1Amending the act of April 8, 1937 (P.L.262, No.66), entitled, as
2amended, "An act relating to consumer credit; requiring
3licenses from the Secretary of Banking; restricting licenses
4to domestic business corporations; fixing minimum capital
5requirements; conferring certain powers on the Secretary of
6Banking; limiting interest and other charges; providing
7certain exemptions; and imposing penalties," further
8providing for title, for definitions, for required license,
9for application for license, for license bond, for license
10fee, for organization and minimum capital, for issuance of
11license, for records required, for reports to the Secretary
12of Banking, for examinations by the secretary, for authority 
13of the secretary, for powers conferred on licensees, for
14licensee requirements and limitations, for statement of
15contract, for scope of act and for penalties.

16The General Assembly of the Commonwealth of Pennsylvania
17hereby enacts as follows:

18Section 1. The title of the act of April 8, 1937 (P.L.262,
19No.66), known as the Consumer Discount Company Act, amended June
2020, 1947 (P.L.665, No.288), is amended to read:

21AN ACT

22Relating to consumer credit; requiring licenses from the
23[Secretary of Banking] Department of Banking and Securities;
24restricting licenses to domestic business corporations;

1fixing minimum capital requirements; conferring certain
2powers on the [Secretary of Banking] Department of Banking 
3and Securities; limiting interest and other charges;
4providing certain exemptions; and imposing penalties.

5Section 2. The definition of "contract" in section 2 of the
6act is amended and the section is amended by adding a definition
7to read:

8Section 2. Definitions.--The following terms shall be
9construed in the act to have the following meanings, except in
10those instances where the context clearly indicates otherwise:

11"Department" means the Department of Banking and Securities
12of the Commonwealth.

13* * *

14"Contract" means a promissory or judgment note, bill of
15exchange, judgment, mortgage, conditional sales, contract, lease
16or bailment by which the lessee or bailee has the option of
17becoming or is bound to become the owner of real or personal
18property upon full compliance with the terms of the agreement,
19or any other form of negotiable or nonnegotiable instrument
20evidencing an agreement to pay a sum certain in money at a fixed
21or determinable time, of not less than ten (10) business days,
22either by a single payment or by stated installments.

23* * *

24Section 3. Clauses A and C of section 3 of the act, amended 
25December 12, 1994 (P.L.1060, No.144) and July 2, 1996 (P.L.490, 
26No.80), are amended to read:

27Section 3. License Required.--A. On and after the effective
28date of this act, no person shall engage or continue to engage
29in this Commonwealth, either as principal, employe, agent or
30broker, in the business of negotiating or making loans or

1advances of money on credit, in the amount or value of twenty-
2five thousand dollars ($25,000) or less, and charge, collect,
3contract for or receive interest, discount, bonus, fees, fines,
4commissions, charges, or other considerations which aggregate in
5excess of the interest that the lender would otherwise be
6permitted by law to charge if not licensed under this act on the
7amount actually loaned or advanced, or on the unpaid principal
8balances when the contract is payable by stated installments
9except a domestic business corporation organized under or
10existing by virtue of the Business Corporation Law of this
11Commonwealth, after first obtaining a license from the
12[Secretary of Banking of the Commonwealth of Pennsylvania]
13department in accordance with the provisions of this act.

14* * *

15C. Notwithstanding subsection A, the [Secretary of Banking] 
16department may license a branch office in another state provided 
17the licensee maintains a place of business in this Commonwealth 
18which is licensed under the provisions of this act.

19Section 4. Section 4 of the act, amended July 2, 1996
20(P.L.490, No.80), is amended to read:

21Section 4. Application for License.--The application for
22such license shall be in writing, under oath and in the form
23prescribed by the [Secretary of Banking] department. The
24application shall contain the corporate title of the applicant
25and any registered or otherwise qualified name to be used as a
26fictitious business name; the street and number, if any, city,
27borough, township or municipality, and county where the business
28is to be conducted; date of incorporation; name and residence
29address of all directors; and such other information as the
30[Secretary of Banking] department may require.

1A separate application on the prescribed form shall be filed
2for each place of business conducted by a licensee.

3Section 5. Section 5 of the act, amended July 30, 1963 
4(P.L.335, No.183), is amended to read:

5Section 5. License Bond.--A bond in the penal sum of five
6thousand dollars ($5,000) shall accompany every application for
7license. Such bond shall be executed by a surety company
8authorized by the laws of Pennsylvania to transact business
9within this Commonwealth. The bond shall be renewed and refiled
10annually not later than June first for the first three
11consecutive years from the date on which the licensee was first
12licensed. The bond shall be executed to the Commonwealth of
13Pennsylvania and shall be for the use of the Commonwealth and
14for any person or persons who may have a cause of action against
15the licensee. The condition of the bond shall be that the
16licensee will comply with and abide by all the provisions of
17this act and all the rules and regulations of the [Secretary of
18Banking] department, lawfully issued in accordance with this act
19and that the licensee will pay to the Commonwealth, to the
20[Secretary of Banking] department, or to any person or persons,
21any and all monies that may come due to the Commonwealth, to the
22[Secretary of Banking] department, or to any person or persons,
23from the said licensee under and by virtue of the provisions of
24this act. If any person shall be aggrieved by the misconduct of
25a licensee and shall recover judgment against such licensee,
26such person may, on any execution issued under such judgment,
27maintain an action upon the bond of the licensee in any court
28having jurisdiction of the amount claimed, provided the
29[Secretary of Banking] department assents thereto.

30A separate bond shall be provided for each place of business

1conducted by a licensee. After the licensee has been
2continuously licensed for three (3) consecutive years, such bond
3shall not be renewed or refiled unless the [Secretary of
4Banking] department has reason to believe that such bond is
5necessary and notifies the licensee in writing on or before May
61 that such bond is required.

7Section 6. Section 6 of the act, amended December 30, 1970 
8(P.L.959, No.301), is amended to read:

9Section 6. License Fee.--A license fee of two hundred
10dollars ($200) shall accompany each application for license
11under this act. Each license shall remain in full force and
12effect until surrendered, revoked or suspended as herein
13provided. The license fee of two hundred dollars ($200) shall be
14paid annually on or before June first. No abatement of the said
15license fee shall be made if the license is issued for less than
16one year. An additional license fee of two hundred dollars
17($200) shall be paid for each place of business conducted by a
18licensee.

19All license fees and fines received by the [Secretary of
20Banking] department under this act shall be deposited in the
21State Treasury to the credit of the Banking Department Fund for
22the use of the [Secretary of Banking] department in
23administering this act.

24Section 7. Section 7 of the act, amended December 9, 1982 
25(P.L.1072, No.249), is amended to read:

26Section 7. Organization; Minimum Capital.--A license under
27the provisions of this act shall be issued only to a corporation
28organized under the Business Corporation Law of the Commonwealth
29of Pennsylvania. Such corporation shall be incorporated with a
30minimum capitalization of seventy-five thousand dollars

1($75,000). At the time of applying for a license under this act,
2the minimum paid in capital shall be seventy-five thousand
3dollars ($75,000). The minimum capitalization required shall be
4increased by twenty-five thousand dollars ($25,000) for each
5additional place of business licensed under this act and no
6license for such additional place of business shall be granted
7until the minimum capitalization requirements are met provided,
8however, in the event that such place of business is to be
9operated by an affiliate or subsidiary corporation, whether
10newly organized or otherwise related to the licensee by virtue
11of common ownership or management the minimum capitalization for
12such affiliate or subsidiary shall be only twenty-five thousand
13dollars ($25,000), and the minimum capitalization of the
14licensee need not be increased. The minimum capitalization shall
15be maintained as permanent capital which shall not be
16distributed to stockholders or be purchased by a licensee
17without the prior written approval of the [Secretary of Banking]
18department. Corporations holding valid licenses on the effective
19date of this amendment shall meet the minimum capitalization
20requirements listed above within two years after the effective
21date of this amendment.

22Section 8. Section 8 of the act, amended December 12, 1994 
23(P.L.1060, No.144), is amended to read:

24Section 8. Issuance of License.--The [Secretary of Banking,
25if he] department, if it approves the application for license,
26shall issue to each applicant a certificate showing the name of
27the corporation and address of the place of business. Such
28license shall be posted in a conspicuous place in the office of
29the licensee. A license may not be transferred or assigned. A
30licensee may, upon prior written notification to the [Secretary

1of Banking] department, change its place of business to another
2location within the same city, town, borough or township. A
3licensee desiring to change its place of business to other than
4the same city, town, borough or township shall give written
5notice thereof to the [Secretary of Banking] department and
6return the license certificate to the [Secretary of Banking]
7department for amendment. The [Secretary of Banking, if he]
8department, if it approves the removal of the place of business,
9shall endorse on the license [his] its approval of the change of
10address and the date thereof, which shall thereafter be the
11authority for the operation of such business under such license
12at the new location. Except as provided herein, no change in the
13place of business of a licensee to a location outside the
14original municipality shall be permitted: Provided, however, A
15licensee may obtain a new license for a place of business in a
16new location in a municipality other than that in which the
17original place of business was located. Only one place of
18business may be operated under the same license.

19A licensee may operate more than one place of business, in
20Pennsylvania or another state, by obtaining a separate license
21by filing an application for each additional place of business,
22and by furnishing a bond for each additional place of business
23and by paying the license fee provided by law for each
24additional place of business.

25No license shall be required for any place of business at
26which payments on contracts are received and processed, records
27are maintained or servicing of contracts is performed. Any such
28place of business may be located outside of this Commonwealth,
29and the licensee shall provide the [Secretary of Banking]
30department with the address of such place of business. The

1licensee shall maintain at its principal place of business
2within this Commonwealth or at such place within or outside this
3Commonwealth, subject to the prior written approval of the
4[Secretary of Banking] department or designee, either the
5original or a copy of such books, accounts, records and
6documents, or electronic or other similar access thereto, of the
7business conducted under the license as may be prescribed by the
8department to enable it to determine whether the business of the
9licensee is being conducted in accordance with the provisions of
10this act and the orders, rules and regulations issued under this
11act.

12Section 9. Sections 9 and 10 of the act are amended to read:

13Section 9. Records Required.--Licensees operating under the
14provisions of this act shall maintain adequate and complete
15records of all business transacted, containing such information
16and in such form as shall be prescribed by the [Secretary of
17Banking] department by general rule or regulation. The records
18of licensees shall be maintained in the English language. The
19records of licensees shall be retained for a period of two years
20after the date of final payment on any contract.

21Section 10. Reports to the [Secretary of Banking]
22department.--Licensees operating under the provisions of this
23act shall annually, on or before the first day of March, file a
24report with the [Secretary of Banking] department, giving such
25relevant information concerning the business and operations
26during the previous calendar year as the [Secretary of Banking]
27department may require. Such report shall be made under oath and
28shall be in the form prescribed by the [Secretary of Banking]
29department. A separate report shall be filed for each place of
30business maintained by a licensee. The [Secretary of Banking]

1department may at any time upon thirty (30) days notice require
2a licensee to file special reports in addition to the annual
3report. For failure to file such reports within the time
4specified, the licensee shall pay to the [Secretary of Banking]
5department a penalty of ten dollars ($10) for each calendar day
6which such report is overdue, but the [Secretary of Banking]
7department may, in [his] its discretion, relieve a licensee of
8any portion or of all such fine. Such fine, which has not been
9paid by the licensee and for the payment of which the licensee
10has not been relieved, may be collected by the [Secretary of
11Banking] department from the bonding company which has executed
12the bond required under this act, and the [Secretary of Banking]
13department may maintain an action for the recovery of such fine
14in any court of competent jurisdiction.

15Section 10. Section 11 of the act, amended December 12, 1994 
16(P.L.1060, No.144), is amended to read:

17Section 11. Examinations by the [Secretary of Banking]
18department.--The [Secretary of Banking] department, and any
19person designated by [him] it for that purpose, shall at least
20once every two calendar years investigate the business and
21affairs and examine the books, accounts, papers, records,
22documents, and files therein of every licensee and of every
23person who shall be engaged in business contemplated by this
24act, whether such person shall act or claim to act as principal,
25agent or broker, or under or without the authority of this act.
26For this purpose the [Secretary of Banking] department shall
27have access during normal business hours to the offices and
28places of business, books, accounts, papers, records, documents,
29files, safes and vaults of all such persons. A person, who is
30not licensed under this act, shall be presumed to be engaged in

1business contemplated by this act if he advertises or solicits
2business as principal, agent or broker for which a license is
3required by the provisions of this act, and the [Secretary of
4Banking] department, and any person designated by [him] it for
5that purpose, is in such cases authorized to examine the books,
6accounts, papers, records, documents, files, safes and vaults of
7such persons for the purpose of discovering violations of this
8act.

9The cost of every examination of the business of a licensee
10by the [Secretary of Banking] department, or [his] its duly
11authorized representative, shall be paid by the licensee so
12examined, and the [Secretary of Banking] department may collect
13such costs from the licensee or from the surety company which
14has executed the bond required under this act, and [he] it may
15maintain an action for the recovery of such costs in any court
16of competent jurisdiction.

17Section 11. Section 12 of the act, amended December 17, 1959 
18(P.L.1890, No.691) and repealed in part April 28, 1978 (P.L.202, 
19No.53), is amended to read:

20Section 12. Authority of the [Secretary of Banking]
21department.--The [Secretary of Banking] department shall have
22the power to reject any application for license if [he] it is
23satisfied that the financial responsibility, experience,
24character and general fitness of the person or persons shown on
25the application for license as officers and directors of the
26applicant corporation are not such as to command the confidence
27of the community and to warrant the conclusion that the business
28will be operated honestly, fairly, and within the intent and
29purpose of this act and in accordance with the general laws of
30this Commonwealth: Provided, however, That no license may be

1issued, if any director, officer, employe, or agent of the
2applicant corporation has been convicted under this act for
3engaging in business contemplated by this act without having
4obtained a license under this act, or if any director, officer,
5employe, or agent of the applicant corporation was a director,
6officer, employe, or agent of a corporation which had been
7convicted of a second offense violation of this act and had its
8license revoked. Whenever the [Secretary of Banking] department
9rejects an application for a license, [he] it shall furnish the
10applicant with a written specification of the reason or reasons
11therefor. The failure of the [Secretary of Banking] department
12to act upon an application within three (3) months of receipt
13thereof shall be deemed to be an approval of such application.

14The [Secretary of Banking] department, upon thirty (30) days'
15written notice to the licensee, forwarded by registered mail to
16the place of business of such licensee, as shown on the
17application for license, stating the contemplated action and in
18general the grounds therefor, may revoke any license if the
19licensee shall violate any provision of this act; or if the
20licensee shall violate any rule or regulation issued by the
21[Secretary of Banking] department under and within the authority
22of this act; or if a licensee shall fail to comply with any
23demand, rule or regulation, lawfully made by the [Secretary of
24Banking] department under and within the authority of this act;
25or if the licensee shall refuse to permit the [Secretary of
26Banking] department, or [his] its designated representative, to
27make examinations authorized by this act; or if the licensee
28shall fail to pay the cost of examination by the [Secretary of
29Banking] department, or [his] its duly authorized
30representative; or if the licensee has failed to maintain in

1effect the bond required under the provisions of this act; or if
2the licensee has failed to maintain records prescribed by the
3[Secretary of Banking] department; or if the licensee has failed
4to file the annual report to the [Secretary of Banking]
5department within the time stipulated in this act; or if the
6licensee, having failed to file the annual report within the
7stipulated time, has not paid the fine required under this act;
8or if any fact or condition exists or is discovered, which, if
9it had existed or had been discovered at the time of filing of
10the application for such license, would have warranted the
11[Secretary of Banking] department in refusing to issue such
12license. Whenever such license is revoked, the [Secretary of
13Banking] department shall not issue another license to the
14licensee until the expiration of at least one year from the date
15of revocation of said license and not at all if such licensee,
16or any officer, director, employe or agent thereof, shall have
17been convicted for a second offense violation of this act.

18The [Secretary of Banking] department is hereby authorized
19and empowered to issue rules and regulations governing the
20records to be maintained by licensees, the statements of
21contract to be given consumers, the receipts for payment of
22contracts to be given consumers, the foreclosure and replevin of
23real or personal property upon default, and the procedure for
24sale of real or personal property upon default, and [he] it is
25further authorized and empowered to issue such general rules and
26regulations as may be necessary for the protection of the
27public, for insuring the proper conduct of the business
28contemplated by this act, and for the enforcement of this act,
29which rules and regulations shall have the force and effect of
30law.

1The [Secretary of Banking] department shall be authorized to
2require the attendance and testimony of witnesses and the
3production of any books, accounts, papers, records, documents,
4and files relating to such business which the [Secretary of
5Banking] department has authority by this act to investigate,
6and, for this purpose, the [Secretary of Banking] department may
7sign subpoenas, administer oaths and affirmations, examine
8witnesses and receive evidence. In case of disobedience of any
9subpoena or the contumacy of any witness appearing before the
10[Secretary of Banking] department, the [Secretary of Banking]
11department may invoke the aid of the courts, and such court
12shall thereupon issue an order requiring the person subpoenaed
13to obey the subpoena or to give evidence or to produce books,
14accounts, papers, records, documents, and files relative to the
15matter in question. Any failure to obey such order of the court
16may be punished by such court as a contempt thereof.

17Section 12. Introductory paragraph and subclause (2) of
18clause Q of section 13 and clause I of section 14 of the act,
19amended or added December 21, 1998 (P.L.1287, No.167), are
20amended to read:

21Section 13. Powers Conferred on Licensees.--In addition to
22the general powers conferred upon a corporation by the Business
23Corporation Law of this Commonwealth, a corporation licensed
24under this act shall have power and authority:

25* * *

26Q. To conduct the business regulated by this act in any
27licensed place of business where another business is conducted
28by the licensee or another person unless the [Secretary of
29Banking] department shall find, after a hearing, the conduct of
30the other business has concealed evasions of this act and shall

1order such person to desist from such conduct and to offer other
2services and products for voluntary purchase subject to the
3provisions of this clause.

4* * *

5(2) A licensee may offer the types of services and products
6described in this subclause and may conduct or permit others to
7conduct the types of business described in this subclause within
8the same office, room or place of business where the licensee
9conducts its licensed business without prior approval by the
10[Secretary of Banking] department.

11* * *

12Section 14. Licensee Requirements and Limitations.--* * *

13I. A licensee may sell contracts to and buy contracts from
14another licensee upon giving prior written notification to the
15[Secretary of Banking] department. The written notification
16shall state the name and address of the licensee to whom or from
17whom the contracts are being sold or purchased, the type of loan
18and number of contracts in the transaction and their aggregate
19principal balances. A licensee may not sell contracts to a
20person or corporation not holding a license under this act
21without the prior written approval of the [Secretary of Banking]
22department.

23Section 13. Section 15 of the act is amended to read:

24Section 15. Statement of Contract.--A licensee shall furnish
25to the consumer a statement setting forth the type of contract,
26description of the security on the contract, the date of the
27contract, the total amount due on the contract, the date upon
28which the contract is due or the dates upon which the
29installment payments are payable, the amount of such installment
30payments, and a statement indicating the basis for computing

1default charges. No default charges may be collected if the
2statement of contract does not give due notice of the licensee's
3intention to collect default charges. This statement of the
4contract shall contain such additional information as the
5[Secretary of Banking] department may require.

6Section 14. Section 17 of the act, amended May 23, 1947 
7(P.L.296, No.128), is amended to read:

8Section 17. Scope of Act.--This act shall not affect any
9existing laws, special or general, authorizing a charge for the
10loan of money in excess of interest at the legal rate. This act
11shall not apply to any person, persons, partnership, association
12or corporation operating under the laws related to banking
13institutions, building and loan associations, credit unions or
14licensed under the Small Loans Act, approved June seventeen, one
15thousand nine hundred fifteen, and supplements or amendments, or
16licensed by the [Secretary of Banking of the Commonwealth of
17Pennsylvania] department under the provisions of any other
18statute. This act shall not apply to any bona fide sale of
19personal property by a person regularly engaged in the sale of
20such personal property, wherein the purchaser may pay any part
21or all of the purchase price in stated installments, nor to any
22such bona fide sale under a conditional sale contract, lease or
23bailment, wherein the purchaser, lessee or bailee has the option
24of becoming, or is bound to become, the owner of the property
25upon full compliance with the terms of the agreement. This act
26shall not apply to nonprofit corporations organized under the
27laws of the Commonwealth of Pennsylvania having memberships
28consisting exclusively of duly licensed physicians, surgeons and
29dentists, operated exclusively for and by their members, and
30engaged in, among other activities, the financing of personal

1obligations arising from the rendering of professional services
2by the members of such nonprofit corporations, which are limited
3strictly to medical, surgical, dental, operative, diagnostic and
4treatment services, or nursing and hospital care.

5Section 15. Section 18 of the act, amended July 2, 1996 
6(P.L.490, No.80), is amended to read:

7Section 18. Penalties.--Any person who has not obtained a
8license from the [Secretary of Banking of the Commonwealth of
9Pennsylvania] department in accordance with the provisions of
10this act, and who shall engage in the business of negotiating or
11making loans or advances of money or credit, in the amount or
12value of twenty-five thousand dollars ($25,000) or less, and
13charge, collect, contract for or receive interest, discount,
14bonus, fees, fines, commissions, charges or other considerations
15which aggregate in excess of the interest that the lender would
16otherwise be permitted by law to charge if not licensed under
17this act on the amount actually loaned or advanced, or on the
18unpaid principal balances when the contract is payable by stated
19installments, shall be guilty of a misdemeanor, upon conviction
20thereof shall be sentenced to pay a fine of not less than five
21hundred dollars ($500) or more than five thousand dollars
22($5,000), and/or suffer imprisonment not less than six (6)
23months nor more than three (3) years, in the discretion of the
24court.

25Except as the result of an accidental bona fide error, a
26corporation licensed under the provisions of this act or any
27director, officer, employe or agent who shall violate any
28provision of this act or shall direct or consent to such
29violations, shall be guilty of a misdemeanor, and, upon
30conviction thereof, shall be sentenced to pay a fine of not more

1than two thousand dollars ($2,000) for the first offense, and
2for each subsequent offense a like fine, and/or suffer
3imprisonment not to exceed one year, in the discretion of the
4court.

5The payment of twenty-five thousand dollars ($25,000) or
6less, in money, credit, goods or things in action as
7consideration for any sale or assignment of, or order for, the
8payment of wages, salary, commissions or other compensation for
9services, whether earned or to be earned, shall, for the
10purposes of regulation under this act, be deemed a loan secured
11by such assignment, and the amount by which such assigned
12compensation exceeds the amount of such consideration actually
13paid shall for the purpose of regulation under this act, be
14deemed interest or charges upon such loan from the date of such
15payment to the date such compensation is payable. Such
16transactions shall be governed by and subject to the provisions
17of this act.

18The payment of twenty-five thousand dollars ($25,000) or
19less, in money, credit, goods or things in action as
20consideration for any sale of real or personal property which is
21made on condition or agreement, expressed or implied, that such
22property be sold back at a greater price shall, for the purpose
23of this act, be deemed to be a loan secured by such property,
24and the amount by which the repurchase price exceeds such
25original purchase price actually paid shall be deemed interest
26or charges upon such loan from the date such original payment is
27made until the date such repurchase price is paid. Such
28transaction shall be governed by and subject to the provisions
29of this act.

30When real or personal property is pledged as security on a

1loan of twenty-five thousand dollars ($25,000) or less, and the
2lender requires the borrower to pay for insurance thereon, such
3charge for insurance shall be construed as interest under this
4act when the lender has failed to have such insurance written by
5an insurance company legally authorized to conduct business in
6Pennsylvania. When the amount charged for such insurance is in
7excess of the standard cost of similar insurance in other
8insurance companies legally authorized to conduct business in
9Pennsylvania, the excess shall be construed as interest under
10this act.

11If a contract is made in good faith in conformity with an
12interpretation of this act by the appellate courts of the
13Commonwealth or in compliance with a rule or regulation
14promulgated by the [Secretary of Banking] department, no
15provision of this section imposing any penalty shall apply,
16notwithstanding that after such contract is made, such
17interpretation, rule or regulation is amended, rescinded or
18determined by judicial or other authority to be invalid for any
19reason.

20Section 16. The amendment of the definition of "contract" in
21section 2 of the act shall apply to contracts entered into or
22renewed on or after the effective date of this section.

23Section 17. This act shall take effect in 60 days.