Vermont
S.249
Introduced by Senator Backus of Chittenden County
Referred to Committee on
Date:
Subject: Banking; unfair and deceptive lending practices
Statement of purpose: This bill proposes to protect consumers from unfair and deceptive acts and practices relating to loans and other credit transactions.
AN ACT RELATING TO UNFAIR AND DECEPTIVE LENDING PRACTICES
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. LEGISLATIVE INTENT
(a) It is the purpose of this act to protect consumers from unfair and deceptive acts and practices relating to loans and other credit transactions, while retaining consumers' access to credit, by authorizing the adoption of consumer protection regulations, including:
(1) Reasonable consumer protection rules in cases where credit card companies solicit financially vulnerable customers with a low, "introductory" interest rate, increasing the interest rate later, and thereby placing the customer in financial jeopardy.
(2) Commonsense lending practices designed to minimize unsuitable extensions ofcredit so that, in the case of financially vulnerable customers, an individual's line of credit generally does not exceed a reasonable percentage of the individual's household income.
(3) Predatory and confiscatory practices of certain "subprime" lenders, such as repeated and unnecessary refinancings, and the targeting of financially vulnerable or uninformed consumers such as senior citizens, students, and the poor.
(b) This legislation is enacted pursuant to the authority conferred on the state of Vermont under 12 U.S.C. §§ 36(f) and 1831(j) to enact consumer protection laws of general applicability to state and national financial institutions.
Sec. 2. 8 V.S.A. § 2240 is added to read:
§ 2240. UNFAIR AND DECEPTIVE LENDING PRACTICES
(a) No person or financial institution shall engage in unfair or deceptive acts or practices in connection with the making of loans or the extension of credit to residents of this state. The commissioner shall adopt such rules as are necessary to carry out the provisions of this section.
(b)(1) The commissioner may, after notice and hearing, in connection with any violation of this section or the rules adopted thereunder:
(A) assess an administrative penalty not to exceed $1,000.00 for each violation; and
(B) order restitution to any injured consumer.
(2) A person who wilfully violates this section or the rules adopted thereunder shall be fined not more than $10,000.00 or imprisoned not more than two years, or both.
(3) A violation of this section or the rules adopted thereunder shall constitute an unfair and deceptive act and practice in commerce under section 2453 of Title 9, and shall be subject to the remedies and penalties provided for under sections 2458, 2459, 2460, and 2461 of Title 9.
(c) As used in this section, "person or financial institution" means any person engaged in the business of making loans or extending credit for consideration, and includes any bank, savings and loan association, credit union, bank subsidiary, licensed lender, mortgage broker, or sales finance company organized or regulated by this state, or under the laws of the United States, or under the laws of any other state or territory of the United States.
Sec. 3. ADOPTION OF RULES
The commissioner of banking, insurance, securities, and health care administration shall file with the legislative committee on administrative rules the rules required to implement the provisions of this act on or before January 1, 1999.