Virginia Administrative Code
Title 10 - FINANCE AND FINANCIAL INSTITUTIONS
Agency 5 - STATE CORPORATION COMMISSION
Chapter 200 - SHORT-TERM LENDING
Section 10VAC5-200-20 - Requirements for licensees; operating rules; acquisitions

Universal Citation: 0 VA Admin Code 5-200-20

Current through Register Vol. 41, No. 3, September 23, 2024

A. A licensee shall maintain unencumbered liquid assets per place of business of at least $25,000 at all times. The minimum liquid assets required to be maintained pursuant to this subsection shall be separate and apart from, and in addition to, any minimum liquid assets that the licensee is required to maintain in connection with any other business conducted in the same office.

B. Any person submitting an application to acquire, directly or indirectly, 25% or more of the voting shares of a corporation or 25% or more of the ownership of any other person licensed to conduct business under the Act shall pay a nonrefundable application fee of $500.

C. Loans made pursuant to the Act prior to January 1, 2021, that remain outstanding on or after January 1, 2021, may be collected in accordance with the preexisting terms of the loan contracts provided that such terms were permitted by law when the loans were made.

D. If a person has filed a bond with the bureau, as required by § 6.2-1804 of the Code of Virginia, such bond shall be retained by the bureau notwithstanding the occurrence of any of the following events:

1. The person's license is surrendered, suspended, or revoked;

2. The person ceases engaging in business as a short-term lender; or

3. The person's application for a license is withdrawn or denied.

E. Upon becoming licensed, a licensee shall give written notice to the bureau within 10 days after it commences business.

F. A licensee shall not obtain any agreement from a borrower that gives the licensee or a third party the authority to create or otherwise prepare a check that is drawn upon the borrower's account at a depository institution.

G. The amount of the check given by a borrower to a licensee as security for a short-term loan shall not exceed the sum of the amount advanced to the borrower and the fees and charges permitted by § 6.2-1817 of the Code of Virginia.

H. Upon satisfaction of a loan or upon learning that a loan has been satisfied, a licensee shall retain either (i) a copy of the signed and dated receipt for the payment that satisfied the loan or (ii) if a judgment was obtained and satisfied, a copy of the judgment marked satisfied.

I. A licensee shall not deposit or otherwise present for payment a check given as security for a loan prior to the date stated on the face of the check. A licensee may require or accept multiple checks in connection with a short-term loan. However, a licensee shall not require or accept any additional or alternative security in connection with a short-term loan.

J. If a borrower (i) cancels or rescinds a loan, or (ii) repays a loan in full with cash or a good funds instrument and not with a check securing the loan, the licensee shall immediately return any check given as security for the loan to the borrower.

K. A licensee or former licensee shall provide the following information to the bureau within 10 days after such person's license is surrendered or revoked or the licensed business is otherwise closed:

(i) the names, addresses, telephone numbers, and email addresses of a designated contact person, the person responsible for updating information in the short-term lending database, and the person who consumers may contact to make payment arrangements for outstanding payday loans or short-term loans;

(ii) the location of the licensee's or former licensee's payday loan or short-term loan records; and

(iii) any additional information that the bureau may reasonably require. A licensee or former licensee shall maintain current information with the bureau until the licensee or former licensee has no outstanding payday loans or short-term loans.

L. A person shall remain subject to the provisions of the Act and this chapter applicable to licensees in connection with all loans that the person made while licensed under the Act notwithstanding the occurrence of any of the following events:

1. The person's license is surrendered, suspended, or revoked; or

2. The person ceases making loans under the Act.

M. If a licensee or former licensee disposes of records containing a consumer's personal financial information, such records shall be shredded, incinerated, or otherwise disposed of in a secure manner. A licensee or former licensee may arrange for service from a business record destruction vendor.

N. Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the commissioner describing the event and its expected impact, if any, on the activities of the licensee in Virginia:

1. Bankruptcy, reorganization, or receivership proceedings are filed by or against the licensee.

2. The Attorney General or any other Virginia governmental authority institutes an action against the licensee under the Virginia Consumer Protection Act (§ 59.1-196 et seq. of the Code of Virginia).

3. Any local, state, or federal governmental authority institutes revocation, suspension, or other formal administrative, regulatory, or enforcement proceedings against the licensee.

4. Any local, state, or federal governmental authority (i) revokes or suspends the licensee's short-term lender license or similar license; (ii) takes formal administrative, regulatory, or enforcement action against the licensee relating to its short-term lending or similar business; or (iii) takes any other action against the licensee relating to its short-term lending or similar business where the total amount of restitution or other payment from the licensee exceeds $20,000. A licensee shall not be required to provide the commissioner with information about such event to the extent that such disclosure is prohibited by the laws of another state.

5. Based on allegations by any local, state, or federal governmental authority that the licensee violated any law or regulation applicable to the conduct of its licensed short-term lending or similar business, the licensee enters into, or otherwise agrees to the entry of, a settlement or consent order, decree, or agreement with or by such governmental authority.

6. The licensee surrenders its license to engage in short-term lending or similar business in another state in lieu of threatened or pending license revocation, license suspension, or other administrative, regulatory, or enforcement action.

7. The licensee is denied a license to engage in short-term lending or similar business in another state.

8. The licensee or any of its members, partners, directors, officers, principals, or employees is indicted for or convicted of a felony.

O. Pursuant to § 6.2-1801 of the Code of Virginia, a licensee shall not make a short-term loan that has been arranged or brokered by another person. This provision shall not be construed to prohibit a licensee from originating short-term loans through its own employees.

P. A licensee shall comply with all federal laws and regulations applicable to the conduct of its business, including the Truth in Lending Act (15 USC § 1601 et seq.), Regulation Z (12 CFR Part 1026), the Equal Credit Opportunity Act (15 USC § 1691 et seq.), Regulation B (12 CFR Part 1002), and the Standards for Safeguarding Customer Information (16 CFR Part 314).

Q. A licensee shall not obtain or receive a personal identification number (PIN) for a credit card, prepaid card, debit card, or any other type of card in connection with a short-term loan transaction.

R. A licensee shall not provide any information to a borrower or prospective borrower that is false, misleading, or deceptive.

S. A licensee shall not engage in any activity that directly or indirectly results in an evasion of the provisions of the Act or this chapter.

T. Any person licensed under the Act to make payday loans as of December 31, 2020, shall be deemed licensed and authorized to make short-term loans pursuant to the Act beginning on January 1, 2021. Licenses issued by the commission prior to January 1, 2021, shall remain in force until they have been surrendered, revoked, or suspended.

U. A licensee shall continuously maintain the requirements and standards for licensure prescribed in § 6.2-1806 of the Code of Virginia.

Statutory Authority: §§ 6.2-1815 and 12.1-13 of the Code of Virginia.

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