ENGROSSED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 457
(By Senators Manchin and Helmick)
____________
[Originating in the Committee on Banking and Insurance;
reported March 1, 1995.]
____________
A BILL to amend and reenact sections two and six, article one,
chapter thirty-one-a of the code of West Virginia, one thousand
nine hundred thirty-one, as amended; to amend and reenact section
four, article two of said chapter; to amend and reenact sections
fourteen and twenty-two, article four of said chapter; to amend
article eight of said chapter by adding thereto a new section,
designated section eight-a; to amend and reenact sections one
hundred two and one hundred three, article one, chapter forty-six-a
of said code; to amend and reenact sections one hundred four and
one hundred eleven, article three of said chapter; to further amend
said article by adding thereto a new section, designated section
one hundred thirteen-a; to amend and reenact sections one hundred
two, one hundred three, one hundred five, one hundred nine and one
hundred eleven, article four of said chapter; to amend and reenact section one hundred one, article five of said chapter; to amend and
reenact sections one hundred three and one hundred fifteen, article
seven of said chapter; and to amend and reenact section five-d,
article six, chapter forty-seven of said code, all relating to
limiting the charging points, loan origination fees, loan
investigation fees and similar charges on certain loans and
consumer credit transactions and the calculation for rebating such
charges upon prepayment; and clarifying the treatment of
confidential banking records.
Be it enacted by the Legislature of West Virginia:
That sections two and six, article one, chapter thirty-one-a
of the code of West Virginia, one thousand nine hundred thirty-one,
as amended, be amended and reenacted; that section four, article
two of said chapter be amended and reenacted; that sections
fourteen and twenty-two, article four of said chapter be amended
and reenacted; that article eight of said chapter be amended by
adding thereto a new section, designated section eight-a; that
sections one hundred two and one hundred three, article one,
chapter forty-six-a of said code be amended and reenacted; that
sections one hundred four and one hundred eleven, article three of
said chapter be amended and reenacted; that said article be further
amended by adding thereto a new section, designated section one
hundred thirteen-a; that sections one hundred two, one hundred three, one hundred five, one hundred nine and one hundred eleven,
article four of said chapter be amended and reenacted; that
sections one hundred one, article five of said chapter be amended
and reenacted; that sections one hundred three and one hundred
fifteen, article seven of said chapter be amended and reenacted;
and that section five-d, article six, chapter forty-seven of said
code be amended and reenacted, all to read as follows:
CHAPTER 31A. BANKS AND BANKING.
ARTICLE 1. GENERAL PROVISIONS AND DEFINITIONS.
§31A-1-2. Definitions.
As used in this chapter, unless the context in which used
plainly requires a different meaning:
(a) The term "action", in the sense of a judicial proceeding,
means any proceeding in a court of competent jurisdiction in which
rights are adjudicated and determined and shall embrace and include
recoupment, counterclaim, setoff and other related, similar and
summary proceedings;
(b) The terms "bank" and "banking institution" mean a
corporation heretofore or hereafter chartered to conduct a banking
business under the laws of West Virginia or an association
heretofore or hereafter authorized to conduct a banking business in
West Virginia under the laws of the United States and having its
principal office in this state and shall embrace and include a savings bank, savings and loan association, trust company or an
institution combining banking and trust company facilities,
functions and services so chartered or authorized to conduct such
business in this state;
(c) The term "bankers' bank" means a banking institution,
insured by the federal deposit insurance corporation, the stock of
which is owned exclusively by banks and other depository
institutions, and such banking institution and all subsidiaries
thereof are engaged exclusively in providing services for banks and
other depository institutions and their officers, directors and
employees;
(d) The term "banking business" means the functions, services
and activities contained, detailed and embraced in sections
thirteen and fourteen, article four of this chapter, and as
elsewhere defined by law;
(e) The term "board" means the West Virginia board of banking
and financial institutions;
(f) The term "branch bank" means an office or other place at
which a bank performs any or all banking business. For purposes of
this chapter, a branch bank does not include:
(1) A bank's principal place of business;
(2) Any customer bank communication terminals installed and
operated pursuant to section twelve-b, article eight of this chapter; and
(3) Any loan origination office authorized by section twelve-
c, article eight of this chapter;
(g) The terms "commissioner" or "commissioner of banking" mean
the commissioner of banking of West Virginia;
(h) The term "community" means a city, town or other
incorporated area, or, where not so incorporated, a trading area;
(i) The word "department" means the department of banking of
West Virginia;
(j) The term "deputy commissioner" or "deputy commissioner of
banking" means the deputy commissioner of banking of West Virginia;
(k) The term "fiduciary" means any trustee, agent, executor,
administrator, curator, committee, guardian or conservator, special
commissioner, receiver, trustee in bankruptcy, assignee for
creditors, or any holder of a similar position of trust or
responsibility;
(l) The term "financial institutions" means banks, building
and loan associations, industrial banks, industrial loan companies,
supervised lenders, credit unions and all other similar
institutions, whether persons, firms or corporations, which are by
law under the jurisdiction and supervision of the commissioner of
banking;
(m) The term "officer", when referring to any financial institution, means any person designated as such in the bylaws and
includes, whether or not so designated, any executive officer, the
chairman of the board of directors, the chairman of the executive
committee and any trust officer, assistant vice president,
assistant treasurer, assistant secretary, assistant trust officer,
assistant cashier, assistant comptroller or any other person who
performs the duties appropriate to those offices. The term
"executive officer" as herein used, when referring to banking
institutions, means an officer of a bank whose duties involve
regular, active and substantial participation in the daily
operations of such institution and who, by virtue of his position,
has both a voice in the formulation of the policy of the bank and
responsibility for implementation of the policy, such
responsibility of and functions performed by the individual, and
not his title or office, being determinative of whether he is an
"executive officer";
(n) The terms "person" or "persons" mean any individual,
partnership, society, association, firm, institution, company,
public or private corporation, state, governmental agency, bureau,
department, division or instrumentality, political subdivision,
county commission, municipality, trust, syndicate, estate or any
other legal entity whatsoever formed, created or existing under the
laws of this state or any other jurisdiction;
(o) The term "safe-deposit box" means a safe-deposit box,
vault or other safe-deposit receptacle maintained by a lessor bank,
and the rules relating thereto apply to property or documents kept
therein in the bank's vault under the joint control of lessor and
lessee;
(p) The term "state bank" or "state banking institution" means
a bank chartered under the laws of West Virginia, as distinguished
from a national banking association; and
(q) The term "trust business" means the functions, services
and activities contained, detailed and embraced in section
fourteen, article four of this chapter, and as elsewhere defined by
law and as may be included within the meaning of the term "banking
business".
§31A-1-6. Deposit insurance required for banking and other
depository institutions.
All credit unions established pursuant to article ten, chapter
thirty-one, and all banking institutions governed by the provisions
of this chapter shall qualify for and obtain federal deposit
insurance, or shall obtain insurance as approved by the
commissioner of banking in an amount equal to that provided by the
federal deposit insurance corporation for eligible institutions.
Each such institution which fails to obtain deposit insurance
as required herein by the first day of July, one thousand nine hundred seventy-eight, shall be prohibited from conducting any
business as a lending institution until such insurance is obtained,
except that the commissioner may grant continuances for compliance
with this section for any institution showing good cause for such
a continuance.
ARTICLE 2. DIVISION OF BANKING.
§31A-2-4. Jurisdiction of commissioner; powers, etc., of department
transferred to commissioner; powers and duties of
commissioner.
(a) Subject to the powers vested in the board by article three
of this chapter, the commissioner shall have supervision and
jurisdiction over state banks (other than those banks excepted by
the provisions of section eleven of this article), industrial loan
companies, building and loan associations, supervised lenders,
credit unions, and all other persons now or hereafter made subject
to his supervision or jurisdiction. All powers, duties, rights and
privileges vested in the department are hereby vested in the
commissioner. He shall be the chief executive officer of the
department of banking and shall be responsible for the department's
organization, services and personnel, and for the orderly and
efficient administration, enforcement and execution of the
provisions of this chapter and all laws vesting authority or powers
in or prescribing duties or functions for the department or the commissioner.
(b) The commissioner shall:
(1) Maintain the office for the department at the state
capitol, and there keep a complete record of all the department's
transactions of the financial conditions of all financial
institutions and such records of the activities of other persons as
the commissioner may deem important. Notwithstanding any other
provision of this code, heretofore or hereafter enacted, the
records relating to the financial condition of any financial
institution and any information contained therein shall be
confidential for the use of the commissioner and authorized
personnel of the department of banking. No person shall divulge
any information contained in any such records except as hereafter
authorized in response to a valid subpoena or subpoena duces tecum
issued pursuant to law. Subpoenas shall first be directed to the
commissioner, who shall authorize disclosure of relevant records
and information therefrom for good cause, upon imposing terms and
conditions as are deemed necessary to protect the confidential
nature of the records, the financial integrity of the financial
institution or the person to which the records relate and the
legitimate privacy interests of any individual named in such
records. Conformity with federal procedures shall be sought where
the institution maintains federal deposit insurance. The commissioner shall have and may exercise reasonable discretion as
to the time, manner and extent the other records in his office and
the information contained therein shall be available for public
examination.
(2) Require all financial institutions to comply with all the
provisions of this chapter and other applicable laws, or any rule
promulgated or order issued thereunder.
(3) Investigate all alleged violations of this chapter and all
other laws which he is required to enforce and of any rule
promulgated or order issued thereunder.
(c) In addition to all other authority and powers vested in
the commissioner by provisions of this chapter and other applicable
laws, the commissioner is authorized and empowered:
(1) To provide for the organization of the department and the
procedures and practices thereof and implement the same by the
promulgation of rules and forms as appropriate, which rules shall
be promulgated in accordance with article three, chapter twenty-
nine-a of this code;
(2) Employ, direct, discipline, discharge and establish
qualifications and duties for all personnel for the department
including, but not limited to, examiners, assistant examiners,
conservators and receivers, to establish the amount and condition
of bonds for such thereof as he deems appropriate and to pay the premiums thereon, and if he so elects, to have all such personnel
subject to and under the classified service of the state personnel
department;
(3) To cooperate with organizations, agencies, committees and
other representatives of financial institutions of the state in
connection with schools, seminars, conferences and other meetings
to improve the responsibilities, services and stability of the
financial institutions;
(4) In addition to the examinations required by section six of
this article, to inspect, examine and audit the books, records,
accounts and papers of all financial institutions at such times as
circumstances in his opinion may warrant;
(5) To call for and require all such data, reports and
information from financial institutions under his jurisdiction, at
such times and in such form, content and detail, deemed necessary
by him in the faithful discharge of his duties and responsibilities
in the supervision of the financial institutions;
(6) Subject to the powers vested in the board by article three
of this chapter, to supervise the location, organization, practices
and procedures of financial institutions and, without limitation on
the general powers of supervision thereof, to require financial
institutions to:
(A) Maintain their accounts consistent with such regulations as he may prescribe and in accordance with generally accepted
accounting practices;
(B) Observe methods and standards which he may prescribe for
determining the value of various types of assets;
(C) Charge off the whole or any part of an asset which at the
time of his action could not lawfully be acquired;
(D) Write down an asset to its market value;
(E) Record or file writings creating or evidencing liens or
other interests in property;
(F) Obtain financial statements from prospective and existing
borrowers;
(G) Obtain insurance against damage and loss to real estate
and personal property taken as security;
(H) Maintain adequate insurance against such other risks as he
may deem and determine to be necessary and appropriate for the
protection of depositors and the public;
(I) Maintain an adequate fidelity bond or bonds on its
officers and employees;
(J) Take such other action as may in his judgment be required
of the institution in order to maintain its stability, integrity
and security as required by law and all rules promulgated by him;
and
(K) Verify any or all asset or liability accounts.
(7) Subject to the powers vested in the board by article three
of this chapter, to receive from any person or persons and to
consider any request, petition or application relating to the
organization, location, conduct, services, policies and procedures
of any financial institution and to act thereupon in accordance
with any provisions of law applicable thereto;
(8) In connection with the investigations required by
subdivision (3), subsection (b) of this section, to issue subpoenas
and subpoenas duces tecum, administer oaths, examine persons under
oath, and hold and conduct hearings, any such subpoenas or
subpoenas duces tecum to be issued, served and enforced in the
manner provided in section one, article five, chapter twenty-nine-a
of this code. Any person appearing and testifying at such a
hearing may be accompanied by an attorney employed by him;
(9) To issue declaratory rulings in accordance with the
provisions of section one, article four, chapter twenty-nine-a of
this code;
(10) To study and survey the location, size and services of
financial institutions, the geographic, industrial, economic and
population factors affecting the agricultural, commercial and
social life of the state, and the needs for reducing, expanding or
otherwise modifying the services and facilities of financial
institutions in the various parts of the state, and to compile and keep current data thereon to aid and guide him in the
administration of the duties of his office;
(11) To implement all of the provisions of this chapter
(except the provisions of article three) and all other laws which
he is empowered to administer and enforce by the promulgation of
rules in accordance with the provisions of article three, chapter
twenty-nine-a of this code;
(12) To implement the provisions of chapter forty-six-a of
this code applicable to consumer loans and consumer credit sales by
the promulgation of rules in accordance with the provisions of
article three, chapter twenty-nine-a of this code so long as said
rules do not conflict with any rules promulgated by the state's
attorney general;
(13) To foster and encourage a working relationship between
the department of banking and financial institutions, credit,
consumer, mercantile and other commercial and finance groups and
interests in the state in order to make current appraisals of the
quality, stability and availability of the services and facilities
of financial institutions;
(14) To provide to financial institutions and the public
copies of the West Virginia statutes relating to financial
institutions, suggested drafts of bylaws commonly used by financial
institutions, and such other forms and printed materials as may be found by him to be helpful to financial institutions, their
shareholders, depositors and patrons, and to make reasonable
charges therefor;
(15) To delegate the powers and duties of his office, other
than the powers and duties in this subsection hereinafter excepted,
to qualified department personnel, who shall act under the
direction and supervision of the commissioner and for whose acts he
shall be responsible, but the commissioner may delegate to the
deputy commissioner of banking and to no other department personnel
the following powers, duties and responsibilities, all of which are
hereby granted to and vested in the commissioner and for all of
which the commissioner shall likewise be responsible:
(A) To order any person to cease violating any provision or
provisions of this chapter or other applicable law or any rule
promulgated or order issued thereunder;
(B) To order any person to cease engaging in any unsound
practice or procedure which may detrimentally affect any financial
institution or depositor thereof; and
(C) To revoke the certificate of authority, permit or license
of any financial institution except a banking institution in
accordance with the provisions of section thirteen of this article;
(16) To receive from state banking institutions applications
to change the locations of their principal offices and to approve or disapprove such applications; and
(17) To take such other action as he may deem necessary to
enforce and administer the provisions of this chapter (except the
provisions of article three) and all other laws which he is
empowered to administer and enforce, and to apply to any court of
competent jurisdiction for appropriate orders, writs, processes and
remedies.
ARTICLE 4. BANKING INSTITUTIONS AND SERVICES GENERALLY.
§31A-4-14. Trust powers of banking institutions.
Every state banking institution which files the reports
required in the following section and which is not otherwise
prohibited by the commissioner or federal bank regulators from
doing so, shall have and exercise the following powers:
(a) All the powers, rights and privileges of any state banking
institution;
(b) To act as trustee, assignee, special commissioner, general
or special receiver, guardian, executor, administrator, committee,
agent, curator, or in any other fiduciary capacity, and to take,
assume, accept and execute trusts of every description not
inconsistent with the constitution and laws of the United States of
America or of this state; and to receive, hold, manage and apply
any sinking fund on the terms and for the purposes specified in the
instrument creating such fund;
(c) To act as registrar, transfer agent or dividend or coupon
paying agent for any corporation;
(d) To make, hold and dispose of investments and establish
common trust funds, and account therefor, pursuant to the
provisions of chapter forty-four of this code;
(e) To purchase and sell and take charge of and receive the
rents, issues and profits of any real estate for other persons or
corporations;
(f) To act as trustee or agent in any collateral trust and in
order to secure the payment of any obligations of any person, firm,
private corporation, public corporation, public body or public
agency to receive and hold in trust any items of personal property
(including, without limitation, notes, bonds, debentures,
obligations and certificates for shares of stock) with the right in
case of default to sell and dispose of such personal property and
to collect, settle and adjust any obligations for the payment of
money, and at any sale of such personal property held by it, to
purchase the same for the benefit of all or any of the holders of
the obligations, to secure the payment of which such items of
personal property were pledged and delivered to the trustee or
agent. Any such sale may be made without any proceedings in any
court, and at such times and upon such terms as may be specified in
the instrument or instruments creating the trust, or, in the absence of any specification of terms, at such time and upon such
terms as the trustee shall deem reasonable; and
(g) To do and perform any act or thing requisite or necessary
in, or incidental to, the exercise of the general powers herein set
forth.
All national banks having their principal offices in this
state which have been, or hereafter may be, authorized under the
laws of the United States to act as trustee and in other fiduciary
capacities in the state of West Virginia shall have all the rights,
powers, privileges and immunities conferred hereunder, provided
they comply with the requirements hereof.
§31A-4-22. Reserves required of banking institutions; reports;
penalties.
Each state banking institution shall at all times maintain on
hand as a reserve in lawful money of the United States of America
an amount equal to at least seven percent of the aggregate of all
of its deposits which are subject to withdrawal on demand and three
percent of its time deposits. Whenever the commissioner of banking
shall determine that the maintenance of sound banking practices or
the prevention of injurious credit expansion or contraction makes
such action advisable, he may by rule or regulation from time to
time change such requirements as to reserves against demand or time
deposits, or both, but the reserves so prescribed shall in no event be less than those specified in this section nor more than twice
those specified. Whenever such reserve shall fall below that
required, the institution shall not thereafter make any new loan or
investment until the required reserve shall be restored. For the
purpose of computing such reserve, all deposits requiring notice of
thirty days or more for withdrawal and time certificates of deposit
and Christmas savings shall be deemed time deposits, and all
checking accounts, certified checks, cashier's checks, demand
certificates of deposit and balances due other banks shall be
deemed demand deposits. But in lieu of lawful money on hand, four
fifths of such reserve may consist of balances payable on demand
from any national or state bank doing business in this state or
solvent banking institutions in other states. The reserve balances
required herein shall be computed on the basis of average daily net
deposit balances and average daily currency and coin during
biweekly periods. The required reserve balance of each bank shall
be computed at the close of business each day based upon its net
deposit balances and currency and coin at the opening of business
on the same day. The biweekly period shall end at the close of
business on days to be fixed by the commissioner in his promulgated
rules. When, however, the reserve computation period ends with a
nonbusiness day, or two or more consecutive nonbusiness days, such
nonbusiness day or days may, at the option of the banking institution, and whether or not it had a deficiency in reserve
balances in such computation period, be included in the next
biweekly computation period.
The commissioner shall, by rule, require regular reports from
such banking institutions, which reports shall be submitted at such
times and contain such information as will enable the commissioner
to adequately supervise the maintenance of reserves under this
section. Penalties for any deficiencies in the required reserves of
any banking institution shall be assessed monthly by the
commissioner on the basis of average daily deficiencies during each
of the computation periods ending in the preceding calendar month.
Such penalties shall be assessed at a rate of two percent per annum
above the lowest rate applicable to borrowings by member banks from
the federal reserve bank of the district in which such deficient
institution is located on the first day of the calendar month in
which the deficiencies occurred. Such penalties shall be paid by
the commissioner into the treasury of the state of West Virginia
and credited to the general fund.
Compliance on the part of any banking institution with the
reserve requirements of the Federal Reserve Act, as amended prior
to the thirty-first day of January, one thousand nine hundred
eighty-one, shall be considered full compliance with the provisions
of this section. No such bank may be required to carry or maintain a reserve other than such as required under terms of the Federal
Reserve Act, as amended prior to the thirty-first day of January,
one thousand nine hundred eighty-one.
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL REVIEW;
UNLAWFUL ACTS; PENALTIES.
§31A-8-8a. Unauthorized disclosure of information from a financial
institution examination report.
Any person having a duty to the financial institution or to a
state agency to maintain the confidentiality of examination reports
by the division of banking, who willfully and knowingly makes an
unauthorized public disclosure of confidential information or
records from a state-chartered depository financial institution
examination report shall be subject to suit by the commissioner or
attorney general for civil penalties of up to one thousand dollars:
Provided, That no such suit shall lie where the person was ordered
to make the disclosure by a court of competent jurisdiction, or
lawfully compelled to make the disclosure as part of a legislative
or executive agency investigation. Officials of the financial
institution or the commissioner may refer matters of possible
wrongdoing discovered by the examination which impact on the
institution's soundness or financial integrity to law-enforcement
officials, or other appropriate governmental regulatory agencies,
including appropriate state bar or ethics officials and such referral shall not constitute public disclosure.
CHAPTER 46A. WEST VIRGINIA CONSUMER CREDIT
AND PROTECTION ACT.
ARTICLE 1. SHORT TITLE, DEFINITIONS AND GENERAL PROVISIONS.
§46A-1-102. General definitions.
In addition to definitions appearing in subsequent articles in
this chapter:
(1) "Actuarial method" means the method, defined by rules
adopted by the commissioner, of allocating payments made on a debt
between principal or amount financed and loan finance charge or
sales finance charge pursuant to which a payment is applied first
to the accumulated loan finance charge or sales finance charge and
the balance is applied to the unpaid principal or unpaid amount
financed.
(2) "Agreement" means the bargain of the parties in fact as
found in their language or by implication from other circumstances
including course of dealing or usage of trade or course of
performance. A "consumer credit agreement" is an agreement where
credit is granted.
(3) "Agricultural purpose" means a purpose related to the
production, harvest, exhibition, marketing, transportation,
processing or manufacture of agricultural products by a natural
person who cultivates, plants, propagates or nurtures the agricultural products. "Agricultural products" includes
agricultural, horticultural, viticultural and dairy products,
livestock, wildlife, poultry, bees, forest products, fish and
shellfish, and any products thereof, including processed and
manufactured products, and any and all products raised or produced
on farms and any processed or manufactured products thereof.
(4) "Amount financed" means the total of the following items
to the extent that payment is deferred:
(a) The cash price of the goods, services or interest in land,
less the amount of any down payment whether made in cash or in
property traded in;
(b) The amount actually paid or to be paid by the seller
pursuant to an agreement with the buyer to discharge a security
interest in or a lien on property traded in; and
(c) If not included in the cash price:
(i) Any applicable sales, use, privilege, excise or
documentary stamp taxes;
(ii) Amounts actually paid or to be paid by the seller for
registration, certificate of title or license fees; and
(iii) Additional charges permitted by this chapter.
(5) "Average daily balance" in a billing cycle for which a
sales finance charge or loan finance charge is made is the sum of
the amount unpaid each day during that cycle divided by the number of days in that cycle. The amount unpaid on a day is determined by
adding to the balance, if any, unpaid as of the beginning of that
day all purchases and other debits and deducting all payments and
other credits made or received as of that day.
(6) The "cash price" of goods, services or an interest in land
means the price at which the goods, services or interest in land
are offered for sale by the seller to cash buyers in the ordinary
course of business, and may include: (a) Applicable sales, use,
privilege, and excise and documentary stamp taxes; (b) the cash
price of accessories or related services such as delivery,
installation, servicing, repairs, alterations and improvements; and
(c) amounts actually paid or to be paid by the seller for
registration, certificate of title, or license fees.
(7) "Closing costs" with respect to a debt secured by an
interest in land include:
(a) Fees or premiums for title examination, title insurance or
similar purposes including surveys;
(b) Fees for preparation of a deed, deed of trust, mortgage,
settlement statement or other documents;
(c) Escrows for future payments of taxes and insurance;
(d) Official fees and fees for notarizing deeds and other
documents;
(e) Appraisal fees; and
(f) Credit reports.
(8) "Code" means the official code of West Virginia, one
thousand nine hundred thirty-one, as amended.
(9) "Commercial facsimile transmission" means the electronic
or telephonic transmission in the state to a facsimile device to
encourage a person to purchase goods, realty or services.
(10) "Commissioner" means the commissioner of banking of West
Virginia.
(11) "Conspicuous". A term or clause is conspicuous when it
is so written that a reasonable person against whom it is to
operate ought to have noticed it. Whether a term or clause is
conspicuous or not is for decision by the court.
(12) "Consumer" means a natural person who incurs debt
pursuant to a consumer credit sale or a consumer loan.
(13) (a) Except as provided in paragraph (b), "consumer credit
sale" is a sale of goods, services or an interest in land in which:
(i) Credit is granted either by a seller who regularly engages
as a seller in credit transactions of the same kind or pursuant to
a seller credit card;
(ii) The buyer is a person other than an organization;
(iii) The goods, services or interest in land are purchased
primarily for a personal, family, household or agricultural
purpose;
(iv) Either the debt is payable in installments or a sales
finance charge is made; and
(v) With respect to a sale of goods or services, the amount
financed does not exceed twenty-five thousand dollars.
(b) "Consumer credit sale" does not include a sale in which
the seller allows the buyer to purchase goods or services pursuant
to a lender credit card or similar arrangement.
(14) (a) "Consumer lease" means a lease of goods:
(i) Which a lessor regularly engaged in the business of
leasing makes to a person, other than an organization, who takes
under the lease primarily for a personal, family, household or
agricultural purpose;
(ii) In which the amount payable under the lease does not
exceed twenty-five thousand dollars; and
(iii) Which is for a term exceeding four months.
(b) "Consumer lease" does not include a lease made pursuant to
a lender credit card or similar arrangement.
(15) "Consumer loan" is a loan made by a person regularly
engaged in the business of making loans in which:
(a) The debtor is a person other than an organization;
(b) The debt is incurred primarily for a personal, family,
household or agricultural purpose;
(c) Either the debt is payable in installments or a loan finance charge is made; and
(d) Either the principal does not exceed twenty-five thousand
dollars or the debt is secured by an interest in land.
(16) "Cosigner" means a natural person who assumes liability
for the obligation on a consumer credit sale or consumer loan
without receiving goods, services or money in return for the
obligation or, in the case of a revolving charge account or
revolving loan account of a consumer, without receiving the
contractual right to obtain extensions of credit under the account.
The term "cosigner" includes any person whose signature is
requested as a condition to granting credit to a consumer or as a
condition for forbearance on collection of a consumer's obligation
that is in default. The term "cosigner" does not include a spouse
whose signature is required to perfect a security interest. A
person who meets the definition in this paragraph is a "cosigner"
whether or not the person is designated as such on the credit
obligation.
(17) "Credit" means the privilege granted by a creditor to a
debtor to defer payment of debt or to incur debt and defer its
payment.
(18) "Earnings" means compensation paid or payable to an
individual or for his account for personal services rendered or to
be rendered by him, whether denominated as wages, salary, commission, bonus or otherwise, and includes periodic payments
pursuant to a pension, retirement or disability program.
(19) "Facsimile device" means a machine that receives and
copies reproductions or facsimiles of documents or photographs that
have been transmitted electronically or telephonically over
telecommunications lines.
(20) "Federal Consumer Credit Protection Act" means the
"Consumer Credit Protection Act" (Public Law 90-321; 82 Stat. 146),
as amended, and includes regulations issued pursuant to that act.
(21) "Goods" includes goods not in existence at the time the
transaction is entered into and gift and merchandise certificates,
but excludes money, chattel paper, documents of title and
instruments.
(22) "Home solicitation sale" means a consumer credit sale in
excess of twenty-five dollars in which the buyer receives a
solicitation of the sale at a place other than the seller's
business establishment at a fixed location and the buyer's
agreement or offer to purchase is there given to the seller or a
person acting for the seller. The term does not include a sale
made pursuant to a preexisting open-end credit account with the
seller in existence for at least three months prior to the
transaction, a sale made pursuant to prior negotiations between the
parties at the seller's business establishment at a fixed location, a sale of motor vehicles, mobile homes or farm equipment or a sale
which may be rescinded under the Federal Truth in Lending Act
(being Title I of the Federal Consumer Credit Protection Act). A
sale which would be a home solicitation sale if credit were
extended by the seller is a home solicitation sale although the
goods or services are paid for, in whole or in part, by a consumer
loan in which the creditor is subject to claims and defenses
arising from the sale.
(23) Except as otherwise provided, "lender" includes an
assignee of the lender's right to payment but use of the term does
not in itself impose on an assignee any obligation of the lender.
(24) "Lender credit card or similar arrangement" means an
arrangement or loan agreement, other than a seller credit card,
pursuant to which a lender gives a debtor the privilege of using a
credit card, letter of credit, or other credit confirmation or
identification in transactions out of which debt arises:
(a) By the lender's honoring a draft or similar order for the
payment of money drawn or accepted by the consumer;
(b) By the lender's payment or agreement to pay the consumer's
obligations; or
(c) By the lender's purchase from the obligee of the
consumer's obligations.
(25) "Loan" includes:
(a) The creation of debt by the lender's payment of or
agreement to pay money to the consumer or to a third party for the
account of the consumer other than debts created pursuant to a
seller credit card;
(b) The creation of debt by a credit to an account with the
lender upon which the consumer is entitled to draw immediately;
(c) The creation of debt pursuant to a lender credit card or
similar arrangement; and
(d) The forbearance of debt arising from a loan.
(26) (a) "Loan finance charge" means the sum of: (i) All
charges payable directly or indirectly by the debtor and imposed
directly or indirectly by the lender as an incident to the
extension of credit, including any of the following types of
charges which are applicable: Interest or any amount payable under
a point, discount or other system of charges, however denominated,
premium or other charge for any guarantee or insurance protecting
the lender against the consumer's default or other credit loss; and
(ii) charges incurred for investigating the collateral or credit
worthiness of the consumer or for commissions or brokerage for
obtaining the credit, irrespective of the person to whom the
charges are paid or payable, unless the lender had no notice of the
charges when the loan was made. The term does not include charges
as a result of default, additional charges, delinquency charges or deferral charges.
(b) If a lender makes a loan to a consumer by purchasing or
satisfying obligations of the consumer pursuant to a lender credit
card or similar arrangement, and the purchase or satisfaction is
made at less than the face amount of the obligation, the discount
is not part of the loan finance charge.
(27) "Merchandise certificate" or "gift certificate" means a
writing issued by a seller or issuer of a seller credit card, not
redeemable in cash and usable in its face amount in lieu of cash in
exchange for goods or services.
(28) "Official fees" means:
(a) Fees and charges prescribed by law which actually are or
will be paid to public officials for determining the existence of
or for perfecting, releasing, terminating or satisfying a security
interest related to a consumer credit sale or consumer loan; or
(b) Premiums payable for insurance or fees escrowed in a
special account for the purpose of funding self-insurance or its
equivalent in lieu of perfecting a security interest otherwise
required by the creditor in connection with the sale, lease or
loan, if such premium or fee does not exceed the fees and charges
described in paragraph (a) which would otherwise be payable.
(29) "Organization" means a corporation, government or
governmental subdivision or agency, trust, estate, partnership, cooperative or association.
(30) "Payable in installments" means that payment is required
or permitted by agreement to be made in: (a) Two or more periodic
payments, excluding a down payment, with respect to a debt arising
from a consumer credit sale pursuant to which a sales finance
charge is made; (b) four or more periodic payments, excluding a
down payment, with respect to a debt arising from a consumer credit
sale pursuant to which no sales finance charge is made; or (c) two
or more periodic payments with respect to a debt arising from a
consumer loan. If any periodic payment other than the down payment
under an agreement requiring or permitting two or more periodic
payments is more than twice the amount of any other periodic
payment, excluding the down payment, the consumer credit sale or
consumer loan is "payable in installments".
(31) "Person" or "party" includes a natural person or an
individual, and an organization.
(32) "Person related to" with respect to an individual means:
(a) The spouse of the individual; (b) a brother, brother-in-law,
sister or sister-in-law of the individual; (c) an ancestor or
lineal descendant of the individual or his spouse; and (d) any
other relative, by blood or marriage, of the individual or his
spouse who shares the same home with the individual. "Person
related to" with respect to an organization means: (a) A person directly or indirectly controlling, controlled by or under common
control with the organization; (b) an officer or director of the
organization or a person performing similar functions with respect
to the organization or to a person related to the organization; (c)
the spouse of a person related to the organization; and (d) a
relative by blood or marriage of a person related to the
organization who shares the same home with him.
(33) "Precomputed loan". A loan, refinancing or consolidation
is "precomputed" if:
(A) The debt is expressed as a sum comprising the principal
and the amount of the loan finance charge computed in advance; or
(B) The loan is expressed in terms of the principal amount;
the loan installment payments are a scheduled, fixed amount
including principal and interest and assume payment on the
installment due date; and interest payments will not vary or result
in an adjustment during the term of the loan or at its final
payment as a result of the actual installment payment dates.
(34) "Precomputed sale". A sale, refinancing or consolidation
is "precomputed" if:
(A) The debt is expressed as a sum comprising the amount
financed and the amount of the sales finance charge computed in
advance; or
(B) The debt is expressed in terms of the principal amount; the debt installment payments are a scheduled, fixed amount
including principal and interest and assume payment on the
installment due date; and interest payments will not vary or result
in an adjustment during the term of the debt or at its final
payment as a result of the actual installment payment dates.
(35) "Presumed" or "presumption" means that the trier of fact
must find the existence of the fact presumed unless and until
evidence is introduced which would support a finding of its
nonexistence.
(36) "Principal" of a loan means the total of:
(a) The net amount paid to, receivable by or paid or payable
for the account of the debtor;
(b) The amount of any discount excluded from the loan finance
charge; and
(c) To the extent that payment is deferred:
(i) Amounts actually paid or to be paid by the lender for
registration, certificate of title, or license fees if not included
in (a); and
(ii) Additional charges permitted by this chapter.
(37) "Revolving charge account" means an agreement between a
seller and a buyer by which: (a) The buyer may purchase goods or
services on credit or a seller credit card; (b) the balances of
amounts financed and the sales finance and other appropriate charges are debited to an account; (c) a sales finance charge if
made is not precomputed but is computed periodically on the
balances of the account from time to time; and (d) there is the
privilege of paying the balances in installments.
(38) "Revolving loan account" means an arrangement between a
lender and a consumer including, but not limited to, a lender
credit card or similar arrangement, pursuant to which: (a) The
lender may permit the consumer to obtain loans from time to time;
(b) the unpaid balances of principal and the loan finance and other
appropriate charges are debited to an account; (c) a loan finance
charge if made is not precomputed but is computed periodically on
the outstanding unpaid balances of the principal of the consumer's
account from time to time; and (d) there is the privilege of paying
the balances in installments.
(39) "Sale of goods" includes any agreement in the form of a
bailment or lease of goods if the bailee or lessee agrees to pay as
compensation for use a sum substantially equivalent to or in excess
of the aggregate value of the goods involved and it is agreed that
the bailee or lessee will become, or for no other or a nominal
consideration has the option to become, the owner of the goods upon
full compliance with his obligations under the agreement.
(40) "Sale of an interest in land" includes a lease in which
the lessee has an option to purchase the interest and all or a substantial part of the rental or other payments previously made by
him are applied to the purchase price.
(41) "Sale of services" means furnishing or agreeing to
furnish services and includes making arrangements to have services
furnished by another.
(42) "Sales finance charge" means the sum of: (a) All charges
payable directly or indirectly by the buyer and imposed directly or
indirectly by the seller or issuer of a seller credit card as an
incident to the extension of credit, including any of the following
types of charges which are applicable: Time-price differential,
however denominated, including service, carrying or other charge,
premium or other charge for any guarantee or insurance protecting
the seller against the buyer's default or other credit loss; and
(b) charges incurred for investigating the collateral or credit
worthiness of the buyer or for commissions or brokerage for
obtaining the credit, irrespective of the person to whom the
charges are paid or payable, unless the seller had no notice of the
charges when the credit was granted. The term does not include
charges as a result of default, additional charges, delinquency
charges or deferral charges. If the seller or issuer of a seller
credit card purchases or satisfies obligations of the consumer and
the purchase or satisfaction is made at less than the face amount
of the obligation, the discount is not part of the sales finance charge.
(43) Except as otherwise provided, "seller" includes an
assignee of the seller's right to payment but use of the term does
not in itself impose on an assignee any obligation of the seller.
(44) "Seller credit card" means an arrangement pursuant to
which a person gives to a buyer or lessee the privilege of using a
credit card, letter of credit, or other credit confirmation or
identification primarily for the purpose of purchasing or leasing
goods or services from that person, that person and any other
person or persons, a person related to that person, or others
licensed or franchised or permitted to do business under his
business name or trade name or designation or on his behalf.
(45) "Services" includes: (a) Work, labor and other personal
services, (b) privileges with respect to transportation, use of
vehicles, hotel and restaurant accommodations, education,
entertainment, recreation, physical culture, hospital
accommodations, funerals, cemetery accommodations, and the like,
and (c) insurance.
(46) "Supervised financial organization" means any
organization, corporation, or person, other than a supervised
lender or an insurance company or other organization primarily
engaged in an insurance business, which is required under state law
to register or obtain a license from the commissioner of banking before conducting business in this state or which is authorized
under federal law to make consumer loans without a license from the
state commissioner of banking, where those loans are subject to
supervision and examination by an official or agency of the United
States.
(47) "Supervised lender" means a person authorized to make or
take assignments of supervised loans.
(48) "Supervised loan" means a consumer loan, including a loan
made pursuant to a revolving loan account, in which the rate of the
loan finance charge exceeds eighteen percent per year as determined
according to the actuarial method, except where the loan is made by
a licensed industrial loan company or qualifies for federal law
preemption from state interest rate limitations. No supervised
loan may exceed two thousand dollars in principal.
§46A-1-103. Effect of chapter on powers of persons making consumer
credit sales and consumer loans, and others; consumer
protection generally.
(1) This chapter prescribes maximum charges for all creditors,
except lessors and those excluded, making consumer credit sales and
consumer loans, and sales and loans made subject to the provisions
of this chapter by agreement, and except as otherwise provided by
this chapter displaces any existing limitations and provisions
regulating maximum interest and charges, minimum charges, additional charges, delinquency charges, deferral charges,
allocation of charges and methods of computing rebates upon
prepayment, refinancing or consolidation with respect to consumer
credit sales and consumer loans, and the debtors' remedies and
penalties provided by this chapter displace all existing provisions
relating to remedies, penalties and forfeitures for usury and
usurious contracts as to transactions covered by this chapter:
Provided, That this chapter shall not displace those provisions of
subsection (a), section eleven, article seven, chapter thirty-one
of this code relating to additional charges which may be imposed
and collected by industrial loan companies.
(2) Except as provided in subsection (1) of this section or
elsewhere in this chapter, this chapter does not displace powers or
limitation on powers which supervised financial organizations and
supervised lenders are authorized to exercise under the laws of the
United States or other laws of this state in effect after the
operative date of this chapter.
(3) This chapter also prescribes in various articles
protective measures for consumers in transactions not necessarily
involving consumer credit.
ARTICLE 3. FINANCE CHARGES AND RELATED PROVISIONS.
§46A-3-104. Finance charge for loans other than loans made
pursuant to revolving loan accounts; finance charge on
assigned contracts; exceptions.
(1) With respect to a consumer loan, other than a consumer
loan made pursuant to a revolving loan account: (a) A bank, as
defined in section two, article one, chapter thirty-one-a of this
code, may contract for and receive a loan finance charge not
exceeding the charge or interest permitted by the provisions of
section thirty, article four, chapter thirty-one-a or by the
provisions of section five, five-a or five-b, article six, chapter
forty-seven of this code, or that allowed under section sixteen,
article ten, chapter thirty-one of this code; (b) an industrial
loan company, as defined in section three, article seven, chapter
thirty-one of this code, may contract for and receive a loan
finance charge not exceeding the aggregate of the interest and
charges permitted by section eleven, article seven, chapter thirty-
one of this code or by the provisions of section five, section
five-a, or section five-b article six, chapter forty-seven of this
code; (c) a credit union, as defined in section one, article ten,
chapter thirty-one of this code, may contract for and receive a
loan finance charge not exceeding the charge or interest permitted
by the provisions of section sixteen, article ten, chapter thirty-
one of this code, or by the provisions of section five, article six, chapter forty-seven of this code; and (d) any other lender may
contract for and receive a loan finance charge not exceeding the
charge or interest permitted by the provisions of section five,
section five-a, or section five-b, article six, chapter forty-seven
of this code.
(2) This section does not limit or restrict the manner of
calculating the loan finance charge, whether by way of add-on,
discount or otherwise, so long as the rate of loan finance charge
does not exceed that permitted by this section.
(3) If the loan is precomputed:
(a) The loan finance charge may be calculated on the
assumption that all scheduled payments will be made when due, and
(b) The effect of prepayment, refinancing or consolidation is
governed by the provisions on rebate upon prepayment, refinancing
or consolidation contained in section one hundred eleven of this
article.
(4) Notwithstanding subsection (1), the lender may contract
for and receive a minimum loan finance charge of not more than five
dollars when the amount loaned does not exceed seventy-five
dollars, or seven dollars and fifty cents when the amount loaned
exceeds seventy-five dollars.
(5) An assignee of a consumer credit sale contract may
collect, receive or enforce the sales finance charge provided in said contract, and any such charge so collected, received or
enforced by an assignee shall not be deemed usurious or in
violation of this chapter or any other provision of this code if
such sales finance charge does not exceed the limits permitted to
be charged by a seller under the provisions of this chapter.
(6) Notwithstanding subsection (5) of this section, a resident
lender who is the assignee of a consumer credit sales contract
executed by a resident of another state with a credit grantor in
that state, may collect, receive or enforce the sales finance
charge provided in said contract under the laws of the state where
executed. Such charge shall not be deemed to be usurious or in
violation of the provisions of this chapter or any other provisions
of this code.
§46A-3-111.Application of payments on account; rebate upon
prepayment, refinancing or consolidation; judgments and
interest on judgments.
(1) When a consumer credit sale or consumer loan is
precomputed all payments on account shall be applied to
installments in the order in which they fall due, except as
provided in subsection (3), section one hundred twelve of this
article. When the total amount is payable in substantially equal
consecutive monthly installments, the portion of the sales finance
charge or loan finance charge attributable to any particular monthly installment period shall be that proportion of the sales
finance charge or loan finance charge originally contracted for, as
the balance scheduled to be outstanding on the last day of the
monthly installment period before deducting the payment, if any,
scheduled to be made on that day bears to the sum of all the
monthly installment balances under the original schedule of
payments. (This method of allocation is the sum of the digits
method, commonly referred to as the "Rule of 78.")
(2) Upon prepayment in full of a precomputed consumer credit
sale or consumer loan by cash, a new loan, refinancing,
consolidation or otherwise, the creditor shall rebate to the
consumer that portion of the sales finance charge or loan finance
charge in the manner specified in section five-d, article six,
chapter forty-seven of this code: Provided, That no rebate of less
than one dollar need be made.
(3) Upon prepayment in full of a precomputed or nonprecomputed
consumer credit sale or consumer loan by cash, a new loan,
refinancing, consolidation, or otherwise, except where the loan is
a purchase money loan secured by a first lien mortgage on
residential property, or is made by a federally-insured depository
institution, the creditor shall rebate to the consumer that portion
of the unearned prepaid finance charges attributable to loan or credit investigations fees, origination fees or points in the
manner specified in subsection (c), section five-d, article six,
chapter forty-seven of this code: Provided, That no rebate of less
than one dollar need be made: Provided, however, That if the loan
was made in furtherance of aiding or abetting a person to whom the
loan is assigned, evade this rebate, then the rebate required
herein shall apply.
(4) If the maturity of a precomputed consumer credit sale or
consumer loan is accelerated for any reason and judgment is
obtained, the debtor is entitled to the same rebate as if the
payment had been made on the date judgment is entered and such
judgment shall bear interest until paid at the rate of ten percent
per annum.
§46A-3-113a. Default charges on consumer sales not payable by
installments.
In a consumer sales purchase transaction where the seller has
provided the goods or services and either bills the consumer the
full amount or permits the consumer to delay payment without any
sales finance charge while maintaining the right to full payment at
the time of the transaction, and does not provide for payment upon
an installment basis, then the seller may, upon notice to the buyer
if payment is not made as requested within ten days or such longer
time as provided by the seller, impose a default charge each month on the unpaid principal balance not to exceed the sale finance
charge monthly rate generally allowed retail merchants under this
article or other law. Alternatively the seller may impose a one-
time late charge of one dollar or not more than five percent of the
unpaid balance up to ten dollars. This provision does not
denigrate any other right that the seller may have under law.
ARTICLE 4. SUPERVISED LENDERS.
§46A-4-102. License to make supervised loans.
(1) The commissioner shall receive and act on all applications
for licenses to make supervised loans under this chapter.
Applications shall be under oath, be filed in the manner prescribed
by the commissioner, and contain the information the commissioner
requires to make an evaluation of the financial responsibility,
experience, character and fitness of the applicant, and the
findings required of him before he may issue a license. At the
time of the filing of the application, the sum of two hundred fifty
dollars shall be paid to the commissioner as an investigation fee.
(2) No license shall be issued to a supervised financial
organization other than to one licensed under the provisions of the
"West Virginia Industrial Loan Company Act" as contained in article
seven, chapter thirty-one of this code, or to one licensed under
the provisions of the West Virginia secondary mortgage loan act as
contained in article seventeen, chapter thirty-one of this code, or to any banking institution as defined by the provisions of section
two, article one, chapter thirty-one-a of this code. No license
will be granted to any office located outside the state of West
Virginia: Provided, That the limitation of licensing contained in
this subsection shall not prevent any supervised financial
organization from making supervised loans when the applicable state
or federal statute, law, rule or regulation permits. No license
shall be issued to any person unless the commissioner, upon
investigation, finds that the financial responsibility, experience,
character and fitness of the applicant, and of the members thereof
(if the applicant is a copartnership or association) and of the
officers and directors thereof (if the applicant is a corporation),
are such as to command the confidence of the community and to
warrant belief that the business will be operated honestly, fairly
and efficiently, within the purposes of this chapter, and the
applicant has available for the operation of the business at the
specified location assets of at least two thousand dollars, and
that allowing the applicant to engage in business will promote the
convenience and advantage of the community in which the business of
the applicant is to be conducted: Provided, however, That any
industrial loan company which is operating in good standing in
accordance with the provisions of article four, chapter forty-six-a of this code shall be presumed to have established that the public
convenience and advantage will be promoted in regard to its
application for a license to make supervised loans in the same
location for which it is licensed as an industrial loan company.
(3) Upon written request, the applicant is entitled to a
hearing on the question of his qualifications for a license if:
(a) The commissioner has notified the applicant in writing that his
application has been denied; or (b) the commissioner has not issued
a license within sixty days after the application for the license
was filed. A request for a hearing may not be made more than
fifteen days after the commissioner has mailed a writing to the
applicant notifying him that the application has been denied and
stating in substance the commissioner's findings supporting denial
of the application.
(4) Not more than one place of business shall be maintained
under the same license, but the commissioner may issue more than
one license to the same licensee upon compliance with all the
provisions of this article governing an original issuance of a
license, for each such new license. Each license shall remain in
full force and effect until surrendered, forfeited, suspended or
revoked.
(5) Upon giving the commissioner at least fifteen days' prior
written notice, a licensee may: (a) Change the location of any place of business located within a municipality to any other
location within that same municipality; or (b) change the location
of any place of business located outside of a municipality to a
location no more than five miles from the originally licensed
location, but in no case may a licensee move any place of business
located outside a municipality to a location within a municipality.
A licensee may not move the location of any place of business
located within a municipality to any other location outside of that
municipality.
(6) A licensee may conduct the business of making supervised
loans only at or from a place of business for which he holds a
license and not under any other name than that stated in the
license. A sale or lease in which credit is granted pursuant to a
lender credit card does not violate this subsection.
(7) A license issued under the provisions of this section
shall not be transferable or assignable.
§46A-4-103. Revocation or suspension of license.
(1) The commissioner may issue to a person licensed to make
supervised loans an order to show cause why his license should not
be revoked or should not be suspended for a period not in excess of
six months. The order shall state the place for a hearing and set
a time for the hearing that is no less than ten days from the date of the order. After the hearing the commissioner shall revoke or
suspend the license if he finds that:
(a) The licensee has repeatedly and willfully violated this
chapter or any rule or order lawfully made or issued pursuant to
this article;
(b) The licensee has failed to remit their required annual
assessment, or to maintain their status as a business in good
standing with the office of the secretary of state, notwithstanding
notification in writing by the commissioner sent by certified mail
to the licensee's last known address providing for thirty days to
rectify such failure;
(c) The licensee has forfeited their license by failing to
remain open for supervised lending business in conformity with the
rules or order of the commissioner; or
(d) Facts or conditions exist which would clearly have
justified the commissioner in refusing to grant a license had these
facts or conditions been known to exist at the time the application
for the license was made.
(2) No revocation or suspension of a license under this
article is lawful unless prior to institution of proceedings by the
commissioner notice is given to the licensee of the facts or
conduct which warrant the intended action, and the licensee is given an opportunity to show compliance with all lawful
requirements for retention of the license.
(3) If the commissioner finds that probable cause for
revocation of a license exists and that enforcement of this article
requires immediate suspension of the license pending investigation,
he may, after a hearing upon five days' written notice, enter an
order suspending the license for not more than thirty days.
(4) Nothing in this section limits the authority of the
commissioner to take action against a supervised lender pursuant to
chapter thirty-one-a of this code.
(5) Whenever the commissioner revokes or suspends a license,
he shall enter an order to that effect and forthwith notify the
licensee of the revocation or suspension. Within five days after
the entry of the order he shall mail by registered or certified
mail or deliver to the licensee a copy of the order and the
findings supporting the order.
(6) Any person holding a license to make supervised loans may
relinquish the license by notifying the commissioner in writing of
its relinquishment, but this relinquishment shall not affect his
liability for acts previously committed.
(7) No revocation, suspension, forfeiture or relinquishment of
a license shall impair or affect the obligation of any preexisting
lawful contract between the licensee and any consumer.
(8) The commissioner may reinstate a license, terminate a
suspension or grant a new license to a person whose license has
been revoked or suspended if no fact or condition then exists which
clearly would have justified the commissioner in refusing to grant
a license.
§46A-4-105. Examinations; assessments and investigations.
(1) The commissioner shall examine at least every eighteen
months the loans, business and records of every licensee. In
addition, for the purpose of discovering violations of this article
or securing information lawfully required, the attorney general or
the commissioner may at any time investigate the loans, business
and records of any supervised lender. For these purposes he shall
have free and reasonable access to the offices, places of business
and records of the lender.
(2) If the lender's records are located outside this state,
the lender at his option shall make them available to the
commissioner at a convenient location within this state, or pay the
reasonable and necessary expenses for the commissioner or his
representatives to examine them at the place where they are
maintained. The commissioner may designate representatives,
including comparable officials of the state in which the records
are located, to inspect them on his behalf.
(3) For the purposes of this section, the commissioner may
administer oaths or affirmations, and upon his own motion or upon
request of any party, may subpoena witnesses, compel their
attendance, adduce evidence and require the production of any
matter which is relevant to the investigation, including the
existence, description, nature, custody, condition and location of
any books, documents or other tangible things and the identity and
location of persons having knowledge of relevant facts or any other
matter reasonably calculated to lead to the discovery of admissible
evidence.
(4) Upon failure without lawful excuse to obey a subpoena or
to give testimony and upon reasonable notice to all persons
affected thereby, the commissioner may apply to any circuit court
of this state for an order compelling compliance.
(5) The commissioner of banking shall charge and collect from
each supervised lender and pay into a special revenue account in
the state treasury for the department of banking an annual
assessment payable on the first day of July, computed upon the
total outstanding loan balances and installment sales contract
balances less unearned finance charges as of the preceding calendar
year-end as is set out in section eight, article two, chapter
thirty-one-a of this code.
§46A-4-109. Restrictions on interest in land as security;
assignment of earnings to supervised lender prohibited; when
security interest on household goods not valid; prohibitions
as to renegotiation of loan discharged in bankruptcy.
(1) A supervised lender may not contract for an interest in
land as security. A security interest taken in violation of this
subsection is void: Provided, That this subsection shall not be
construed as prohibiting one licensed to make loans under the
provisions of the "West Virginia Industrial Bank and Industrial
Loan Company Act" as set forth in the provisions of article seven,
chapter thirty-one of this code, or the West Virginia secondary
mortgage loan act as set forth in the provisions of article
seventeen, chapter thirty-one, from taking an interest in land as
security for loans made pursuant to either of those acts.
(2) Notwithstanding the provisions of section one hundred
sixteen, article two of this chapter, no supervised lender shall
take any assignment of or order for payment of any earnings to
secure any loan made by any supervised lender under this article.
An assignment or order taken in violation of this subsection is
void.
(3) Other than for a purchase money lien, no supervised lender
may take a security interest in household goods in the possession
and use of the borrower. Where federal law permits a security interest in certain nonpurchase items deemed not to be household
goods, the security agreement creating such security interest must
be in writing, signed in person by the borrower, and if the
borrower is married, signed in person by both husband and wife:
Provided, That the signature of both husband and wife shall not be
required when they have been living separate and apart for a period
of at least five months prior to the making of such security
agreement. A security interest taken in violation of this
subsection is void.
(4) A supervised lender may not renegotiate the original loan,
or any part thereof, or make a new contract covering the original
loan, or any part thereof, with any borrower, who has received a
discharge in bankruptcy of the original loan or any balance due
thereon at the time of said discharge from any court of the United
States of America exercising jurisdiction in insolvency and
bankruptcy matters, unless said supervised lender shall pay to and
deliver to the borrower the full amount of the loan shown on said
note, promise to pay, or security, less any deductions for charges
herein specifically authorized.
§46A-4-111. Limitations on charging loan origination fees, loan
investigation fees and points.
In any supervised loan transaction the consumer may not be
charged any loan origination fee, loan investigation fee, points,
or similar prepaid finance charges.
ARTICLE 5. CIVIL LIABILITY AND CRIMINAL PENALTIES.
§46A-5-101. Effect of violations on rights of parties; limitation
of actions.
(1) If a creditor has violated the provisions of this chapter
applying to collection of excess charges, security in sales and
leases, disclosure with respect to consumer leases, receipts,
statements of account and evidences of payment, limitations on
default charges, assignment of earnings, authorizations to confess
judgment, illegal, fraudulent or unconscionable conduct, any
prohibited debt collection practice, or restrictions on interest in
land as security, assignment of earnings to supervised lender,
security agreement on household goods for benefit of supervised
lender, and renegotiation by supervised lender of loan discharged
in bankruptcy, the consumer has a cause of action to recover actual
damages and in addition a right in an action to recover from the
person violating this chapter a penalty in an amount determined by
the court not less than one hundred dollars nor more than one
thousand dollars. With respect to violations arising from consumer
credit sales or consumer loans made pursuant to revolving charge
accounts or revolving loan accounts, or from sales as defined in article six of this chapter, no action pursuant to this subsection
may be brought more than four years after the violations occurred.
With respect to violations arising from other consumer credit sales
or consumer loans, no action pursuant to this subsection may be
brought more than one year after the due date of the last scheduled
payment of the agreement.
(2) If a creditor has violated the provisions of this chapter
respecting authority to make supervised loans, the loan is void and
the consumer is not obligated to pay either the principal or the
loan finance charge. If he has paid any part of the principal or
of the finance charge, he has a right to recover in an action the
payment from the person violating this chapter or from an assignee
of that person's rights who undertakes direct collection of
payments or enforcement of rights arising from the debt. With
respect to violations arising from supervised loans made pursuant
to revolving loan accounts, no action pursuant to this subsection
may be brought more than four years after the violation occurred.
With respect to violations arising from other supervised loans, no
action pursuant to this subsection may be brought more than one
year after the due date of the last scheduled payment of the
agreement pursuant to which the charge was paid.
(3) A consumer is not obligated to pay a charge in excess of
that allowed by this chapter and if he has paid an excess charge he has a right to a refund. A refund may be made by reducing the
consumer's obligation by the amount of the excess charge. If the
consumer has paid an amount in excess of the lawful obligation
under the agreement, the consumer may recover in an action the
excess amount from the person who made the excess charge or from an
assignee of that person's rights who undertakes direct collection
of payments from or enforcement of rights against the consumer
arising from the debt.
(4) If a creditor has contracted for or received a charge in
excess of that allowed by this chapter, the consumer may, in
addition to recovering such excess charge, also recover from the
creditor or the person liable in an action a penalty in an amount
determined by the court not less than one hundred dollars nor more
than one thousand dollars. With respect to excess charges arising
from consumer credit sales or consumer loans made pursuant to
revolving charge accounts or revolving loan accounts, no action
pursuant to this subsection may be brought more than four years
after the time the excess charge was made. With respect to excess
charges arising from other consumer credit sales or consumer loans
no action pursuant to this subsection may be brought more than one
year after the due date of the last scheduled payment of the
agreement pursuant to which the charge was made.
(5) Except as otherwise provided, a violation of this chapter
does not impair rights on a debt.
(6) If an employer discharges an employee in violation of the
provisions prohibiting discharge, the employee may within ninety
days bring a civil action for recovery of wages lost as a result of
the violation and for an order requiring the reinstatement of the
employee. Damages recoverable shall not exceed lost wages for six
weeks.
(7) A creditor has no liability for a penalty under subsection
(1) or subsection (4) of this section if within fifteen days after
discovering an error, and prior to the institution of an action
under this section or the receipt of written notice of the error,
the creditor notifies the person concerned of the error and
corrects the error. If the violation consists of a prohibited
agreement, giving the consumer a corrected copy of the writing
containing the error is sufficient notification and correction. If
the violation consists of an excess charge, correction shall be
made by an adjustment or refund.
(8) If the creditor establishes by a preponderance of evidence
that a violation is unintentional or the result of a bona fide
error of fact notwithstanding the maintenance of procedures
reasonably adapted to avoid any such violation or error, no liability is imposed under subsections (1), (2) and (4) of this
section, and the validity of the transaction is not affected.
ARTICLE 7. ADMINISTRATION.
§46A-7-103. Division of administrative powers; investigation and
administration.
(1) With respect to supervised lenders and supervised
financial organizations, the powers of examination and
investigation and administrative enforcement shall be exercised by
the official or agency to whose supervision the organization is
subject. All other powers of the attorney general under this
chapter may be exercised by him with respect to a financial
organization. Notwithstanding the first sentence of this
subsection and notwithstanding subsection (3) of this section, the
attorney general may pursue any investigation, prosecute any suit
and take any other proper action relating to the enforcement of any
consumer protection provision in this chapter.
(2) If the attorney general receives a complaint or other
information concerning noncompliance with this chapter by a
financial organization, he shall inform the official or agency
having supervisory authority over the organization concerned. The
attorney general may request information about financial
organizations from the officials or agencies supervising them.
(3) The attorney general and any official or agency of this
state having supervisory authority over a financial organization
are authorized and directed to consult and assist one another in
maintaining compliance with this chapter. They may jointly pursue
investigations, prosecute actions, and take other official actions,
as they deem appropriate, if either of them otherwise is empowered
to take the action.
§46A-7-115. Notification.
(1) Every person engaged in this state in making consumer
credit sales or consumer loans, including any person subject to the
provisions of section five-a, article twenty-three, chapter eleven
of this code as a result of their consumer lending or any person
who regularly purchases retail installment contracts or other
consumer paper from a business to which it is affiliated, and every
person having an office or place of business in this state who
takes assignments of and undertakes direct collection of payments
from or enforcement of rights against debtors arising from such
sales or loans shall file notification with the state tax
department within thirty days after commencing business in this
state, and, thereafter, on or before the thirty-first day of
January of each year. A notification shall be deemed to be in
compliance with this section if the information hereinafter
required is given in an application for a business registration certificate provided for in section four, article twelve, chapter
eleven of this code. The state tax commissioner shall make any
information required by this section available to the attorney
general or commissioner upon request. The notification shall state:
(a) Name of the person;
(b) Name in which business is transacted if different from
(a);
(c) Address of principal office, which may be outside this
state;
(d) Address of all of its offices, if any, in this state at
which consumer loans are made, or in the case of a lender credit
card, a description of its affiliation to any store chain, or
national or regional card acceptance system (i.e. Visa/Mastercard)
or in the case of a person taking assignments of obligations, the
offices or places of business within this state at which business
is transacted;
(e) If consumer credit sales or consumer loans, including
mortgage loans, are made otherwise than at its retail store or
office in this state, a brief description of the manner in which
they are made;
(f) Address of designated agent upon whom service of process
may be made in this state; and
(g) Whether supervised loans are made.
(2) If information in a notification becomes inaccurate after
filing, accurate information must be filed within thirty days.
(3) The provisions of this section are not applicable to a
seller whose credit sales consist entirely of sales made pursuant
to a seller's credit card so long as the issuer of the card has
fully complied with the provisions of this section. Nor are the
provisions of this section applicable to a person whose consumer
lending in West Virginia is incidental and confined to access
through a nonproprietary automatic teller machine or similar
electronic communication terminal.
CHAPTER 47. REGULATION OF TRADE.
ARTICLE 6. MONEY AND INTEREST.
§47-6-5d. Rebate upon prepayment, refinancing, consolidation or
otherwise; liability and penalties for excess charges.
(a) Upon prepayment in full of a precomputed loan, credit sale
or transaction, forbearance or similar transaction repayable
according to its original terms over a period of thirty-six months
or less, the creditor shall rebate that portion of the finance
charge attributable to the prepaid periodic installment periods.
When the total is payable in substantially equal consecutive
monthly installments, the portion of such finance charge
attributable to any particular monthly installment period shall be
that proportion of charge originally contracted for, as the balance scheduled to be outstanding on the last day of the monthly
installment period before deducting the payment, if any, scheduled
to be made on that day bears to the sum of all the monthly
installment balances under the original schedule of payments.
(This method of allocation is the sum of the digits method,
commonly referred to as the "Rule of 78".) For prepayment in full
of a precomputed loan, credit sale or transaction, forbearance or
similar transaction: (i) Repayable according to its original terms
over a period of thirty-six months or less; (ii) in which unequal
or irregular or other than substantially equal consecutive monthly
installments are payable, the commissioner of banking shall
prescribe by rule the method or procedure for the allocation of
charges and the calculation or rebates consistent with the rule of
78.
(b) Upon prepayment in full of a precomputed loan, credit sale
or transaction, forbearance or similar transaction, repayable by
its original terms over a period of greater than thirty-six months,
an amount shall be rebated of not less than the unearned portion of
the finance charge calculated by applying the rate of finance
charge which was required by applicable law to be disclosed in the
transaction according to the actuarial method to the unpaid balance
for the time remaining as originally scheduled or as extended by
deferral or otherwise for the period following prepayment. In instances where no rate of finance charge was required by law or
otherwise to be disclosed, the unearned portion of the finance
charge shall be calculated by applying the finance charge which was
charged in the transaction according to the actuarial method to the
unpaid balance for the time remaining as originally scheduled or as
extended by deferral or otherwise for the period following
prepayment.
(c) Unearned prepaid finance charges upon prepayment includes
all prepaid finance charges for points, loan/credit origination
fees or loan/credit investigation fees: Provided, That: (i) In
calculating the rebate for a consumer loan or credit sale unsecured
by real property where such prepaid finance charges have been
imposed, the lender/creditor may deduct such charges up to a
maximum of two percent of the amount financed; and (ii) in
calculating the rebate for a consumer loan or credit sale secured
by real property where such prepaid finance charges have been
imposed, the lender/creditor may deduct such charges up to a
maximum of five percent of the amount financed, but no such
deduction over that amount may be made twice by the same lender
within a twelve month period as a result of a refinancing. Upon
prepayment in full of a consumer loan or credit sale such unearned
prepaid finance charges shall be rebated by using the rule of 78 where the original loan term is thirty-six months or less,
otherwise by using the actuarial method. To the extent that this
section overrides the preemption on limiting points and other such
charges on first lien residential mortgages for nonpurchase money
loans contained in Section 501 of the United States Depository
Institutions Deregulation and Monetary Control Act of 1980, the
state law limitations contained in this section shall apply:
Provided, however, That this subsection does not apply to loans
made by federally-insured depository institutions.
(d) For purposes of the rebate of unearned finance charges as
required by this section, a prepayment in full shall include
repayment by a new loan, extension of credit, refinancing,
consolidation, forbearance or otherwise; and the term loan/credit
investigation fees does not include the reasonable costs of credit
reports paid to third parties as part of the bona fide closing
costs in real estate transactions when such costs are not included
as part of the finance charge.
(e) As an alternative to the rule of 78 method of rebate of
determining the unearned finance charge required by this section,
a creditor may rebate unearned finance charges under any other
method which gives a greater rebate to the debtor than the rebate
determined by the rule of 78.
(f) The provisions governing rebates as set forth in this
section shall apply to all transactions entered into on or after
the first day of September, one thousand nine hundred eighty-one.
For transactions entered into prior to the first day of September,
one thousand nine hundred eighty-one, the provisions in effect
prior to the effective date of this section of the respective
chapters of this code shall be utilized to determine the rebate of
unearned finance charges.
(g) For consumer credit sales or consumer loans subject to the
provisions of chapter forty-six-a of this code the provisions of
article five of said chapter, govern the imposition of liability
and penalties for charging interest or a finance charge in excess
of the maximum rate allowed under the provisions of this section.
In all other instances, the provisions of this article govern the
imposition of liability and penalties for charging interest or a
finance charge in excess of the maximum allowed under this section.