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March 25, 1999
S. Printed 3/25/99--S.
Read the first time March 25, 1999.
TO AMEND TITLE 37, OF THE SOUTH CAROLINA CODE OF LAWS, 1976, RELATING TO THE CONSUMER PROTECTION CODE, BY ADDING CHAPTER 17, "SOUTH CAROLINA TITLE LENDERS ACT", WHICH ESTABLISHES A LICENSURE AND REGULATION FRAMEWORK FOR TITLE LENDERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 37 of the 1976 Code is amended by adding:
Section 37-17-10. This act may be cited as the `South Carolina Title Lenders Act.'
Section 37-17-20. As used in this chapter, unless the context clearly indicates otherwise, the following definitions apply:
(1) `Person' means an individual, partnership, corporation, joint venture, trust, association, or any other legal entity however organized.
(2) `Title lender' means a person engaged in the business of lending money on the security of a motor vehicle certificate of title.
(3)(a) `Motor vehicle certificate of title' means a motor vehicle certificate of title:
(i) which is deposited with or otherwise delivered into the possession of a title lender in the course of the title lender's business in connection with a title loan transaction; and
(ii) for which the title lender records a lien in accordance with Article 5, Chapter 19, Title 56.
(b) For purposes of this item, `motor vehicle certificate of title' does not include a certificate of title to a mobile home or a certificate of title to any other item, regardless of whether it is motorized or self-propelled, which is designed as a dwelling unit.
(4) `Administrator' means the administrator of the department.
(5) `Title loan transaction' means the lending of money by a title lender under this chapter to a borrower who uses a motor vehicle certificate of title as security for the loan of money.
(6) `Department' means the Department of Consumer Affairs.
(7) `Location' means the entire space in which title lending 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 37-17-30. (A) All title lenders conducting business in this State are under the authority of and regulated by the department, the administrator of which has the authority to promulgate regulations as considered necessary to carry out the conditions and intent of this chapter. No person may carry on the business of title lending in any location in this State without first having obtained a certificate of authority for each location from the department. Upon receipt of the application for the certificate of authority, the department shall notify the law enforcement agency having jurisdiction where the applicant intends to do business. The law enforcement agency shall conduct a criminal background investigation of the applicant and upon its completion shall make the results of the investigation known to the administrator of the department along with its appropriate recommendation on the issuance of the certificate of authority.
(B) Except as otherwise provided in subsection (C) of this section, no person may accept a motor vehicle certificate of title as security for the loan of money except as provided in this chapter.
(C) The provisions of this chapter do not apply to:
(1) a supervised financial organization, as defined in Section 37-1-301(27); or
(2) a restricted lender, as defined in Section 37-3-501(4), or a supervised lender, as defined in Section 37-3-501(2), if not less than eighty percent of all loans made by the lender are made for terms greater than ninety days.
(D) No person required to have a certificate of authority pursuant to this chapter may engage in the business of making restricted loans or supervised loans at the same location where title loan transactions are conducted or engage in the retail sale of goods or services at the same location where title loan transactions are conducted.
(E) A person convicted of a felony may not:
(1) be issued a certificate of authority to carry on the business of a title lender;
(2) act as a party to a title loan transaction on behalf of a person to whom a certificate of authority to carry on the business of a title lender has been issued; or
(3) in any manner engage in the business of a title lender.
Section 37-17-40. No person may carry on the business of a title lender in any location other than the one designated in the title lender's certificate of authority.
Section 37-17-50. No title lender may charge or collect any fees, costs, or assessments or any kind or nature other than those specifically allowed under this chapter.
Section 37-17-60. Every person seeking a certificate of authority to carry on the business of a title lender shall, at the time of application for the title lender's certificate of authority, file with the department a bond in the favor of the department to be executed by the person granted the certificate and by two responsible sureties or a surety company licensed to do business in this State in the penal sum of five thousand dollars to be approved by the administrator. The bond must be conditioned for the faithful performance of the duties and obligations pertaining to the business so authorized. In lieu of the above, other evidence of financial responsibility approved by the administrator must be submitted, including, but not limited to, letters of credit or certificates of deposit. Each applicant shall also file proof of net worth which must be a minimum of thirty-five thousand dollars until that time as liability insurance covering the contents of the title loan locations is secured by the title lender. The amount of the liability insurance required must be set by regulations promulgated by the administrator.
Section 37-17-70. Every title lender shall keep a record, at the time of any title loan transaction, containing an account and description of the motor vehicle for which a motor vehicle certificate of title is given, the amount of money loaned thereon, the date of the transaction, the charges, or the rate of interest to be paid on the loan, and the name and residence of the person providing the motor vehicle certificate of title.
Section 37-17-80. Every title lender a the time of each title loan transaction shall deliver to the person giving the motor vehicle title, at no charge, a written agreement signed by the title lender and by the person giving the motor vehicle title containing the substance of the entry required by Section 37-17-70.
Section 37-17-90. Records kept by title lenders pursuant to this chapter must at all reasonable times be open to inspection by court officials, law enforcement officers, the administrator, and their designees. Any loan records identifying any individual must be handled in a confidential manner at all times.
Section 37-17-100. Title lenders may charge interest on loans not exceeding the following amounts:
(1) at the rate of two dollars and fifty cents per thirty-day period for each ten dollars loaned for the first fifty dollars loaned;
(2) at the rate of two dollars per thirty-day period for each ten dollars loaned on that portion of the loan exceeding fifty dollars but not exceeding one hundred dollars;
(3) at the rate of one dollar and fifty cents per thirty-day period for each ten dollars loaned on that portion of the loan exceeding one hundred dollars but not exceeding two hundred dollars;
(4) at the rate of one dollar per thirty-day period for each ten dollars loaned on that portion of the loan exceeding two hundred dollars but not exceeding one thousand dollars;
(5) at the rate of fifty cents per thirty-day period for each ten dollars loaned on that portion of the loan exceeding one thousand dollars but not exceeding two thousand dollars.
No title lender may separate or divide a title loan transaction into two or more transactions for the purpose or with the effect of obtaining a total interest rate in excess of that authorized for an amount financed equal to the total of the amounts financed in the resulting transactions.
No title lender may make a loan in excess of two thousand dollars. Every title lender shall post these rates in a form which is prescribed by the administrator. The following statement must be included in the posted rate schedule:
`Consumers: All title lenders operating in South Carolina are required by law to post a schedule showing the maximum rate of LOAN FINANCE CHARGES stated as dollars for each ten dollars for each thirty-day period that the title lender intends to charge for title loan transactions. The purpose of this requirement is to assist you in comparing the maximum rates that title lenders charge, thereby furthering your understanding of the terms of title loan transactions and helping you to avoid the uninformed use of credit.
NOTE: Title lenders are prohibited only from granting credit at rates higher than those specified above. A title lender may be willing to grant you credit at rates that are lower than those specified, depending on the amount, terms, collateral, and your credit worthiness.'
Section 37-17-110. In the case of a title loan transaction which is a renewal:
(A) a title lender may charge the maximum interest allowed by Section 37-17-100 only during the first ninety days of the title loan transaction; and
(B) after ninety days, a title lender may charge interest on renewals at the rate of one-half of the amount per thirty-day period allowed by Section 37-17-100.
Section 37-17-120. (A) If any title loan remains unpaid after a period of sixty days from the due date or any renewal or extension thereof, the title lender has the same rights as a secured party accorded under Part 5, Chapter 9, Title 36 when a debtor is in default under a security agreement. All collections, takings of possession, and dispositions of collateral after default shall be conducted in accordance with Part 5, Chapter 9, Title 36. All rights accorded a debtor under Part 5, Chapter 9, Title 36 shall apply to a borrower in a title loan transaction.
(B)(1) No title lender may use any rights or remedies provided in subsection (A):
(a) unless the loan amount for the initial title loan transaction is at least fifty-five percent of the fair market value of the motor vehicle at the time of the title loan transaction; or
(b) if the borrower has made payments on the principal amount of the original title loan transaction equal to at least one hundred percent of the principal amount of the original title loan transaction plus thirty percent of the interest accrued from the time of the original title loan transaction, provided, that no title lender shall refuse any partial payment of principal offered by a borrower.
(2) For purposes of item (1), the fair market value of the motor vehicle shall be determined in the same manner as county auditors determine the assessed value of motor vehicles for property tax purposes pursuant to Section 12-36-2640.
Section 37-17-130. Each title lender applying for a certificate of authority shall tender to the department a fee of two hundred seventy-five dollars for each location plus all other applicable fees required by other agencies to process the application. The administrator may promulgate regulations for obtaining the certificate of authority. Certificates of authority must be renewed on a yearly basis. An application for renewal must be accompanied by a renewal fee of two hundred seventy-five dollars for each location.
Section 37-17-140. All title lenders shall comply with the Federal Truth in Lending Act. The administrator has the administrative powers set forth in Section 108 of the Federal Truth in Lending Act.
Section 37-17-150. No title lender shall accept property from a borrower upon which there is evidence of ownership by a third party without first taking reasonable steps to ascertain its true ownership. Any such item accepted by a title lender must be returned on demand without fee to the third party owner.
Section 37-17-160. (A) The department may suspend or revoke a license issued pursuant to this chapter if, after notice and opportunity for hearing, the department 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 department as authorized by this chapter;
(4) failed to comply with an order of the department;
(5) demonstrated incompetency or untrustworthiness to engage in the business of title lending services; or
(6) been convicted of a felony or misdemeanor involving fraud, misrepresentation, or deceit.
(B) The department 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 37-17-170. If the department determines that a person subject to the provisions of this chapter has violated this chapter or regulations adopted pursuant to it, the department, 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 department may designate a hearing officer or hearing panel to conduct hearings or take other action as necessary pursuant to this section and may also seek the assistance of the Attorney General in enforcing compliance with this chapter. The department may enforce compliance with an order issued pursuant to this section by the imposition and collection of civil penalties authorized in this chapter.
Section 37-17-180. The department 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 department also may order repayment of unlawful or excessive fees charged to customers.
Section 37-17-190. The department, upon a determination that a violation of Section 37-17-30 is wilful, may refer the violation to the Attorney General or to the appropriate circuit solicitor for criminal prosecution. A wilful violation of Section 37-17-30 is a Class B misdemeanor, and each transaction constitutes a separate offense.
Section 37-17-200. Title loan transactions conducted in accordance with this chapter are 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 37-17-210. The department 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. This act takes effect upon approval by the Governor except that those persons making title loans on the effective date of this act have sixty days to comply with the provisions of this act.
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