FILED SENATE
Mar 20, 2023
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 331
SESSION 2023 PRINCIPAL CLERK
S D
SENATE BILL DRS35130-MUf-18
Short Title: Consumer Finance Act Amendments. (Public)
Sponsors: Senators Perry and Britt (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO AMEND THE NORTH CAROLINA CONSUMER FINANCE ACT.
3 The General Assembly of North Carolina enacts:
4 SECTION 1. Article 15 of Chapter 53 of the General Statutes reads as rewritten:
5 "Article 15.
6 "North Carolina Consumer Finance Act.
7 "§ 53-164. Title.
8 This Article shall be known and may be cited as the North Carolina Consumer Finance Act.
9 "§ 53-165. Definitions.
10 The following definitions apply in this Article:
11 (a)(1) "Amount of the loan" shall mean the aggregate of the cash advance and
12 Amount financed. – The amount of cash or its equivalent the borrower actually
13 receives or is paid out at the borrower's discretion or on the borrower's behalf,
14 including the charges authorized by G.S. 53-173 and G.S.
15 53-176.G.S. 53-173, 53-176, 53-177(a) and (d), 53-177.1, and 53-189. The
16 term includes both of the following:
17 a. Fees and charges prescribed by law that actually are or will be paid by
18 a licensee for determining the existence of or for perfecting, releasing,
19 or satisfying a security interest related to a loan under this Article.
20 b. Premiums payable for insurance in lieu of perfecting a security interest
21 otherwise required by a licensee in connection with a loan under this
22 Article if the premium does not exceed the fees and charges described
23 in sub-subdivision a. of this subdivision that would otherwise be
24 payable.
25 (b)(2) "Borrower" shall mean any Borrower. – Any person who that borrows money
26 from any licensee or who that pays or obligates himself oneself to pay any
27 money or otherwise furnishes any valuable consideration to any licensee for
28 any act of the licensee as a licensee.
29 (c) "Cash advance" shall mean the amount of cash or its equivalent that the
30 borrower actually receives or is paid out at his discretion or on his behalf.
31 (d)(3) "Commission" shall mean the Commission. – The State Banking Commission.
32 (e)(4) "Commissioner" shall mean the Commissioner. – The Commissioner of
33 Banks.
34 (f) "Deputy commissioner" shall mean the deputy commissioner of banks.
35 (5) Electronic payment. – An electronic or digital means of transferring funds as
36 an alternative to a cash payment. The term includes a payment using an
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1 automated clearing house (ACH) transaction, a credit or debit card, a mobile
2 wallet, a unified payments interface (UPI), internet banking, or mobile
3 banking.
4 (g)(6) "License" shall mean the License. – The certificate issued by the
5 Commissioner under the authority of this Article to conduct a consumer
6 finance business.
7 (h)(7) "Licensee" shall mean a Licensee. – A person to whom which one or more
8 licenses have been issued.
9 (8) Loan amount. – The aggregate of the amount financed and all charges
10 authorized by this Article.
11 (i)(9) "Loanable assets" shall mean cash Loanable assets. – Cash or bank deposits
12 or installment loans made as a licensee pursuant to this Article or installment
13 loans made as a licensee pursuant to the Article which that this Article
14 supersedes or such other loans payable on an installment basis as approved by
15 the Commissioner of Banks may approve, Commissioner, or any combination
16 of two or more thereof.
17 (j)(10) "Person" shall include Person. – Includes any person, firm, partnership,
18 association association, or corporation.
19 (11) Servicing loans. – Receiving any scheduled periodic payments from a
20 borrower regarding a loan made pursuant to this Article and making the
21 payments to the owner of the loan or another third party.
22 "§ 53-166. Scope of Article; evasions; penalties; loans in violation of Article void.
23 (a) Scope. – No person shall engage in the business of lending or servicing a loan in
24 amounts of fifteen thousand dollars ($15,000) an amount of twenty-five thousand dollars
25 ($25,000) or less and contract for, exact, or receive, directly or indirectly, on or in connection
26 with any such the loan, any charges whether for interest, compensation, consideration, or
27 expense, or any other purpose whatsoever, which that in the aggregate are greater than permitted
28 by Chapter 24 of the General Statutes, except as provided in and authorized by this Article, and
29 without first having obtained a license from the Commissioner. The word "lending" as used in
30 this section, includes, but is not limited to, endorsing or otherwise securing loans or contracts for
31 the repayment of loans.
32 (b) Evasions. – Subsection (a) of this section applies to any person that seeks to avoid its
33 application by any device, subterfuge, or pretense whatsoever. Devices, subterfuges, and
34 pretenses include any transaction in which a cash rebate or other advance of funds is offered and
35 all of the following apply:
36 (1) The cash advance rebate or other advance of funds is made
37 contemporaneously with the transaction or soon thereafter.
38 (2) The amount of the cash advance rebate or other advance of funds is required
39 to be repaid at a later date.
40 (3) The selling or providing of any item, service, or commodity with the
41 transaction is incidental to, or a pretext for, the advance of funds.
42 (c) Penalties; Commissioner to Provide Facts and Testify. – Any person not exempt from
43 this Article, or any officer, agent, employee, or representative thereof, that fails to comply with
44 or that otherwise violates any of the provisions of this Article is guilty of a Class 1 misdemeanor.
45 Each violation is a separate offense. The Commissioner shall provide the district attorney of the
46 court having jurisdiction of any offense under this subsection with all facts and evidence in the
47 Commissioner's actual or constructive possession and shall testify as to these facts upon the trial
48 of any person for the offense.
49 (d) Additional Penalties. – Any contract of loan, the making making, servicing, or
50 collecting of which violates any provision of this Article, or rule thereunder, adopted under it,
51 except as a result of accidental or bona fide error of computation is void, and the licensee or any
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1 other party in violation shall not collect, receive, or retain any principal or charges whatsoever
2 with respect to the loan. If an affiliate operating in the same office or subsidiary operating in the
3 same office of a licensee makes a loan in violation of G.S. 53-180(i), the affiliate or subsidiary
4 may recover only its principal on the loan.
5 "§ 53-167. Expenses of supervision.
6 For the purpose of defraying necessary expenses of the Office of Commissioner of Banks for
7 supervision, each licensee shall pay to the Commissioner an assessment not to exceed eighteen
8 dollars ($18.00) per one hundred thousand dollars ($100,000) of assets, or fraction thereof, plus
9 a fee of three hundred dollars ($300.00) per office; provided, however, a consumer finance
10 licensee shall pay a minimum annual assessment of not less than five hundred dollars ($500.00).
11 one thousand dollars ($1,000). The assessment shall be determined on a consumer finance
12 licensee's total assets as shown on its report of condition made to the Commissioner as of
13 December 31 of each year, or the date most nearly approximating that date. If the Commissioner
14 determines that the financial condition or manner of operation of a consumer finance licensee
15 warrants further examination or an increased level of supervision, the licensee may be subject to
16 assessment not to exceed the amount determined in accordance with the schedule set forth in this
17 section.
18 "§ 53-168. License required; showing of convenience, advantage advantage, and financial
19 responsibility; investigation of applicants; hearings; existing businesses;
20 contents of license; transfer; posting.
21 (a) Necessity for License; Prerequisites to Issuance. – No person shall engage in or offer
22 to engage in the business regulated by this Article unless and until a license has been issued by
23 the Commissioner of Banks, Commissioner, and the Commissioner shall not issue any such the
24 license unless and until the Commissioner finds:finds all of the following:
25 (1) That authorizing the applicant to engage in such the business will promote the
26 convenience and advantage of the community in which the applicant proposes
27 to engage in business; andbusiness.
28 (2) That the financial responsibility, experience, character character, and general
29 fitness of the applicant are such as to command the confidence of the public
30 and to warrant the belief that the business will be operated lawfully and fairly,
31 within the purposes of this Article; andArticle.
32 (3) That the applicant has available for the operation of such the business at the
33 specified location loanable assets of at least fifty thousand dollars ($50,000).
34 (b) Investigation of Applicants. – Upon the receipt of an application, the Commissioner
35 shall investigate the facts. If the Commissioner determines from such this preliminary
36 investigation that the applicant does not satisfy the conditions set forth in subsection (a), (a) of
37 this section, the Commissioner shall so notify the applicant who shall then be applicant. The
38 applicant is entitled to an informal hearing thereon provided he so on the matter if the applicant
39 requests in writing within 30 days after the Commissioner has caused the above-referred to
40 notification to be mailed the notice to the applicant. In the event of a hearing, to be held in the
41 offices of the Commissioner of Banks in Raleigh, the Commissioner shall reconsider the
42 application and, after the hearing, shall issue a written order granting or denying such the
43 application. At the time of making such the application, the applicant shall pay the Banking
44 Department Office of the Commissioner of Banks the sum of two hundred fifty dollars ($250.00)
45 five hundred dollars ($500.00) as a fee for investigating the application, which shall to be retained
46 irrespective of whether or not a license is granted to the applicant.
47 (c) Repealed by Session Laws 2001-519, s. 2.
48 (d) Required Assets Available. – Each licensee shall continue at all times to have
49 available for the operation of the business at the specified location loanable assets of at least fifty
50 thousand dollars ($50,000). The requirements and standards of this subsection and subsection
51 subdivision (a)(2) of this section shall be maintained throughout the period of the license and
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1 failure to maintain such these requirements or and standards shall be are grounds for the
2 revocation of a license under the provisions of G.S. 53-171 of this Article.G.S. 53-171.
3 (e) License, Posting, and Continuing. – Each license shall state the address at which the
4 business is to be conducted and shall state fully the name of the licensee, and if the licensee is a
5 copartnership, partnership or association, the names of the members thereof, and if a corporation,
6 the date and place of its incorporation. Transfer or assignment of a license by one person to
7 another by sale or otherwise is prohibited without the prior approval of the Commissioner. A
8 licensee shall provide the Commissioner notice of the proposed transfer or assignment not less
9 than 30 days before the date the transaction is set to close, and the Commissioner shall promptly
10 render a decision in the matter. Purchase of a loan made under this Article by an existing licensee
11 shall be reported to the Commissioner within 30 days after the transaction is completed. Each
12 license shall be kept posted in the licensed place of business. business or on the licensee's website.
13 Each license shall remain remains in full force and effect until surrendered, revoked, or
14 suspended as hereinafter provided.suspended.
15 …
16 "§ 53-170. Locations; change of ownership or management.
17 (a) Business Location. – A licensee may conduct and carry on his the licensee's business
18 only at such location or one or more locations as may be approved by the Commissioner of Banks,
19 Commissioner, and no changes shall be made from one location to another without the approval
20 of the Commissioner.
21 (b) Additional Places of Business. – Not more than one place of business shall be
22 maintained under the same license, but the Commissioner may issue more than one license to the
23 same licensee upon compliance with all the provisions of this Article governing issuance of a
24 single license.
25 (c) Change of Location, Ownership Ownership, or Management. – If any change occurs
26 in the name and address of the licensee or of the president, secretary secretary, or agent of a
27 corporation, corporation holding a license, or in the membership of any partnership under said
28 sections, holding a license, a true and full statement of such the change, sworn to in the manner
29 required by this Article in the case of the original application, shall forthwith be filed with the
30 Commissioner.Commissioner within 90 days of the change.
31 "§ 53-171. Revocation, suspension suspension, or surrender of license.
32 (a) If the Commissioner shall find, finds, after due notice and hearing, or opportunity for
33 hearing, that any such a licensee, or an officer, agent, employee, or representative thereof thereof,
34 has violated any of the provisions of this Article, or has failed to comply with the rules,
35 regulations, instructions or orders promulgated rules adopted or orders issued by the Commission
36 pursuant to the powers and duties prescribed therein, or Commission, has failed or refused to
37 make its reports to the Commissioner, or has failed to pay the fees for its examination and
38 supervision, or has furnished false information to the Commissioner or the Commission, the
39 Commissioner may issue an order revoking or suspending the right of such the licensee and such
40 or the officer, agent, employee employee, or representative to do business in North Carolina as a
41 licensee, and upon receipt of such an the order from the Commissioner, the licensee shall
42 immediately surrender his the licensee's license to the Commissioner. Within five days after the
43 entry of such an the order the Commissioner shall place on file his the Commissioner's findings
44 of fact and mail or otherwise deliver a copy to the licensee. Any licensee who fails to make any
45 loans during any period of 90 consecutive days after being licensed shall surrender his license to
46 the Commissioner.
47 (b) Any A licensee may surrender any license by delivering it to the Commissioner with
48 written notice of its surrender, but such the surrender shall does not affect his the licensee's civil
49 or criminal liability for acts committed prior thereto.to the surrender.
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1 (c) No revocation, suspension suspension, or surrender of any license shall impair or
2 affect impairs or affects the obligation of any preexisting lawful contract between the licensee
3 and any obligor.
4 (d) The Commissioner, in his the Commissioner's discretion, may reinstate suspended
5 licenses or issue new licenses to a person whose license or licenses have been revoked, revoked
6 or surrendered if and when he the Commissioner determines no fact or condition exists which
7 that clearly would have justified the Commissio