6.1-459 - (Repealed effective October 1, 2010) Required and prohibited business methods.
§ 6.1-459. (Repealed effective October 1, 2010) Required and prohibitedbusiness methods.
Each licensee shall comply with the following requirements:
1. Each payday loan shall be evidenced by a written loan agreement, whichshall be signed by the borrower and a person authorized by the licensee tosign such agreements and dated the same day the loan is made and disbursed.The loan agreement shall set forth, at a minimum: (i) the principal amount ofthe loan; (ii) the interest and any fee charged; (iii) the annual percentagerate, which shall be stated using that term, applicable to the transactioncalculated in accordance with Federal Reserve Board Regulation Z; (iv)evidence of receipt from the borrower of a check, dated as of the date thatthe loan is due, as security for the loan, stating the amount of the check;(v) an agreement by the licensee not to present the check for payment ordeposit until the date the loan is due, which date shall produce a loan termof at least two times the borrower's pay cycle and after which date interestshall not accrue on the amount advanced at a greater rate than six percentper year; (vi) an agreement by the licensee that the borrower shall have theright to cancel the loan transaction at any time before the close of businesson the next business day following the date of the transaction by paying tothe licensee, in the form of cash or other good funds instrument, the amountadvanced to the borrower; and (vii) an agreement that the borrower shall havethe right to prepay the loan prior to maturity by paying the licensee theprincipal amount advanced and any accrued and unpaid interest, fees, andcharges.
2. The licensee shall give a duplicate original of the loan agreement to theborrower at the time of the transaction.
3. A licensee shall not obtain any agreement from the borrower (i) giving thelicensee or any third person power of attorney or authority to confessjudgment for the borrower; (ii) authorizing the licensee or any third partyto bring suit against the borrower in a court outside the Commonwealth; or(iii) waiving any right the borrower has under this chapter.
4. A licensee shall not require or accept more than one check from a borroweras security for any loan.
5. A licensee shall not cause any person to be obligated to the licensee inany capacity at any time in the principal amount of more than $500.
6. A licensee shall not (i) refinance, renew or extend any payday loan; (ii)make a loan to a person if the loan would cause the person to have more thanone payday loan from any licensee outstanding at the same time; (iii) make aloan to a borrower on the same day that a borrower paid or otherwisesatisfied in full a previous payday loan; (iv) make a payday loan to a personwithin 90 days following the date that the person has paid or otherwisesatisfied in full a payday loan through an extended payment plan as providedin subdivision 26; (v) make a payday loan to a person within 45 daysfollowing the date that the person has paid or otherwise satisfied in full afifth payday loan made within a period of 180 days as provided in subdivision27 a; or (vi) make a payday loan to a person within the longer of (a) 90 daysfollowing the date that the person has paid or otherwise satisfied in full anextended term loan or (b) 150 days following the date that the person entersinto an extended term loan, as provided in subdivision 27 b.
7. A licensee shall not cause a borrower to be obligated upon more than oneloan at any time.
8. A check accepted by a licensee as security for any loan shall be dated asof the date the loan is due.
9. A licensee shall not threaten, or cause to be instigated, criminalproceedings against a borrower if a check given as security for a loan isdishonored. In addition to any other remedies available at law, a licenseethat knowingly violates this prohibition shall pay the affected borrower acivil monetary penalty equal to three times the amount of the dishonoredcheck.
10. A licensee shall not take an interest in any property other than a checkpayable to the licensee as security for a loan.
11. A licensee shall not make a loan to a borrower to enable the borrower topay for any other product or service sold at the licensee's business location.
12. Loan proceeds shall be disbursed in cash or by the licensee's businesscheck. No fee shall be charged by the licensee or an affiliated check casherfor cashing a loan proceeds check.
13. A check given as security for a loan shall not be negotiated to a thirdparty.
14. Upon receipt of a check given as security for a loan, the licensee shallstamp the check with an endorsement stating: "This check is being negotiatedas part of a payday loan pursuant to Chapter 18 (§ 6.1-444 et seq.) of Title6.1 of the Code of Virginia, and any holder of this check takes it subject toall claims and defenses of the maker."
15. Before entering into a payday loan, the licensee shall provide eachborrower with a pamphlet, in form consistent with regulations promulgated bythe Commission, explaining in plain language the rights and responsibilitiesof the borrower and providing a toll-free number at the Commission forassistance with complaints.
16. Before disbursing funds pursuant to a payday loan, a licensee shallprovide a clear and conspicuous printed notice to the borrower indicatingthat a payday loan is not intended to meet long-term financial needs and thatthe borrower should use a payday loan only to meet short-term cash needs.
17. A borrower shall be permitted to make partial payments, in increments ofnot less than $5, on the loan at any time prior to maturity, without charge.The licensee shall give the borrower signed, dated receipts for each paymentmade, which shall state the balance due on the loan. Upon repayment of theloan in full, the licensee shall mark the original loan agreement with theword "paid" or "canceled," return it to the borrower, and retain a copyin its records.
18. Each licensee shall conspicuously post in its licensed location aschedule of fees and interest charges, with examples using a $300 loanpayable in 14 days and 30 days.
19. Any advertising materials used to promote payday loans that includes theamount of any payment, expressed either as a percentage or dollar amount, orthe amount of any finance charge, shall also include a statement of theinterest, fees and charges, expressed as an annual percentage rate, payableusing as an example a $300 loan payable in 14 and 30 days.
20. In any print media advertisement, including any web page, used to promotepayday loans, the disclosure statements shall be conspicuous. "Conspicuous"shall have the meaning set forth in subdivision (a) (14) of § 59.1-501.2. Ifa single advertisement consists of multiple pages, folds, or faces, thedisclosure requirement applies only to one page, fold, or face. In atelevision advertisement used to promote payday loans, the visual disclosurelegend shall include 20 scan lines in size. In a radio advertisement oradvertisement communicated by telephone used to promote payday loans, thedisclosure statement shall last at least two seconds and the statement shallbe spoken so that its contents may be easily understood.
21. A licensee or affiliate shall not knowingly make a payday loan to aperson who is a member of the military services of the United States or thespouse or other dependent of a member of the military services of the UnitedStates. Prior to making a payday loan, every licensee or affiliate shallinquire of every prospective borrower if he or she is a member of themilitary services of the United States or the spouse or other dependent of amember of the military services of the United States. The loan documentsshall include verification that the borrower is not a member of the militaryservices of the United States or the spouse of a member of the militaryservices of the United States.
22. In collecting or attempting to collect a payday loan, a licensee shallcomply with the restrictions and prohibitions applicable to debt collectorscontained in the Fair Debt Collection Practices Act (15 U.S.C. § 1692 etseq.) regarding harassment or abuse, false or misleading misrepresentations,and unfair practices in collections.
23. A licensee may not file or initiate a legal proceeding of any kindagainst a borrower until 60 days after the date of default on a payday loan,during which period the licensee and borrower may voluntarily enter into arepayment arrangement.
24. A licensee shall not obtain authorization to electronically debit aborrower's deposit account in connection with any payday loan.
25. A licensee may not engage in any unfair, misleading, deceptive, orfraudulent acts or practices in the conduct of its business.
26. A borrower may pay any outstanding payday loan from any licensee by meansof an extended payment plan as follows:
a. A borrower shall not be eligible to enter into more than one extendedpayment plan in any 12-month period.
b. To enter into an extended payment plan with respect to a payday loan, theborrower shall agree in a written and signed document to repay the amountowed in at least four equal installments over an aggregate term of at least60 days. Interest shall not accrue on the indebtedness during the term of theextended payment plan. The borrower may prepay an extended payment plan infull at any time without penalty. If the borrower fails to pay the amountowed under the extended payment plan when due, then the licensee mayimmediately accelerate the unpaid loan balance.
c. If the borrower enters into an extended payment plan, then no licensee maymake a payday loan to the borrower until a waiting period of 90 days shallhave elapsed from the date that the borrower pays or satisfies in full thebalance of the loan under the terms of the extended payment plan.
d. At each licensed location, the licensee shall post a notice in at least24-point bold type, in a form established or approved by the Commission,informing persons that they may be eligible to enter into an extended paymentplan.
e. The licensee shall provide oral notice to any borrower who is eligible toenter into an extended payment plan, at the time a payday loan is made, whichnotice shall inform the borrower of his ability to pay the payday loan bymeans of an extended payment plan. The information contained in the noticeshall be in a form provided by the Bureau of Financial Institutions.
27. In addition to the other conditions set forth in this chapter, the fifthpayday loan that is made to any person within a period of 180 days shall bemade only in compliance with, at the option of the borrower, either of thefollowing:
a. The fifth payday loan is made upon the same terms and conditions otherwiseapplicable to payday loans under the terms of this chapter, except that (i)no licensee may make a payday loan to such borrower during a period of 45days following the date such fifth payday loan is paid or otherwise satisfiedin full and (ii) the borrower may elect, at any time on or before its duedate, to repay such fifth payday loan by means of an extended payment plan asprovided in subdivision 26 b; or
b. The fifth payday loan is made in the form of an extended term loan. Anextended term loan is a loan that complies with the terms and conditionsotherwise applicable to payday loans under the terms of this chapter exceptthat (i) the principal amount of the loan amount, and any interest and feespermitted by § 6.1-460, shall be payable in four equal installments over apayment period of 60 days following the date the loan is made and (ii) nolicensee may make a payday loan to such borrower during the longer of (a) 90days following the date the extended term loan is paid or otherwise satisfiedin full or (b) 150 days following the date the extended term loan is made.
(2002, c. 897; 2003, c. 593; 2004, c. 295; 2005, c. 571; 2008, cc. 849, 876.)