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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY WALKO, FRANKEL, MANDERINO, BRENNAN, CREIGHTON, GEORGE, HALUSKA, JOSEPHS, KOTIK, MAHONEY, PARKER AND SIPTROTH, APRIL 27, 2009 |
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| REFERRED TO COMMITTEE ON COMMERCE, APRIL 27, 2009 |
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| AN ACT |
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1 | Regulating tax refund anticipation loan and check providers; |
2 | providing for the powers and duties of the Secretary of |
3 | Banking; and prescribing penalties. |
4 | TABLE OF CONTENTS |
5 | Chapter 1. Preliminary Provisions |
6 | Section 101. Short title. |
7 | Section 102. Definitions. |
8 | Chapter 3. Licensure Provisions |
9 | Section 301. License requirement. |
10 | Section 302. Application for license. |
11 | Section 303. License bond. |
12 | Section 304. License renewal. |
13 | Section 305. License fee. |
14 | Section 306. Issuance of license. |
15 | Section 307. Powers of secretary. |
16 | Section 308. Examination by secretary. |
17 | Section 309. Reports to secretary. |
18 | Section 310. Recordkeeping. |
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1 | Section 311. Interest and charges. |
2 | Section 312. Penalties. |
3 | Chapter 5. Miscellaneous Provisions |
4 | Section 501. Severability. |
5 | Section 502. Effective date. |
6 | The General Assembly of the Commonwealth of Pennsylvania |
7 | hereby enacts as follows: |
8 | CHAPTER 1 |
9 | PRELIMINARY PROVISIONS |
10 | Section 101. Short title. |
11 | This act shall be known and may be cited as the Tax Refund |
12 | Anticipation Loan and Check Regulation Act. |
13 | Section 102. Definitions. |
14 | The following words and phrases when used in this act shall |
15 | have the meanings given to them in this section unless the |
16 | context clearly indicates otherwise: |
17 | "Applicant." A person who applies for registration as a |
18 | facilitator of loans. |
19 | "Check." A check or other payment mechanism representing the |
20 | proceeds of a consumer's tax refund or tax credits issued by a |
21 | depository institution or person that received a direct deposit |
22 | of the consumer's tax refund or tax credits, and for which the |
23 | consumer has paid a fee or other consideration for the payment |
24 | mechanism. |
25 | "Consumer." An individual who, singly or jointly with |
26 | another individual, is solicited for, applies for or receives |
27 | the proceeds of a loan or check. |
28 | "Creditor." A person who makes a refund anticipation loan or |
29 | who takes an assignment of a refund anticipation loan. |
30 | "Department." The Department of Banking of the Commonwealth. |
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1 | "License." A license issued under this act. |
2 | "Loan." A loan that is secured by or that a creditor |
3 | arranges to be repaid directly or indirectly from the proceeds |
4 | of a consumer's income tax refund or tax credits. The term |
5 | includes a sale assignment or purchase of a consumer's tax |
6 | refund at a discount, whether or not the consumer is required to |
7 | repay the buyer or assignee if the Internal Revenue Service |
8 | denies or reduces the consumer's tax refund. |
9 | "Loan fee." The charges, fees or other consideration charged |
10 | or imposed by a creditor or facilitator for the making of a |
11 | loan. This term does not include: |
12 | (1) A charge, fee or other consideration usually charged |
13 | or imposed by the facilitator in the ordinary course of |
14 | business, such as fees for tax return preparation and fees |
15 | for electronic filing of tax returns, if the same fees in the |
16 | same amount are charged to the facilitator's customers who do |
17 | not receive loans or checks. |
18 | (2) A charge, fee or other consideration for a deposit |
19 | account if the deposit account is used for receipt of the |
20 | consumer's tax refund to repay the amount owed on the loan. |
21 | "Loan interest rate." The interest rate for a loan |
22 | calculated on an annualized basis. The term includes all refund |
23 | anticipation loan fees, including any administrative, document |
24 | preparation or any fees that are not charged to customers who do |
25 | not receive a loan or check. If a deposit account is established |
26 | or maintained in whole or in part for the purpose of receiving |
27 | the consumer's tax refund to repay the amount owed on a refund |
28 | anticipation loan: |
29 | (1) The maturity of the loan for the purpose of |
30 | determining the refund anticipation loan interest rate shall |
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1 | be assumed to be the estimated date when the tax refund will |
2 | be deposited in the deposit account. |
3 | (2) A fee charged to the consumer for the deposit |
4 | account shall be considered a loan fee and shall be included |
5 | in the calculation of the interest rate. |
6 | "Loan provider" or "check provider." A person, including any |
7 | officer, agent, employee or representative, who individually or |
8 | in conjunction or cooperation with another person solicits the |
9 | execution of, processes, receives or accepts an application or |
10 | agreement for a refund anticipation loan or refund anticipation |
11 | check or in any other manner facilitates the making of a loan or |
12 | check. |
13 | "Market" or "advertise." To produce, distribute or otherwise |
14 | display or have displayed written material describing a |
15 | facilitator's products and services, radio and other oral |
16 | marketing and advertising and telephone and in-person |
17 | interactions with customers. |
18 | "Person." An individual, firm, partnership, association, |
19 | corporation or any other entity. |
20 | "Registrant." A person who is registered under this act as a |
21 | facilitator of loans or checks and any officer, agent, employee |
22 | or representative of that person. |
23 | "Secretary." The Secretary of Banking of the Commonwealth. |
24 | CHAPTER 3 |
25 | LICENSURE PROVISIONS |
26 | Section 301. License requirement. |
27 | No person, partnership, association, business corporation, |
28 | nonprofit corporation, common law trust, joint-stock company or |
29 | any group of individuals however organized shall, on and after |
30 | the effective date of this section, engage or continue to engage |
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1 | in business as a loan provider or check provider in this |
2 | Commonwealth except as authorized by this act and without first |
3 | obtaining a license from the secretary. |
4 | Section 302. Application for license. |
5 | (a) General rule.--The application for a license shall be in |
6 | writing, under oath and in the form prescribed by the secretary |
7 | and shall contain: |
8 | (1) the name and address of the residence of the |
9 | applicant and if the applicant is a partnership, association, |
10 | joint-stock company or common law trust of every member and, |
11 | if the applicant is a business corporation or nonprofit |
12 | corporation, of each officer and director; |
13 | (2) the county and municipality with street and number, |
14 | if any, office building and room number, if any, where the |
15 | business is to be conducted; and |
16 | (3) such further information as the secretary may |
17 | require. |
18 | The application shall be signed by the individual owner if the |
19 | applicant is an individual, by all the partners if the applicant |
20 | is a partnership, by two officers if the applicant is an |
21 | association, joint-stock company or common law trust and by the |
22 | president and secretary if the applicant is a business |
23 | corporation or a nonprofit corporation. |
24 | (b) Posting of application.--An applicant for a new license |
25 | shall post, for a period of at least 30 days beginning with the |
26 | day the application is filed with the secretary, in a |
27 | conspicuous place on the outside of the premises or at the |
28 | proposed new location for which the licensee applies, a notice |
29 | of the application in the form, of the size and containing |
30 | provisions as the secretary may require by regulation. Proof of |
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1 | the posting of the notice shall be filed with the secretary. |
2 | (c) Posting.--A loan or check provider licensed by the |
3 | department shall display in a conspicuous place within the |
4 | registered building the license approved by the secretary. |
5 | Section 303. License bond. |
6 | (a) Requirements.-- |
7 | (1) A bond in the penal sum of $250,000 shall accompany |
8 | each application for license. The bond shall be executed by a |
9 | surety company authorized by the laws of this Commonwealth to |
10 | transact business within this Commonwealth. The secretary |
11 | may, in lieu of the surety company bond, accept a bond |
12 | executed by the applicant for license if the bond is secured |
13 | by the deposit with the secretary of cashier's checks, |
14 | treasurer's checks or certificates of deposit of a banking |
15 | institution or readily marketable securities approved by the |
16 | secretary. The collateral, deposited in lieu of a surety |
17 | company bond, shall be deposited for safekeeping by the |
18 | secretary in the office of the State Treasurer. |
19 | (2) The bond shall be renewed and refiled annually not |
20 | later than October 1 of each year. The bond shall be executed |
21 | to the Commonwealth of Pennsylvania. The bond shall be for |
22 | the use of the Commonwealth and for any person or persons who |
23 | may have a cause of action against the loan or check provider |
24 | as a licensee under this act. |
25 | (3) The condition of the bond shall be that the loan or |
26 | check provider shall comply with and abide by all the |
27 | provisions of this act and all rules and regulations of the |
28 | secretary lawfully issued under this act and shall pay to the |
29 | Commonwealth, to the secretary or to any person or persons |
30 | any and all moneys that may come due to the Commonwealth, to |
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1 | the secretary or to any person or persons from the refund |
2 | anticipation loan or refund anticipation check provider under |
3 | and by virtue of the provisions of this act. |
4 | (b) Separate bonds.--A separate bond shall be required for |
5 | each place of business conducted by a loan or check provider. |
6 | (c) Execution on bond.--If any person shall be aggrieved by |
7 | the misconduct of a loan or check provider and shall recover |
8 | judgment against the loan or check provider, the person may, on |
9 | any execution issued under the judgment, maintain an action upon |
10 | the bond of the loan or check provider in any court having |
11 | jurisdiction of the amount claimed, provided the secretary |
12 | assents thereto. |
13 | Section 304. License renewal. |
14 | (a) General rule.--An application for license renewal shall |
15 | be published 30 days before renewal in a newspaper of general |
16 | circulation in the municipality where the license is to be |
17 | renewed. |
18 | (b) Limitation.--The secretary shall not issue a license or |
19 | a license renewal for a period of at least five years to any |
20 | applicant who has been determined to be operating as a loan or |
21 | check provider without a license. |
22 | Section 305. License fee. |
23 | (a) General rule.--An application for license under this act |
24 | shall be accompanied by an annual license fee of $5,000. A |
25 | license shall expire on October 1 annually. No abatement of the |
26 | license fee shall be made if the license is issued for less than |
27 | one year. A license shall be renewed annually on the first day |
28 | of October, and an annual license renewal fee of $5,000 shall be |
29 | paid for the next ensuing license year. |
30 | (b) Deposits by secretary.--All license fees and fines |
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1 | received by the secretary shall be deposited in the State |
2 | Treasury to the credit of the Banking Department Fund for the |
3 | use of the secretary in administering this act. |
4 | Section 306. Issuance of license. |
5 | (a) General rule.--The secretary, if he approves the |
6 | application for license, shall issue to each loan or check |
7 | provider a certificate showing the name of the loan or check |
8 | provider and the address of the place of business. The license |
9 | shall be posted in a conspicuous place in the office of the loan |
10 | or check provider so that it shall be in full view of the public |
11 | at all times. The license may not be transferred or assigned. |
12 | (b) Change of place of business.-- |
13 | (1) Whenever a loan or check provider shall change his |
14 | place of business to another location within the same city, |
15 | borough or township, the loan or check provider shall at once |
16 | give written notice to the secretary and return the license |
17 | certificate to the secretary for amendment. |
18 | (2) The secretary, if he approves the removal, shall |
19 | endorse on the license in writing his record of the change of |
20 | address and the date, which shall be the authority for the |
21 | operation of the business under the license at the new |
22 | location. |
23 | (3) No change in the place of business of a loan or |
24 | check provider to a location outside the original city, |
25 | borough or township shall be permitted under the same |
26 | license. Not more than one place of business may be operated |
27 | under the same license. |
28 | (4) If a loan or check provider operates more than one |
29 | place of business, additional licenses may be obtained by |
30 | filing a separate application for each additional place of |
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1 | business and furnishing an additional bond for each |
2 | additional place of business and paying the license fee |
3 | provided in this act for each place of business. |
4 | Section 307. Powers of secretary. |
5 | (a) Grounds for rejecting application for license.-- |
6 | (1) The secretary may reject an application for license |
7 | if the secretary is satisfied that the financial |
8 | responsibility, experience, character and general fitness of |
9 | the applicant or applicants are not such as to command the |
10 | confidence of the community and to warrant the conclusion |
11 | that the business will be operated honestly, fairly and |
12 | within the laws of this Commonwealth or if the secretary is |
13 | not satisfied that allowing the applicant to engage in |
14 | business will promote the convenience and advantage of the |
15 | community in which the business of the applicant is to be |
16 | conducted. |
17 | (2) No license may be issued to an applicant who has |
18 | been convicted under this act for engaging in the business of |
19 | loan or check providing in this Commonwealth without having |
20 | obtained a license under this act. |
21 | (3) The secretary may reject an application for a |
22 | license based upon proliferation of existing licenses within |
23 | the same area, community opposition to the application and |
24 | inability to meet minimum capital requirements or |
25 | recordkeeping obligations. |
26 | (b) Revocation of license.--The secretary may, upon 30 days' |
27 | written notice to the loan or check provider, forwarded by |
28 | registered mail to the place of business of the loan or check |
29 | provider as shown in the application for license, stating the |
30 | contemplated action and in general the grounds for revocation, |
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1 | revoke any license if: |
2 | (1) the loan or check provider violates any provisions |
3 | of this act; |
4 | (2) the loan or check provider violates any rule or |
5 | regulation made by the secretary under and within the |
6 | authority of this act; |
7 | (3) a refund loan or check provider fails to comply with |
8 | any demand, rule or regulation lawfully made by the secretary |
9 | under and within the authority of this act; |
10 | (4) the loan or check provider fails to pay the cost of |
11 | examination by the secretary or the secretary's authorized |
12 | representative; |
13 | (5) the loan or check provider fails to maintain in |
14 | effect the bond required under the provisions of this act; |
15 | (6) the loan or check provider fails to file the annual |
16 | report to the secretary within the time stipulated in this |
17 | act; or |
18 | (7) if any fact or condition exists which, if it had |
19 | existed at the time of original application for license, |
20 | clearly would have warranted the secretary originally in |
21 | refusing to issue the license. |
22 | (c) Limitation.--Whenever the license is revoked, the |
23 | secretary may not issue another license to the loan or check |
24 | provider until the expiration of at least one year from the date |
25 | of revocation of the license and not at all if the loan or check |
26 | provider shall have been convicted for a deliberate violation of |
27 | this act or for a second offense. |
28 | (d) Special reports.--The secretary may require a loan or |
29 | check provider licensed under this act to file special reports |
30 | in addition to the annual report required under this act. |
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1 | (e) Rules and regulations.--The secretary may issue rules |
2 | and regulations governing the records to be maintained by a loan |
3 | or check provider licensed under this act and may issue general |
4 | rules and regulations as may be necessary for the protection of |
5 | the public and to insure the proper conduct of the business and |
6 | for the enforcement of this act, which rules and regulations |
7 | shall have the force and effect of law. These rules and |
8 | regulations shall include minimum start-up and capital operating |
9 | requirements, the filing of annual reports to the secretary and |
10 | any other financial recordkeeping the secretary deems necessary |
11 | to ensure compliance with this act. |
12 | Section 308. Examination by secretary. |
13 | (a) General rule.--The secretary and any person designated |
14 | by the secretary for that purpose may at any time investigate |
15 | the business and examine the books, accounts, records and files |
16 | of every loan or check provider and of every person who or which |
17 | shall be engaged in the business of loan or check providing |
18 | whether the person shall act or claim to act as principal or |
19 | agent or under or without the authority of this act. For this |
20 | purpose, the secretary shall have free access to the office and |
21 | places of business, books, accounts, papers, records, files, |
22 | safes and vaults of all persons. A person who is not licensed |
23 | under this act shall be presumed to be engaged in the business |
24 | of loan or check providing if that person advertises or solicits |
25 | business as a loan or check provider as defined in this act, and |
26 | the secretary is in such cases authorized to examine the books, |
27 | accounts, papers, files, safes and vaults of the person for the |
28 | purpose of discovering violations of this act. |
29 | (b) Costs.--The costs of an examination of the business of a |
30 | licensed loan or check provider by the secretary shall be paid |
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1 | by the loan or check provider so examined, and the secretary may |
2 | collect the costs from the surety company which has executed the |
3 | bond required under this act and may maintain an action for the |
4 | recovery of the costs in any court of competent jurisdiction. |
5 | Section 309. Reports to secretary. |
6 | (a) Duty to report.--A loan or check provider licensed under |
7 | this act shall annually, on or before the first day of March, |
8 | file a report with the secretary giving relevant information as |
9 | the secretary may require concerning the business and operations |
10 | during the previous calendar year of the licensed place of |
11 | business conducted by the loan or check provider within this |
12 | Commonwealth. The report shall be made under oath and shall be |
13 | in the form prescribed by the secretary. |
14 | (b) Penalty.--A loan or check provider who fails to file a |
15 | report as required by this act shall pay to the secretary a |
16 | penalty of $100 for each calendar day which the report is |
17 | overdue, but the secretary may, in his discretion, relieve a |
18 | loan or check provider of any portion or all of such fine. |
19 | Section 310. Recordkeeping. |
20 | A loan or check provider licensed under this act shall |
21 | maintain adequate records of all business transacted containing |
22 | the information in English and in the forms as shall be |
23 | prescribed by the secretary by general rule or regulation. The |
24 | records of a loan or check provider shall be retained for a |
25 | period of two years after the date of the payment of any loan. |
26 | Section 311. Interest and charges. |
27 | (a) Interest rate.-- |
28 | (1) A loan or check provider may not charge, contract |
29 | for or receive interest in excess of 18% per year on any loan |
30 | or check. |
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1 | (2) The interest and charges authorized by this act |
2 | shall be computed at the rates specified on the actual |
3 | principal balance of the loan due for the actual time which |
4 | has elapsed from the date of the loan to the date of payment. |
5 | (3) For the purpose of calculation of interest and |
6 | charges permitted under this act, a year shall be 12 calendar |
7 | months and a month shall be one calendar month, or any |
8 | fractional part. A calendar month shall be any period from a |
9 | certain date in one month to the same date in the next |
10 | succeeding month. |
11 | (b) Fees.--A loan or check provider may not charge more than |
12 | $3 in administrative, document preparation or application fees |
13 | for each loan entered into with a consumer. This limitation on |
14 | fees shall apply to any electronic filing fee charged by the |
15 | facilitator unless the same electronic filing fee is charged to |
16 | the facilitator's customers who do not receive loans or checks. |
17 | (c) Prohibition.--No greater interest nor other fees, fines, |
18 | charges or costs shall be charged, contracted for or received, |
19 | directly or indirectly, under any pretext whatsoever. Interest |
20 | and charges permitted under this act may not be collected or |
21 | deducted in advance. |
22 | Section 312. Penalties. |
23 | Any person, partnership, association or corporation or any |
24 | partner, director, officer, agent or member who shall engage in |
25 | the business of loan or check providing in this Commonwealth |
26 | without first obtaining a license under this act commits a |
27 | misdemeanor and, upon conviction, shall be sentenced to pay a |
28 | fine of not less than $1,000 nor more than $20,000 or a term of |
29 | imprisonment not less than one year nor more than five years, or |
30 | both, in the discretion of the court. A loan or check provider |
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1 | licensed under the provisions of this act who violates any |
2 | provisions of this act or directs or consents to such violations |
3 | commits a misdemeanor and, upon conviction, shall be sentenced |
4 | to pay a fine of not more than $2,500 or a term of imprisonment |
5 | not to exceed three years, or both, in the discretion of the |
6 | court. |
7 | CHAPTER 5 |
8 | MISCELLANEOUS PROVISIONS |
9 | Section 501. Severability. |
10 | The provisions of this act are severable. If any provision of |
11 | this act or its application to any person or circumstance is |
12 | held invalid, the invalidity shall not affect other provisions |
13 | or applications of this act which can be given effect without |
14 | the invalid provision or application. |
15 | Section 502. Effective date. |
16 | This act shall take effect in 60 days. |
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