.

20(2) A political subdivision shall be prohibited from
21enacting and enforcing an ordinance, resolution and
22regulation expressly pertaining to a person subject to this

24(b) Exception.--A political subdivision may, under zoning
25and subdivision ordinances, require a short-term lender to:

26(1) locate within approved residential, industrial,
27commercial or other zones; and

28(2) obtain necessary and appropriate zoning and
29subdivision permits, pay appropriate fees and undergo
30required inspections under the zoning and subdivision


2§ 5153. Prohibited location.

3The location of a short-term loan business may not be within
41,000 feet of the following:

5(1) A racetrack or other nonprimary location where
6thoroughbred or harness horse race meetings are conducted,
7respectively, with pari-mutuel wagering in accordance with
8the act of December 17, 1981 (P.L.435, No.135), known as the
9Race Horse Industry Reform Act.

10(2) A licensed facility at which slot machine gaming is
11conducted under 4 Pa.C.S. Pt. II (relating to gaming).

12(3) A military installation or a facility operated by
13the United States Department of Veterans Affairs.

14§ 5154. Report to General Assembly.

15One year from the effective date of this section, and
16annually thereafter, the department shall report to the
17Secretary of the Senate and the Chief Clerk of the House of
18Representatives on the status of the short-term loan industry.
19The report shall include:

20(1) The number of short-term lenders with active
21licenses issued by the department and the number of persons
22employed in this Commonwealth.

23(2) A summary of the number of loans issued, the average
24loan amount and any other information as determined by the

26(3) A compilation of aggregate data concerning the
27short-term lending industry in this Commonwealth as reported
28to the department under section 5119 (relating to
29verification of compliance with regulatory terms and

1(4) Information on consumer complaints. This paragraph
2shall include alleged or confirmed reports of unfair or
3deceptive trade practices and false, misleading or deceptive

5(5) The effectiveness of the compliance system in
6providing real-time reporting of loan transactions,
7verification of consumers' borrowing and repayment history,
8enrollment in extended payment plans and use of financial
9literacy programs.

10(6) Information on the effectiveness of credit
11counseling under section 5117 (relating to licensee duty to
12offer credit counseling), including all of the following:

13(i) Identification by name and address of third-
14party credit counselors approved by the agency.

15(ii) The geographic locations in this Commonwealth
16where credit counseling is available to consumers.

17(iii) Information on the number of consumers who
18participated in credit counseling, including demographic
19data associated with the consumers.

20(iv) Information on the instructional format used by
21third-party credit counselors to provide financial and
22educational credit counseling.

23(v) Number of participating third-party certified
24credit counselors.

25(vi) Identification by licensee of the consumers who
26participated in credit counseling.

27(7) Other information the department deems necessary and

29Section 2. Section 4107(a) of Title 18 is amended by adding
30a paragraph to read:

1§ 4107. Deceptive or fraudulent business practices.

2(a) Offense defined.--A person commits an offense if, in the
3course of business, the person:

4* * *

5(9.1) violates 7 Pa.C.S. § 5128 (relating to unfair or
6deceptive practices);

7* * *

8Section 3. Title 18 is amended by adding a section to read:

9§ 7332. Unlicensed short-term lending.

10A person that operates without a license in violation of 7
11Pa.C.S. § 5111 (relating to license requirements) commits a
12felony of the third degree.

13Section 4. This act shall take effect as follows:

14(1) The following provisions of 7 Pa.C.S. shall take
15effect 30 days after publication by the Department of Banking
16and Securities of a notice in the Pennsylvania Bulletin that
17the compliance system described in 7 Pa.C.S. § 5121 is
18operational and ready to begin receiving the information
19required to be provided to the compliance system by licensees
20under 7 Pa.C.S. § 5121(b):

21(i) Section 5119(b).

22(ii) Section 5120(b)(1)(ii).

23(2) This section shall take effect immediately.

24(3) The remainder of this act shall take effect in 60