InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Oregon Governor Enacts Law Regarding Compliance Requirements for Debt Collection Licensees
On August 2, Oregon Governor Kate Brown signed into law House Bill 2356 (HB 2356), which establishes provisions relating to debt collection practices in the state. Among other things, the law (i) details the practices a debt buyer, or debt collector acting on behalf of a debt buyer, is required to follow to legally collect debt; (ii) specifies the type of notice and documents that a debt buyer must provide to a debtor; (iii) requires persons engaged in debt buying to obtain or renew their licenses through the Department of Consumer and Business Services; and (iv) specifies duties of licensees, outlines prohibited conduct, and identifies unlawful collection practices. The law takes effect January 1, 2018.
North Carolina Amends Collection Agency Definition
On July 20, North Carolina Governor Roy Cooper signed into law Senate Bill 415 (S.L. 149), which amends the state’s collection agency law to exclude persons engaged in routine billing services from the definition of a “collection agency.” Specifically, a “collection agency” does not include “corporations or associations engaged in accounting, bookkeeping, or data processing services where a primary component of such services is the rendering of statements of accounts and bookkeeping services for creditors.” The law went into effect July 20, 2017.
Connecticut Governor Enacts Law Regarding Compliance Requirements for Mortgage Licensees
On July 11, Connecticut Governor Dannel Malloy signed into law Public Act No. 17-233 (H.B. 7141), which makes various revisions to the state’s banking laws. Among other things, the law (i) applies certain mortgage servicers’ and student loan servicers’ prohibited acts to other licensees; (ii) requires non-depository licensees to maintain and enforce compliance policies and procedures; (iii) allows the banking commissioner to require the use of electronic bonds for licensed or registered individuals to participate in the Nationwide Mortgage Licensing System; (iv) reduces pre-licensing education requirements for mortgage loan originators, loan processors, and underwriters; and (v) sets limits for money transmitters regarding virtual currency transactions and timeframes for transmitting money. The law takes effect October 1, 2017, with provisions relating to compliance policies and procedures taking effect July 1, 2018, and pre-licensing education requirements taking effect January 1, 2019.
Hawaii Enacts Law to Prohibit Release of Credit Information of Children, Others
On July 5, Hawaii Governor David Y. Igge signed into law H.B. 651, which was devised to protect children and certain other individuals from identity theft and credit fraud. The law applies to “protected consumers,” defined as minors under the age of 16 years, incapacitated persons, and individuals with appointed guardians or conservators.
Based on research suggesting that minors may be targeted for identity theft due to their clean credit reports, the legislation permits representatives of protected consumers to place and remove security freezes on protected consumers’ credit files. Because one impediment to requesting such a freeze is the lack of an existing credit file, the legislation also requires consumer credit reporting agencies (CRAs) to create records for the protected consumers. A CRA may not release the protected person’s file when it is in a security freeze until the representative requests a removal of the freeze. In order to request a security freeze or a freeze removal, a protected person’s representative must provide proper identification and evidence of authority to the CRA. Additionally, with a few exceptions, the CRA may charge a fee not to exceed five dollars for each freeze or removal of a freeze to a protected person’s credit file.
The law will go into effect on January 1, 2018.
Maine Passes Law to Notify Secretary of State About Abandoned Motor Vehicles
On June 21, LD 1251, “An Act Regarding Certain Abandoned Vehicles and Notice to the Secretary of State Regarding Those Vehicles” became law in Maine. The law applies to a vehicle left at a business after authorized repairs were made at the request of the vehicle owner, and to a vehicle left in storage when the vehicle owner has not paid the storage fee. The law requires the owner of a repair or storage facility or the owner’s agent to notify the Secretary of State within 14 days after the earliest date that the vehicle owner becomes responsible for unpaid repair or storage and towing fees. After notice is provided by the facility (or facility’s agent), the Secretary of State must notify the vehicle’s owner and lienholder that the vehicle is being claimed unless the charges against the vehicle are paid. If the Secretary of State is not notified within 14 days using the prescribed form, the owner of the auto repair business or storage facility cannot charge the vehicle owner more than 14 days of storage fees. The law will take effect 90 days following the adjournment of the legislative session.
North Carolina Changes Retail Installment Sales Act Default Fee
On June 12, the General Assembly of North Carolina ratified Senate Bill 577, which amends the North Carolina Retail Installment Sales Act. Specifically, Senate Bill 577 modifies the late charge on an installment sale contract to be a flat fee of fifteen dollars, which is an increase from the prior limit of the lesser of five percent of the installment payment amount or six dollars. The amendment became effective on June 26 and applies to defaults from that day forward.
Texas Passes Law Repealing Vehicle Protection Product Regulatory Act
On June 15, Texas Governor Greg Abbott signed SB 2065. The law modifies a number of motor vehicle-related regulations and licensing requirements. Specifically, the law:
- eliminates the Vehicle Protection Product Act;
- abolishes the Vehicle Protection Product Warrantor Advisory Board;
- requires the warrantor of a vehicle protection product to pay expenses to the person who purchases the product or system if loss or damage occurs due to failure of the product or system;
- prohibits a retail seller from requiring a vehicle buyer—“as a condition of a retail installment transaction or the cash sale of a commercial vehicle”—to buy a vehicle protection product that is not installed on the vehicle at the time of the transaction, classifying this violation as a “false, misleading, or deceptive act or practice” actionable under the Deceptive Trade Practices-Consumer Protection Act; and
- eliminates the licensing requirements for boot operators and boot companies, but requires a booting company to remove a boot within an hour of being contacted by the owner or forfeit all removal fees.
The law takes effect September 1.
Florida Adds Virtual Currency to Anti-Money Laundering Law
On June 23, Florida Governor Rick Scott signed H.B. 1379, which will incorporate virtual currency into the Florida Money Laundering Act. Specifically, the Bill adds virtual currency to the list of currency and negotiable instruments classified as “monetary instruments” under the Act. In addition, virtual currency will be included in the definitions section as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.” The law goes into effect on July 1.
Ohio Enacts Consumer Installment Loan Act
On June 13, Ohio Governor John R. Kasich signed into law S.B. 24, the Ohio Consumer Installment Loan Act (CILA). According to a blog post on the Ohio senate majority caucus’ website, CILA aims to “clarify Ohio's installment lending laws to help eliminate confusion for consumers and lenders as well as simplify the role of industry regulators.” CILA applies to loans that, among other requirements, exceed a term of six months, generally require equal monthly payments, are not secured by real property, are not covered by any other Ohio loan laws, and have a maximum interest rate of 25 percent (or 28 percent for an open-end loan). CILA also provides for regulation and lender licensing by the state’s Division of Financial Institutions in the Department of Commerce. The law goes into effect on July 1.
Iowa Enacts Amendments to Consumer Credit Code
Two amendments to the Iowa Consumer Credit Code (ICCC) recently signed into law by Iowa Governor Terry Branstad will go into effect July 1. The ICCC applies to, among others, consumer credit transactions, retail installment sales, lending transactions, and motor vehicle financing.
Senate File 502, which relates to banks, credit unions, and specific consumer credit transactions, adds a new subsection 2A to the ICCC, which states a supervised loan made in violation of subsection 2 is void and “the consumer is not obligated to pay either the amount financed or the finance charge.” Additionally, “[i]f the consumer has paid any part of the amount financed or the finance charge, the consumer has the right to recover the payment from the [lender] . . . or from an assignee . . . who undertakes direct collection of payments or enforcement of rights arising from the debt.” Open-end loans have a statute of limitations of two years from the date of the violation, and closed-end loans have a statute of limitations of one year after the due date of the last scheduled payment. Other changes under Senate File 502 include a removal of the ban prohibiting returned check fees, an increase in the maximum late fee applied to transactions, and a clause that allows credit reporting charges to be excluded from finance charges.
Senate File 503, which concerns “the deferral of unpaid installments and deferral charges for certain interest-bearing consumer credit transactions,” contains the following changes, among others: (i) parties may agree in writing to the deferral of unpaid installments before or after default, and (ii) deferral charges are permitted on closed-end, interest-bearing transactions and limited to $30.