Bill Text: MN HF2936 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Lenders, loans, lending practices, health insurance benefits, property and casualty cancellations, and non renewals regulated; communications fraud act established; and criminal and civil penalties prescribed.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-03-10 - Introduction and first reading, referred to Commerce and Consumer Protection Finance and Policy [HF2936 Detail]
Download: Minnesota-2013-HF2936-Introduced.html
1.2relating to commerce; regulating certain lenders, loans, lending practices, health
1.3insurance benefits, and property and casualty cancellations and nonrenewals;
1.4establishing a communications fraud act and prescribing criminal and civil
1.5penalties;amending Minnesota Statutes 2012, sections 47.60, subdivision 2;
1.647.601, subdivision 2; 53.05; 53C.01, subdivisions 8, 12; 53C.02; 53C.08,
1.7subdivision 1, by adding a subdivision; 72A.20, by adding a subdivision; 332.32;
1.8proposing coding for new law in Minnesota Statutes, chapters 53C; 609.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 Section 1. Minnesota Statutes 2012, section 47.60, subdivision 2, is amended to read:
1.11 Subd. 2. Authorization, terms, conditions, and prohibitions. (a) In lieu of the
1.12interest, finance charges, or fees in any other law, a consumer small loan lender may
1.13charge the following, but in no event may these charges exceed an annual percentage rate
1.14of interest of 30 percent:
1.15(1) on any amount up to and including $50, a charge of $5.50 may be added;
1.16(2) on amounts in excess of $50, but not more than $100, a charge may be added
1.17equal to ten percent of the loan proceeds plus a $5 administrative fee;
1.18(3) on amounts in excess of $100, but not more than $250, a charge may be
1.19added equal to seven percent of the loan proceeds with a minimum of $10 plus a $5
1.20administrative fee;
1.21(4) for amounts in excess of $250 and not greater than the maximum in subdivision
1.221, paragraph (a), a charge may be added equal to six percent of the loan proceeds with a
1.23minimum of $17.50 plus a $5 administrative fee.
1.24(b) The term of a loan made under this section shall be for no more than 30 calendar
1.25days.
2.1(c) After maturity, the contract rate must not exceed2.75 percent per month of the
2.2remaining loan proceeds after the maturity date calculated at a rate of 1/30 of the monthly
2.3rate in the contract for each calendar day the balance is outstanding.
2.4(d) No insurance charges or other charges must be permitted to be charged, collected,
2.5or imposed on a consumer small loan except as authorized in this section.
2.6(e) On a loan transaction in which cash is advanced in exchange for a personal
2.7check, a return check charge may be charged as authorized by section604.113, subdivision
2.82 , paragraph (a). The civil penalty provisions of section
604.113, subdivision 2 , paragraph
2.9(b), may not be demanded or assessed against the borrower.
2.10(f) A loan made under this section must not be repaid by the proceeds of another
2.11loan made under this section by the same lender or related interest. The proceeds from a
2.12loan made under this section must not be applied to another loan from the same lender or
2.13related interest. No loan to a single borrower made pursuant to this section shall be split or
2.14divided and no single borrower shall have outstanding more than one loan with the result
2.15of collecting a higher charge than permitted by this section or in an aggregate amount of
2.16principal exceed at any one time the maximum of $350.
2.17 Sec. 2. Minnesota Statutes 2012, section 47.601, subdivision 2, is amended to read:
2.18 Subd. 2. Consumer short-term loan contract. (a) No contract or agreement
2.19between a consumer short-term loan lender and a borrower residing in Minnesota may
2.20contain the following:
2.21(1) a provision selecting a law other than Minnesota law under which the contract
2.22is construed or enforced;
2.23(2) a provision choosing a forum for dispute resolution other than the state of
2.24Minnesota; or
2.25(3) a provision limiting class actions against a consumer short-term lender for
2.26violations of subdivision 3 or for making consumer short-term loans:
2.27(i) without a required license issued by the commissioner; or
2.28(ii) in which interest rates, fees, charges, or loan amounts exceed those allowable
2.29under section47.59, subdivision 6 , or
47.60, subdivision 2 , other than by de minimis
2.30amounts if no pattern or practice exists.
2.31(b) Any provision prohibited by paragraph (a) is void and unenforceable.
2.32(c) A consumer short-term loan lender must furnish a copy of the written loan
2.33contract to each borrower. The contract and disclosures must be written in the language in
2.34which the loan was negotiated with the borrower and must contain:
3.1(1) the name; address, which may not be a post office box; and telephone number of
3.2the lender making the consumer short-term loan;
3.3(2) the name and title of the individual employee or representative who signs the
3.4contract on behalf of the lender;
3.5(3) an itemization of the fees and interest charges to be paid by the borrower;
3.6(4) in bold, 24-point type, the annual percentage rate as computed under United
3.7States Code, chapter 15, section 1606; and
3.8(5) a description of the borrower's payment obligations under the loan.
3.9(d) The holder or assignee of a check or other instrument evidencing an obligation of
3.10a borrower in connection with a consumer short-term loan takes the instrument subject to
3.11all claims by and defenses of the borrower against the consumer short-term lender.
3.12(e) A licensee may not knowingly enter into a consumer short-term loan with a
3.13borrower if that borrower is in an extended repayment plan with any licensee until 14
3.14days after the plan is paid in full.
3.15 Sec. 3. Minnesota Statutes 2012, section 53.05, is amended to read:
3.1653.05 POWERS, LIMITATION.
3.17No industrial loan and thrift company may do any of the following:
3.18(1) carry demand banking accounts; use the word "savings" unless the institution's
3.19investment certificates, savings accounts, and savings deposits are insured by the Federal
3.20Deposit Insurance Corporation and then only if the word is not followed by the words
3.21"and loan" in its corporate name; use the word "bank" or "banking" in its corporate name;
3.22operate as a savings bank;
3.23(2) have outstanding at any one time certificates of indebtedness, savings accounts,
3.24and savings deposits 30 times the sum of capital stock and surplus of the company;
3.25(3) accept trusts, except as provided in section47.75, subdivision 1 , or act as
3.26guardian, administrator, or judicial trustee in any form;
3.27(4) deposit any of its funds in any banking corporation, unless that corporation has
3.28been designated by vote of a majority of directors or of the executive committee present at
3.29a meeting duly called, at which a quorum was in attendance;
3.30(5) change any allocation of capital made pursuant to section53.03 or reduce or
3.31withdraw in any way any portion of the capital stock and surplus without prior written
3.32approval of the commissioner of commerce;
3.33(6) take any instrument in which blanks are left to be filled in after execution;
3.34(7) lend money in excess of 20 percent of the total of its capital stock and surplus at
3.35all its authorized locations to a person primarily liable. Companies not issuing investment
4.1certificates of indebtedness under section53.04 need not comply with the requirement if
4.2the amount of money lent does not exceed $100,000 of principal as defined by section
4.347.59, subdivision 1
, paragraph (p).
4.4However, industrial loan and thrift companies with deposit liabilities must comply
4.5with the provisions of section48.24 ; or
4.6(8) issue cashier's checks pursuant to section48.151 , unless and at all times the
4.7aggregate liability to all creditors on these instruments is protected by a special fund in
4.8cash or due from banks to be used solely for payment of the cashier's checks.; or
4.9(9) make a consumer short-term loan, as defined in section 47.601, under any section
4.10of law other than section 47.60.
4.11 Sec. 4. Minnesota Statutes 2012, section 53C.01, subdivision 8, is amended to read:
4.12 Subd. 8. Retail installment contract. "Retail installment contract" means any
4.13agreement, entered into in this state, evidencing a retail installment sale of a motor vehicle,
4.14other than for the purpose of resale, when purchased primarily for personal, family or
4.15household use, pursuant to which title to, or a lien upon the motor vehicle is retained by
4.16the retail seller as security for the retail buyer's obligation. This term includes a mortgage,
4.17conditional sale contract, or any contract for the bailment or leasing of a motor vehicle by
4.18which the bailee or lessee contracts to pay as compensation for its use a sum substantially
4.19equivalent to the retail installment sale price of the motor vehicle and by which it is agreed
4.20that the bailee or lessee is bound to become, or has the option of becoming, the owner of
4.21such motor vehicle for no additional consideration or for nominal additional consideration.
4.22"Retail installment contract" does not include any agreement, entered into in this state,
4.23 evidencing an installment sale of a motor vehicle purchased primarily for use in business.
4.24For purposes of this subdivision, "business" means a commercial or industrial enterprise
4.25which is carried on for the purpose of active or passive investment or profit.
4.26 Sec. 5. Minnesota Statutes 2012, section 53C.01, subdivision 12, is amended to read:
4.27 Subd. 12. Sales finance company. "Sales finance company" means a person
4.28engaged, in whole or in part, in the business of purchasing retail installment contractsin
4.29this state from one or more retail sellers. The term includes a bank, trust company, or
4.30industrial loan and thrift company, if so engaged. The term also includes a retail seller
4.31engaged, in whole or in part, in the business of creating and holding retail installment
4.32contracts. The term does not include the pledges of an aggregate number of the contracts
4.33to secure a bona fide loan thereon.
5.1 Sec. 6. Minnesota Statutes 2012, section 53C.02, is amended to read:
5.253C.02 SALES FINANCE COMPANY; LICENSE, FEES, REFUND.
5.3(a) No person shall engage in the business of a sales finance company in this state
5.4without a license therefor as provided in sections53C.01 to
53C.14 provided, however,
5.5that no bank, trust company, savings bank, savings association, or credit union, whether
5.6state or federally chartered, industrial loan and thrift company, or licensee under the
5.7Minnesota Regulated Loan Act authorized to do businessin this state shall be required to
5.8obtain a license under sections53C.01 to
53C.14 .
5.9(b) The application for a license shall be in writing, under oath and in the form
5.10prescribed by the commissioner. The application shall contain the name of the applicant;
5.11date of incorporation, if incorporated; the address where the business is or is to be
5.12conducted and similar information as to any branch office of the applicant; the name and
5.13resident address of the owner or partners, or, if a corporation or association, of the directors,
5.14trustees and principal officers, and other pertinent information the commissioner requires.
5.15(c) The licensee fee for the fiscal year beginning July 1 and ending June 30 of the
5.16following year, or any part thereof shall be the sum of $250 for the principal place of
5.17business of the licensee, and the sum of $125 for each branch of the licensee, maintained
5.18in this state. Any licensee who proves to the satisfaction of the commissioner, by affidavit
5.19or other proof satisfactory to the commissioner, that during the 12 calendar months of the
5.20immediately preceding fiscal year, for which the license has been paid that the licensee
5.21has not held retail installment contracts exceeding $15,000 in amount, shall be entitled
5.22to a refund of that portion of each license fee paid in excess of $25. The commissioner
5.23shall certify to the commissioner of management and budget that the licensee is entitled to
5.24a refund, and payment thereof shall be made by the commissioner of management and
5.25budget. The amount necessary to pay for the refundment of the license fee is appropriated
5.26out of the general fund. All license fees received by the commissioner under sections
5.2753C.01
to
53C.14 shall be deposited with the commissioner of management and budget.
5.28(d) Each license shall specify the location of the office or branch and must be
5.29conspicuously displayed there. In case the location be changed, the commissioner shall
5.30endorse the change of location on the license.
5.31(e) Upon the filing of such application, and the payment of the fee, the commissioner
5.32shall issue a license to the applicant to engage in the business of a sales finance company
5.33under and in accordance with the provisions of sections53C.01 to
53C.14 for a period
5.34which shall expire the last day of June next following the date of its issuance. The license
5.35shall not be transferable or assignable. No licensee shall transact any business provided
5.36for by sections53C.01 to
53C.14 under any other name.
6.1 Sec. 7. [53C.025] BOND.
6.2Before a license may be issued to a sales finance company, the applicant shall file
6.3annually with and have approved by the commissioner a surety bond, issued by a bonding
6.4company authorized to do business in this state in the principal amount of $........ The
6.5bond must run to the commissioner and is for the benefit of creditors of the sales finance
6.6company for liability incurred by the sales finance company in connection with providing
6.7its services. The commissioner may require a licensee to file a bond in an additional
6.8amount if the commissioner considers it necessary to meet the requirements of this
6.9section. In determining the additional amount of the bond which may be required, the
6.10commissioner may require the licensee to file its financial records. In no case may the
6.11bond be less than the initial $....... or more than the outstanding liabilities.
6.12 Sec. 8. Minnesota Statutes 2012, section 53C.08, subdivision 1, is amended to read:
6.13 Subdivision 1. Terms and limitations. (a) Every retail installment contract shall
6.14be in writing, shall contain all the agreements of the parties, shall be signed by the retail
6.15buyer and seller, and a copy signed by the retail buyer shall be furnished to such retail
6.16buyer at the time the retail buyer executes the contract. Until the copy signed by both the
6.17retail buyer and retail sellershall be provided to the is received by a retail buyer within
6.18seven days after delivery of the vehicle. With respect to any contract executed prior to
6.19August 1, 1996, which has not been paid in full by the retail buyer, the retail seller shall
6.20provide such retail buyer a copy signed by both the retail buyer and retail seller within 120
6.21days after August 1, 1996 who has not taken delivery of the motor vehicle, the retail buyer
6.22may cancel the agreement and upon cancellation must receive a refund from the holder of
6.23the retail installment contract of all payments made by the retail buyer.
6.24(b) No provisions for confession of judgment or power of attorney therefor contained
6.25in any retail installment contract or contained in a separate agreement relating thereto,
6.26shall be valid or enforceable.
6.27(c) The holder of a precomputed retail installment contract may, if the contract so
6.28provides, collect a delinquency and collection charge on each installment in arrears for a
6.29period not less than ten days in an amount not in excess of five percent of each installment
6.30or $5, whichever is greater. In addition to such delinquency and collection charge, the
6.31retail installment contract, whether interest-bearing or precomputed, may provide for the
6.32payment of attorneys' fees not exceeding 15 percent of the amount due and payable under
6.33such contract where such contract is referred to an attorney not a salaried employee of the
6.34holder of the contract for collection plus the court costs.
7.1(d) Unless written notice has been given to the retail buyer of actual or intended
7.2assignment of a retail installment contract, payment thereunder or tender thereof made
7.3by the retail buyer to the last known holder of such contract shall be binding upon all
7.4subsequent holders or assignees.
7.5(e) Upon written request from the retail buyer, the holder of the retail installment
7.6contract shall give or forward to the retail buyer a written statement of the dates and
7.7amounts of payments and the total amount unpaid under such contract. A retail buyer shall
7.8be given a written receipt for any payment when made in cash.
7.9 Sec. 9. Minnesota Statutes 2012, section 53C.08, is amended by adding a subdivision
7.10to read:
7.11 Subd. 6. Regulatory agency. A retail installment contract must contain the
7.12following statement: "This contract is regulated under the provisions of Minnesota
7.13Statutes, chapter 53C. The regulatory agency is: Minnesota Department of Commerce, 85
7.14Seventh Place East, Suite 500, St. Paul, Minnesota 55101-2198."
7.15 Sec. 10. Minnesota Statutes 2012, section 72A.20, is amended by adding a subdivision
7.16to read:
7.17 Subd. 40. Claims arising from natural causes; limitations on cancellations
7.18and nonrenewals. An insurer shall not cancel, refuse to renew, reduce the limits of
7.19coverage, or eliminate coverage for damages to property based solely on claims arising
7.20from natural causes.
7.21For purposes of this subdivision: (1) a "natural cause" is an act occasioned
7.22exclusively by the violence of nature where the policyholder's action did not cause the
7.23damage or injury; and (2) "solely" means that claims arising from natural causes and that
7.24are beyond the insured's control cannot be the event that triggers the cancellation, refusal
7.25to renew, reduction in the limits of coverage, or elimination of coverage.
7.26 Sec. 11. Minnesota Statutes 2012, section 332.32, is amended to read:
7.27332.32 EXCLUSIONS.
7.28(a) The term "collection agency" shall not include persons whose collection activities
7.29are confined to and are directly related to the operation of a business other than that of
7.30a collection agency such as, but not limited to banks when collecting accounts owed to
7.31the banks and when the bank will sustain any loss arising from uncollectible accounts,
7.32abstract companies doing an escrow business, real estate brokers, public officers, persons
7.33acting under order of a court,lawyers exempt attorneys at law, trust companies, insurance
8.1companies, credit unions, savings associations, loan or finance companies unless they
8.2are engaged in asserting, enforcing or prosecuting unsecured claims which have been
8.3purchased from any person, firm, or association when there is recourse to the seller for
8.4all or part of the claim if the claim is not collected. For purposes of this paragraph,
8.5"exempt attorneys at law" means attorneys licensed or otherwise authorized to practice
8.6law in this state:
8.7(1) whose exclusive and principal practice does not involve collection activities; and
8.8(2) who do not have a business relationship with a collection agency that involves
8.9collection activities.
8.10(b) The term "collection agency" shall not include a trade association performing
8.11services authorized by section604.15, subdivision 4a , but the trade association in
8.12performing the services may not engage in any conduct that would be prohibited for a
8.13collection agency under section332.37 .
8.14 Sec. 12. [609.8051] COMMUNICATIONS FRAUD.
8.15 Subdivision 1. Definitions. (a) As used in this section, the terms in paragraphs
8.16(b) to (f) have the meanings given them.
8.17(b) "Communicate" means to originate, emit, disseminate, transmit, transfer, or
8.18cause another person to originate, emit, disseminate, transmit, or transfer, signs, signals,
8.19writing, images, sounds, data, or intelligences of any nature, in whole or in part by
8.20any method including, but not limited to, mail, television, Internet, cable, wire, fiber
8.21optic, wireless, radio, satellite, electromagnetic, photoelectronic, or photooptical system,
8.22including telecommunications and data communications.
8.23(c) "Scheme to defraud" means an ongoing course of conduct with the intent to
8.24obtain money, property, services, or identity from one or more persons by false or
8.25fraudulent statements, pretenses, representations, or promises.
8.26(d) "Telecommunication" means the origination, emission, dissemination,
8.27transmission, or reception of a communication by any method, including, but not limited
8.28to, a fiber optic, electronic, magnetic, optical, digital, or analog method.
8.29(e) "Property," "services," and "value" have the meanings given in section 609.52.
8.30(f) "Identity" has the meaning given in section 609.527.
8.31 Subd. 2. Fraud. (a) A person is guilty of communications fraud and may
8.32be sentenced as provided in subdivision 3 if the person knowingly engages in a
8.33communication with the purpose of executing or otherwise furthering a scheme to defraud.
8.34(b) If a person violates paragraph (a), and the violation occurs as part of a course
8.35of conduct involving additional violations or attempted violations of paragraph (a), or
9.1violations, attempted violations, or conspiracies to violate section 609.52 or 609.527, the
9.2court may aggregate the value of the money, property, services, and identities obtained or
9.3attempted to be obtained by the person.
9.4 Subd. 3. Penalty. A person who commits communications fraud may be sentenced
9.5as follows:
9.6(1) if the violation involves a single victim and the total combined value of the
9.7money, property, services, or identity the person obtained or intended to obtain is $250 or
9.8less, the person may be sentenced as provided in section 609.52, subdivision 3, clause (5);
9.9(2) if the violation involves a single victim and the total combined value of the
9.10money, property, services, or identity the person obtained or intended to obtain is more
9.11than $250 but not more than $500, the person may be sentenced as provided in section
9.12609.52, subdivision 3, clause (4);
9.13(3) if the offense involves two or three victims or the total combined value of the
9.14money, property, services, or identities the person obtained or intended to obtain is more
9.15than $500 but not more than $2,500, the person may be sentenced as provided in section
9.16609.52, subdivision 3, clause (3);
9.17(4) if the offense involves more than three but not more than seven victims or the
9.18total combined value of the money, property, services, or identities the person obtained
9.19or intended to obtain is more than $2,500, the person may be sentenced as provided in
9.20section 609.52, subdivision 3, clause (2); and
9.21(5) if the offense involves eight or more victims or the total combined value of the
9.22money, property, services, or identities the person obtained or intended to obtain is more
9.23than $35,000, the person may be sentenced as provided in section 609.52, subdivision
9.243, clause (1).
9.25 Subd. 4. Vulnerable adults. When the victim of the violation is a vulnerable adult,
9.26as defined by section 609.232, subdivision 11, a person who violates subdivision 2 may
9.27also be subject to the criminal penalties of section 609.2335.
9.28 Subd. 5. No bar to conviction. Notwithstanding section 609.035 or 609.04, a
9.29prosecution for or conviction of the crime of communications fraud under subdivision 2 is
9.30not a bar to conviction of or punishment for any other crime.
9.31 Subd. 6. Venue. Notwithstanding anything to the contrary in section 627.01, a
9.32violation committed under subdivision 2 may be prosecuted in:
9.33(1) the county where the offense occurred;
9.34(2) the county of the residence or place of business of the victim; or
10.1(3) if violations are committed by a person in more than one county, the person may
10.2be prosecuted in any county in which one of the violations was committed for all of the
10.3violations aggregated under this section.
10.4 Subd. 7. Civil action. A person who has been injured by a violation of subdivision
10.52 may bring a civil action for three times the amount of actual damages sustained by
10.6that person or $1,500, whichever is greater, and costs and disbursements including, at a
10.7minimum, reasonable attorney fees.
10.8EFFECTIVE DATE.This section is effective August 1, 2014, and applies to
10.9violations committed on or after that date.
1.3insurance benefits, and property and casualty cancellations and nonrenewals;
1.4establishing a communications fraud act and prescribing criminal and civil
1.5penalties;amending Minnesota Statutes 2012, sections 47.60, subdivision 2;
1.647.601, subdivision 2; 53.05; 53C.01, subdivisions 8, 12; 53C.02; 53C.08,
1.7subdivision 1, by adding a subdivision; 72A.20, by adding a subdivision; 332.32;
1.8proposing coding for new law in Minnesota Statutes, chapters 53C; 609.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.10 Section 1. Minnesota Statutes 2012, section 47.60, subdivision 2, is amended to read:
1.11 Subd. 2. Authorization, terms, conditions, and prohibitions. (a) In lieu of the
1.12interest, finance charges, or fees in any other law, a consumer small loan lender may
1.13charge the following, but in no event may these charges exceed an annual percentage rate
1.14of interest of 30 percent:
1.15(1) on any amount up to and including $50, a charge of $5.50 may be added;
1.16(2) on amounts in excess of $50, but not more than $100, a charge may be added
1.17equal to ten percent of the loan proceeds plus a $5 administrative fee;
1.18(3) on amounts in excess of $100, but not more than $250, a charge may be
1.19added equal to seven percent of the loan proceeds with a minimum of $10 plus a $5
1.20administrative fee;
1.21(4) for amounts in excess of $250 and not greater than the maximum in subdivision
1.221, paragraph (a), a charge may be added equal to six percent of the loan proceeds with a
1.23minimum of $17.50 plus a $5 administrative fee.
1.24(b) The term of a loan made under this section shall be for no more than 30 calendar
1.25days.
2.1(c) After maturity, the contract rate must not exceed
2.2remaining loan proceeds after the maturity date calculated at a rate of 1/30 of the monthly
2.3rate in the contract for each calendar day the balance is outstanding.
2.4(d) No insurance charges or other charges must be permitted to be charged, collected,
2.5or imposed on a consumer small loan except as authorized in this section.
2.6(e) On a loan transaction in which cash is advanced in exchange for a personal
2.7check, a return check charge may be charged as authorized by section
2.82
2.9(b), may not be demanded or assessed against the borrower.
2.10(f) A loan made under this section must not be repaid by the proceeds of another
2.11loan made under this section by the same lender or related interest. The proceeds from a
2.12loan made under this section must not be applied to another loan from the same lender or
2.13related interest. No loan to a single borrower made pursuant to this section shall be split or
2.14divided and no single borrower shall have outstanding more than one loan with the result
2.15of collecting a higher charge than permitted by this section or in an aggregate amount of
2.16principal exceed at any one time the maximum of $350.
2.17 Sec. 2. Minnesota Statutes 2012, section 47.601, subdivision 2, is amended to read:
2.18 Subd. 2. Consumer short-term loan contract. (a) No contract or agreement
2.19between a consumer short-term loan lender and a borrower residing in Minnesota may
2.20contain the following:
2.21(1) a provision selecting a law other than Minnesota law under which the contract
2.22is construed or enforced;
2.23(2) a provision choosing a forum for dispute resolution other than the state of
2.24Minnesota; or
2.25(3) a provision limiting class actions against a consumer short-term lender for
2.26violations of subdivision 3 or for making consumer short-term loans:
2.27(i) without a required license issued by the commissioner; or
2.28(ii) in which interest rates, fees, charges, or loan amounts exceed those allowable
2.29under section
2.30amounts if no pattern or practice exists.
2.31(b) Any provision prohibited by paragraph (a) is void and unenforceable.
2.32(c) A consumer short-term loan lender must furnish a copy of the written loan
2.33contract to each borrower. The contract and disclosures must be written in the language in
2.34which the loan was negotiated with the borrower and must contain:
3.1(1) the name; address, which may not be a post office box; and telephone number of
3.2the lender making the consumer short-term loan;
3.3(2) the name and title of the individual employee or representative who signs the
3.4contract on behalf of the lender;
3.5(3) an itemization of the fees and interest charges to be paid by the borrower;
3.6(4) in bold, 24-point type, the annual percentage rate as computed under United
3.7States Code, chapter 15, section 1606; and
3.8(5) a description of the borrower's payment obligations under the loan.
3.9(d) The holder or assignee of a check or other instrument evidencing an obligation of
3.10a borrower in connection with a consumer short-term loan takes the instrument subject to
3.11all claims by and defenses of the borrower against the consumer short-term lender.
3.12(e) A licensee may not knowingly enter into a consumer short-term loan with a
3.13borrower if that borrower is in an extended repayment plan with any licensee until 14
3.14days after the plan is paid in full.
3.15 Sec. 3. Minnesota Statutes 2012, section 53.05, is amended to read:
3.1653.05 POWERS, LIMITATION.
3.17No industrial loan and thrift company may do any of the following:
3.18(1) carry demand banking accounts; use the word "savings" unless the institution's
3.19investment certificates, savings accounts, and savings deposits are insured by the Federal
3.20Deposit Insurance Corporation and then only if the word is not followed by the words
3.21"and loan" in its corporate name; use the word "bank" or "banking" in its corporate name;
3.22operate as a savings bank;
3.23(2) have outstanding at any one time certificates of indebtedness, savings accounts,
3.24and savings deposits 30 times the sum of capital stock and surplus of the company;
3.25(3) accept trusts, except as provided in section
3.26guardian, administrator, or judicial trustee in any form;
3.27(4) deposit any of its funds in any banking corporation, unless that corporation has
3.28been designated by vote of a majority of directors or of the executive committee present at
3.29a meeting duly called, at which a quorum was in attendance;
3.30(5) change any allocation of capital made pursuant to section
3.31withdraw in any way any portion of the capital stock and surplus without prior written
3.32approval of the commissioner of commerce;
3.33(6) take any instrument in which blanks are left to be filled in after execution;
3.34(7) lend money in excess of 20 percent of the total of its capital stock and surplus at
3.35all its authorized locations to a person primarily liable. Companies not issuing investment
4.1certificates of indebtedness under section
4.2the amount of money lent does not exceed $100,000 of principal as defined by section
4.4However, industrial loan and thrift companies with deposit liabilities must comply
4.5with the provisions of section
4.6(8) issue cashier's checks pursuant to section
4.7aggregate liability to all creditors on these instruments is protected by a special fund in
4.8cash or due from banks to be used solely for payment of the cashier's checks
4.9(9) make a consumer short-term loan, as defined in section 47.601, under any section
4.10of law other than section 47.60.
4.11 Sec. 4. Minnesota Statutes 2012, section 53C.01, subdivision 8, is amended to read:
4.12 Subd. 8. Retail installment contract. "Retail installment contract" means any
4.13agreement, entered into in this state, evidencing a retail installment sale of a motor vehicle,
4.14other than for the purpose of resale, when purchased primarily for personal, family or
4.15household use, pursuant to which title to, or a lien upon the motor vehicle is retained by
4.16the retail seller as security for the retail buyer's obligation. This term includes a mortgage,
4.17conditional sale contract, or any contract for the bailment or leasing of a motor vehicle by
4.18which the bailee or lessee contracts to pay as compensation for its use a sum substantially
4.19equivalent to the retail installment sale price of the motor vehicle and by which it is agreed
4.20that the bailee or lessee is bound to become, or has the option of becoming, the owner of
4.21such motor vehicle for no additional consideration or for nominal additional consideration.
4.22"Retail installment contract" does not include any agreement
4.23 evidencing an installment sale of a motor vehicle purchased primarily for use in business.
4.24For purposes of this subdivision, "business" means a commercial or industrial enterprise
4.25which is carried on for the purpose of active or passive investment or profit.
4.26 Sec. 5. Minnesota Statutes 2012, section 53C.01, subdivision 12, is amended to read:
4.27 Subd. 12. Sales finance company. "Sales finance company" means a person
4.28engaged, in whole or in part, in the business of purchasing retail installment contracts
4.29
4.30industrial loan and thrift company, if so engaged. The term also includes a retail seller
4.31engaged, in whole or in part, in the business of creating and holding retail installment
4.32contracts. The term does not include the pledges of an aggregate number of the contracts
4.33to secure a bona fide loan thereon.
5.1 Sec. 6. Minnesota Statutes 2012, section 53C.02, is amended to read:
5.253C.02 SALES FINANCE COMPANY; LICENSE, FEES, REFUND.
5.3(a) No person shall engage in the business of a sales finance company in this state
5.4without a license therefor as provided in sections
5.5that no bank, trust company, savings bank, savings association, or credit union, whether
5.6state or federally chartered, industrial loan and thrift company, or licensee under the
5.7Minnesota Regulated Loan Act authorized to do business
5.8obtain a license under sections
5.9(b) The application for a license shall be in writing, under oath and in the form
5.10prescribed by the commissioner. The application shall contain the name of the applicant;
5.11date of incorporation, if incorporated; the address where the business is or is to be
5.12conducted and similar information as to any branch office of the applicant; the name and
5.13resident address of the owner or partners, or, if a corporation or association, of the directors,
5.14trustees and principal officers, and other pertinent information the commissioner requires.
5.15(c) The licensee fee for the fiscal year beginning July 1 and ending June 30 of the
5.16following year, or any part thereof shall be the sum of $250 for the principal place of
5.17business of the licensee, and the sum of $125 for each branch of the licensee
5.18
5.19or other proof satisfactory to the commissioner, that during the 12 calendar months of the
5.20immediately preceding fiscal year, for which the license has been paid that the licensee
5.21has not held retail installment contracts exceeding $15,000 in amount, shall be entitled
5.22to a refund of that portion of each license fee paid in excess of $25. The commissioner
5.23shall certify to the commissioner of management and budget that the licensee is entitled to
5.24a refund, and payment thereof shall be made by the commissioner of management and
5.25budget. The amount necessary to pay for the refundment of the license fee is appropriated
5.26out of the general fund. All license fees received by the commissioner under sections
5.28(d) Each license shall specify the location of the office or branch and must be
5.29conspicuously displayed there. In case the location be changed, the commissioner shall
5.30endorse the change of location on the license.
5.31(e) Upon the filing of such application, and the payment of the fee, the commissioner
5.32shall issue a license to the applicant to engage in the business of a sales finance company
5.33under and in accordance with the provisions of sections
5.34which shall expire the last day of June next following the date of its issuance. The license
5.35shall not be transferable or assignable. No licensee shall transact any business provided
5.36for by sections
6.1 Sec. 7. [53C.025] BOND.
6.2Before a license may be issued to a sales finance company, the applicant shall file
6.3annually with and have approved by the commissioner a surety bond, issued by a bonding
6.4company authorized to do business in this state in the principal amount of $........ The
6.5bond must run to the commissioner and is for the benefit of creditors of the sales finance
6.6company for liability incurred by the sales finance company in connection with providing
6.7its services. The commissioner may require a licensee to file a bond in an additional
6.8amount if the commissioner considers it necessary to meet the requirements of this
6.9section. In determining the additional amount of the bond which may be required, the
6.10commissioner may require the licensee to file its financial records. In no case may the
6.11bond be less than the initial $....... or more than the outstanding liabilities.
6.12 Sec. 8. Minnesota Statutes 2012, section 53C.08, subdivision 1, is amended to read:
6.13 Subdivision 1. Terms and limitations. (a) Every retail installment contract shall
6.14be in writing, shall contain all the agreements of the parties, shall be signed by the retail
6.15buyer and seller, and a copy signed by the retail buyer shall be furnished to such retail
6.16buyer at the time the retail buyer executes the contract. Until the copy signed by both the
6.17retail buyer and retail seller
6.18
6.19
6.20
6.21
6.22may cancel the agreement and upon cancellation must receive a refund from the holder of
6.23the retail installment contract of all payments made by the retail buyer.
6.24(b) No provisions for confession of judgment or power of attorney therefor contained
6.25in any retail installment contract or contained in a separate agreement relating thereto,
6.26shall be valid or enforceable.
6.27(c) The holder of a precomputed retail installment contract may, if the contract so
6.28provides, collect a delinquency and collection charge on each installment in arrears for a
6.29period not less than ten days in an amount not in excess of five percent of each installment
6.30or $5, whichever is greater. In addition to such delinquency and collection charge, the
6.31retail installment contract, whether interest-bearing or precomputed, may provide for the
6.32payment of attorneys' fees not exceeding 15 percent of the amount due and payable under
6.33such contract where such contract is referred to an attorney not a salaried employee of the
6.34holder of the contract for collection plus the court costs.
7.1(d) Unless written notice has been given to the retail buyer of actual or intended
7.2assignment of a retail installment contract, payment thereunder or tender thereof made
7.3by the retail buyer to the last known holder of such contract shall be binding upon all
7.4subsequent holders or assignees.
7.5(e) Upon written request from the retail buyer, the holder of the retail installment
7.6contract shall give or forward to the retail buyer a written statement of the dates and
7.7amounts of payments and the total amount unpaid under such contract. A retail buyer shall
7.8be given a written receipt for any payment when made in cash.
7.9 Sec. 9. Minnesota Statutes 2012, section 53C.08, is amended by adding a subdivision
7.10to read:
7.11 Subd. 6. Regulatory agency. A retail installment contract must contain the
7.12following statement: "This contract is regulated under the provisions of Minnesota
7.13Statutes, chapter 53C. The regulatory agency is: Minnesota Department of Commerce, 85
7.14Seventh Place East, Suite 500, St. Paul, Minnesota 55101-2198."
7.15 Sec. 10. Minnesota Statutes 2012, section 72A.20, is amended by adding a subdivision
7.16to read:
7.17 Subd. 40. Claims arising from natural causes; limitations on cancellations
7.18and nonrenewals. An insurer shall not cancel, refuse to renew, reduce the limits of
7.19coverage, or eliminate coverage for damages to property based solely on claims arising
7.20from natural causes.
7.21For purposes of this subdivision: (1) a "natural cause" is an act occasioned
7.22exclusively by the violence of nature where the policyholder's action did not cause the
7.23damage or injury; and (2) "solely" means that claims arising from natural causes and that
7.24are beyond the insured's control cannot be the event that triggers the cancellation, refusal
7.25to renew, reduction in the limits of coverage, or elimination of coverage.
7.26 Sec. 11. Minnesota Statutes 2012, section 332.32, is amended to read:
7.27332.32 EXCLUSIONS.
7.28(a) The term "collection agency" shall not include persons whose collection activities
7.29are confined to and are directly related to the operation of a business other than that of
7.30a collection agency such as, but not limited to banks when collecting accounts owed to
7.31the banks and when the bank will sustain any loss arising from uncollectible accounts,
7.32abstract companies doing an escrow business, real estate brokers, public officers, persons
7.33acting under order of a court,
8.1companies, credit unions, savings associations, loan or finance companies unless they
8.2are engaged in asserting, enforcing or prosecuting unsecured claims which have been
8.3purchased from any person, firm, or association when there is recourse to the seller for
8.4all or part of the claim if the claim is not collected. For purposes of this paragraph,
8.5"exempt attorneys at law" means attorneys licensed or otherwise authorized to practice
8.6law in this state:
8.7(1) whose exclusive and principal practice does not involve collection activities; and
8.8(2) who do not have a business relationship with a collection agency that involves
8.9collection activities.
8.10(b) The term "collection agency" shall not include a trade association performing
8.11services authorized by section
8.12performing the services may not engage in any conduct that would be prohibited for a
8.13collection agency under section
8.14 Sec. 12. [609.8051] COMMUNICATIONS FRAUD.
8.15 Subdivision 1. Definitions. (a) As used in this section, the terms in paragraphs
8.16(b) to (f) have the meanings given them.
8.17(b) "Communicate" means to originate, emit, disseminate, transmit, transfer, or
8.18cause another person to originate, emit, disseminate, transmit, or transfer, signs, signals,
8.19writing, images, sounds, data, or intelligences of any nature, in whole or in part by
8.20any method including, but not limited to, mail, television, Internet, cable, wire, fiber
8.21optic, wireless, radio, satellite, electromagnetic, photoelectronic, or photooptical system,
8.22including telecommunications and data communications.
8.23(c) "Scheme to defraud" means an ongoing course of conduct with the intent to
8.24obtain money, property, services, or identity from one or more persons by false or
8.25fraudulent statements, pretenses, representations, or promises.
8.26(d) "Telecommunication" means the origination, emission, dissemination,
8.27transmission, or reception of a communication by any method, including, but not limited
8.28to, a fiber optic, electronic, magnetic, optical, digital, or analog method.
8.29(e) "Property," "services," and "value" have the meanings given in section 609.52.
8.30(f) "Identity" has the meaning given in section 609.527.
8.31 Subd. 2. Fraud. (a) A person is guilty of communications fraud and may
8.32be sentenced as provided in subdivision 3 if the person knowingly engages in a
8.33communication with the purpose of executing or otherwise furthering a scheme to defraud.
8.34(b) If a person violates paragraph (a), and the violation occurs as part of a course
8.35of conduct involving additional violations or attempted violations of paragraph (a), or
9.1violations, attempted violations, or conspiracies to violate section 609.52 or 609.527, the
9.2court may aggregate the value of the money, property, services, and identities obtained or
9.3attempted to be obtained by the person.
9.4 Subd. 3. Penalty. A person who commits communications fraud may be sentenced
9.5as follows:
9.6(1) if the violation involves a single victim and the total combined value of the
9.7money, property, services, or identity the person obtained or intended to obtain is $250 or
9.8less, the person may be sentenced as provided in section 609.52, subdivision 3, clause (5);
9.9(2) if the violation involves a single victim and the total combined value of the
9.10money, property, services, or identity the person obtained or intended to obtain is more
9.11than $250 but not more than $500, the person may be sentenced as provided in section
9.12609.52, subdivision 3, clause (4);
9.13(3) if the offense involves two or three victims or the total combined value of the
9.14money, property, services, or identities the person obtained or intended to obtain is more
9.15than $500 but not more than $2,500, the person may be sentenced as provided in section
9.16609.52, subdivision 3, clause (3);
9.17(4) if the offense involves more than three but not more than seven victims or the
9.18total combined value of the money, property, services, or identities the person obtained
9.19or intended to obtain is more than $2,500, the person may be sentenced as provided in
9.20section 609.52, subdivision 3, clause (2); and
9.21(5) if the offense involves eight or more victims or the total combined value of the
9.22money, property, services, or identities the person obtained or intended to obtain is more
9.23than $35,000, the person may be sentenced as provided in section 609.52, subdivision
9.243, clause (1).
9.25 Subd. 4. Vulnerable adults. When the victim of the violation is a vulnerable adult,
9.26as defined by section 609.232, subdivision 11, a person who violates subdivision 2 may
9.27also be subject to the criminal penalties of section 609.2335.
9.28 Subd. 5. No bar to conviction. Notwithstanding section 609.035 or 609.04, a
9.29prosecution for or conviction of the crime of communications fraud under subdivision 2 is
9.30not a bar to conviction of or punishment for any other crime.
9.31 Subd. 6. Venue. Notwithstanding anything to the contrary in section 627.01, a
9.32violation committed under subdivision 2 may be prosecuted in:
9.33(1) the county where the offense occurred;
9.34(2) the county of the residence or place of business of the victim; or
10.1(3) if violations are committed by a person in more than one county, the person may
10.2be prosecuted in any county in which one of the violations was committed for all of the
10.3violations aggregated under this section.
10.4 Subd. 7. Civil action. A person who has been injured by a violation of subdivision
10.52 may bring a civil action for three times the amount of actual damages sustained by
10.6that person or $1,500, whichever is greater, and costs and disbursements including, at a
10.7minimum, reasonable attorney fees.
10.8EFFECTIVE DATE.This section is effective August 1, 2014, and applies to
10.9violations committed on or after that date.
