H 3766 Session 111 (1995-1996)
H 3766 General Bill, By J.H. Neal, Anderson, Askins, Bailey, D.W. Beatty,
Breeland, J. Brown, T. Brown, A.W. Byrd, Canty, Clyburn, J. Hines, Howard,
Inabinett, Littlejohn, Lloyd, Moody-Lawrence, Scott, J.S. Shissias, Spearman,
Stuart and Whipper
Similar(S 602)
A Bill to amend Section 34-29-100, Code of Laws of South Carolina, 1976,
relating to records and reports of restricted lenders, by adding information
required to be reported in the Annual Report made by restricted lenders; to
amend Section 34-29-140, as amended, relating to charges permitted to
restricted lenders, so as to revise the finance charges and to provide
limitations on loan renewals; to amend Section 37-1-301, as amended, relating
to definitions under the Consumer Protection Code, so as to add a definition
for "debt collector"; to amend Section 37-1-303, relating to the index of
definitions in Title 37, so as to add "debt collector"; to amend Section
37-3-201, as amended, relating to loan finance charges for supervised loans,
so as to provide that supervised loans not exceeding six hundred dollars shall
be made in accordance with Section 34-29-140 relating to finance charges for
restricted loans; to amend Section 37-3-305, as amended, relating to the
posting and filing of maximum rate schedules by supervised lenders, so as to
provide that for loans not exceeding six hundred dollars, a rate may not be
posted which exceeds the charges imposed in Section 34-29-140; to amend
Section 37-3-505, relating to records and annual reports for supervised
lenders, so as to add information required to be included in the annual report
of supervised lenders; by adding Section 37-3-515 so as to provide a
limitation on loan renewals; to amend Section 37-5-108, relating to
unconscionability under the Consumer Protection Code, by adding particular
circumstances which constitute unconscionability and providing remedies; to
amend Section 37-6-117, as amended, relating to the administrative
responsibilities of the administration of the Department of Consumer Affairs,
so as to require the administration to devise a pamphlet for distribution to
certain consumers informing them of their rights; and to amend Section
37-9-102, relating to the licensure election, so as to provide that certain
supervised lenders may elect to be restricted lenders.
03/08/95 House Introduced and read first time HJ-5
03/08/95 House Referred to Committee on Labor, Commerce and
Industry HJ-6
A BILL
TO AMEND SECTION 34-29-100, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO RECORDS AND REPORTS
OF RESTRICTED LENDERS, BY ADDING INFORMATION
REQUIRED TO BE REPORTED IN THE ANNUAL REPORT
MADE BY RESTRICTED LENDERS; TO AMEND SECTION
34-29-140, AS AMENDED, RELATING TO CHARGES
PERMITTED TO RESTRICTED LENDERS, SO AS TO REVISE
THE FINANCE CHARGES AND TO PROVIDE LIMITATIONS
ON LOAN RENEWALS; TO AMEND SECTION 37-1-301, AS
AMENDED, RELATING TO DEFINITIONS UNDER THE
CONSUMER PROTECTION CODE, SO AS TO ADD A
DEFINITION FOR "DEBT COLLECTOR"; TO
AMEND SECTION 37-1-303, RELATING TO THE INDEX OF
DEFINITIONS IN TITLE 37, SO AS TO ADD "DEBT
COLLECTOR"; TO AMEND SECTION 37-3-201, AS
AMENDED, RELATING TO LOAN FINANCE CHARGES FOR
SUPERVISED LOANS, SO AS TO PROVIDE THAT
SUPERVISED LOANS NOT EXCEEDING SIX HUNDRED
DOLLARS SHALL BE MADE IN ACCORDANCE WITH
SECTION 34-29-140 RELATING TO FINANCE CHARGES FOR
RESTRICTED LOANS; TO AMEND SECTION 37-3-305, AS
AMENDED, RELATING TO THE POSTING AND FILING OF
MAXIMUM RATE SCHEDULES BY SUPERVISED LENDERS,
SO AS TO PROVIDE THAT FOR LOANS NOT EXCEEDING
SIX HUNDRED DOLLARS, A RATE MAY NOT BE POSTED
WHICH EXCEEDS THE CHARGES IMPOSED IN SECTION
34-29-140; TO AMEND SECTION 37-3-505, RELATING TO
RECORDS AND ANNUAL REPORTS FOR SUPERVISED
LENDERS, SO AS TO ADD INFORMATION REQUIRED TO BE
INCLUDED IN THE ANNUAL REPORT OF SUPERVISED
LENDERS; BY ADDING SECTION 37-3-515 SO AS TO
PROVIDE A LIMITATION ON LOAN RENEWALS; TO
AMEND SECTION 37-5-108, RELATING TO
UNCONSCIONABILITY UNDER THE CONSUMER
PROTECTION CODE, BY ADDING PARTICULAR
CIRCUMSTANCES WHICH CONSTITUTE
UNCONSCIONABILITY AND PROVIDING REMEDIES; TO
AMEND SECTION 37-6-117, AS AMENDED, RELATING TO
THE ADMINISTRATIVE RESPONSIBILITIES OF THE
ADMINISTRATION OF THE DEPARTMENT OF CONSUMER
AFFAIRS, SO AS TO REQUIRE THE ADMINISTRATION TO
DEVISE A PAMPHLET FOR DISTRIBUTION TO CERTAIN
CONSUMERS INFORMING THEM OF THEIR RIGHTS; AND
TO AMEND SECTION 37-9-102, RELATING TO THE
LICENSURE ELECTION, SO AS TO PROVIDE THAT
CERTAIN SUPERVISED LENDERS MAY ELECT TO BE
RESTRICTED LENDERS.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 34-29-100 of the 1976 Code is amended
to read:
"Section 34-29-100. (a) Each licensee shall keep and use in
his business such full and correct books and accounting records as
are in accordance with sound and accepted accounting principles
and practices and such books and records, including cards used in
the card system, if any, as are in accord with the rules and
regulations lawfully made by the Board board. Each
licensee shall preserve such books, accounts and records, including
cards used in the card system, if any, for at least two years after
making the final entry on any loan recorded thereon. The renewal
or refinancing of a loan shall constitute a final entry.
(b) Every licensee shall file in the office of the Board
board, on or before the first day of April, a report for the
preceding calendar year. The report shall give information with
respect to the financial condition of such licensee, and shall include
the name and address of the licensee, balance sheets at the
beginning and end of the accounting period, a statement of income
and expenses for the period, a reconciliation of surplus with the
balance sheets, a schedule of assets used and useful in the consumer
finance business in the State, an analysis of charges, size of loans
and types of actions undertaken to effect collection, and
such other relevant information in form and detail as the
Board board may prescribe.
(c) In addition to the information required to be reported
under subsection (b), the annual report shall include the following:
(1) the total number of loans and aggregate dollar amounts
made by the lender which renewed existing accounts;
(2) the total number of new loans and aggregate dollar
amounts made to former borrowers;
(3) the total number of loans and aggregate dollar amounts
made to new borrowers;
(4) the total number of loans and aggregate dollar amounts
which received a final entry, as provided in subsection (a), other
than by renewal;
(5) the total number of renewals in which the borrower
received a cash advance which was less than ten percent of the net
outstanding loan balance at the time of renewal;
(6) the total number of loans and aggregate dollar amounts
outstanding at the beginning of the reporting period; and
(7) the total number of loans and aggregate dollar amounts
outstanding at the end of the reporting period.
(d) Such report shall be made under oath and shall be in
the form prescribed by the Board board and consistent
with this section. which The board shall make
and publish annually an analysis and recapitulation of such reports.
(c) (e) In addition to the report required by the
provisions of Section 34-29-100 (b) and (c), the
Board board may under rules and regulations
promulgated by it under the procedure provided in this chapter
require quarterly and/or semiannual reports from licensees to
facilitate the performance of its duties and to effectively regulate
the making of loans under this chapter."
SECTION 2. Section 34-29-140(a) of the 1976 Code, as last
amended by Act 98 of 1991, is further amended to read:
"(a) Maximum finance charges permitted; initial
charge.-A licensee under this chapter may lend any sum of money
not exceeding seventy-five hundred dollars, excluding charges, and
notwithstanding the fact that the loan may be repayable in
substantially equal monthly installments, may contract for and
receive finance charges not to exceed:
(1) Loans Not Exceeding One Hundred Fifty Dollars.-On
loans with cash advance not exceeding one hundred fifty dollars, a
charge not to exceed two dollars and fifty cents per month if
contracted for in writing by the borrower, may be charged in lieu of
interest, and such loans may be repaid in weekly payments, with
four weeks constituting a month.
(2) Loans Over One Hundred and Fifty Dollars But Not
Exceeding Two Thousand Dollars.-On loans with a cash advance
exceeding one hundred fifty dollars but not exceeding two thousand
dollars, twenty dollars per one hundred dollars on that portion of
the cash advance not exceeding two hundred dollars; eighteen
dollars per one hundred dollars on that portion of the cash advance
exceeding two hundred dollars but not exceeding six hundred
dollars; eleven dollars per one hundred dollars on that portion of the
cash advance exceeding six hundred dollars but not exceeding one
thousand dollars; nine dollars per one hundred dollars on that
portion of the cash advance exceeding one thousand dollars but not
exceeding two thousand dollars, when the loan is made payable
over a period of one year, and proportionately at those rates over a
longer or shorter period of time.
(2) Loans Over One Hundred Fifty Dollars But Not
Exceeding Two Thousand Dollars.-On loans with a cash advance
exceeding one hundred fifty dollars but not exceeding two thousand
dollars, twenty five dollars per one hundred dollars on that portion
of the cash advance not exceeding six hundred dollars; eighteen
dollars per one hundred dollars on that portion of the cash advance
exceeding six hundred dollars but not exceeding one thousand
dollars; and twelve dollars per one hundred dollars on that portion
of the cash advance exceeding one thousand dollars but not
exceeding two thousand dollars when the loan is made payable over
a period of one year, and proportionately at those rates over a
longer or shorter period of time.
In addition to the finance charges authorized in subparagraphs (1)
and (2) of this subsection (a), a licensee under this chapter may
contract for and receive an initial charge in such an amount as may
be agreed upon in writing with the borrower, but not to exceed
seven percent of the cash advance or fifty-six dollars, whichever is
the lesser, for the expenses, including, but not
limited to, any attorney's fees and broker's fees, then or
theretofore incurred and the services then or theretofore rendered by
the lender incident to the loan or the security therefor, such as
investigating the moral and financial standing of the borrower,
investigating the security, title, and similar investigations
and for closing the loan, including any and all expenses incurred or
services rendered at the request of the borrower or on his behalf in
connection with the loan. Such initial charge may not be contracted
for and received on any renewal loan or other loan made to the
same borrower more often than once in a three-month period.
Upon any loan made to the borrower of a sum in excess of the
amount on which the initial charge may have been charged within
the three-month period, then the initial charge may be contracted
for and received on the excess. The initial charge is a one-time
charge, not a per annum charge, and is not subject to refund.
The initial charge on loans not exceeding one hundred fifty
dollars is a one-time charge, not a per annum charge and is not
subject to refund. The initial charge on loans in excess of one
hundred fifty dollars is a one-time charge, not a per annum charge
and shall be subject to refund upon prepayment of the loan. The
amount of the refund or refund credit shall represent at least as
great a proportion of the total charges as the sum of the periodical
times balances after the date of the prepayment bears to the sum of
all periodical time balances under the schedule of payments in the
loan contract.
(3) Loans over Two Thousand but Not over Seventy-Five
Hundred Dollars.-On loans with a cash advance exceeding two
thousand dollars but not exceeding seventy-five hundred dollars, the
finance charges authorized in subparagraphs (1) and (2) of this
subsection (a) are not permitted on any part of the loan. On such
loans a licensee under this chapter may contract for and receive
finance charges not to exceed seven dollars per one hundred dollars
of the cash advance, when the loan is made payable over a period
of one year, and proportionately at that rate over a longer or shorter
period.
(3) Loans Over Two Thousand But Not Over Seventy-Five
Hundred Dollars.-On loans with a cash advance exceeding two
thousand dollars but not exceeding seventy-five hundred dollars, the
finance charges authorized in subparagraphs (1) and (2) of this
subsection (a) shall not be permitted on any part of the loan. On
such loans a licensee under this chapter may contract for and
receive finance charges not to exceed nine dollars per one hundred
dollars of the cash advance, when the loan is made payable over a
period of one year, and proportionately at that rate over a longer or
shorter period.
In addition to the finance charges authorized in
subparagraph (3) of this subsection (a), a licensee under this chapter
may contract for and receive an initial charge in such an amount as
may be agreed upon in writing with the borrower, but not to exceed
five percent of the cash advance or two hundred dollars, whichever
is lesser, for the expenses, including, but not limited, to any
attorney's fees and broker's fees, then or theretofore incurred and
the services then and theretofore rendered by the lender incident to
the loan or the security therefor, such as investigating the morals
and financial standing of the borrower, investigating the security,
title, and similar investigations and for closing the loan, including
any and all expenses incurred or services rendered at the request of
the borrower or on his behalf in connection with the loan. The
initial charge may not be contracted for or received on any renewal
loan made to the same borrower more often than once in a
twelve-month period. Upon any loan made to the borrower of a
sum in excess of the amount on which the initial charge may have
been charged within the twelve-month period, then the initial charge
may be contracted for and received on the excess. If a loan is
renewed or refinanced after the expiration of the initial
twelve-month period the initial charge may not exceed two percent
of the cash advance. The initial charge is a one-time charge, not
a per annum charge, and is not subject to refund. The initial
charge is a one-time charge, not a per annum charge and shall be
subject to refund upon prepayment of the loan. The amount of the
refund or refund credit shall represent at least as great a proportion
of the total charges as the sum of the periodical times balances after
the date of the prepayment bears to the sum of all periodical time
balances under the schedule of payments in the loan
contract."
SECTION 3. Section 34-29-140 of the 1976 Code is amended
by adding an appropriately numbered subsection to read:
"( ) Dollar Limits on Renewals. A licensee under this
chapter may not renew a loan more than one time during any
fifteen-month period where the cash advanced to the customer is
less than ten percent of the net outstanding loan balance at the time
of renewal."
SECTION 4. Section 37-1-301 of the 1976 Code is amended by
adding an appropriately numbered subsection to read:
"( ) `Debt Collector' means any person who collects,
attempts to collect, directly or indirectly, debts due or asserted to be
owed or due another. The term also includes a creditor who
collects, attempts to collect, directly or indirectly, his own
debts."
SECTION 5. Section 37-1-303 of the 1976 Code is amended by
adding:
"`Debt Collector' - Section 37-1-301"
SECTION 6. Section 37-3-201(2) of the 1976 Code is amended
to read:
"(2) With respect to a consumer loan, including a loan
pursuant to open-end credit, a supervised lender may contract for
and receive a loan finance charge, calculated according to the
actuarial method, not exceeding the greater of either of the
following:
(a) any rate filed and posted pursuant to Section 37-3-305;
or
(b) eighteen percent per year on the unpaid balances of
principal. as provided below:
(a) on loans with a cash advance not exceeding six
hundred dollars, the maximum charges imposed in Section
34-29-140 and all other provisions of Title 34 shall apply, provided
that a supervised lender may impose finance charges at a rate less
than provided in Title 34;
(b) on loans with a cash advance exceeding six hundred
dollars, any rate filed and posted pursuant to Section 37-3-305;
or
(c) eighteen percent per year on the unpaid balances of
principal."
SECTION 7. Section 37-3-305 of the 1976 Code is amended by
adding an appropriately numbered subsection to read:
"( ) On loans with a cash advance not exceeding six
hundred dollars, a supervised lender may not post a rate which
exceeds the maximum charges imposed in Section
34-29-140."
SECTION 8. Section 37-3-505 of the 1976 Code is amended to
read:
"Section 37-3-505. (1) Every licensee shall maintain
records in conformity with generally accepted accounting principles
and practices in a manner that will enable the State Board of
Financial Institutions to determine whether the licensee is
complying with the provisions of this title. The recordkeeping
system of a licensee shall be sufficient if he makes the required
information reasonably available. The records need not be kept in
the place of business where supervised loans are made, if the board
is given free access to the records wherever located. The records
pertaining to any loan, including the certified maximum rate chart
in effect at the time the loan was made, need not be preserved for
more than two years after making the final entry relating to the
loan, but in the case of a revolving loan account the two years is
measured from the date of each entry.
(2) On or before April 15 each year every licensee shall file
with the Board board a composite annual report in
the form prescribed by the Board board relating to
all supervised loans made by him. The Board board
shall consult with comparable officials in other states for the
purpose of making the kinds of information required in annual
reports uniform among the states.
(3) The report shall include, but is not limited to, the
following:
(a) the total number of loans and aggregate dollar amounts
made by the lender which renewed existing accounts;
(b) the total number of new loans and aggregate dollar
amounts made to former borrowers;
(c) the total number of loans and aggregate dollar amounts
made to new borrowers;
(d) the total number of loans and aggregate dollar amounts
which received a final entry, as provided in subsection (a), other
than by renewal;
(e) the total number of renewals in which the borrower
received a cash advance which was less than ten percent of the net
outstanding loan balance at the time of renewal;
(f) the total number of loans and aggregate dollar amounts
outstanding at the beginning of the reporting period;
(g) the total number of loans and aggregate dollar amounts
outstanding at the end of the reporting period;
(h) the highest annual percentage rate charged by the lender
on loans of various sizes; and
(i) the most frequent annual percentage rate charged by the
lender on loans of various sizes.
(4) Information contained in annual reports shall be
confidential and may be published only in composite form."
SECTION 9. Chapter 3, Title 37 of the 1976 Code is amended
by adding:
"Section 37-3-515. A Supervised Lender may not renew a
loan of one thousand dollars or less more than one time during any
fifteen-month period where the cash advanced to the customer is
less than ten percent of the net outstanding loan balance at the time
of renewal."
SECTION 10. Section 37-5-108 of the 1976 Code is amended to
read:
"Section 37-5-108. (1) With respect to a transaction that
is, gives rise to, or leads the debtor to believe will give rise to, a
consumer credit transaction, if the court as a matter of law finds:
(a) the agreement or transaction to have been unconscionable
at the time it was made, or to have been induced by unconscionable
conduct, the court may refuse to enforce the agreement; or
(b) any term or part of the agreement or transaction to have
been unconscionable at the time it was made, the court may refuse
to enforce the agreement, enforce the remainder of the agreement
without the unconscionable term or part, or so limit the application
of any unconscionable term or part as to avoid any unconscionable
result and award the consumer any actual damages he has sustained.
(2) With respect to a consumer credit transaction, if the court as
a matter of law finds that a person has engaged in, is engaging in,
or is likely to engage in unconscionable conduct in collecting a debt
arising from that transaction, the court may grant an injunction
and award the consumer any treble damages he has
sustained. In addition, the consumer has a cause of action to
recover actual damages and, in an action other than a class action, a
right to recover from the person violating this section a penalty in
the amount determined by the court of not less than one hundred
dollars nor more than one thousand. For purposes of this
subsection and subsection (3), the term `collecting a debt' in a
consumer credit transaction includes the collection or the attempt to
collect any rental charge or any other fee or charge or any item
rented to a lessee in connection with a consumer rental-purchase
agreement as described in Section 37-2-701(6).
(3) If it is claimed or appears to the court that the agreement or
transaction or any term or part thereof may be unconscionable, or
that a person has engaged in, is engaging in, or is likely to engage
in unconscionable conduct in collecting a debt, the parties shall be
afforded a reasonable opportunity to present evidence as to the
setting, purpose, and effect of the agreement or transaction or term
or part thereof, or of the conduct, to aid the court in making the
determination.
(4) In applying subsection (1), consideration must be given to
each of the following factors, among others, as applicable:
(a) belief by the seller, lessor, or lender at the time a
transaction is entered into that there is no reasonable probability of
payment in full of the obligation by the consumer or debtor;
provided, however, that the rental renewals necessary to acquire
ownership in a consumer rental-purchase agreement shall not be
construed to be the obligation contemplated in this code section;
(b) in the case of a consumer credit sale, consumer lease, or
consumer rental-purchase agreement, knowledge by the seller or
lessor at the time of the sale or lease of the inability of the
consumer to receive substantial benefits from the property or
services sold or leased;
(c) in the case of a consumer credit sale, consumer lease,
consumer rental-purchase agreement, or consumer loan, gross
disparity between the price of the property or services sold, leased,
or loaned and the value of the property, services, or loan measured
by the price at which similar property, services, or loans are readily
obtainable in consumer credit transactions by like consumers;
(d) the fact that the creditor contracted for or received
separate charges for insurance with respect to a consumer credit
sale, consumer loan, or consumer rental-purchase agreement with
the effect of making the sale or loan considered as a whole,
unconscionable, including the sale of insurance where the
consumer could receive no potential benefit as referenced in Section
37-4-106(1)(a);
(e) the fact that the seller, lessor, or lender has knowingly
taken advantage of the inability of the consumer or debtor
reasonably to protect his interests by reason of physical or mental
infirmities, ignorance, illiteracy, inability to understand the language
of the agreement, or similar factors.
(f) taking a nonpurchase money nonpossessory security
interest in clothing, furniture, appliances, one radio and one
television, linens, china, crockery, kitchenware, and personal effects
(including wedding rings) of the consumer and his or her
dependents. Provided that when a purchase money loan is
refinanced or consolidated, the security lawfully collateralizing the
prior loan can continue to secure the new loan, even if the new loan
is for a larger amount or is in other respects a nonpurchase money
loan. Provided further that a nonpurchase money, nonpossessory
security interest may be taken in the following:
(i) work of art;
(ii) electronic entertainment equipment (except one
television and one radio);
(iii) items acquired as antiques which are over one hundred
years of age;
(iv) jewelry (except wedding rings).
(5) In applying subsection (2), consideration shall be given to
each of the following factors, among others, as applicable:
(a) using or threatening to use force, violence, or criminal
prosecution against the consumer or members of his family,
including harm to the physical person, reputation, or property of
any person;
(b) communicating with the consumer or a member of his
family at frequent intervals during a twenty-four hour
period or at unusual hours or under other circumstances so that
it is a reasonable inference that the primary purpose of the
communication was to harass the consumer;.
The term `communication' means the conveying of information
regarding a debt directly or indirectly to any person through any
medium. A creditor or debt collector may not:
(i) communicate with a consumer at any unusual time
or placeknown or which should be known to be inconvenient to the
consumer. In the absence of knowledge of circumstances to the
contrary, it may be assumed that a convenient time to communicate
with a consumer is between 8 a.m. and 9 p.m.; or
(ii) communicate with a consumer who is represented by
an attorney when such fact is known to the creditor or debt
collector unless the attorney consents to direct communication or
fails to respond within ten days to a communication; or
(iii) contact a consumer at his place of employment after
the consumer or his employer has requested in writing that no
contacts be made at such place of employment or except as may be
otherwise permitted by statute or to verify the consumer's
employment; or
(iv) communicate with anyone other than the consumer, his
attorney, a consumer reporting agency if otherwise permitted by
law, the attorney of the creditor or debt collector, unless the
consumer or a court of competent jurisdiction has given prior direct
permission; or
(v) use obscene or profane language or language the
natural consequence of which is to abuse the hearer or reader; or
(vi) publish a list of consumers who allegedly refuse to pay
debts, except to a consumer reporting agency; or
(vii) cause a telephone to ring repeatedly during a
twenty-four hour period or engage any person in a telephone
conversation with intent to annoy, abuse, or harass any person at
the called number; or
(viii) advertise for sale any debt to coerce payment of the
debt; or
(ix) communicate with a consumer regarding a debt by
postcard; or
(x) deposit or threaten to deposit any postdated check or
other postdated payment instrument prior to the date on such check
or instrument: or
(xi) take or threaten to take any nonjudicial action to effect
dispossession or disablement of property if:
(aa) there is no present right to possession of the property
claimed as collateral through an enforceable security interest;
(bb) there is no present intention to take possession of the
property; or
(cc) the property is exempt by law from such
dispossession or disablement;
(xii) cause charges to be incurred by any person for
communications to the consumer by concealment of the true
purpose of the communication, such charges include, but are not
limited to, collect telephone calls and telegram fees.
(c) using fraudulent, deceptive or misleading representations
such as a communication which simulates legal process or which
gives the appearance of being authorized, issued, or approved by a
government, governmental agency, or attorney at law when it is not,
or threatening or attempting to enforce a right with knowledge or
reason to know that the right does not exist; in connection
with the collection of a consumer credit transaction. Such false
representations shall include:
(i) the character, amount, or legal status of any debt; or
(ii) any services rendered or fees which may be received,
unless such fees are expressly authorized by law; or
(iii) a claim of an individual that he is an attorney or that
any communication is from an attorney; or
(iv) any claim or implication that nonpayment of any debt
will result in arrest, imprisonment, garnishment, seizure, or
attachment; or
(v) a claim or implication that the consumer committed any
crime or other conduct to disgrace the consumer; or
(vi) any written communication which simulates or appears
to be a document authorized, issued, or approved by any state or
federal agency or court or creates a false impression as to its
source; or
(d) causing or threatening to cause injury to the consumer's
reputation or economic status by disclosing information affecting
the consumer's reputation for creditworthiness with knowledge or
reason to know that the information is false; communicating with
the consumer's employer before obtaining a final judgment against
the consumer, except as permitted by statute or to verify the
consumer's employment; disclosing to a person, with knowledge or
reason to know that the person does not have a legitimate business
need for the information, or in any way prohibited by statute,
information affecting the consumer's credit or other reputation; or
disclosing information concerning the existence of a debt known to
be disputed by the consumer without disclosing that fact;
(e) engaging in conduct with knowledge that like conduct has
been restrained or enjoined by a court in a civil action by the
Administrator against any person pursuant to the provisions on
injunctions against fraudulent or unconscionable agreements or
conduct (Section 37-6-111).
(6) No action in law may be commenced in any court until
at least thirty days after the facts and circumstances of any claim of
unconscionable conduct in collecting a debt arising out of a
consumer credit transaction has been filed in writing with the
Administrator of the Department of Consumer Affairs. The
Administrator shall immediately provide to the person or
organization complained against with a copy of any complaint
alleging unconscionable debt collection practices filed with the
Department of Consumer Affairs. The Administrator shall
immediately provide to the Director of the Consumer Finance
Division of the Board of Financial Institutions a copy of any written
claim of unconscionable conduct in collecting a debt filed against a
Supervised Lender under Title 37 or a Restricted Lender under Title
34. A creditor or debt collector may only take such action as is
expressly authorized by law to protect its collateral during the thirty
day state agency review period. The Administrator shall take
immediate steps to investigate, evaluate, and attempt to resolve such
complaints. The Administrator and Director shall jointly take
immediate steps to investigate, evaluate, and attempt to resolve
complaints involving Supervised and Restricted Lenders If in
an action, properly filed after the thirty-day state agency review
period with regard to conduct in collecting a debt arising out of a
consumer credit transaction, in which unconscionability is
claimed the court finds unconscionability pursuant to subsection (1)
or (2), the court shall award reasonable fees to the attorney for the
consumer or debtor. If the court does not find unconscionability
and the consumer or debtor claiming unconscionability has brought
or maintained an action he knew to be groundless, the court may
award reasonable fees to the attorney for the party against whom
the claim is made. In determining attorney's fees, the amount of the
recovery on behalf of the consumer is not controlling.
(7) The remedies of this section are in addition to remedies
available for the same conduct under law other than his title.
(8) For the purpose of this section, a charge or practice
expressly permitted by this title is not in itself unconscionable.
(9) Nothing in this title may be construed to prevent a finding
of unconscionability where a creditor assesses an origination charge,
prepaid finance charge, service, or other prepaid charge which
substantially exceeds the usual and customary charge for the
particular type of consumer credit transaction. In such a transaction
the court shall consider the relative sophistication of the debtor and
the creditor, the relative bargaining power of the debtor and
creditor, and any oral or written representations made by the
creditor regarding the credit service charge or the loan finance
charge of the consumer credit transaction."
SECTION 11. Section 37-6-117 of the 1976 Code is amended by
adding an appropriately numbered subsection to read:
"( ) Develop a written pamphlet that explains the rights
and responsibilities of consumers who obtain consumer loans under
this Title and Title 34 for distribution in all consumer loan offices.
Such pamphlet shall include the names, addresses, and telephone
numbers of state agencies responsible for enforcing the provisions
of Title 37 and Title 34. Such pamphlet shall be given to a
consumer at the time the initial loan is made whenever the amount
financed is two thousand dollars or less and shall be reading readily
available to all consumers at all times in each loan office. The
Administrator shall consult with, and seek input from
representatives of consumers, the consumer finance industry, and
the Director of the Consumer Finance Division of the Board of
Financial Institutions. Each licensed lender shall be responsible for
reproducing and distributing the pamphlet finally approved and
authorized by the Administrator. The pamphlet developed under
this subsection shall be provided to consumers as of January 1,
1996."
SECTION 12. Section 37-9-102 of the 1976 Code is amended to
read:
"Section 37-9-102. (A) All persons now or
hereafter holding a license under the provisions of Chapter 29 of
title Title 34, as amended, may elect to be licensed
to make supervised loans under this title pursuant to the Part on
Supervised Loans (Part 5) of the Chapter on Loans (Chapter 3),
provided, however, that all persons related to such persons shall
make the same election. Upon such election at any time hereafter in
writing to the Board of Bank Control Financial
Institutions, the lender shall be deemed to have surrendered his
license to lend under Chapter 29 of title Title 34
and to have obtained a license to lend under this title. As soon as is
practicable after the Board board receives such
writing it shall issue a new certificate identifying the lender as a
Supervised Lender. The only requirements that the Board
board may impose for licensure under this section are:
(1) The election must be stated in writing;
(2) All persons related to the electing lender must also have
made such election; and
(3) The person making any such election must then hold a
currently valid license under Chapter 29 of title
Title 34.
(B) A lender licensed to make supervised loans under this
title under Chapter 3 of Title 37, who was previously licensed
under the provisions of Chapter 29 of Title 34, as amended, may
elect to again be licensed under Chapter 29 of Title 34, provided,
however, that all persons related to such persons shall make the
same election. Upon such election, which must be made in writing
to the Board of Financial Institutions prior to January 1, 1997, the
lender shall be deemed to have surrendered his license to lend under
Chapter 3 of Title 37 and to have obtained a license to lend under
Title 34. As soon as practicable after the board receives such
writing, it shall issue a new certificate identifying the lender as a
Restricted Lender under Title 34. The only requirements that the
board may impose for licensure under this section are:
(1) The election must be stated in writing;
(2) All persons related to the electing lender must also
have made such election; and
(3) The person making any such election must then
hold a currently valid license under Chapter 3 of Title
37."
SECTION 13. (A) On or after July 1, 1997, a review of the
consumer finance industry shall be commenced by a legislative
study committee in order to study the impact of this act. The
committee shall report its findings and recommendations, if any, to
the General Assembly by January 1, 1998. The committee shall be
composed of three members of the House of Representatives, to be
appointed by the Speaker; three members of the Senate, to be
appointed by the President Pro Tempore; the State Consumer
Advocate, or his designee; and the Director of the Consumer
Finance Division of the State Board of Financial Institutions, or his
designee. The committee shall elect its chairman from among its
members. The committee shall utilize the existing staff of the
Senate Banking and Insurance Committee, or its successor in
interest; the existing staff of the Labor, Commerce and Industry
Committee of the House of Representatives, or its successor in
interest; and such other legislative staff members as may be
available to the chairman. The committee shall dissolve upon
presentation of its report.
(B) On or after July 1, 1998, a second review of the consumer
finance industry shall be commenced by a legislative study
committee in order to further study the impact of this act and any
subsequent amendments to the consumer finance laws. The
committee shall report its findings and recommendations, if any, to
the General Assembly by January 1, 1999. The committee shall be
composed of three members of the House of Representatives, to be
appointed by the Speaker; three members of the Senate, to be
appointed by the President Pro Tempore; the State Consumer
Advocate, or his designee; and the Director of the Consumer
Finance Division of the State Board of Financial Institutions, or his
designee. The committee shall elect its chairman from among its
members. The committee shall utilize the existing staff of the
Senate Banking and Insurance Committee, or its successor in
interest; the existing staff of the Labor, Commerce and Industry
Committee of the House of Representatives, or its successor in
interest; and such other legislative staff members as may be
available to the chairman. The committee shall dissolve upon
presentation of its report.
SECTION 14. This act takes effect January 1, 1996.
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