2009 Regular Session
To: Business and Financial Institutions
By: Senator(s) Jackson (11th)
AN ACT TO CREATE THE "MISSISSIPPI SHORT-TERM LENDER LAW"; TO REQUIRE LICENSURE OF SHORT-TERM LENDERS; TO PROVIDE APPLICATION PROCEDURE AND BOND REQUIREMENTS; TO PROVIDE CERTAIN RESTRICTIONS ON SHORT-TERM LOANS; TO LIMIT THE INTEREST RATE AND FEES ON SHORT-TERM LOANS; TO PROHIBIT CERTAIN ACTS BY SHORT-TERM LOAN LICENSEES; TO PROVIDE FOR THE REFUSAL, SUSPENSION OR REVOCATION OF LICENSE; TO REQUIRE LICENSEE RECORDS AND REPORTS; TO AUTHORIZE THE COMMISSIONER OF BANKING AND CONSUMER FINANCE TO ADOPT RULES AND ISSUE SPECIFIC ORDERS TO ENFORCE AND CARRY OUT THE PROVISIONS OF THE ACT; TO PROVIDE CRIMINAL PENALTIES FOR CERTAIN VIOLATIONS; TO PROHIBIT DEBT COLLECTOR COMMUNICATIONS AND CONDUCT BY SHORT-TERM LENDERS; TO REQUIRE THE COMMISSIONER OF BANKING TO DEVELOP AND MAINTAIN A STATEWIDE DATABASE OF SHORT-TERM LOANS; TO PROVIDE REPORTING REQUIREMENTS BY THE COMMISSIONER OF BANKING; TO CREATE A CONSUMER FINANCE EDUCATION BOARD AND PROVIDE FOR ITS MEMBERSHIP; TO PRESCRIBE THE DUTIES OF THE BOARD; TO REPEAL SECTIONS 75-67-505 THROUGH 75-67-539, MISSISSIPPI CODE OF 1972, WHICH CREATE THE MISSISSIPPI CHECK CASHERS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Title. Sections 1 through 18 of this act shall be known and may be cited as the "Mississippi Short-Term Lender Law."
SECTION 2. Short-term lenders definitions. As used in Sections 1 through 18 of this act:
(a) "Short-term loan" means a loan made pursuant to Sections 1 through 18 of this act.
(b) "Commissioner" means the Commissioner of Banking and Consumer Finance of the State of Mississippi.
(c) "Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including fees, loan origination charges, service charges, renewal charges, credit insurance premiums, and any ancillary product sold in connection with a loan made pursuant to Sections 1 through 20 of this act.
(d) "Annual percentage rate" has the same meaning as in the "Truth in Lending Act," 82 Stat. 149 (1980), 15 USC 1606, as implemented by regulations of the Board of Governors of the Federal Reserve System. All fees and charges shall be included in the computation of the annual percentage rate. Fees and charges for single premium credit insurance and other ancillary products sold in connection with the credit transaction shall be included in the calculation of the annual percentage rate.
SECTION 3. Short-term lender license required; out-of-state transactions. (1) No person shall engage in the business of making short-term loans to a borrower in Mississippi, or, in whole or in part, make, offer, or broker a loan, or assist a borrower in Mississippi to obtain such a loan, without first having obtained a license from the Commissioner of Banking and Consumer Finance under Sections 1 through 18 of this act. No licensee shall make, offer, or broker a loan, or assist a borrower to obtain such a loan, when the borrower is not physically present in the licensee's business location.
(2) No person not located in Mississippi shall make a short-term loan to a borrower in Mississippi from an office not located in Mississippi. Nothing in this section prohibits a business not located or licensed in Mississippi from lending funds to Mississippi borrowers who physically visit the out-of-state office of the business and obtain the disbursement of loan funds at that location. No person shall make, offer, or broker a loan, or assist a borrower to obtain a loan, via the telephone, mail or Internet.
SECTION 4. Application for license, investigation, bond. (1) Application for an original or renewal license to make short-term loans shall be in writing, under oath, and in the form prescribed by the Commissioner of Banking and Consumer Finance, and shall contain the name and address of the applicant, the location where the business of making loans is to be conducted, and any further information as the commissioner requires. At the time of making an application for an original license, the applicant shall pay to the commissioner a nonrefundable investigation fee of Two Hundred Dollars ($200.00). No investigation fee or any portion thereof shall be refunded after an original license has been issued. The application for an original or renewal license shall be accompanied by an original or renewal license fee, for each business location of One Thousand Dollars ($1,000.00), except that applications for original licenses issued on or after the first day of July for any year shall be accompanied by an original license fee of Five Hundred Dollars ($500.00), and except that an application for an original or renewal license, for a nonprofit corporation that is incorporated under the Mississippi Nonprofit Corporation Act, Section 79-11-101 et seq., shall be accompanied by an original or renewal license fee, for each business location, that is one-half (1/2) of the fee otherwise required. All fees paid to the commissioner pursuant to this subsection shall be deposited into the State Treasury to the credit of the Consumer Finance Fund.
(2) Upon the filing of an application for an original license and, with respect to an application filed for a renewal license, on a schedule determined by the commissioner by rule adopted pursuant to Section 12 of this act, and the payment of fees in accordance with subsection (1) of this section, the commissioner shall investigate the facts concerning the applicant and the requirements provided by this subsection. The commissioner shall request the Department of Public Safety, or a vendor approved by the department, to conduct a criminal records check based on the applicant's fingerprints. The Commissioner of Banking and Consumer Finance shall request that criminal record information from the Federal Bureau of Investigation be obtained as part of the criminal records check. The Commissioner of Banking and Consumer Finance shall conduct a civil records check. The commissioner shall approve an application and issue an original or renewal license to the applicant if the commissioner finds all of the following:
(a) The financial responsibility, experience, reputation and general fitness of the applicant are such as to warrant the belief that the business of making loans will be operated lawfully, honestly, and fairly under Sections 1 through 18 of this act and within the purposes of those sections; that the applicant has fully complied with those sections and any rule or order adopted or issued pursuant to Section 12 of this act; and that the applicant is qualified to engage in the business of making loans under Sections 1 through 18 of this act.
(b) The applicant is financially sound and has a net worth of not less than One Hundred Thousand Dollars ($100,000.00), or in the case of a nonprofit corporation that is incorporated under Section 79-11-101 et seq., a net worth of not less than Fifty Thousand Dollars ($50,000.00). The applicant's net worth shall be computed according to generally accepted accounting principles.
(c) The applicant has never had revoked a license to make loans under Sections 1 through 18 of this act, or under former Sections 75-67-505 through 75-67-539, Mississippi Code of 1972.
(d) Neither the applicant nor any senior officer, or partner of the applicant, has pleaded guilty to or been convicted of any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, or drug trafficking, or any criminal offense involving money or securities or any violation of an existing or former law of this state, any other state, or the United States that substantially is equivalent to a criminal offense described in that division. However, if the applicant or any of those other persons has pleaded guilty to or been convicted of any such offense other than theft, the commissioner shall not consider the offense if the applicant has proven to the commissioner, by a preponderance of the evidence, that the applicant's or other person's activities and employment record since the conviction show that the applicant or other person is honest, truthful, and of good reputation, and there is no basis in fact for believing that the applicant or other person will commit such an offense again.
(e) Neither the applicant nor any senior officer, or partner of the applicant, has been subject to any adverse judgment for conversion, embezzlement, misappropriation of funds, fraud, misfeasance or malfeasance, or breach of fiduciary duty, or if the applicant or any of those other persons has been subject to such a judgment, the applicant has proven to the commissioner, by a preponderance of the evidence, that the applicant's or other person's activities and employment record since the judgment show that the applicant or other person is honest, truthful, and of good reputation, and there is no basis in fact for believing that the applicant or other person will be subject to such a judgment again.
(3) If the commissioner finds that the applicant does not meet the requirements of subsection (2) of this section, or the commissioner finds that the applicant knowingly or repeatedly contracts with or employs persons to directly engage in lending activities who have been convicted of a felony crime listed in subsection (2)(e) of this section, the commissioner shall issue an order denying the application for an original or renewal license and giving the applicant an opportunity for a hearing on the denial. The commissioner shall notify the applicant of the denial, the grounds for the denial, and the applicant's opportunity for a hearing. If the application is denied, the commissioner shall return the annual license fee but shall retain the investigation fee.
(4) No person licensed under Sections 1 through 18 of this act shall conduct business in this state unless the licensee has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the superintendent and in the penal sum of at least One Hundred Thousand Dollars ($100,000.00), or in the case of a nonprofit corporation that is incorporated under Section 79-11-101 et seq., in the amount of Fifty Thousand Dollars ($50,000.00). The term of the bond shall coincide with the term of the license. The licensee shall file a copy of the bond with the commissioner. The bond shall be for the exclusive benefit of any borrower injured by a violation by a licensee or any employee of a licensee, of any provision of Sections 1 through 18 of this act.
SECTION 5. License contents - place of business. (1) A license issued by the Commissioner of Banking and Consumer Finance pursuant to Sections 1 through 18 of this act shall state the address at which the business of making loans is to be conducted and shall state the full name of the business. Each license issued shall be conspicuously posted in the place of business and is not transferable or assignable.
(2) (a) Not more than one (1) place of business shall be maintained under the same license issued under Sections 1 through 18 of this act, but the commissioner may issue additional licenses to the same applicant upon compliance with those sections.
(b) No change in the place of business of a licensee to a location outside the original municipal corporation shall be permitted under the same license. When a licensee wishes to change its place of business within the same municipal corporation, written notice thereof shall be given in advance to the commissioner who shall provide without cost a license pursuant to Sections 1 through 18 of this act for the new address.
SECTION 6. Short-term loan requirements and restrictions. A licensee under Sections 1 through 18 of this act may engage in the business of making loans provided that each loan meets all of the following conditions:
(a) The total amount of the loan does not exceed Five Hundred Dollars ($500.00).
(b) The duration of the loan, as specified in the loan contract required under paragraph (c) of this section, is not less than thirty-one (31) days.
(c) The loan is made pursuant to a written loan contract that sets forth the terms and conditions of the loan. A copy of the loan contract shall be provided to the borrower. The loan contract shall disclose in a clear and concise manner all of the following:
(i) The total amount of fees and charges the borrower will be required to pay in connection with the loan pursuant to the loan contract;
(ii) The total amount of each payment, when each payment is due, and the total number of payments that the borrower will be required to make under the loan contract;
(iii) A statement, printed in boldface type of the minimum font size of ten (10) points, as follows: "WARNING: The cost of this loan is higher than the average cost charged by financial institutions on substantially similar loans."
(iv) A statement, printed in a minimum font size of ten (10) points, which informs the borrower that complaints regarding the loan or lender may be submitted to the Department of Banking and Consumer Finance and includes the correct telephone number and mailing address for the department;
(v) Any disclosures required under the "Truth in Lending Act," 82 Stat. 146 (1974), 15 USC 1601 et seq.;
(vi) The rate of interest contracted for under the loan contract as an annual percentage rate based on the sum of the principal of the loan and the loan origination fee, check collection charge, and all other fees or charges contracted for under the loan contract.
(d) The loan contract includes a provision that offers the borrower an optional extended payment plan that may be invoked by the borrower at any time before the maturity date of the loan. To invoke the extended payment plan, the borrower shall return to the office where the loan was made and sign an amendment to the original loan agreement reflecting the extended terms of the loan. The extended payment plan shall allow the borrower to repay the balance by not less than sixty (60) days from the original maturity date. No additional fees or charges may be applied to the loan upon the borrower entering the extended payment plan. The person originating the loan for the licensee shall identify verbally to the borrower the contract provision regarding the extended payment plan, and the borrower shall verify that the provision has been identified by initialing the contract adjacent to the provision.
SECTION 7. Permissible short-term loan fees. A person licensed pursuant to Sections 1 through 18 of this act may charge, collect, and receive the following fees and charges in connection with a short-term loan:
(a) Interest calculated in compliance with 15 USC 1606, and not exceeding an annual percentage rate greater than twenty-eight percent (28%);
(b) One (1) check collection charge per loan not exceeding an amount equal to Twenty Dollars ($20.00) plus any amount passed on from other financial institutions for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason, provided that the terms and conditions upon which check collection charges will be charged to the borrower are set forth in the written loan contract described in paragraph (c) of Section 5 of this act;
(c) Damages, costs, and disbursements to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default.
SECTION 8. Short-term loan prohibitions. No person licensed pursuant to Sections 1 through 18 of this act shall do any of the following:
(a) Violate Section 3 of this act;
(b) Make a loan that does not comply with Section 6 of this act;
(c) Charge, collect, or receive, directly or indirectly, any additional fees, interest, or charges in connection with a loan, other than fees and charges permitted by Section 7 of this act and costs or disbursements to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default;
(d) Collect treble damages in connection with any civil action to collect a loan after a default due to a check, negotiable order of withdrawal, share draft, or other negotiable instrument that was returned or dishonored for insufficient funds;
(e) Make a short-term loan to a borrower if there exists an outstanding loan between the licensee and that borrower, if a loan between any licensee and that borrower was terminated on the same business day, if the borrower has more than one (1) outstanding loan, if the loan would obligate the borrower to repay a total amount of more than Five Hundred Dollars ($500.00) to licensees, or indebt the borrower, to licensees, for an amount that is more than twenty-five percent (25%) of the borrowers gross monthly salary not including bonus, overtime, or other such compensation, based on a payroll verification statement presented by the borrower;
(f) Bring or threaten to bring an action or complaint against the borrower for the borrower's failure to comply with the terms of the loan contract solely due to the check, negotiable order of withdrawal, share draft, or negotiable instrument being returned or dishonored for insufficient funds. Nothing herein prohibits such conduct, action, or complaint if the borrower has intentionally engaged in fraud by, including, but not limited to, closing or using any closed or false account to evade payment;
(g) Make a short-term loan to a borrower for purposes of retiring an existing short-term loan between any licensee and that borrower;
(h) Require the borrower to waive the borrower's right to legal recourse under any otherwise applicable provision of state or federal law;
(i) Accept the title of a vehicle, real property, physical assets, or other collateral as security for the obligation;
(j) Engage in any device or subterfuge to evade the requirements of Sections 1 through 18 of this act including assisting a borrower to obtain a loan on terms that would be prohibited by Sections 1 through 18 of this act, making loans disguised as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates for the pretextual installment sale of goods or services;
(k) Assess or charge a borrower a fee for prepaying the loan in full prior to the maturity date;
(l) Fail to comply with Section 14 of this act;
(m) Recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested;
(n) Make a loan to a borrower that has received two (2) loans within the previous ninety (90) days from licensees, unless the borrower has completed during that period a financial literacy program approved by the superintendent;
(o) Draft funds electronically from any depository financial institution in this state, or bill any credit card issued by such an institution. Nothing in this paragraph shall prohibit the conversion of a negotiable instrument into an electronic form for processing through the automated clearinghouse system;
(p) Make, publish, or otherwise disseminate, directly or indirectly, any misleading or false advertisement, or engage in any other deceptive trade practice;
(q) Offer any incentive to a borrower in exchange for the borrower taking out multiple loans over any period of time, or provide a short-term loan at no charge or at a discounted charge as compensation for any previous or future business;
(r) Make a loan to a borrower if the borrower has received a total of four (4) or more loans, from licensees, in the calendar year;
(s) Present a check, negotiable order of withdrawal, share draft, or other negotiable instrument, that has been previously presented by the licensee and subsequently returned or dishonored for any reason, without prior written approval from the borrower;
(t) Change the check number, or in any other way alter a check, negotiable order of withdrawal, or share draft, prior to submitting such check, negotiable order of withdrawal, or share draft for processing through the automated clearinghouse system, or submit false information about any check, negotiable order of withdrawal, or share draft to the automated clearinghouse system.
SECTION 9. Refusal, suspension or revocation of license - fines. (1) The Commissioner of Banking and Consumer Finance may suspend or revoke a license issued pursuant to Sections 1 through 18 of this act, if the commissioner determines that either of the following applies:
(a) The licensee has failed to comply with any order issued by the commissioner pursuant to Section 10 of this act.
(b) Any fact or condition exists that if it had existed or had been known to exist at the time of original or renewal licensure pursuant to Sections 1 through 18 of this act, the fact or condition clearly would have warranted the commissioner to refuse to issue a license pursuant to those sections.
(2) The commissioner may make any investigation and conduct any hearing the commissioner considers necessary to determine whether any person has violated Sections 1 through 18 of this act, or any rule or order adopted or issued under Section 10 of this act, or has otherwise engaged in conduct that would justify the suspension, revocation, or refusal of an original or renewal license or the imposition of a fine.
The commissioner may impose a monetary fine of not more than One Thousand Dollars ($1,000.00) for each such violation.
(3) In making any investigation or conducting any hearing pursuant to this section, the commissioner, or any person designated by the commissioner, at any time may compel by subpoena witnesses, may take depositions of witnesses residing outside the state in the manner provided for in civil actions, pay any witnesses the fees and mileage for their attendance provided for witnesses in civil actions, and administer oaths. The commissioner also may compel by order or subpoena duces tecum the production of, and examine, all relevant books, records, accounts, and other documents. If a person does not comply with a subpoena or subpoena duces tecum, the commissioner may apply to the circuit court of Hinds County for an order compelling the person to comply with the subpoena or subpoena duces tecum or, for failure to do so, an order to be held in contempt of court.
(4) In connection with any investigation under this section, the commissioner may file an action in the circuit court of Hinds County or the circuit court of the county in which the person who is the subject of the investigation resides, or is engaging in or proposing to engage in actions in violation of Sections 1 through 18 of this act, to obtain an injunction, temporary restraining order, or other appropriate relief.
SECTION 10. Examination of licensee's records. As often as the commissioner considers it necessary, the commissioner may examine the records of a licensee, but in any case, the commissioner shall examine the records of a licensee at least annually.
SECTION 11. Required licensee records and reports. (1) Every licensee shall keep and use in the licensee's business such books, accounts, records, and loan documents as will enable the Department of Banking and Consumer Finance to determine whether the licensee is complying with Sections 1 through 18 of this act and with the orders and rules made by the department under those sections. Such books, accounts, records, and loan documents shall be segregated from those pertaining to transactions that are not subject to Sections 1 through 18 of this act. Every licensee shall preserve the books, accounts, records, and loan documents pertaining to loans made under Sections 1 through 18 of this act for at least two (2) years after making the final entry on, or final revision of any loan document relative to, any loan recorded therein. Accounting systems maintained in whole or in part by mechanical or electronic data processing methods that provide information equivalent to that otherwise required are acceptable for this purpose.
(2) (a) As required by the Commissioner of Banking and Consumer Finance, each licensee shall file with the department each year a report under oath or affirmation, on forms supplied by the department, concerning the business and operation for the preceding calendar year. If a licensee has more than one (1) place of business in this state, the licensee shall furnish a report for each location.
(b) The department shall publish annually an analysis of the information required under subsection (2)(a) of this section, but the individual reports shall not be public records and shall not be open to public inspection.
SECTION 12. Implementing rules and enforcement orders. The Commissioner of Banking and Consumer Finance may adopt rules and regulations to enforce and carry out the purposes of Sections 1 through 18 of this act. The commissioner shall issue a rule defining "senior officer" for the purpose of Section 4 of this act. The commissioner may adopt, amend, and repeal substantive rules defining with reasonable specificity acts or practices that violate Section 14 of this act.
SECTION 13. Violations as unfair or deceptive acts - criminal proceedings. (1) A violation of Section 10 of this act is deemed an unfair or deceptive act or practice in violation of Section 75-24-5. A borrower injured by a violation of Section 10 of this act shall have a cause of action and be entitled to the same relief available to a consumer under Sections 75-24-1 through 75-24-27, and all powers and remedies available to the Attorney General to enforce Sections 75-24-1 through 75-24-27 are available to the Attorney General to enforce Section 10 of this act.
(2) The Commissioner of Banking and Consumer Finance or a borrower may bring directly an action to enjoin a violation of Sections 1 through 18 of this act. The prosecuting attorney of the county in which the action may be brought may bring an action to enjoin a violation of Sections 1 through 18 of this act only if the prosecuting attorney first presents any evidence of the violation to the Attorney General and, within a reasonable period of time, the Attorney General has not agreed to bring the action.
(3) The commissioner may initiate criminal proceedings under Sections 1 through 18 of this act by presenting any evidence of criminal violation to the prosecuting attorney of the county in which the offense may be prosecuted. If the prosecuting attorney does not prosecute the violations, or at the request of the prosecuting attorney, the superintendent shall present any evidence of criminal violations to the Attorney General, who may proceed in the prosecution with all the rights, privileges, and powers conferred by law on prosecuting attorneys, including the power to appear before grand juries and to interrogate witnesses before such grand juries. These powers of the Attorney General are in addition to any other applicable powers of the Attorney General.
(4) The prosecuting attorney of the county in which an alleged offense may be prosecuted may initiate criminal proceedings under Sections 1 through 18 of this act.
(5) In order to initiate criminal proceedings under Sections 1 through 18 of this act, the Attorney General first shall present any evidence of criminal violations to the prosecuting attorney of the county in which the alleged offense may be prosecuted. If, within a reasonable period of time, the prosecuting attorney has not agreed to prosecute the violations, the Attorney General may proceed in the prosecution with all the rights, privileges, and powers described in subsection (2) of this section.
(6) When a judgment under this section becomes final, the clerk of court shall mail a copy of the judgment, including supporting opinions, to the commissioner.
SECTION 14. Prohibited debt collector communications and conduct. (1) As used in this section, unless the context requires otherwise:
(a) "Debt collector" means a licensee, officer, employee, or agent of a licensee, or any person acting as a debt collector for a licensee, or any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt resulting from a short-term loan made by a licensee.
(b) "Borrower" means a person who has an outstanding or delinquent short-term loan. For the purpose of this section, the term "borrower" includes the borrower's spouse, parent, if the borrower is a minor, guardian, executor or administrator.
(c) "Communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.
(d) "Consumer reporting agency" means any person that, for monetary fees, dues or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties and that uses any means or facility for the purpose of preparing or furnishing consumer reports.
(e) "Location information" means a consumer's residence, telephone number or place of employment.
(2) When communicating with any person other than the borrower for the purpose of acquiring location information about the borrower, the debt collector shall identify self, state that the purpose for the communication is to confirm or correct location information concerning a person, and, only if expressly requested, identify the debt collector's employer. The debt collector shall not do any of the following:
(a) State that the person for whom location information is being sought is a borrower or owes any debt;
(b) Communicate with any person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
(c) Communicate by postcard;
(d) Use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the communication relates to the collection of a debt;
(e) After the debt collector knows the borrower is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.
(3) A debt collector, without the prior consent of the borrower given directly to the debt collector or without the express permission of a court of competent jurisdiction, may not communicate with a borrower in connection with the collection of any debt:
(a) At any unusual time or place or a time or place known or which should be known to be inconvenient to the borrower. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a borrower is after 8:00 a.m. central standard time and before 9:00 p.m. central standard time at the borrower's location.
(b) If the debt collector knows the borrower is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the borrower;
(c) At the borrower's place of employment if the debt collector knows or has reason to know that the borrower's employer prohibits the borrower from receiving such communication.
(4) A debt collector, when communicating with a third party without the prior consent of the borrower given directly to the debt collector, or without the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, may not communicate, in connection with the collection of any debt, with any person other than the borrower, the borrower's attorney, a consumer reporting agency if otherwise permitted by law, or the attorney of the debt collector.
(5) If a borrower provides written notification to a person licensed under Sections 1 through 18 of this act or a debt collector that the borrower refuses to pay a debt or that the borrower wishes the debt collector to cease further communication with the borrower, the debt collector shall not communicate further with the borrower with respect to such debt, except:
(a) To advise the borrower that the debt collector's further efforts are being terminated;
(b) To notify the borrower that the debt collector or licensee may invoke specified remedies that are ordinarily invoked by such debt collector or licensee;
(c) Where applicable, to notify the borrower that the debt collector or licensee intends to invoke a specified remedy. If such notice from the borrower is made by mail, notification shall be complete upon receipt.
(6) A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, including, but not limited to, any of the following:
(a) Using or threatening to use violence or other criminal means to harm the physical person, reputation, or property of any person;
(b) Using obscene or profane language or language the natural consequence of which is to abuse the hearer or reader;
(c) Publication of a list of borrowers who allegedly refuse to pay debts, except to a consumer-reporting agency;
(d) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
(7) A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, including, but not limited to, any of the following:
(a) Falsely representing or implying that the debt collector is vouched for, bonded by, or affiliated with the United States or any state, including the use of any badge, uniform, or facsimile thereof;
(b) Falsely representing the character, amount, or legal status of any debt, or any services rendered, or compensation which may be lawfully received by any debt collector for the collection of a debt;
(c) Falsely representing or implying that any individual is an attorney or that any communication is from an attorney;
(d) Representing or implying that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector intends to take such action;
(e) Threatening to take any action that cannot legally be taken or that is not intended to be taken;
(f) Falsely representing or implying that a sale, referral, or other transfer of any interest in a debt shall cause the borrower to lose any claim or defense to payment of the debt;
(g) Falsely representing or implying that the borrower committed any crime or other conduct in order to disgrace the borrower;
(h) Communicating or threatening to communicate to any person credit information that is known or that should be known to be false, including the failure to communicate that a disputed debt is disputed;
(i) Using or distributing any written communication that simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any state, or that creates a false impression as to its source, authorization, or approval;
(j) Using any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower;
(k) Failing to disclose in the initial written communication with the borrower, and in addition, if the initial communication with the borrower is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that subsection (7)(k) of this section shall not apply to a formal pleading made in connection with a legal action;
(l) Falsely representing or implying that accounts have been turned over to innocent purchasers for value;
(m) Falsely representing or implying that documents are legal process;
(n) Using any business, company, or organization name other than the true name of the debt collector's business, company, or organization;
(o) Falsely representing or implying that documents are not legal process forms or do not require action by the consumer;
(p) Falsely representing or implying that a debt collector operates or is employed by a consumer reporting agency.
(8) A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt, including, but not limited to, any of the following:
(a) Collecting any amount, including any interest, fee, charge, or expense incidental to the principal obligation, unless the amount is expressly authorized by the agreement creating the debt or permitted by law;
(b) Accepting from any person a check or other payment instrument postdated by more than five (5) days unless the person is notified in writing of the debt collector's intent to deposit the check or instrument not more than ten (10) nor less than three (3) business days prior to deposit;
(c) Soliciting any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution;
(d) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on the check or instrument;
(e) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. The charges include, but are not limited to, collect telephone calls and telegram fees;
(f) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if there is no present right to possession of the property claimed as collateral through an enforceable security interest, there is no present intention to take possession of the property, or the property is exempt by law from dispossession or disablement;
(g) Communicating with a borrower regarding a debt by postcard;
(h) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a borrower by use of the mail or by telegram, except that a debt collector may use the collector's business name if the name does not indicate that the collector is in the debt collection business;
(i) Designing, compiling, and furnishing any form knowing that the form would be used to create the false belief in a borrower that a person other than the licensee is participating in the collection of or in an attempt to collect a debt the borrower allegedly owes the creditor, when in fact the person is not so participating.
(9) In addition to the requirements of this section, a debt collector shall follow the practices set forth in the federal "Fair Debt Collection Practices Act," 91 Stat. 874 (1977), Sections 15 USC 1692b, 15 USC 1692c, 15 USC 1692d, 15 USC 1692e, and 15 USC 1692f, as those sections of federal law exist on the effective date of this section. In the event of a conflict between described practices in the federal act and described practices in this section, this section shall prevail.
SECTION 15. Statewide database used to determine borrower eligibility. (1) If more than four hundred (400) persons are licensed under Sections 1 through 18 of this act at any point after September 1, 2009, the superintendent of financial institutions shall develop and make a statewide common database, as implemented by the commissioner, accessible at all times to persons licensed under Sections 1 through 18 of this act and to the commissioner through an Internet connection. Licensees shall use the database to determine if a borrower is eligible for a loan. Licensees shall submit the required data in a format as the superintendent prescribes by rule, and verify eligibility before entering into each loan transaction.
(2) If a statewide common database is developed pursuant to subsection (1) of this section, the commissioner shall adopt rules to administer and enforce this section and to ensure that the database is used by licensees in accordance with this section, including:
(a) A rule requiring that data are retained in the database only as required to ensure licensee compliance with this section;
(b) A rule requiring that identifying borrower information is deleted from the database on a regular and routine basis, twelve (12) months after the transaction is closed;
(c) A rule authorizing the archiving of deleted data, should the commissioner determine that archiving is necessary for the enforcement of this section;
(d) A rule prohibiting the database from ranking the credit worthiness of a borrower and limiting the database so that it may only be used to determine a borrower's eligibility or ineligibility for a loan based on the provisions of this chapter;
(e) A rule requiring that data collected pursuant to this section be used only as prescribed in this section and for no other purpose;
(f) A rule authorizing the database operator to impose a per transaction fee to be paid by the licensee for data required to be submitted;
(g) A rule prohibiting the database operator from including, in the database, the social security number of any borrower.
(3) The database operator, whether the commissioner or a third party selected by the commissioner, shall do all of the following:
(a) Establish and maintain a process for responding to transaction verification requests due to technical difficulties with the database that prevent the licensee from accessing the database through the Internet;
(b) Provide accurate and secure receipt, transmission, and storage of borrower data;
(c) Designate a transaction as closed within one (1) business day of receiving notification from a licensee;
(d) Take all reasonable measures to ensure the confidentiality of the database and to prevent identity theft.
(4) A licensee may rely on the information contained in the database as accurate and is not subject to any administrative penalty or civil liability as a result of relying on inaccurate information contained in the database.
(5) With respect to the database prescribed in subsection (1) of this section, any information submitted for incorporation into the database, information in the database itself, or archived information as maintained by the commissioner pursuant to this section is not a public record under the Mississippi Public Records Act, Section 25-61-1 et seq.
(6) If approved by the commissioner, the database operator may impose a per transaction fee for the actual costs of entering, accessing, and maintaining data in the database. The fee shall be payable to the database operator in a manner prescribed by the superintendent. A licensee may not charge a customer all or part of the fee.
SECTION 16. Alternative borrower database. (1) If a statewide common database is not developed under Section 15 of the act, each licensee shall subscribe to, report to, and use an electronic database tracking service that permits the licensee to determine whether the borrower has an outstanding unpaid check or debit authorization that is, or reasonably appears to be, connected to a short-term loan. In the absence of an electronic database tracking service, each licensee shall require a borrower to sign a written declaration confirming that, pursuant to Section 8 of this act, the borrower is eligible to receive a loan.
(2) The records of a licensee and any electronic database tracking service shall be subject to review and examination by the Department of Banking and Consumer Finance to determine whether the licensee is complying with this section and other applicable provisions of Sections 1 through 18 of this act.
SECTION 17. Additional duties of licensees - civil action by borrower. (1) A person licensed, and any person required to be licensed under Sections 1 through 18 of this act, in addition to duties imposed by other statutes or common law, shall do all of the following:
(a) Follow reasonable and lawful instructions from the borrower;
(b) Act with reasonable skill, care, and diligence;
(c) Act in good faith and fair dealing in any transaction or practice or course of business in connection with a short-term loan.
(2) The duties and standards of care created in this section may not be waived or modified.
(3) A borrower injured by a violation of this section may bring an action for recovery of damages. Damages awarded shall not be less than all compensation paid directly or indirectly to a licensee from any source, plus reasonable attorney's fees and court costs. The borrower may be awarded punitive damages.
SECTION 18. Reports by superintendent - confidentiality of information. (1) The Commissioner of Banking and Consumer Finance shall report semiannually to the Governor and the Legislature on the operations of the Department of Banking and Consumer Finance with respect to the following:
(a) Enforcement actions instituted by the commissioner for a violation of or failure to comply with any provision of Sections 1 through 18 of this act, and the final dispositions of each such enforcement action;
(b) Suspensions, revocations, or refusals to issue or renew licenses under Sections 1 through 18 of this act.
(2) The information required under subsection (1)(a) and (b) of this section does not include information that, pursuant to subsection (3) of this section, is confidential.
(3) The following information is confidential:
(a) Examination information, and any information leading to or arising from an examination;
(b) Investigation information, and any information arising from or leading to an investigation.
(4) The information described in subsection (1)(a) of this section shall remain confidential for all purposes except when it is necessary for the commissioner to take official action regarding the affairs of a licensee, or in connection with criminal or civil proceedings to be initiated by a prosecuting attorney or the Attorney General.
(5) All application information, except social security numbers, employer identification numbers, financial account numbers, the identity of the institution where financial accounts are maintained, personal financial information, fingerprint cards and the information contained on such cards, and criminal background information, is a public record as defined in the Mississippi Public Records Act, Section 25-61-1 et seq.
(6) This section does not prevent the department from releasing information relating to licensees to the Attorney General for purposes of that office's administration of Sections 75-24-1 through 75-24-27. Information the department releases to the Attorney General pursuant to this section remains privileged and confidential, and the Attorney General may not disclose the information except by introduction into evidence in connection with the Attorney General's administration of Sections 75-24-1 through 75-24-27 or as authorized by the commissioner.
SECTION 19. Consumer finance education board. (1) There is hereby created a consumer finance education board, consisting of the following ten (10) members:
(a) An employee of the Mississippi Attorney General's office, appointed by the Governor;
(b) An employee of the Department of Banking and Consumer Finance, appointed by the Governor;
(c) An employee of the Mississippi Home Corporation, appointed by the Governor;
(d) A representative of Mississippi minority advocacy groups, appointed by the Governor;
(e) A member of the Mississippi Bankers Association, appointed by the Speaker of the House of Representatives;
(f) A member of the Mississippi Credit Union Association, appointed by the Speaker of the House of Representatives;
(g) A representative of the Mississippi real estate industry, appointed by the Speaker of the House of Representatives;
(h) A member of the Mississippi mortgage brokers association, appointed by the Lieutenant Governor;
(i) A representative of the financial services industry, appointed by the Lieutenant Governor;
(j) A representative of consumer advocacy organizations, appointed by the Lieutenant Governor.
(2) Geographically diverse representation of the state shall be considered in making appointments. Of the initial appointments to the board, four (4) shall be for a term ending December 31, 2010, four (4) shall be for a term ending December 31, 2011, and four (4) shall be for a term ending December 31, 2012. Thereafter, terms of office are for three (3) years, commencing on the first day of January and ending on the thirty-first day of December. Each member shall hold office from the date of the member's appointment until the end of the term for which the member is appointed. Prior to assuming the duties of office, each member shall subscribe to, and file with the Secretary of State, the constitutional oath of office. Vacancies that occur on the board shall be filled in the manner prescribed for regular appointments to the board. A member appointed to fill a vacancy occurring prior to the expiration of the term for which the member's predecessor was appointed shall hold office for the remainder of that predecessor's term. A member shall continue in office subsequent to the expiration date of the member's term until the member's successor takes office or until sixty (60) days have elapsed, whichever occurs first. No person shall serve as a member of the board for more than two (2) consecutive terms.
(3) Annually, upon the qualification of the members appointed in that year, the board shall organize by selecting from its members a chairperson. The board shall meet at least once each calendar quarter to conduct its business with the place of future meetings to be decided by a vote of its members. Each member shall be provided with written notice of the time and place of each board meeting at least ten (10) days prior to the scheduled date of the meeting. A majority of the members of the board constitutes a quorum to transact and vote on all business coming before the board.
(4) (a) The Governor shall call the first meeting of the Consumer Finance Education Board. At that meeting, and annually thereafter, the board shall elect a chairperson for a one-year term and may elect members to other positions on the board as the board considers necessary or appropriate.
(b) Each member of the board shall receive the uniform per diem for public officers pursuant to Section 25-3-69 for each day employed in the discharge of the member's official duties, and the member's actual and necessary expenses incurred in the discharge of those duties pursuant to Section 25-3-41.
(5) The board may obtain services from any state agency, including, but not limited to, the Department of Banking and Consumer Finance or its successor agency.
SECTION 20. Additional duties of Consumer Finance Education Board. (1) In addition to any other duties imposed on the Consumer Finance Education Board by Section 19 of this act, the board shall:
(a) Analyze and investigate, on its own initiative, the policies and practices of state agencies, nonprofit entities, and businesses, inasmuch as such policies and practices address financial literacy, access by state residents to financial information, education, and resources, prevention of foreclosures and bankruptcies, prepurchase and postpurchase counseling and education for homebuyers, and small loan counseling and education for borrowers;
(b) Provide an annual report and consultation and recommendations to the Governor, the Legislature, state agencies, nonprofit entities, and businesses based on the board's findings;
(c) Coordinate and provide resources and assistance to state agencies, nonprofit entities, and businesses in the furtherance of those entities' efforts to improve financial literacy, access by state residents to financial information, education, and resources, prevention of foreclosures and bankruptcies, prepurchase and postpurchase counseling and education for homebuyers, and small loan counseling and education for borrowers.
(d) Provide financial assistance to Mississippians through grants and utilize these same funds to provide grants to design, develop, and implement any other programs described in this section.
(e) Receive grants for the implementation of this section.
(2) The board may assign and delegate the execution of its duties to smaller groups of its own members, which shall include committees specifically chartered to address all of the following issues:
(a) The needs of persons, ages eighteen (18) to twenty-five (25), in the context of the objectives enumerated in subsection (1) of this section;
(b) The needs of persons, classified as needy, based on a household adjusted gross income equal to or less than two hundred percent (200%) of the poverty level or the earned income amount described in Section 32 of the Internal Revenue Code of 1986, taking into account the size of the household, in the context of the objectives enumerated in subsection (1) of this section;
(c) The needs of persons, previously convicted of one or more felonies, in the context of the objectives enumerated in subsection (1) of this section;
(d) The needs of persons, characterized as vulnerable by reason of advanced age, disability, minority, or other demographic consideration, in the context of the objectives enumerated in subsection (1) of this section;
(e) Any other group or issue identified by the board as worthy of particular attention.
(3) The board shall create a pilot financial literacy and counseling program, to be operated in the five (5) counties with the highest mortgage foreclosure rates as of the effective date of this act, and completion of which shall be recommended by mortgage brokers and loan officers for any consumer seeking a mortgage loan with origination fees greater than five percent (5%). Before a mortgage broker permits a consumer to commit to such a loan, the broker shall notify the consumer that the loan may have attributes that are predatory. No person who offers education, advice, or counseling through the financial literacy and counseling program shall be held liable for any damages incurred from actions taken based on the education, advice, or counseling given.
SECTION 21. Sections 75-67-505, 75-67-507, 75-67-515, 75-67-516, 75-67-519, 75-67-525 and 75-67-539, Mississippi Code of 1972, which create the Mississippi Check Cashers Act, are hereby repealed.
SECTION 22. This act shall take effect and be in force from and after July 1, 2009.