MISSISSIPPI LEGISLATURE
2016 Regular Session
To: Business and Financial Institutions
By: Senator(s) Doty
AN ACT TO CREATE THE "LIMITED ACCESS CREDIT ACT"; TO DEFINE CERTAIN TERMS USED IN THE ACT; TO REQUIRE A LICENSE FROM THE COMMISSIONER OF BANKING AND CONSUMER FINANCE BEFORE ENGAGING IN BUSINESS AS A LIMITED ACCESS CREDIT LICENSEE; TO PROVIDE EXEMPTIONS TO THE ACT; TO PROVIDE ELIGIBILITY REQUIREMENTS FOR A LIMITED ACCESS CREDIT LICENSE; TO PROVIDE THAT EACH APPLICATION FOR A LICENSE SHALL BE IN A FORM PRESCRIBED BY THE COMMISSIONER; TO REQUIRE INVESTIGATION BY THE DEPARTMENT OF BANKING BEFORE ISSUANCE OF A LICENSE, AND TO REQUIRE THAT THE LICENSE SHALL BE CONSPICUOUSLY POSTED IN THE PLACE OF BUSINESS OF THE LICENSEE; TO AUTHORIZE THE DEPARTMENT OF BANKING TO ADOPT REGULATIONS AND TO EXAMINE THE BOOKS AND RECORDS OF ANY LICENSEE; TO PROHIBIT THE ADVERTISING, DISPLAYING OR PUBLISHING OF FALSE OR MISLEADING STATEMENTS BY A LICENSEE; TO PROVIDE FOR FEES AND CHARGES TO BE CHARGED BY A LICENSEE UNDER A LIMITED ACCESS CREDIT AGREEMENT; TO AUTHORIZE THE COMMISSIONER OF BANKING TO SUSPEND OR REVOKE A LICENSE UPON MAKING CERTAIN FINDINGS; TO AUTHORIZE THE COMMISSIONER OF BANKING TO INVESTIGATE AND EXAMINE PERSONS LICENSED UNDER THE ACT AND PERSONS REASONABLY SUSPECTED OF CONDUCTING BUSINESS WHICH REQUIRES A LICENSE UNDER THE ACT; TO PROVIDE PENALTIES FOR ENGAGING IN BUSINESS WITHOUT A LICENSE; TO PROVIDE CRIMINAL AND CIVIL PENALTIES FOR VIOLATIONS OF THE ACT; TO REQUIRE THE COMMISSIONER OF BANKING TO DEVELOP ANY NECESSARY FORMS TO CARRY OUT THE PROVISIONS OF THE ACT; TO PROVIDE THAT MUNICIPALITIES OF THIS STATE MAY ENACT ORDINANCES WHICH ARE IN COMPLIANCE WITH, BUT NOT MORE RESTRICTIVE THAN, THE PROVISION OF THE ACT; TO AUTHORIZE THE COMMISSIONER OF BANKING TO EMPLOY THE NECESSARY FULL-TIME EMPLOYEES ABOVE THE NUMBER OF PERMANENT FULL-TIME EMPLOYEES AUTHORIZED FOR THE DEPARTMENT FOR FISCAL YEAR 2016 TO ENFORCE THE PROVISIONS OF THE ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Short title. This act shall be known and may be cited as the "Limited Access Credit Act."
SECTION 2. Chapter definitions. (1) The following words and phrases used in this act shall have the following meanings unless the context clearly indicates otherwise:
(a) "Appropriate law enforcement agency" means the sheriff of each county in which the licensee maintains an office, or the police chief of the municipality in which the licensee maintains an office, or law enforcement officers of the Department of Public Safety.
(b) "Attorney General" means the Attorney General of the State of Mississippi.
(c) "Commissioner" means the Mississippi Commissioner of Banking and Consumer Finance, or his designee, as the designated official for the purpose of enforcing this act.
(d) "Department" means the Department of Banking and Consumer Finance.
(e) "Licensee" means any individual, partnership, association or corporation duly licensed by the Department of Banking and Consumer Finance to engage in the business of providing limited access credit under this act.
(f) "Limited access credit transaction" means a transaction whereby a limited access credit licensee provides a consumer with an unsecured loan, payable in equal payments based on the amount initially disbursed to the customer plus any fees that may be charged, in an amount and manner provided for under this act.
(g) "Month" means the calendar month beginning on and including the date of the limited access credit transaction.
(h) "Person" means an individual, partnership, corporation, joint venture, trust, association or any legal entity, however organized.
SECTION 3. Licensing requirements. (1) A person may not engage in business as a limited access credit licensee or otherwise portray himself as a limited access credit licensee unless the person has a valid license authorizing engagement in the business. Any transaction that would be subject to this act that is made by a person who does not have a valid license under this act shall be null and void.
(2) A Limited access credit licensee shall (a) have a definitive United States Postal address and E911 address; (b) comply with local zoning requirements; (c) have the proper signage; and (d) maintain separate books and records for the limited access credit transactions.
(3) (a) The commissioner may issue more than one (1) license to a person if that person complies with this act for each license. A new license is required upon a change, directly or beneficially, in the ownership of any licensed limited access credit business and an application shall be made to the commissioner in accordance with this act.
(b) When a licensee wishes to move a limited access credit business to another location, the licensee shall give thirty (30) days' prior written notice to the commissioner who shall amend the license accordingly.
(c) Each license shall remain in full force and effect until relinquished suspended, revoked or expired. With each initial application for a license, the applicant shall pay the commissioner at the time of making the application a license fee of Seven Hundred Fifty Dollars ($750.00), and on or before September 1 of each year thereafter, an annual renewal fee of Four Hundred Seventy-five Dollars ($475.00). If the annual renewal fee remains unpaid twenty-nine (29) days after September 1, the license shall thereupon expire, but not before the thirtieth day of September of any year for which the annual fee has been paid. If any licensee fails to pay the annual renewal fee before the thirtieth day of September of any year for which the renewal fee is due, then the licensee shall be liable for the full amount of the license fee, plus a penalty in an amount not to exceed Twenty-five Dollars ($25.00) for each day that the licensee has engaged in business after September 30. All licensing fees and penalties shall be paid into the Consumer Finance Fund of the Department of Banking and Consumer Finance.
(d) Notwithstanding other provisions of this act, the commissioner may issue a temporary license authorizing the operator of a limited access credit business on the receipt of an application for a license involving principals and owners that are substantially identical to those of an existing licensed limited access credit licensee. The temporary license is effective until the permanent license is issued or denied.
SECTION 4. Exemptions. The provisions of this act shall not apply to any bank, trust company, savings association, savings and loan association, savings bank or credit union which is chartered under the laws of this state or under federal law and domiciled in this state.
SECTION 5. Applicant eligibility requirements. To be eligible for a limited access credit license, applicant shall:
(a) Operate lawfully and fairly within the purposes of this act.
(b) Not have been convicted of a felony in the last ten (10) years or be active as a beneficial owner for someone who has been convicted of a felony in the last ten (10) years.
(c) File with the commissioner a bond with good security in the penal sum of Ten Thousand Dollars ($10,000.00), payable to the State of Mississippi for the faithful performance by the licensee of the duties and obligations pertaining to the business so licensed and the prompt payment of any judgment which may be recovered against the licensee on account of charges or other claims arising directly or collectively from any violation of the provisions of this act. The bond shall not be valid until it is approved by the commissioner. The applicant may file, in lieu of the bond, cash, a certificate of deposit or government bonds in the amount of Ten Thousand Dollars ($10,000.00). Those deposits shall be filed with the commissioner and are subject to the same terms and conditions as are provided for in the surety bond required in this paragraph. Any interest or earnings on those deposits are payable to the depositor. Applicants applying for multiple licenses may submit a single bond for all licenses, provided that the total value of the bond is equal to Ten Thousand Dollars ($10,000.00) per license.
(d) File with the commissioner an application for a license and the initial license fee required in this act. If applicant's application is approved, a limited access credit license will be issued within thirty (30) days.
(e) Submit a set of fingerprints from any local law enforcement agency. In order to determine the applicant's suitability for license, the commissioner shall forward the fingerprints to the Department of Public Safety; and if no disqualifying record is identified at the state level, the fingerprints shall be forwarded by the Department of Public Safety to the FBI for a national criminal history record check.
(f) Complete and file with the commissioner an annual renewal application for a license accompanied by the renewal fee required in this act.
SECTION 6. Application Form. Each application for a license shall be in a form prescribed by the commissioner, signed under oath, and shall include the following:
(a) The legal name, residence and business address of the applicant and, if the applicant is a partnership, association or corporation, of every member, officer and director thereof. However, the application need not state the full name and address of each shareholder, if the applicant is owned directly or beneficially by a person which as an issuer has a class of securities registered under Section 12 of the Securities and Exchange Act of 1934 or is an issuer of securities which is required to file reports with the Securities and Exchange Commission under Section 15(d) of the Securities and Exchange Act, provided that the person files with the commissioner such information, documents and reports as are required by the provisions of the Securities and Exchange Act to be filed by the issuer with the Securities and Exchange Commission.
(b) The complete address of the location at which the applicant proposes to engage in the business of offering limited access credit accounts.
(c) Other data and information the department may require with respect to the applicant, its directors, trustees, officers members or agents.
(d) Sworn financial statements of the applicant showing a net worth of at least Twenty Thousand Dollars ($20,000.00) for the first license. The applicant shall possess and maintain a net worth of at least Twenty Thousand Dollars ($20,000.00) for the first license and at least Five Thousand Dollars ($5,000.00) for each additional license.
SECTION 7. Investigations, findings and posting of licenses. (1) Upon filing of an application in a form prescribed by the commissioner, accompanied by the documents required in this act, the department shall investigate to ascertain whether the qualifications prescribed in this act have been satisfied. If the commissioner finds that the qualifications have been satisfied and, if he approves the documents so filed by the applicant, he shall issue to the applicant a license to engage in the limited access credit business in this state.
(2) The license shall be kept conspicuously posted in the place of business of the licensee.
SECTION 8. Licensee duties; regulations; examinations of books and records. (1) The department may adopt reasonable administrative regulations, not inconsistent with law, for the enforcement of this act.
(2) To assure compliance with the provisions of this act, the department may examine the books and records of any licensee without notice during normal business hours. The commissioner may charge the licensee an examination fee in an amount not less than Three Hundred Dollars ($300.00) nor more than Six Hundred Dollars ($600.00) for each office or location within the State of Mississippi plus any actual expenses incurred while examining the licensee's records or books that are located outside the State of Mississippi. However, in no event shall a licensee be examined more than once in a two-year period unless for cause shown based upon a consumer complaint and/or other exigent reasons as determined by the commissioner.
(3) Each licensee shall keep and use in its business any books, accounts and records the department may required to carry into effect the provisions of this act and the administrative regulations issued under this act. Every licensee shall preserve the books, accounts and records of its business for at least two (2) years.
SECTION 9. Advertising, displaying or publishing false or misleading statements prohibited. A licensee shall not advertise, display or publish, or permit to be advertised, displayed or published, in any manner whatsoever, any statement or representation that is false, misleading or deceptive.
SECTION 10. Fees and charges; method of computation. (1) Notwithstanding any other statutory limitation, a licensee authorized to provide limited access credit transactions under this act may charge and collect fees and charges in a manner consistent with this section.
(2) A licensee may charge and collect a monthly handling fee for services, expenses, and costs not to exceed thirty two and a half percent (32.5%) of the outstanding principal balance of any limited access credit account per month, or any portion thereof. The handling fee shall not be deemed interest for any purpose of law.
(3) (a) In addition to the charges authorized under subsection (2) of this section, a licensee may also charge and collect an origination fee in the amount of one percent (1%) of the amount disbursed to the customer or Five Dollars ($5.00), whichever is greater, for costs associated with providing a limited access credit transaction.
(b) The origination fee shall not be deemed interest for any purpose of law.
(4) No individual shall have an outstanding limited access credit principal balance with any limited access credit licensee in excess of Seven Hundred Fifty Dollars ($750.00) at any time.
(5) Any limited access credit account under this act shall require payments on or before the due date of each payment in an amount sufficient to reduce any outstanding principal balance by a minimum of eight percent (8%) each calendar month. Notwithstanding the foregoing, the customer shall be given a minimum of four (4) months to repay the original amount disbursed to the customer under the limited access credit agreement.
(6) In the event a customer defaults under the terms of a limited access credit agreement, the licensee may charge and collect from the customer the following fees in connection with any such default, provided such fees are clearly disclosed in the limited access credit agreement in accordance with the Federal Truth in Lending Act:
(a) The licensee may charge and collect a late fee of ten percent (10%) of the past due amount, provided however, that no such late fee may be charged unless a customer has failed to pay the past due amount within three (3) business days after the due date;
(b) If the licensee is required to collect on the customer's account the licensee may:
(i) If the limited access credit agreement so provides, charge and collect a reasonable attorney's fee; and
(ii) If the limited access credit agreement so provides, a licensee shall be entitled to recover from the customer all court costs incurred and to recover court awarded damages, including those incurred on appeal.
SECTION 11. Licensee to provide consumer with a written explanation of fees and charges. (1) A licensee shall provide each prospective customer, before consummation of a limited access credit transaction, a written explanation of the fees, and charges to be charged by the licensee and the due dates for all payments. The style, content and method of executing the required written explanation shall comply with federal truth-in-lending laws and shall contain a statement that the customer may prepay the unpaid balance in whole or in part at any time. The commissioner may promulgate rules in accordance with this act in order to assure complete and accurate disclosure of the fees and charges to be charged by a licensee under a limited access credit agreement. At a minimum, the written explanation must include:
(a) The amount of the transaction;
(b) The date the agreement was entered into;
(c) A schedule or description of the payments;
(d) The name and address of the licensed office;
(e) The name of the person primarily obligated on the agreement;
(f) The amount of the principal;
(g) The agreed rate of charge stated on a percent per year basis and the amount in dollars and cents;
(h) All other disclosures required pursuant to state and federal law.
(2) The contract for any limited access credit agreement shall include, along with other state or federal law requirements, the right for a customer to rescind the transaction within one (1) business day; provided, however, that if the customer accepts funds from the limited access credit licensee prior to the expiration of the one (1) day rescission period, any origination fee charged shall be nonrefundable.
(3) A licensee shall display in its customer area, and shall provide a copy to any customer that requests it, a pamphlet that describes general information about the transaction and about the customer's rights and responsibilities in the transaction, including the rates and fees charged by the licensee, the licensee's rights in event of default by the consumer, the maximum allowable account balance, and the consumer hotline phone number to the Mississippi Department of Banking and Consumer Finance.
SECTION 12. Suspending or revoking license; reinstatement; notice to law enforcement. (1) The commissioner may, after notice and hearing, suspend or revoke a license if he finds that:
(a) The licensee, either knowingly, or without the exercise of due care to prevent the same, has violated any provision of this act;
(b) Any fact or condition exists which, if it had existed or had been known to exist at the time of the original application for the license, clearly would have justified the commissioner in refusing the license;
(c) The licensee has aided, abetted or conspired with an individual or person to circumvent or violate the requirement of this act;
(d) The licensee, or a legal or beneficial owner of the license, has been convicted of a felony, or has been convicted or a misdemeanor that the commissioner finds directly relates to the duties and responsibilities of the business of offering limited access credit.
(2) The commissioner may conditionally license or place on probation a person whose license has been suspended or may reprimand a licensee for a violation of this act.
(3) The manner of giving notice and conducting a hearing as required by subsection (1)(a) of this section shall be performed in accordance with procedures prescribed by the commissioner in rules or regulations adopted under Mississippi Administrative Procedures Law, Section 25-43-1 et seq.
(4) Any licensee may surrender any license by delivering it to the commissioner with written notice of its surrender, but that surrender shall not affect the licensee's civil or criminal liability for acts committed prior thereto.
(5) The commissioner may reinstate suspended licenses or issue new licenses to a person whose licenses have been revoked if no fact or condition then exists which clearly would have justified the commissioner in refusing originally to issue a license under this act.
(6) The appropriate local law enforcement agency shall be notified of any licensee who has his license suspended or revoked as provided by this act.
(7) The commissioner shall enforce the provisions of this section.
SECTION 13. Investigative powers and examinations. The commissioner, or his duly authorized representative, for the purpose of discovering violations of this act and for the purpose of determining whether persons are subject to the provisions of this act, may examine persons licensed under this act and persons reasonably suspected by the commissioner of conducting business which requires a license under this act, including all relevant books, records and papers employed by those persons in the transaction of their business, and may summon witnesses and examine them under oath concerning matters relating to the business of those persons, or such other matters as may be relevant to the discovery of violations of this act, including without limitation the conduct of business without a license as required under this act.
SECTION 14. Engaging in business without license; penalty. (1) Any person who engages in the business of offering limited access credit without first securing a license prescribed by this act shall be guilty of a misdemeanor and upon conviction thereof, shall be punishable by a fine not in excess of One Thousand Dollars ($1,000.00) or by confinement in the county jail for not more than one (1) year, or both.
(2) Any person who engages in the business of offering limited access credit without first securing a license prescribed by this act shall be liable for the full amount of the license fee, plus a penalty in an amount not to exceed Twenty-five Dollars ($25.00) for each day that the person engaged in the business without a license. All licensing fees and penalties shall be paid into the Consumer Finance Fund of the Department of Banking and Consumer Finance.
SECTION 15. Violations; criminal and civil penalties; enforcement; order to refrain; injunctions; bond forfeiture. (1) In addition to any other penalty which may be applicable, any licensee or employee who willfully violates any provision of this act, or who willfully makes a false entry in any record specifically required by this act, shall be guilty of a misdemeanor and upon conviction thereof, shall be punishable by a fine not in excess of One Thousand Dollars ($1,000.00) per violation or false entry.
(2) Compliance with criminal provisions of this act shall be enforced by the appropriate law enforcement agency, which may exercise for that purpose any authority conferred upon the agency by law.
(3) When the commissioner has reasonable cause to believe that a person is violating any provision of this act, the commissioner, in addition to and without prejudice to the authority provided elsewhere in this act, may enter an order requiring the person to stop or to refrain from the violation. The commissioner may sue in any circuit court of the state having jurisdiction and venue to enjoin the person from engaging in or continuing the violation or form doing any action furtherance of the violation. In such an action, the court may enter an order or judgment awarding a preliminary or permanent injunction.
(4) The commissioner may impose a civil penalty against any licensee adjudged by the commissioner to be in violation of the provisions of this act. The civil penalty shall not exceed Five Hundred Dollars ($500.00) per violation and shall be deposited into the Department of Banking and Consumer Finance, "Consumer Finance Fund."
(5) Any licensee convicted in the manner provided in this act shall forfeit the surety bond or deposit required in this act and the amount of the bond or deposit shall be credited to the budget of the state or local agency which directly participated in the prosecution of the licensee, for the specific purpose of increasing law enforcement resources for that specific state or local agency. The bond or deposit shall be used to augment existing state and local law enforcement budgets and not to supplant them.
SECTION 16. Severability. The provisions of this act are severable. If any part of this act is declared invalid or unconstitutional, that declaration shall not affect the parts which remain.
SECTION 17. Forms. The commissioner shall develop and provide any necessary forms to carry out the provisions of this act.
SECTION 18. Municipal ordinances. (1) Municipalities of this state may enact ordinances which are in compliance with, but not more restrictive than, the provisions of this act. Any existing or future order, ordinance or regulation which conflicts with this provision shall be null and void.
(2) For purposes of existing zoning ordinances, any person or entity conducting business under a valid license of any kind from the department as of the effective date of this act that elects to secure a license under this act may not be restricted from continuing operations under this act in the same location, regardless of whether the licensee elects to continue, if permitted by law, or terminate its previous license.
SECTION 19. Commissioner employees and funds authorized for enforcement. The commissioner may employ the necessary full-time employees above the number of permanent full-time employees authorized for the department for fiscal year 2016, to carry out and enforce the provisions of this act. The commissioner may also expend the necessary funds to equip and provide necessary travel expenses for those employees.
SECTION 20. This act shall take effect and be in force from and after July 1, 2016.