Senate Bill No. 332
(By Senator Minard)
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[Introduced January 24, 2008; referred to the Committee on
Banking and Insurance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §11-28-1, §11-28-2,
§11-28-3, §11-28-4 and §11-28-5, all relating to required
disclosures for loans in anticipation of a tax refund.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §11-28-1, §11-28-2,
§11-28-3, §11-28-4 and §11-28-5, all to read as follows:
ARTICLE 28. REFUND ANTICIPATION LOAN DISCLOSURE ACT.
§11-28-1. Definitions.
For the purposes of this article, the following words have the
following meanings:
(a)"Applicant" means a customer who applies for a refund
anticipation loan through a facilitator.
(b)"Borrower" means an applicant who receives a refund anticipation loan through a facilitator.
(c) "Customer" means an individual for whom tax preparation
services are performed.
(d) "Facilitator" means a person who receives or accepts for
delivery an application for a refund anticipation loan, delivers a
check in payment of refund anticipation loan proceeds, or in any
other manner acts to allow the making of a refund anticipation
loan. "Facilitator" does not include a bank, thrift, savings
association, industrial bank, or credit union, operating under the
laws of the United States or this state, an affiliate that is a
servicer for such an entity, or any person who acts solely as an
intermediary and does not deal with an applicant in the making of
the refund anticipation loan.
(e)"Person" means an individual, a firm, a proprietorship, an
association, a corporation, or another entity.
(f) "Refund anticipation loan" means a loan, whether provided
through a facilitator or by another entity such as a financial
institution, made at approximately the same time an income tax
return is filed, in anticipation of, and whose payment is secured
by, a customer's federal or state income tax refund or by both.
(g) "Refund anticipation loan Fee" means any fee, charge or
other consideration imposed by a lender or a facilitator for a
refund anticipation loan. The term does not include any fee,
charge or other consideration usually imposed by a facilitator in the ordinary course of business for nonloan services, such as fees
for preparing tax returns and fees for the electronic filing of tax
returns.
(h) "Refund Anticipation Loan Fee Schedule" means a list or
table of refund anticipation loan fees that includes three or more
representative refund anticipation loan amounts. The schedule
shall separately list each fee or charge imposed, as well as a
total of all fees imposed, related to the making of a refund
anticipation loan. The schedule shall also include, for each
representative loan amount, the estimated annual percentage rate
calculated under the guidelines established by the federal Truth in
Lending Act (15 U.S.C. Sec. 1601 and following).
(i) "Tax Return" means a return, declaration, statement,
refund claim, or other document required to be made or filed in
connection with state or federal income taxes.
§11-28-2. Advertising and disclosures.
(a) Any facilitator who advertises the availability of a
refund anticipation loan shall not directly or indirectly represent
the loan as a customer's actual refund. Any advertisement that
mentions a refund anticipation loan shall state conspicuously that
it is a loan and that a fee or interest will be charged by the
lending institution. The advertisement shall also disclose the
name of the lending institution.
(b) (1) Prior to an applicant's completion of the refund anticipation loan application, a facilitator that offers to
facilitate a refund anticipation loan shall show to the applicant
a clear disclosure containing all of the following information:
(A) The refund anticipation loan fee schedule.
(B) That a refund anticipation loan is a loan and is not the
applicant's actual income tax refund.
(C) That a customer can file an income tax return
electronically without applying for a refund anticipation loan.
(D) The average amount of time, according to the Internal
Revenue Service, within which a customer who does not obtain a
refund anticipation loan can expect to receive a refund if a
customer's return is filed or mailed as follows:
(i) Filed electronically and the refund is deposited directly
into a customer's bank account or mailed to the customer.
(ii) Mailed to the Internal Revenue Service and the refund is
deposited directly into a customer's bank account or mailed to a
customer.
(E) That the Internal Revenue Service does not guarantee that
it will pay the full amount of the anticipated refund and it does
not guarantee a specific date that a refund will be deposited into
a customer's bank account or mailed to a customer.
(F) That the borrower is responsible for the repayment of the
refund anticipation loan and the related fees in the event that the
tax refund is not paid or paid in full.
(G) The estimated time within which the loan proceeds will be
paid to the borrower if the loan is approved.
(H) The fee that will be charged, if any, if the applicant's
loan is not approved.
(2) Prior to an applicant's consummation of the refund
anticipation loan transaction, a facilitator shall provide to the
applicant, in either written or electronic form, the following
information:
(A) The estimated total fees for obtaining the refund
anticipation loan.
(B) The estimated annual percentage rate for the applicant's
refund anticipation loan, using the guidelines established under
the federal Truth in Lending Act (15 U.S.C. Sec. 1601 and
following).
(C) The various costs, fees, and finance charges, if
applicable, associated with receiving a refund by mail or by direct
deposit directly from the Internal Revenue Service, a refund
anticipation loan, a refund anticipation check, or any other refund
settlement options facilitated by the facilitator.
(c) Any facilitator who offers to facilitate, or who
facilitates, a refund anticipation loan may not engage in any of
the following activities:
(1) Requiring a customer to enter into a loan arrangement in
order to complete a tax return.
(2) Misrepresenting a material factor or condition of a refund
anticipation loan.
(3) Failing to process the application for a refund
anticipation loan promptly after an applicant applies for the loan.
(4) Engaging in any transaction, practice, or course of
business that operates a fraud upon any person in connection with
a refund anticipation loan.
(d) When an application involves more than one customer,
notification pursuant to this section need only be given to one
customer.
§11-28-3. Right of rescission.
A borrower who obtains a refund anticipation loan may rescind
the loan, on or before the close of business on the next day of
business, by either returning the original check issued for the
loan or providing the amount of the loan in cash to the lender. The
facilitator may not charge the borrower a fee for rescinding the
loan or a refund anticipation loan fee if the loan is rescinded but
may charge the customer a fee for establishing and administering a
bank account to electronically receive and distribute the refund.
§11-28-4. Effect on other local or municipal laws.
(a) This article preempts and is exclusive of all local acts,
statutes, ordinances, and rules relating to refund anticipation
loans. This subsection shall be given retroactive and prospective
effect.
(b) This article is exclusive of all other state laws and
rules relating to advertising or disclosures regarding refund
anticipation loans or potential licensing of facilitators. This
subsection shall be given retroactive and prospective effect.
§11-28-5. Penalty.
Any person who knowingly and willfully violates any provision
of this article is guilty of a misdemeanor and upon conviction
thereof, shall be fined not more than five hundred dollars for each
violation.
NOTE: The purpose of this bill is to provide regulations and
disclosure requirements for loans applied for in anticipation of an
income tax return.
This article is new; therefore, strike-throughs and
underscoring have been omitted.