PRINTER'S NO. 2348
No. 1808 Session of 2003
INTRODUCED BY ROSS, BELFANTI, CAPPELLI, CREIGHTON, FRANKEL, FREEMAN, GEIST, GILLESPIE, HARHAI, HARRIS, HERSHEY, KELLER, LEWIS, R. MILLER, MYERS, NICKOL, REICHLEY, SATHER, R. STEVENSON, T. STEVENSON, E. Z. TAYLOR, TIGUE AND YOUNGBLOOD, JULY 2, 2003
REFERRED TO COMMITTEE ON COMMERCE, JULY 2, 2003
AN ACT 1 Reducing or eliminating the most serious problems associated 2 with short-term loans; creating an avenue for emergency 3 short-term loans by incorporating significant consumer 4 protections; preventing the use or threat to use the criminal 5 courts to collect short-term loans; and providing for 6 licensure of short-term lenders and short-term brokers by the 7 Department of Banking and for examination and regulation of 8 the short-term loan industry by the Department of Banking. 9 The General Assembly of the Commonwealth of Pennsylvania 10 hereby enacts as follows: 11 CHAPTER 1 12 PRELIMINARY PROVISIONS 13 Section 101. Short title. 14 This act shall be known and may be cited as the Short-Term 15 Loan Act. 16 Section 102. Definitions. 17 The following words and phrases when used in this act shall 18 have the meanings given to them in this section unless the 19 context clearly indicates otherwise:
1 "Check." A check as that term is defined in 13 Pa.C.S. § 2 3104(f) (relating to negotiable instrument) which is drawn on a 3 financial institution and is to be payable on demand at maturity 4 of the short-term loan. 5 "Consumer." An individual who, singly or jointly with 6 another individual, enters into a short-term loan. 7 "Department." The Department of Banking of the Commonwealth. 8 "Short-term broker." A person who markets, services or 9 arranges, for a third party, a short-term loan for consumers for 10 a fee, finance charge or other consideration. 11 "Short-term broker licensee." A person licensed by the 12 Department of Banking to market, service or arrange, for a third 13 party, a short-term loan for consumers for a fee, finance charge 14 or other consideration. 15 "Short-term lender." A person who negotiates, arranges, 16 places or originates a short-term loan for consumers for a fee, 17 finance charge or other consideration. 18 "Short-term lender licensee." A person licensed by the 19 Department of Banking to negotiate, arrange, place or originate 20 a short-term loan for consumers for a fee, finance charge or 21 other consideration. 22 "Short-term loan." A loan to a consumer in principal amount 23 of $1,000 or less for a minimum of seven days to a maximum of 30 24 days by a lender that, for a fee, finance charge or other 25 consideration: 26 (1) Accepts a dated check from the consumer. 27 (2) Agrees to hold the check for a period of time prior 28 to negotiation or deposit of the check. 29 (3) Pays to the consumer or credits to the consumer's 30 account the amount of the check, less finance charges 20030H1808B2348 - 2 -
1 permitted under section 203. 2 CHAPTER 2 3 NATURE AND EFFECT OF SHORT-TERM LOANS 4 Section 201. License requirements and exemptions. 5 No person shall act as a short-term lender or short-term 6 broker in this Commonwealth by extending or negotiating 7 electronically or by other means a short-term loan for a person 8 who resides in this Commonwealth without a license under this 9 act. 10 Section 202. Written agreement requirements. 11 Each short-term loan transaction and renewal shall be 12 documented by a written short-term loan agreement and, if there 13 is a renewal, by an amendment or a separate written agreement, 14 signed by both the lender and consumer. The agreement shall 15 contain: 16 (1) The name of the consumer. 17 (2) The transaction date. 18 (3) The amount of the check. 19 (4) A statement of the total amount of finance charges 20 charged, expressed both as a dollar amount and an annual 21 percentage rate. 22 (5) A date, not more than 30 days after the loan 23 transaction date, upon which the check may be deposited or 24 negotiated. 25 (6) The name, address, telephone number of the short- 26 term loan lender licensee and the name and title of the 27 individual employee who signs the agreement on behalf of the 28 licensee. 29 (7) An itemization of the fees and interest charges to 30 be paid by the consumer. 20030H1808B2348 - 3 -
1 (8) Disclosures required by the Truth in Lending Act 2 (Public Law 90-321, 15 U.S.C. § 77aaa et seq.), regardless of 3 whether the Truth in Lending Act applies to the particular 4 short-term loan transaction. 5 (9) A clear description of the consumer's payment 6 obligations under the loan. 7 (10) Disclosure that consumers may not obtain renewal 8 for this loan more than one time for an additional period of 9 not less than seven days nor more than 30 days of time 10 mutually agreed to by the consumer and lender or broker. 11 (11) Disclosure in boldface print indicating the maximum 12 loan amount and finance charge. 13 (12) Disclosure in boldface print indicating the 14 prohibition on multiple loans. 15 (13) Disclosure in boldface print indicating the 16 customer's right of rescission. 17 (14) Such other information the department shall 18 require. 19 Section 203. Authorized finance charge. 20 A lender may charge a finance charge for each short-term loan 21 that may not exceed $0.175 per $1 of the amount advanced. A 22 lender shall prorate any charge, based upon the maximum charge 23 of $0.175 per $1 of the amount advanced. The charge shall be 24 deemed fully earned as of the date of the transaction unless the 25 consumer rescinds the loan under section 204(b). The lender may 26 charge only charges authorized in this act in connection with a 27 short-term loan. 28 Section 204. Maximum loan amount. 29 (a) General rule.--A lender may not lend an amount greater 30 than $500 in a single transaction to any consumer. A licensee 20030H1808B2348 - 4 -
1 may not make a loan to a consumer if the aggregate value, as 2 verified through section 205, of outstanding loans exceeds 3 $1,000. 4 (b) Right to rescind.-- 5 (1) A consumer may rescind a short-term loan before the 6 lender's close of business on the business day immediately 7 following the day on which the short-term loan was made. 8 (2) In order to rescind a short-term loan, a consumer 9 shall notify the lender of the consumer's desire to rescind 10 the loan and return to the lender, at the time of giving 11 notice, cash in the amount of the principal of the short-term 12 loan. 13 (3) No finance charge or other charge or fee may be 14 charged or collected by the lender when a loan is rescinded. 15 (4) The lender shall return to the consumer any check 16 given to the lender in connection with the loan. 17 Section 205. Prohibition on multiple loans exceeding $1,000. 18 (a) General rule.--A lender shall not knowingly make a 19 short-term loan or renewal of a loan if the consumer has another 20 short-term loan with the licensee, its affiliate or any other 21 licensee and the aggregate amount of all outstanding loans 22 exceeds the maximum loan amount allowed under section 204(a). 23 (b) Verification.--A consumer shall verify in writing at the 24 time of entering into a short-term loan transaction that the 25 consumer does not have short-term loans outstanding which exceed 26 the maximum loan allowed under section 204(a). A licensee shall 27 confirm the accuracy of the verification by: 28 (1) A query of the licensee's own records; and 29 (2) A query of a subprime credit reporting service. 30 (c) Procedure to determine outstanding loans.-- 20030H1808B2348 - 5 -
1 (1) Within 90 days after the effective date of this act, 2 licensees shall subscribe to a subprime credit reporting 3 service certified by the department which has the capability 4 of verifying the number of loans and the amount of loans a 5 consumer has outstanding with any licensee licensed under 6 this act. Within 30 days after the effective date of this 7 act, the department shall issue a "Request for Proposal" from 8 subprime credit reporting services capable of verifying the 9 information required to enforce section 205. Within 45 days 10 after the effective date of this act, the department shall 11 designate a service which is capable of providing 12 verification to licensees. 13 (2) Licensees shall report to the subprime credit 14 reporting service information necessary for the subprime 15 credit reporting service to verify the number of loans and 16 the amount of loans a consumer has outstanding with any 17 licensee licensed under this act. 18 Section 206. Renewal of short-term loans. 19 (a) General rule.--A short-term loan may not be renewed more 20 than once. The minimum term of renewal shall be seven days and 21 the maximum term of the renewal shall be 30 days. After renewal, 22 the consumer must pay the debt in cash or its equivalent. If the 23 consumer fails to pay the debt, the lender may deposit the 24 consumer's check. 25 (b) Additional finance charge limitation.--Upon renewal of a 26 short-term loan, the lender may assess additional finance 27 charges not to exceed $0.175 per $1 of the amount advanced. A 28 lender shall prorate any charge, based upon the maximum charge 29 of $0.175 per $1 of the amount advanced. 30 (c) Completed transaction.--A transaction is completed when 20030H1808B2348 - 6 -
1 the lender receives payment or the consumer redeems the check by 2 paying the full amount of the check to the holder. When the 3 consumer has completed the short-term loan transaction, the 4 consumer may enter into a new short-term loan agreement with the 5 short-term lender licensee. 6 Section 207. Form of loan proceeds. 7 (a) General rule.--A lender licensee may pay the proceeds 8 from a short-term loan to the consumer in the form of an 9 immediately and locally cashable check, money order or cash. 10 (b) Prohibition.--A lender licensee may not charge the 11 consumer an additional finance charge or fee for cashing the 12 lender licensee's check. 13 Section 208. Endorsement of check. 14 A lender licensee may not negotiate or present a check for 15 payment unless the instrument is endorsed with the actual 16 business name of the lender. 17 Section 209. Redemption of check. 18 Prior to the lender licensee's negotiating or presenting the 19 check, the consumer shall have the right to redeem any check 20 held by a lender as a result of a short-term loan if the 21 consumer pays the full amount of the check to the lender 22 licensee. The redemption may be in connection with a rescission 23 under section 204, minus the finance charge. 24 Section 210. Authorized dishonored check charge. 25 (a) General rule.--If a consumer's check held by a lender 26 licensee as a result of a short-term loan is returned to the 27 lender licensee from a payor financial institution due to 28 insufficient funds, a closed account or a stop-payment order, 29 the lender licensee: 30 (1) Shall have the right to exercise all civil means 20030H1808B2348 - 7 -
1 authorized by law to collect the face value of the check. 2 (2) May contract for and collect from the consumer a 3 returned check charge not to exceed $25 plus court costs 4 consistent with 42 Pa.C.S. § 8304 (relating to damages in 5 actions on bad checks). 6 (3) May not collect any other fees as a result of the 7 default. 8 (b) When charge not allowed.--A returned check charge shall 9 not be allowed: 10 (1) if the loan proceeds check from the lender licensee 11 is dishonored by the financial institution; 12 (2) if the consumer places a stop-payment order due to 13 forgery or theft; or 14 (3) if the cash loan proceeds are counterfeit. 15 Section 211. Posting of charges. 16 A lender licensee offering a short-term loan shall post in 17 large type in plain view of the public at any place of business 18 where short-term loans are made a notice of the finance charges 19 and any related charges such as dishonored check charges imposed 20 for short-term loans. 21 Section 212. Notice on assignment or sale of checks. 22 (a) General rule.--Prior to sale or assignment of checks 23 held by the lender licensee as a result of a short-term loan, 24 the lender licensee shall place a notice on the sale or 25 assignment check in at least ten-point type to read: This is a 26 short-term loan instrument. 27 (b) Payoff of loan.--The consumer may pay off the short-term 28 loan at the office of the original lender licensee. The lender 29 licensee shall inform the consumer in writing immediately of the 30 name, address and telephone number of the lender licensee to 20030H1808B2348 - 8 -
1 which a short-term loan was assigned. Only a lender licensee may 2 accept assignment or sale of a short-term loan from another 3 lender licensee. 4 Section 213. No criminal culpability. 5 A consumer shall not be subject to a criminal penalty: 6 (1) For entering into a short-term loan agreement. 7 (2) In the event the instrument is dishonored, unless 8 the consumer's account on which the instrument was written 9 was closed by the consumer before the agreed-upon date of 10 negotiation, in which event the provisions of 18 Pa.C.S. § 11 4105 (relating to bad checks) shall apply. 12 Section 214. Unfair or deceptive practices. 13 A person shall not engage in unfair or deceptive acts, 14 practices or advertising in connection with a short-term loan. A 15 violation of the provisions of this section shall also be a 16 violation of the act of December 17, 1968 (P.L.1224, No.387), 17 known as the Unfair Trade Practices and Consumer Protection Law. 18 CHAPTER 3 19 ADMINISTRATIVE AND LICENSURE PROVISIONS 20 Section 301. Application for license. 21 (a) Contents.--An application for a license to act as a 22 short-term lender or short-term broker shall be on forms 23 prescribed and provided by the department. Each application 24 shall include the address or addresses where business is to be 25 conducted, the full name, official title and business address of 26 each director and principal officer of the business and any 27 other information that may be required by the department. An 28 applicant shall demonstrate to the department that policies and 29 procedures have been developed to receive and process customer 30 inquiries and grievances promptly and fairly. 20030H1808B2348 - 9 -
1 (b) Financial structure.-- 2 (1) The applicant must establish that: 3 (i) at the time of application, the applicant has a 4 minimum tangible net worth of $25,000 for the applicant's 5 principal place of business and an additional $25,000 for 6 each branch office, to a maximum of $250,000; and 7 (ii) the applicant will, at all times thereafter, 8 maintain the minimum tangible net worth. 9 (2) An applicant for a short-term lender license or a 10 short-term broker license must maintain a bond in the amount 11 of $100,000 for the applicant's principal place of business 12 prior to the issuance of the license. 13 (3) The applicant must also establish to the 14 satisfaction of the department that the applicant has an 15 otherwise adequate financial structure. 16 Section 302. Annual license fee. 17 (a) General rule.--An applicant for a license shall pay to 18 the department at the time an application is filed an initial 19 license fee for the principal place of business of $1,000 and an 20 additional license fee for each branch office of $1,000. On or 21 before February 1 of each year, a licensee shall pay a license 22 renewal fee for the principal place of business and for each 23 branch office. 24 (b) Recovery of costs.--No abatement of a licensee fee shall 25 be made if the license is issued for a period of less than one 26 year. The department shall be entitled to recover any cost of 27 investigation in excess of license or renewal fees from the 28 licensee or from a person who is not licensed under this act but 29 who is presumed to be engaged in business contemplated by this 30 act. 20030H1808B2348 - 10 -
1 Section 303. Issuance of license. 2 (a) Time limit.--Within 60 days after a completed 3 application is received, the department shall either issue a 4 license or, for any reason for which the department may suspend, 5 revoke or refuse to renew a license under section 308, refuse to 6 issue a license. Upon receipt of an application for a license, 7 the department shall conduct such investigation as it deems 8 necessary to determine that the applicant and its officers, 9 directors and principals are of good character and ethical 10 reputation. 11 (b) Appeal of denial.--If the department refuses to issue a 12 license, it shall notify the applicant in writing of the denial, 13 the reason therefor and the applicant's right to appeal the 14 denial to the Commonwealth Court. An appeal from the 15 department's refusal to approve an application for a license 16 shall be filed by the applicant within 30 days of notice of 17 refusal. 18 (c) Contents of license.--Each license issued by the 19 department shall specify: 20 (1) The name and address of the licensee and the address 21 of the licensee's principal place of business within this 22 Commonwealth. 23 (2) The licensee's reference number. 24 (3) Any other information the department shall require 25 to carry out the purposes of this act. 26 (d) Denial of license due to conviction.-- 27 (1) The department may deny a license if it finds that 28 the applicant or a director, officer, partner, agent or 29 ultimate equitable owner of 10% or more of the applicant has 30 been convicted of a felony in any jurisdiction or of a crime 20030H1808B2348 - 11 -
1 which, if convicted in this Commonwealth, would constitute a 2 felony. For the purposes of this act, a person shall be 3 deemed to have been convicted of a crime if the person: 4 (i) pleads guilty or nolo contendere to a criminal 5 charge before a court or Federal magistrate; 6 (ii) is found guilty by the decision or judgment of 7 a court or Federal magistrate or by the verdict of a 8 jury, irrespective of the pronouncement of sentence or 9 the suspension thereof, 10 unless the plea of guilty or nolo contendere or the decision, 11 judgment or verdict is set aside, vacated, reversed or 12 otherwise abrogated by lawful judicial process. 13 (2) (i) In connection with any initial application 14 submitted to the department for a short-term lender 15 license or a short-term broker license, an applicant 16 shall submit the applicant's fingerprints to the 17 department or to such other international, Federal, State 18 or local government agency or designee thereof selected 19 by the department, including the Pennsylvania State 20 Police and the Federal Bureau of Investigation, in order 21 for the department to receive criminal history record 22 information from any international, Federal, State or 23 local government agency or designee thereof, including 24 criminal history record information from the Pennsylvania 25 State Police or national criminal history record 26 information from the Federal Bureau of Investigation. The 27 department shall send or receive the criminal history 28 record information or national criminal history record 29 information to or from the Pennsylvania State Police, the 30 Federal Bureau of Investigation or any other 20030H1808B2348 - 12 -
1 international, Federal, State or local government agency, 2 or designee thereof, in a manner satisfactory to the 3 department. National criminal history record information 4 received by the department shall be handled or maintained 5 in accordance with Federal Bureau of Investigation 6 policy. 7 (ii) An individual who later occupies a position 8 that would have required the person to submit criminal 9 history record information at the time an application for 10 a short-term lender license or a short-term broker 11 license was submitted to the department shall comply with 12 the requirements of paragraph (1) at the time an 13 application to renew an existing covered license is 14 submitted to the department. 15 (iii) During the initial or renewal license 16 application process, the department may deem the license 17 application incomplete and therefore not commence the 18 review period stated in the respective licensing statutes 19 if the department has not received evidence from the 20 applicant that national criminal history record 21 information and other criminal history record information 22 required under this section have been requested from the 23 Federal Bureau of Investigation, the Pennsylvania State 24 Police or any other international, Federal, State or 25 local government agency or designee thereof for criminal 26 history record information. 27 (iv) Notwithstanding any other law to the contrary, 28 the department may suspend its processing and 29 consideration of an initial or renewal license 30 application submitted to the department under this act 20030H1808B2348 - 13 -
1 until the department receives all national criminal 2 history record information from the Federal Bureau of 3 Investigation or criminal history record information from 4 the Pennsylvania State Police or any other international, 5 Federal, State or local government agency responsible for 6 such recordkeeping. If the department does not receive 7 the criminal history record information, including 8 national criminal history record information, required 9 under this section, the department may deny the initial 10 or renewal license application. 11 (v) Notwithstanding subparagraphs (iii) and (iv), 12 the department's approval or denial of a license 13 application under a licensing statute without receiving 14 criminal history record information or national criminal 15 history record information regarding covered individuals 16 as required under this section shall not prohibit the 17 department from taking any action authorized by law, 18 including suspension or revocation of the license. The 19 department may deny an application or suspend or revoke a 20 license based on the contents of criminal history record 21 information, the untimely receipt or failure to provide 22 criminal history record information or misleading or 23 inaccurate information provided by the applicant or 24 covered individual under this section, any other statute 25 or other applicable law, including 18 Pa.C.S. Ch. 91 26 (relating to criminal history record information). 27 (vi) The cost of any criminal history record 28 information, including national criminal history record 29 information, obtained by the department under this 30 section shall be paid by the initial or renewal license 20030H1808B2348 - 14 -
1 applicant or the individual whose criminal history is 2 being checked. The cost shall be paid in the manner and 3 monetary amount required jointly and severally by the 4 Pennsylvania State Police, the Federal Bureau of 5 Investigation, the department or any other applicable 6 international, Federal, State or local government agency 7 or designee thereof. 8 (e) Denial of license for other reason.--The department may 9 deny a license or otherwise restrict a license if it finds that 10 the applicant or a director, officer, partner, agency or 11 ultimate equitable owner of 10% or more of the applicant: 12 (1) has had a license application or license issued by 13 the department denied, suspended or revoked; 14 (2) is the subject of an order of the department 15 denying, suspending or revoking a license as a lender; or 16 (3) has violated or failed to comply with any provision 17 of this act or any rule, regulation or order of the 18 department. 19 Section 304. License duration. 20 A license issued by the department shall: 21 (1) Be renewed on February 1 of each year upon payment 22 of the annual renewal fee and after the department determines 23 that the licensee is conducting business in accordance with 24 this act. No refund of any portion of the license fee shall 25 be made if the license is voluntarily surrendered to the 26 department or suspended or revoked by the department prior to 27 its expiration date. 28 (2) Be invalid if the lender's charter is voided under 29 any law of this Commonwealth or any other state. 30 (3) Not be assignable or transferable by operation of 20030H1808B2348 - 15 -
1 law or otherwise without the written consent of the 2 department. 3 Section 305. Licensee requirements. 4 (a) Requirements of licensee.--A licensee shall: 5 (1) Conspicuously display its license at each licensed 6 place of business. 7 (2) Maintain at its principal place of business within 8 this Commonwealth, or at such place within or outside this 9 Commonwealth if agreed to by the department, the original or 10 a copy of any books, accounts, records and documents, or 11 electronic or similar access thereto, of the business 12 conducted under the license as prescribed by the department 13 to enable the department to determine whether the business of 14 the licensee is being conducted in accordance with the 15 provisions of this act and the orders, rules and regulations 16 issued under this act. The department shall have free access 17 to and authorization to examine records maintained outside 18 this Commonwealth. The costs of the examination, including 19 travel costs, shall be borne by the licensee. The department 20 may deny or revoke the authority to maintain records outside 21 this Commonwealth for good cause in the interest of consumer 22 protection for Commonwealth borrowers. 23 (3) Annually, before July 1, file a report with the 24 department which shall set forth such information as the 25 department shall require concerning the business conducted as 26 a licensee during the preceding calendar year. The report 27 shall be on a form in writing and under oath, provided by the 28 department. Licensees which fail to file the required report 29 by July 1 shall be subject to a penalty of $100 for each day 30 after July 1. 20030H1808B2348 - 16 -
1 (4) Be subject to examination by the department at its 2 discretion, at which time the department shall have free 3 access, during regular business hours, to the licensee's 4 place or places of business in this Commonwealth and to all 5 instruments, documents, accounts, books and records which 6 pertain to a licensee's loan business, whether maintained in 7 or outside this Commonwealth. The department may examine a 8 licensee at any time if the department deems the examination 9 to be necessary or desirable. The cost of any such 10 examination shall be borne by the licensee. 11 (5) Include in all advertisements language indicating 12 that the licensee is licensed by the department. 13 (b) Accounting records.--The licensee's accounting records 14 must be constructed and maintained in compliance with generally 15 accepted accounting principles or as provided by department 16 regulation. All instruments, documents, accounts, books and 17 records shall be kept separate and apart from the records of any 18 other business conducted by the licensee and shall be preserved 19 and kept available for investigation or examination by the 20 department for a period determined by the department. 21 (c) Copies.--If copies of instruments, documents, accounts, 22 books or records are maintained under subsection (a)(2), they 23 may be photostatic, microfilm or electronic copies or copies 24 provided in some other manner approved by the department. Access 25 to information required by the department shall be maintained at 26 all times within this Commonwealth. 27 Section 306. Licensee limitations. 28 A licensee shall not: 29 (1) Transact any business under this act under any other 30 name except those designated in its license. A licensee that 20030H1808B2348 - 17 -
1 changes its name or place or places of business shall 2 immediately notify the department, which shall issue a 3 certificate to the licensee, if appropriate, which shall 4 specify the licensee's new name or address. 5 (2) Conduct a business other than a business regulated 6 by the department in a place of business licensed under this 7 act without at least 30 days' prior written notification to 8 the department. 9 Section 307. Authority of department. 10 (a) Regulations.--The department shall have the authority 11 to: 12 (1) Examine any instrument, document, account, book, 13 record or file of a licensee or any person having a 14 connection to the licensee or make such other investigation 15 as may be necessary to administer the provisions of this act. 16 The costs of the examination shall be borne by the licensee 17 or the entity subject to the examination. 18 (2) Conduct administrative hearings on any matter 19 pertaining to this act, issue subpoenas to compel the 20 attendance of witnesses and the production of instruments, 21 documents, accounts, books and records at any such hearing. 22 The instruments, documents, accounts, books and records may 23 be retained by the department until the completion of all 24 proceedings in connection with which the materials were 25 produced. A department official may administer oaths and 26 affirmations to a person whose testimony is required. In the 27 event a person fails to comply with a subpoena issued by the 28 department or to testify on a matter concerning which he may 29 be lawfully interrogated, on application by the department, 30 the Commonwealth Court may issue an order requiring the 20030H1808B2348 - 18 -
1 attendance of the person, the production of instruments, 2 documents, accounts, books and records and the giving of 3 testimony. 4 (3) Request and receive information or records of any 5 kind, including reports of criminal history record 6 information from any Federal, State, local or foreign 7 government entity regarding an applicant for a license, 8 licensee or person related in any way to the business of the 9 applicant or licensee, at a cost to be paid by the applicant 10 or licensee. 11 (4) Impose a civil penalty of up to $2,000 for each 12 offense under section 309. The department may require the 13 offender to pay investigative costs, if any. 14 (5) Suspend, revoke or refuse to renew a license issued 15 by the department in accordance with the provisions of 16 section 509. 17 (6) Prohibit or permanently remove an individual 18 responsible for a violation of this chapter from working in 19 his or her present capacity or in any other capacity related 20 to activities regulated by the department. 21 (7) Order a person to cease and desist any violation of 22 this chapter and to make restitution for actual damages to 23 consumers. 24 (8) Impose such other conditions as the department deems 25 appropriate. 26 (b) Hearings.--A person aggrieved by a decision of the 27 department that has a direct interest in the decision may appeal 28 the decision of the department to the Secretary of Banking. The 29 appeal shall be conducted under 2 Pa.C.S. Ch. 5 Subch. A 30 (relating to practice and procedure of Commonwealth agencies). 20030H1808B2348 - 19 -
1 (c) Injunctions.--The department may maintain an action for 2 an injunction or other process against a person to restrain and 3 prevent the person from engaging in an activity violating this 4 act. 5 (d) Final orders.--A decision of the Secretary of Banking 6 shall be a final order of the department and shall be 7 enforceable in a court of competent jurisdiction. The department 8 shall publish the final adjudication issued under this section, 9 subject to redaction or modification to preserve 10 confidentiality. 11 (e) Appeals.--A person that has a direct interest in a 12 decision of the Secretary of Banking may appeal the decision 13 under 2 Pa.C.S. Ch. 7 Subch A. (relating to judicial review of 14 Commonwealth agency action). 15 Section 308. Suspension, revocation or refusal. 16 (a) Departmental action.--The department may suspend, revoke 17 or refuse to renew a license issued under this act if a licensee 18 has: 19 (1) Made a material misstatement in an application. 20 (2) Failed to comply with or violated a provision of 21 this act or a rule, regulation or order promulgated by the 22 department under this act. 23 (3) Engaged in dishonest, fraudulent or illegal 24 practices or conduct in a business or unfair or unethical 25 practices or conduct in connection with the short-term loan 26 business. 27 (4) Been convicted of a misdemeanor or a felony. 28 (5) Permanently or temporarily been enjoined by a court 29 of competent jurisdiction from engaging in or continuing 30 conduct or a practice involving an aspect of the short-term 20030H1808B2348 - 20 -
1 loan business. 2 (6) Become the subject of an order of the department 3 denying, suspending or revoking a license as a short-term 4 lender or short-term broker. 5 (7) Become the subject of a United States Postal Service 6 fraud order. 7 (8) Failed to comply with the requirements of this act 8 to make and keep records prescribed by rule or order of the 9 department, to produce records required by the department or 10 to file financial reports or other information that the 11 department by rule or order may require. 12 (9) Become the subject of an order of the department 13 denying, suspending or revoking a license under the 14 provisions of a law administered by the department. 15 (10) Failed to comply with a cease and desist order 16 issued by the department. 17 (11) Demonstrated negligence or incompetence in 18 performing an act for which the licensee is required to hold 19 a license under this act. 20 (b) Reinstatement.--The department may reinstate a license 21 which was previously refused for renewal if: 22 (1) The condition which warranted the original action 23 has been corrected. 24 (2) The department has reason to believe that the 25 condition is not likely to reoccur. 26 (3) The licensee satisfies the requirements of this act. 27 Section 309. Penalties. 28 (a) Nonlicensees.--A person who is not licensed by the 29 department and is not exempted from the licensing requirements 30 of this act who engages in the business of a short-term loan 20030H1808B2348 - 21 -
1 lender or short-term loan broker commits a felony of the third 2 degree. 3 (b) Nonlicensees subject to the provisions of this act.--A 4 person subject to the provisions of this act and not licensed by 5 the department who violates a provision to which the person is 6 subject may be fined by the department up to $2,000 for each 7 offense. 8 (c) Violation by licensee.-- 9 (1) A person licensed under this act or director, 10 officer or agent of a licensee who violates a provision of 11 this act shall be subject to a fine levied by the department 12 of up to $2,000 for each offense. 13 (2) It shall be an affirmative defense for a licensee 14 that, prior to an alleged violation of section 205, the 15 licensee complied with the following: 16 (i) Required a consumer to verify in writing that 17 the consumer does not have any outstanding short-term 18 loan with the licensee, its affiliate or any other 19 licensee. 20 (ii) Accessed a private credit reporting service to 21 determine whether the consumer had any outstanding short- 22 term loans. 23 CHAPTER 4 24 MISCELLANEOUS PROVISIONS 25 Section 401. Applicability. 26 The provisions of this act shall apply to a short-term loan 27 which: 28 (1) is made or executed within this Commonwealth; or 29 (2) is negotiated, offered or otherwise transacted 30 within this Commonwealth, in whole or in part, whether by the 20030H1808B2348 - 22 -
1 ultimate lender or any other person. 2 Section 402. Report to General Assembly. 3 Three years from the effective date of this act, the 4 department shall report to the General Assembly on the status of 5 the short-term loan industry, including, but not limited to, the 6 number of licensed short-term lenders and short-term brokers 7 operating in this Commonwealth, a summary of the number of loans 8 issued, the average short-term loan amount and any other 9 information as determined by the department. 10 Section 403. Effective date. 11 This act shall take effect in 60 days. F30L07MRD/20030H1808B2348 - 23 -