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Virginia Administrative Code
Title 10. Finance And Financial Institutions
Agency 5. State Corporation Commission
Chapter 200. Short-Term Lending
10/2/2022

10VAC5-200-100. Conducting other business.

A. This section governs the conduct of any business other than short-term lending where a licensed short-term lending business is conducted. As used in this section, the term "other business operator" refers to a licensee or third party, including an affiliate or subsidiary of the licensee, who conducts or wants to conduct other business from one or more short-term lending offices.

1. Pursuant to § 6.2-1820 of the Code of Virginia, a licensee shall not conduct the business of making short-term loans at any office, suite, room, or place of business where any other business is solicited or conducted, except a check cashing business registered under Chapter 21 (§ 6.2-2100 et seq.) of Title 6.2 of the Code of Virginia, a motor vehicle title lending business licensed under Chapter 22 (§ 6.2-2200 et seq.) of Title 6.2 of the Code of Virginia, or such other business as the commission determines should be permitted, and subject to such conditions as the commission deems necessary and in the public interest.

2. Notwithstanding any provision of this section or order entered by the commission prior to October 1, 2010, the following other businesses shall not be conducted from any office, suite, room, or place of business where a licensed short-term lending business is conducted:

a. Selling insurance or enrolling borrowers under group insurance policies.

b. Making loans under an open-end credit plan as described in § 6.2-312 of the Code of Virginia.

3. This section shall not apply to any other business that is transacted solely with persons residing outside of the Commonwealth.

4. Notwithstanding any provision of this section or order entered by the commission prior to January 1, 2021, a licensee shall not make short-term loans at the same location at which the licensee, or any affiliate or owner of the licensee, conducts business under Chapter 15 (§ 6.2-1500 et seq.) of Title 6.2 of the Code of Virginia. However, if prior to January 1, 2021, a licensee obtained authority under § 6.2-1820 for the licensee or its affiliate or owner to make consumer finance loans from the licensee's payday lending offices, then the licensee or its affiliate or owner may continue collecting payments on any outstanding consumer finance loans (i) in accordance with the preexisting terms of the loan contracts provided that such terms were permitted by law when the loans were made, and (ii) subject to the general conditions set forth in subsection E of this section.

5. If a licensee accepts loan applications, sends or receives loan-related information or documents, disburses loan funds, or accepts loan payments on or through the licensee's website or mobile application, and any other products or services are or will be offered or sold to Virginia residents on or through such website or mobile application, then the offer or sale of such other products or services shall constitute the conduct of other business and shall be subject to all of the provisions of this section to the same extent as if such other business was conducted by an other business operator from the licensee's short-term lending offices.

B. No other business shall be conducted in a location where a licensee conducts a short-term lending business unless the proposed other business is financial in nature and the licensee obtains prior approval from the commission. Applications for approval shall be made in writing on a form provided by the commissioner and shall be accompanied by payment of a $300 fee and any information relating to the application that the commissioner may require. In acting upon an application, the commission shall consider (i) whether the other business operator has the general fitness to warrant belief that the business will be operated in accordance with law; (ii) whether the applicant has been operating its business in accordance with the Act and this chapter; and (iii) any other factors that the commission deems relevant.

1. The commission shall in its discretion determine whether a proposed other business is "financial in nature," and shall not be obliged to consider the meaning of this term under federal law. A business is financial in nature if it primarily deals with the offering of debt, money or credit, or services directly related thereto.

2. Prior approval from the commission shall not be required for a licensee to conduct a short-term lending business from one or more locations where an other business operator will conduct (i) a registered check cashing business under Chapter 21 (§ 6.2-2100 et seq.) of Title 6.2 of the Code of Virginia, or (ii) a licensed motor vehicle title lending business under Chapter 22 (§ 6.2-2200 et seq.) of Title 6.2 of the Code of Virginia. However, the conduct of these other businesses from a licensee's short-term lending offices shall otherwise be governed by this section, including the conditions prescribed in subsections E, F, and G of this section.

C. Nonfinancial other business may be conducted pursuant to any order of the commission entered on or before June 15, 2004. However, this subsection shall not be construed to authorize any person to begin engaging in such other business at locations where such other business was not conducted as of June 15, 2004.

D. Except as provided in subdivision B 2 of this section, written evidence of commission approval of each other business conducted by an other business operator should be maintained at each approved location.

E. Except as otherwise provided in subsection O of this section, all other businesses in short-term lending offices shall be conducted in accordance with the following conditions:

1. The licensee shall not make a short-term loan to a borrower to enable the borrower to purchase or pay any amount owed in connection with the (i) goods or services sold, or (ii) loans offered, facilitated, or made, by the other business operator at the licensee's short-term lending offices.

2. The other business operator shall comply with all federal and state laws and regulations applicable to its other business, including any applicable licensing or registration requirements.

3. The other business operator shall not use or cause to be published any advertisement or other information that contains any false, misleading, or deceptive statement or representation concerning its other business, including the rates, terms, or conditions of the products, services, or loans that it offers. The other business operator shall not make or cause to be made any misrepresentation as to (i) its being licensed to conduct the other business, or (ii) the extent to which it is subject to supervision or regulation.

4. The licensee shall not make a short-term loan or vary the terms of a short-term loan on the condition or requirement that a person also (i) purchase a good or service from, or (ii) obtain a loan from or through, the other business operator. The other business operator shall not (a) sell its goods or services, (b) offer, facilitate, or make loans, or (c) vary the terms of its goods, services, or loans, on the condition or requirement that a person also obtain a short-term loan from the licensee.

5. The other business operator shall maintain books and records for its other business separate and apart from the licensee's short-term lending business and in a different location within the licensee's short-term lending offices. The bureau shall be given access to all such books and records and be furnished with any information and records that it may require in order to determine compliance with all applicable conditions, laws, and regulations.

F. If an other business operator conducts a check cashing business from the licensee's short-term lending offices, the following additional conditions shall be applicable:

1. The other business operator shall be registered or exempt from registration under Chapter 21 (§ 6.2-2100 et seq.) of Title 6.2 of the Code of Virginia.

2. If the other business operator is registered under Chapter 21 (§ 6.2-2100 et seq.) of Title 6.2 of the Code of Virginia, then the other business operator shall not make any loans unless the other business operator is licensed under the Act and the loans are made in accordance with the Act.

3. The other business operator shall not charge a fee to cash a check issued by the licensee or any other person operating in the licensee's short-term lending offices.

G. If an other business operator conducts a motor vehicle title lending business from the licensee's short-term lending offices, the following additional conditions shall be applicable:

1. The other business operator shall be licensed or exempt from licensing under Chapter 22 (§ 6.2-2200 et seq.) of Title 6.2 of the Code of Virginia.

2. The licensee shall not make a short-term loan to a person if (i) the person has an outstanding motor vehicle title loan from the other business operator, or (ii) on the same day the person repaid or satisfied in full a motor vehicle title loan from the other business operator.

3. The other business operator shall not make a motor vehicle title loan to a person if (i) the person has an outstanding short-term loan from the licensee, or (ii) on the same day the person repaid or satisfied in full a short-term loan from the licensee.

4. The other business operator and the licensee shall not make a motor vehicle title loan and a short-term loan contemporaneously or in response to a single request for a loan or credit.

5. The licensee and other business operator shall provide each applicant for a short-term loan or motor vehicle title loan with a separate disclosure, signed by the applicant, that clearly identifies all of the loan products available in the licensee's short-term lending offices along with the corresponding Annual Percentage Rate, interest rate, and other costs associated with each loan product. The disclosure shall also identify the collateral, if any, that will be used to secure repayment of each loan product.

H. If a licensee received or receives commission authority for an other business operator to conduct business as an authorized delegate or agent of a money order seller or money transmitter from the licensee's short-term lending offices, the other business operator shall be and remain a party to a written agreement to act as an authorized delegate or agent of a person licensed or exempt from licensing as a money order seller or money transmitter under Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia. The other business operator shall not engage in money order sales or money transmission services on its own behalf or on behalf of any person other than a licensed or exempt money order seller or money transmitter with whom it has a written agreement.

I. If a licensee received or receives commission authority for an other business operator to conduct the business of (i) tax preparation or electronic tax filing services, or (ii) facilitating third party tax preparation or electronic tax filing services, from the licensee's short-term lending offices, the following additional conditions shall be applicable:

1. The licensee shall not make a short-term loan that is secured by an interest in a borrower's tax refund.

2. The other business operator shall not engage in the business of (i) accepting funds for transmission to the Internal Revenue Service or other government instrumentalities, or (ii) receiving tax refunds for delivery to individuals, unless licensed or exempt from licensing under Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia.

J. If a licensee received or receives commission authority for an other business operator to conduct the business of facilitating or arranging tax refund anticipation loans or tax refund payments from the licensee's short-term lending offices, the following additional conditions shall be applicable:

1. The other business operator shall not facilitate or arrange a tax refund anticipation loan or tax refund payment to enable a person to pay any amount owed to the licensee as a result of a short-term loan transaction.

2. The other business operator and the licensee shall not facilitate or arrange a tax refund anticipation loan or tax refund payment and make a short-term loan contemporaneously or in response to a single request for a loan or credit.

3. The licensee shall not make a short-term loan that is secured by an interest in a borrower's tax refund.

4. The other business operator shall not engage in the business of receiving tax refunds or tax refund payments for delivery to individuals unless licensed or exempt from licensing under Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia.

5. The licensee and other business operator shall provide each applicant for a short-term loan or tax refund anticipation loan with a separate disclosure, signed by the applicant, that clearly identifies all of the loan products available in the licensee's short-term lending offices along with the corresponding Annual Percentage Rate, interest rate, and other costs associated with each loan product. The disclosure shall also identify the collateral, if any, that will be used to secure repayment of each loan product.

K. If a licensee received or receives commission authority for an other business operator to conduct a consumer finance business from the licensee's short-term lending offices, the following additional conditions shall be applicable:

1. The other business operator shall be licensed or exempt from licensing under Chapter 15 (§ 6.2-1500 et seq.) of Title 6.2 of the Code of Virginia.

2. Pursuant to subdivision A 4 of this section, the other business shall be conducted by a person other than the licensee or an affiliate or owner of the licensee.

3. The licensee shall not make a short-term loan to a person if (i) the person has an outstanding consumer finance loan from the other business operator, or (ii) on the same day the person repaid or satisfied in full a consumer finance loan from the other business operator.

4. The other business operator shall not make a consumer finance loan to a person if (i) the person has an outstanding short-term loan from the licensee, or (ii) on the same day the person repaid or satisfied in full a short-term loan from the licensee.

5. The licensee and other business operator shall not make a short-term loan and a consumer finance loan contemporaneously or in response to a single request for a loan or credit.

6. The licensee and other business operator shall provide each applicant for a short-term loan or consumer finance loan with a separate disclosure, signed by the applicant, that clearly identifies all of the loan products available in the licensee's short-term lending offices along with the corresponding Annual Percentage Rate, interest rate, and other costs associated with each loan product. The disclosure shall also identify the collateral, if any, that will be used to secure repayment of each loan product.

L. If a licensee received or receives commission authority for an other business operator to conduct the business of operating an automated teller machine from the licensee's short-term lending offices, the other business operator shall not charge a fee or receive other compensation in connection with the use of its automated teller machine by a person when the person is withdrawing funds in order to make a payment on a loan that was made by the licensee or any other lender conducting business from the licensee's short-term lending offices.

M. The commission may impose any additional conditions upon the conduct of other business in short-term lending offices that it deems necessary and in the public interest.

N. Except as otherwise provided in subsection O of this section, the conditions set forth or referred to in subsections E through M of this section shall supersede the conditions set forth in the commission's approval orders entered prior to January 1, 2021.

O. If prior to January 1, 2011, a licensee received commission authority for an other business operator to conduct a business not identified in subsections F through L of this section, the conditions that were imposed by the commission at the time of the approval shall remain in full force and effect.

P. Failure by a licensee or other business operator to comply with any provision of this section or any condition imposed by the commission, or failure by a licensee to comply with the Act, this chapter, or any other law or regulation applicable to the conduct of the licensee's business, may result in revocation of the authority to conduct other business or any form of enforcement action specified in 10VAC5-200-120.

Statutory Authority

§§ 6.2-1815 and 12.1-13 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 20, Issue 22, eff. June 15, 2004; amended, Virginia Register Volume 26, Issue 11, eff. February 1, 2010; Volume 27, Issue 10, eff. January 1, 2011; Volume 37, Issue 25, eff. August 1, 2021.

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