PRIOR PRINTER'S NO. 2607 PRINTER'S NO. 3697
No. 2005 Session of 1997
INTRODUCED BY HASAY, LESCOVITZ, DeWEESE, TRELLO, GODSHALL,
TULLI, MARKOSEK, BAKER, SEMMEL, GEIST, ZUG, STABACK,
LAUGHLIN, ROONEY, OLASZ, SAYLOR, BUNT, YOUNGBLOOD, SERAFINI
AND HABAY, NOVEMBER 25, 1997
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
JUNE 8, 1998
AN ACT
1 Amending the act of April 8, 1937 (P.L.262, No.66), entitled, as
2 amended, "An act relating to consumer credit; requiring
3 licenses from the Secretary of Banking; restricting licenses
4 to domestic business corporations; fixing minimum capital
5 requirements; conferring certain powers on the Secretary of
6 Banking; limiting interest and other charges; providing
7 certain exemptions; and imposing penalties," further defining
8 the phrase "revolving loan account"; providing for other
9 services and products; and further providing for maturity of
10 loans, for service charge and for written receipt and sale of
11 assets.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The definition of "revolving loan account" in
15 section 2 of the act of April 8, 1937 (P.L.262, No.66), known as
16 the Consumer Discount Company Act, amended December 18, 1984
17 (P.L.1083, No.216), is amended to read:
18 Section 2. Definitions.--The following terms shall be
19 construed in the act to have the following meanings, except in
20 those instances where the context clearly indicates otherwise:
21 * * *
1 "Revolving loan account" means an agreement pursuant to which
2 (i) the licensee may permit the borrower to obtain one or a
3 series of loans or advances from time to time: Provided,
4 however, That the aggregate of the unpaid principal balances due
5 a licensee from a consumer under this act on any date shall not
6 exceed the sum of [fifteen thousand dollars ($15,000)] twenty-
7 five thousand dollars ($25,000), (ii) the unpaid principal
8 balances and the appropriate charges are debited to an account,
9 (iii) the charges for the loan are computed on the outstanding
10 unpaid principal balances of the account from time to time, and
11 (iv) the borrower has the privilege of paying the balances in
12 installments.
13 * * *
14 Section 2. Clauses F and Q of section 13 of the act, amended
15 December 9, 1982 (P.L.1072, No.249), are amended to read:
16 Section 13. Powers Conferred on Licensees.--In addition to
17 the general powers conferred upon a corporation by the Business
18 Corporation Law of this Commonwealth, a corporation licensed
19 under this act shall have power and authority:
20 * * *
21 F. To charge, contract for, receive or collect on any
22 contract a service charge of [one dollar ($1.00)] one dollar and
23 fifty cents ($1.50) for each fifty dollars ($50), or fraction
24 thereof, provided that the total service charge shall not exceed
25 [one hundred dollars ($100)] one hundred fifty dollars ($150) on
26 any contract.
27 * * *
28 Q. To conduct the business regulated by this act in any
29 licensed place of business where another business is conducted
30 by the licensee or another person unless the Secretary of
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1 Banking shall find, after a hearing, the conduct of the other
2 business has concealed evasions of this act and shall order such
3 person to desist from such conduct[.] and to offer other
4 services and products for voluntary purchase subject to the
5 provisions of this clause.
6 (1) The licensee, or such other person, may offer the types
7 of products or services described in subclause (2) provided,
8 however, that if the products or services are to be offered to
9 an applicant or applicants for a loan:
10 (i) the products or services shall not be offered to such
11 applicant or applicants until the loan has been approved and the
12 applicants, or the applicant being offered the service or
13 product in the case of co-applicants, have been advised that the
14 loan has been approved, either orally or in writing;
15 (ii) when the applicant has been advised that the loan is
16 approved and products or services are then offered orally, by
17 telephone or otherwise, the applicant shall also be advised that
18 the purchase of the service or product is not required in order
19 to qualify for the loan and that the purchase thereof is
20 voluntary;
21 (iii) whether or not an oral disclosure has been made as
22 provided in paragraph (ii), the applicant or applicants shall be
23 provided a separate and distinct disclosure written in plain
24 language to be signed by the applicant prior to the closing of
25 the loan, which clearly states that the purchase of the service
26 or product is not required in order to obtain the loan and that
27 the purchase thereof is voluntary; and
28 (iv) if the cost of the service or product is to be included
29 in the loan and paid from the loan proceeds, a separate loan
30 proceeds check shall be drawn, made payable to the borrower or
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1 borrowers, for the cost or price of the service or product,
2 which may then be endorsed by the borrower or borrowers to the
3 vendor of the service or product after closing at the option of
4 the borrower or borrowers.
5 (2) A licensee may offer the types of services and products
6 described in this subclause and may conduct, or permit others to
7 conduct, the types of business described in this subclause
8 within the same office, room or place of business where the
9 licensee conducts its licensed business without prior approval
10 by the Secretary of Banking.
11 (i) Automobile security plans which provide protection
12 against automobile emergencies and which provide for full or
13 partial reimbursement of certain costs incurred as the result of
14 such emergencies, such as towing, lost key service, emergency
15 transportation, stolen automobile expenses, bail bonds,
16 emergency treatment expense, legal defense and similar or
17 related items, which may include extended warranties, travel
18 discounts and service items, among other things.
19 (ii) Home security plans which provide protection against
20 home emergencies and provide full or partial reimbursement of
21 certain costs incurred because of home emergencies, such as
22 medical costs, health insurance deductibles, pharmacy service,
23 extended warranties, lost or stolen key protection, credit card
24 liability coverage, and which may include life-saving training,
25 home security training and protection services and products,
26 among other things.
27 (iii) First mortgage lending in accordance with all
28 applicable Federal and State law and regulation.
29 (iv) Secondary mortgage lending in accordance with all
30 applicable Federal and State law and regulation.
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1 (v) Sales finance agreements pursuant to applicable law and
2 regulation.
3 (vi) Income tax preparation services.
4 (vii) Commercial or business loans, including installment
5 sales financing contracts for commercial purposes.
6 (viii) Credit card agreements, including additional services
7 or goods which are or may be offered in connection with such
8 credit cards or credit card agreements.
9 * * *
10 Section 3. Clause H of section 14 of the act, amended March
11 3, 1976 (P.L.36, No.17), is amended and the section is amended
12 by adding a clause to read:
13 Section 14. Licensee Requirements and Limitations.--* * *
14 H. A licensee shall not discount or deduct interest in
15 advance on any contract, for any period in excess of [five
16 years] seven years and fifteen days.
17 I. A licensee may sell contracts to and buy contracts from
18 another licensee upon giving prior written notification to the
19 Secretary of Banking. The written notification shall state the
20 name and address of the licensee to whom or from whom the
21 contracts are being sold or purchased, the type of loan and
22 number of contracts in the transaction and their aggregate
23 principal balances. A licensee may not sell contracts to a
24 person or corporation not holding a license under this act
25 without the prior written approval of the Secretary of Banking.
26 Section 4. Section 16 of the act, amended December 9, 1982
27 (P.L.1072, No.249), is amended to read:
28 Section 16. [Receipts] Receipt for Payment.--A licensee
29 shall furnish, at the time payment of any installment on a
30 contract is made in cash, a written receipt [setting forth the <--
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1 account number or other identification mark or symbol, the date
2 of the payment, AND the amount paid [and upon request of the <--
3 borrower the unpaid balance of the account prior to and after
4 the cash payment].
5 Section 5. This act shall take effect immediately.
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