6.2-2215 - (Effective October 1, 2010) Required and prohibited business methods.
§ 6.2-2215. (Effective October 1, 2010) Required and prohibited businessmethods.
Each licensee shall comply with the following requirements and prohibitions:
1. Each motor vehicle title loan shall be evidenced by a written motorvehicle title loan agreement. Each motor vehicle title loan agreement shall:
a. Be signed by the borrower and by a person authorized by the licensee tosign such agreements;
b. Be dated the day it is executed by the borrower;
c. Set forth or contain, at a minimum: (i) the loan amount; (ii) the interestrate and any fees charged pursuant to the loan, which shall not exceed themaximum rate permitted pursuant to § 6.2-2216; (iii) the annual percentagerate, which shall be stated using that term, calculated in accordance withthe Federal Reserve Board's Regulation Z; (iv) the amounts and scheduled duedates of the monthly installment payments of principal and interest; (v) theborrower's mailing address; (vi) the make, model, year, and vehicleidentification number of the motor vehicle in which a security interest isbeing given to as security for the loan; (vii) that the borrower shall havethe right to cancel the loan agreement at any time before the close ofbusiness on the next business day following the day the loan agreement isexecuted by returning the original loan proceeds check to or paying to thelicensee, in the form of cash or other good funds instrument, the loanproceeds; (viii) the loan's maturity date, which shall not be earlier than120 days from the date the loan agreement is executed nor later than 12months from the date the loan agreement is executed; and (viii) such otherinformation relating to the title loan as the Commission shall determine, byregulation, is necessary in order to ensure that the borrower is providedadequate notice of the relevant provisions of the title loan;
d. Not cause any person to be obligated to the licensee for a principalamount that exceeds 50 percent of the fair market value of the motor vehiclein which the licensee is taking an interest, which value shall be determinedby reference to the loan value for the motor vehicle specified in arecognized pricing guide if the motor vehicle is included in a recognizedpricing guide; and
e. Contain the following notice in at least 14-point bold type immediatelyabove the borrower's signature:
THE INTEREST RATE ON THIS LOAN IS HIGH. YOU SHOULD CONSIDER WHETHER THERE AREOTHER LOWER COST LOANS AVAILABLE TO YOU.
THIS IS A MOTOR VEHICLE TITLE LOAN AGREEMENT. IT ALLOWS YOU TO RECEIVE LOANPROCEEDS TO MEET YOUR IMMEDIATE CASH NEEDS. IT IS NOT INTENDED TO MEET YOURLONG-TERM FINANCIAL NEEDS.
WHEN USING THIS LOAN, YOU SHOULD REQUEST THE MINIMUM AMOUNT REQUIRED TO MEETYOUR IMMEDIATE NEEDS AND YOU SHOULD REPAY THE LOAN AS QUICKLY AS POSSIBLE TOREDUCE THE AMOUNT OF INTEREST YOU ARE CHARGED.
YOU SHOULD TRY TO REPAY THIS LOAN AS QUICKLY AS POSSIBLE. YOU WILL BEREQUIRED TO PAY THE PRINCIPAL AND INTEREST ON THE LOAN IN MONTHLYSUBSTANTIALLY EQUAL INSTALLMENTS. YOU SHOULD TRY TO PAY EVEN MORE TOWARDSYOUR PRINCIPAL BALANCE EACH MONTH. DOING SO WILL SAVE YOU MONEY.
YOU MAY RESCIND THIS LOAN WITHOUT COST OR FURTHER OBLIGATION IF YOU RETURNTHE LOAN PROCEEDS, IN CASH OR THE ORIGINAL LOAN CHECK, PRIOR TO THE CLOSE OFBUSINESS ON THE BUSINESS DAY IMMEDIATELY FOLLOWING THE EXECUTION OF THISAGREEMENT.
YOU ARE PLEDGING YOUR MOTOR VEHICLE AS COLLATERAL FOR THIS LOAN. IF YOU FAILTO REPAY THE LOAN PURSUANT TO THIS AGREEMENT, WE MAY REPOSSESS YOUR MOTORVEHICLE.
UNLESS YOU CONCEAL OR INTENTIONALLY DAMAGE THE MOTOR VEHICLE, OR OTHERWISEIMPAIR OUR SECURITY INTEREST BY PLEDGING THE MOTOR VEHICLE TO A THIRD PARTYOR PLEDGING A MOTOR VEHICLE TO US THAT IS ALREADY SUBJECT TO AN UNDISCLOSEDEXISTING LIEN, YOUR LIABILITY FOR DEFAULTING UNDER THIS LOAN IS LIMITED TOTHE LOSS OF THE MOTOR VEHICLE.
IF YOUR MOTOR VEHICLE IS SOLD DUE TO YOUR DEFAULT, YOU ARE ENTITLED TO ANYSURPLUS OBTAINED AT SUCH SALE BEYOND WHAT IS OWED PURSUANT TO THIS AGREEMENTALONG WITH ANY REASONABLE COSTS OF RECOVERY AND SALE;
2. Before entering into a motor vehicle title loan, a licensee shall provideeach borrower with a pamphlet, in a form consistent with regulations adoptedby the Commission, explaining in plain language the rights andresponsibilities of the borrower and providing a toll-free number at theCommission for assistance with complaints;
3. The borrower shall have the right to prepay the title loan prior tomaturity by paying the outstanding balance at any time without penalty. Aborrower shall also be permitted to make partial payments on a motor vehicleequity loan without charge at any time prior to the date such amounts wouldotherwise be due to the licensee. The licensee shall give the borrowersigned, dated receipts for any cash payment made in person;
4. A licensee shall give a duplicate original of the loan agreement to theborrower at the time it is executed;
5. 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; (iii)waiving or modifying any right the borrower has under this chapter or Title8.9A; or (iv) requiring the borrower to use arbitration or other alternativedispute resolution mechanisms that do not conform to Chapter 21 (§ 8.01-577et seq.) of Title 8.01;
6. A motor vehicle title loan agreement shall not (i) contain a provision bywhich a person acting on behalf of the licensee is treated as an agent of theborrower in connection with its formation or execution other than forpurposes of filing or releasing a lien with the Department of Motor Vehicles,(ii) contain an acceleration clause under which a licensee may demandimmediate payment of any amount owed to it unless the borrower is in defaultunder the terms of the loan agreement, or (iii) be sold or otherwise assignedto any other person who is not also a licensee, and if a loan agreement issold or assigned to another licensee, the buyer or assignee of the loanagreement shall be subject to the same obligations under this chapter thatapply to the selling or assigning licensee;
7. Loan proceeds shall be disbursed (i) in cash, (ii) by the licensee'sbusiness check, or (iii) by debit card provided that the borrower will not bedirectly charged a fee by the licensee in connection with the withdrawal ofthe funds. No fee shall be charged by the licensee or check casher forcashing a title loan proceeds check;
8. A licensee shall not obtain or accept from a borrower an authorization toelectronically debit the borrower's deposit account;
9. A licensee shall not take an interest in any real or personal propertyother than one motor vehicle owned by the borrower as security for a titleloan. For purposes of this subdivision, "motor vehicle" includes anyaccessories or accessions to a motor vehicle that are affixed thereto;
10. A licensee shall not (i) make a motor vehicle title loan if, on the datethe loan agreement is signed by the borrower, the motor vehicle's certificateof title evidences that the motor vehicle is security for another loan orotherwise is encumbered by a lien; (ii) make a loan to an individual who thelicensee knows is a borrower under another motor vehicle title loan, whethermade by the same or another licensee, or (iii) knowingly cause a borrower tobe obligated upon more than one motor vehicle title loan at any time. Priorto making a motor vehicle title loan, every licensee shall inquire of everyprospective borrower if the individual is obligated on a motor vehicle titleloan with any licensee. Each loan agreement shall include the borrower'scertification that the borrower is not obligated on another motor vehicletitle loan;
11. A licensee shall (i) hold the certificate of title to the motor vehiclethroughout the period that the loan agreement is in effect and (ii) withinseven days following the date of the motor vehicle title loan agreement, fileto have its security interest in the motor vehicle added to its certificateof title by complying with the requirements of § 46.2-637;
12. A licensee shall not make a title loan to a borrower to enable theborrower to (i) pay for any other product or service sold at the licensee'sbusiness location or (ii) repay any amount owed to the licensee or anaffiliate of the licensee in connection with another credit transaction;
13. A licensee's security interest in a motor vehicle shall be promptlyreleased when the borrower's obligations under the loan agreement aresatisfied in full. When releasing the security interest in a motor vehicle, alicensee shall (i) mark the original loan agreement with the word "paid" or"canceled," return it to the borrower, and retain a copy in its records;(ii) take any action necessary to reflect the termination of its lien on themotor vehicle's certificate of title; and (iii) return the certificate oftitle to the borrower;
14. A licensee shall conspicuously post in each licensed location (i) aschedule of finance charges on a title loan, using as an example a $1,000loan that is repaid over a 12-month period and (ii) a notice containing thefollowing statement: "Should you wish to file a complaint against us, youmay contact the Bureau of Financial Institutions at [insert contactinformation]." The Commission shall furnish licensees with the appropriatecontact information;
15. A licensee or affiliate shall not knowingly make a motor vehicle titleloan to a covered member of the armed forces or a dependent of such member.Prior to making a motor vehicle title loan, every licensee or affiliate shallinquire of every prospective borrower if the individual is a covered memberof the armed forces or a dependent of a covered member. The prospectiveborrower shall affirm in writing to the licensee or affiliate if he is not acovered member of the armed forces or a dependent of a covered member. Forpurposes of this section, "covered member of the armed forces" means aperson on active duty under a call or order that does not specify a period of30 days or less or on active guard and reserve duty. For purposes of thissection, "dependent of a covered member of the armed forces" means themember's spouse, the member's child as defined by 38 U.S.C. § 101(4), or anindividual for whom the member provided more than one-half of theindividual's support for 180 days immediately preceding the date the motorvehicle title loan is sought;
16. In collecting or attempting to collect a motor vehicle title loan, alicensee shall comply with the restrictions and prohibitions applicable todebt collectors contained in the Fair Debt Collection Practices Act (15U.S.C. § 1692 et seq.) regarding harassment or abuse, false, misleading ordeceptive statements or representations, and unfair practices in collections;
17. A licensee shall not (i) engage in any unfair, misleading, deceptive, orfraudulent acts or practices in the conduct of its business, (ii) engage inany business or activity that directly or indirectly results in an evasion ofthe provisions of this chapter, or (iii) threaten, or cause to be instigated,criminal proceedings against a borrower arising from the borrower's failureto pay any sum due under a loan agreement;
18. A licensee shall not conduct the business of making motor vehicle titleloans under this chapter at any office, suite, room, or place of businesswhere any other business is solicited or conducted except a registered checkcashing business or such other business as the Commission determines shouldbe permitted, and subject to such conditions as the Commission deemsnecessary and in the public interest. No other such business shall be allowedexcept as permitted by Commission regulation or upon the filing of a writtenapplication with the Commission, payment of a $300 fee, and provision of suchinformation as the Commission may deem pertinent. The Commission shall not,however, permit the sale of insurance or the enrolling of borrowers undergroup insurance policies;
19. A licensee shall provide a safe place for the keeping of all certificatesof title while they are in its possession;
20. A licensee may require a borrower to purchase or maintain propertyinsurance upon a motor vehicle securing a title loan made pursuant to thischapter. A licensee may not require the borrower to obtain such insurancefrom a particular provider; and
21. If the licensee takes possession of a motor vehicle securing a titleloan, the vehicle shall be stored in a secure location.
(2010, c. 477.)