H 4359 Session 112 (1997-1998)
H 4359 General Bill, By Law and Cato
Similar(S 994)
A BILL TO AMEND TITLE 34, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO
BANKING, FINANCIAL INSTITUTIONS, AND MONEY, BY ADDING CHAPTER 39 SO AS TO
ENACT THE SOUTH CAROLINA DEFERRED PRESENTMENT SERVICES ACT, PROVIDING FOR
LICENSING AND REGULATION OF PERSONS OFFERING DEFERRED PRESENTMENT SERVICES.
12/03/97 House Prefiled
12/03/97 House Referred to Committee on Labor, Commerce and Industry
01/13/98 House Introduced and read first time HJ-27
01/13/98 House Referred to Committee on Labor, Commerce and
Industry HJ-27
05/14/98 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-34
05/19/98 House Requests for debate-Rep(s). Cotty HJ-46
05/20/98 House Recommitted to Committee on Labor, Commerce and
Industry HJ-110
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
May 14, 1998
H. 4359
Introduced by Reps. Law and Cato
S. Printed 5/14/98--H.
Read the first time January 13, 1998.
THE COMMITTEE ON
LABOR, COMMERCE AND INDUSTRY
To whom was referred a Bill (H. 4359), to amend Title 34, Code of
Laws of South Carolina, 1976, relating to banking, etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking all after the enacting
words and inserting:
/SECTION 1. Title 34 of the 1976 Code is amended by adding:
"CHAPTER 39
Deferred Presentment Services
Section 34-39-110. This chapter may be cited as the 'South
Carolina Deferred Presentment Services Act'.
Section 34-39-120. As used in this chapter, unless the context
clearly requires otherwise, the term:
(1) 'Board' means the State Board of Financial Institutions.
(2) 'Check' means a check signed by the maker and made payable
to a person licensed pursuant to this chapter. The name of the maker
must be preprinted on the face of the check. 'Counter checks' and
checks without the name of the maker preprinted on the face of the
check may not be accepted by a licensee.
(3) 'Deferred presentment services' means a transaction pursuant
to a written agreement involving the following combination of
activities in exchange for a fee:
(a) accepting a check dated on the date it was written; and
(b) holding the check for a period of time before presentment
for payment or deposit.
(4) 'Licensee' means a person licensed to provide deferred
presentment services pursuant to this chapter.
(5) 'Person' means an individual, group of individuals, partnership,
association, corporation, or other business unit or legal entity.
(6) 'Location' means the entire space in which deferred
presentment services are provided. The space must be completely
separated from any space where goods or services are sold or leased.
The location must be separately staffed and must not have a common
entrance with any other business not permitted by this chapter.
Section 34-39-130. (A) A person may not engage in the business
of deferred presentment services without first obtaining a license
pursuant to this chapter. A separate license is required for each
location from which the business is conducted. The licensee shall
post its license to engage in the business of deferred presentment
services at each location licensed pursuant to this chapter.
(B) A person engaged in the business of deferred presentment
services on the effective date of this chapter may continue to engage
in the business without a license until the board has acted upon the
application for a license, but the application must be filed within sixty
days after the effective date of this chapter.
Section 34-39-140. This chapter does not apply to:
(1) a bank, savings institution, credit union, or farm credit system
organized under the laws of the United States or any state; and
(2) a person principally engaged in the bona fide retail sale of
goods or services who, either as an incident to or independently of a
retail sale or service and not holding itself out to be a deferred
presentment service, from time to time cashes checks, drafts, or
money orders without a fee or other consideration.
Section 34-39-150. (A) An application for licensure pursuant to
this chapter must be in writing, under oath, and on a form prescribed
by the board. The application must set forth all of the following:
(1) the legal name and residence and business addresses of the
applicant and, if the applicant is a partnership, association, or
corporation, of every member, officer, managing employee, and
director of it;
(2) the location of the registered office of the applicant;
(3) the registered agent of the applicant if the applicant is
required by other law to have a registered agent;
(4) the addresses of the locations to be licensed; and
(5) other information concerning the financial responsibility,
background experience, and activities, such as other partnerships,
associations, and corporations located at or adjacent to the licensed
location, of the applicant and its members, officers, managing
employees, and directors as the board requires.
(B) Upon receipt of an application in the form prescribed by the
board, accompanied by the required fee, the board shall investigate
whether the qualifications for licensure are satisfied. If the board
finds that the qualifications are satisfied, it shall issue to the applicant
a license to engage in the deferred presentment services business. If
the board fails to issue a license, it shall notify the applicant of the
denial and the reasons for it. The provisions of the Administrative
Procedures Act apply to the appeal of the denial of a license.
(C) The application must be accompanied by payment of an
application fee of two hundred fifty dollars and an investigation fee
of five hundred dollars. These fees are not refundable or abatable.
If the license is granted, however, payment of the application fee
satisfies the fee requirement for the first license year or its remainder.
(D) A license expires annually and may be renewed upon payment
of a license fee of two hundred fifty dollars. The annual license
renewal fee for an applicant with more than one location is two
hundred fifty dollars for the first location and fifty dollars for each
additional location.
Section 34-39-160. To qualify for a license issued pursuant to this
chapter, an applicant shall have:
(1) a minimum net worth, determined in accordance with generally
accepted accounting principles, of at least twenty-five thousand
dollars available for the operation of each location; and
(2) the financial responsibility, character, experience, and general
fitness so as to command the confidence of the public and to warrant
belief that the business is operated lawfully, honestly, fairly, and
efficiently.
Section 34-39-170. (A) A licensee may not advance monies on
the security of a check unless the account on which the presented
check is drawn is a legitimate, open, and active account.
(B) A licensee, in every location conducting business under a
license issued pursuant to this chapter, conspicuously shall post and
at all times display a notice stating the fee charged for deferred
presentment services. A licensee shall file with the board a statement
of the fees charged at every location licensed for deferred
presentment services.
(C) A licensee shall endorse in the name of the licensee every
check, draft, or money order presented by the licensee for payment
or deposit.
Section 34-39-180. (A) A licensee may defer the presentment or
deposit of a check for up to thirty-one days pursuant to the provisions
of this section.
(B) The face amount of a check taken for deferred presentment or
deposit may not exceed three hundred dollars, exclusive of the fees
allowed in Section 34-39-180(E).
(C) Each check must be documented by a written agreement signed
by both the customer and the licensee. The written agreement must
contain the name or trade name of the licensee, the transaction date,
the amount of the check, and a statement of the total amount of fees
charged, expressed both as a dollar amount and as an effective annual
percentage rate (APR). The written agreement must authorize
expressly the licensee to defer presentment or deposit of the check
until a specific date, not later than thirty-one days from the date the
check is accepted by the licensee.
(D) The board shall require each licensee to issue a standardized
consumer notification and disclosure form in compliance with state
and federal truth-in-lending laws before entering into a deferred
presentment agreement.
(E) A licensee shall not charge, directly or indirectly, a fee or other
consideration in excess of fifteen percent of the face amount of the
check for accepting a check for deferred presentment or deposit. The
fee or other consideration authorized by this subsection may be
imposed only once for each written agreement. Records must be kept
by each licensee with sufficient detail to ensure that the fee or other
consideration authorized by this subsection may be imposed only
once for each written agreement.
(F) A check accepted for deferred presentment or deposit pursuant
to this chapter may not be repaid from the proceeds of another check
accepted for deferred presentment or deposit by the same licensee or
an affiliate of the licensee. A licensee shall not renew or otherwise
extend presentment of a check or withhold the check from deposit,
for old or new consideration, for a period beyond the time set forth
in the written agreement with the customer.
(G) If a check is returned to the licensee from a payer financial
institution due to insufficient funds, closed account, or stop payment
order, the licensee may pursue all legally available civil means to
collect the check including, but not limited to, the imposition of a
returned check charge as provided in Section 34-11-70(a), except that
the service charge imposed by the licensee shall not exceed the lesser
of ten dollars or the fee imposed by the financial institution on the
licensee for the returned check. An individual who issues a personal
check to a licensee under a deferred presentment agreement is not
subject to criminal penalty.
Section 34-39-190. (A) A person subject to the provisions of this
chapter shall maintain in its offices books, accounts, and records, as
the board may reasonably require and establish by regulation. The
books, accounts, and records must be kept with sufficient detail to
ensure that the provisions of Section 34-39-180(E) are met. The
books, accounts, and records must be maintained separately from
other business in which the person is engaged and must be retained
for at least three years.
(B) The board may examine the books, accounts, and records to
determine compliance with this chapter and with the regulations
adopted pursuant to it. The licensee examined pursuant to this
section must pay the cost of the examination to the board.
Section 34-39-200. A person required to be licensed pursuant to
this chapter may not:
(1) charge fees in excess of those authorized by this chapter;
(2) engage in the business of:
(i) making loans of money or extension of credit;
(ii) discounting notes, bills of exchange, items, or other
evidences of debt; or
(iii) accepting deposits or bailments of money or items, except
as expressly provided by Section 34-39-180;
(3) use or cause to be published or disseminated advertising
communication which contains false, misleading, or deceptive
statements or representations;
(4) conduct business at premises or locations other than locations
licensed by the board;
(5) engage in unfair, deceptive, or fraudulent practices, including
unconscionable conduct in violation of Section 37-5-108;
(6) alter or delete the date on a check accepted by the licensee;
(7) accept an undated check or a check dated on a date other than
the date on which the licensee accepts the check;
(8) require a customer to provide security for the transaction or
require the customer to provide a guaranty from another person;
(9) engage in the retail sale of goods or services, other than
deferred presentment services and Level I check-cashing services as
defined in Section 34-41-10, at the location licensed pursuant to this
chapter, provided, however, that a sale of money orders, postage
stamps, payment of utility bills with no additional fee to the
customer, vending machines for food or beverage, facsimile services,
Western Union services, or postal boxes at rates not higher than
allowed by the United States Postal Service is not the sale of goods
or services prohibited by this subsection;
(10) be licensed pursuant to Section 12-21-2720(a)(3) to operate
a video poker machine; or
(11) permit others to engage in an activity prohibited by this section
at a location licensed pursuant to this chapter.
Section 34-39-210. (A) The board may suspend or revoke a
license issued pursuant to this chapter if, after notice and opportunity
for hearing, the board issues written findings that the licensee has:
(1) violated this chapter or applicable state or federal law;
(2) made a false statement on the application for a license under
the chapter;
(3) refused to permit investigation by the board as authorized by
this chapter;
(4) failed to comply with an order of the board;
(5) demonstrated incompetency or untrustworthiness to engage
in the business of deferred presentment services; or
(6) been convicted of a felony or misdemeanor involving fraud,
misrepresentation, or deceit.
(B) The board may not suspend or revoke a license issued pursuant
to this chapter unless the licensee has been given notice and
opportunity for hearing in accordance with the Administrative
Procedures Act.
Section 34-39-220. If the board determines that a person subject
to the provisions of this chapter has violated this chapter or
regulations adopted pursuant to it, the board, upon notice and
opportunity for hearing in accordance with the Administrative
Procedures Act, may order the person to cease and desist from the
violations and to comply with this chapter. The board may designate
a hearing officer or hearing panel to conduct hearings or take other
action as necessary pursuant to this section and may seek the
assistance of the Attorney General or the Department of Consumer
Affairs in enforcing compliance with this chapter. The board may
enforce compliance with an order issued pursuant to this section by
the imposition and collection of civil penalties authorized in this
chapter.
Section 34-39-230. The board may order and impose civil
penalties upon a person subject to the provisions of this chapter for
violations of this chapter or its regulations in an amount not to exceed
one thousand dollars for each violation. The board also may order
repayment of unlawful or excessive fees charged to customers.
Section 34-39-240. The board, upon a determination that a
violation of Section 34-39-130 is wilfull, may refer the violation to
the Attorney General or to the appropriate circuit solicitor for
criminal prosecution. A wilfull violation of Section 34-39-130 is a
Class B misdemeanor, and each transaction involving unlawful
deferred presentment constitutes a separate offense.
Section 34-39-250. The business of deferred presentment services
conducted in accordance with this chapter is not subject to or
controlled by any other state statute governing the imposition of
interest, fees, or loan charges, or the extension of credit.
Section 34-39-260. The board may promulgate regulations
pursuant to the Administrative Procedures Act necessary to carry out
the purposes of this chapter, to provide for the protection of the
public, and to assist licensees in interpreting and complying with this
chapter."
SECTION 2. Title 34 of the 1976 Code is amended by adding:
"CHAPTER 41
Check-Cashing Services
Section 34-41-10. As used in this chapter, unless the context
clearly requires otherwise, the term:
(1) 'Board' means the State Board of Financial Institutions.
(2) 'Cashing' means providing currency for payment instruments
but does not include the bona fide sale or exchange of travelers
checks and foreign denomination payment instruments.
(3) 'Level I check-cashing service' means any person or entity
engaged in the business of cashing checks, drafts, or money orders
for a fee, service charge, or other consideration.
(4) 'Level II check-cashing services' means any person or entity
engaged in the business of cashing checks, drafts, or money orders
for a fee, service charge, or other consideration. A Level II licensee
may not be licensed to engaged in the business of deferred
presentment.
(5) 'Licensee' means a person or entity licensed to engage in either
a Level I or Level II check-cashing services pursuant to this chapter.
(6) 'Person' means an individual, partnership, association, or
corporation.
Section 34-41-20. (A) No person or other entity may engage in
the business of either Level I or Level II check-cashing services
without first obtaining a license pursuant to this chapter. No person
or other entity providing a Level I or Level II check-cashing service
may avoid the requirements of this chapter by providing a check or
other currency equivalent instead of currency when cashing payment
instruments.
(B) A person providing Level I or Level II check-cashing services
on the effective date of this chapter may continue to engage in the
business without a license until the board has acted upon the
application for a license, but the application must be filed within sixty
days after the effective date of this chapter.
Section 34-41-30. This chapter shall not apply to:
(1) a bank, savings institution, credit union, or farm credit system
organized under the laws of the United States or any state; and
(2) any person or entity principally engaged in the bona fide retail
sale of goods or services, who either as an incident to or
independently of a retail sale or service and not holding itself out to
be a Level I or Level II check-cashing service, from time to time
cashes checks, drafts, or money orders without a fee or other
consideration.
Section 34-41-40. (A) An application for licensure pursuant to
this chapter must be in writing, under oath, and on a form prescribed
by the board. The application shall set forth all of the following:
(1) the name and address of the applicant;
(2) if the applicant is a firm or partnership, the name and
address of each member of the firm or partnership;
(3) if the applicant is a corporation, the name and address of
each officer, director, registered agent, and principal;
(4) the addresses of the locations of the business to be licensed;
and
(5) other information concerning the financial responsibility,
background experience, and activities, such as other partnerships,
associations, and corporations located at or adjacent to the licensed
location, of the applicant and its members, officers, directors, and
principals as the board requires.
(B) The board may make such investigations as the board
considers necessary to determine if the applicant has complied with
all applicable provisions of this chapter and state and federal law.
(C) The application must be accompanied by payment of a two
hundred fifty dollar application fee and a five hundred dollar
investigation fee. These fees are not refundable or abatable, but, if
the license is granted, payment of the application fee shall satisfy the
fee requirement for the first license year or remaining part of it.
(D) Licenses shall expire annually and may be renewed upon
payment of a license fee of two hundred fifty dollars plus a fifty
dollar fee for each branch location certificate issued under a license.
Section 34-41-42. For the purposes of this chapter, all mobile
check-cashing services must:
(1) be licensed as a Level I licensee;
(2) be a registered and licensed armored vehicle in accordance
with the laws of this State;
(3) be considered a 'Branch' of a check-cashing business for
purposes of licensure through this chapter; and
(4) keep records in accordance with this chapter that are returned
daily to either the main office or another nonmobile branch of the
business.
Section 34-41-50. (A) Each licensee and applicant shall have and
maintain liquid assets of at least fifty thousand dollars for each
licensee.
(B) Upon the filing and investigation of an application, and
compliance by the applicant with Section 34-41-40, and this section,
the board shall issue and deliver to the applicant the license applied
for to engage in business pursuant to this chapter at the locations
specified in the application, provided that the board finds that the
financial responsibility, character, reputation, experience, and general
fitness of the applicant and its members, officers, directors, and
principals are such as to warrant belief that the business will be
operated efficiently and fairly, in the public interest, and in
accordance with law. If the board fails to make these findings, a
license may not be issued, and the board shall notify the applicant of
the denial and the reasons for it. The provisions of the
Administrative Procedures Act apply to the appeal of the denial of a
license.
Section 34-41-60. (A) Notwithstanding any other provision of
law, a check-cashing service licensed pursuant to this chapter may
not directly or indirectly charge or collect fees or other consideration
for check-cashing services in excess of the following:
(1) two percent of the face amount of the check or three dollars,
whichever is greater, for checks issued by the federal government,
state government, or any agency of the state or federal government,
or any county or municipality of this State;
(2) two percent of the face amount of the check or three dollars,
whichever is greater, for printed payroll checks. For purposes of this
item, 'printed' means type written, electronically generated, or
computer generated; and
(3) seven percent of the face amount of the check or five
dollars, whichever is greater, for all other checks, including
handwritten payroll checks, or for money orders.
(B) A licensee may not advance monies on the security of any
check unless the account from which the check being presented is
drawn is legitimate, open, and active. A licensee who cashes a check
for a fee shall deposit the check not later than five days from the date
the check is cashed.
(C) A licensee shall ensure that in every location conducting
business under a license issued pursuant to this chapter, there is
posted conspicuously and at all times displayed a notice stating the
fees charged for cashing checks, drafts, and money orders. A
licensee further shall ensure that notice of the fees currently charged
at every location is filed with the board.
(D) A licensee shall endorse every check, draft, or money order
presented by the licensee for payment in the name of the licensee.
(E) Each check must be documented by a written agreement signed
by both the customer and the licensee. In the case of an automated
check-cashing machine, a printed receipt of the transaction between
the customer and the licensee shall constitute an agreement. The
written agreement must contain the name or trade name of the
licensee, the transaction date, the amount of the check, and a
statement of the total amount of fees charged.
Section 34-41-70. (A) Each person required to be licensed
pursuant to this chapter shall maintain in its offices such books,
accounts, and records as the board reasonably may require. The
books, accounts, and records must be maintained separate from any
other business in which the person is engaged and must be retained
for a period prescribed by the board.
(B) The licensee shall ensure that each customer cashing a check
is provided a receipt showing the name or trade name of the licensee,
the transaction date, amount of the check, and the fee charged.
(C) The board may examine the books, accounts, and records in
order to determine whether the person is complying with this chapter
and rules adopted pursuant to it. The cost of the examination must be
paid by the licensee and must be determined by the board.
Section 34-41-80. No person required to be licensed pursuant to
this chapter shall do any of the following:
(1) charge fees in excess of those authorized pursuant to this
chapter;
(2) engage in the business of:
(i) making loans of money or extension of credit;
(ii) discounting notes, bills of exchange, items, or other
evidences of debt; or
(iii) accepting deposits or bailments of money or items;
(3) use or cause to be published or disseminated any advertising
communication which contains any false, misleading, or deceptive
statement or representation;
(4) conduct business at premises or locations other than locations
licensed by the board;
(5) engage in unfair, deceptive, or fraudulent practices, including
unconscionable conduct in violation of Section 37-5-108;
(6) cash a check, draft, or money order made payable to a payee
other than a natural person unless the licensee has previously
obtained appropriate documentation from the executive entity of the
payee clearly indicating the authority of the natural person or persons
cashing the check, draft, or money order on behalf of the payee;
(7) as a Level I licensee, engage in the retail sale of goods or
services, other than check-cashing services and deferred presentment
services, at the location licensed pursuant to this chapter, provided,
however, that a sale of money orders, postage stamps, payment of
utility bills with no additional fee to the customer, vending machines
for food or beverage, facsimile services, Western Union services, or
postal boxes at rates not higher than allowed by the United States
Postal Service is not the sale of goods or services prohibited by this
subsection;
(8) as a Level II licensee, engage in the business of deferred
presentment as provided in Chapter 39 of Title 34;
(9) be licensed pursuant to Section 12-21-2720(a)(3) to operate a
video poker machine; or
(10) permit others to engage in an activity prohibited by this section
at a location licensed pursuant to this chapter.
Section 34-41-90. (A) The board may suspend or revoke any
license or licenses issued pursuant to this chapter if, after notice and
opportunity for hearing, the board issues written findings that the
licensee has engaged in any of the following conduct:
(1) violated this chapter or applicable state or federal law or
rules;
(2) made a false statement on the application for a license
pursuant to this chapter;
(3) refused to permit investigation by the board authorized
pursuant to this chapter;
(4) failed to comply with an order of the board;
(5) demonstrated incompetency or untrustworthiness to engage
in the business of check cashing; or
(6) has been convicted of a felony or misdemeanor involving
fraud, misrepresentation, or deceit.
(B) The board may not suspend or revoke any license issued
pursuant to this chapter unless the licensee has been given notice and
opportunity for hearing in accordance with the Administrative
Procedures Act.
Section 34-41-100. If the board determines that a person required
to be licensed pursuant to this chapter has violated this chapter or
regulations promulgated pursuant to this chapter, the board, upon
notice and opportunity for hearing in accordance with the
Administrative Procedures Act, may order the person to cease and
desist from the violations and to comply with this chapter. The board
may designate a hearing officer or hearing panel to conduct hearings
or take other action as necessary pursuant to this section and may
seek the assistance of the Attorney General or the Department of
Consumer Affairs in enforcing compliance with this chapter. The
board may enforce compliance with an order issued pursuant to this
section by the imposition and collection of civil penalties authorized
pursuant to this chapter.
Section 34-41-110. The board may order and impose civil
penalties upon any person required to be licensed pursuant to this
chapter for violations of this chapter or regulations promulgated
under it. Civil penalties shall not exceed one thousand dollars for
each violation. The board also may order repayment of unlawful or
excessive fees charged to customers.
Section 34-41-120. The board, upon a determination that a
violation of Section 34-41-20 is wilfull, may refer a violation to the
Attorney General or to the appropriate circuit solicitor for criminal
prosecution. A violation of Section 34-41-20 by a person required to
obtain a license pursuant to this chapter is a Class B misdemeanor
and each transaction involving the unlawful cashing of a check, draft,
or money order constitutes a separate offense.
Section 34-41-130. The board may promulgate regulations
necessary to carry out the purposes of this chapter, to provide for the
protection of the public, and to assist licensees in interpreting and
complying with this chapter."
SECTION 3. If any provision of these chapters or its application
to any person or circumstance is held invalid, the invalidity does not
affect other provisions or application of these chapters which can be
given effect without the invalid provision or application, and to that
end, the provisions of these chapters are declared to be severable.
SECTION 4. Section 34-29-100(a) of the 1976 Code, as last
amended by Act 135 of 1995, is further amended to read:
"(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. 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 in them. The renewal or refinancing of a loan
shall constitute a final entry. Notwithstanding any other
provision of law or regulation, each licensee, subject to the approval
of the Director of the Consumer Finance Division of the South
Carolina Board of Financial Institutions, may retain books and
records in any other medium, electronic or otherwise, that conforms
with the requirements of these chapters."
SECTION 5. This act takes effect upon approval by the
Governor./
Amend title to conform.
HARRY F. CATO, for Committee.
STATEMENT OF ESTIMATED FISCAL
IMPACT
ESTIMATED FISCAL IMPACT ON GENERAL FUND
EXPENDITURES IS:
-0-
The State Board of Financial Institutions has indicated there could
be approximately 600 deferred presentment services resulting from
this bill. The board indicates five new FTE's will be needed to
implement this bill, however, these FTE's will be funded from fees
collected. Section 34-39-150 provides for a $250 application fee, a
$500 investigation fee, and a $250 renewal fee.
Pursuant to Section 2-7-71 of the 1976 South Carolina Code of
Laws the Board of Economic Advisors is the appropriate agency to
address any revenue impact of this legislation.
Approved By:
Frank A. Rainwater
Office of State Budget
A BILL
TO AMEND TITLE 34, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO BANKING, FINANCIAL
INSTITUTIONS, AND MONEY, BY ADDING CHAPTER 39 SO
AS TO ENACT THE SOUTH CAROLINA DEFERRED
PRESENTMENT SERVICES ACT, PROVIDING FOR
LICENSING AND REGULATION OF PERSONS OFFERING
DEFERRED PRESENTMENT SERVICES.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Title 34 of the 1976 Code is amended by adding:
"CHAPTER 39
Deferred Presentment Services
Section 34-39-110. This chapter may be cited as the 'South
Carolina Deferred Presentment Services Act'.
Section 34-39-120. As used in this chapter, unless the context
clearly requires otherwise, the term:
(1) 'Board' means the State Board of Financial Institutions;
(2) 'Check' means a check signed by the maker and made payable
to a person licensed under this chapter;
(3) 'Deferred presentment services' means a transaction pursuant
to a written agreement involving the following combination of
activities in exchange for a fee:
(a) accepting a check dated on the date it was written; and
(b) holding the check for a period of time prior to presentment
for payment or deposit;
(4) 'Licensee' means a person licensed to provide deferred
presentment services pursuant to this chapter;
(5) 'Person' means an individual, group of individuals, partnership,
association, corporation, or other business unit or legal entity.
Section 34-39-130. (A) A person may not engage in the business
of deferred presentment services without first obtaining a license
pursuant to this chapter. A separate license is required for each
location from which the business is conducted. The licensee shall
post its license to engage in the business of deferred presentment
services at each location licensed under this chapter.
(B) A person engaged in the business of deferred presentment
services on the effective date of this act may continue to engage in
the business without a license until the board has acted upon the
application for a license, but the application must be filed within sixty
days after the effective date of this act.
Section 34-39-140. This chapter does not apply to:
(1) a bank, savings institution, credit union, or farm credit system
organized under the laws of the United States or any state; and
(2) a person principally engaged in the bona fide retail sale of
goods or services who, either as an incident to or independently of a
retail sale or service and not holding itself out to be a deferred
presentment service, from time to time cashes checks, drafts, or
money orders for a fee or other consideration.
Section 34-39-150. (A) An application for licensure under this
chapter must be in writing, under oath, and on a form prescribed by
the board. The application must set forth all of the following:
(1) the legal name and residence and business addresses of the
applicant and, if the applicant is a partnership, association, or
corporation, of every member, officer, managing employee, and
director of it;
(2) the location of the registered office of the applicant;
(3) the registered agent of the applicant if the applicant is
required by other law to have a registered agent;
(4) the addresses of the locations to be licensed; and
(5) other information concerning the financial responsibility,
background experience, and activities of the applicant and its
members, officers, managing employees, and directors as the board
requires.
(B) Upon receipt of an application in the form prescribed by the
board, accompanied by the required fee, the board shall investigate
whether the qualifications for licensure are satisfied. If the board
finds that the qualifications are satisfied, it shall issue to the applicant
a license to engage in the deferred presentment services business. If
the board fails to issue a license, it shall notify the applicant of the
denial and the reasons for it. The provisions of the Administrative
Procedures Act apply to the appeal of the denial of a license.
(C) The application must be accompanied by payment of an
application fee of two hundred fifty dollars and an investigation fee
of five hundred dollars. These fees are not refundable or abatable.
If the license is granted, however, payment of the application fee
satisfies the fee requirement for the first license year or its remainder.
(D) A license expires annually and may be renewed upon payment
of a license fee of two hundred fifty dollars. The annual license
renewal fee for an applicant with more than one location is two
hundred fifty dollars for the first location and fifty dollars for each
additional location.
Section 34-39-160. To qualify for a license issued pursuant to this
chapter, an applicant shall have:
(1) a minimum net worth, determined in accordance with generally
accepted accounting principles, of at least twenty-five thousand
dollars available for the operation of each location; and
(2) the financial responsibility, character, experience, and general
fitness so as to command the confidence of the public and to warrant
belief that the business is operated lawfully, honestly, fairly, and
efficiently.
Section 34-39-170. (A) A licensee may not advance monies on
the security of a check unless the account on which the presented
check is drawn is a legitimate, open, and active account.
(B) A licensee shall, in every location conducting business under
a license issued pursuant to this chapter, conspicuously post and at all
times display a notice stating the fee charged for deferred
presentment services. A licensee shall file with the board a statement
of the fees charged at every location licensed for deferred
presentment services.
(C) A licensee shall endorse in the name of the licensee every
check, draft, or money order presented by the licensee for payment
or deposit.
Section 34-39-180. (A) A licensee may defer the presentment or
deposit of a check for up to thirty-one days pursuant to the provisions
of this section.
(B) The face amount of a check taken for deferred presentment or
deposit may not exceed three hundred dollars, exclusive of the fees
allowed in Section 34-39-180(E).
(C) Each check must be documented by a written agreement signed
by both the customer and the licensee. The written agreement must
contain the name or trade name of the licensee, the transaction date,
the amount of the check, and a statement of the total amount of fees
charged, expressed both as a dollar amount and as an effective annual
percentage rate (APR). The written agreement must authorize
expressly the licensee to defer presentment or deposit of the check
until a specific date, not later than thirty-one days from the date the
check is accepted by the licensee.
(D) The board shall require each licensee to issue a standardized
consumer notification and disclosure form in compliance with state
and federal truth-in-lending laws prior to entering into a deferred
presentment agreement.
(E) A licensee shall not charge, directly or indirectly, a fee or other
consideration in excess of fifteen percent of the face amount of the
check for accepting a check for deferred presentment or deposit.
(F) A check accepted for deferred presentment or deposit pursuant
to this chapter may not be repaid from the proceeds of another check
accepted for deferred presentment or deposit by the same licensee or
an affiliate of the licensee. A licensee shall not renew or otherwise
extend presentment of a check or withhold the check from deposit,
for old or new consideration, for a period beyond the time set forth
in the written agreement with the customer.
(G) If a check is returned to the licensee from a payer financial
institution due to insufficient funds, closed account, or stop payment
order, the licensee may pursue all legally available civil means to
collect the check including, but not limited to, the imposition of a
returned check charge as provided in Section 34-11-70(a). An
individual who issues a personal check to a licensee under a deferred
presentment agreement is not subject to criminal penalty.
Section 34-39-190. (A) A person subject to the provisions of this
chapter shall maintain in its offices books, accounts, and records, as
the board may reasonably require. The books, accounts, and records
must be maintained separately from other business in which the
person is engaged and must be retained for at least two years.
(B) The board may examine the books, accounts, and records to
determine compliance with this chapter and with the regulations
adopted pursuant to it. The licensee examined pursuant to this
section must pay the cost of the examination to the board.
Section 34-39-200. A person required to be licensed pursuant to
this chapter may not:
(1) charge fees in excess of those authorized by this chapter;
(2) engage in the business of:
(i) making loans of money or extension of credit;
(ii) discounting notes, bills of exchange, items, or other
evidences of debt; or
(iii) accepting deposits or bailments of money or items, except
as expressly provided by Section 34-39-180;
(3) use or cause to be published or disseminated advertising
communication which contains false, misleading, or deceptive
statements or representations;
(4) conduct business at premises or locations other than locations
licensed by the board;
(5) engage in unfair, deceptive, or fraudulent practices;
(6) alter or delete the date on a check accepted by the licensee;
(7) accept an undated check or a check dated on a date other than
the date on which the licensee accepts the check;
(8) require a customer to provide security for the transaction or
require the customer to provide a guaranty from another person; or
(9) engage in the retail sale of goods or services, other than
deferred presentment services, at the location licensed under this
chapter.
Section 34-39-210. (A) The board may suspend or revoke a
license issued pursuant to this chapter if, after notice and opportunity
for hearing, the board issues written findings that the licensee has:
(1) violated this chapter or applicable state or federal law;
(2) made a false statement on the application for a license under
the chapter;
(3) refused to permit investigation by the board as authorized by
this chapter;
(4) failed to comply with an order of the board;
(5) demonstrated incompetency or untrustworthiness to engage
in the business of deferred presentment services; or
(6) been convicted of a felony or misdemeanor involving fraud,
misrepresentation, or deceit.
(B) The board may not suspend or revoke a license issued under
this chapter unless the licensee has been given notice and opportunity
for hearing in accordance with the Administrative Procedures Act.
Section 34-39-220. If the board determines that a person subject
to the provisions of this chapter has violated this chapter or
regulations adopted pursuant to it, the board may, upon notice and
opportunity for hearing in accordance with the Administrative
Procedures Act, order the person to cease and desist from the
violations and to comply with this chapter. The board may enforce
compliance with an order issued pursuant to this section by the
imposition and collection of civil penalties authorized in this chapter.
Section 34-39-230. The board may order and impose civil
penalties upon a person subject to the provisions of this chapter for
violations of this chapter or its regulations in an amount not to exceed
one thousand dollars for each violation. The board also may order
repayment of unlawful or excessive fees charged to customers.
Section 34-39-240. The board, upon a determination that a
violation of Section 34-39-130 is wilful, may refer the violation to
the Attorney General or to the appropriate circuit solicitor for
criminal prosecution. A wilful violation of Section 34-39-130 is a
Class B misdemeanor, and each transaction involving unlawful
deferred presentment constitutes a separate offense.
Section 34-39-250. The business of deferred presentment services
conducted in accordance with this chapter is not subject to or
controlled by any other state statute governing the imposition of
interest, fees, or loan charges, or the extension of credit.
Section 34-39-260. The board may promulgate regulations
pursuant to the Administrative Procedures Act necessary to carry out
the purposes of this chapter, to provide for the protection of the
public, and to assist licensees in interpreting and complying with this
chapter."
SECTION 2. If any provision of this act or its application to any
person or circumstance is held invalid, the invalidity does not affect
other provisions or application of the act which can be given effect
without the invalid provision or application, and to that end, the
provisions of this act are declared to be severable.
SECTION 3. This act takes effect upon approval by the Governor.
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