Virginia Payday Loan Laws

STATE CORPORATION COMMISSION
REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency which by the Constitution is expressly granted any of the powers of a court of record.
Title of Regulation: 10 VAC 5 200. Payday Lending (adding 10 VAC 5 200 10 through 10 VAC 5 200 60).
Statutory Authority: §§ 6.1-458 and 12.1-13 of the Code of Virginia.
Public Hearing Date: June 26, 2002 (if requested).
Public comments may be submitted until June 20, 2002.
Agency Contact: Susan Hancock, Deputy Commissioner, Bureau of Financial Institutions, State Corporation Commission, P.O. Box 640, Richmond, VA 23218, telephone (804) 371-9702, FAX (804) 371-9416, toll free 1-800-552-7945 or e-mail shancock@scc.state.va.us.
Summary:
The proposed regulation defines various terms used in the Payday Loan Act (§ 6.1-444 et seq. of the Code of Virginia) and regulation and sets forth requirements relating to required liquid assets, acquisition of interests in licenses, surety bond retention, and provision of notice of commencement of business. It also prescribes forms for a pamphlet and special notice that must be given to borrowers, and rules relating to prepayment of loans and timely licensee responses to requests for information and records.
AT RICHMOND, MAY 28, 2002
COMMONWEALTH OF VIRGINIA, ex rel.
STATE CORPORATION COMMISSION
CASE NO. BFI-2002-00012
Ex Parte: In re: proposed
payday lending regulations
ORDER TO TAKE NOTICE
WHEREAS, § 6.1-458 of the Payday Loan Act ("the Act"), §§ 6.1-444 et seq. of the Code of Virginia, authorizes the State Corporation Commission ("Commission") to adopt such regulations as it deems appropriate to effect the purposes of the Act; and
WHEREAS, the Bureau of Financial Institutions has proposed regulations that will define various terms used in the Act, clarify certain requirements and rules applicable to payday lending licensees and payday loans, and provide for the contents of a borrower rights and responsibilities pamphlet;
IT IS THEREFORE ORDERED THAT:
(1) The proposed payday lending regulations are appended hereto and made a part of the record herein.
(2) On or before June 20, 2002, any person desiring a hearing or to comment on the proposed regulations shall file a written request for hearing or written comments containing a reference to Case No. BFI-2002-00012, with the Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218.
(3) If a request for hearing is filed with the Clerk, a hearing will be held on June 26, 2002, at 10:00 a.m. in the Commission Courtroom, 1300 East Main Street, Second Floor, Richmond, Virginia.
(4) The proposed regulations shall be posted on the Commission's website at the following address:
http://www.state.va.us/scc/caseinfo/orders.htm
(5) An attested copy hereof, together with a copy of the proposed regulation, shall be sent to the Registrar of Regulations for publication in the Virginia Register.
AN ATTESTED COPY hereof shall be sent to the Commissioner of Financial Institutions.
CHAPTER 200.
PAYDAY LENDING.
10 VAC 5 200 10. Definitions.
A. The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:
"Act" means the Payday Loan Act (§ 6.1-444 et seq. of the Code of Virginia).
"Bureau" means the Bureau of Financial Institutions.
"Commission" means the State Corporation Commission.
"Duplicate original" for purposes of subdivision 2 of § 6.1-459 of the Code of Virginia and this chapter means an exact copy with signatures created by the same impression as the original, or an exact copy bearing an original signature.
"Good funds instrument" for purposes of clause 1(vi) of § 6.1-459 of the Code of Virginia and this chapter means a certified check, cashier's check, money order, or payment effected by use of a debit or credit card.
"Liquid assets" for purposes of the Act and this chapter means cash on hand and in depository institutions, money market funds, commercial paper, and treasury bills.
"Small," as used in the definition of "payday loan" in § 6.1-444 of the Code of Virginia, means $2,500 or less.
B. Other terms used in this chapter shall have the meaning set forth in § 6.1-444 of the Act.
10 VAC 5 200 20. Requirements for licensees; operating rules.
A. A licensee shall maintain unencumbered liquid assets per place of business in Virginia of at least $25,000 at all times. The bureau may require submission of proof of maintenance of such liquid assets at any time.
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. Each original license shall be prominently posted in each place of business of the licensee. In order for a licensee to receive a replacement or reissued license, a licensee shall pay a fee of $50 per place of business to the commission. Licenses will only be replaced or reissued if the licensee is in compliance with all laws and regulations applicable to the conduct of the licensee's business.
D. If a person has filed a bond with the bureau, as required by § 6.1-448 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; or
2. The person ceases engaging in business as a payday lender.
E. Upon becoming licensed, a licensee shall give written notice to the bureau of its commencement of business within 10 days thereafter.
10 VAC 5 200 30. Notice and payday lending pamphlet.
A. Before entering into a payday loan transaction, a licensee shall provide each prospective borrower with a pamphlet which explains the borrower's rights and responsibilities. This pamphlet shall use the exact language appearing in the "Payday Lending Pamphlet" set forth in 10 VAC 5 200 60. The form shall be printed or typed without alteration separate from all other papers or documents obtained by the licensee in type of size not less than that known as 10 point. The title of the pamphlet ("Payday Lending in the Commonwealth of Virginia, Borrower Rights and Responsibilities") and the headings for the individual sections of the pamphlet (e.g., "In General," "Notice from Lender," "Limitations on Security Interest," etc.) shall be in bold-face print or type.
B. Prior to disbursing loan funds to a borrower, a licensee shall provide each borrower with a printed notice which states the following: "WARNING: A payday loan is not intended to meet long-term financial needs. It is recommended that you use a payday loan only to meet occasional or unusual short-term cash needs."
1. The notice and acknowledgement shall be printed or typed on 8-1/2 x 11 paper without alteration, be separate from all other papers or documents obtained by the licensee, and be in type not less than that known as 24 point. The notice must also contain an acknowledgement stating the following: "I acknowledge that I have received a copy of this notice and the pamphlet entitled "Payday Lending in the Commonwealth of Virginia - Borrower Rights and Responsibilities."
2. The notice must be signed and dated by each borrower. A duplicate original of the acknowledged notice shall be kept in the separate loan file maintained with respect to the loan for the period specified in § 6.1-453 of the Code of Virginia.
10 VAC 5 200 40. Borrower prepayment.
A. In order to prepay a payday loan, a borrower shall only be required to pay the principal amount advanced as well as any accrued and unpaid fees.
B. For purposes of the Act and this chapter, interest and fees will be deemed "accrued" on a straight line basis over the term of a payday loan. Accordingly, a borrower choosing to prepay his payday loan shall only be responsible for the pro-rata portion of the total interest and fees based upon the number of days which have elapsed between the loan disbursement date and the date of repayment. (For example, if a $400 loan with fees of $60 and a term of 10 days is prepaid after five days, the borrower shall only be required to pay in cash or good funds instrument $430 ($400 + $30) to the licensee.)
10 VAC 5 200 50. Responding to requests from the Bureau of Financial Institutions.
A. When the bureau requests a written response, books, records, documentation, or other information from a licensee in connection with the bureau's investigation, enforcement, or examination of compliance with applicable laws, the licensee shall deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the bureau's request. If no time period is specified, a written response as well as any requested books, records, documentation, or information shall be delivered by the licensee to the bureau not later than 30 days from the date of such request. In determining the specified time period for responding to the bureau and when considering a request for an extension of time to respond, the bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation, or information, and such other factors as the bureau determines to be relevant under the circumstances.
B. Requests made by the bureau pursuant to subsection A are deemed to be in furtherance of the bureau's investigation and examination authority provided for in § 6.1-456 of the Code of Virginia. Failure to comply with subsection A may result in fines, license suspension, or license revocation.
10 VAC 5 200 60. Payday lending pamphlet text.
The required text of the payday lending pamphlet referred to in 10 VAC 5 200 30 is as follows:
PAYDAY LENDING IN THE COMMONWEALTH OF VIRGINIA
BORROWER RIGHTS AND RESPONSIBILITIES
Please take the time to carefully review the information contained in this pamphlet. It is designed to advise you of your right and responsibilities in connection with obtaining a payday loan in Virginia under the Payday Loan Act, §§ 6.1-444 et seq. of the Code of Virginia. If you have any questions about payday lending or want additional information, you may contact the Virginia State Corporation Commission's Bureau of Financial Institutions toll-free at (800) 552-7945 or on the internet at http://www.state.va.us/scc/division/banking. The Bureau of Financial Institutions has available a "Consumer Guide to Payday Lending" which may be viewed at this website or obtained by calling the toll-free telephone number listed above.
In General: You are responsible for evaluating whether a payday loan is right for you. Alternatives may includes less expensive short-term financing from another financial institution, family, or friends, a cash advance on a credit card, an account with overdraft protection, or a loan repayable over several months.
Notice from Lender: The lender is required to provide you with a clear and conspicuous printed notice advising you that a payday loan is not intended to meet long-term financial needs and that you should use a payday loan only to meet occasional or unusual short-term cash needs.
Limitations on Security Interest: The lender cannot require you to provide more than one check as security for any payday loan. The check cannot be post-dated. The lender cannot require you to provide any security for your payday loan other than a check payable to the lender.
$500 Maximum/7 Day Minimum Term: The lender cannot lend you more than $500. By law, the specified due date of your loan must be at least seven days after the date that money is advanced to you.
Fees, Charges, and Interest: The lender is permitted to charge you interest in the form of a fee not exceeding 15% of the amount of money advanced to you (i.e., $15 per $100 advanced). For example, if the lender advances you $500 (the maximum amount allowed), the lender may charge you up to $75 as a fee for obtaining the loan. No additional amounts may be directly or indirectly charged, contracted for, collected, received, or recovered.
You will receive your loan proceeds in the form of either cash or a check from the lender. The lender cannot charge you a fee for cashing their check. Similarly, a check casher affiliated with the lender cannot charge you a fee for cashing the lender's check.
Written Agreement: The lender must provide you with a written loan agreement, which must be signed by both you and an authorized representative of the lender. The loan agreement is a binding, legal document which requires you to repay the loan. Make sure you read the entire loan agreement carefully before signing and dating it. The lender must provide you with a duplicate original of the loan agreement at the time of your loan transaction.
Cannot Purchase Other Products & Services: You are prohibited from using any of the money from your payday loan to purchase any other product or service sold at the lender's business location.
Right to Cancel: You have the right to cancel your loan at any time prior to the close of business on the next business day following the date your loan is made by paying the lender the amount advanced to you in cash, certified check, cashier's check, or money order, or by using a credit or debit card. For example, if you obtain a loan on a Friday, you have until the close of business on the following Monday to cancel your loan (assuming that neither Friday nor Monday are federal holidays).
Partial Payments and Prepayments: You have the right to make partial payments (in increments of not less than $5.00) on your payday loan at any time without charge. You have the right to receive signed, dated receipts for each payment made along with a statement of the balance remaining on your payday loan. You also have the right to prepay your loan in full before its specified due date without penalty by paying the lender in cash, certified check, cashier's check, or money order, or by use of a credit or debit card, the amount of money advanced to you as well as any accrued and unpaid fees.
No Rollovers, Extensions, Etc.: The lender cannot refinance, renew, extend, or rollover your payday loan.
Failure to Repay: Pay back your loan! Know when your payment is due and be sure to repay your loan on time and in full. You are responsible for having sufficient funds in your checking account on the due date of your loan so that your check does not bounce if the lender deposits it in his account. If you do not repay your loan by the specified due date, the lender may begin accruing interest at a maximum rate of 6% per year.
The lender is prohibited from threatening or beginning criminal proceedings against you if a check you provide to the lender bounces.
If you cannot or do not repay the loan: (i) the lender is permitted to recover from you any fee charged to the lender (maximum of $25) as a result of your check being returned due to your account being closed by you or containing insufficient funds, or if you stopped payment on your check; and (ii) if the lender seeks and obtains judgment against you as a result of your returned check, the lender may obtain court costs and reasonable attorney's fees (total may not exceed $250) if such costs and fees are awarded by the court.
Legal Action Against Lender: You have the right to sue the lender if you suffer a loss as a result of the lender violating any provision of the Payday Loan Act. If you are successful in your lawsuit, you have the right to be reimbursed for reasonable attorney's fees, expert witness fees, and court costs you have paid in connection with the lawsuit. Losses suffered as the result of the lender's violation of the Payday Loan Act may also be pursued under the Virginia Consumer Protection Act (§§ 59-196 et seq. of the Code of Virginia).
Complaints and Contacting the Bureau of Financial Institutions: For assistance with any complaints you may have against a payday lender, please contact the Bureau of Financial Institutions toll-fee at (800) 552-7945 or on the internet at http://www.state.va.us/scc/division/banking.
VA.R. Doc. No. R02-190; Filed May 29, 2002, 9:53 a.m.

TITLE 10. FINANCE AND FINANCIAL INSTITUTIONS
STATE CORPORATION COMMISSION
REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.
Title of Regulation: 10 VAC 5-200. Payday Lending (adding 10 VAC 5-200-90).
Statutory Authority: §§ 6.1-457 and 12.1-13 of the Code of Virginia.
Public Hearing Date: Hearing will be scheduled if requested.
Public comments may be submitted until September 8, 2003.
Agency Contact: Gerald Fallen, Assistant Commissioner, State Corporation Commission, Bureau of Financial Institutions, P.O. Box 640, Richmond, VA 23218, telephone (804) 371-9699, FAX (804) 371-9416, or e-mail gfallen@scc.state.va.us.
Summary:
This regulation establishes the schedule for computing the annual fee to be paid by licensed payday lenders in accordance with § 6.1-457 of the Code of Virginia.
AT RICHMOND, AUGUST 6, 2003
COMMONWEALTH OF VIRGINIA, ex rel.
STATE CORPORATION COMMISSION
CASE NO. BFI-2003-00047
Ex Parte: In re annual fees
for licensed payday lenders
ORDER TO TAKE NOTICE
WHEREAS § 6.1-457 of the Code of Virginia requires licensed payday lenders to pay an annual fee calculated in accordance with a schedule set by the State Corporation Commission ("Commission"); and
WHEREAS the Commission, based upon information supplied by the Staff of the Bureau of Financial Institutions, now proposes to promulgate a regulation setting a schedule of annual fees which will promote the efficient and effective examination, supervision, and regulation of licensed payday lenders;
IT IS ORDERED THAT:
(1) The proposed regulation, entitled "Schedule of Annual Fees for the Examination, Supervision and Regulation of Payday Lenders", is appended hereto and made part of the record herein.
(2) On or before September 8, 2003, any person desiring to comment on the proposed regulation shall file written comments containing a reference to Case No. BFI-2003-00047 with the Clerk of the Commission, Document Control Center, P.O. Box 2118, Richmond, Virginia 23219.
(3) The proposed regulation shall be posted on the Commission's website at http://www.state.va.us/scc/caseinfo.htm.
(4) AN ATTESTED COPY hereof, together with a copy of the proposed regulation, shall be sent to the Registrar of Regulations for publication in the Virginia Register.
10 VAC 5-200-90. Schedule of annual fees for the examination, supervision, and regulation of payday lenders.
Pursuant to § 6.1-457 of the Code of Virginia, the commission sets the following schedule of annual fees to be paid by payday lenders required to be licensed under Chapter 18 (§ 6.1-444 et seq.) of Title 6.1 of the Code of Virginia. Such fees are to defray the costs of examination, supervision and regulation of such lenders by the Bureau of Financial Institutions. The fees are related to the actual costs of the bureau, to the number of offices operated by the lenders, to the volume of business of the lenders, and to other factors relating to their supervision and regulation.
The annual fee shall be $300 per office, authorized and opened, as of December 31, plus $.18 per payday loan made as of December 31.
The annual fee for each payday lender shall be computed on the basis of the number of offices operated as of December 31, and the number of payday loans as defined in § 6.1-444 of the Code of Virginia made during the calendar year preceding the year of assessment.
Fees shall be assessed on or before September 15 for the current calendar year. By law the fee must be paid on or before October 15.
The annual report, due March 25 each year, of each licensee provides the basis for its assessment, i.e., the number of offices and payday loans made. In cases where a license has been granted between January 1 and September 15 of the year of assessment, the licensee shall pay $150 per office, authorized and opened, as of September 15 of that year.
Fees prescribed and assessed by this schedule are apart from, and do not include, the reimbursement for expenses

TITLE 10. FINANCE AND FINANCIAL INSTITUTIONS
STATE CORPORATION COMMISSION
REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.
Title of Regulation: 10 VAC 5-200. Payday Lending (adding 10 VAC 5-200-100).
Statutory Authority: §§ 6.1-458 and 12.1-13 of the Code of Virginia.
Public Hearing Date: Hearing will be scheduled if requested.
Public comments may be submitted until January 9, 2004.
Agency Contact: E. J. Face, Jr., Commissioner, Bureau of Financial Institutions, State Corporation Commission, P.O. Box 640, Richmond, VA 23218, telephone (804) 371-9659, FAX (804) 371-9416, toll free (800) 552-7945, or e-mail jface@scc.state.va.us.
Summary:
The proposed amendments govern the conduct of any business other than payday lending where a licensed payday lending business is conducted.
AT RICHMOND, NOVEMBER 14, 2003
COMMONWEALTH OF VIRGINIA, ex rel.
STATE CORPORATION COMMISSION
CASE NO. BFI-2003-00054
Ex Parte: In re: proposed regulation
relating to conduct of other business
in payday lending offices
ORDER TO TAKE NOTICE
WHEREAS, § 6.1-458 of the Payday Loan Act ("Act"), § 6.1-444 et seq. of the Code of Virginia, authorizes the State Corporation Commission ("Commission") to adopt such regulations as it deems appropriate to effect the purposes of the Act;
WHEREAS, § 6.1-463 of the Act authorizes the Commission to determine what other businesses should be solicited or conducted at the office of a licensed payday lender; and
WHEREAS, the Bureau of Financial Institutions has proposed a regulation that will govern the conduct of business other than payday lending where a licensed payday lending business is conducted;
IT IS THEREFORE ORDERED THAT:
(1) The proposed payday lending regulation, entitled "Other business in payday lending offices," is appended hereto and made a part of the record herein.
(2) Comments or requests for hearing on the proposed regulation must be submitted in writing to Joel H. Peck, Clerk, State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218, on or before January 9, 2004. Requests for hearing shall state why a hearing is necessary and why such issues cannot be adequately addressed in written comments. All correspondence shall contain a reference to Case No. BFI-2003-00054. Interested persons desiring to submit comments or request a hearing electronically may do so by following the instructions available at the Commission's website:
(3) The proposed regulation shall be posted on the Commission's website at
http://www.state.va.us/scc/caseinfo.htm.
(4) AN ATTESTED COPY hereof, together with a copy of the proposed regulation, shall be sent to the Registrar of Regulations for publication in the Virginia Register.
AN ATTESTED COPY hereof shall be sent to the Commissioner of Financial Institutions, who forthwith shall mail a copy of this order, together with the proposed regulation, to all licensed payday lenders and other interested parties designated by the Bureau of Financial Institutions.
10 VAC 5-200-100. Other business in payday lending offices.
A. This section governs the conduct of any business other than payday lending where a licensed payday lending business is conducted.
B. Upon the filing of a written application and payment of the fee required by law, and subject to approval by the commission and the imposition of such conditions as the commission deems necessary and in the public interest, other business may be conducted in a location where a licensed payday lending business is conducted if the commission determines that such other business is financial in nature, except the selling of insurance or the enrolling of borrowers under group insurance policies. The commission shall in its discretion determine whether a proposed other business is "financial in nature," and shall not be obliged to consider the meaning of this term under federal law. Notwithstanding whether a proposed other business is financial in nature, the commission may approve, among other things, the following: (i) furnishing copy machine or facsimile services; (ii) selling stamps, prepaid telephone cards, photo IDs, or check cashing membership cards; (iii) selling lottery tickets, provided the seller is licensed to sell lottery tickets by the State Lottery Department; (iv) operating a cash dispensing only ATM; or (v) selling any other product or service with a price of less than $5.00.
C. Nothing contained herein shall apply to any nonfinancial other business conducted pursuant to any order of the commission entered on or before November 30, 2003. However, this subsection shall not be construed to authorize any person to begin engaging in such other business at payday lending locations where such other business was not conducted as of November 30, 2003.
D. Written evidence of commission approval of each other business conducted by any payday lender licensee shall be maintained at each location where such other business is conducted.
VA.R. Doc. No. R04-47; Filed November 17, 2003, 11:42 a.m.
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