3899-1:N:04/11/1992:DA/DA LRS97-3143
| SYNOPSIS: | Existing law does not provide for the licensing and regulation of delayed deposit check-cashing services. |
| This bill would provide for the State Banking Department to license and regulate individuals engaged in delayed deposit check-cashing services. | |
| This bill would provide for license fees, the suspension and revocation of the license, and the surrender of licenses. | |
| This bill would provide for limitation on the maximum fees charged for delayed deposit check-cashing services. | |
| This bill would provide for the State Banking Department to promulgate rules and regulations to administer this bill, and to provide for fines and penalties for violation. |
To license and regulate delayed deposit check-cashing services; to provide for definitions; to provide for administration by the State Banking Department; to provide for exemptions, fines, and penalties; and to provide for an appropriation.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as the "Deferred Presentment Services Act."
Section 2. As used in this act, the following terms shall have the following meanings:
Section 3. No person shall engage in the business of deferred presentment services without having first obtained a license. A separate license shall be required for each location from which such business is conducted. Any person engaged in the business of deferred presentment services on the effective date of this act may continue to engage in the business without a license until the supervisor has acted upon the application for a license if the application is filed within 60 days after the effective date of this act.
Section 4. An applicant shall satisfy the following requirements to qualify for a license:
(1) The applicant shall have a minimum net worth determined in accordance with generally accepted accounting principles of at least twenty-five thousand dollars ($25,000) available for the operation of each location.
(2) The financial responsibility, financial condition, business experience, character, and general fitness of the applicant shall reasonably warrant the belief that the applicant's business will be conducted lawfully and fairly. In determining whether this qualification has been met, and for the purpose of investigating compliance with this act, the supervisor may review and approve any of the following:
a. The relevant business records and the capital adequacy of the applicant.
b. The competence, experience, integrity, and financial ability of any person who is a director, officer, or five percent or more shareholder of the applicant or owns or controls the applicant.
c. Any record on the part of the applicant, or any person referred to in paragraph b., of any criminal activity, any fraud, or other act of personal dishonesty, any act, omission, or practice which constitutes a breech of a fiduciary duty, or any suspension, removal, or administrative action by any agency or department of the United States or any state from participation in the conduct of any business.
(3) The requirements set forth in subdivisions (1) and (2) shall be continuing in nature.
Section 5. Each application for a license shall be in writing and under oath to the supervisor, in a form prescribed by the supervisor, and shall include all of the following:
(1) The legal name and residence and business address of the applicant. If the applicant is a partnership, association, or corporation, the name and address of every member, officer, managing employee, and director.
(2) The location in Alabama at which the registered office of the applicant shall be located.
(3) Other data and information the supervisor may require with respect to the applicant, its directors, trustees, officers, members, managing employees, or agents.
Section 6. (a) Each application for a license shall be accompanied by both of the following:
(1) A filing fee of five hundred dollars ($500) which shall not be subject to refund but which, if the license is granted, shall constitute the license fee for the first license year or part thereof.
(2) A balance sheet and income statement for the immediately preceding fiscal year end, prepared in accordance with generally accepted accounting principles by a certified public accountant or public accounting firm. For a newly created entity, the supervisor may accept a balance sheet only, accompanied by a projected income statement demonstrating that the licensee shall have adequate capital after payment of start-up costs.
(b) The filing fee in subdivision (1) shall be applicable to each location.
Section 7. (a) Upon the filing of an application in the form prescribed by the supervisor, accompanied by the fee and documents required in Section 6, the supervisor shall investigate to ascertain whether the qualifications prescribed by Section 4 have been satisfied. If the supervisor finds that the qualifications have been satisfied, and approves the documents, the supervisor shall issue to the applicant a license to engage in the deferred presentment services business in Alabama.
(b) The license shall be kept conspicuously posted in the place of business of the licensee.
(c) A license issued pursuant to this section shall remain in force and effect through the remainder of the fiscal year ending September 30 after its date of issuance unless surrendered, suspended, or revoked pursuant to this act.
Section 8. (a) A license issued pursuant to this act shall not be transferred or assigned.
(b) The prior written approval of the supervisor shall be required for the continued operation of a deferred presentment services business whenever a change in control of a license is proposed. Control in the case of a corporation shall mean direct or indirect ownership, or the right to control 25 percent or more of the voting shares of the corporation, or the ability of a person to elect a majority of the directors or otherwise effect a change in policy. Control in the case of any other entity shall mean the ability to change the principles of the organization, whether active or passive. The supervisor may require information deemed necessary to determine whether a new application is required. Costs incurred by the supervisor in investigating a change of control request shall be paid by the person requesting such approval, subject to the limitations set forth in Section 11.
(c) A licensee shall notify the department five days before any change in the business location or name of the licensee.
Section 9. Within 15 days of the occurrence of any one of the following events, a licensee shall file a written report with the supervisor describing such event and its expected impact on the activities of the licensee in this state:
(1) The filing for bankruptcy or reorganization by the licensee.
(2) The institution of revocation or suspension proceedings against the licensee by any state or governmental authority.
(3) The denial of the opportunity to engage in the deferred presentment services business by any state or governmental authority.
(4) Any felony indictment of the licensee or any of its directors, officers, or principles.
(5) Any felony conviction of the licensee or any of its directors, officers, or principles.
(6) All other events as the supervisor may determine and identify by regulation.
Section 10. Licenses issued pursuant to this act shall expire on September 30. Each license may be renewed for the ensuing 12-month period upon application by the licensee showing continued compliance with the requirements of Section 4 and the payment to the supervisor annually, on or before September 1 of each year, a license renewal fee of five hundred dollars ($500).
Section 11. (a) The supervisor may promulgate reasonable regulations for the enforcement of this act pursuant to the Administrative Procedure Act, Chapter 22 of Title 41 of the Code of Alabama 1975. A copy of any rule or regulation adopted by the supervisor shall be mailed to each licensee at least 30 days before the effective date.
(b) To assure compliance with the provisions of this act, the supervisor may examine the relevant business books, and records of any licensee. The supervisor may charge and collect an examination fee of two hundred dollars ($200) per day per examiner for any compliance examination conducted by the supervisor, which fee shall not exceed one thousand two hundred dollars ($1,200) per year.
(c) The supervisor may examine persons licensed under this act and persons reasonably suspected by the supervisor of conducting business which requires a license under this act, including all relevant books, records, and papers employed by such persons in the transaction of their business, and summon witnesses and examine them under oath concerning matters relating to the business of such 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 12. (a) Each licensee shall keep and use in its business any books, accounts, and records the supervisor may require to carry into effect the provisions of this act and the administrative regulations issued hereunder. Every licensee shall preserve the books, accounts, and records for at least two years.
(b) A licensee may charge a fee to defray operational costs, including without limitation investigating the checking account and copying required documents, photographing the person signing the check, securing the check and customer records in a safe, fire-proof place, maintaining records as required by this act, maintaining required capital and liquidity, processing, documenting, closing the transaction, and for other expenses and losses. The fee, when made and collected, shall not be deemed interest for any purpose of law. The fee authorized by this subsection shall not exceed the lesser of any one of the following:
(1) Fifteen percent of the face amount of the check.
(2) Thirty dollars ($30).
(c) Before a licensee shall present for payment or deposit a check accepted by the licensee, the check shall be endorsed with the actual name under which the licensee is doing business.
(d) Any agreement for deferred presentment of a check shall be in writing and signed by the maker of the check. The maker of a check shall have the right to redeem the check from the licensee before the agreed date of deposit upon payment to the licensee of the amount of the check. A licensee shall not defer presentment of any personal check for more than 31 calendar days after the date the check is tendered to the licensee.
(e) The licensee shall notify the district attorney for the circuit in which the check was received within five business days after being advised by the payer financial institution that a check or draft has been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority, or represents the proceeds of illegal activity. If a check or draft is returned to the licensee by the payer financial institution for any of these reasons, the licensee shall not release the check, draft, or money order without the consent of the district attorney or other investigating law enforcement authority.
(f) A licensee shall comply with all provisions of state and federal law regarding cash transactions and cash transaction reporting.
(g) A licensee shall provide each prospective customer, before consummation of the deferred presentment agreement, a written explanation, in clear, understandable language, of the fees to be charged by the licensee, and the date on which the check will be deposited or presented by the licensee. The supervisor may promulgate rules establishing additional requirements in order to assure complete and accurate disclosure. The department may promulgate rules requiring each licensee to issue a standardized consumer notification and disclosure form in compliance with federal truth-in-lending laws prior to entering into any deferred presentment transaction. The required style, content, and method of executing the form shall be prescribed by the rules and shall be designed to ensure that the consumer, prior to entering into a deferred presentment transaction, shall receive and acknowledge an accurate and complete notification and disclosure of the itemized and total amounts of all fees and other costs that will or potentially could be imposed as a result of such agreement. Enactment of this subsection shall not create any inference that a particular method of disclosure was required prior to the effective date of this act
(h) A licensee shall issue a receipt to each person for whom a licensee defers deposit of a check. The receipt shall include the information described in subsection (g).
(i) If a check is returned to the licensee from a payer financial institution due to insufficient funds, closed account, or a stop payment order, the licensee shall have the right to all civil remedies available and allowed by law to collect the check. No individual who issues a personal check to a licensee under this act shall be convicted pursuant to Section 13A-9-13.1 of the Code of Alabama 1975.
(j) No licensee may alter or delete the date on any check accepted by the licensee. No licensee may accept an undated check or a check dated on a date other than the date on which the licensee accepts the check.
(k) No licensee shall engage in unfair or deceptive acts, practices, or advertising in the conduct of the licensed business.
(l) Consistent with the nature of a deferred presentment transaction, no licensee shall require a customer to provide security for the transaction or require the customer to provide a guaranty from another person.
(m) Each licensee shall pay the full amount of any check cashed in cash or by check issued by the licensee, less only the fees permitted under this act.
(n) Each licensee shall display its license in a conspicuous location in its place of business and shall post a notice in a conspicuous location in its place of business containing a description of the charges imposed by the licensee.
(o) No licensee or any person related to the licensee by common ownership or control may have more than two checks outstanding from any one customer not to exceed five hundred dollars ($500).
(p) Each licensee shall make an inquiry of any person seeking deferred presentment services regarding the outstanding checks of a person from other licensees. If the customer represents in writing that the customer has no more than two checks outstanding to any licensee or licensees and that the aggregate face value of all outstanding checks issued by the customer for deferred presentment does not equal or exceed five hundred dollars ($500), a licensee may accept for deferred presentment a check in an amount which, when combined with the other outstanding checks of the customer held for deferred presentment, does not exceed five hundred dollars ($500), so long as such check for deferred presentment complies with subsection (o). If the customer represents in writing that the customer has three or more checks outstanding to any licensee or licensees, or if the aggregate face value of all outstanding checks issued by the customer for deferred presentment equals or exceeds five hundred dollars ($500), a licensee shall not accept another check for deferred presentment from that customer until the customer presents to the licensee in writing that the customer qualifies to issue a new check for deferred presentment in accordance with the preceding sentence.
(q) A licensee shall not renew or otherwise consolidate a deferred presentment transaction with the proceeds of another deferred presentment transaction made by the same licensee. A transaction entered into in violation of this subsection shall be void and unenforceable.
(r) A licensee shall not use any device or agreement, including agreements with affiliated licensees, with the intent to obtain greater charges than otherwise would be authorized by this act.
Section 13. (a) If the supervisor determines that an applicant is not qualified to receive a license, the supervisor shall notify the applicant in writing that the application has been denied, stating the basis for denial.
(b) If the supervisor denies an application, or if the supervisor fails to act on an application within 90 days after the filing of a properly completed application, the applicant may make written demand to the supervisor for a hearing before the supervisor on the question of whether the license should be granted.
(c) At the hearing, the burden of proving that the applicant is entitled to a license shall be on the applicant. A decision of the supervisor following any hearing on the denial of a license shall be subject to review by the Circuit Court of Montgomery County.
Section 14. (a) The supervisor may, after notice and hearing, suspend or revoke any license if the supervisor finds that the licensee has knowingly or through lack of due care has committed one of the following:
(1) Failed to pay the annual license fee imposed by this act or an examination fee imposed by the supervisor under the authority of this act.
(2) Committed fraud, engaged in a dishonest activity, or made misrepresentations.
(3) Violated a provision of this act, an administrative regulation issued pursuant to this act, or has violated any other law in the course of its or his or her dealings as a licensee.
(4) Made a false statement in the application for the license or failed to give a true reply to a question in the application.
(5) Demonstrated its or his or her incompetency or untrustworthiness to act as a licensee.
(b) If the reason for revocation or suspension of a license of the licensee at any one location is of general application to all locations operated by a licensee, the supervisor may revoke or suspend all licenses issued to a licensee.
(c) A hearing shall be held on written notice given at least 20 days prior to the date of the hearing.
Section 15. If, after a hearing, the supervisor finds that a person has violated this act, or any administrative regulation issued pursuant to this act, the supervisor may do one or all of the following:
(1) Order the person to cease and desist violating the act or any administrative rules issued pursuant thereto.
(2) Require the refund of any fees collected by such person in violation of this act.
(3) Order the person to pay to the supervisor a civil penalty of not more than one thousand dollars ($1,000) for each transaction in violation of this act or for each day that a violation has occurred and continues.
Section 16. (a) The supervisor may enter into consent orders at any time with any person to resolve any matter arising under this act. A consent order shall be signed by the person to whom it is issued, or a duly authorized representative, and shall indicate agreement to the terms contained therein. A consent order need not constitute an admission by any person that any provision of this act, or any rule, regulation, or order promulgated or issued pursuant to this act has been violated, nor need it constitute a finding by the supervisor that such person has violated any provision of this act or any rule, regulation, or order promulgated or issued hereunder.
(b) Notwithstanding the issuance of a consent order, the supervisor may seek civil or criminal penalties or compromise civil penalties concerning matters encompassed by the consent order.
(c) In cases involving extraordinary circumstances requiring immediate action, the supervisor may take any enforcement action authorized by this act without providing the opportunity for a prior hearing, but shall promptly afford a subsequent hearing upon an application to rescind the action taken which is filed with the supervisor within 20 days after receipt of the emergency action of the supervisor.
Section 17. (a) Any person aggrieved by the conduct of a licensee under this act in connection with the regulated activities of the licensee may file a written complaint with the supervisor who may investigate the complaint.
(b) In the course of the investigation of the complaint, the supervisor may do all of the following:
(1) Subpoena witnesses.
(2) Administer oaths.
(3) Examine any individual under oath.
(4) Compel the production of records, books, papers, contracts, or other documents relevant to the investigation.
(c) If a person fails to comply with a subpoena of the supervisor under this act or to testify concerning any matter about which the person may be interrogated under this act, the supervisor may petition any court of competent jurisdiction for enforcement.
(d) The license of any licensee under this act who fails to comply with a subpoena of the supervisor may be suspended pending compliance with the subpoena.
(e) The supervisor shall have exclusive administrative power to investigate and enforce any and all complaints filed by any person which are not criminal in nature, which complaint relates to the business of deferred presentment services.
Section 18. (a) Each licensee shall file an annual report with the supervisor by September 1 of each year, containing all of the following information:
(1) The names and addresses of persons owning controlling interest in each licensee.
(2) The location of all places of business operated by the licensee and the nature of the business conducted at each location.
(3) The names and addresses of all affiliated entities doing business in this state.
(4) Balance sheets, statements of income and expense, and such other statistical information as may be reasonably required by the supervisor, consistent with generally accepted accounting practices, for the purpose of determining the general results of operations under this act.
(5) If the licensee is a corporation, the names and addresses of its officers and directors, if the licensee is a partnership, the names and addresses of the partners, or if the licensee is a limited liability company, the names and addresses of the board of governors of the limited liability company.
(b) If the licensee holds two or more licenses or is affiliated with other licensees, a composite report may be filed, but may not be required.
(c) All reports shall be filed in the form as required by the supervisor and shall be sworn to by a responsible officer of the licensee.
(d) The supervisor shall annually prepare and submit to the Governor, an analysis and recapitulation of the reports for the preceding calendar year for the purpose of reflecting the general results of operations under this act.
Section 19. In addition to all other appropriations heretofore or hereunder made, there is appropriated sixty thousand dollars ($60,000) to the State Banking Department from the Banking Assessments Fees Fund for the 1998 fiscal year, to be utilized for the implementation and administration of this act. All license fees and administrative penalties collected shall be paid into the special fund provided by Section 5-2A-20 of the Code of Alabama 1975, and used in the supervision and examination of licensees.
Section 20. The provisions of this act are severable. If any part of this act is declared invalid or unconstitutional, that declaration shall not affect the part which remains.
Section 21. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.