H. B. 2235
(By Delegate Kiss, By Request))
[Introduced January 25, 1995; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact section one hundred two, article one,
chapter forty-six-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, relating to
the West Virginia consumer credit and protection act;
general definitions; and providing that certain types of
insurance coverage may not be purchased with a credit card.
Be it enacted by the Legislature of West Virginia:
That section one hundred two, article one, chapter
forty-six-a of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted to read
as follows:
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: Provided, That nothing in this chapter
may be construed as permitting a person, holding a lender's
credit card or any other credit confirmation or identification in
transactions out of which debt arises, to use that credit to
obtain insurance for life, disability or unemployment coverage.
(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 a person,
other than a supervised lender or an insurance company or other
organization primarily engaged in an insurance business:
(a) Organized, chartered or holding an authorization
certificate under the laws of this state or of the United States which authorizes the person to make consumer loans; and
(b) Subject to supervision and examination with respect to
such loans by an official or agency of this state or 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 made by other
than a supervised financial organization, including a loan made
pursuant to a revolving loan account, where the principal does
not exceed two thousand dollars, and in which the rate of the
loan finance charge exceeds eight percent per year as determined
according to the actuarial method.
NOTE: The purpose of this bill is to prohibit the purchase
of insurance for life, disability or unemployment coverage by use
of a charge card.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.