South Carolina General Assembly
112th Session, 1997-1998

Bill 4359


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Bill Number:                    4359
Type of Legislation:            General Bill GB
Introducing Body:               House
Introduced Date:                19980113
Primary Sponsor:                Law 
All Sponsors:                   Law and Cato
Drafted Document Number:        pt\1432mm.98
Companion Bill Number:          994
Residing Body:                  House
Current Committee:              Labor, Commerce and Industry
                                Committee 26 HLCI
Subject:                        Deferred Presentment Services Act,
                                Acts Cited by Popular Name, Banks and
                                Savings and Loans, Financial
                                Institutions

History

Body    Date      Action Description                       Com     Leg Involved
______  ________  _______________________________________  _______ ____________

House   19980520  Recommitted to Committee                 26 HLCI
House   19980519  Request for debate by Representative             Cotty
House   19980514  Committee report: Favorable with         26 HLCI
                  amendment
House   19980113  Introduced, read first time,             26 HLCI
                  referred to Committee
House   19971203  Prefiled, referred to Committee          26 HLCI


View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

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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