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Code of Virginia
Title 6.2. Financial Institutions and Services
Chapter .
7/31/2021

Chapter 14. Industrial Loan Associations.

§ 6.2-1400. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Affiliated person of an association" means any person which is a subsidiary, stockholder, partner, trustee, director, officer, or employee of an association, and any corporation 10 percent or more of the capital stock of which is owned by an association or by any person which is a subsidiary, stockholder, partner, trustee, director, officer, or employee of an association.

"Association" means a corporation organized as an industrial loan association under the provisions of the Virginia Stock Corporation Act (§ 13.1-601 et seq.), the business of which is substantially confined to the business of making loans and issuing certificates of investment.

"Mortgage loan" means a loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage or deed of trust upon any interest in one- to four-family residential property located in the Commonwealth, regardless of where made, including the renewal or refinancing of any such loan, but excluding (i) loans or extensions of credit to buyers of real property for any part of the purchase price of such property by persons selling such property owned by them, (ii) loans to persons related to the lender by blood or marriage, and (iii) loans to persons who are bona fide employees of the lender. "Mortgage loan" shall not include any loan secured by a mortgage or deed of trust upon any interest in a more than four-family residential property or property used for a commercial or agricultural purpose.

2010, c. 794.

§ 6.2-1401. Powers of associations.

Associations shall have all the general powers and be subject to all the restrictions contained in the Virginia Stock Corporation Act (§ 13.1-601 et seq.), except as herein otherwise provided. An association need not comply with the provisions of subsection A of § 13.1-630.

Code 1950, §§ 6-242, 6-244; 1956, c. 433; 1958, c. 139; 1966, c. 584, § 6.1-227; 2010, c. 794.

§ 6.2-1402. Use of certain words in name prohibited.

An association shall neither use in its corporate name nor do business under a name containing the word "bank," "savings bank," "banker," "trust company," "trust," or other word of similar import.

Code 1950, §§ 6-242, 6-244; 1956, c. 433; 1958, c. 139; 1966, c. 584, § 6.1-227; 2010, c. 794.

§ 6.2-1403. Directors.

A. Every association shall have at least five directors, each of whom shall own in his own right and have in his personal possession or control shares of stock in the association that (i) have in the aggregate at least $100 in par value, and (ii) shall be unpledged and unencumbered at the time he became a director and during his entire term as director.

B. Each director shall take and subscribe an oath that he will (i) comply with the requirements of subsection A regarding his stock of the association and (ii) diligently and honestly administer the affairs of the association as its director. The oath shall be transmitted to the Commission within 60 days following his election.

C. Any director violating the provisions of this section shall thereby vacate his office. The remaining directors shall proceed forthwith to fill such vacancy.

D. The directors shall require all active officers of such association to provide bonds in such sums as may be prescribed by the Commission in a surety company authorized to do business in the Commonwealth.

Code 1950, § 6-252; 1966, c. 584, § 6.1-235; 2010, c. 794.

§ 6.2-1404. Commission may regulate issuance of evidences of debt.

The Commission may by regulation prescribe the terms and conditions upon which an association may issue bonds, debentures, or other evidences of debt, however described, that are offered to the public by advertisement or solicitation.

1974, c. 174, § 6.1-227.1; 2010, c. 794.

§ 6.2-1405. Extent to which associations regarded as banks; conversion of certain associations to banks; new associations not authorized.

A. An association incorporated after July 1, 1960, shall have all the powers conferred on banks, shall be subject to all restrictions applicable to banks, and shall for the purposes of state supervision and control be banks.

B. An association that had certificates of investment issued and outstanding on January 1, 1959, may become a bank upon complying with all the provisions of Chapter 8 (§ 6.2-800 et seq.).

C. Any person who has not obtained authorization from the Commission to do business as an association prior to October 1, 2010, shall not conduct business as an association.

Code 1950, §§ 6-245, 6-250; 1956, c. 433; 1960, c. 62; 1966, c. 584, §§ 6.1-228, 6.1-230; 2010, c. 794.

§ 6.2-1406. Sale of certificates of investment by certain associations prohibited.

A. An association that had no certificates of investment issued and outstanding on January 1, 1959, may not sell certificates of investment.

B. An association that had certificates of investment issued and outstanding on January 1, 1959, may sell certificates of investment upon either the fully paid or partial payment system. Any such association that did not obtain insurance of its liability for such certificates, through either a state or federal agency, up to the limits of insurance provided thereby prior to July 1, 1975, shall not sell such certificates after such date.

Code 1950, § 6-255; 1960, c. 63; 1966, c. 584, §§ 6.1-229, 6.1-231; 1974, c. 176; 2010, c. 794.

§ 6.2-1407. Prohibitions on associations with certificates issued and outstanding; advertisements.

A. An association that has certificates of investment issued and outstanding shall not:

1. Advertise that it carries insurance unless its certificates of investment are insured or guaranteed by a state or federal agency;

2. Own any shares of stock issued by any other corporation except to the extent legal for banks;

3. Invest more than 80 percent of the amount of its outstanding certificates of investment in loans secured by liens on real estate;

4. Make any loan secured by liens on real estate in excess of that percent of the appraised value permitted to banks;

5. Issue certificates of investment for the purpose of borrowing money from financial institutions; or

6. Issue a certificate of investment paying a higher rate of interest than four and one-half percent per annum, except that notwithstanding this limitation it may pay at any time an interest rate equal to the highest rate paid by any state savings institution or bank located in the same community in the Commonwealth.

B. An association that has certificates of investment issued and outstanding shall place in a prominent manner in every advertisement for, and upon any document evidencing ownership of, certificates of investment that are not insured by a state or federal agency the words: "The savings accounts in this association are not insured."

Code 1950, § 6-251; 1956, c. 433; 1960, c. 64; 1966, c. 584, § 6.1-232; 1974, cc. 175, 176, § 6.1-232.1; 1978, c. 14; 1996, c. 16; 2010, c. 794.

§ 6.2-1408. Associations to have one office; how office moved.

An association shall not have more than one office for the conduct of its business. An association shall not move its office without first satisfying the Commission that moving its office will promote the convenience of its customers.

1966, c. 584, § 6.1-233; 2010, c. 794.

§ 6.2-1409. Prepayment by borrower from association; rebates for unearned interest; prepayment penalty.

A. Any individual borrowing from an association shall have the right to anticipate payment of his debt at any time.

B. If interest has been added to the face amount of the note, the borrower shall have the right, upon prepayment of the debt, to receive a rebate by way of credit for any unearned interest. The rebate shall be computed:

1. On loans (i) with an initial maturity and corresponding amortization period of 61 months or less and (ii) payable in equal periodic installments, in accordance with the Rule of 78 as illustrated in § 6.2-403 or by using any other method that is at least as favorable to such borrower; and

2. On other loans, under a method at least as favorable to the borrower as the actuarial method.

C. An association may charge a prepayment penalty not to exceed two percent of the amount of the prepayment, provided such prepayment penalty, including the percent thereof, is set forth in the contract of indebtedness and is disclosed to the borrower pursuant to applicable federal interest disclosure laws.

1987, c. 622, § 6.1-330.84; 1990, c. 338; 1991, c. 171; 2010, c. 794.

§ 6.2-1410. Amount of loan.

No loan made by an association shall be made for a greater amount in the aggregate to any person than 20 percent of the paid-in capital stock and capital surplus of the association.

Code 1950, §§ 6-250, 6-253, 6-254; 1952, c. 70; 1956, c. 433; 1966, c. 584, § 6.1-234; 1968, c. 754; 1975, c. 448; 1981, c. 56; 2010, c. 794.

§ 6.2-1411. Retention of books, accounts, and records.

A. Every association shall maintain in its offices such books, accounts, and records as the Commission may reasonably require in order to determine whether such association is complying with the provisions of this chapter and regulations adopted in furtherance thereof. Such books, accounts, and records as relate to the mortgage lending or mortgage brokering business of the association shall be maintained separate from any other business in which the association is involved.

B. When acting as a mortgage lender, the association shall retain for at least three years after final payment is made on any mortgage loan or the mortgage loan is sold, whichever first occurs, copies of the note, settlement statement, Truth in Lending disclosure, and such other papers or records relating to the loan as may be required by regulation.

C. When acting as a mortgage broker, the association shall retain for at least three years after the mortgage loan is made the original contract for its compensation, a copy of the settlement statement, an account of fees received in connection with the loan, and such other papers and records as may be required by regulation.

1993, c. 419, § 6.1-237.1; 2010, c. 794.

§ 6.2-1412. Annual report.

Each association shall annually, on or before March 25, file a written report with the Commissioner containing such information as the Commissioner may require concerning its business and operations during the preceding calendar year. Reports shall be made under oath and be in the form prescribed by the Commissioner.

1993, c. 419, § 6.1-237.2; 2010, c. 794.

§ 6.2-1413. Investigations; examinations.

The Commission, as often as it deems necessary, may investigate and examine the affairs, business, premises, and records of any association. Examinations shall be conducted at least twice in each three-year period. In the course of such investigations and examinations, the owners, officers, directors, and employees of the association shall, upon demand of the person making such examination or investigation, afford full access to all premises, books, records, and information that the person making such examination or investigation deems necessary. For the purposes of this section, the person making such examination or investigation shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

1993, c. 419, § 6.1-237.3; 2010, c. 794.

§ 6.2-1414. Annual fees.

Each association shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the total assets of the individual associations, the actual costs of the associations' examination and other factors relating to their supervision and regulation. All such fees shall be assessed on or before July 1 for each calendar year and be paid by the associations to the State Treasurer on or before the July 31 following such assessment.

1993, c. 419, § 6.1-237.4; 2010, c. 794.

§ 6.2-1415. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard.

1993, c. 419, § 6.1-237.5; 2010, c. 794.

§ 6.2-1416. Prohibited practices.

A. No association shall:

1. Obtain any agreement or instrument in which blanks are left to be filled in after execution;

2. Take an interest in collateral other than the real estate or residential property, including fixtures and appliances thereon, securing a mortgage loan; however, an interest in collateral other than real estate may be taken if the real estate taken as collateral does not have sufficient equity to secure the mortgage loan;

3. Obtain any exclusive dealing or exclusive agency agreement from any borrower;

4. Delay closing of any mortgage loan for the purpose of increasing interest, costs, fees, or charges payable by the borrower;

5. Obtain any agreement or instrument executed by the borrower which contains an acceleration clause permitting the unpaid balance of a mortgage loan to be declared due for any reason other than failure to make timely payments of interest and principal or to perform other obligations undertaken in the agreement or instrument; or

6. If acting as a mortgage lender, fail to require the person closing the mortgage loan to provide the borrower, prior to closing of the mortgage loan, with a (i) settlement statement and (ii) disclosure which conforms to that required by the provisions of 15 U.S.C. § 1601 et seq. and Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).

B. No association, when acting as a mortgage broker, shall:

1. Except for documented costs of a credit report and appraisals, receive compensation from a borrower until a written commitment to make a mortgage loan is given to the borrower by a mortgage lender;

2. Receive compensation from a mortgage lender of which it is a principal, partner, trustee, director, officer, or employee;

3. Receive compensation from a borrower in connection with any mortgage loan transaction in which it is the lender or a principal, partner, trustee, director, or officer of the lender;

4. Receive compensation from a borrower other than that specified in a written agreement signed by the borrower; or

5. Receive compensation for negotiating, placing or finding a mortgage loan where such association, or any person affiliated with such association, has otherwise acted as a real estate broker, agent, or salesman in connection with the real estate which secures the mortgage loan, and such association or affiliated person has received or will receive any other compensation or thing of value from the lender, borrower, seller, or any other person, unless the borrower is given the following notice in writing at the time the mortgage broker services are first offered to the borrower:

NOTICE

WE HAVE OFFERED TO ASSIST YOU IN OBTAINING A MORTGAGE LOAN. IF WE ARE SUCCESSFUL IN OBTAINING A LOAN FOR YOU, WE WILL CHARGE AND COLLECT FROM YOU A FEE NOT TO EXCEED _____ % OF THE LOAN AMOUNT.

WE DO NOT REPRESENT ALL OF THE LENDERS IN THE MARKET AND THE LENDERS WE DO REPRESENT MAY NOT OFFER THE LOWEST INTEREST RATES OR BEST TERMS AVAILABLE TO YOU. YOU ARE FREE TO SEEK A LOAN WITHOUT OUR ASSISTANCE, IN WHICH EVENT YOU WILL NOT BE REQUIRED TO PAY US A FEE FOR THAT SERVICE.

IF YOU ARE A MEMBER OF A CREDIT UNION, YOU SHOULD COMPARE OUR INTEREST RATES AND TERMS WITH THE MORTGAGE LOANS AVAILABLE THROUGH YOUR CREDIT UNION.

______________________________
BORROWER'S SIGNATURE

______________________________
BORROWER'S SIGNATURE

The foregoing notice shall be in at least 10-point type, and the prospective borrower shall acknowledge receipt of the written notice.

1993, c. 419, § 6.1-237.6; 2010, c. 794; 2016, c. 501.

§ 6.2-1417. Escrow accounts.

All moneys required by an association to be paid by borrowers in escrow to defray future taxes or insurance premiums shall be kept in accounts segregated from accounts of the association and shall not be commingled with other funds of the association. No association shall require any borrower to pay any amounts in escrow to defray future taxes and insurance premiums in connection with a loan secured by a subordinate mortgage or deed of trust as defined in Chapter 3 (§ 6.2-300 et seq.), except where escrows for such purposes are not being maintained in connection with a mortgage loan superior to such subordinate mortgage loan.

1993, c. 419, § 6.1-237.7; 2010, c. 794.

§ 6.2-1418. Suspension or revocation of authority.

A. The Commission may suspend or revoke the authority of an association to do business upon any of the following grounds:

1. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of its business;

2. A course of conduct consisting of failure to perform written agreements with borrowers;

3. Failure to account for funds received or disbursed to the satisfaction of the person supplying or receiving such funds;

4. Failure to disburse funds in accordance with any agreement connected with, and promptly upon closing of, a mortgage loan, taking into account any applicable right of rescission;

5. Conviction of any felony or misdemeanor involving fraud, misrepresentation, or deceit;

6. Entry of judgment against such association involving fraud, misrepresentation, or deceit;

7. Entry of a federal or state administrative order against such association for violation of any law or regulation applicable to the conduct of its business;

8. Refusal to permit an investigation or examination by the Commission;

9. Failure to pay any fee or assessment imposed by this chapter; or

10. Failure to comply with any order of the Commission.

B. For the purposes of this section, acts of any officer, director, or principal stockholder shall be deemed acts of the association.

1993, c. 419, § 6.1-237.8; 2010, c. 794.

§ 6.2-1419. Cease and desist orders.

If the Commission determines that any association has violated any provision of this chapter or any regulation adopted pursuant thereto, the Commission may, upon 21 days' notice in writing, order the association to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of the association and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the association may file with the clerk of the Commission a written request for a hearing. If a hearing is so requested, the Commission shall not issue a cease and desist order prior to such hearing. The Commission may enforce compliance with any such order by imposition and collection of such fines and penalties as may be prescribed by Commission regulations, or by revocation of the association's authority to do business in accordance with §§ 6.2-1418 and 6.2-1420.

1993, c. 419, § 6.1-237.9; 2010, c. 794.

§ 6.2-1420. Notice of proposed suspension or revocation.

The Commission may not revoke or suspend the authority of an association to do business upon any of the grounds set forth in § 6.2-1418 until it has given the association 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the association and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the association may file with the clerk of the Commission a written request for a hearing. If a hearing is so requested, the Commission shall not suspend or revoke the association's authority to do business except based upon findings made at such hearing.

1993, c. 419, § 6.1-237.10; 2010, c. 794.

§ 6.2-1421. Civil penalties.

In addition to the authority conferred upon the Commission by other provisions of this chapter, the Commission may impose a civil penalty not exceeding $1,000 upon any association which it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or regulations adopted pursuant thereto. For the purposes of this section, each separate violation shall constitute a separate offense.

1993, c. 419, § 6.1-237.11; 2010, c. 794.

Chapter 15. Consumer Finance Companies.

§ 6.2-1500. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Access partner" means a person that, at the person's physical location in the Commonwealth, facilitates the making and servicing of a loan through provision of some or all of the services described in § 6.2-1523.1 pursuant to a contract with a licensee. The term does not include (i) a person licensed under Chapter 25.1 (§ 59.1-335.1 et seq.) of Title 59.1; (ii) a person that is ineligible for licensure under § 6.2-1502 or to which this chapter shall not apply under § 6.2-1503; (iii) a person that has had any license revoked by the Commission at any time in the previous three years; (iv) a person that has violated or participated in the violation of § 6.2-1501 in the previous five years; or (v) a person who is licensed under Chapter 18 (§ 6.2-1800 et seq.) or Chapter 22 (§ 6.2-2200 et seq.).

"Arranging or brokering" means, with respect to consumer finance loans, negotiating, placing, or finding consumer finance loans for consumers, or offering to negotiate, place, or find consumer finance loans for consumers, in return for compensation paid directly by the consumers.

"Consumer finance company" means a person engaged in the business of making loans to individuals for personal, family, household, or other nonbusiness purposes.

"Licensee" means a consumer finance company to which a license has been issued by the Commission pursuant to this chapter.

"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in another person.

Code 1950, § 6-275; 1966, c. 584, § 6.1-245; 1978, c. 14; 2005, c. 63; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1501. Compliance with chapter; license required; attempts to evade application of chapter.

A. No person shall engage in the business of making loans to individuals for personal, family, household, or other nonbusiness purposes, and charge, contract for, or receive, directly or indirectly, on or in connection with any loan interest, charges, compensation, consideration, or expense that in the aggregate is greater than the interest permitted by § 6.2-303, whether or not the person has a location in the Commonwealth, except as provided in and authorized by this chapter, Chapter 18 (§ 6.2-1800 et seq.), or Chapter 22 (§ 6.2-2200 et seq.) and without first having obtained a license from the Commission.

B. Subject to subdivision C 3 and subsection C of § 6.2-1524, the prohibition in subsection A shall not be construed to prevent any person, other than a licensee, from:

1. Providing the services of an access partner described in § 6.2-1523.1;

2. Making a mortgage loan pursuant to §§ 6.2-325 and 6.2-326 or §§ 6.2-327 and 6.2-328 in any principal amount; or

3. Extending credit as described in § 6.2-312 in any amount.

C. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:

1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;

2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and

3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.

D. No person shall engage in the business of arranging or brokering consumer finance loans for any consumer residing in the Commonwealth, whether or not the person has an office or conducts business at a location in the Commonwealth.

E. The provisions of this section shall apply to any person, whether or not the person has an office or conducts business at a location in the Commonwealth.

F. Any loan made in violation of this section is void, and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the loan.

Code 1950, §§ 6-279, 6-281; 1956, c. 71; 1966, c. 584, §§ 6.1-249, 6.1-251; 1968, c. 489; 1974, c. 371; 1986, c. 502; 1995, c. 2; 1998, c. 9; 2001, c. 308; 2002, c. 897; 2010, cc. 477, 794; 2020, cc. 1215, 1258.

§ 6.2-1502. Certain persons ineligible as licensees; exception for subsidiaries.

A. No person doing business under the authority of any law of the Commonwealth or of the United States relating to banks, savings institutions, trust companies, building and loan associations, industrial loan associations, or credit unions shall be eligible for licensure under this chapter.

B. Nothing contained in subsection A or any other section of this title shall be construed to prevent a subsidiary of a bank or savings institution from becoming a licensee under this chapter. A licensee that is a subsidiary or affiliate of a bank or savings institution shall be governed by the provisions of this chapter, and all regulations adopted hereunder, as fully as if such licensee were not such a subsidiary or affiliate.

Code 1950, § 6-280; 1966, c. 584, § 6.1-250; 1996, c. 16; 2000, c. 192; 2010, c. 794.

§ 6.2-1503. Scope of chapter.

This chapter shall not apply to:

1. Any business transacted by any person under the authority of and as permitted by any law of the Commonwealth or of the United States relating to banks, savings institutions, trust companies, building and loan associations, industrial loan associations, or credit unions;

2. Any bona fide pawnbroking business transacted under a pawnbroker's license; or

3. Any person operating in accordance with the specific provisions of any other provision of this title currently in effect or hereafter enacted.

Code 1950, § 6-280; 1966, c. 584, § 6.1-250; 1996, c. 16; 2000, c. 192; 2010, c. 794.

§ 6.2-1504. Restrictions on name.

No licensee shall use a firm, corporate, or assumed name that contains any of the words "savings," "trust," "trustee," "bank," "banker," "banking," "investment," "thrift," "building," or "industrial."

Code 1950, § 6-283; 1966, c. 584, § 6.1-253; 2010, c. 794.

§ 6.2-1505. Application for license; application fee.

A. Application for a license to make loans under this chapter shall be in writing, under oath, and in the form prescribed by the Commission.

B. The application shall contain:

1. The name and address of the applicant;

2. If the applicant is a partnership or association, the name and address of each partner or member of the partnership or association;

3. If the applicant is a corporation or limited liability company, the name and address of each senior officer, director, member, registered agent, and principal;

4. If the applicant is a business trust, the name and address of each trustee and beneficiary;

5. The addresses of the locations where the business is to be conducted; and

6. Such other information as may be required by the Commission.

C. The application shall be accompanied by payment of an application fee of $500.

Code 1950, § 6-284; 1966, c. 584, § 6.1-254; 1976, c. 658; 1981, c. 452; 1989, c. 239; 2005, c. 63; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1506. Investigation of application.

A. Upon the filing of the application and the payment of the application fee, the Commission shall make such investigation relative to the application and the requirements provided for in § 6.2-1507 as it deems appropriate.

B. The Commission shall grant or deny each application for a license within 60 days from the date the application, together with all required information and the application fee, is filed unless the period is extended by order of the Commission that recites the reasons for the extension.

Code 1950, § 6-285; 1956, c. 71; 1966, c. 584, § 6.1-255; 1989, c. 239; 2010, c. 794.

§ 6.2-1507. Issuance of license.

A. The Commission shall issue to the applicant a license to make loans in accordance with the provisions of this chapter if it finds:

1. That the financial responsibility, experience, character and general fitness of the applicant and its members, senior officers, directors, and principals are such as to command the confidence of the public and to warrant belief that this business will be operated lawfully, honestly, fairly and efficiently within the purpose of this chapter;

2. That the applicant has available, for the operation of the business, unencumbered liquid assets of at least $25,000 per location;

3. That the applicant has complied with all of the prerequisites to obtaining the license prescribed by § 6.2-1505; and

4. That the applicant will not make loans in accordance with the provisions of this chapter at the same location at which the applicant, its affiliate, or its subsidiary conducts business under either Chapter 18 (§ 6.2-1800 et seq.) or Chapter 22 (§ 6.2-2200 et seq.).

If the Commission fails to make the findings required by subdivisions 1, 2, 3, and 4, it shall deny the application for a license.

B. If the Commission denies an application for a license, it shall notify the applicant of the denial. The Commission shall retain the application fee.

Code 1950, § 6-287; 1966, c. 584, § 6.1-257; 1982, c. 79, § 6.1-256.1; 1995, c. 2; 2005, c. 63; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1508. Notices to Commission.

A. After receiving approval to conduct business at an additional location pursuant to subsection B of § 6.2-1507 or providing notice of relocation pursuant to § 6.2-1519, a licensee shall give written notice to the Commissioner within 10 days of the commencement of business at the additional location or relocated place of business.

B. Every licensee shall notify the Commissioner, in writing, within 10 days of (i) the closing of any business location, and (ii) the name, address and position of each new senior officer, member, partner, or director. The licensee also shall provide such other information with respect to any such event as the Commissioner may reasonably require.

1982, c. 79, § 6.1-256.1; 1995, c. 2; 2005, c. 63; 2010, c. 794.

§ 6.2-1508.1. Additional offices; relocation of offices.

A. No licensee shall open an additional office without prior approval of the Commission. Applications for such approval shall be made in writing on a form prescribed by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commission finds that the applicant does not have the required liquid assets or surety bond or has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with the law. The application shall be deemed approved if notice to the contrary has not been sent by the Commission to the applicant within 30 days of the date the application is received by the Commission.

B. Prior approval of the Commission shall not be required in the event that a licensee needs to temporarily open an office due to a natural disaster or act of God. However, the licensee shall notify the Commission within 10 days of opening the office.

C. A licensee shall notify the Commission in writing within 10 days of relocating any approved office.

2020, cc. 1215, 1258.

§ 6.2-1509. Contents, posting, transfer, and duration of license.

A. Each license shall contain:

1. The address at which the business is to be conducted;

2. The full name of the licensee or, if the licensee is a partnership or association, the names of the partners or members; and

3. If the licensee is a corporation, the date and place of incorporation.

B. The licensee shall post the license prominently in each approved place of business of the licensee. The licensee shall prominently disclose on its website the license number assigned by the Commission to the licensee.

C. The license shall not be transferable or assignable.

D. Each license shall remain in full force and effect until surrendered, revoked, or suspended as provided by this chapter or by lawful order of the Commission.

Code 1950, §§ 6-288, 6-289; 1966, c. 584, §§ 6.1-258, 6.1-259; 1980, c. 211; 1982, c. 609; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1510. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire, directly or indirectly, 25 percent or more of the voting shares of a corporation, or 25 percent or more of the ownership of any other person, licensed to conduct business under this chapter unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals, and members, and of any proposed new directors, senior officers, principals, or members of the licensee; and

3. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers, and principals, and any proposed new directors, members, senior officers, and principals have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person licensed by this chapter, (ii) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person affiliated through common ownership with the licensee, or (iii) the acquisition of an interest in a licensee by a person by bequest, descent, survivorship or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

2005, c. 63, § 6.1-258.1; 2010, c. 794.

§ 6.2-1511. Revocation of license.

The Commission, upon 10 days' written notice to the licensee stating the contemplated action and in general the grounds therefor, and upon reasonable opportunity to be heard, may revoke any license issued hereunder if it finds that:

1. The licensee has failed to pay the annual fee assessed pursuant to § 6.2-1532 or to comply with any order of the Commission lawfully made pursuant to and within the authority of this chapter;

2. The licensee, either knowingly or without the exercise of due care to prevent the same, has violated any provision of this chapter or any regulation lawfully made by the Commission under § 6.2-1535; or

3. Any fact or condition exists that clearly would have warranted the Commission to refuse originally to issue the license.

Code 1950, § 6-290; 1956, c. 71; 1966, c. 584, § 6.1-260; 2010, c. 794.

§ 6.2-1512. Suspension of license.

If the Commission finds that probable cause for revocation of any license exists and that enforcement of the law requires immediate suspension of the license pending investigation, it may, upon three days' written notice and a hearing, by the Commission or by the Commissioner, enter an order suspending the license for a period not exceeding 30 days.

Code 1950, § 6-291; 1966, c. 584, § 6.1-261; 2010, c. 794.

§ 6.2-1513. Record and notice of revocation or suspension.

Whenever the Commission revokes or suspends a license issued pursuant to this chapter, it shall:

1. Enter an order to that effect, which order shall set forth its findings;

2. Compile a record containing (i) a summary of the evidence, (ii) the findings with respect thereto, (iii) the order, and (iv) the reasons supporting the revocation or suspension; and

3. Serve a copy of the order upon the licensee.

Code 1950, § 6-292; 1966, c. 584, § 6.1-262; 2010, c. 794.

§ 6.2-1514. Surrender of license.

Any licensee may surrender any license by delivering it to the Commission with written notice of its surrender. The surrender shall not affect the licensee's civil or criminal liability for acts previously committed.

Code 1950, § 6-293; 1966, c. 584, § 6.1-263; 2010, c. 794.

§ 6.2-1515. Effect of license revocation, suspension, or surrender.

The revocation, suspension, or surrender of any license shall not impair or affect the obligation of any preexisting lawful contract between the licensee and any borrower.

Code 1950, § 6-294; 1966, c. 584, § 6.1-264; 2010, c. 794.

§ 6.2-1516. Reinstatement of license.

The Commission may reinstate any suspended license, or issue a new license to a person any license of whom has been revoked, if no fact or condition then exists that clearly would have warranted the Commission to refuse originally to issue a license under this chapter.

Code 1950, § 6-295; 1966, c. 584, § 6.1-265; 2010, c. 794.

§ 6.2-1517. Place of business generally.

A licensee shall not use any name other than the legal name or fictitious name set forth on the license issued by the Commission. No licensee shall conduct the business of making loans provided for by this chapter within any place of business other than is designated in the license issued by the Commission.

Code 1950, §§ 6-296, 6-298; 1966, c. 584, §§ 6.1-266, 6.1-268; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1518. Notice of conduct of other business in same place of business; fee.

A. A licensee shall not conduct the business of making loans under this chapter within any office, suite, room, or other place of business in which any other business is solicited or engaged in, or in association or conjunction with any other business, unless the licensee has first given 30 days' written notice to the Commission. Every notice shall be accompanied by a fee of $300.

B. Upon receipt of such notice and fee, the Commission may require the licensee to provide information relating to the other business, including how and by whom it will be conducted. The Commission shall have the authority to investigate the conduct of such other businesses in the licensee's place of business.

C. The provisions of this section shall not affect (i) any regulations adopted by the Commission prior to July 1, 2000, governing the conduct of other businesses in the place of business designated in a license or (ii) the authority of the Commission to adopt such regulations as the Commission deems necessary.

D. If the Commission finds that the other business (i) is of such a nature or is being conducted in such a manner as to conceal or facilitate a violation or evasion of the provisions of this chapter or regulations adopted pursuant to it; (ii) is contrary to the public interest; or (iii) is otherwise being conducted in an unlawful manner, the Commission may, after notice to the licensee and an opportunity for a hearing, prohibit or limit the conduct of such other business in the place of business designated in the license.

E. Any authority granted under this section shall remain in full force and effect until surrendered, or until revoked or suspended by the Commission as provided in this chapter or by lawful order of the Commission.

F. A licensee that conducts the business of making loans pursuant to this chapter solely over the Internet shall not offer, sell, or make available any other products or services to Virginia residents, except as permitted by Commission regulation or upon approval of a written application with the Commission, payment of a fee of $300, and provision of such information as the Commission may deem pertinent.

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

Code 1950, § 6-297; 1966, c. 584, § 6.1-267; 1981, c. 452, § 6.1-267.1; 1982, c. 609; 2000, c. 192; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1519. Changing place of business.

A. A licensee may change its place of business to a different location in the Commonwealth if the new location is:

1. Within the original locality; or

2. From the original locality to a location in a contiguous locality.

B. A licensee shall notify the Commission of a change in the place of business within 10 days of such relocation. Upon receipt of the notification, the Commission shall issue and deliver to the licensee an amended license covering the new location if it finds that the change in the place of business meets one of the criteria listed in subsection A. Each notice of change of location under this section shall be accompanied by a fee of $250.

1982, c. 78, § 6.1-269.1; 1988, c. 147; 2000, c. 192; 2010, c. 794.

§ 6.2-1520. Rate of interest; late charges; processing fees.

A. A licensee may make installment loans of between $300 and $35,000, which loans shall have a term of no fewer than six months and no more than 120 months and shall be repayable in at least six substantially equal consecutive payments. A licensee may charge and collect interest on a loan made under this chapter at a single annual rate not to exceed 36 percent. Interest shall not be charged on an add-on basis and shall not be compounded but shall be computed and paid only as a percentage of the unpaid principal balance. Interest shall be computed on the basis of the number of days elapsed; however, if part or all of the consideration for a loan contract is the unpaid principal balance of a prior loan, then the principal amount payable under the loan contract may include any unpaid interest on the prior loan that has accrued within 90 days before the making of the new loan contract. For the purpose of computing interest, a day may equal 1/360th or 1/365th of a year.

B. A licensee may charge a late payment fee of $20 for any payment or portion of a payment not received and applied within 10 days of the contractual due date. For purposes of this section, a late payment fee for any individual scheduled contractual payment due may be assessed only once. The late payment fee shall be specified in the contract between the lender and the borrower.

C. A licensee may charge a loan processing fee not to exceed the greater of $50 or six percent of the principal amount of the loan, provided that the loan processing fee shall in no event exceed $150. The loan processing fee shall be stated in the loan contract. The loan processing fee shall not be deemed to constitute interest charged on the principal amount of the loan for purposes of determining whether the interest charged exceeds the 36 percent annual contract interest rate limitation imposed by subsection A. Upon payment of the full amount of principal due plus accrued interest and any other applicable fees within the first 30 days, whether through outside funds or a refinancing under a new loan advance, the borrower shall be entitled to a full rebate of the loan processing fee less an amount not to exceed $50 or the actual loan processing fee, whichever is less. If a loan is refinanced or renewed, a licensee may assess an additional loan processing fee on the loan no more than once during any 12-month period.

D. A licensee may collect from the borrower the amount of any actual fees necessary to file, record, or release its security interest with any public official or agency of a locality or the Commonwealth as may be required by law.

1995, c. 2, § 6.1-272.1; 2001, c. 308; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1521. Post-judgment charges.

If judgment is obtained against any party on any loan made under the provisions of this chapter, neither the judgment nor the loan shall carry, from the date of the judgment, any charges against any party to the loan other than court costs, attorney fees, and interest on the amount of the judgment at the rate fixed by § 6.2-302.

Code 1950, § 6-603; 1966, c. 584, § 6.1-273; 1975, c. 270; 1987, c. 196; 2010, c. 794.

§ 6.2-1522. Other limitations on interest.

A. Any loan made under the provisions of this chapter that is properly scheduled in a bankruptcy proceeding shall bear interest against any party to the loan from 90 days after the date of adjudication, whether there is an ultimate discharge or an extension, if any interest is allowable at all, at six percent per year. This limitation shall not apply (i) to a comaker not currently in bankruptcy when the bankrupt is not entitled to a discharge, or (ii) if the particular obligation is not dischargeable under the provisions of Title 11 of the United States Code.

B. After 90 days from the date of the death of the borrower, no other charges than interest at six percent per year shall be computed or collected from any party to the loan upon the unpaid principal balance of the loan.

C. For the period beginning six months after the date of maturity, as originally scheduled or as deferred in the event of deferment, of any loan contract under the provisions of this chapter, no further charges than interest at six percent per year shall be computed or collected from any party to the loan upon the unpaid balance of the loan.

Code 1950, §§ 6-304, 6-305, 6-306; 1966, c. 584, §§ 6.1-274, 6.1-275, 6.1-276; 1968, c. 489; 1987, c. 410; 2010, c. 794.

§ 6.2-1523. Additional charges prohibited; exceptions.

In addition to the interest, late payment fees, and loan processing fee permitted under § 6.2-1520, no further or other amount whatsoever for any examination service, brokerage, commission, fine, notarial fee, or other thing or otherwise shall be directly or indirectly charged, contracted for, collected, or received, except:

1. Insurance premiums actually paid out by the licensee to any insurance company or agent duly authorized to do business in the Commonwealth or another state for insurance for the protection and benefit of the borrower written in connection with any loan;

2. The actual cost of recordation fees or, on loans over $100, the amount of the lawful premiums, no greater than such fees, actually paid for insurance against the risk of not recording any instrument securing the loan; and

3. A handling fee not to exceed $25 for each check returned to the licensee because the drawer had no account or insufficient funds in the payor bank.

Code 1950, § 6-308; 1966, c. 584, § 6.1-278; 1978, c. 625; 1981, cc. 37, 38; 1984, c. 296; 1986, c. 502; 1990, c. 751; 1995, c. 2; 2001, c. 308; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1523.1. Access partners.

A. Notwithstanding the provisions of §§ 6.2-1501 and 6.2-1518, a licensee may use the services of one or more access partners, provided that all of the following conditions are met:

1. All loans made in connection with an access partner comply with the requirements of this chapter.

2. The licensee maintains a written agreement with each access partner. The written agreement shall (i) require the access partner to comply with this section and all rules adopted under this section regarding the activities of access partners; (ii) give the Commission access to the access partner's books and records pertaining to the access partner's operations under the agreement with the licensee in accordance with § 6.2-1533 and authority to examine the access partner pursuant to § 6.2-1531; (iii) prohibit the access partner from charging or accepting any fees or compensation in connection with a loan from any person, other than what the licensee pays to the access partner under the terms of the contract; and (iv) require the access partner to keep written records sufficient to ensure compliance with this chapter, including records of all loan disbursements and loan payments for at least three years.

3. A licensee shall conduct a due diligence review of all access partners. The due diligence shall include a review of the access partner's financial soundness and legal compliance and the criminal history of the access partner and its employees. A licensee shall be responsible for implementing and maintaining a reasonable risk-based supervision program to monitor its access partners. The licensee shall provide to the Commission any information relating to the access partners as the Commissioner prescribes. Such information shall be provided in a form and manner as prescribed by the Commissioner.

4. The services of an access partner shall be limited to (i) distributing written materials or providing written factual information about loans that has been prepared or authorized in writing by the licensee; (ii) explaining the loan application process to prospective borrowers or assisting applicants to complete a loan application according to procedures the licensee approves; (iii) processing credit applications provided by the licensee, which applications shall clearly state that the licensee is the lender and disclose the licensee's contact information and how to submit complaints to the Commission; (iv) communicating with the licensee or the applicant about the status of applications; (v) obtaining the borrower's signature on documents prepared by the licensee and delivering final documents to the borrower; (vi) disbursing loan proceeds or receiving loan payments, provided the access partner provides a plain and complete written receipt at the time each disbursement or payment is made; and (vii) operating electronic access points through which a prospective borrower may directly access the website of the licensee to apply for a loan.

5. An access partner shall not (i) provide counseling or advice to a borrower or prospective borrower with respect to any loan term; (ii) provide loan-related marketing material that has not previously been approved by the licensee; (iii) negotiate a loan term between a licensee and a prospective borrower; (iv) offer information pertaining to a single prospective borrower to more than one licensee, except that if a licensee has declined to offer a loan to a prospective borrower in writing the access partner may offer information pertaining to that borrower to another licensee with whom it has an access partner agreement; or (v) offer information pertaining to any prospective borrower to any person or entity other than a licensee operating under this chapter, subject to clause (iv).

6. A licensee shall apply any payment a borrower makes to an access partner as of the date on which the payment is received by the access partner.

7. A licensee shall not (i) hold a borrower liable for a failure or delay by an access partner in transmitting a payment to the licensee; (ii) knowingly conduct business with an access partner that has solicited or accepted fees or compensation in connection with a licensee's loan other than what is specified in the written agreement described in subdivision 2; or (iii) directly or indirectly pass on to a borrower any fee or other compensation that a licensee pays to an access partner in connection with such borrower's loan.

B. A licensee shall be responsible for any act of its access partner if such act would violate any provision of this chapter.

C. The Commission may (i) bar a licensee that violates any part of this chapter from using the services of specified access partners, or access partners generally; (ii) subject a licensee to disciplinary action for any violation of this chapter committed by a contracted access partner; or (iii) bar any person who violates the requirements of this chapter from performing services pursuant to this chapter generally or at particular locations.

D. The Commission shall have the authority to conduct investigation and examination of access partners, provided the scope of any investigation or examination shall be limited to those books, accounts, records, documents, materials, and matters reasonably necessary to determine compliance with this chapter.

E. An access partner location shall not be considered an office for purposes of § 6.2-1508.1.

F. An access partner shall not be required to be licensed under Chapter 19 (§ 6.2-1900 et seq.) to provide the services of an access partner described in subdivision A 4.

2020, cc. 1215, 1258.

§ 6.2-1523.2. Application of chapter to Internet loans.

A. The provisions of this chapter, including specifically the licensure requirements of § 6.2-1501, shall apply to persons making loans over the Internet to Virginia residents or any individuals in Virginia, whether or not the person maintains a physical presence in the Commonwealth.

B. The Commission may, from time to time, by administrative rule or policy statement, set requirements that the Commission reasonably deems necessary to ensure compliance with this section.

2020, cc. 1215, 1258.

§ 6.2-1523.3. Bond required.

An application for a license under this chapter shall be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $25,000, or such greater sum as the Commission may require, but not to exceed a total of $500,000. The form of such bond shall be approved by the Commission. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by it in its licensed business, and conducting its licensed business in conformity with this chapter and all applicable laws. Any person who may be damaged by noncompliance of the licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

2020, cc. 1215, 1258.

§ 6.2-1524. Required and prohibited activities and conduct.

A. Each licensee shall maintain at all times the minimum unencumbered liquid assets prescribed by § 6.2-1507.

B. A licensee or other person subject to this chapter shall not advertise, display, distribute or broadcast, or cause or permit to be advertised, displayed, distributed or broadcast, in any manner whatsoever, any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for loans made under this chapter. The Commission may require that charges or rates of charge, if stated by a licensee, be stated fully and clearly in such manner as it deems necessary to prevent misunderstanding by prospective borrowers. The Commission may permit or require licensees to refer in their advertising to the fact that their business is under state supervision, subject to conditions imposed by it to prevent false, misleading, or deceptive impression as to the scope or degree of protection provided by this chapter.

C. A licensee shall not take a lien upon real estate as security for any loan made under the provisions of this chapter, except a lien arising upon rendition of a judgment. Any lien taken in violation of this subsection shall be void.

D. A licensee shall, at the time any loan is made, deliver to the borrower, or if there are two or more borrowers to one of them, a statement disclosing (i) the names and addresses of the licensee and of the principal debtor on the loan contract, and (ii) a statement in compliance with Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).

E. A licensee shall give the borrower a receipt for all cash payments. The Commission may specify the form and content of such receipts in keeping with the intent and purpose of this chapter.

F. A licensee shall permit payment to be made in advance in whole, or in part equal to one or more full installments. The licensee may apply the payment first to any amounts that are due and unpaid at the time of such payment.

G. A licensee shall, upon repayment of the loan in full, (i) mark plainly every obligation and security other than a security agreement executed by the borrower with the word "Paid" or "Canceled," (ii) mark satisfied any judgment, (iii) restore any pledge, (iv) cancel and return any note and any assignment given by the borrower to the licensee, and (v) release any security agreement or other form of security instrument that no longer secures an outstanding loan between the borrower and the licensee.

H. In the event of collection by foreclosure sale or otherwise, a licensee shall pay and return to the borrower, or to another person entitled thereto, any surplus arising after the payment of the expenses of collection, sale or foreclosure and satisfaction of the debt.

I. A licensee shall not take any confession of judgment or any power of attorney running to himself or to any third person to confess judgment or to appear for the borrower in a judicial proceeding. Any such confession of judgment or power of attorney to confess judgment shall be void.

J. A licensee shall not take any note, promise to pay, or instrument of security in which blanks are left to be filled in after execution, or that does not give the amount of the loan, a clear description of the installment payments required, and the rate of interest charged. A licensee may also include the disclosures required by Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026) in the note, promise to pay, or instrument of security.

K. Every loan contract shall be in writing, be signed by the borrower, provide for repayment of the amount loaned in substantially equal monthly installments of principal and interest, and include the following statement: "This loan is made pursuant to Chapter 15 of Title 6.2 of the Code of Virginia". Nothing contained in this chapter shall prevent (i) a loan being considered a new loan because the proceeds of the loan are used to pay an existing loan contract or (ii) a licensee from entering into a loan contract providing for an odd first payment period of up to 45 days and an odd first payment greater than other monthly payments because of such odd first payment period.

Code 1950, §§ 6-309, 6-310, 6-311, 6-312, 6-313, 6-315; 1956, c. 71; 1966, c. 584, §§ 6.1-279, 6.1-280, 6.1-281, 6.1-282, 6.1-283, 6.1-284.1, 6.1-285; 1968, c. 489; 1974, c. 371; 1983, c. 500; 1987, c. 683, § 6.1-284.1; 1995, c. 2; 1997, c. 113; 2001, c. 308; 2010, c. 794; 2016, c. 501; 2020, cc. 1215, 1258.

§ 6.2-1525. Wage purchases.

The payment of any amount in money, credit, goods or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commission, or other compensation for services, whether earned or to be earned, shall for the purposes of this chapter be deemed a loan of money secured by the sale, assignment or order. The amount by which the compensation so sold, assigned or ordered paid exceeds the amount of consideration actually paid (i) shall be deemed for the purpose of this chapter to be interest upon the loan from the date of the payment to the date the compensation is payable and (ii) shall not, in any case, be more than is sufficient to yield, to the person making the loan, interest on his investment at the annual rate of 10 percent. Such transaction shall in all other respects be governed by and subject to the provisions of this chapter.

Code 1950, § 6-317; 1956, c. 71; 1966, c. 584, § 6.1-288; 1968, c. 489; 1974, c. 371; 1995, c. 2; 2001, c. 308; 2010, c. 794.

§ 6.2-1526. Wage assignments.

A. A valid assignment or order for the payment of future salary, wages, commissions, or other compensation for services may be given as security for a loan made by any licensee, notwithstanding the provisions of any other law to the contrary.

B. No assignment of, or order for payment of, any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any licensee shall be valid unless:

1. The amount of the loan is paid to the borrower simultaneously with its execution; and

2. The assignment or order is in writing, signed in person by the borrower, and not by an attorney, or if the borrower is married unless it is signed in person by both spouses, and not by an attorney. Written assent of a spouse shall not be required when the spouses have been living separate and apart for a period of at least five months prior to the giving of the assignment or order. The provisions of this section are in addition to, and not in derogation of, the general statutes pertaining to the subject.

C. Under the assignment or order, an amount equal to not more than 10 percent of the borrower's salary, wages, commissions, or other compensation for services shall be collectible from the employer of the borrower by the licensee at the time of each payment to the borrower of the salary, wages, commission, or other compensation for services, from the time that a copy of the assignment, verified by the oath of the licensee or his agent, together with a similarly verified statement of the amount unpaid upon the loan and a printed copy of this section, is served upon the employer.

Code 1950, §§ 6-318, 6-319; 1966, c. 584, §§ 6.1-289, 6.1-290; 2010, c. 794; 2020, c. 900.

§ 6.2-1527. Liens on household furniture.

No chattel mortgage or other lien on household furniture then in the possession and use of the borrower given to secure any loan made by a licensee shall be valid unless it is in writing, signed in person by the borrower, and not by an attorney, or if the borrower is married unless it is signed in person by both spouses, and not by an attorney. Written assent of a spouse shall not be required when the spouses have been living separate and apart for a period of at least five months prior to the giving of the mortgage or lien.

Code 1950, § 6-318; 1966, c. 584, § 6.1-289; 2010, c. 794; 2020, c. 900.

§ 6.2-1528. Exemptions unimpaired.

A. Nothing in this chapter shall have the effect of impairing any rights on the part of anyone as to exemptions under the poor debtors law or under any other applicable exemption law now in effect or hereafter enacted.

B. The provisions of subdivision B 2 of § 6.2-1526 and § 6.2-1527 are in addition to, and not in derogation of, the general statutes pertaining to the subject.

Code 1950, § 6-318; 1966, c. 584, § 6.1-289; 2010, c. 794.

§ 6.2-1529. Collection of loans made outside Commonwealth.

No loan made outside the Commonwealth for which greater rates of interest, consideration or charges than are permitted by the law applicable to such loan in the state in which the loan was made, have been charged, contracted for, or received shall be collected in the Commonwealth. Every person in any way participating in an effort to enforce the collection of such loan in the Commonwealth shall be subject to the provisions of this chapter.

Code 1950, § 6-320; 1956, c. 71; 1966, c. 584, § 6.1-291; 1968, c. 489; 1974, c. 371; 1995, c. 2; 2001, c. 308; 2010, c. 794.

§ 6.2-1530. Investigations; immunities.

A. For the purpose of discovering violations of this chapter or securing information lawfully required under it, the Commission may at any time investigate the loans, books and records of any person who:

1. Is engaged, or appears to the Commission to be engaged, in a business for which the person is required to be licensed and supervised under this chapter;

2. Advertises for, solicits, or holds itself out as willing to make loans subject to the provisions of this chapter; or

3. The Commission has reason to believe is violating any provision of this chapter, whether such person shall act or claim to act under or without the authority of this chapter, or as principal, agent, broker, or otherwise.

B. In furtherance of the investigation the Commission shall:

1. Have and be given free access to the offices, places of business, books, papers, accounts, records, files, safes, and vaults of all such persons; and

2. Have authority to require attendance of witnesses and to examine under oath any person whose testimony may be required relative to any such loans or business or to the subject matter of the investigation, examination or hearing.

C. Before making an investigation as provided for in this section as to any person who is neither licensed nor an applicant for a license under this chapter, an order shall be entered by the Commission. The order shall specifically direct the investigation to be made, command submission by the person whose business is to be investigated, and set forth all other details the Commission finds necessary. The Commission shall not enter such an order except upon (i) at least one affidavit, which may be given by an employee of the Commission or by any other person, (ii) documentary data, (iii) admissions of the person to be investigated, or (iv) any combination of the foregoing, satisfactorily establishing, prima facie, facts sufficient to warrant the investigation provided for by subsection A. If the person involved consents to the investigation, the foregoing requirements may be dispensed with and the investigation may be made upon direction of the Commission or the Commissioner.

D. No criminal prosecution or action for the imposition of any penalty or forfeiture provided for by this chapter may be maintained against a person not a licensee or an applicant for a license under this chapter who is investigated following entry of an order as provided in subsection C. This subsection shall not:

1. Prevent prosecution for the violation of any other criminal law or of any other law providing for penalty or forfeiture; and

2. Provide immunity from prosecution for any officer, agent, or employee of the person whose business is investigated.

E. If the Commission compels a person not a licensee or an applicant for a license under this chapter to give verbal testimony, the person so compelled to testify shall not be subject to criminal prosecution or the imposition of any penalty or forfeiture in connection with the subject matter as to which such testimony is compelled.

F. The immunities provided pursuant to subsections D and E shall not impair (i) any civil right of action, not involving penalty or forfeiture, of any person and (ii) the authority of the Attorney General to institute and prosecute a proceeding for injunctive relief as provided for in § 6.2-1537. Any facts discovered and disclosures made in the course of any investigation following entry of an order as provided in subsection C or verbal testimony compelled as provided in subsection E shall be available in any proceeding involving any civil right of action or for obtaining an injunction under this chapter against the person so investigated or so compelled to testify.

Code 1950, §§ 6-323, 6-324, 6-325, 6-326; 1956, c. 71; 1966, c. 584, §§ 6.1-294, 6.1-295, 6.1-296, 6.1-297; 1968, c. 489; 1974, c. 371; 2010, c. 794.

§ 6.2-1531. Examination.

The Commission shall, as often as it deems to be in the public interest, examine the affairs, business, office, and records of each licensee that pertain to any business licensed under this chapter. Such examination shall be conducted at least once in every three-year period. The licensee shall furnish promptly by mail or otherwise such facts and statements in connection with its business transacted in the Commonwealth that the Commission may request from time to time.

Code 1950, § 6-327; 1966, c. 584, § 6.1-298; 1976, c. 658; 1998, c. 44; 2010, c. 794.

§ 6.2-1532. Fees for examination, supervision and regulation.

To defray the costs of examination, supervision and regulation of licensed consumer finance companies, every licensee shall pay an annual fee to be calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the total assets, including loans under this chapter and other loans, of various licensees and their affiliates doing business in authorized consumer finance company offices, to the actual cost of their respective examinations, and to other factors relating to their supervision and regulation. Fees shall be assessed pursuant to this section on or before May 1 of every calendar year. All such fees shall be paid by the licensees to the State Treasurer on or before June 1 following each assessment.

1982, c. 609, § 6.1-299.1; 2010, c. 794.

§ 6.2-1533. Books, accounts, and records; pledge or deposit of notes and securities.

A. Each licensee shall maintain in its authorized consumer finance company office, or at such other place within or outside the Commonwealth as the Commission may approve, such books, accounts, and records as the Commission may reasonably require to determine whether the licensee is complying with the provisions of this chapter and with regulations adopted in furtherance thereof. Such books, accounts, and records shall be maintained in paper form or, with the Commission's approval, in any electronic format available for examination on the basis of computer printed reproduction, video display, or other medium. Any books, accounts, and records not maintained in paper form shall be convertible into clearly legible paper documents within a reasonable time. Every licensee shall preserve the books, accounts, and records for at least three years after making the final entry on any loan recorded therein.

B. If any note or security taken under this chapter shall be pledged as collateral or deposited within or outside the Commonwealth, the licensee shall notify promptly the Commission in writing of the identity and location of the person holding such paper. Prior approval of the Commission shall not be required. Any pledged or deposited paper shall be subject to examination by the Commission in accordance with subsection C as fully as if maintained in an approved location.

C. All books, accounts, and records shall be subject to examination by the Commission. If such books, accounts, and records are examined outside the Commonwealth, all reasonable costs associated with such examination shall be paid by the licensee.

Code 1950, § 6-329; 1966, c. 584, § 6.1-300; 1998, c. 44; 2010, c. 794.

§ 6.2-1534. Annual reports.

Each licensee shall annually, on or before April 1, file a report with the Commission giving such relevant information as may reasonably be required concerning its business and operations during the preceding calendar year as to each authorized consumer finance company office. Reports shall be made under oath and shall be in the form prescribed by the Commission.

Code 1950, § 6-330; 1966, c. 584, § 6.1-301; 1968, c. 489; 2000, c. 55; 2010, c. 794.

§ 6.2-1535. Regulations and orders.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules. A copy of each regulation and order adopting it shall be mailed to all licensees at least 10 days before the effective date thereof.

Code 1950, § 6-331; 1966, c. 584, § 6.1-302; 1993, c. 366; 2010, c. 794.

§ 6.2-1536. Disclosures in connection with sale of securities.

A. The Commission may adopt regulations prescribing required disclosures in connection with the offer or sale of any "security," as that term is defined in § 13.1-501 of the Virginia Securities Act (§ 13.1-501 et seq.), issued by any licensee organized under the laws of the Commonwealth.

B. The disclosures prescribed by subsection A shall be printed in bold, 10-point type and shall contain substantially the following language: "This security or these securities are being offered in Virginia pursuant to an exemption from the registration requirements of the Virginia Securities Act. The State Corporation Commission does not pass upon the adequacy or accuracy of the security or this offering circular or upon the merits of this security or this offering. These securities are not insured or guaranteed by any state or federal agency."

Code 1950, § 6-331; 1966, c. 584, § 6.1-302; 1993, c. 366; 2010, c. 794.

§ 6.2-1537. Authority of Attorney General; impoundment of property and receivership.

A. Whenever the Attorney General has reasonable cause to believe that (i) any person, not licensed under this chapter, is violating, has violated, is threatening to violate or intends to violate any provision of this chapter or any order or regulation lawfully made pursuant to the authority of this chapter and (ii) the facts justify it, the Attorney General shall institute and prosecute a lawsuit for monetary or injunctive relief or both in the Circuit Court of the City of Richmond, in the name of the Commonwealth. The court may grant monetary relief or may enjoin and restrain or both any such person from engaging in or continuing any such violation or from doing any act or acts in furtherance thereof. In any such suit a decree or order may be entered awarding such monetary relief or preliminary or final injunctive relief as may be deemed proper.

B. In addition to all other means provided by law for the enforcement of an award of monetary relief, a temporary restraining order, temporary injunction, or final injunction, the court may impound, and appoint a receiver for, (i) the property and business of the defendant, including books, papers, documents, and records pertaining thereto, (ii) so much thereof as the court deems reasonably necessary to prevent further violation of this chapter through or by means of the use of such property and business, or (iii) so much thereof as is necessary to identify borrowers who have been damaged and the amount of their damages, and to refund the amount of any such damages to the borrowers pursuant to subsection C. The receiver, when appointed and qualified, shall have such powers and duties as to custody, collection, administration, payment of debts and liquidation of the property and business as from time to time are conferred upon him by the court.

C. The Attorney General may seek and the circuit court may order or decree such other relief allowed by law, including restitution to the extent available to borrowers under § 6.2-1541.

D. In any action brought by the Attorney General by virtue of the authority granted in this section, the Attorney General shall be entitled to seek attorney fees and costs.

E. Nothing in this section shall be construed to preclude any person who suffers a loss as a result of a violation of § 6.2-1501 from maintaining an action to recover damages or restitution under § 6.2-1541.

F. No individual shall be entitled to refuse to testify in a suit brought under this section because the person's testimony would tend to incriminate such person or subject the individual to penalty or forfeiture. If called to testify by the Commonwealth or by the court trying the case, the individual may not thereafter be prosecuted for any crime or subjected to any penalty or forfeiture growing out of the transaction concerning which the individual testifies.

Code 1950, §§ 6-322, 6-333; 1966, c. 584, §§ 6.1-303, 6.1-304; 1988, c. 186; 1992, c. 9; 2010, c. 794.

§ 6.2-1538. Copies of orders or licenses.

On application of any person, and payment of the costs, the Commission shall furnish such person with a certified copy of any order entered or license issued by it. Such copy shall be prima facie evidence in any court or proceeding of the fact of the entry of the order or of the issuance of the license.

Code 1950, § 6-334; 1966, c. 584, § 6.1-305; 2010, c. 794.

§ 6.2-1539. Review by Commission.

In addition to any other remedy he may have any licensee or any other person considering himself aggrieved by any action of the Commissioner under this chapter pursuant to authority conferred upon him or delegated to him by the Commission may, within 30 days of the action complained of, file a petition as a matter of right with the Commission to review the action. The proceeding on review shall be de novo and the record and summary of the evidence before, and findings of, the Commissioner shall be admissible as evidence before the Commission.

Code 1950, § 6-335; 1966, c. 584, § 6.1-306; 2010, c. 794.

§ 6.2-1540. Criminal penalties.

Any person, including the members, officers, directors, agents, and employees of an entity, who violates or participates in the violation of any provision of § 6.2-1501 is guilty of a Class 2 misdemeanor.

Code 1950, § 6-337; 1966, c. 584, § 6.1-308; 1986, c. 502; 2010, c. 794.

§ 6.2-1541. Unlawful contracts void; recovery of amounts paid.

A. A loan contract shall be void if any act has been done in the making or collection thereof that violates § 6.2-1501.

B. The lender on any loan for which a person has taken any action in its making or collection in violation of § 6.2-1501 shall not collect, receive, or retain any principal, interest, or charges whatsoever with respect to the loan, and any principal or interest paid on the loan shall be recoverable by the person by or for whom payment was made.

Code 1950, § 6-337; 1966, c. 584, § 6.1-308; 1986, c. 502; 2010, c. 794.

§ 6.2-1542. Duty to refund unauthorized or excess charges; liability to borrower for penalty.

A. If any amount not authorized by this chapter or in excess of the charges permitted by this chapter is charged and received by a licensee, such unauthorized or excess charge actually received by a licensee shall be refunded to the borrower or credited to the borrower's account.

B. Except for excess charges charged and received as the result of a bona fide error of computation that was not made pursuant to a regular course of dealing, the licensee shall be liable to the borrower for a penalty of twice the amount of any unauthorized or excess charge actually received by the licensee and for any court costs and reasonable attorney fees incurred by the borrower.

Code 1950, § 6-338; 1956, c. 71; 1966, c. 584, § 6.1-309; 1976, c. 658; 1986, c. 502; 2010, c. 794.

§ 6.2-1543. Civil penalties.

The Commission may impose a civil penalty not exceeding $10,000 upon any licensee who it determines, in proceedings conducted in accordance with the Commission's Rules, has violated any provision of this chapter or of any regulation or order of the Commission, either knowingly or without the exercise of due care to prevent the violation. In any proceeding under this section, a licensee shall not be penalized for any act or omission done in reasonable reliance on any regulation, order, letter, or other written directive or request of the Commission.

Code 1950, § 6-338; 1956, c. 71; 1966, c. 584, § 6.1-309; 1976, c. 658; 1986, c. 502; 2010, c. 794.

Chapter 16. Mortgage Lenders and Mortgage Brokers.

§ 6.2-1600. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Entity" means any corporation, partnership, association, cooperative, limited liability company, trust, joint venture, or other legal or commercial entity.

"Licensee" means a mortgage lender or mortgage broker licensed by the Commission pursuant to this chapter.

"Mortgage broker" means any person who directly or indirectly negotiates, places or finds mortgage loans for others, or offers to negotiate, place or find mortgage loans for others. Any licensed mortgage lender that, pursuant to an executed originating agreement with the Virginia Housing Development Authority, acts or offers to act as an originating agent of the Virginia Housing Development Authority in connection with a mortgage loan shall not be deemed to be acting as a mortgage broker with respect to such mortgage loan but shall be deemed to be acting as a mortgage lender with respect to such mortgage loan, notwithstanding that the Virginia Housing Development Authority is or would be the payee on the note evidencing such mortgage loan and that the Virginia Housing Development Authority provides or would provide the funding of such mortgage loan prior to or at the settlement thereof.

"Mortgage lender" means any person who directly or indirectly originates or makes mortgage loans.

"Mortgage loan" means a loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage or deed of trust upon any interest in one- to four-family residential property located in the Commonwealth, regardless of where made, including the renewal or refinancing of any such loan, but excluding (i) loans to persons related to the lender by blood or marriage and (ii) loans to persons who are bona fide employees of the lender. "Mortgage loan" shall not include any loan secured by a mortgage or deed of trust upon any interest in a more than four-family residential property or property used for a commercial or agricultural purpose.

"Nationwide Mortgage Licensing System and Registry" or "Registry" means the mortgage licensing and registration system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

"Person" means any individual or entity.

"Principal" means any person who, directly or indirectly, owns or controls a 10 percent or greater interest in any entity.

"Residential property" means improved real property used or occupied, or intended to be used or occupied, for residential purposes.

1987, c. 596, § 6.1-409; 1993, c. 183; 2006, c. 422; 2008, c. 863; 2010, cc. 146, 665, 794, 831; 2012, cc. 53, 188.

§ 6.2-1601. License requirement.

A. No person shall engage in business as a mortgage lender or a mortgage broker, or hold himself out to the general public to be a mortgage lender or a mortgage broker, unless such person has first obtained a license under this chapter. Subject to such conditions as the Commission may prescribe, an individual who is a bona fide employee or exclusive agent of a licensee may negotiate, place or find mortgage loans without being licensed as a mortgage broker.

B. Every mortgage lender and mortgage broker required to be licensed under this chapter shall register with the Registry and be subject to such registration and renewal requirements as may be established by the Registry, in addition to any requirements of this chapter. In adopting rules and regulations pursuant to § 6.2-1613, the Commission shall include any terms, conditions, or requirements applicable to such registration and renewal. Any fees required by the Registry shall be separate and apart from any fees imposed by this chapter. The Commission, at its discretion, may collect any registration and renewal fees on behalf of the Registry and remit such fees to the Registry or permit the Registry to collect any fees imposed by this chapter and remit such fees to the Commission.

C. In connection with its implementation and administration of this chapter, the Commission may establish agreements or contracts with the Registry or other entities designated by the Registry to collect, distribute, and maintain information and records, and process fees related to mortgage lenders and mortgage brokers required to be licensed under this chapter. In establishing such agreements or contracts, the Commission shall not be subject to the Virginia Public Procurement Act (§ 2.2-4300 et seq.).

1987, c. 596, § 6.1-410; 1990, c. 4; 2001, c. 24; 2010, cc. 146, 794, 831.

§ 6.2-1602. Persons exempt from chapter.

The following shall be exempt from the licensing and other provisions of this chapter:

1. Lenders making three or fewer mortgage loans in any period of 12 consecutive months;

2. Any person subject to the general supervision of or subject to examination by the Commissioner pursuant to Chapter 7 (§ 6.2-700 et seq.), 8 (§ 6.2-800 et seq.), 11 (§ 6.2-1100 et seq.), 13 (§ 6.2-1300 et seq.), or 14 (§ 6.2-1400 et seq.);

3. Any lender authorized to engage in business as a bank, savings institution, or credit union under the laws of the United States or any state, and subsidiaries and affiliates of such entities which lender, subsidiary or affiliate is subject to the general supervision or regulation of or subject to audit or examination by a regulatory body or agency of the United States or any state;

4. Nonprofit corporations making mortgage loans to promote home ownership or improvements for the disadvantaged;

5. Agencies of the federal government, or any state or municipal government, or any quasi-governmental agency making or brokering mortgage loans under the specific authority of the laws of any state or the United States;

6. Persons acting as fiduciaries with respect to any employee pension benefit plan qualified under the Internal Revenue Code who make mortgage loans solely to plan participants from plan assets;

7. Any insurance company;

8. Persons licensed by the Commonwealth as attorneys, real estate brokers, or real estate salesmen, not actively and principally engaged in negotiating, placing or finding mortgage loans, when rendering services as an attorney, real estate broker or real estate salesman; however, a real estate broker or real estate salesman who receives any fee, commission, kickback, rebate or other payment for directly or indirectly negotiating, placing or finding a mortgage loan for others shall not be exempt from the provisions of this chapter;

9. Persons acting in a fiduciary capacity conferred by authority of any court;

10. Persons licensed as small business investment companies by the Small Business Administration;

11. The Virginia Housing Development Authority and persons who (i) are approved by the Virginia Housing Development Authority pursuant to its rules and regulations to act as field originators with respect to mortgage loans made under its programs and (ii) are not engaged in any other activities for which a license is required to be obtained under this chapter; and

12. Persons who make loans or extend credit for any part of the purchase price of real property owned by such person.

1987, c. 596, § 6.1-411; 1989, cc. 411, 667; 1992, c. 156; 1995, c. 62; 1996, c. 126; 2003, c. 386; 2010, c. 794; 2012, cc. 53, 188.

§ 6.2-1603. Application for license; form; content; fee.

A. An application for a license under this chapter shall be made in writing, under oath and on a form provided by the Commissioner.

B. The application shall set forth:

1. The name and address of the applicant;

2. If the applicant is a firm or partnership, the name and address of each member of the firm or partnership;

3. If the applicant is a corporation or a limited liability company, the name and address of each officer, director, registered agent and each principal;

4. The address of each office at which the business to be licensed is to be conducted;

5. Whether the applicant seeks a license to act as a mortgage lender, mortgage broker, or both; and

6. Such other information concerning the financial responsibility, background, experience and activities of the applicant and its members, officers, directors, and principals as the Commissioner may require.

C. The application shall be accompanied by payment of the following fees:

1. A license application fee of:

a. In the case of an application for a license to act as a mortgage lender or a mortgage broker, $500; or

b. In the case of an application for a license to act as both mortgage lender and mortgage broker, $1,000; and

2. An application fee of $150 for each office at which the business to be licensed is to be conducted.

D. The application fees shall not be refundable in any event. The fees shall not be abated by surrender, suspension or revocation of the license.

1987, c. 596, § 6.1-412; 1989, c. 411; 1992, c. 283; 1993, c. 183; 2010, c. 794; 2011, c. 435.

§ 6.2-1604. Bond required.

The application for a license shall also be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $25,000, or such greater sum as the Commissioner may require. The form of the bond shall be approved by the Commission. The bond shall be continuously maintained thereafter in full force. The bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by him in his licensed business, and conducting his licensed business in conformity with this chapter and all applicable law. Any person who may be damaged by noncompliance of a licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

1987, c. 596, § 6.1-413; 1989, c. 411; 2001, c. 511; 2010, c. 794.

§ 6.2-1605. Investigation of applications.

A. The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations.

B. For the purpose of investigating individuals who are members, senior officers, directors, and principals of an applicant, such persons shall consent to a national and state criminal history records check and submit to fingerprinting. Each member, senior officer, director, and principal shall pay for the cost of such fingerprinting and criminal records check. Such persons shall cause their fingerprints, personal descriptive information, and records check fees to be submitted to either of the following, as prescribed by the Commission:

1. The Commissioner, who shall forward these items to the Central Criminal Records Exchange. The Central Criminal Records Exchange shall (i) conduct a search of its own criminal history records and forward such individuals' fingerprints and personal descriptive information to the Federal Bureau of Investigation for the purpose of obtaining national criminal history record information regarding such individuals, and (ii) forward the results of the state and national records search to the Commissioner or his designee, who shall be an employee of the Commission; or

2. The Registry, provided that it is capable of processing such criminal history records check.

C. If any member, senior officer, director, or principal of an applicant fails to cause his fingerprints, personal descriptive information, or records check fees to be submitted in accordance with subsection B, the application for licensure as a mortgage lender or mortgage broker shall be denied.

1987, c. 596, § 6.1-414; 2008, c. 863; 2010, c. 794; 2012, c. 189.

§ 6.2-1606. Qualifications.

A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-1603 and 6.2-1604, the Commission shall issue and deliver to the applicant the license applied for to engage in business under this chapter at the office locations specified in the application if it finds:

1. That the financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest and in accordance with law; and

2. That, in the case of an application for a license to act as a mortgage lender, the applicant has funds available for the operation of the business of at least $200,000.

B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.

1987, c. 596, § 6.1-415; 1988, c. 303; 1993, c. 183; 2010, c. 794.

§ 6.2-1607. Licenses; places of business; changes.

A. Each license shall state the address of each office at which the business is to be conducted and shall state fully the name of the licensee. Each licensee shall (i) display proof of licensing upon request and (ii) prominently display at any location where the licensee conducts business in person with a borrower or prospective borrower the telephone number and website address for the Commission where borrowers and prospective borrowers may confirm the status of the license. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any name other than the name set forth on the license issued by the Commission.

B. No licensee shall open an additional office without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commission finds that the applicant has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission.

C. Every licensee shall within 10 days notify the Commissioner, in writing, of the closing of any approved office and of the name, address and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.

D. Every license shall remain in force until it expires or has been surrendered, revoked, or suspended. The expiration, surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such lender or broker.

E. Notwithstanding any other provision of this chapter, a mortgage lender or mortgage broker license shall expire at the end of each calendar year unless it is renewed by a licensee prior to the expiration date. A licensee may renew its license by (i) requesting renewal through the Registry and (ii) complying with any requirements associated with such renewal request that are imposed by the Registry. If a mortgage lender or mortgage broker license has expired, the Commission may by regulation permit the former licensee to seek license reinstatement after the license expiration date by renewing its license in accordance with this subsection and paying a reinstatement fee as prescribed by the Commission.

1987, c. 596, § 6.1-416; 1988, c. 303; 1990, c. 8; 1992, c. 283; 2010, c. 794; 2011, c. 435; 2016, cc. 329, 360.

§ 6.2-1608. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire directly or indirectly 25 percent or more of the voting shares of a corporation or 25 percent or more of the ownership of any licensee unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals and members, and of any proposed new directors, senior officers, principals, or members of the licensee;

3. Submits and furnishes to the Commissioner information concerning the identity of the directors, senior officers, principals, and members of the applicant, and of any proposed new directors, senior officers, principals, or members of the licensee. Such individuals shall (i) consent to a national and state criminal history records check, submit to fingerprinting, and pay for the cost of such fingerprinting and criminal records check; and (ii) cause their fingerprints, personal descriptive information, and records check fees to be submitted to either of the following, as prescribed by the Commission:

a. The Commissioner, who shall forward these items to the Central Criminal Records Exchange. The Central Criminal Records Exchange shall (i) conduct a search of its own criminal history records and forward such individuals' fingerprints and personal descriptive information to the Federal Bureau of Investigation for the purpose of obtaining national criminal history record information regarding such individuals, and (ii) forward the results of the state and national records search to the Commissioner or his designee, who shall be an employee of the Commission; or

b. The Registry, provided that it is capable of processing such criminal history records checks; and

4. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers and principals, and any proposed new directors, members, senior officers and principals have the financial responsibility, character, reputation, experience and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial. If an applicant or any individual specified in subdivision A 3 fails to comply with the requirements of this section, the application shall be denied.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee directly or indirectly including an acquisition by merger or consolidation by or with another licensee or a person exempt from this chapter under the provisions of subdivisions 2 through 11 of § 6.2-1602, (ii) the acquisition of an interest in a licensee directly or indirectly including an acquisition by merger or consolidation by or with a person affiliated through common ownership with the licensee, or (iii) the acquisition of an interest in a licensee by a person by bequest, descent, or survivorship or by operation of law. The person acquiring an interest in a licensee in a transaction which is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

1988, c. 303, § 6.1-416.1; 1993, c. 183; 1998, c. 33; 2010, c. 794; 2011, c. 435; 2012, c. 189.

§ 6.2-1609. Retention of books, accounts and records.

A. Every mortgage lender or mortgage broker required to be licensed under this chapter shall maintain in its offices such books, accounts, and records as the Commission may reasonably require in order to determine whether such person is complying with the provisions of this chapter and regulations adopted hereunder. Such books, accounts, and records shall be maintained apart and separate from any other business in which the mortgage lender or mortgage broker is involved.

B. Each mortgage lender required to be licensed under this chapter shall retain, for at least three years after final payment is made on any mortgage loan or the mortgage loan is sold, whichever first occurs, copies of the note, settlement statement, truth-in-lending disclosure, and such other papers or records relating to the loan as may be required by regulation.

C. Each mortgage broker required to be licensed under this chapter shall retain for at least three years after a mortgage loan is made the original contract for his compensation, a copy of the settlement statement, and an account of fees received in connection with the loan, and such other papers or records as may be required by regulation.

1987, c. 596, § 6.1-417; 1995, c. 62; 2010, c. 794.

§ 6.2-1610. Periodic reports.

Each licensee shall file periodic written reports with the Commissioner or the Registry containing such information as the Commissioner may require concerning the licensee's business and operations. Reports shall be in the form and be submitted with such frequency and by such dates as may be prescribed by the Commissioner, who shall make and publish annually an analysis and recapitulation of the reports.

1987, c. 596, § 6.1-418; 1996, c. 30; 2010, c. 794; 2016, c. 329.

§ 6.2-1611. Investigations; examinations.

The Commission may, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any mortgage lender or mortgage broker required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of such mortgage lenders shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, and employees of such mortgage lender or mortgage broker being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records and information which the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

1987, c. 596, § 6.1-419; 2010, c. 794.

§ 6.2-1612. Annual fees.

A. To defray the costs of examination, supervision, and regulation, every:

1. Mortgage lender required to be licensed under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of an individual mortgage lender, the actual cost of the examination, and to other factors relating to the supervision and regulation; and

2. Mortgage broker required to be licensed under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the volume of business transacted by such mortgage broker, to the actual cost of examination and to other factors relating to the supervision and regulation.

B. The annual fee prescribed in subsection A shall be assessed on or before April 25 for every calendar year. All such fees shall be paid by the licensees to the State Treasurer on or before May 25 following each assessment.

C. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a mortgage lender or mortgage broker required to be licensed under this chapter at a location outside the Commonwealth, the mortgage lender or mortgage broker shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision and regulation, or shall pay at a reasonable per diem rate approved by the Commission.

1987, c. 596, § 6.1-420; 1988, c. 303; 1990, c. 32; 1996, c. 524; 2010, c. 794.

§ 6.2-1613. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to present evidence and be heard, in accordance with the Commission's Rules.

1987, c. 596, § 6.1-421; 2010, c. 794.

§ 6.2-1614. Prohibitions applicable to mortgage lenders and mortgage brokers.

No mortgage lender or mortgage broker required to be licensed under this chapter shall:

1. Obtain any agreement or instrument in which blanks are left to be filled in after execution;

2. Take an interest in collateral other than the real estate or residential property securing a mortgage loan, including any fixtures and appliances thereon and any mobile or manufactured home placed on such real estate even if such mobile or manufactured home is not permanently affixed thereto;

3. Obtain any exclusive dealing or exclusive agency agreement from any borrower;

4. Delay closing of any mortgage loan for the purpose of increasing interest, costs, fees, or charges payable by the borrower;

5. Obtain any agreement or instrument executed by a borrower which contains an acceleration clause permitting the unpaid balance of a mortgage loan to be declared due for any reason other than failing to make timely payments of interest and principal, submitting false information in connection with an application for the mortgage loan, breaching any representation or covenant made in the agreement or instrument, or failing to perform any other obligations undertaken in the agreement or instrument;

6. Recommend or encourage a person to default on an existing loan or other debt, if such default adversely affects such person's creditworthiness, in connection with the solicitation or making of a mortgage loan that refinances all or any portion of such existing loan or debt;

7. Knowingly or intentionally engage in the act or practice of refinancing a mortgage loan within 12 months following the date the refinanced mortgage loan was originated, unless the refinancing is in the borrower's best interest, which act or practice is commonly referred to as "flipping." This prohibition shall apply regardless of whether the interest rate, points, fees, and charges paid or payable by the borrower in connection with the refinancing exceed any limitation established pursuant to Chapter 3 (§ 6.2-300 et seq.) or Article 2 (§ 6.2-406 et seq.) of Chapter 4. Factors to be considered in determining if the refinancing is in the borrower's best interest include but are not limited to whether:

a. The borrower's new monthly payment is lower than the total of all monthly obligations being financed, taking into account the costs and fees;

b. There is a change in the amortization period of the new loan;

c. The borrower receives cash in excess of the costs and fees of refinancing;

d. The rate of interest on the borrower's note is reduced;

e. There is a change from an adjustable to a fixed rate loan, taking into account costs and fees; and

f. The refinancing is necessary to respond to a bona fide personal need or an order of an appropriate court; or

8. Use or cause to be published any advertisement that:

a. Contains any false, misleading, or deceptive statement or representation; or

b. Identifies the mortgage lender or mortgage broker by any name other than the name set forth on the license issued by the Commission.

1987, c. 596, §§ 6.1-422, 6.1-424; 1989, c. 667; 1993, c. 183; 1995, c. 62; 1997, c. 228; 2001, cc. 502, 510, 511, § 6.1-422.1; 2003, c. 386; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1615. Other prohibitions applicable to mortgage lenders.

No mortgage lender required to be licensed under this chapter shall fail to require the person closing the mortgage loan to provide to the borrower prior to closing of the mortgage loan, a (i) settlement statement and (ii) disclosure which conforms to that required by the provisions of 15 U.S.C. § 1601 et seq. and Consumer Financial Protection Bureau Regulation Z (12 C.F.R. Part 1026).

1987, c. 596, § 6.1-422; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511; 2009, cc. 189, 261; 2010, c. 794; 2016, c. 501.

§ 6.2-1616. Other prohibitions applicable to mortgage brokers.

A. As used in this section, "person affiliated," when used with reference to another person, means (i) any person who is a subsidiary, stockholder, partner, trustee, director, officer or employee of the other person or (ii) any corporation 10 percent or more of the capital stock of which is owned by the other person or by any person who is a subsidiary, stockholder, partner, trustee, director, officer, or employee of the other person.

B. No mortgage broker required to be licensed under this chapter shall:

1. Except for documented costs of credit reports and appraisals, receive compensation from a borrower until a written commitment to make a mortgage loan is given to the borrower by a mortgage lender;

2. Receive compensation from a mortgage lender of which he is a principal, partner, trustee, director, officer, or employee;

3. Receive compensation from a borrower in connection with any mortgage loan transaction in which he is the lender or a principal, partner, trustee, director, or officer of the lender;

4. Receive compensation from a borrower other than that specified in a written agreement signed by the borrower;

5. Receive compensation for negotiating, placing or finding a mortgage loan where such mortgage broker, or any person affiliated with the mortgage broker, has otherwise acted as a real estate broker, agent or salesman in connection with the sale of the real estate which secures the mortgage loan and such mortgage broker or person affiliated with the mortgage broker has received or will receive any other compensation or thing of value from the lender, borrower, seller or any other person, unless the borrower is given the following notice in writing at the time the mortgage broker services are first offered to the borrower:

NOTICE

WE HAVE OFFERED TO ASSIST YOU IN OBTAINING A MORTGAGE LOAN. IF WE ARE SUCCESSFUL IN OBTAINING A LOAN FOR YOU, WE WILL CHARGE AND COLLECT FROM YOU A FEE OF % OF THE LOAN AMOUNT.

WE DO NOT REPRESENT ALL OF THE LENDERS IN THE MARKET AND THE LENDERS WE DO REPRESENT MAY NOT OFFER THE LOWEST INTEREST RATES OR BEST TERMS AVAILABLE TO YOU. YOU ARE FREE TO SEEK A LOAN WITHOUT OUR ASSISTANCE, IN WHICH EVENT YOU WILL NOT BE REQUIRED TO PAY US A FEE FOR THAT SERVICE.

IF YOU ARE A MEMBER OF A CREDIT UNION YOU SHOULD COMPARE OUR INTEREST RATES AND TERMS WITH THE MORTGAGE LOANS AVAILABLE THROUGH YOUR CREDIT UNION.

BORROWER'S SIGNATURE

BORROWER'S SIGNATURE

The foregoing notice shall be in at least 10-point type and the prospective borrower shall acknowledge receipt of the written notice; or

6. Fail to use reasonable skill, care, and diligence in exercising the broker's duty, which duty is hereby created, to make reasonable efforts to secure a mortgage loan that is in the best interests of the applicant, considering the applicant's circumstances and loan characteristics, including but not limited to the product type, rates, charges, and repayment terms of the loan.

C. Notwithstanding the provisions of subdivision B 5, no person shall act as a mortgage broker in connection with any real estate sales transaction in which such person, or any person affiliated with such person, has acted as a real estate broker, agent, or salesman and has received or will receive compensation in connection with such transaction, unless such person was regularly engaged in acting as a mortgage broker in the Commonwealth as of February 25, 1989.

1987, c. 596, § 6.1-422; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1617. Application to certain real estate brokers.

The provisions of this chapter shall not be construed to prohibit a real estate broker, as defined in § 54.1-2100, who is either an owner of an interest in a real estate firm or acts as a real estate broker in a sole proprietorship, from:

1. Having an ownership interest in a mortgage broker or mortgage lender;

2. Receiving returns on investment arising from the real estate broker's ownership interest in a mortgage broker or mortgage lender; or

3. Receiving payment of compensation for services actually performed for a mortgage broker or mortgage lender in which the real estate broker has an ownership interest.

1987, c. 596, § 6.1-422; 1989, c. 667; 1993, c. 183; 1997, c. 228; 2001, cc. 502, 511; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1618. Escrow accounts.

A. All moneys required by a mortgage lender required to be licensed under this chapter to be paid by borrowers in escrow to defray future taxes or insurance premiums, or for other lawful purposes, shall be kept in accounts segregated from accounts of the lender, and shall not be commingled with other funds of the lender.

B. No licensed mortgage lender shall require any borrower to pay any moneys in escrow to defray future taxes and insurance premiums, or for any other purpose, in connection with a subordinate mortgage loan as referred to in Article 2 (§ 6.2-406 et seq.) of Chapter 4, except where escrows for such purposes are not being maintained in connection with the mortgage loan superior to such subordinate mortgage loan.

C. Mortgage lenders holding money in escrow for insurance premiums shall notify the insurer in writing within 30 days of a change of the mortgage lender's billing address, or 60 days prior to the renewal date of the insurance policy, whichever is later.

1987, c. 596, § 6.1-423; 2001, c. 504; 2010, c. 794.

§ 6.2-1619. Suspension or revocation of license.

A. The Commission may suspend or revoke any license issued under this chapter to a mortgage lender or mortgage broker upon any of the following grounds:

1. Any ground for denial of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the mortgage lender's or mortgage broker's business;

3. A course of conduct consisting of the failure to perform written agreements with borrowers;

4. Failure to account for funds received or disbursed to the satisfaction of the person supplying or receiving such funds;

5. Failure to pay when due reasonable fees to a licensed appraiser for appraisal services that are (i) requested from the appraiser in writing by the mortgage broker or mortgage lender or an employee of the mortgage broker or mortgage lender and (ii) performed, in accordance with the terms of the contract with the appraiser and all regulatory requirements related to such appraiser and appraisal, by the appraiser in connection with the origination or closing of a mortgage loan for a customer of the mortgage broker or mortgage lender;

6. Failure to disburse funds in accordance with any agreement connected with, and promptly upon closing of, a mortgage loan, taking into account any applicable right of rescission;

7. Conviction of a felony or misdemeanor involving fraud, misrepresentation or deceit;

8. Entry of a judgment against the licensee involving fraud, misrepresentation or deceit;

9. Entry of a federal or state administrative order against the licensee for violation of any law or any regulation applicable to the conduct of his business;

10. Refusal to permit an investigation or examination by the Commission;

11. Failure to pay any fee or assessment imposed by this chapter; or

12. Failure to comply with any order of the Commission.

B. For the purposes of this section, acts of any officer, director, member, partner, or principal shall be deemed acts of the licensee.

1987, c. 596, § 6.1-425; 1993, c. 183; 2008, c. 863; 2010, c. 794.

§ 6.2-1620. Censuring, suspending, or barring persons.

A. The Commission, after providing notice and an opportunity for a hearing, may (i) censure a person, (ii) suspend a person for a defined period from any position of employment, management, or control of any licensee, or (iii) bar a person from any position of employment, management, or control of any licensee, if the Commission finds that:

1. The censure, suspension or bar is in the public interest and that the person, after July 1, 2003, has committed or caused a violation of this chapter or any regulation or order of the Commission; or

2. The person, after July 1, 2003, was (i) convicted of, or pled guilty or nolo contendere to, any crime; (ii) held liable in any civil action by final judgment; or (iii) held liable in any administrative proceeding by any public agency, if the criminal conviction or plea, or the holding in the civil action or administrative proceeding, involved any offense reasonably related to the qualifications, functions, or duties of a person employed by, or in a position of management or control of, a licensee.

B. Persons suspended or barred under this section are prohibited from participating in any business activity of a licensee and from engaging in any business activity on the premises where a licensee is conducting its business. This subsection shall not be construed to prohibit suspended or barred persons from having their personal transactions processed by a licensee.

2003, c. 386, § 6.1-425.1; 2010, c. 794.

§ 6.2-1621. Filing of written report with Commissioner; events affecting activities of licensee.

A. A licensee shall file a written report with the Commissioner within 15 days of becoming aware of the occurrence of any of the following:

1. The filing for bankruptcy or reorganization by the licensee;

2. The institution of revocation or suspension proceedings against the licensee by any state or governmental authority;

3. The denial of the opportunity of the licensee to engage in business by any state or governmental authority;

4. Any felony indictment of the licensee or any of its employees, officers, directors, or principals;

5. Any felony conviction of the licensee or any of its employees, officers, directors, or principals; and

6. Such other events as the Commissioner may determine and identify by regulation.

B. The report shall be in writing and describe the event and its expected impact on the activities of the licensee in the Commonwealth.

2003, c. 386, § 6.1-425.2; 2010, c. 794.

§ 6.2-1622. Cease and desist orders.

A. If the Commission determines that any mortgage lender or mortgage broker required to be licensed hereunder has violated any provision of this chapter or any regulation adopted pursuant thereto, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such mortgage lender or mortgage broker and shall state the grounds for the contemplated action.

B. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at the hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such fines and penalties as may be prescribed by Commission regulations.

1987, c. 596, § 6.1-426; 2010, c. 794.

§ 6.2-1623. Notice of proposed suspension or revocation.

The Commission may not revoke or suspend the license of any licensee upon any of the grounds set forth in § 6.2-1619 until it has given the mortgage lender or mortgage broker (i) 21 days' notice in writing of the reasons for the proposed revocation or suspension and (ii) an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of such licensee and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the licensee named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1.

1987, c. 596, § 6.1-427; 2010, c. 794.

§ 6.2-1624. Civil penalties.

In addition to the authority conferred under §§ 6.2-1619 and 6.2-1622, the Commission may impose a civil penalty not exceeding $2,500 upon any mortgage lender or mortgage broker required to be licensed under this chapter who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or any other law or regulation applicable to the conduct of the mortgage lender's or mortgage broker's business. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed, and each day after the date of notification, excluding Sundays and holidays, as prescribed in § 2.2-3300, that an unlicensed person engages in the business or holds himself out to the general public as a mortgage lender or mortgage broker shall constitute a separate violation.

1987, c. 596, § 6.1-428; 1990, c. 4; 2001, c. 511; 2008, c. 863; 2010, c. 794.

§ 6.2-1625. Criminal penalties.

Any person not exempt from the licensure requirements of this chapter who acts as a mortgage lender or mortgage broker in the Commonwealth without having obtained a license is guilty of a Class 6 felony. For the purposes of this section, each violation shall constitute a separate offense.

1987, c. 596, § 6.1-429; 2010, c. 794.

§ 6.2-1626. Authority of Attorney General; referral by Commission to Attorney General.

A. If the Commission determines that a licensee is in violation of, or has violated, § 6.2-1614, 6.2-1615, or 6.2-1616, or any provision of Chapter 3 (§ 6.2-300 et seq.) or Chapter 4 (§ 6.2-400 et seq.), the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations.

B. Upon such referral, the Attorney General:

1. May seek to enjoin violations of such laws. The appropriate circuit court may enjoin such violations notwithstanding the existence of an adequate remedy at law; and

2. May seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law.

C. Persons entitled to any relief authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.

D. In any action brought by the Attorney General by virtue of the authority granted in this section, the Attorney General shall be entitled to seek attorney fees and costs.

E. The Attorney General shall be authorized to bring an action to enjoin violations of the Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C. § 2601 et seq.), to the extent authorized by §§ 8 and 16 of RESPA (12 U.S.C. §§ 2607 and 2614).

1987, c. 596, § 6.1-430; 2001, c. 510; 2008, c. 863; 2009, cc. 204, 727; 2010, c. 794.

§ 6.2-1627. Private actions.

A. Nothing in this chapter shall be construed to preclude any person who suffers loss as a result of a violation of Chapter 3 (§ 6.2-300 et seq.) or Chapter 4 (§ 6.2-400 et seq.) from maintaining an action to recover damages or restitution and, as provided by statute, attorney fees. However, in any matter in which the Attorney General has exercised his authority pursuant to § 6.2-1626, an individual action shall not be maintainable if the individual has received damages or restitution pursuant to § 6.2-1626.

B. A borrower who suffers a loss as a result of a mortgage broker's breach of duty as set forth in subdivision B 6 of § 6.2-1616 may bring an action against such broker to recover actual damages. In addition to any damages awarded, such borrower also may be awarded attorney fees and court costs.

1987, c. 596, § 6.1-431; 2009, cc. 189, 261; 2010, c. 794.

§ 6.2-1628. Enforcement of prohibitions on certain practices; recovery of attorney fees.

A. The Attorney General, the Commission, or any party to a mortgage loan may enforce the provisions of §§ 6.2-1614, 6.2-1615, and 6.2-1616.

B. In any suit instituted by a borrower who alleges that the defendant violated § 6.2-1614, 6.2-1615, or 6.2-1616, the presiding judge may, in the judge's discretion, allow reasonable attorney fees to the attorney representing the prevailing party. The attorney fees shall be taxed as a part of the court costs and payable by the losing party upon a finding by the presiding judge that (i) the party charged with the violation has willfully engaged in the act or practice with which he was charged or (ii) the party instituting the action knew, or should have known, that the action was frivolous and malicious.

C. The provisions of this section shall be in addition to, and shall not impair, the rights of and remedies available to borrowers in mortgage loans otherwise provided by law.

2001, c. 510, § 6.1-422.1; 2003, c. 386; 2010, c. 794.

§ 6.2-1629. Prohibited practices; authority of the Attorney General.

A. Notwithstanding whether a person is licensed, is required to be licensed, or is exempt from licensure under this chapter, and notwithstanding any other provision of the law to the contrary, no person that is engaged in the business of originating residential mortgage loans in the Commonwealth shall use any deception, fraud, false pretense, false promise, or misrepresentation in connection with a mortgage loan transaction.

B. Whenever the Attorney General has reasonable cause to believe that any person has engaged in, or is engaging in, or is about to engage in, any violation of this section, the Attorney General is empowered to issue a civil investigative demand. The provisions of § 59.1-9.10 shall apply, mutatis mutandis, to civil investigative demands issued pursuant to this section.

C. The Attorney General may cause an action to be brought in the appropriate circuit court in the name of the Commonwealth to enjoin any violation of this section. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law. In any action under this section, it shall not be necessary that damages or intent be proved to establish a violation. The standard of proof at trial shall be preponderance of the evidence. The circuit courts are authorized to issue temporary or permanent injunctions to restrain and prevent violations of this section.

D. In any action brought under this section, if the court finds that a person has willfully engaged in a violation of this section, the Attorney General may recover, upon petition to the court, a civil penalty of not more than $2,500 per violation.

E. In any action brought under this section, the Attorney General may recover damages and such other relief allowed by law, including restitution on behalf of borrowers injured by violations of this section as well as costs and reasonable expenses incurred by the Commonwealth in investigation and preparing the case, including attorney fees.

F. Unless the Attorney General determines that a person subject to the provisions of this section intends to depart from the Commonwealth or to remove his property from the Commonwealth, or to conceal himself or his property in the Commonwealth, or on a reasonable determination that irreparable harm may occur if immediate action is not taken, the Attorney General shall, before initiating any legal proceedings as provided in this section, give notice in writing that such proceedings are contemplated, and allow such person a reasonable opportunity to appear before the Attorney General and show that a violation did not occur or execute an assurance of voluntary compliance or consent judgment.

G. Nothing in this section shall create a private right of action in favor of any individual aggrieved by a violation of this section.

2009, cc. 204, 727, § 6.1-430.1; 2010, c. 794.

Chapter 17. Mortgage Loan Originators.

§ 6.2-1700. Definitions.

As used in this chapter:

"Act" means the federal Secure and Fair Enforcement for Mortgage Licensing Act, Title V (§ 1501 et seq.) of the Housing and Economic Recovery Act of 2008, P.L. 110-289.

"Administrative or clerical tasks" means the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan in the mortgage industry and communication with the consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan.

"Covered financial institution" has the same meaning as that term is defined in 12 C.F.R. § 1007.102.

"Dwelling" means a residential structure or mobile home that contains one to four family housing units, or individual units of condominiums or cooperatives.

"Employee" means an individual (i) whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person and (ii) whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by the controlling person.

"Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.

"Licensee" means an individual licensed under this chapter.

"Loan processor or underwriter" means an individual who, with respect to the origination of a residential mortgage loan, performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensee or a registered mortgage loan originator. For the purposes of this definition, clerical or support duties include (i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan and (ii) communication with a consumer to obtain the information necessary for the processing or underwriting of a residential mortgage loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.

"Mortgage loan originator" means an individual who (i) takes an application for or offers or negotiates the terms of a residential mortgage loan in which the dwelling is or will be located in the Commonwealth or (ii) represents to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities described in clause (i).

"Nationwide Multistate Licensing System and Registry" or "Registry" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage loan originators.

"Nontraditional mortgage product" means any mortgage product other than a 30-year fixed rate mortgage.

"Real estate brokerage activities" means any activity that involves offering or providing real estate brokerage services to the public, including (i) acting as a real estate broker, real estate agent, or real estate salesperson for a buyer, seller, lessor, or lessee of real property; (ii) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property; (iii) negotiating any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to any such transaction; (iv) engaging in any activity for which a person is required to be licensed or registered as a real estate broker, real estate agent, or real estate salesperson; and (v) offering to engage in any activity or act in any capacity described in clauses (i) through (iv).

"Registered mortgage loan originator" means any individual who (i) takes an application for or offers or negotiates the terms of a residential mortgage loan in which the dwelling is or will be located in the Commonwealth, (ii) is an employee of a covered financial institution, and (iii) is registered with, and maintains a unique identifier through, the Registry.

"Residential mortgage loan" means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling.

"Unique identifier" means a number or other identifier assigned by protocols established by the Registry that permanently identifies a mortgage loan originator.

2009, cc. 273, 453, § 6.1-431.1; 2010, c. 794; 2011, cc. 301, 435; 2012, cc. 52, 187; 2013, cc. 20, 380; 2014, cc. 295, 343; 2019, c. 740.

§ 6.2-1701. License requirement.

A. Except as otherwise provided in § 6.2-1701.3, no individual shall engage in the business of a mortgage loan originator unless such individual has first obtained and maintains annually a license under this chapter.

B. The following shall be exempt from licensing and other provisions of this chapter:

1. Any individual engaged solely as a loan processor or underwriter. Except as otherwise provided in this subsection, an individual acting as an independent contractor may not engage in residential mortgage loan origination activities as a loan processor or underwriter unless such individual has first obtained and maintains annually a mortgage loan originator license;

2. Any individual who only performs administrative or clerical tasks on behalf of a mortgage loan originator;

3. Any individual who only performs real estate brokerage activities and is licensed or registered in accordance with applicable law, unless the individual is compensated directly or indirectly by the lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator;

4. Any individual solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101 (53D);

5. A registered mortgage loan originator;

6. Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual;

7. Any individual who acts as a loan originator in providing financing for the sale of that individual's own residence;

8. A licensed attorney, provided that the attorney's mortgage loan origination activities are: (i) considered by the Supreme Court of Virginia to be part of the authorized practice of law within the Commonwealth, (ii) carried out within an attorney-client relationship, and (iii) accomplished by the attorney in compliance with all applicable laws, rules, ethics, and standards;

9. Any employee of federal, state, or local government, or a housing finance agency, who acts as a mortgage loan originator only pursuant to his official duties of employment. For the purposes of this subdivision, "local government" means any county, city, or town or other local or regional political subdivision; and

10. Any employee of a bona fide nonprofit organization, as determined by the Commission in accordance with § 6.2-1701.1, who acts as a mortgage loan originator only (i) pursuant to his official duties of employment and (ii) with respect to residential mortgage loans with terms that are favorable to a borrower.

2009, cc. 273, 453, § 6.1-431.2; 2010, c. 794; 2012, cc. 52, 187; 2013, cc. 20, 380; 2014, cc. 295, 343; 2019, c. 740.

§ 6.2-1701.1. Bona fide nonprofit organizations.

A. The Commission shall prescribe by regulation (i) the procedures and criteria that it will use to determine whether an organization is a bona fide nonprofit organization and (ii) the information and fees that must be submitted by an organization to the Commission in connection with a request for a determination under this section. In establishing the criteria for a bona fide nonprofit organization, the Commission shall give consideration to the criteria that have been adopted by the Consumer Financial Protection Bureau or any other federal agency with rulemaking authority under the Act.

B. The Commission shall, as often as it deems necessary, investigate and periodically examine the business activities, books, and records of any bona fide nonprofit organization insofar as they pertain to the criteria that the Commission has prescribed pursuant to clause (i) of subsection A. In the course of such investigations and examinations, the organization being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all books, records, and information that the person making such investigation or examination deems necessary.

C. The Commission may, after providing notice and an opportunity for a hearing, revoke its determination that an organization is a bona fide nonprofit organization if it finds that the organization no longer meets the criteria prescribed by the Commission pursuant to clause (i) of subsection A.

2012, cc. 52, 187.

§ 6.2-1701.2. Repealed.

Repealed by Acts 2019, c. 740, cl. 2, effective July 1, 2019.

§ 6.2-1701.3. Temporary authority to act as a mortgage loan originator.

A. An individual shall be deemed to have temporary authority to act as a mortgage loan originator in the Commonwealth to the extent authorized by, and subject to the terms and conditions prescribed in, § 1518 of the Act.

B. A mortgage lender or mortgage broker that employs an individual who is deemed to have temporary authority to act as a mortgage loan originator in the Commonwealth pursuant to this section shall be subject to the requirements of this chapter and Chapter 16 (§ 6.2-1600 et seq.) to the same extent that such mortgage lender or mortgage broker would be subject to such requirements if such individual were a licensed mortgage loan originator under this chapter.

C. An individual who is deemed to have temporary authority to act as a mortgage loan originator in the Commonwealth pursuant to this section and acts as a mortgage loan originator shall be subject to the requirements of this chapter to the same extent as if such individual was a licensed mortgage loan originator under this chapter.

2019, c. 740.

§ 6.2-1702. Application for license; form; content; fee.

A. An application for a license under this chapter shall be on a form provided by the Registry.

B. The application shall set forth:

1. The name and residential address of the applicant;

2. The address of the applicant's employer or the address where the applicant will act as a mortgage loan originator, as applicable; and

3. Such other information concerning the financial responsibility, background, experience, and activities of the applicant as the Commissioner may require.

C. The application shall be accompanied by payment of an application fee in an amount not to exceed $150, or a lesser amount as may be prescribed by the Commission. The application fee shall be in addition to any other fees payable by the applicant, including but not limited to fees for pre-licensing education and testing, fingerprinting, criminal background checks, credit reports, or administrative fees charged by the Registry.

D. The application fee shall not be refundable in any event. The fee shall not be abated by surrender, suspension, or revocation of the license.

2009, cc. 273, 453, § 6.1-431.3; 2010, c. 794.

§ 6.2-1703. Bond required.

A. The application for a license shall be accompanied by a bond to be filed with the Commission with corporate surety authorized to execute such bond in the Commonwealth, the form of which shall be approved by the Commission.

1. If the applicant is not an employee or exclusive agent of a person licensed or exempt from licensing under Chapter 16 (§ 6.2-1600 et seq.), the bond shall be an individual surety bond for the applicant; or

2. If the applicant is an employee or exclusive agent of a person licensed or exempt from licensing under Chapter 16 (§ 6.2-1600 et seq.), the bond shall be a surety bond filed by such person covering all such employees and exclusive agents holding or applying for a license as a mortgage loan originator.

B. The amount of the bond shall be $25,000, or such greater sum as the Commission may require based on the total dollar amount of residential mortgage loans originated in the preceding calendar year by (i) the applicant, in the case of the bond referred to in subdivision A 1 or (ii) the person licensed or exempt from licensing under Chapter 16 (§ 6.2-1600 et seq.), in the case of the bond referred to in subdivision A 2. A bond already filed with the Commission pursuant to § 6.2-1604 may be applied toward the minimum bond required by this section, subject to approval by the Commission. In the case of the bond referred to in subdivision A 2, it shall be the responsibility of the person licensed or exempt from licensing under Chapter 16 (§ 6.2-1600 et seq.) to provide information, in a form satisfactory to the Commission, sufficient for determining and verifying the total dollar amount of residential mortgage loans originated in the preceding calendar year.

C. Such bond shall be continuously maintained thereafter in full force.

D. Such bond shall be conditioned upon the licensee: (i) performing all written agreements with borrowers or prospective borrowers; (ii) correctly and accurately accounting for all funds received by him in the course of his business activities as a licensee; and (iii) conducting himself in conformity with this chapter and all applicable laws and regulations.

E. Any person who may be damaged by noncompliance of a licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

2009, cc. 273, 453, § 6.1-431.4; 2010, c. 794.

§ 6.2-1704. Mortgage loan originator background checks.

A. In connection with an application for licensing as a mortgage loan originator, the applicant shall furnish to the Registry information concerning the applicant's identity, including fingerprints for submission to the Federal Bureau of Investigation or any federal or state governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check, as prescribed by the Commission.

B. The applicant shall also submit personal history and experience in a form prescribed by the Registry, including submission of authorization for the Registry and the Commission to obtain (i) an independent credit report from a consumer reporting agency described in § 603(p) of the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), and (ii) information related to any administrative, civil, or criminal findings by any governmental jurisdiction.

C. For the purposes of this section and in order to reduce the points of contact that the Federal Bureau of Investigation may be required to maintain, the Commission may use the Registry as a channeling agent for requesting information from, and distributing information to, the Department of Justice, other governmental agency, or any other source.

2009, cc. 273, 453, § 6.1-431.5; 2010, c. 794.

§ 6.2-1705. Coordination of licensing.

In connection with its administration and enforcement of this chapter, the Commission is authorized to establish agreements or contracts with the Registry or other entities designated by the Registry to collect, distribute, and maintain information and records, and to process transaction fees and other fees, related to licensees and other persons subject to this chapter. When establishing such agreements or contracts the Commission shall not be subject to the Virginia Public Procurement Act (§ 2.2-4300 et seq.). Notwithstanding the provisions of § 6.2-101, the Commission shall report regularly to the Registry any violations of this chapter, enforcement actions, and license status changes. The Commission shall report to the Registry only those violations, actions, and license status changes effected by final order of the Commission or by the Commissioner pursuant to his delegated authority.

2009, cc. 273, 453, § 6.1-431.6; 2010, c. 794.

§ 6.2-1706. Qualifications.

Upon the filing and investigation of an application for a license and compliance by the applicant with all applicable provisions of this chapter, the Commission shall issue and deliver to the applicant the license applied for to engage in business under this chapter if it finds that the financial responsibility, character, and general fitness of the applicant are such as to warrant belief that the licensee will act as a mortgage loan originator efficiently and fairly, in the public interest, and in accordance with law. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial. The Commission shall not base a license denial, in whole or in part, on an applicant's credit score, nor shall it use a credit report as the sole basis for license denial.

2009, cc. 273, 453, § 6.1-431.7; 2010, c. 794; 2014, cc. 295, 343; 2019, c. 740.

§ 6.2-1707. Other conditions for mortgage loan originator licensing.

In addition to the findings required by § 6.2-1706, the Commission shall not issue a mortgage loan originator license unless it finds that:

1. The applicant has never had a mortgage loan originator license revoked by any governmental authority;

2. The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court (i) during the seven-year period preceding the application for licensing and registration; or (ii) at any time preceding such date of application if such felony involved an act of fraud, dishonesty, breach of trust, or money laundering;

3. The applicant has completed the pre-licensing education requirement described in § 6.2-1708;

4. The applicant has passed a written test that meets the test requirement described in § 6.2-1709; and

5. The applicant has become registered through, and obtained a unique identifier from, the Registry.

2009, cc. 273, 453, § 6.1-431.8; 2010, c. 794; 2014, cc. 295, 343; 2019, c. 740.

§ 6.2-1708. Pre-licensing education of mortgage loan originators.

A. In order to meet the pre-licensing education requirement referred to in subdivision 3 of § 6.2-1707, an applicant shall complete at least 20 hours of pre-licensing education courses, approved in accordance with subsection B, which shall include at least (i) three hours of federal law and regulations; (ii) three hours of ethics, which shall include instruction about fraud, consumer protection, and fair lending issues; and (iii) two hours of training related to lending standards for the nontraditional mortgage product marketplace.

B. Pre-licensing education courses shall be reviewed and approved by the Registry based upon reasonable standards. Review and approval of a course shall include review and approval of the course provider.

C. Nothing in this section shall preclude the provision of any pre-licensing education course that has been approved by the Registry by: (i) the employer of the applicant; (ii) an entity that is affiliated with the applicant by any agency contract; or (iii) a subsidiary or affiliate of such employer or entity.

D. Pre-licensing education courses may be offered in a classroom, online, or by any other means approved by the Registry.

E. Except as otherwise provided by the Commission, pre-licensing education courses shall be subject to such expiration rules as may be established by the Registry. Expired courses shall not count toward the minimum number of hours of pre-licensing education required by subsection A.

2009, cc. 273, 453, § 6.1-431.9; 2010, c. 794; 2019, c. 740.

§ 6.2-1709. Testing of mortgage loan originator applicants.

A. In order to meet the written test requirement referred to in subdivision 4 of § 6.2-1707, an individual shall pass, in accordance with reasonable standards established under this section, a qualified written test that has been developed by the Registry and administered by a test provider approved by the Registry.

B. A written test shall not be a qualified written test for purposes of subsection A unless the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including: (i) ethics; (ii) federal law and regulation pertaining to mortgage loan origination; (iii) state law pertaining to mortgage loan origination; and (iv) federal and state law and regulation pertaining to fraud, consumer protection, the nontraditional mortgage product marketplace, and fair lending issues.

C. Nothing in this section shall prohibit a test provider approved by the Registry from providing a test at a location of: (i) the employer of the applicant; (ii) any subsidiary or affiliate of the employer; or (iii) any entity with which the applicant maintains an exclusive arrangement to act as a mortgage loan originator.

D. An individual shall not be considered to have passed a qualified written test unless he has correctly answered at least 75 percent of the test questions. An individual may take a test three consecutive times with each consecutive taking occurring at least 30 days after the preceding test. After failing three consecutive tests, an individual shall wait at least six months before retaking the test. A licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer, exclusive of any period during which such individual is a registered mortgage loan originator, shall retake the test and correctly answer at least 75 percent of the test questions.

E. An applicant who has successfully completed pre-licensing education and testing that is mandated by the Act and approved by the Registry for any state shall be deemed to have completed Virginia's pre-licensing education and testing requirements, other than any limited or separate state testing requirements relating to Virginia law and regulation as described in subsection B.

2009, cc. 273, 453, § 6.1-431.10; 2010, c. 794; 2012, cc. 52, 187.

§ 6.2-1710. Continuing education requirements.

A. A licensed mortgage loan originator shall complete annually at least eight hours of continuing education courses approved in accordance with subsection B, which shall include at least: (i) three hours related to federal law and regulations; (ii) two hours related to ethics, which shall include instruction about fraud, consumer protection, and fair lending issues; and (iii) two hours related to lending standards for the nontraditional mortgage product marketplace.

B. Continuing education courses shall be reviewed and approved by the Registry based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.

C. Nothing in this section shall preclude the provision of any continuing education course that has been approved by the Registry by: (i) the employer of the mortgage loan originator; (ii) an entity that is affiliated with the mortgage loan originator by an agency contract; or (iii) a subsidiary or affiliate of such employer or entity.

D. Continuing education courses may be offered in a classroom, online, or by any means approved by the Registry.

E. A licensed mortgage loan originator may only receive credit for a continuing education course in the year in which the course is taken and may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.

F. A licensed mortgage loan originator who is an instructor of an approved continuing education course may receive credit for his annual continuing education requirement at the rate of two hours of credit for every one hour of teaching.

G. A licensed mortgage loan originator who has successfully completed Registry-approved continuing education courses that satisfy the requirements of subsection A for any state shall be deemed to have satisfied the continuing education requirements of this chapter.

2009, cc. 273, 453, § 6.1-431.11; 2010, c. 794.

§ 6.2-1711. Licenses; places of business; changes.

A. Each license shall state fully the name and address of record of the licensee. Each licensee shall be required to display proof of licensing upon request, and to prominently display at any location where he acts as a mortgage loan originator the telephone numbers and Internet addresses for the Registry and the Commission where consumers and other interested parties may confirm the status of his license. Licenses shall not be transferable or assignable, by operation of law or otherwise. Except as otherwise provided by the Commission, no licensee shall use any name, in acting as a mortgage loan originator, other than the name set forth on the license issued by the Commission.

B. Every licensee shall within 10 days notify the Commissioner, in writing, of any change of residential or business address and provide such other information with respect to any such change as the Commissioner may reasonably require.

C. Every license shall remain in force until it expires or has been surrendered, revoked, or suspended. The expiration, surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of the licensee. In addition:

1. Except as otherwise provided by the Commission, licenses shall expire at the end of each calendar year. A licensee may request renewal by (i) filing a license renewal application through the Registry, (ii) paying the annual license renewal fee prescribed in § 6.2-1714, (iii) obtaining the continuing education prescribed in § 6.2-1710, and (iv) furnishing such other information as may be required by the Commission;

2. The Commission shall renew an individual's license if the Commission finds that the individual has complied with the requirements of this chapter and continues to meet the conditions for initial licensure. If the Commission fails to make the findings required by this subdivision, the Commission shall not renew the individual's license. In determining whether to renew a license, the Commission shall consider whether the licensee has violated state or federal law; and

3. Notwithstanding any other provision of this chapter, the Commission may by regulation permit a former licensee to seek license reinstatement after the license expiration date by requesting renewal in accordance with subdivision 1 and paying a reinstatement fee as prescribed by the Commission.

2009, cc. 273, 453, § 6.1-431.12; 2010, c. 794; 2012, cc. 52, 187.

§ 6.2-1712. Repealed.

Repealed by Acts 2011, c. 435, cl. 3, effective July 1, 2012.

§ 6.2-1712.1. Inactive mortgage loan originator licenses.

A. Notwithstanding any other provision of this chapter, if the Commission finds that an individual has applied for a mortgage loan originator license and meets all applicable requirements for licensure except § 6.2-1703, then the Commission shall issue a mortgage loan originator license to the applicant. However, the license issued by the Commission shall be inactive by operation of law until the Commission has updated the licensee's status in the Registry pursuant to subsection D.

B. Notwithstanding any other provision of this chapter, if the Commission finds that an individual has requested renewal of his mortgage loan originator license in accordance with subsection C of § 6.2-1711 and meets all applicable requirements for license renewal except § 6.2-1703, then the Commission shall renew the individual's mortgage loan originator license. However, the license renewed by the Commission shall be inactive by operation of law until the Commission has updated the licensee's status in the Registry pursuant to subsection D.

C. If at any time a licensee ceases to be covered by a surety bond meeting the requirements of § 6.2-1703, then the individual's license shall be inactive by operation of law until the Commission has updated the licensee's status in the Registry pursuant to subsection D.

D. If a licensee's mortgage loan originator license is inactive by operation of law pursuant to this section, then the licensee shall not engage in the business of a mortgage loan originator until (i) the Commission has determined that the licensee is covered by a surety bond meeting the requirements of § 6.2-1703 and (ii) based upon its determination, the Commission has updated the licensee's status in the Registry to indicate that the licensee may engage in the business of a mortgage loan originator.

2016, c. 330; 2019, c. 740.

§ 6.2-1713. Investigations; examinations.

The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the business activities, premises, and records of any individual required to be licensed under this chapter insofar as they pertain to any activities for which a license is required by this chapter. In the course of such investigations and examinations, the individual being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all persons, premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned individuals, and compel the production of papers and objects of all kinds.

2009, cc. 273, 453, § 6.1-431.14; 2010, c. 794.

§ 6.2-1714. Annual fees.

A. In order to defray the costs of his examination, supervision, and regulation, every licensee shall pay an annual license renewal fee. The fee shall be $100 unless another amount is prescribed by the Commission. The renewal fee shall be paid by the licensee to the State Treasurer or through the Registry, as determined by the Commission, on or before the end of each license year.

B. When it becomes necessary to examine or investigate the books and records of an individual required to be licensed under this chapter at a location outside the Commonwealth, the individual shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of his examination, supervision, and regulation, or shall pay a reasonable per diem rate approved by the Commission. Any sums due pursuant to this subsection shall be in addition to the annual fee prescribed in subsection A.

C. If an individual is an employee or exclusive agent of a person licensed under Chapter 16 (§ 6.2-1600 et seq.), the expenses referred to in subsection B shall be paid by the licensed mortgage lender or mortgage broker.

2009, cc. 273, 453, § 6.1-431.15; 2010, c. 794.

§ 6.2-1715. Advertising; use of a unique identifier.

A. No individual required to be licensed under this chapter shall use or cause to be published any advertisement that:

1. Contains any false, misleading, or deceptive statement or representation; or

2. Except as otherwise provided by the Commission, identifies a licensee by any name other than the name set forth on the license issued by the Commission.

B. No licensee shall use the unique identifier obtained from the Registry for any purpose other than the purposes of the Act and this chapter.

2009, cc. 273, 453, § 6.1-431.16; 2010, c. 794; 2012, cc. 52, 187.

§ 6.2-1716. Suspension or revocation of license.

The Commission may suspend or revoke any license issued under this chapter based upon:

1. Any ground sufficient for denial of the issuance of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the licensee's licensed activities;

3. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;

4. Entry of a judgment against a licensee involving fraud, misrepresentation, or deceit;

5. Entry of a federal or state administrative order against a licensee for violation of any law or any regulation applicable to the conduct of his licensed activities;

6. Refusal to permit an investigation or examination by the Commission;

7. Failure to pay any fee or assessment imposed by this chapter;

8. Failure to comply with any order of the Commission; or

9. Failure to maintain registration with, or a unique identifier from, the Registry.

2009, cc. 273, 453, § 6.1-431.17; 2010, c. 794.

§ 6.2-1717. Filing of written report with Commissioner; events affecting a licensee.

Within 15 days of becoming aware of the occurrence of any of the events listed below, a licensee shall file a written report with the Commissioner describing such event:

1. The institution of revocation or suspension proceedings against the licensee by any state or other governmental authority;

2. The denial of the opportunity to engage in business by any state or other governmental authority;

3. Any felony indictment of the licensee;

4. Any felony conviction of the licensee; and

5. Such other events as the Commission may determine and identify by regulation.

2009, cc. 273, 453, § 6.1-431.18; 2010, c. 794.

§ 6.2-1718. Notice of proposed suspension or revocation.

The Commission may not revoke or suspend the license of any licensee under this chapter unless it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and has given the licensee an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the licensee's last address on the Commission's records and shall state with particularity the basis for the contemplated action. Within 14 days of mailing the notice, the licensee may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1.

2009, cc. 273, 453, § 6.1-431.19; 2010, c. 794.

§ 6.2-1719. Civil penalties.

The Commission may impose a civil penalty not exceeding $2,500 upon any individual required to be licensed under this chapter who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or any other law or regulation applicable to the licensee's activities. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed, and each day that an unlicensed individual engages in the business of a mortgage loan originator shall constitute a separate violation.

2009, cc. 273, 453, § 6.1-431.20; 2010, c. 794; 2012, cc. 52, 187.

§ 6.2-1720. Regulations; agreements between Commission and Registry.

A. The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulations, the Commission shall give reasonable notice of their content and shall afford interested parties an opportunity to present evidence and be heard, in accordance with the Commission's Rules.

B. The Commission shall, to the extent practicable, include in any written memorandum of understanding or other written agreement between the Commission and the Registry provisions substantially similar to the following:

1. Any organization serving as the administrator of the Registry or any officer or employee of any such entity shall implement and maintain an information security program that meets or exceeds federal and state standards pursuant to § 18.2-186.6 and that complies with the regulation guidelines promulgated under the Gramm-Leach-Bliley Act (15 U.S.C. § 6801 et seq.) for safeguarding personal information of mortgage loan originators and applicants;

2. The Registry shall not under any circumstances disclose to any third party any information pertaining to any pending or incompletely adjudicated regulatory matters;

3. The Registry shall develop, as requested by the Commission, a mortgage loan originator licensing test that may be limited to specific products and services; and

4. The Registry shall provide to the Commission summary statistical information by March 31 of each year relating to loan originator examinations taken by applicants for a mortgage loan originator license in the Commonwealth during the preceding calendar year.

C. Except as otherwise provided in the Act or this chapter, any requirement under federal or state law regarding the privacy or confidentiality of any information or material provided to the Registry, and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the Registry. Such information and material may be shared with all state and federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by federal or state law. In addition:

1. Information or material that is subject to privilege or confidentiality under this subsection shall not be subject to: (i) disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the Commonwealth or (ii) subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Registry with respect to such information or material, the individual to whom such information or material pertains waives, in whole or in part, in the discretion of such individual, that privilege;

2. Any provision of the laws of the Commonwealth relating to the disclosure of confidential supervisory information or any information or material described in this subsection that is inconsistent with this subsection shall be superseded by the requirements of this subsection to the extent that such provision provides less confidentiality or a weaker privilege; and

3. This subsection shall not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators that is included in the Registry for access by the public.

D. The Commission shall:

1. Annually review the proposed budget, fees, and audited financial statements of the Registry;

2. Annually, to the extent practicable, report to the House Committee on Labor and Commerce and the Senate Committee on Commerce and Labor on the operations of the Registry, including compliance with its established protocols for securing and safeguarding personal information in the Registry;

3. To the extent practicable, prepare, publicly announce, and publish a report, by no later than July 1 of each year, that summarizes statistical test results and demographic information to be prepared by the Registry or its test administrator; and

4. Report violations of this chapter, any enforcement actions thereunder, and other relevant information to the Registry on a regular basis.

2009, cc. 273, 453, § 6.1-431.21; 2010, c. 794; 2012, cc. 52, 187.

§ 6.2-1721. Cease and desist orders.

A. If the Commission determines that any mortgage loan originator required to be licensed hereunder has violated any provision of this chapter or any regulation adopted pursuant thereto, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the address of record in the Registry for such mortgage loan originator and shall state the grounds for the contemplated action.

B. Within 14 days after the mailing of the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at the hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such penalties as may be prescribed by Commission regulations.

2011, c. 435.

Chapter 18. Short-Term Loans.

§ 6.2-1800. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Affiliate" means a person related to a licensee by common ownership or control, or any employee or agent of a licensee.

"Annual percentage rate" has the same meaning as in the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) and its implementing regulations, as they may be amended from time to time. All fees and charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including interest and the monthly maintenance fees authorized under § 6.2-1817, shall be included in the computation of the annual percentage rate.

"Check" means a draft drawn on the account of an individual at a depository institution.

"Depository institution" means a bank, savings institution, or credit union.

"Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including fees, service charges, and renewal charges, and any ancillary product sold in connection with a loan, but does not include the monthly maintenance fees, deposit item return fees, or late charges authorized under § 6.2-1817.

"Licensee" means a person to whom a license has been issued under this chapter.

"Loan amount" means the principal amount of a loan, exclusive of fees or charges.

"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in a nonstock corporation or a limited liability company.

"Short-term loan" means a loan made pursuant to this chapter.

2002, c. 897, § 6.1-444; 2005, c. 571; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1801. License requirement.

A. No person shall engage in the business of making loans to individuals for personal, family, household, or other nonbusiness purposes, and charge, contract for, or receive, directly or indirectly, on or in connection with any loan interest, charges, compensation, consideration, or expense that in the aggregate is greater than the interest permitted by § 6.2-303, whether or not the person has a location in the Commonwealth, except as provided and authorized by this chapter, Chapter 15 (§ 6.2-1500 et seq.), or Chapter 22 (§ 6.2-2200 et seq.) and without having first obtained a license under this chapter from the Commission.

B. No person shall engage in the business of arranging or brokering short-term loans for any consumer residing in the Commonwealth, whether or not the person has an office or conducts business at a location in the Commonwealth.

C. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:

1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;

2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and

3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.

D. Any loan made in violation of this section is void, and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the loan.

2002, c. 897, § 6.1-445; 2005, c. 571; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1802. Applicability.

The provisions of this chapter shall not apply to any depository institution that does not elect to become licensed under this chapter. Electing to become licensed under this chapter shall constitute a waiver of the benefit of any and all laws of the Commonwealth and other states and federal laws preemptive of, or inconsistent with, the provisions of this chapter.

2002, c. 897, § 6.1-446; 2010, c. 794.

§ 6.2-1803. Application for license; form; content; fee.

A. An application for a license under this chapter shall be made in writing, under oath and on a form provided by the Commissioner.

B. The application shall set forth:

1. The name and address of the applicant;

2. If the applicant is a firm or partnership, the name and address of each member of the firm or partnership;

3. If the applicant is a corporation or a limited liability company, the name and address of each officer, director, registered agent, and each principal;

4. The addresses of the locations of the offices to be approved; and

5. Such other information concerning the financial responsibility, background, experience and activities of the applicant and its members, officers, directors, and principals as the Commissioner may require.

C. The application shall be accompanied by payment of an application fee of $500 or other reasonable amount that the Commission prescribes by regulation.

D. The application fee shall not be refundable in any event. The fee shall not be abated by surrender, suspension, or revocation of the license.

2002, c. 897, § 6.1-447; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1804. Bond required.

The application for a license shall be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $10,000 per office, or such greater sum as the Commission may require, but not to exceed a total of $500,000. The form of such bond shall be approved by the Commission. The bond shall be continuously maintained thereafter in full force. The bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by him in his licensed business, and conducting his licensed business in conformity with this chapter and all other applicable law. Any person who may be damaged by noncompliance of the licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

2002, c. 897, § 6.1-448; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1805. Investigation of applications.

The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations adopted thereunder.

2002, c. 897, § 6.1-449; 2010, c. 794.

§ 6.2-1806. Qualifications.

A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-1803 and 6.2-1804, the Commission shall issue and deliver to the applicant the license applied for to engage in business under this chapter at the offices specified in the application if it finds:

1. That the financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest and in accordance with law; and

2. That the applicant has unencumbered liquid assets per office available for the operation of the business of at least $25,000.

B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.

2002, c. 897, § 6.1-450; 2010, c. 794.

§ 6.2-1807. Licenses; places of offices; changes.

A. Each license shall:

1. State the address of each approved office at which the business is to be conducted;

2. State fully the name of the licensee; and

3. Be prominently posted in each office of the licensee.

B. No licensee shall:

1. Use any name other than the name set forth on the license issued by the Commission; or

2. Open an additional office or relocate any office without prior approval of the Commission.

C. Applications for Commission approval to open an additional office or relocate any office shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee or other reasonable amount as the Commission may prescribe by regulation. The application shall be approved unless the Commission finds that the applicant does not have the required liquid assets or has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission. After approval, the applicant shall give written notice to the Commissioner within 10 days of the commencement of business at the additional office or relocated office.

D. Every licensee shall within 10 days notify the Commissioner, in writing, of the closing of any office and of the name, address, and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.

E. Licenses shall:

1. Not be transferable or assignable, by operation of law or otherwise; and

2. Remain in force until they have been surrendered, revoked, or suspended. The surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of the licensee.

2002, c. 897, § 6.1-451; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1808. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire, directly or indirectly, 25 percent or more of the voting shares of a corporation or 25 percent or more of the ownership of any other person licensed to conduct business under this chapter unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals and members, and of any proposed new directors, senior officers, principals or members of the licensee; and

3. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers and principals, and any proposed new directors, members, senior officers and principals have the financial responsibility, character, reputation, experience and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person licensed by this chapter, (ii) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person affiliated through common ownership with the licensee, or (iii) the acquisition of an interest in a licensee by a person by bequest, descent, survivorship or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

2002, c. 897, § 6.1-452; 2010, c. 794.

§ 6.2-1809. Retention of books, accounts, and records.

Every licensee shall maintain in its approved offices such books, accounts and records as the Commission may reasonably require in order to determine whether such licensee is complying with the provisions of this chapter and regulations adopted in furtherance thereof. Such books, accounts and records shall be maintained apart and separate from any other business in which the licensee is involved. Such records relating to short-term loans, including copies of checks given to a licensee as security for such loans, shall be retained for at least three years after final payment is made on any loan.

2002, c. 897, § 6.1-453; 2004, c. 295; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1810. Loan database.

A. The Commission shall certify and contract with one or more third parties to develop, implement, and maintain a real-time, Internet-accessible database that contains such short-term loan information as the Commission may require from time to time by administrative rule or policy statement.

B. The following provisions shall apply to the database:

1. Before making a short-term loan, a licensee shall query the database through a Commission-certified database provider and shall retain evidence of the query for the Commission's supervisory review. The database shall allow a licensee to make a short-term loan only if making the loan is permissible under the provisions of this chapter. During any period that the database is unavailable due to technical problems beyond the licensee's control, a licensee may rely on the loan applicant's written representations, rather than the database's information, to verify that making the loan applied for is permissible under the provisions of this chapter. Because a licensee may rely on the accuracy of the applicant's representations and the database's information, a licensee is not subject to any administrative penalty or civil liability if that information is later determined to be inaccurate.

2. The database provider shall maintain the database, take all actions it deems necessary to protect the confidentiality and security of the information contained in the database, be responsible for the confidentiality and security of such information, and own the information contained in the database. The Commission shall have access to and utilize the database as a supervision and enforcement tool to ensure licensees' compliance with the provisions of this chapter.

3. Upon a licensee's query, the database shall advise the licensee whether the applicant is eligible for a new short-term loan and, if the applicant is ineligible, the reason for such ineligibility. If the database advises the licensee that the applicant is ineligible for a short-term loan, then the applicant shall direct any inquiry regarding the specific reason for such ineligibility to the database provider rather than to the licensee. The information contained in the database is confidential and exempt from the Freedom of Information Act (§ 2.2-3700 et seq.).

4. If a licensee and borrower consummate a loan, then the licensee shall pay a fee to defray the costs of submitting the database inquiry. The amount of the database inquiry fee shall be calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to actual cost of the operation of the database. If a licensee submits a database inquiry but does not consummate a loan with the applicant, then the licensee shall not pay the database inquiry fee. Each licensee shall remit all database inquiry fees directly to the database provider on a weekly basis.

5. If a borrower enters into a short-term loan or pays or otherwise satisfies a short-term loan in full, then the licensee making the loan shall report such event or other information to the database not later than the close of business on the date of such event.

2008, cc. 849, 876, § 6.1-453.1; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1811. Annual report.

A. Each licensee under this chapter shall annually, on or before March 25, file a written report with the Commissioner containing such information as the Commissioner may require concerning his business and operations during the preceding calendar year as to each approved office. Reports shall be made under oath and shall be in the form prescribed by the Commissioner.

B. The Commissioner shall publish annually and make available to the public an analysis of the information required under this section and other information the Commissioner may choose to include. The published analysis shall include all of the following:

1. The total number of borrowers, loans, defaulted loans, and charged-off loans and the total dollar value of the charged-off loans;

2. The average loan size, average contracted annual percentage rate, average contracted loan charges, average loan charges actually paid, total contracted loan charges, and total loan charges actually paid;

3. The total number of deposit item return fees and the total dollar value of those charges;

4. The total number of licensee business locations and the average number of borrowers per location; and

5. A summary of pending and completed enforcement actions, which shall include lists of suspended or revoked licenses, cease and desist orders, and civil penalties pursuant to this chapter.

2002, c. 897, § 6.1-454; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1812. Other reporting requirements.

A. A licensee shall file a written report with the Commissioner within 15 days following the occurrence of any of the following:

1. The filing of bankruptcy, reorganization or receivership proceedings by or against the licensee;

2. The institution of administrative or regulatory proceedings against the licensee by any governmental authority;

3. Any felony indictments of the licensee or any of its members, partners, directors, officers, or principals;

4. Any felony conviction of the licensee or any of its members, partners, directors, officers, or principals; and

5. Such other event as the Commission may prescribe by regulation.

B. The report shall be in writing and describe the event and its expected impact on the business of the licensee.

2002, c. 897, § 6.1-455; 2010, c. 794.

§ 6.2-1813. Investigations; examinations.

The Commission may, as often as it deems necessary, investigate and examine the affairs, business, premises and records of any person licensed or required to be licensed under this chapter or any person who may be violating § 6.2-1801. Examinations of licensees shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, and employees of such person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

2002, c. 897, § 6.1-456; 2003, c. 593; 2010, c. 794.

§ 6.2-1814. Annual fees.

A. To defray the costs of examination, supervision and regulation, every licensee shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of licensees, the actual costs of their examinations, and to other factors relating to their supervision and regulation. All such fees shall be assessed on or before September 15 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before October 15 following each assessment.

B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision and regulation, or shall pay at a reasonable per diem rate approved by the Commission.

2002, c. 897, § 6.1-457; 2010, c. 794.

§ 6.2-1815. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.

2002, c. 897, § 6.1-458; 2010, c. 794.

§ 6.2-1816. Required and prohibited business methods.

Each licensee shall comply with the following requirements and prohibitions:

1. A licensee shall not make a loan that does not comply with § 6.2-1816.1.

2. A licensee shall not charge, collect, or receive, directly or indirectly, credit insurance premiums, charges for any ancillary product sold, charges for disbursing loan proceeds or refunds including check-cashing charges and any other charges for negotiating forms of payment other than cash, charges for brokering or obtaining a loan, or any fees, interest, or charges in connection with a loan, other than fees and charges permitted by § 6.2-1817.

3. A licensee shall not obtain any agreement from the borrower (i) giving the licensee or any third person power of attorney or authority to confess judgment for the borrower; (ii) authorizing the licensee or any third party to bring suit against the borrower in a court outside the Commonwealth; or (iii) waiving the borrower's right to legal recourse or any other right the borrower has under any otherwise applicable provision of state or federal law.

4. A licensee shall not make a loan to a person if that person is obligated upon any loan to a person licensed under Chapter 22 (§ 6.2-2200 et seq.). Prior to making a loan, a licensee shall make a reasonable attempt to verify the borrower's eligibility under this subsection that includes reviewing the files of any affiliate that is licensed under Chapter 22. Unless the Commission requires otherwise by administrative rule or policy statement, a licensee may rely on the loan applicant's written representations with respect to the applicant's obligations to lenders that are licensed under Chapter 22 (§ 6.2-2200 et seq.) but are not affiliates of the licensee, and a licensee is not subject to any administrative penalty or civil liability if such representations are later determined to be inaccurate.

5. A licensee shall not cause any person to be obligated to the licensee in any capacity at any time in the principal amount of more than $2,500.

6. Except as provided in § 6.2-1818.1, a licensee shall not refinance, renew, or extend any short-term loan or make a loan to a person if the loan would cause the person to have more than one short-term loan from any licensee outstanding at the same time.

7. A licensee shall not cause a borrower to be obligated upon more than one loan at any time.

8. A check accepted by a licensee as security for any loan shall be dated no earlier than the date of the first required loan payment shown in the loan agreement.

9. Notwithstanding any provision of § 8.01-226.10 to the contrary, a licensee shall not threaten, or cause to be instigated, criminal proceedings against a borrower if a check given as security for a loan is dishonored or for any reason related to the borrower's failure to pay any sum due under a loan agreement.

10. A licensee shall not (i) accept the title or registration of a vehicle, real or personal property, or any interest in any property other than a check payable to the licensee as security for a loan; (ii) create or accept any remotely created check, as defined in 12 C.F.R. § 229.2(fff), in connection with a loan; (iii) draft funds electronically from a borrower's account without express written authorization from the borrower; or (iv) fail to stop attempts to draft funds electronically from a borrower's account upon request from the borrower or his agent. Nothing in this section shall prohibit the conversion of a negotiable instrument into an electronic form for processing through the automated clearing house system.

11. A licensee shall not present a check, negotiable order of withdrawal, share draft, or other negotiable instrument that has been previously presented by the licensee and subsequently returned dishonored for any reason, unless the licensee obtains new written authorization from the borrower to present the previously returned item.

12. A licensee shall not attempt to draft funds electronically from a borrower's account after two consecutive attempts have failed, unless the licensee obtains new written authorization from the borrower to transfer or withdraw funds electronically from the borrower's account.

13. A licensee shall not make a loan to a borrower to enable the borrower to (i) pay for any other product or service sold at the licensee's office location or (ii) repay any amount owed to the licensee or an affiliate of the licensee in connection with another credit transaction.

14. Loan proceeds shall be disbursed in cash or by the licensee's business check. No fee shall be charged by the licensee or an affiliate for cashing a loan proceeds check.

15. A check given as security for a loan shall not be negotiated to a third party.

16. Upon receipt of a check given as security for a loan, the licensee shall stamp the check with an endorsement stating: "This check is being negotiated as part of a short-term loan pursuant to Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia, and any holder of this check takes it subject to all claims and defenses of the maker."

17. Before entering into a short-term loan, the licensee shall provide each borrower with a pamphlet, in form consistent with regulations adopted by the Commission, explaining in plain language the rights and responsibilities of the borrower and providing a toll-free number at the Commission for assistance with complaints.

18. Each licensee shall conspicuously post in each approved office (i) a schedule of fees and interest charges, which shall include examples using a $300 loan repaid in three months, a $500 loan repaid in five months, and a $1,000 loan repaid in 10 months, and (ii) a notice containing the following statement: "If you wish to file a complaint against us, you may contact the Bureau of Financial Institutions at [insert contact information]." The Commission shall furnish licensees with the appropriate contact information.

19. A licensee shall not knowingly make a short-term loan to a person who is a member of the military services of the United States or the spouse or other dependent of a member of the military services of the United States. Prior to making a short-term loan, every licensee shall inquire of every prospective borrower if he is a member of the military services of the United States or the spouse or other dependent of a member of the military services of the United States. The loan documents shall include verification that the borrower is not a member of the military services of the United States or the spouse or other dependent of a member of the military services of the United States.

20. In collecting or attempting to collect a short-term loan, a licensee shall comply with the restrictions and prohibitions applicable to debt collectors contained in the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.) regarding harassment or abuse, false or misleading misrepresentations, and unfair practices in collections.

21. A licensee shall not contact a borrower for any reason other than (i) for the borrower's benefit regarding upcoming payments, options for obtaining loans, payment options, payment due dates, the effect of default, or, after default, receiving payments or other actions permitted by the licensee; (ii) to advise the borrower of missed payments or dishonored checks; or (iii) to assist the transmittal of payments via a third-party mechanism.

22. A short-term loan agreement shall not be sold or otherwise assigned to any other person who is not also a licensee, and if a loan agreement or its servicing is sold or assigned to another licensee, the buyer or assignee of the loan agreement shall be subject to the same obligations under this chapter that apply to the selling or assigning licensee. If a licensee sells or assigns a short-term loan or its servicing, the licensee shall provide to the borrower written notice and the information needed to make future payments no later than 10 days before the borrower's next payment due date.

23. A licensee shall not make a loan to a borrower that includes an acceleration clause or demand feature that permits the licensee, in the event the borrower fails to meet the repayment terms for any outstanding balance, to terminate the loan in advance of the original maturity date and to demand repayment of the entire outstanding balance, unless both of the following conditions are met: (i) not earlier than 10 days after the borrower's payment was due, the licensee provides written notice to the borrower of the termination of the loan and (ii) in addition to the outstanding balance, the licensee collects only prorated interest and the fees earned up to termination of the loan. For purposes of this subdivision, the outstanding balance and prorated interest and fees shall be calculated as if the borrower had voluntarily prepaid the loan in full on the date of termination.

24. A licensee may not file or initiate a legal proceeding of any kind against a borrower until 60 days after the date of default on a short-term loan, during which period the licensee and borrower may voluntarily enter into a repayment arrangement.

25. A licensee shall not recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested.

26. A licensee may not engage in any unfair, misleading, deceptive, or fraudulent acts or practices in the conduct of its business.

2002, c. 897, § 6.1-459; 2003, c. 593; 2004, c. 295; 2005, c. 571; 2008, cc. 849, 876; 2010, c. 794; 2016, c. 501; 2020, cc. 1215, 1258.

§ 6.2-1816.1. Loan terms and conditions.

A licensee may engage in the business of making short-term loans, provided that each loan meets all of the following conditions:

1. The total amount of the loan does not exceed $2,500.

2. The minimum duration of the loan is four months and the maximum duration of the loan is 24 months; however, the minimum duration of the loan may be less than four months if the total monthly payment on the loan does not exceed the greater of (i) an amount that is five percent of the borrower's verified gross monthly income or (ii) six percent of the borrower's verified net monthly income.

3. The loan is made pursuant to a written loan contract that sets forth the terms and conditions of the loan, which shall be signed by the borrower and a person authorized by the licensee to sign such agreements and dated the same day the loan is made and disbursed. A copy of the signed loan contract shall be provided to the borrower. The loan contract shall disclose in a clear and concise manner all of the following:

a. The principal amount of the loan and the total amount of fees and charges the borrower will be required to pay in connection with the loan pursuant to the loan contract;

b. The amount of each payment of principal and interest, when each payment is due, the total number of payments that the borrower will be required to make under the loan contract, and the loan's maturity date;

c. If the licensee receives a check as security for the loan, evidence of receipt from the borrower of a check, stating the amount of the check and terms upon which the check may be presented for payment;

d. A statement, printed in a minimum font size of 10 points, that informs the borrower that complaints regarding the loan or lender may be submitted to the Bureau and includes the correct telephone number, website address, and mailing address for the Bureau;

e. Any disclosures required under the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) and its implementing regulations, as they may be amended from time to time;

f. The annual percentage rate;

g. A statement, printed in a minimum font size of 10 points, as follows: "This loan is made pursuant to Chapter 18 of Title 6.2 of the Code of Virginia. You have the right to rescind or cancel this loan by returning the loan proceeds check or the originally contracted loan amount by 5 p.m. of the third business day immediately following the day you enter into this contract.";

h. A statement, printed in a minimum font size of 10 points, as follows: "Electronic payment is optional. You have the right to revoke or remove your authorization for electronic payment at any time.";

i. The borrower's mailing address.

j. Such other information relating to the loan as the Commission shall determine, by regulation, is necessary to ensure that the borrower is provided adequate notice of the relevant provisions of the loan.

4. The loan is a precomputed loan and is payable in substantially equal installments consisting of principal, fees, and interest combined. For purposes of this section, "precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of fees and interest computed in advance on the assumption that all scheduled payments will be made when due.

5. The loan may be rescinded or canceled on or before 5 p.m. of the third business day immediately following the day of the loan transaction upon the borrower returning the original loan proceeds check or paying to the licensee, in the form of cash or other good funds instrument, the loan proceeds.

2020, cc. 1215, 1258.

§ 6.2-1817. Authorized fees and charges.

A. A licensee may charge, collect, and receive only the following fees and charges in connection with a short-term loan, provided such fees and charges are set forth in the written loan contract described in § 6.2-1816.1:

1. Interest at a simple annual rate not to exceed 36 percent;

2. Subject to § 6.2-1817.1, a monthly maintenance fee that does not exceed the lesser of eight percent of the originally contracted loan amount or $25, provided the fee is not added to the loan balance on which interest is charged;

3. Any deposit item return fee incurred by the licensee, not to exceed $25, if a borrower's check or electronic draft is returned because the account on which it was drawn was closed by the borrower or contained insufficient funds, or the borrower stopped payment of the check or electronic draft, provided that the terms and conditions upon which such fee will be charged to the borrower are set forth in the written loan contract described in § 6.2-1816.1; and

4. Damages and costs to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default, except that the total amount of damages and costs shall not exceed the originally contracted loan amount.

B. A licensee may impose a late charge according to the provisions of § 6.2-400 provided, however, that the late charge shall not exceed $20.

2002, c. 897, § 6.1-460; 2008, cc. 849, 876; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1817.1. Inflation adjustment of maximum monthly maintenance fee.

The Commission may, from time to time, by regulation, adjust the dollar amount of $25 specified in subsection A of § 6.2-1817 to reflect the rate of inflation from the previous date that the dollar amount was established, as measured by the Consumer Price Index or other method of measuring the rate of inflation that the Commission determines is reliable and generally accepted.

2020, cc. 1215, 1258.

§ 6.2-1818. Repealed.

Repealed by Acts 2020, cc. 1215 and 1258, cl. 2, effective January 1, 2021.

§ 6.2-1818.1. Refinancing of short-term loans.

Subject to subsection F of § 6.2-1818.2, a licensee may refinance a short-term loan, provided that the refinanced loan is also a short-term loan.

2020, cc. 1215, 1258.

§ 6.2-1818.2. Statement of balance due; repayment and refunds.

A. The licensee shall, upon the request of the borrower or his agent, provide a statement of balance due on a short-term loan.

B. A borrower shall be permitted to make partial payments, in increments of not less than $5, on the loan at any time prior to maturity, without charge. The licensee shall give the borrower dated receipts for each payment made, which shall state the updated balance due on the loan.

C. When providing a statement of balance due on the loan, the licensee shall state the amount required to discharge the borrower's obligation in full as of the date the notice is provided and for each of the next three business days following that date. If the licensee cannot reasonably supply a firm statement of balance due when requested or required, the licensee may provide a good faith estimate of the balance due immediately and provide to the borrower or his agent a firm statement of balance due within two business days.

D. The licensee shall provide any statement of balance due verbally and in writing, and shall not fail to provide the information by phone upon the request of the borrower or his agent.

E. A licensee shall not fail to accept cash or other good funds instrument from the borrower, or a third party when submitted on behalf of the borrower, for repayment of a short-term loan in full or in part. Payments shall be credited by the licensee on the date received.

F. Notwithstanding any other provision of law, if a short-term loan is prepaid in full or refinanced prior to the loan's maturity date, the licensee shall refund to the borrower a prorated portion of fees and charges based on a ratio of the number of days the loan was outstanding and the number of days for which the loan was originally contracted. For purposes of this section, all charges made in connection with the loan shall be included when calculating the loan charges except for deposit item return fees and late charges authorized under § 6.2-1817.

G. If a licensee presents a check held as security for a loan, the licensee shall refund any amount received that is in excess of the payment due on the loan as of the day the licensee presents the check. For purposes of this subsection, the payment due on the loan shall be no more than the amount of unpaid payments and fees that have already come due according to the loan contract or, if applicable, the amount due according to a valid contractual acceleration clause or demand feature as described in subdivision 23 of § 6.2-1816.

H. The licensee shall provide any refund due to a borrower in the form of cash or business check as soon as reasonably possible and not later than two business days after receiving payment from the borrower.

I. Upon repayment of the loan in full, the licensee shall mark the original loan agreement with the word "paid" or "canceled," return it to the borrower, and retain a copy in its records.

2020, cc. 1215, 1258.

§ 6.2-1818.3. Restriction on certain fees and charges.

Notwithstanding any provision of this chapter to the contrary, a licensee shall not contract for, charge, collect, or receive in connection with a short-term loan a total amount of fees and charges that exceeds either (i) 50 percent of the originally contracted loan amount, if the originally contracted loan amount was $1,500 or less or (ii) 60 percent of the originally contracted loan amount, if the originally contracted loan amount was greater than $1,500. For purposes of this section, all charges made in connection with the loan shall be included when calculating the total loan charges except for deposit item return fees and late charges authorized under § 6.2-1817.

2020, cc. 1215, 1258.

§ 6.2-1818.4. Verification of borrower's income.

Before initiating a short-term loan transaction with a borrower, a licensee shall make a reasonable attempt to verify the borrower's income. At a minimum, the licensee shall obtain from the borrower one or more recent pay stubs or other written evidence of recurring income, such as a bank statement. The written evidence shall include at least one document that, when presented to the licensee, is dated not earlier than 45 days prior to the borrower's initiation of the short-term loan transaction.

2020, cc. 1215, 1258.

§ 6.2-1819. Advertising.

A. No person licensed or required to be licensed under this chapter shall use or cause to be published any advertisement that (i) contains any false, misleading or deceptive statement or representation; or (ii) identifies the person by any name other than the name set forth on the license issued by the Commission.

B. Any advertising materials used to promote short-term loans that includes the amount of any payment, expressed either as a percentage or dollar amount, or the amount of any finance charge, shall also include a statement of the interest, fees and charges, expressed as an annual percentage rate, payable using examples of a $300 loan repaid in three months, a $500 loan repaid in five months, and a $1,000 loan repaid in 10 months.

C. In any print media advertisement, including any website, used to promote short-term loans, the disclosure statements described in subsection B shall be conspicuous. "Conspicuous" shall have the meaning set forth in subdivision (a) (14) of § 59.1-501.2. If a single advertisement consists of multiple pages, folds, or faces, the disclosure requirement applies only to one page, fold, or face. In a television advertisement used to promote short-term loans, the visual disclosure legend shall include 20 scan lines in size. In a radio advertisement or advertisement communicated by telephone used to promote short-term loans, the disclosure statement shall last at least two seconds and the statement shall be spoken so that its contents may be easily understood.

2002, c. 897, § 6.1-462; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1820. Other business.

No licensee shall conduct the business of making short-term loans under this chapter at any office, suite, room, or other place of business where any other business is solicited or conducted except a registered check cashing business, a motor vehicle title loan business licensed under Chapter 22 (§ 6.2-2200 et seq.), 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. No such other business shall be allowed except as permitted by Commission regulation or upon the filing of a written application with the Commission, payment of a $300 fee or other reasonable amount that the Commission may set, and provision of such information as the Commission may deem pertinent. The Commission shall not, however, permit the sale of insurance or the enrolling of borrowers under group insurance policies. This section shall not apply to any other business that is transacted with persons residing solely outside the Commonwealth.

2002, c. 897, § 6.1-463; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1821. Suspension or revocation of license.

A. The Commission may suspend or revoke any license issued under this chapter upon any of the following grounds:

1. Any ground for denial of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the licensee's business;

3. A course of conduct consisting of the failure to perform written agreements with borrowers;

4. Conviction of a felony or misdemeanor involving fraud, misrepresentation or deceit;

5. Entry of a judgment against the licensee involving fraud, misrepresentation or deceit;

6. Entry of a federal or state administrative order against such licensee for violation of any law or any regulation applicable to the conduct of his business;

7. Refusal to permit an investigation or examination by the Commission;

8. Failure to pay any fee or assessment imposed by this chapter; or

9. Failure to comply with any order of the Commission.

B. For the purposes of this section, acts of any officer, director, member, partner, or principal shall be deemed acts of the licensee.

2002, c. 897, § 6.1-464; 2010, c. 794.

§ 6.2-1822. Cease and desist orders.

If the Commission determines that any person has violated any provision of this chapter or any regulation adopted hereunder, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at such hearing. Such hearing shall be conducted in accordance with the provisions of Title 12.1. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.

2002, c. 897, § 6.1-465; 2003, c. 593; 2010, c. 794.

§ 6.2-1823. Notice of proposed suspension or revocation.

The Commission shall not revoke or suspend the license of any licensee upon any of the grounds set forth in § 6.2-1821 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the licensee or other address authorized under § 12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1.

2002, c. 897, § 6.1-466; 2010, c. 794.

§ 6.2-1824. Civil penalties.

In addition to the authority conferred under §§ 6.2-1821 and 6.2-1822, the Commission may impose a civil penalty not exceeding $1,000 upon any person who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter, the regulations adopted by the Commission pursuant thereto, or any other law or regulation applicable to the conduct of the lender's business. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed, and in the case of a violation of § 6.2-1801, each loan made or arranged shall constitute a separate violation.

2002, c. 897, § 6.1-467; 2003, c. 593; 2008, cc. 849, 876; 2010, c. 794.

§ 6.2-1825. Criminal penalties.

Any person violating § 6.2-1801 is guilty of a Class 6 felony. For the purposes of this section, each violation shall constitute a separate offense.

2002, c. 897, § 6.1-468; 2010, c. 794.

§ 6.2-1826. Validity of noncompliant loan agreement; private right of action.

A. If any provision of a written loan agreement violates this chapter, such provision shall be unenforceable against the borrower.

B. Any person who suffers loss by reason of a violation of any provision of this chapter may bring a civil action to enforce such provision. Any person who is successful in such action shall recover reasonable attorney fees, expert witness fees, and court costs incurred by bringing such action.

2002, c. 897, § 6.1-469; 2008, cc. 849, 876; 2010, c. 794.

§ 6.2-1827. Application of chapter to Internet loans.

A. The provisions of this chapter, including specifically the licensure requirements of § 6.2-1801, shall apply to persons making short-term loans over the Internet to Virginia residents or any individual in the Commonwealth, whether or not the person making the loan maintains a physical presence in the Commonwealth.

B. The Commission may, from time to time, by administrative rule or policy statement, set requirements that the Commission reasonably deems necessary to ensure compliance with this section.

2008, cc. 849, 876, § 6.1-469.1; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1828. Authority of Attorney General; referral by Commission to Attorney General.

A. If the Commission determines that a person is in violation of, or has violated, any provision of this chapter, the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations. With or without such referral, the Attorney General is authorized to seek to enjoin violations of this chapter. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law.

B. The Attorney General may also seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law. Persons entitled to any relief as authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.

C. In any action brought by the Attorney General by virtue of the authority granted in this provision, the Attorney General shall be entitled to seek reasonable attorney fees and costs.

D. If the Attorney General files an action to enjoin violations of this chapter, the Attorney General shall give notice of such action to the Commission.

2002, c. 897, § 6.1-470; 2010, c. 794; 2020, cc. 1215, 1258.

§ 6.2-1829. Violation of the Virginia Consumer Protection Act.

Any violation of the provisions of this chapter shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).

2002, c. 897, § 6.1-471; 2010, c. 794.

Chapter 19. Money Order Sellers and Money Transmitters.

§ 6.2-1900. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Authorized delegate" means a person designated or appointed by a licensee to sell money orders or provide money transmission services on behalf of the licensee.

"Licensee" means a person licensed under this chapter to engage in the business of selling money orders or the business of money transmission, or both.

"Member" means a person who owns or controls a 10 percent or greater interest in a limited liability company.

"Monetary value" means a medium of exchange, whether or not redeemable in money.

"Money order" means a check, traveler's check, draft, or other instrument for the transmission or payment of money or monetary value whether or not negotiable.

"Money order seller" means a person engaged in the business of selling money orders.

"Money transmission" means receiving money or monetary value for transmission by wire, facsimile, electronic means or other means or selling or issuing stored value.

"Money transmitter" means a person engaged in the business of money transmission.

"Nationwide Multistate Licensing System and Registry" or "Registry" means the licensing and registration system operated by the State Regulatory Registry LLC.

"Outstanding" means:

1. With respect to a money order, a money order that has been issued and sold directly by a licensee, or sold by an authorized delegate of the licensee and reported to the licensee, that has not yet been paid by or on behalf of the licensee; or

2. With respect to a money transmission transaction, a money transmission transaction for which the licensee, directly or through an authorized delegate of the licensee, has received money or monetary value from a customer for transmission, but has not yet (i) completed the money transmission transaction by delivering the money or monetary value to the person designated by the customer, or (ii) refunded the money or monetary value to the customer.

"Principal" means any person who, directly or indirectly, owns or controls a 10 percent or greater interest in any form of entity.

"Stored value" means monetary value that is evidenced by an electronic record.

1974, c. 578, § 6.1-370; 1994, c. 889; 1998, c. 10; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454; 2019, c. 634.

§ 6.2-1901. License required; exception.

A. No person shall engage in the business of selling money orders or engage in the business of money transmission, whether or not the person has a location in the Commonwealth, unless the person obtains from the Commission a license issued pursuant to this chapter.

B. No license under this chapter shall be required of any authorized delegate of a licensee.

C. Every person required to be licensed under this chapter shall register with the Registry and be subject to such registration and renewal requirements as may be established by the Registry, in addition to any requirements of this chapter. In adopting regulations pursuant to § 6.2-1913, the Commission shall include any terms, conditions, or requirements applicable to such registration and renewal. Any fees required by the Registry shall be separate and apart from any fees imposed by this chapter. The Commission, at its discretion, may collect any registration and renewal fees on behalf of the Registry and remit such fees to the Registry or permit the Registry to collect any fees imposed by this chapter and remit such fees to the Commission.

D. In connection with its implementation and administration of this chapter, the Commission may establish agreements or contracts with the Registry or other entities designated by the Registry to collect, distribute, and maintain information and records and process fees related to persons required to be licensed under this chapter. In establishing such agreements or contracts, the Commission shall not be subject to the Virginia Public Procurement Act (§ 2.2-4300 et seq.).

1974, c. 578, §§ 6.1-371, 6.1-377; 1983, c. 156; 1987, c. 283; 1990, c. 259; 1994, c. 889; 2001, c. 372; 2005, c. 314; 2009, c. 346; 2010, c. 794; 2019, c. 634.

§ 6.2-1902. Scope and construction of chapter.

A. The provisions of this chapter shall not apply to:

1. The United States, or any department, instrumentality or agency thereof;

2. Any state, or any department, instrumentality, agency, locality, municipality, or political subdivision thereof;

3. Any bank, trust company, savings institution, or credit union operating under the laws of the United States or any state or territory thereof, or other person to the extent the person provides money transmission services as an agent of one or more banks, trust companies, savings institutions, or credit unions operating under the laws of the United States or any state or territory thereof;

4. Any private security services business, licensed under § 9.1-139, that transports or offers to transport money; or

5. Any entity that has been explicitly designated in a written agreement as an agent of any governmental authority or unit identified in subdivision 1 or 2, provided that any funds collected by the agent shall be deemed for all purposes to be received by the governmental authority or unit. This subdivision shall not be construed to prohibit the governmental authority or unit from seeking indemnification from its agent for any direct losses incurred due to the agent's failure to remit funds in accordance with its agreement.

B. This chapter shall be construed by the Commission for the purpose of protecting, against financial loss, residents of the Commonwealth who (i) purchase money orders or (ii) give money or control of their funds or credit into the custody of another person for transmission, regardless of whether the money order seller or money transmitter has any office, facility, authorized delegate, or other physical presence in the Commonwealth.

1974, c. 578, § 6.1-371; 1983, c. 156; 1987, c. 283; 1990, c. 259; 1994, c. 889; 2001, c. 372; 2005, c. 314; 2009, c. 346; 2010, c. 794; 2013, c. 237.

§ 6.2-1903. Application for license; financial statements; application fee.

A. Applications for a license shall be made on forms furnished by the Commissioner and shall set forth the name and address of the applicant, which shall be an entity, a description of the manner in which and the locations at which it proposes to do business, and such additional relevant information as the Commissioner requires. If any material information provided by the applicant changes during the investigation period, the applicant shall immediately notify the Commissioner.

B. The application shall be accompanied by such audited financial statements as the Commissioner may require and an application fee of $1,000. If an application for a license under this chapter is denied, the application fee shall not be refunded. The fee shall not be abated by the expiration, surrender, or revocation of the license.

1974, c. 578, §§ 6.1-372, 6.1-373; 1987, c. 283; 1990, c. 259; 1992, c. 283; 1994, cc. 312, 889; 1996, c. 274; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454.

§ 6.2-1904. Bond required.

A. The application for a license shall be accompanied by a surety bond satisfactory to the Commissioner in the principal amount as determined by the Commissioner. The amount of the bond shall be not less than $25,000 nor more than $1 million. The bond shall be conditioned upon the licensee (i) performing its obligations to purchasers, payees, and holders of money orders and money transmission services sold by the licensee and its authorized delegates and (ii) conducting the licensed business in conformity with this chapter.

B. As an alternative security device and in lieu of the surety bond required by subsection A, a license applicant may deposit with a financial institution designated by such applicant and approved by the Commissioner for that purpose, cash, stocks and bonds, notes, debentures or other obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States, or of the Commonwealth, or of a locality or other political subdivision of the Commonwealth, in an aggregate amount, based upon the principal amount or market value, whichever is lower, of not less than the amounts required by the Commissioner pursuant to subsection A. Such cash or securities shall be deposited and held to secure obligations established in subsection A, but the licensee shall be entitled to (i) receive all interest and dividends thereon and (ii) substitute, with the Commissioner's prior approval, other securities for those deposited. The Commissioner may also direct the licensee, for good cause shown, to substitute other securities for those deposited.

C. The security device required by this section shall remain in place for five years after a licensee ceases money order sales or money transmission activities. The Commissioner may permit the security device to be reduced or eliminated prior to that time to the extent the amount of such licensee's outstanding money orders and money transmission transactions are reduced. The Commissioner may also permit any licensee to substitute a letter of credit, or such other form of security device as may be acceptable to the Commissioner, for the security device in place at the time the licensee ceases money order sales or money transmission activities.

1974, c. 578, § 6.1-372; 1987, c. 283; 1990, c. 259; 1992, c. 283; 1994, c. 889; 1996, c. 274; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454.

§ 6.2-1904.1. Investigation of applications.

A. The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations adopted thereunder.

B. For the purpose of investigating individuals who are members, senior officers, directors, and principals of an applicant, such individuals shall comply with one or both of the following, as applicable:

1. In the case of members, senior officers, directors, and principals who have resided in the United States at any time within the previous 10 years, such individuals shall consent to a national and state criminal history records check and submit to fingerprinting. Each member, senior officer, director, and principal shall pay for the cost of such fingerprinting and criminal records check. Such individuals shall cause their fingerprints, personal descriptive information, and records check fees to be submitted to either of the following, as prescribed by the Commissioner:

a. The Bureau, which shall forward these items to the Central Criminal Records Exchange. The Central Criminal Records Exchange shall (i) conduct a search of its own criminal history records and forward such individuals' fingerprints and personal descriptive information to the Federal Bureau of Investigation for the purpose of obtaining national criminal history record information regarding such individuals and (ii) forward the results of the state and national records search to the Commissioner or his designee, who shall be an employee of the Commission; or

b. The Registry, provided that it is capable of processing such criminal history records check.

2. In the case of members, senior officers, directors, and principals who have resided outside of the United States at any time within the previous 10 years, such individuals shall cause an investigative background report to be submitted to the Commissioner. The report shall be prepared by an independent search firm that is acceptable to the Commissioner and be in the English language. Each member, senior officer, director, and principal shall pay for the cost of such report, and the report shall be sent directly by the search firm to the Commissioner or his designee, who shall be an employee of the Commission.

C. If any member, senior officer, director, or principal of an applicant fails to cause his fingerprints, personal descriptive information, records check fees, or investigative background report to be submitted in accordance with subsection B, the application for licensure shall be denied.

2014, c. 454; 2019, c. 634.

§ 6.2-1905. Annual fees; expenses; annual reports; renewal.

A. Each licensee shall pay to the Commission annually on or before December 31 a license renewal fee of $750. All fees paid pursuant to this chapter shall be paid into the state treasury and credited to the "Financial Institutions Special Fund — State Corporation Commission."

B. In order to defray the costs of their examination and supervision, every licensee under this chapter shall pay an annual assessment calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the dollar volume of money orders sold and Virginia money transmission business conducted by licensees, either directly or through their authorized delegates, the costs of their examinations, and to other factors relating to their supervision and regulation. All such fees shall be assessed on or before August 1 for every calendar year. All such fees shall be paid by licensees to the State Treasurer on or before September 1 following each assessment.

C. In addition to the annual assessment prescribed in subsection B, when it becomes necessary to examine or investigate the affairs, business, premises, books, or records of a licensee or any of its authorized delegates at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination or investigation, or shall pay a reasonable per diem rate approved by the Commission.

D. Each licensee under this chapter shall file periodic written reports with the Commissioner or the Registry containing such information as the Commissioner may require concerning the licensee's business and operations, including audited financial statements. Reports shall be in the form and be submitted with such frequency and by such dates as may be prescribed by the Commissioner. If a licensee is unable to furnish copies of its audited financial statements by the dates prescribed by the Commissioner, the licensee may request an extension, which may be granted by the Commissioner for good cause shown.

E. If a license has expired or has been surrendered or revoked, the former licensee shall immediately (i) cease selling money orders and engaging in the money transmission business, and (ii) instruct its authorized delegates to cease selling money orders and accepting funds for transmission on behalf of the licensee. The Commission may grant relief from this subsection for good cause shown.

F. A license issued under this chapter shall expire on December 31 of each year unless it is renewed by a licensee prior to the expiration date. A licensee may renew its license by (i) requesting renewal through the Registry; (ii) complying with any requirements associated with such renewal request that are imposed by the Registry; (iii) paying the license renewal fee prescribed in subsection A; (iv) paying the annual assessment prescribed in subsection B; (v) filing the periodic written reports and audited financial statements prescribed in subsection D; and (vi) maintaining the minimum net worth specified in subsection B of § 6.2-1906, as evidenced by its audited financial statements. If the Commissioner finds that the licensee has satisfied these requirements, the Commissioner shall renew such person's license. If a license has expired, the former licensee may seek reinstatement on or before the last day of February of the following calendar year. Upon finding that the former licensee has complied with the renewal requirements set forth in this subsection and remitted payment of a reinstatement fee of $1,000, the Commissioner shall reinstate such person's license.

1974, c. 578, § 6.1-373; 1987, c. 283; 1994, cc. 312, 889; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454; 2019, c. 634.

§ 6.2-1906. Conditions prerequisite to issuance of license; net worth requirement.

A. The Commission shall not issue a license to an applicant unless it determines that:

1. The applicant will be able to and will perform its obligations to purchasers of money transmission services and purchasers, payees, and holders of money orders sold by it and its authorized delegates; and

2. The financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with applicable law and regulations.

B. Each licensee shall at all times have a net worth of not less than $200,000, or a higher amount not to exceed $1 million as determined by the Commission, calculated in accordance with generally accepted accounting principles.

1974, c. 578, § 6.1-374; 1990, c. 259; 1994, c. 889; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454.

§ 6.2-1906.1. Licenses; places of business; changes.

A. Each license shall state the address at which the principal place of business is to be conducted and shall state fully the legal name of the licensee as well as any fictitious names by which the licensee is conducting business under this chapter. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any names other than the legal name or fictitious names set forth on the license issued by the Commission.

B. Every licensee shall notify the Commissioner, in writing, at least 30 days prior to relocating its principal place of business and confirm the change in writing within five days after such relocation.

C. Every licensee shall within 10 days notify the Commissioner, in writing, of (i) any change to its legal name, (ii) any change to or additional fictitious name by which the licensee is conducting business under this chapter, and (iii) the name, address, and position of each new member, senior officer, director, or principal. At the direction of the Commissioner, any such individual shall be treated as a member, senior officer, director, or principal of an applicant for the purpose of being investigated pursuant to subsection B of § 6.2-1904.1. The licensee shall provide such other information with respect to the changes and persons identified in this subsection as the Commissioner may reasonably require.

D. Every license shall remain in force until it expires or has been surrendered or revoked. The expiration, surrender, or revocation of a license shall not affect any preexisting legal right or obligation of the licensee.

2014, c. 454.

§ 6.2-1907. License revocation.

A. The Commission may revoke a license issued under this chapter:

1. If it reasonably determines that (i) a licensee is engaging in one or more unsafe or unsound practices, (ii) a licensee may be unable to perform its obligations, or (iii) a licensee has willfully failed without reasonable cause to pay or provide for the payment of any of its obligations; or

2. Upon any of the following grounds:

a. Any ground for denial of a license under this chapter;

b. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the licensee's business;

c. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;

d. Entry of a judgment against such licensee involving fraud, misrepresentation, or deceit;

e. Entry of a federal or state administrative order against such licensee for violation of any law or any regulation applicable to the conduct of his business;

f. Refusal to permit an investigation or examination by the Commission;

g. Failure to pay any fee or assessment imposed by this chapter; or

h. Failure to comply with any order of the Commission.

B. For the purposes of this section, acts of any officer, director, member, partner, or principal shall be deemed acts of the licensee.

1974, c. 578, § 6.1-374; 1990, c. 259; 1994, c. 889; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454.

§ 6.2-1908. Notice of proposed revocation.

The Commission may not revoke a license issued under this chapter upon any of the grounds set forth in § 6.2-1907 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation and has given the licensee an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of such licensee and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not revoke the license except based upon findings made at such hearing.

2009, c. 346, § 6.1-374.1; 2010, c. 794.

§ 6.2-1909. Cease and desist orders.

A. If the Commission determines that (i) any person has violated any provision of this chapter or any regulation adopted hereunder or (ii) a licensee is engaging in one or more unsafe or unsound practices, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.

B. When, in the opinion of the Commission, immediate action is required to protect the public interest, a cease and desist order may be issued immediately without prior hearing. In such cases, the Commission shall make a hearing available to the person on an expedited basis.

C. If required to conserve the assets of a licensee or protect the public interest, the Commission may order a licensee and its authorized delegates to cease and desist from selling additional money orders or receiving additional funds for transmission.

D. The Commission shall have jurisdiction to enter and enforce a cease and desist order against any person, regardless of whether such person is present in the Commonwealth, who directly or indirectly (i) sells money orders to citizens of the Commonwealth or (ii) obtains money or control over such citizens' funds for transmission.

2009, c. 346, § 6.1-374.2; 2010, c. 794.

§ 6.2-1910. Investigations; examinations; reporting violations.

A. The Commission shall have authority to investigate and examine the affairs, business, premises, books, and records of all money order sellers and money transmitters and their authorized delegates. Except as provided herein, the Commission shall make an examination of each licensee at least once in every three-year period and shall adjust the surety bond or alternative security device as it may deem necessary in accordance with § 6.2-1904. The Commission may also examine any authorized delegate of a licensee as often as it is deemed to be in the public interest. Examinations under this section may be conducted in conjunction with examinations to be performed by representatives of agencies of the federal government or another state. The Commission, in lieu of an examination, may accept the examination report of the federal government or another state.

B. Any person designated by the Commission to make investigations or examinations pursuant to this section shall have authority to (i) administer oaths; (ii) examine under oath in the course of such investigations or examinations, the principals, members, owners, officers, directors, partners, and employees of any person required to be licensed by this chapter or such person's authorized delegates; and (iii) compel the production of documents. The principals, members, owners, officers, directors, partners, and employees of any person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary.

C. The Commission shall report violations of the licensing requirements of § 6.2-1901 to the attorney for the Commonwealth of the city or county in which such violation occurs.

1974, c. 578, § 6.1-375; 1976, c. 531; 1990, c. 259; 1994, c. 889; 2001, c. 372; 2009, c. 346; 2010, c. 794; 2014, c. 454.

§ 6.2-1911. Conduct of business through authorized delegates of licensee.

A. A licensee may conduct its business through or by means of such authorized delegates as the licensee may designate or appoint under a written agreement with such authorized delegates. The agreement between a licensee and an authorized delegate shall (i) require the authorized delegate to comply with the provisions of this chapter and all other applicable state and federal laws and regulations; (ii) require the authorized delegate to remit all sums owing to the licensee in accordance with the terms of the written agreement; (iii) require the authorized delegate to permit the Commission to investigate or examine its business pursuant to § 6.2-1910; and (iv) prohibit the authorized delegate from using a subdelegate, or from otherwise designating or appointing another person to sell money orders or engage in money transmission business on behalf of the licensee.

B. A licensee shall conduct a due diligence review of all new authorized delegates. A licensee shall be responsible for implementing and maintaining a reasonable risk-based supervision program to monitor its authorized delegates.

1974, c. 578, § 6.1-377; 1994, c. 889; 2001, c. 372; 2009, c. 346; 2010, c. 794.

§ 6.2-1912. Liability of licensee for payment of money order; money order to bear name of licensee.

A. A licensee shall be liable for the payment of all funds collected for transmission by the licensee or its authorized delegates and all money orders which it sells, in whatever form and whether directly or through an authorized delegate, as the maker or drawer thereof according to the negotiable instrument laws of the Commonwealth. A licensee who sells a money order, whether directly or through an authorized delegate, upon which he is not designated as maker or drawer shall nevertheless have the same liabilities with respect thereto as if he had signed the money order as the maker or drawer thereof.

B. Every money order sold by a licensee, whether directly or through an authorized delegate, shall bear the name of the licensee clearly imprinted thereon as it appears on its license.

1974, c. 578, § 6.1-378; 2009, c. 346; 2010, c. 794.

§ 6.2-1913. Regulations.

The Commission may adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.

1990, c. 259, § 6.1-378.1; 1994, c. 889; 2010, c. 794.

§ 6.2-1914. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire directly or indirectly 25 percent or more of the voting shares of a corporation or 25 percent or more of the ownership of any other entity licensed to conduct business under this chapter unless such person first:

1. Files an application with the Commission in such form as the Commission may prescribe from time to time;

2. Delivers such information as the Commission may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals, and members, and of any proposed new directors, senior officers, principals, or members of the licensee;

3. Furnishes to the Commissioner information concerning the identity of the directors, senior officers, principals, and members of the applicant, and of any proposed new directors, senior officers, principals, or members of the licensee. For the purpose of investigating these directors, senior officers, principals, and members, such individuals shall comply with one or both of the following, as applicable:

a. In the case of directors, senior officers, principals, and members who have resided in the United States at any time within the previous 10 years, such individuals shall consent to a national and state criminal history records check and submit to fingerprinting. Each director, senior officer, principal, and member shall pay for the cost of such fingerprinting and criminal records check. Such individuals shall cause their fingerprints, personal descriptive information, and records check fees to be submitted to either of the following, as prescribed by the Commissioner:

(1) The Bureau, which shall forward these items to the Central Criminal Records Exchange. The Central Criminal Records Exchange shall (i) conduct a search of its own criminal history records and forward such individuals' fingerprints and personal descriptive information to the Federal Bureau of Investigation for the purpose of obtaining national criminal history record information regarding such individuals, and (ii) forward the results of the state and national records search to the Commissioner or his designee, who shall be an employee of the Commission; or

(2) The Registry, provided that it is capable of processing such criminal history records check.

b. In the case of directors, senior officers, principals, and members who have resided outside of the United States at any time within the previous 10 years, such individuals shall cause an investigative background report to be submitted to the Commissioner. The report shall be prepared by an independent search firm that is acceptable to the Commissioner and be in the English language. Each director, senior officer, principal, and member shall pay for the cost of such report, and the report shall be sent directly by the search firm to the Commissioner or his designee, who shall be an employee of the Commission; and

4. Pays such application fee as the Commission may prescribe.

B. If any material information provided by the applicant changes during the investigation period, the applicant shall immediately notify the Commissioner.

C. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers, and principals, and any proposed new directors, members, senior officers, and principals have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with the applicable laws and regulations. The Commission shall grant or deny the application within 90 days from the date a completed application, accompanied by the required fee, is filed unless the period is extended by the Commission. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

D. The provisions of this section shall not apply to the acquisition of an interest in a licensee directly or indirectly by merger, consolidation, or otherwise, (i) by or with a person licensed under this chapter, (ii) by or with a person affiliated through common ownership with the licensee, or (iii) by bequest, descent, survivorship, or by operation of law. The person acquiring an interest in a licensee in a transaction which is exempt from filing an application by this subsection shall send written notice to the Commission of such acquisition within 30 days after its closing.

E. If any person acquires an ownership interest in a licensee without obtaining prior approval from the Commission as required by this section, the Commission may for good cause shown order such person to divest himself or itself of such ownership interest.

F. The Commission may not enter an order requiring divestiture pursuant to subsection E until it has given the person 21 days' notice in writing of the reasons for the proposed divestiture and has given the person an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to such person and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not require divestiture except based upon findings made at such hearing.

1998, c. 10, § 6.1-378.2; 2009, c. 346; 2010, c. 794; 2014, c. 454; 2019, c. 634.

§ 6.2-1915. Sale or issuance of bearer money orders; prohibition.

A. No authorized delegate of a licensee shall sell a money order with a face amount of $750 or more that does not designate a specific payee.

B. This section applies only to paper money orders.

C. This section does not apply to (i) travelers checks, (ii) electronic instruments, (iii) stored value products or other similar instruments for the transmission or payment of money, or (iv) money orders sold or issued by insured financial institutions.

D. Licensees shall inform their authorized delegates of the obligations imposed by this section.

1999, c. 355, § 6.1-378.3; 2009, c. 346; 2010, c. 794.

§ 6.2-1916. Retention of books, accounts, and records.

A. Every licensee shall maintain in its principal place of business such books, accounts, and records as the Commission may reasonably require in order to determine whether such licensee is complying with the provisions of this chapter and other laws applicable to the conduct of its licensed business. Such books, accounts, and records shall be maintained apart and separate from any other business in which the licensee is involved.

B. Each licensee shall retain the following records for at least three years:

1. A record of each money transmission transaction and money order sold;

2. A general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;

3. Bank statements and bank reconciliation records;

4. Records of outstanding money orders and money transmission transactions;

5. Records of each money order and money transmission transaction paid or completed within the three-year period; and

6. A list of the names, addresses, and telephone numbers of all of the licensee's authorized delegates.

C. Each licensee shall maintain policies and procedures sufficient for it to comply with this chapter and all other laws and regulations applicable to the conduct of its licensed business. A licensee shall furnish copies of its policies and procedures, as amended, to all of its authorized delegates.

2009, c. 346, § 6.1-378.5; 2010, c. 794; 2014, c. 454.

§ 6.2-1917. Other reporting requirements.

A. A licensee or other person shall file a report with the Commissioner within 15 days after the licensee or other person becomes aware of any material changes in information previously provided in an application filed under § 6.2-1903 or 6.2-1914. This requirement shall be applicable only to material changes that occur within one year after the date the licensee begins business or the acquisition is consummated.

B. A licensee shall file with the Commissioner no later than 45 days after the end of each fiscal quarter its quarterly financial statements along with a current list of all authorized delegates and locations where the licensee or an authorized delegate of the licensee sells money orders or receives money for transmission. The licensee shall state the name, street address, and telephone number of each location and authorized delegate.

C. A licensee shall file a report with the Commissioner within one business day after the licensee becomes aware of the occurrence of any of the following events:

1. The filing of a petition by or against the licensee for bankruptcy or reorganization;

2. The filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors;

3. The commencement of administrative or regulatory proceedings against the licensee by any governmental authority;

4. The cancellation or other impairment of the licensee's bond or other security;

5. Any felony indictment of the licensee or any of its members, partners, directors, officers, principals, or authorized delegates;

6. Any felony conviction of the licensee or any of its members, partners, directors, officers, principals, or authorized delegates; or

7. Such other events as the Commission may prescribe by regulation.

D. Any reports or filings required by this section may be submitted to the Commissioner through the Registry, provided that the Registry is capable of receiving such reports or filings.

2009, c. 346, § 6.1-378.6; 2010, c. 794; 2014, c. 454; 2019, c. 634.

§ 6.2-1918. Maintenance of permissible investments.

A. A licensee shall maintain at all times permissible investments that have a market value computed in accordance with generally accepted accounting principles of not less than the aggregate dollar amount of all of its (i) outstanding money orders from all states and (ii) outstanding money transmission transactions from all states. For purposes of this subsection, a licensee may calculate the aggregate dollar amount of its outstanding stored value products in accordance with generally accepted accounting principles.

B. The Commission, with respect to any licensees, may limit the extent to which a type of investment within a class of permissible investments may be considered a permissible investment, except for money and certificates of deposit issued by a bank. The Commission may prescribe by regulation other types of investments that the Commission determines to have a safety substantially equivalent to other permissible investments.

C. Permissible investments shall be deemed to be held in trust for the benefit of the purchasers and holders of the licensee's outstanding money orders and money transmission services in the event of bankruptcy or receivership of the licensee.

2009, c. 346, § 6.1-378.7; 2010, c. 794; 2017, c. 654.

§ 6.2-1919. Types of permissible investments.

A. Except to the extent otherwise limited by the Commission pursuant to § 6.2-1918, the following investments are permissible under § 6.2-1918:

1. Cash, a certificate of deposit, or senior debt obligation of an insured depository institution, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. § 1813).

2. A banker's acceptance or bill of exchange that is eligible for purchase upon endorsement by a member bank of the Federal Reserve System and is eligible for purchase by a Federal Reserve Bank.

3. An investment bearing a rating of one of the three highest grades, as defined by a nationally recognized organization that rates securities.

4. An investment security that is an obligation of the United States or a department, agency, or instrumentality thereof; an investment in an obligation that is guaranteed fully as to principal and interest by the United States; or an investment in an obligation of a state or a governmental subdivision, agency, or instrumentality thereof.

5. Receivables that are payable to a licensee from its authorized delegates, pursuant to contracts and in the ordinary course of business, that are not past due or doubtful of collection. A receivable shall be deemed to be past due or doubtful of collection if the money owed to the licensee is not remitted within seven business days. However, the aggregate amount of receivables under this subdivision from any one person shall not comprise more than 10 percent of the licensee's total permissible investments.

6. A share or a certificate issued by an open-end management investment company that is registered with the U.S. Securities and Exchange Commission under the Investment Companies Act of 1940 (15 U.S.C. § 80a-1 et seq.), and whose portfolio is restricted by the management company's investment policy to investments specified in subdivisions 1 through 4.

B. The following investments are permissible under § 6.2-1918, but only to the extent specified:

1. An interest-bearing bill, note, bond, or debenture of a person whose equity shares are traded on a national securities exchange or on a national over-the-counter market, if the aggregate of investments under this subdivision does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time hold investments under this subdivision in any one person aggregating more than 10 percent of the licensee's total permissible investments;

2. A share of a person traded on a national securities exchange or a national over-the-counter market or a share or a certificate issued by an open-end management investment company that is registered with the U.S. Securities and Exchange Commission under the Investment Companies Act of 1940 (15 U.S.C. § 80a-1 et seq.), and whose portfolio is restricted by the management company's investment policy to shares of a person traded on a national securities exchange or a national over-the-counter market, if the aggregate of investments under this subdivision does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time hold investments in any one person aggregating more than 10 percent of the licensee's total permissible investments;

3. A demand-borrowing agreement made to a corporation or a subsidiary of a corporation whose securities are traded on a national securities exchange if the aggregate of the amount of principal and interest outstanding under demand-borrowing agreements under this subdivision does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time hold principal and interest outstanding under demand-borrowing agreements under this subdivision with any one person aggregating more than 10 percent of the licensee's total permissible investments; and

4. Any other investment the Commission designates, to the extent specified by the Commission.

C. The aggregate of investments under subsection B may not exceed 50 percent of the total permissible investments of a licensee calculated in accordance with § 6.2-1918.

2009, c. 346, § 6.1-378.8; 2010, c. 794; 2014, c. 454.

§ 6.2-1920. Civil penalties.

In addition to the authority conferred under §§ 6.2-1907 and 6.2-1909, the Commission may impose a civil penalty not exceeding $2,500 upon any person licensed or required to be licensed under this chapter who the Commission determines has violated any of the provisions of this chapter or any other law or regulation applicable to the conduct of the person's business. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed. In the case of a violation of § 6.2-1901, each money order sale or money transmission transaction shall constitute a separate violation.

2001, c. 372, § 6.1-378.4; 2009, c. 346; 2010, c. 794.

§ 6.2-1921. Criminal penalty.

Any person required by this chapter to have a license who sells money orders or engages in the business of money transmission without first being licensed as required by § 6.2-1901 is guilty of a Class 1 misdemeanor.

1974, c. 578, § 6.1-375; 1976, c. 531; 1990, c. 259; 1994, c. 889; 2001, c. 372; 2009, c. 346, 2010, c. 794.

Chapter 20. Agencies Providing Debt Management Plans.

§ 6.2-2000. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Agency" means any person that provides or offers to provide debt management plans for consumers.

"Consumer" means an individual residing in the Commonwealth who owes money to one or more creditors, for personal, family, or household purposes, including an individual who owes money jointly with one or more other individuals.

"Credit counselor" means an employee or agent of an agency who designs a debt management plan, provides consumer budget and basic financial planning services, or engages in debt settlement or debt pooling and distribution services on a consumer's behalf. "Credit counselor" does not include licensed certified public accountants or licensed certified public accounting firms engaging in usual and customary services performed on behalf of clients.

"Creditor" or "credit-granting organization" does not include (i) doctors, lawyers, or other professionals who receive payment for their services in installments or (ii) persons whose only participation in a credit transaction is to honor a credit card.

"Debt collector" means a person defined as a debt collector under 15 U.S.C. § 1692a of the federal Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.).

"Debt management plan" or "DMP" means a program whereby a person agrees to engage in debt pooling and distribution services on behalf of a consumer, or multiple consumers if a joint account.

"Debt pooling and distribution service" means an arrangement whereby a consumer gives money or control of his funds to a person for distribution to the consumer's creditors.

"Debt settlement" means any action or negotiation initiated or taken by or on behalf of any consumer with any creditor of the consumer for the purpose of obtaining debt forgiveness of a portion of the credit extended by the creditor to the consumer or reduction of payments, charges, or fees payable by the consumer.

"Duplicate original" means an exact copy with signatures created by the same impression as the original, or an exact copy bearing an original signature, or in the case of an electronic transaction, an electronic version with electronic signatures.

"Electronic signature" means a signature as defined in § 59.1-480.

"Licensee" means a person licensed under this chapter.

"Maintenance fee" means a fee paid by a consumer to an agency for the administration of a DMP.

"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in a person.

"Set-up fee" means a fee paid by a consumer to an agency for the establishment of a DMP.

2004, c. 790, §§ 6.1-363.2, 6.1-363.7; 2005, c. 315; 2010, c. 794; 2011, c. 307.

§ 6.2-2001. License requirement; exceptions.

A. No person shall engage in the business of providing or offering to provide a DMP to any consumer, whether or not the person has an office, facility, agent, or other physical presence in the Commonwealth, unless such person obtains from the Commission a license issued pursuant to this chapter. The provisions of this chapter shall not apply to any bank, savings institution, or credit union, or to a person licensed to practice law in the Commonwealth.

B. This chapter shall be construed by the Commission to promote sound personal financial advice and management, and protect against financial loss consumers who place money or control of their funds or credit into the custody of an agency for transmission to such consumers' creditors.

C. A person licensed under this chapter is not required to be licensed as a money transmitter under Chapter 19 (§ 6.2-1900 et seq.), if the person's money transmission activities are limited to providing debt pooling and distribution services in accordance with this chapter.

2004, c. 790, § 6.1-363.3; 2010, c. 794; 2019, c. 325.

§ 6.2-2002. Application for license; form; content; fee.

A. An application for a license under this chapter shall be made in writing, under oath, and on a form provided by the Commissioner.

B. The application shall include:

1. The name and address of the applicant; and (i) if the applicant is a partnership, firm, or association, the name and address of each partner or member; (ii) if the applicant is a corporation or limited liability company, the name and address of each director, member, registered agent, and principal; or (iii) if the applicant is a business trust, the name and address of each trustee and beneficiary;

2. The name and address of each manager and officer;

3. The addresses of the locations of the business to be licensed;

4. Financial statements for the applicant as of the most recent fiscal year;

5. A current copy of the agency's standard DMP agreement;

6. Such other information concerning the financial responsibility, background, experience, and activities of the applicant and the persons referred to in this section as the Commissioner may require;

7. Any other pertinent information as the Commissioner may require; and

8. Payment of an application fee of $500.

C. The application fee shall not be refundable in any event. The fee shall not be abated by surrender, suspension, or revocation of the license.

2004, c. 790, § 6.1-363.4; 2005, c. 315; 2010, c. 794.

§ 6.2-2003. Bond required.

The application for a license shall be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute the bond in the Commonwealth, in the principal amount as determined by the Commission. The amount of the bond shall be not less than $25,000 nor more than $350,000. The form of the bond shall be approved by the Commission. The bond shall be continuously maintained thereafter in full force, and the Commission may require the principal amount to be adjusted as it deems necessary. The bond shall be conditioned upon the licensee performing all written agreements with consumers, correctly and accurately accounting for all funds received by the licensee in the licensed business, and conducting the licensed business in conformity with this chapter and all applicable law. Any person who may be damaged by noncompliance of the licensee with any condition of the bond may proceed on the bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

2004, c. 790, § 6.1-363.5; 2010, c. 794.

§ 6.2-2004. Investigation of applications.

The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations adopted thereunder.

2004, c. 790, § 6.1-363.6; 2010, c. 794.

§ 6.2-2005. Qualifications.

A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-2002 and 6.2-2003, the Commission shall issue and deliver to the applicant the license to engage in business under this chapter at the locations specified in the application if it finds that:

1. The financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors, trustees, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law;

2. The applicant has made acceptable provision for the avoidance of conflicts of interest;

3. The applicant maintains a separate trust account with an FDIC-insured depository institution for the handling of customers' funds;

4. The applicant's credit counselors are certified through a bona fide third-party certification provider unaffiliated with the applicant that authenticates the competence of counselors providing consumer assistance;

5. No more than one-third of the board of directors or managing members are employees, officers, members, principals, trustees, directors, agents, or other representatives of organizations that grant credit to consumers;

6. The applicant is accredited by the International Standards Organization or the Council on Accreditation or any other organization approved by the Commission;

7. The applicant has fidelity bond coverage in such principal amount as may be determined by the Commission;

8. The applicant (i) is not the subject of any current material administrative or regulatory proceedings by any governmental authority and (ii) has not received a material adverse determination in any past administrative or regulatory proceedings by any governmental authority; and

9. The applicant has filed with the Commission a form, that shall be provided to each consumer prior to his execution of a DMP, that contains the following disclosures to the consumer: (i) all fees charged by the applicant or contributions solicited by the applicant from the consumer; (ii) whether the applicant is a for-profit entity or nonprofit entity; and (iii) whether the applicant received financial support from creditors during the preceding calendar year.

B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.

C. A license shall not be issued to a collection agency, or to any creditor or association of creditors, or to any credit-granting organization or association of such organizations.

2004, c. 790, § 6.1-363.7; 2005, c. 315; 2010, c. 794.

§ 6.2-2006. Licenses; places of business; changes.

A. Each license shall state the address or addresses at which the business is to be conducted and shall state fully the legal name of the licensee as well as any fictitious name by which the licensee is operating in the Commonwealth. Each license shall be posted prominently in each place of business of the licensee. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any name in the Commonwealth other than the legal name or fictitious name set forth on the license issued by the Commission.

B. No licensee shall open an additional office or relocate any place of business without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commission finds that the applicant has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission, but this period may be extended for good cause. After approval, the applicant shall give written notice to the Commissioner within 20 days of the commencement of business at the additional location or relocated place of business.

C. Every licensee shall within 20 days notify the Commissioner, in writing, of the closing of any business location and of the name, address, and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.

D. Every license shall remain in force until it has been surrendered, revoked, or suspended. The surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such licensee.

2004, c. 790, § 6.1-363.8; 2010, c. 794.

§ 6.2-2007. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire, directly or indirectly, 25 percent or more of the voting shares of a corporation, or 25 percent or more of the ownership of any other person, licensed to conduct business under this chapter unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, trustees, beneficiaries, principals, and members, and of any proposed new directors, senior officers, principals, or members of the licensee; and

3. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers, members, trustees, beneficiaries, and principals, and any proposed new persons having any such status have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person licensed by this chapter, (ii) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person affiliated through common ownership with the licensee, or (iii) the acquisition of an interest in a licensee by a person by bequest, descent, survivorship, or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

2004, c. 790, § 6.1-363.9; 2010, c. 794.

§ 6.2-2008. Retention of books, accounts, and records; responding to Bureau.

A. Every licensee shall maintain in its licensed offices such books, accounts, and records as the Commission may reasonably require in order to determine whether the licensee is complying with the provisions of this chapter and regulations adopted thereunder. Such books, accounts, and records shall be maintained apart and separate from any other business in which the licensee is involved. Such records relating to DMPs shall be retained for at least three years after the DMPs are terminated. To safeguard the privacy of consumers, records containing personal financial information shall be shredded, incinerated, or otherwise disposed of in a secure manner. Licensees may arrange for the shredding, incineration, or other disposal of the records from a business record destruction vendor.

B. When the Bureau requests a written response, books, records, documentation, or other information from a licensee in connection with the Bureau's investigation, enforcement, or examination of compliance with applicable laws, the licensee shall deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the Bureau's request. If no time period is specified, a written response as well as any requested books, records, documentation, or information shall be delivered by the licensee to the Bureau not later than 30 days from the date of such request. In determining the specified time period for responding to the Bureau and when considering a request for an extension of time to respond, the Bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation, or information and such other factors as the Bureau determines to be relevant under the circumstances.

2004, c. 790, § 6.1-363.10; 2010, c. 794.

§ 6.2-2009. Annual report.

Each licensee under this chapter shall annually, on or before March 25, file a written report with the Commissioner containing such information as the Commissioner may require concerning his business and operations during the preceding calendar year as to each licensed place of business. Reports shall be made under oath and shall be in the form prescribed by the Commissioner.

2004, c. 790, § 6.1-363.11; 2010, c. 794.

§ 6.2-2010. Other reporting requirements.

A. Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the Commission describing such event and its expected impact upon the business of the licensee:

1. The filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;

2. The institution of administrative or regulatory proceedings against the licensee by any governmental authority;

3. Any felony indictments of the licensee or any of its members, partners, directors, officers, trustees, beneficiaries, or principals, if known;

4. Any felony conviction of the licensee or any of its members, partners, directors, officers, trustees, beneficiaries, or principals, if known;

5. The institution of an action against the licensee under the Virginia Consumer Protection Act (§ 59.1-196 et seq.) by the Attorney General or any other governmental authority; or

6. Such other event as the Commission may prescribe by regulation.

B. Within 30 days of judgment against the licensee in a civil action relating to the DMP of a consumer, a licensee shall file a written report with the Commission describing such event and its expected impact upon the business of the licensee. The licensee shall advise the Commission within 30 days of any settlement or the result of any judgment entered.

C. Within 10 days of receipt of any qualified audit, a licensee shall notify the Commission and describe what steps are being taken to address concerns raised in the audit.

D. Failure to file a report or other information or documents required under this section shall subject the licensee to a fine of $25 for each day the report is overdue.

2004, c. 790, § 6.1-363.12; 2010, c. 794.

§ 6.2-2011. Investigations; examinations.

The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any person licensed or required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of licensees shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, trustees, beneficiaries, and employees of such person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

2004, c. 790, § 6.1-363.13; 2010, c. 794.

§ 6.2-2012. Annual fees.

A. To defray the costs of the examination, supervision, and regulation of licensees, every licensee under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the total number of DMPs maintained by licensees in the Commonwealth, the actual costs of their examinations, and to other factors relating to their supervision and regulation. All such fees shall be assessed on or before June 1 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before July 1 following each assessment.

B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee under this chapter at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision, and regulation, or shall pay at a reasonable per diem rate approved by the Commission.

2004, c. 790, § 6.1-363.14; 2008, c. 508; 2010, c. 794.

§ 6.2-2013. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.

2004, c. 790, § 6.1-363.15; 2010, c. 794.

§ 6.2-2014. Required and prohibited business methods.

Each licensee shall comply with the following requirements:

1. Each DMP shall be evidenced by an agreement, which shall be maintained in either a hard copy, including a faxed copy, or electronic version and which shall be signed by the consumer and a person authorized by the licensee to sign such agreements and dated the same day the DMP is executed by the consumer. The agreement may be signed by the parties either originally or by electronic signature. The agreement shall set forth, at a minimum: (i) the name and address of both the consumer and the licensee; (ii) a full description of all services to be performed for the consumer by the licensee; (iii) a clear explanation, highlighted in bold type, of the costs to the consumer; (iv) a statement that the DMP agreement can be terminated for any reason by the consumer and that the consumer has no obligation to continue the arrangement unless satisfied with the services provided; (v) a statement that in the event of termination of the agreement, the consumer shall be entitled to a refund of all funds that have not been disbursed to creditors and either (a) all fees paid if terminated within five days of the date the DMP agreement is executed by the consumer or (b) all fees paid less the set-up fee if terminated more than five but less than 31 days after execution by the consumer; (vi) an explanation of the method of dispute resolution under the agreement; (vii) an explanation of the obligations of the consumer and the licensee that are subject to the agreement; (viii) notification of privacy policies in compliance with state and federal laws and regulations; and (ix) a statement that participating in a DMP may have a derogatory effect upon the consumer's credit report;

2. A licensee shall give to the consumer a duplicate original of the agreement executed by the consumer and licensee upon full execution;

3. At the time of execution of the DMP, a licensee shall have a good faith belief that the creditors listed in the DMP will participate in the DMP. A licensee shall advise the consumer of any changes by a creditor in accepting payments under the DMP promptly upon learning of such changes;

4. A licensee shall provide a consumer enrolled in a DMP with periodic statements, no less often than quarterly, accounting for the funds received from the consumer for payments to the consumer's creditors and disbursements made to each such creditor on the consumer's behalf since the last report;

5. A licensee shall not purchase any debt or obligation of a consumer;

6. A licensee shall not lend money or provide credit to any consumer;

7. A licensee shall not obtain a mortgage or any other security interest in the property of a consumer;

8. A licensee shall not operate as a debt collector;

9. A licensee shall not structure an agreement for the consumer that, at the conclusion of the DMP, would knowingly result in negative amortization of any of the consumer's obligations to creditors;

10. A licensee shall not give legal advice to a consumer or perform legal services on behalf of a consumer;

11. A licensee shall have an established practice of disbursing to creditors funds received from a consumer under a DMP within eight business days of receipt and shall provide consumers its disbursement practices in writing, including any circumstances that would establish an exception to the eight-day practice;

12. A licensee shall maintain appropriate safeguards against conflicts of interest in the conduct of its DMP activities;

13. A licensee shall not employ any person who is employed at the same time by a creditor or collection agency;

14. A licensee shall keep (i) its operating funds separate from the funds entrusted to the licensee by consumers for disbursement to creditors and (ii) consumers' funds in a trust account, held in the name of the licensee by an insured depository institution;

15. A licensee shall upon request give a consumer signed, dated receipts for funds received from a consumer under a DMP, or provide a means whereby the consumer may view the status of his account electronically; and

16. A licensee shall not obtain any agreement from a consumer (i) giving the licensee or any third person power of attorney or authority to confess judgment for the consumer; (ii) authorizing the licensee or any third party to bring suit against the consumer in a court outside the Commonwealth; or (iii) waiving any right the consumer has under this chapter.

2004, c. 790, § 6.1-363.16; 2010, c. 794.

§ 6.2-2015. Fees and contributions.

For establishing and maintaining a DMP, a licensee may charge or receive fees or contributions in an amount not to exceed the following: (i) $75 for a set-up fee; and (ii) a monthly maintenance fee of 15 percent of the total amount disbursed, but in no event more than $60 per month.

2004, c. 790, § 6.1-363.17; 2010, c. 794.

§ 6.2-2016. Additional charges.

In addition to the fees and contributions permitted under § 6.2-2015, no further or other amount whatsoever shall be directly or indirectly charged, contracted for, collected, received, or recovered with respect to a DMP except, with the consumer's advance permission after disclosure of such amounts, reimbursement for (i) the actual cost of obtaining for such consumer one credit report and related credit report information from a credit reporting agency; and (ii) the actual bank charges for automatic account debiting for debt repayment.

2004, c. 790, § 6.1-363.18; 2010, c. 794.

§ 6.2-2017. Advertising.

No person licensed or required to be licensed under this chapter shall use or cause to be published any advertisement that (i) contains any false, misleading, or deceptive statement or representation; or (ii) identifies the person by any name other than the name set forth on the license issued by the Commission.

2004, c. 790, § 6.1-363.19; 2010, c. 794.

§ 6.2-2018. Suspension or revocation of license.

A. The Commission may suspend or revoke any license issued under this chapter upon any of the following grounds:

1. Any ground for denial of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission thereunder, or a violation of any other law or regulation applicable to the conduct of the licensee's business;

3. A course of conduct consisting of the failure to perform written agreements with consumers;

4. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;

5. Entry of a judgment against the licensee involving fraud, misrepresentation, or deceit;

6. Entry of a federal or state administrative order against such licensee for violation of any law or any regulation applicable to the conduct of his business;

7. Refusal to permit an investigation or examination by the Commission;

8. Failure to pay any fee or assessment imposed by this chapter;

9. Failure to comply with any order of the Commission; or

10. Insolvency of the licensee.

B. For the purposes of this section, acts of any officer, director, member, trustee, beneficiary, partner, or principal shall be deemed acts of the licensee.

2004, c. 790, § 6.1-363.20; 2010, c. 794.

§ 6.2-2019. Cease and desist orders.

A. If the Commission determines that any person has violated any provision of this chapter or any regulation adopted hereunder, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at such hearing. Such hearing shall be conducted in accordance with the Commission's Rules. The Commission may enforce compliance with any order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.

B. When, in the opinion of the Commission, immediate action is required to protect the public interest, a cease and desist order may be issued without prior hearing. In such cases, the Commission shall make a hearing available to the person on an expedited basis.

C. The Commission shall have jurisdiction to enter and enforce a cease and desist order against any person, regardless of whether such person is present in the Commonwealth, who obtains money or funds from a consumer for transmission to the consumer's creditors.

2004, c. 790, § 6.1-363.21; 2010, c. 794.

§ 6.2-2020. Notice of proposed suspension or revocation.

The Commission shall not revoke or suspend the license of any person licensed under this chapter upon any of the grounds set forth in § 6.2-2018 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the licensee or other address authorized under § 12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules.

2004, c. 790, § 6.1-363.22; 2010, c. 794.

§ 6.2-2021. Civil penalties.

A. In addition to the authority conferred under §§ 6.2-2018 and 6.2-2019, the Commission may impose a civil penalty not exceeding $1,000 upon any person who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed. In the case of a violation of § 6.2-2001, each DMP entered into shall constitute a separate violation.

B. The Commission shall have jurisdiction to impose civil penalties upon any person, regardless of whether such person is present in the Commonwealth, who obtains money or funds from a consumer for transmission to the consumer's creditors.

2004, c. 790, § 6.1-363.23; 2010, c. 794.

§ 6.2-2022. Criminal penalty.

Any person violating subsection A of § 6.2-2001 is guilty of a Class 1 misdemeanor. For purposes of this section, each violation shall constitute a separate offense.

2004, c. 790, § 6.1-363.3; 2010, c. 794.

§ 6.2-2023. Private right of action.

Any person who suffers loss by reason of a violation of any provision of this chapter may bring a civil action to enforce such provision. Any person who is successful in such action shall recover reasonable attorney fees, expert witness fees, and court costs incurred by bringing such action.

2004, c. 790, § 6.1-363.24; 2010, c. 794.

§ 6.2-2024. Authority of Attorney General; referral by Commission to Attorney General.

A. If the Commission determines that a person is in violation, or has violated, any provision of this chapter, the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations. In the case of such referral, the Attorney General is hereby authorized to seek to enjoin violations of this chapter. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law.

B. Upon such referral by the Commission, the Attorney General may also seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law. Persons entitled to any relief as authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.

C. In any action brought by the Attorney General by virtue of the authority granted in this provision, the Attorney General shall be entitled to seek reasonable attorney fees and costs.

2004, c. 790, § 6.1-363.25; 2010, c. 794.

§ 6.2-2025. Violation of the Virginia Consumer Protection Act.

Any violation of the provisions of this chapter shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).

2004, c. 790, § 6.1-363.26; 2010, c. 794.

Chapter 20.1. Debt Settlement Services Providers.

§ 6.2-2026. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Consumer" means an individual residing in the Commonwealth who owes money to one or more creditors, for personal, family, or household purposes, including an individual who owes money jointly with one or more other individuals.

"Credit counselor" means an employee or agent of a licensee who engages in debt settlement services on a consumer's behalf.

"Creditor" includes persons that extend credit to, or persons that service loans made to, consumers. "Creditor" or "credit-granting organization" does not include (i) doctors, lawyers, or other professionals who receive payment for their services in installments or (ii) persons whose only participation in a credit transaction is to honor a credit card.

"Debt collector" means a person defined as a debt collector under 15 U.S.C. § 1692a of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.

"Debt settlement services" means any action or negotiation initiated or taken on behalf of any consumer with any creditor of the consumer for the purpose of obtaining debt forgiveness of all or a portion of the credit extended by the creditor to the consumer or a reduction of payments, charges, or fees payable by the consumer. For purposes of this chapter, with respect to student loan forgiveness or student loan payment reduction programs established under federal or state law and widely available to similarly situated consumers at no cost, the facilitation of enrollment in or qualification for such programs does not constitute an action or negotiation.

"Duplicate original" means an exact copy with signatures created by the same impression as the original, an exact copy bearing an original signature, or, in the case of an electronic transaction, an electronic version with electronic signatures.

"Electronic signature" means an electronic signature as defined in § 59.1-480.

"Licensee" means a person licensed under this chapter.

"Principal" means any person that, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in a person.

2020, c. 785.

§ 6.2-2027. License requirement; exceptions.

A. No person shall engage in the business of providing or offering to provide debt settlement services to any consumer, whether or not the person has an office, facility, agent, or other physical presence in the Commonwealth, unless such person obtains from the Commission a license issued pursuant to this chapter. The provisions of this chapter shall not apply to any bank, savings institution, or credit union or any person licensed to practice law in the Commonwealth.

B. This chapter shall be construed by the Commission to promote sound personal financial advice and management.

C. A person licensed under Chapter 20 (§ 6.2-2000 et seq.) is not required to be licensed under this chapter if it offers to provide or provides debt settlement services solely in connection with offering to provide or providing debt management plans.

D. A person licensed under this chapter shall not receive money from consumers for transmission to consumers' creditors or engage in the business of providing or offering to provide debt management plans to consumers unless such person is also licensed under Chapter 20 (§ 6.2-2000 et seq.).

2020, c. 785.

§ 6.2-2028. Application for license; form; content; fee.

A. An application for a license under this chapter shall be made in writing, under oath, and on a form provided by the Commissioner.

B. The application shall include:

1. The name and address of the applicant and (i) if the applicant is a partnership, firm, or association, the name and address of each partner or member; (ii) if the applicant is a corporation or limited liability company, the name and address of each director, member, registered agent, and principal; or (iii) if the applicant is a business trust, the name and address of each trustee and beneficiary;

2. The name and address of each manager and officer;

3. The addresses of the locations of the business to be licensed;

4. Financial statements for the applicant;

5. A current copy of the applicant's standard debt settlement services agreement;

6. Such other information concerning the financial responsibility, background, experience, and activities of the applicant and the persons referred to in this section as the Commissioner may require;

7. Any other pertinent information as the Commissioner may require; and

8. Payment of an application fee of $500.

C. The application fee shall not be refundable in any event. The fee shall not be abated by surrender, suspension, or revocation of the license.

2020, c. 785.

§ 6.2-2029. Bond required.

The application for a license shall be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute the bond in the Commonwealth, in the principal amount as determined by the Commission. The amount of the bond shall be not less than $25,000 nor more than $350,000. The form of the bond shall be approved by the Commission. The bond shall be continuously maintained thereafter in full force, and the Commission may require the principal amount to be adjusted as it deems necessary. The bond shall be conditioned upon the licensee performing all written agreements with consumers and conducting the licensed business in conformity with this chapter and all applicable law. Any person who may be damaged by noncompliance of the licensee with any condition of the bond may proceed on the bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

2020, c. 785.

§ 6.2-2030. Investigation of applications.

The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations adopted thereunder.

2020, c. 785.

§ 6.2-2031. Qualifications.

A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-2028 and 6.2-2029, the Commission shall issue and deliver to the applicant the license to engage in business under this chapter at the locations specified in the application if it finds that:

1. The financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors, trustees, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law;

2. The applicant has made acceptable provision for the avoidance of conflicts of interest;

3. The applicant's credit counselors are certified through a bona fide third-party certification provider unaffiliated with the applicant that authenticates the competence of counselors providing consumer assistance;

4. No more than one-third of the board of directors or managing members are employees, officers, members, principals, trustees, directors, agents, or other representatives of organizations that grant credit to consumers;

5. The applicant has fidelity bond coverage in such principal amount as may be determined by the Commission; and

6. The applicant (i) is not the subject of any current material administrative or regulatory proceedings by any governmental authority and (ii) has not received a material adverse determination in any past administrative or regulatory proceedings by any governmental authority.

B. For purposes of subdivision A 6, the Commission shall have sole discretion to determine the materiality of any proceedings or determinations.

C. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.

D. A license shall not be issued to a collection agency, or to any creditor or association of creditors, or to any credit-granting organization or association of such organizations.

2020, c. 785.

§ 6.2-2032. Licenses; places of business; changes.

A. Each license shall state the address or addresses at which the business is to be conducted and shall state fully the legal name of the licensee, as well as any fictitious name by which the licensee is operating in the Commonwealth. Each license shall be posted prominently in each place of business of the licensee. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any name in the Commonwealth other than the legal name or fictitious name set forth on the license issued by the Commission.

B. No licensee shall open an additional office or relocate any place of business without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commission finds that the applicant has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission, but this period may be extended for good cause. After approval, the applicant shall give written notice to the Commissioner within 20 days of the commencement of business at the additional location or relocated place of business.

C. Every licensee shall within 20 days notify the Commissioner, in writing, of the closing of any business location and of the name, address, and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.

D. Every license shall remain in force until it has been surrendered, revoked, or suspended. The surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such licensee.

2020, c. 785.

§ 6.2-2033. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire, directly or indirectly, 25 percent or more of the voting shares of a corporation, or 25 percent or more of the ownership of any other person, licensed to conduct business under this chapter unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, trustees, beneficiaries, principals, and members, and any proposed new directors, senior officers, principals, or members of the licensee; and

3. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant and its directors, senior officers, members, trustees, beneficiaries, and principals, and any proposed new persons having any such status have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person licensed by this chapter; (ii) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation, by or with a person affiliated through common ownership with the licensee; or (iii) the acquisition of an interest in a licensee by a person by bequest, descent, survivorship, or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

2020, c. 785.

§ 6.2-2034. Retention of books, accounts, and records; responding to Bureau.

A. Every licensee shall maintain in its licensed offices such books, accounts, and records as the Commission may reasonably require in order to determine whether the licensee is complying with the provisions of this chapter and regulations adopted thereunder. Such books, accounts, and records shall be maintained apart and separate from any other business in which the licensee is involved. Such records relating to debt settlement services agreements shall be retained for at least three years after the debt settlement services agreements are terminated. To safeguard the privacy of consumers, records containing personal financial information shall be shredded, incinerated, or otherwise disposed of in a secure manner. Licensees may arrange for the shredding, incineration, or other disposal of the records from a business record destruction vendor.

B. When the Bureau requests a written response, books, records, documentation, or other information from a licensee in connection with the Bureau's investigation, enforcement, or examination of compliance with applicable laws, the licensee shall deliver a written response, as well as any requested books, records, documentation, or information within the time period specified in the Bureau's request. If no time period is specified, a written response, as well as any requested books, records, documentation, or information, shall be delivered by the licensee to the Bureau not later than 30 days from the date of such request. In determining the specified time period for responding to the Bureau and when considering a request for an extension of time to respond, the Bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation, or information and such other factors as the Bureau determines to be relevant under the circumstances.

2020, c. 785.

§ 6.2-2035. Annual report.

Each licensee under this chapter shall annually, on or before March 25, file a written report with the Commissioner containing such information as the Commissioner may require concerning the licensee's business and operations during the preceding calendar year as to each licensed place of business. Reports shall be made under oath and shall be in the form prescribed by the Commissioner.

2020, c. 785.

§ 6.2-2036. Other reporting requirements.

A. Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the Commission describing such event and its expected impact on the business of the licensee:

1. The filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;

2. The institution of administrative or regulatory proceedings against the licensee by any governmental authority;

3. Any felony indictments of the licensee or any of its members, partners, directors, officers, trustees, beneficiaries, or principals, if known;

4. Any felony conviction of the licensee or any of its members, partners, directors, officers, trustees, beneficiaries, or principals, if known;

5. The institution of an action against the licensee under the Virginia Consumer Protection Act (§ 59.1-196 et seq.) by the Attorney General or any other governmental authority; or

6. Such other event as the Commission may prescribe by regulation.

B. Within 30 days of judgment against the licensee in a civil action relating to the debt settlement services agreement of a consumer, a licensee shall file a written report with the Commission describing such event and its expected impact on the business of the licensee.

C. Within 10 days of receipt of any qualified audit, a licensee shall notify the Commission and describe what steps are being taken to address concerns raised in the audit.

2020, c. 785.

§ 6.2-2037. Investigations; examinations.

The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any person licensed or required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of licensees shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, trustees, beneficiaries, and employees of such person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the purposes of this section, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

2020, c. 785.

§ 6.2-2038. Annual fees.

A. To defray the costs of the examination, supervision, and regulation of licensees, every licensee under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the total number of agreements to provide debt settlement services maintained by licensees, to the actual costs of their examinations, and to other factors relating to their supervision and regulation. All such fees shall be assessed on or before June 1 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before July 1 following each assessment.

B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee under this chapter at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement the actual travel and reasonable living expenses incurred on account of its examination, supervision, and regulation, or shall pay at a reasonable per diem rate approved by the Commission.

2020, c. 785.

§ 6.2-2039. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.

2020, c. 785.

§ 6.2-2040. Licensees providing debt settlement services; prohibited and required business methods.

Each licensee engaged in the business of providing or offering to provide debt settlement services to any consumer shall comply with the following requirements:

1. Each debt settlement services agreement shall be evidenced by a written agreement, which shall be maintained in either a hard copy, including a faxed copy, or electronic version and which shall be signed by the consumer and a person authorized by the licensee to sign such agreements and dated the same day the debt settlement services agreement is executed by the consumer. The agreement may be signed by the parties either originally or by electronic signature. The agreement shall set forth, at a minimum, (i) the name and address of both the consumer and the licensee; (ii) a full description of all services to be performed for the consumer by the licensee; (iii) a clear explanation, highlighted in bold type, of the costs to the consumer; (iv) a statement that the debt settlement services agreement may be terminated for any reason by the consumer and that the consumer has no obligation to continue the arrangement unless satisfied with the services provided; (v) an explanation of the method of dispute resolution under the agreement; (vi) an explanation of the obligations of the consumer and the licensee that are subject to the agreement; and (vii) notification of privacy policies in compliance with state and federal laws and regulations.

2. A licensee shall give to the consumer a duplicate original of the agreement executed by the consumer and licensee upon full execution.

3. A licensee shall not request or receive payment or other compensation for any debt settlement services until and unless:

a. The licensee has negotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a debt settlement services agreement it executed with a consumer; and

b. The consumer has made at least one payment to a creditor following the licensee's negotiation, settlement, reduction, or other alteration of at least one debt owned by the consumer to that creditor.

4. Prior to the execution of a debt settlement services agreement with a consumer, a licensee shall disclose to the consumer in writing, and retain a copy of, the following:

a. The amount of time necessary to achieve the represented results and, to the extent that the services may include a settlement offer to any of the customer's creditors or debt collectors, the time by which the licensee will make a bona fide settlement offer to each of them;

b. To the extent that the services may include a settlement offer to any of the customer's creditors or debt collectors, the amount of money or the percentage of each outstanding debt that the customer must accumulate before the licensee will make a bona fide settlement offer to each of them; and

c. To the extent that any aspect of the debt settlement services relies upon or results in the consumer's failure to make timely payments to creditors or debt collectors, that the use of the debt settlement services will likely adversely affect the consumer's creditworthiness, may result in the consumer being subject to collections or sued by creditors or debt collectors, and may increase the amount of money the consumer owes due to the accrual of fees and interest.

5. A licensee shall not require a consumer to execute a power of attorney, as defined in § 64.2-1600, as a condition of receiving debt settlement services.

6. A licensee shall not require a consumer to open an account, as defined in § 6.2-604, as a condition of receiving debt settlement services. A licensee may request that a consumer open an account in connection with its provision of debt settlement services, provided that:

a. The consumer's funds are held in an account at an FDIC-insured financial institution;

b. The consumer owns the funds held in the account and is paid accrued interest on the account, if any;

c. The entity administering the account is not owned or controlled by, or in any way affiliated with, the debt settlement services provider;

d. The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business involving the debt settlement services provider; and

e. The consumer may withdraw from the debt settlement services at any time without penalty and must receive all funds in the account, other than the fee earned by the debt settlement services provider for completed services, if any, subject to the limitations imposed in § 6.2-2041.

7. A licensee shall not receive a gift or bonus, premium, reward, or other compensation, directly or indirectly, for advising, arranging, or assisting an individual in connection with obtaining an extension of credit or other service from a creditor, except for educational or counseling services required in connection with a government-sponsored program.

2020, c. 785.

§ 6.2-2041. Fee.

A. For providing debt settlement services, a licensee may charge or receive a fee totaling either (i) no more than 20 percent of the principal amount of the debt enrolled by a consumer into the licensee's service or (ii) no more than 30 percent of the difference between the amount owed by a consumer at the time the licensee settles the debt and the amount to be paid by the consumer to satisfy the debt.

B. If more than one debt is the subject of a debt settlement services agreement, the licensee may only charge or collect that proportion of the total fee allowable under clause (i) of subsection A that equals the proportion of the aggregate debt the individual settled debt represents.

C. A licensee shall not charge or receive any other fee or compensation from a consumer for providing debt settlement services other than the fee provided for in this section.

2020, c. 785.

§ 6.2-2042. Advertising.

No person licensed or required to be licensed under this chapter shall use or cause to be published any advertisement that (i) contains any false, misleading, or deceptive statement or representation or (ii) identifies the person by any name other than the name set forth on the license issued by the Commission.

2020, c. 785.

§ 6.2-2043. Suspension or revocation of license.

A. The Commission may suspend or revoke any license issued under this chapter upon any of the following grounds:

1. Any ground for denial of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission thereunder, or a violation of any other law or regulation applicable to the conduct of the licensee's business;

3. A course of conduct consisting of the failure to perform written agreements with consumers;

4. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;

5. Entry of a judgment against the licensee involving fraud, misrepresentation, or deceit;

6. Entry of a federal or state administrative order against such licensee for violation of any law or any regulation applicable to the conduct of his business;

7. Refusal to permit an investigation or examination by the Commission;

8. Failure to pay any fee or assessment imposed by this chapter;

9. Failure to comply with any order of the Commission; or

10. Insolvency of the licensee.

B. For the purposes of this section, acts of any officer, director, member, trustee, beneficiary, partner, or principal shall be deemed acts of the licensee.

2020, c. 785.

§ 6.2-2044. Cease and desist orders.

A. If the Commission determines that any person has violated any provision of this chapter or any regulation adopted hereunder, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at such hearing. Such hearing shall be conducted in accordance with the Commission's Rules. The Commission may enforce compliance with any order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.

B. When, in the opinion of the Commission, immediate action is required to protect the public interest, a cease and desist order may be issued without prior hearing. In such cases, the Commission shall make a hearing available to the person on an expedited basis.

C. The Commission shall have jurisdiction to enter and enforce a cease and desist order against any person, regardless of whether such person is present in the Commonwealth, who violates any provision of this chapter or any regulation adopted hereunder.

2020, c. 785.

§ 6.2-2045. Notice of proposed suspension or revocation.

The Commission shall not revoke or suspend the license of any person licensed under this chapter upon any of the grounds set forth in § 6.2-2043 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the licensee or other address authorized under § 12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except on the basis of findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules.

2020, c. 785.

§ 6.2-2046. Civil penalties.

In addition to the authority conferred under §§ 6.2-2043 and 6.2-2044, the Commission may impose a civil penalty not exceeding $1,000 upon any person who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed. In the case of a violation of § 6.2-2027, each debt settlement services agreement entered into shall constitute a separate violation.

2020, c. 785.

§ 6.2-2047. Criminal penalty.

Any person violating subsection A of § 6.2-2027 is guilty of a Class 1 misdemeanor. For purposes of this section, each violation shall constitute a separate offense.

2020, c. 785.

§ 6.2-2048. Private right of action.

Any person who suffers loss by reason of a violation of any provision of this chapter may bring a civil action to enforce such provision. Any person who is successful in such action shall recover reasonable attorney fees, expert witness fees, and court costs incurred by bringing such action.

2020, c. 785.

§ 6.2-2049. Authority of Attorney General; referral by Commission to Attorney General.

A. If the Commission determines that a person is in violation, or has violated, any provision of this chapter, the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations. With or without such referral, the Attorney General is hereby authorized to seek to enjoin violations of this chapter. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law.

B. The Attorney General may also seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to consumers under applicable law. Persons entitled to any relief as authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.

C. In any action brought by the Attorney General by virtue of the authority granted in this provision, the Attorney General shall be entitled to seek reasonable attorney fees and costs.

D. If the Attorney General files an action to enjoin violations of this chapter, the Attorney General shall provide notice of such action to the Commission.

2020, c. 785.

§ 6.2-2050. Violation of the Virginia Consumer Protection Act.

Any violation of the provisions of this chapter shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).

2020, c. 785.

Chapter 21. Check Cashers.

§ 6.2-2100. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Check casher" means a person engaged in the business of cashing checks, drafts, or money orders for compensation.

"Item" means a check, draft, or money order.

"Registrant" means a person registered under this chapter.

"Registration" means a registration filed under this chapter.

1995, c. 221, § 6.1-432; 2010, c. 794.

§ 6.2-2101. Registration requirement; offices.

A. No person shall engage in business as a check casher in the Commonwealth unless such person has first registered with the Commission in accordance with procedures established by the Commission under this chapter.

B. Every registered check casher shall give written notice to the Commission, within 10 days thereafter, of the opening, closing, or relocation of an office.

1995, c. 221, § 6.1-433; 1999, c. 529; 2010, c. 794.

§ 6.2-2102. Exempt persons.

This chapter shall not apply to:

1. Any person who:

a. Does not hold itself out to be a check cashing service;

b. Is principally engaged in the bona fide retail sale of goods or services;

c. Either as an incident to or independently of such a retail sale from time to time cashes items; and

d. Charges a fee or other consideration for the service that does not exceed the greater of $2 or two percent of the amount of the item; or

2. Any person authorized to engage in business as a bank, savings institution, or credit union under the laws of the United States or any state.

1995, c. 221, § 6.1-434; 2010, c. 794.

§ 6.2-2103. Registration fees; reports.

A. Each registration form shall be accompanied by payment of a $200 fee, which shall not be refundable or abated in any event.

B. To defray the costs of their examination, supervision and regulation, check cashers required to be registered under this chapter shall pay to the Commission annually on or before July 1 a registration fee in an amount prescribed by the Commission, but not exceeding $250.

C. All fees shall be paid into the state treasury and credited to the "Financial Institutions Special Fund -- State Corporation Commission."

D. Every check casher required to be registered under this chapter shall file such annual or other reports as the Commission may prescribe.

1995, c. 221, § 6.1-435; 1999, c. 529; 2010, c. 794.

§ 6.2-2104. Investigations.

The Commission, upon receiving a complaint or upon its own motion, may investigate the affairs, business, premises and records of any person required to be registered under this chapter. In the course of such investigation, all persons associated with the person being investigated shall afford full access to all premises, books, records and information which the person making such investigation deems necessary. For the foregoing purposes, the person making such investigation shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of documents and objects of all kinds.

1995, c. 221, § 6.1-436; 2010, c. 794.

§ 6.2-2105. Fees posted; endorsement of items cashed.

A. A registrant shall conspicuously post and at all times display, in every location at which it conducts the business of a check casher, a notice stating the fees charged for cashing items. A registrant shall further file with the Commissioner a statement of the fees currently charged at every such location.

B. Items cashed by registrants shall be deposited or presented for payment by the second business day from the date the item is cashed for the customer. A registrant shall endorse every item presented by the registrant for payment in the actual name under which the registrant is doing business.

C. A registrant shall post in every location at which it conducts the business of a check casher the Commission's toll-free telephone number and information on how to file a complaint pursuant to regulations adopted by the Commission.

D. A registrant shall provide each customer cashing an item with a receipt showing the name or trade name of the registrant, the transaction date, the amount of the check, the fee charged, and the cash given.

1995, c. 221, § 6.1-437; 2010, c. 794.

§ 6.2-2106. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulations, the Commission shall give reasonable notice of the content thereof, and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.

1995, c. 221, § 6.1-438; 2010, c. 794.

§ 6.2-2107. Prohibited practices.

No person required to be registered under this chapter shall:

1. Engage in the business of making loans of credit, goods, or things; or discounting notes, bills of exchange, items, or other evidences of debt; or accepting deposits or bailments of money or items without meeting the requirements of the laws of the Commonwealth;

2. Cash post-dated items, other than government or payroll checks;

3. Use, or cause to be published or disseminated, any advertisement or communication that (i) contains any false, misleading, or deceptive statement or representation or (ii) identifies the person by any name other than the name or trade name set forth on the registration;

4. Engage in unfair, deceptive, or fraudulent practices; or

5. Make loans unless such person is licensed under, and the loans are made in accordance with, Chapter 18 (§ 6.2-1800 et seq.).

1995, c. 221, § 6.1-439; 2002, c. 897; 2010, c. 794.

§ 6.2-2107.1. Recordkeeping requirements.

A. As used in this section, a customer's "identification document" means any of the following:

1. A state-issued driver's license or identification card;

2. A U.S. government resident alien identification card;

3. A passport;

4. A U.S. military identification card;

5. A Non-U.S. government identification card;

6. A Mexican Matricula identification card; or

7. Other government identification card.

B. A registrant shall not cash an item for a customer in the course of conducting its business unless the registrant:

1. Makes a copy of both sides of the item or maintains a record of the following information that is available from the item:

a. ABA number;

b. Account number;

c. Check number;

d. Check type;

e. Date of check; and

f. Check amount; and

2. Makes a copy of an identification document that is presented by the customer to the registrant at the time the customer presents the item for cashing or maintains a record of the following information that is available from the identification:

a. Name;

b. Address;

c. Date of birth;

d. Type of identification;

e. Identification number; and

f. Identification expiration date.

C. A registrant shall maintain the information required by subsection B and a record of the time and date of the transaction. Such materials shall be maintained for a period of not less than six months following the date an item is cashed.

D. The provisions of this section shall not apply to any registrant that is principally engaged in the bona fide retail sale of goods or services.

2014, c. 768.

§ 6.2-2108. Civil penalties; civil action.

A. The Commission may impose a civil penalty not exceeding $1,000 upon any person required to be registered hereunder who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or regulations adopted thereunder. However, the civil penalty that may be imposed upon any registrant who has violated a provision of § 6.2-2107.1 shall not exceed $100. For the purposes of this section, each separate violation shall be subject to the civil penalty therein prescribed.

B. Any person who suffers loss by reason of a violation of any provision of this chapter, other than a violation of a provision of § 6.2-2107.1, may bring a civil action to enforce such provision. Any person who is successful in such action shall recover reasonable attorney fees, expert witness fees, and court costs incurred by bringing such action.

1995, c. 221, § 6.1-440; 2010, c. 794; 2014, c. 768.

§ 6.2-2109. Criminal penalties.

Any person required to be registered under this chapter who acts as a check casher without first registering with the Commission as required by § 6.2-2101 is guilty of a Class 1 misdemeanor. For the purposes of this section, each transaction entered into involving the cashing of an item by such person shall constitute a separate offense.

1995, c. 221, § 6.1-441; 2010, c. 794.

§ 6.2-2110. Revocation of registration.

A. The Commission may revoke a registration under this chapter upon any of the following grounds:

1. Any violation of the provisions of this chapter or regulations adopted thereunder or of any law or regulation applicable to the conduct of the registrant's business;

2. Charging fees for cashing items in excess of fees posted at any place of business or filed with the Commission pursuant to § 6.2-2105;

3. Conviction of a felony or misdemeanor involving fraud, misrepresentation, deceit, false swearing, or theft; or

4. Refusal to permit or respond to an investigation by the Commission.

B. For the purposes of this section, acts of any officer, director, member, partner, or principal shall be deemed acts of the registrant.

1995, c. 221, § 6.1-442; 2010, c. 794.

§ 6.2-2111. Notice of proposed revocation.

The Commission may not revoke a registration under this chapter until it has given the registrant 21 days' notice in writing of the grounds for the proposed revocation and an opportunity to be heard. The notice shall be served in accordance with § 12.1-19.1. Within 14 days of mailing the notice, the registrant may file with the clerk of the Commission a written request for a hearing. If a written request for a hearing is filed, the Commission shall not revoke the registration except based upon findings made at such hearing.

1995, c. 221, § 6.1-443; 2010, c. 794.

Chapter 22. Motor Vehicle Title Loans.

§ 6.2-2200. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Affiliate" means a person related to a licensee by common ownership or control, or any employee or agent of a licensee.

"Annual percentage rate" has the same meaning as in the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) and its implementing regulations, as they may be amended from time to time. All fees and charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including interest and the monthly maintenance fees authorized under § 6.2-2216, shall be included in the computation of the annual percentage rate.

"Bond" includes any form of financial instrument that provides security equivalent to that provided by a bond, such as an irrevocable letter of credit, if its use in lieu of a bond is authorized pursuant to regulations adopted by the Commission.

"Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including fees, service charges, and renewal charges, and any ancillary product sold in connection with a loan, but does not include the monthly maintenance fees, deposit item return fees, late charges, or reasonable costs of repossession and sale authorized under § 6.2-2216.

"Licensee" means a person to whom a license has been issued under this chapter.

"Loan amount" means the principal amount of a loan exclusive of fees or charges.

"Motor vehicle" means an automobile, motorcycle, mobile home, truck, van, or other vehicle operated on public highways and streets.

"Motor vehicle title loan" or "title loan" means a loan secured by a non-purchase money security interest in a motor vehicle.

"Motor vehicle title loan agreement" or "loan agreement" means a written document that sets out the terms and conditions under which a licensee agrees to make a motor vehicle title loan to a borrower, and the borrower agrees to give to the licensee a security interest in a motor vehicle owned by the borrower to secure repayment of the motor vehicle title loan and performance of the other obligations under the loan agreement.

"Person" means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, or other legal or commercial entity.

"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in any other type of entity.

2010, c. 477, § 6.1-480; 2020, cc. 1215, 1258.

§ 6.2-2201. License required.

A. Unless exempted from the provisions of this chapter pursuant to § 6.2-2202:

1. No person shall engage in the business of making motor vehicle title loans to residents of the Commonwealth or to any individuals in the Commonwealth, whether or not the person has a location in the Commonwealth, except in accordance with the provisions of this chapter and without having first obtained a license under this chapter from the Commission;

2. No person shall engage in the business of arranging or brokering motor vehicle title loans for residents of the Commonwealth, or any individuals in the Commonwealth, whether or not the person has a location in the Commonwealth; and

3. Any loan made in violation of this section is void, and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the loan.

B. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:

1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;

2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and

3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.

2010, c. 477, § 6.1-481; 2011, c. 418; 2020, cc. 1215, 1258.

§ 6.2-2202. Scope of chapter.

A. The provisions of this chapter shall not apply to any bank, savings institution, or credit union, or to a person licensed under Chapter 15 (§ 6.2-1500 et seq.), that does not elect to become licensed under this chapter. Electing to become licensed under this chapter, however, shall constitute a waiver of the benefit of any and all laws of the Commonwealth and other states, territories, possessions, and districts of the United States and federal laws preemptive of, or inconsistent with, the provisions of this chapter.

B. The provisions of this chapter shall not apply to extensions of credit for the sole purpose of financing the purchase of a motor vehicle, or of refinancing a purchase money loan, secured by a lien on the motor vehicle.

2010, c. 477, § 6.1-482.

§ 6.2-2203. Application for license; form; content; fee.

A. An application for a license under this chapter shall be made in writing, under oath, and on a form provided by the Commissioner.

B. The application shall set forth:

1. The name and address of the applicant and (i) if the applicant is a partnership, firm, or association, the name and address of each partner or member; (ii) if the applicant is a corporation or limited liability company, the name and address of each director, member, registered agent, and principal; or (iii) if the applicant is a business trust, the name and address of each trustee and beneficiary;

2. The addresses of the locations of the business to be licensed; and

3. Such other information concerning the financial responsibility, background, experience, and activities of the applicant and its members, officers, directors, and principals as the Commissioner may require.

C. The application shall be accompanied by payment of an application fee of $500, or other reasonable amount that the Commission may prescribe by regulation.

D. The application fee shall not be refundable in any event. The fee shall not be abated by surrender, suspension, or revocation of the license.

2010, c. 477, § 6.1-483; 2020, cc. 1215, 1258.

§ 6.2-2204. Bond required.

The application for a license shall also be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $50,000 per location, or such greater sum as the Commission may require, but not to exceed a total of $500,000. The form of such bond shall be approved by the Commission. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by him in his licensed business, and conducting his licensed business in conformity with this chapter and all applicable laws. Any person who may be damaged by noncompliance of the licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.

2010, c. 477, § 6.1-484; 2020, cc. 1215, 1258.

§ 6.2-2205. Investigation of applications.

The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations adopted thereunder.

2010, c. 477, § 6.1-485.

§ 6.2-2206. Qualifications.

A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-2203 and 6.2-2204, the Commission shall issue and deliver to the applicant the license applied for to engage in business under this chapter at the locations specified in the application if it finds:

1. That the financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors, trustees, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law; and

2. That the applicant has unencumbered liquid assets per location available for the operation of the business of at least $75,000.

B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.

2010, c. 477, § 6.1-486.

§ 6.2-2207. Licenses; places of business; changes.

A. Each license shall state the address or addresses at which the business is to be conducted and shall state fully the legal name of the licensee as well as any fictitious name by which the licensee is operating in the Commonwealth. Each license shall be posted prominently in each place of business of the licensee. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any name in the Commonwealth other than the legal name or fictitious name set forth on the license issued by the Commission.

B. No licensee shall open an additional office or relocate any place of business without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee or other reasonable amount that the Commission may prescribe by regulation. The application shall be approved unless the Commission finds that the applicant does not have the required liquid assets or has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission. After approval, the applicant shall give written notice to the Commissioner within 10 days of the commencement of business at the additional location or relocated place of business.

C. Every licensee shall within 10 days notify the Commissioner, in writing, of the closing of any business location and of the name, address, and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.

D. Every license shall remain in force until it has been surrendered, revoked, or suspended. The surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such licensee.

2010, c. 477, § 6.1-487; 2020, cc. 1215, 1258.

§ 6.2-2208. Acquisition of control; application.

A. Except as provided in this section, no person shall acquire, directly or indirectly, 25 percent or more of the voting shares of a corporation or 25 percent or more of the ownership of any other person licensed to conduct business under this chapter unless such person first:

1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;

2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals, and members and of any proposed new directors, senior officers, principals, or members of the licensee; and

3. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers, trustees, and principals and any proposed new directors, members, senior officers, trustees, and principals have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation by or with a person licensed under this chapter; (ii) the acquisition of an interest in a licensee, directly or indirectly, by merger or consolidation by or with a person affiliated through common ownership with the licensee; or (iii) the acquisition of an interest in a licensee by bequest, descent, survivorship, or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.

2010, c. 477, § 6.1-488.

§ 6.2-2209. Retention of books, accounts, and records.

Every licensee shall maintain in its licensed offices such books, accounts, and records as the Commission may reasonably require in order to determine whether such licensee is complying with the provisions of this chapter and rules and regulations adopted in furtherance thereof. Such books, accounts, and records shall be maintained apart and separate from any other business in which the licensee is involved. Such records relating to title loans shall be retained for at least three years after final payment is made on any title loan.

2010, c. 477, § 6.1-489.

§ 6.2-2210. Annual report.

A. Each licensee under this chapter shall annually, on or before March 25, file a written report with the Commissioner containing such information as the Commissioner may require concerning his business and operations during the preceding calendar year as to each licensed place of business. Reports shall be made under oath and shall be in the form prescribed by the Commissioner.

B. The Commissioner shall publish annually and make available to the public an analysis of the information required under this section and other information the Commissioner may choose to include. The published analysis shall include all of the following:

1. The total number of borrowers, loans, defaulted loans, and charged-off loans and the total dollar value of the charged-off loans;

2. The average loan size, average contracted annual percentage rate, average contracted charges per loan, total contracted loan charges, and total loan charges actually paid;

3. The total number of deposit item return fees and the total dollar value of those charges;

4. The total number of licensee business locations and the average number of borrowers per location;

5. The total number of title loan contracts that resulted in repossession or surrender of a vehicle, the total number of title loan contracts that resulted in a borrower redeeming a repossessed or surrendered vehicle, the total number of repossessed or surrendered vehicles that were sold, the total fair market value of repossessed or surrendered vehicles that were sold as stated in the loan contracts, the total amount of proceeds licensees received from the sale of repossessed or surrendered vehicles, the total amount of sale proceeds in excess of the redemption amount paid to borrowers as described in subsection C of § 6.2-2217, the total amount of charges licensees received from borrowers related to the repossession and sale of vehicles, and the percentage of all title loan contracts that resulted in a repossession of a vehicle; and

6. A summary of pending and completed enforcement actions, which shall include lists of suspended or revoked licenses, cease and desist orders, and civil penalties pursuant to this chapter.

2010, c. 477, § 6.1-490; 2020, cc. 1215, 1258.

§ 6.2-2211. Other reporting requirements.

Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the Commission describing such event and its expected impact upon the business of the licensee:

1. The filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;

2. The institution of administrative or regulatory proceedings against the licensee by any governmental authority;

3. Any felony indictments of the licensee or any of its members, partners, directors, officers, or principals;

4. Any felony conviction of the licensee or any of its members, partners, directors, officers, or principals; and

5. Such other event as the Commission may prescribe by regulation.

2010, c. 477, § 6.1-491.

§ 6.2-2212. Investigations; examinations.

The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any person licensed or required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of licensees shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, trustees, beneficiaries, and employees of such person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

2010, c. 477, § 6.1-492.

§ 6.2-2213. Annual fees.

A. In order to defray the costs of their examination, supervision, and regulation, every licensee under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of such licensees, the actual costs of their examinations, and other factors relating to their supervision and regulation. All such fees shall be assessed on or before September 15 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before October 15 following each assessment.

B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee under this chapter at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision, and regulation, or shall pay at a reasonable per diem rate approved by the Commission.

2010, c. 477, § 6.1-493.

§ 6.2-2214. Regulations.

The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules of Practice and Procedure.

2010, c. 477, § 6.1-494.

§ 6.2-2215. Required and prohibited business methods.

Each licensee shall comply with the following requirements and prohibitions:

1. A licensee shall not make a loan that does not comply with § 6.2-2215.1;

2. A licensee shall not charge, collect, or receive, directly or indirectly, credit insurance premiums, charges for any ancillary product sold, charges for disbursing loan proceeds or refunds including check-cashing charges and any other charges for negotiating forms of payment other than cash, charges for brokering or obtaining a loan, or any fees, interest, or charges in connection with a loan, other than fees and charges permitted by § 6.2-2216;

3. A licensee shall not make a loan to a person if that person is obligated upon any loan to a person licensed under Chapter 18 (§ 6.2-1800 et seq.). Prior to making a loan, a licensee shall make a reasonable attempt to verify the prospective borrower's eligibility under this section which shall include reviewing the files of any affiliate that is licensed under Chapter 18. Unless the Commission requires otherwise by administrative rule or policy statement, a licensee may rely on the loan applicant's written representations with respect to the applicant's obligations to lenders that are licensed under Chapter 18 but are not affiliates of the licensee and a licensee is not subject to any administrative penalty or civil liability if such representations are later determined to be inaccurate;

4. Except as provided in § 6.2-2216.2, a licensee shall not refinance, renew, or extend any title loan or make a loan to a person if the loan would cause the person to have more than one title loan from any licensee outstanding at the same time;

5. Before entering into a motor vehicle title loan, a licensee shall provide each borrower with a pamphlet, in a form consistent with regulations adopted by the Commission, explaining in plain language the rights and responsibilities of the borrower and providing a toll-free number at the Commission for assistance with complaints;

6. A licensee shall not cause any person to be obligated to the licensee in any capacity at any time in the principal amount of more than $2,500;

7. A licensee shall not obtain any agreement from the borrower (i) giving the licensee or any third person power of attorney or authority to confess judgment for the borrower; (ii) authorizing the licensee or any third party to bring suit against the borrower in a court outside the Commonwealth; or (iii) waiving the borrower's right to legal recourse or any other right the borrower has under any otherwise applicable provision of state or federal law;

8. A motor vehicle title loan agreement shall not (i) contain a provision by which a person acting on behalf of the licensee is treated as an agent of the borrower in connection with its formation or execution other than for purposes of filing or releasing a lien with the state where the motor vehicle is registered or (ii) be sold or otherwise assigned to any other person who is not also a licensee, and if a loan agreement is sold or assigned to another licensee, the buyer or assignee of the loan agreement shall be subject to the same obligations under this chapter that apply to the selling or assigning licensee. If a motor vehicle title loan or its servicing is sold or assigned, a licensee shall provide to the borrower written notice and the information needed to make future payments no later than 10 days before the borrower's next payment due date;

9. Loan proceeds shall be disbursed (i) in cash, (ii) by the licensee's business check, or (iii) by debit card provided that the borrower will not be directly charged a fee by the licensee in connection with the withdrawal of the funds. No fee shall be charged by the licensee or affiliate for cashing a title loan proceeds check;

10. A licensee shall not (i) accept a check, real or personal property, or any interest in any property other than the title of one motor vehicle owned by the borrower as security for a title loan; (ii) create or accept any remotely created check, as defined in 12 C.F.R. § 229.2(fff), in connection with a loan; (iii) draft funds electronically from a borrower's account without express written authorization from the borrower; (iv) fail to stop attempts to draft funds electronically from a borrower's account upon request from the borrower or his agent; or (v) require or accept from a borrower a set of keys to a motor vehicle that secures a loan. Nothing in this subdivision shall prohibit the conversion of a negotiable instrument into an electronic form for processing through the automated clearing house system. For purposes of this subdivision, "motor vehicle" includes any accessories or accessions to a motor vehicle that are affixed thereto;

11. A licensee shall not attempt to draft funds electronically from a borrower's account after two consecutive attempts have failed, unless the licensee obtains new written authorization from the borrower to transfer or withdraw funds electronically from the borrower's account;

12. A licensee shall not make a motor vehicle title loan if, on the date the loan agreement is signed by the borrower, the motor vehicle's certificate of title evidences that the motor vehicle is security for another loan or otherwise is encumbered by a lien;

13. A licensee shall (i) hold the certificate of title to the motor vehicle throughout the period that the loan agreement is in effect and (ii) within seven days following the date of the motor vehicle title loan agreement, file to have its security interest in the motor vehicle added to its certificate of title by complying with the requirements of § 46.2-637, or in the case of a motor vehicle registered in a state other than the Commonwealth by complying with that state's requirements for perfecting a security interest in a motor vehicle;

14. A licensee shall not knowingly make a title loan to a borrower to enable the borrower to (i) pay for any other product or service sold at the licensee's business location or by an affiliate or (ii) repay any amount owed to the licensee or an affiliate of the licensee in connection with another credit transaction;

15. A licensee shall conspicuously post in each licensed location (i) a schedule of finance charges on a title loan, using as an example a $1,000 loan that is repaid over a 12-month period and (ii) a notice containing the following statement: "Should you wish to file a complaint against us, you may contact the Bureau of Financial Institutions at [insert contact information]." The Commission shall furnish licensees with the appropriate contact information;

16. A licensee or affiliate shall not knowingly make a motor vehicle title loan to a covered member of the armed forces or a dependent of such member. Prior to making a motor vehicle title loan, every licensee or affiliate shall inquire of every prospective borrower if the individual is a covered member of the armed forces or a dependent of a covered member. The prospective borrower shall affirm in writing to the licensee or affiliate if he is not a covered member of the armed forces or a dependent of a covered member. For purposes of this section, "covered member of the armed forces" means a person on active duty under a call or order that does not specify a period of 30 days or less or on active guard and reserve duty. For purposes of this section, "dependent of a covered member of the armed forces" means the member's spouse, the member's child as defined by 38 U.S.C. § 101 (4), or an individual for whom the member provided more than one-half of the individual's support for 180 days immediately preceding the date the motor vehicle title loan is sought;

17. In collecting or attempting to collect a motor vehicle title loan, a licensee shall comply with the restrictions and prohibitions applicable to debt collectors contained in the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.) regarding harassment or abuse, false, misleading or deceptive statements or representations, and unfair practices in collections;

18. A licensee shall not contact a borrower for any reason other than (i) for the borrower's benefit regarding upcoming payments, options for obtaining loans, payment options, payment due dates, the effect of default, or, after default, receiving payments or other actions permitted by the licensee; (ii) to advise the borrower of missed payments or dishonored checks; (iii) to advise the borrower regarding a repossessed or surrendered vehicle; or (iv) to assist the transmittal of payments via a third-party mechanism;

19. A licensee shall not make a loan to a borrower that includes an acceleration clause or a demand feature that permits the licensee, in the event the borrower fails to meet the repayment terms for any outstanding balance, to terminate the loan in advance of the original maturity date and to demand repayment of the entire outstanding balance, unless both of the following conditions are met: (i) not earlier than 10 days after the borrower's payment was due, the licensee provides written notice to the borrower of the termination of the loan and (ii) in addition to the outstanding balance, the licensee collects only prorated interest and the fees earned up to the date the loan was terminated or the borrower's vehicle was repossessed or surrendered, whichever is earlier. For purposes of this subsection, the outstanding balance and prorated interest and fees shall be calculated as if the borrower had voluntarily prepaid the loan in full on the date of termination, repossession, or surrender;

20. A licensee shall not recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested;

21. A licensee shall not (i) engage in any unfair, misleading, deceptive, or fraudulent acts or practices in the conduct of its business or (ii) threaten, or cause to be instigated, criminal proceedings against a borrower arising from the borrower's failure to pay any sum due under a loan agreement;

22. A licensee shall provide a safe place for the keeping of all certificates of title while they are in its possession;

23. A licensee may require a borrower to purchase or maintain property insurance upon a motor vehicle securing a title loan made pursuant to this chapter. A licensee may not require the borrower to obtain such insurance from a particular provider; and

24. If a licensee or any person acting at its direction takes possession of a motor vehicle securing a title loan, the vehicle and any personal items in it shall be stored in a secure location.

2010, c. 477, § 6.1-495; 2011, c. 418; 2016, c. 501; 2020, cc. 1215, 1258.

§ 6.2-2215.1. Loan terms and conditions.

A licensee may engage in the business of making motor vehicle title loans provided that each loan meets all of the following conditions:

1. The total amount of the loan does not exceed $2,500.

2. The minimum duration of the loan is six months and the maximum duration of the loan is 24 months; however, the minimum duration of the loan may be less than six months if the total monthly payment on the loan does not exceed the greater of an amount that is (i) five percent of the borrower's verified gross monthly income or (ii) six percent of the borrower's verified net monthly income.

3. The loan is made pursuant to a written loan contract that sets forth the terms and conditions of the loan, which shall be signed by the borrower and a person authorized by the licensee to sign such agreements and dated the same day the loan is made and disbursed. A copy of the signed loan contract shall be provided to the borrower. The loan contract shall disclose in a clear and concise manner all of the following:

a. The principal amount of the loan and the total amount of fees and charges the borrower will be required to pay in connection with the loan pursuant to the loan contract.

b. The amount of each payment of principal and interest, when each payment is due, the total number of payments that the borrower will be required to make under the loan contract, and the loan's maturity date.

c. The make, model, year, and vehicle identification number of the motor vehicle in which a security interest is being given as security for the loan, and the fair market value of the vehicle which value the licensee shall determine by reference to the value for the motor vehicle specified in a recognized pricing guide if the motor vehicle is included in a recognized pricing guide.

d. A statement, printed in a minimum font size of 10 points, that informs the borrower that complaints regarding the loan or lender may be submitted to the Bureau and includes the correct telephone number, website address, and mailing address for the Bureau.

e. Any disclosures required under the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) and its implementing regulations, as they may be amended from time to time.

f. The annual percentage rate.

g. A statement, printed in a minimum font size of 10 points, as follows: "This loan is made pursuant to Chapter 22 of Title 6.2 of the Code of Virginia. You have the right to rescind or cancel this loan by returning the loan proceeds check or the originally contracted loan amount by 5 p.m. of the third business day immediately following the day you enter into this contract."

h. A statement, printed in a minimum font size of 10 points, as follows: "Electronic payment is optional. You have the right to revoke or remove your authorization for electronic payment at any time."

i. The borrower's mailing address.

j. A statement, printed in at least 14-point bold type immediately above the borrower's signature, as follows:

YOU ARE PLEDGING YOUR MOTOR VEHICLE AS COLLATERAL FOR THIS LOAN. IF YOU FAIL TO REPAY THE LOAN PURSUANT TO THIS AGREEMENT, WE MAY REPOSSESS YOUR MOTOR VEHICLE.

UNLESS YOU CONCEAL OR INTENTIONALLY DAMAGE THE MOTOR VEHICLE, OR OTHERWISE IMPAIR OUR SECURITY INTEREST BY PLEDGING THE MOTOR VEHICLE TO A THIRD PARTY OR PLEDGING A MOTOR VEHICLE TO US THAT IS ALREADY SUBJECT TO AN UNDISCLOSED EXISTING LIEN, YOUR LIABILITY FOR DEFAULTING UNDER THIS LOAN IS LIMITED TO THE LOSS OF THE MOTOR VEHICLE.

IF YOUR MOTOR VEHICLE IS SOLD DUE TO YOUR DEFAULT, YOU ARE ENTITLED TO ANY SURPLUS OBTAINED AT SUCH SALE BEYOND WHAT IS OWED PURSUANT TO THIS AGREEMENT ALONG WITH ANY REASONABLE COSTS OF RECOVERY AND SALE.

k. Such other information relating to the loan as the Commission shall determine, by regulation, is necessary to ensure that the borrower is provided adequate notice of the relevant provisions of the loan.

4. The loan is a precomputed loan and is payable in substantially equal installments consisting of principal, fees, and interest combined. For purposes of this section, "precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of fees and interest computed in advance on the assumption that all scheduled payments will be made when due.

5. The loan may be rescinded or canceled on or before 5 p.m. of the third business day immediately following the day of the loan transaction upon the borrower returning the original loan proceeds check or paying to the licensee, in the form of cash or other good funds instrument, the loan proceeds.

2020, cc. 1215, 1258.

§ 6.2-2216. Authorized fees and charges.

A. A licensee may charge, collect, and receive only the following fees and charges in connection with a motor vehicle title loan, provided such fees and charges are set forth in the written loan contract described in § 6.2-2215.1:

1. Interest at a simple annual rate not to exceed 36 percent;

2. Subject to § 6.2-2216.1, a monthly maintenance fee that does not exceed the lesser of eight percent of the originally contracted loan amount or $15, provided the fee is not added to the loan balance on which interest is charged;

3. Any deposit item return fee incurred by the licensee, not to exceed $25, if a borrower's check or electronic draft is returned because the account on which it was drawn was closed by the borrower or contained insufficient funds, or the borrower stopped payment of the check or electronic draft;

4. Damages and costs to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default, except that the total amount of damages and costs shall not exceed the originally contracted loan amount;

5. Reasonable costs of repossession and sale of the motor vehicle in accordance with § 6.2-2217, provided that the total amount of such costs of repossession and sale that a licensee or any person working on its behalf may charge or receive from the borrower shall be limited to an amount equal to five percent of the originally contracted loan amount; and

6. A late charge in accordance with the provisions of § 6.2-400 provided that the late charge shall not exceed $20.

B. Notwithstanding anything set forth in subsection A, other provisions of this chapter, or in a motor vehicle title loan agreement, interest shall not accrue on the principal balance of a motor vehicle title loan from and after:

1. The date that the motor vehicle securing the title loan is repossessed by or at the direction of the licensee; or

2. Sixty days after the borrower has failed to make a monthly payment on a motor vehicle title loan as required by the loan agreement unless the borrower has not surrendered the motor vehicle and the borrower is concealing the motor vehicle.

C. A licensee shall not be entitled to collect or recover from a borrower any sum otherwise permitted pursuant to § 6.2-302, 8.01-27.2, or 8.01-382. In no event shall the borrower be liable for fees incurred in connection with the storage of a motor vehicle securing a title loan.

D. If any person causes a borrower to pay fees related to repossession or sale of the motor vehicle in excess of the amount allowed under subdivision A 5, or any fee to store the motor vehicle, the borrower shall be entitled to recover such amounts or fees from the licensee upon presenting a valid receipt.

2010, c. 477, § 6.1-496; 2020, cc. 1215, 1258.

§ 6.2-2216.1. Inflation adjustment of maximum monthly maintenance fee.

The Commission may, from time to time, by regulation, adjust the dollar amount of $15 specified in subdivision A 2 of § 6.2-2216 to reflect the rate of inflation from the previous date that the dollar amount was established, as measured by the Consumer Price Index or other method of measuring the rate of inflation which the Commission determines is reliable and generally accepted.

2020, cc. 1215, 1258.

§ 6.2-2216.2. Refinancing of motor vehicle title loan.

Subject to subsection F of § 6.2-2216.3, a licensee may refinance a title loan, provided that the refinanced loan is also a title loan.

2020, cc. 1215, 1258.

§ 6.2-2216.3. Statement of balance due; repayment and refunds.

A. The licensee shall, upon the request of the borrower or his agent, provide a statement of balance due on a motor vehicle title loan.

B. A borrower shall be permitted to make partial payments, in increments of not less than $5, on the loan at any time prior to maturity, without charge. The licensee shall give the borrower dated receipts for each payment made, which shall state the updated balance due on the loan.

C. When providing a statement of balance due on the loan, the licensee shall state the amount required to discharge the borrower's obligation in full as of the date the notice is provided and for each of the next three business days following that date. If the licensee cannot reasonably supply a firm statement of balance due when requested or required, the licensee may provide a good faith estimate of the balance due immediately and provide to the borrower or his agent a firm statement of balance due within two business days.

D. The licensee shall provide any statement of balance due verbally and in writing, and shall not fail to provide the information by phone upon the request of the borrower or his agent.

E. A licensee shall not fail to accept cash or other good funds instrument from the borrower, or a third party when submitted on behalf of the borrower, for repayment of a title loan in full or in part. Payments shall be credited by the licensee on the date received.

F. Notwithstanding any other provision of law, if a title loan is prepaid in full or refinanced prior to the loan's maturity date, the licensee shall refund to the borrower a prorated portion of loan charges based on a ratio of the number of days the loan was outstanding and the number of days for which the loan was originally contracted. For purposes of this section, all charges made in connection with the loan shall be included when calculating the loan charges except for deposit item return fees, late charges, and reasonable costs of repossession and sale authorized under § 6.2-2216.

G. The licensee shall provide any refund due to a borrower in the form of cash or business check as soon as reasonably possible and not later than two business days after receiving payment from the borrower.

H. Upon repayment of the loan in full, the licensee shall (i) mark the original loan agreement with the word "paid" or "canceled," return it to the borrower, and retain a copy in its records and (ii) promptly release any security interest in a motor vehicle.

I. When releasing a security interest in a motor vehicle, a licensee shall (i) take any action necessary to reflect the termination of its lien on the motor vehicle's certificate of title and (ii) promptly return the certificate of title to the borrower.

2020, cc. 1215, 1258.

§ 6.2-2216.4. Restriction on certain fees and charges.

Notwithstanding any provision of this chapter to the contrary, a licensee shall not contract for, charge, collect, or receive in connection with a motor vehicle title loan a total amount of fees and charges that exceeds either (i) 50 percent of the originally contracted loan amount, if the originally contracted loan amount was $1,500 or less, or (ii) 60 percent of the originally contracted loan amount, if the originally contracted loan amount was greater than $1,500. For purposes of this section, all charges made in connection with the loan shall be included when calculating the total loan charges except for deposit item return fees, late charges, and reasonable costs of repossession and sale authorized under § 6.2-2216.

2020, cc. 1215, 1258.

§ 6.2-2216.5. Verification of borrower's income.

Before initiating a motor vehicle title loan transaction with a borrower, a licensee shall make a reasonable attempt to verify the borrower's income. At a minimum, the licensee shall obtain from the borrower one or more recent pay stubs or other written evidence of recurring income, such as a bank statement. The written evidence shall include at least one document that, when presented to the licensee, is dated not earlier than 45 days prior to the borrower's initiation of the title loan transaction.

2020, cc. 1215, 1258.

§ 6.2-2217. Limited recourse; repossession and sale of motor vehicle.

A. Except as otherwise provided in subsection E, a licensee taking a security interest in a motor vehicle pursuant to this chapter shall be limited, upon default by the borrower, to seeking repossession of, preparing for sale, and selling the motor vehicle in accordance with Title 8.9A. Unless (i) the licensee, at least 10 days prior to repossessing the motor vehicle securing a title loan, has sent to the borrower, by first class mail, written notice advising the borrower that his title loan is in default and stating that the motor vehicle may be repossessed unless the principal and interest owed under the loan agreement are paid and (ii) the borrower does not pay such principal and interest prior to the date the motor vehicle is repossessed by or at the direction of the licensee, then the licensee shall not collect or charge the costs of repossessing and selling the motor vehicle described in subdivision A 5 of § 6.2-2216. A licensee shall not repossess a motor vehicle securing a title loan prior to the date specified in the notice. Except as otherwise provided in subsection E, a licensee shall not seek or obtain a personal money judgment against a borrower for any amount owed under a loan agreement or any deficiency resulting after the sale of a motor vehicle.

B. At least 15 days prior to the sale of a motor vehicle, a licensee shall (i) notify the borrower of the date and time after which the motor vehicle is subject to sale and (ii) provide the borrower with a written accounting of the redemption amount, which shall be the sum of the principal amount due to the licensee, interest accrued through the date the licensee took possession of the motor vehicle, and any reasonable expenses incurred to date by the licensee in taking possession of, preparing for sale, and selling the motor vehicle. At any time prior to such sale, the licensee shall permit the borrower to redeem the motor vehicle by tendering cash or other good funds instrument for the principal amount due to the licensee, interest accrued through the date the licensee took possession, and any allowable fees or costs of repossessing and selling the motor vehicle described in subdivision A 5 of § 6.2-2216. Borrowers shall be permitted to recover personal items from repossessed motor vehicles promptly and at no cost.

C. Within 10 days of the licensee's receipt of funds from the sale of a motor vehicle, the borrower is entitled to receive all proceeds from such sale of the motor vehicle in excess of the redemption amount included in the notice described in subsection B, less any additional allowable fees or costs of repossessing and selling the motor vehicle described in subdivision A 5 of § 6.2-2216 that were not included in the redemption amount.

D. Except in the case of fraud or a voluntary surrender of the motor vehicle, a licensee shall not take possession of a motor vehicle until such time as a borrower is in default under the loan agreement. Except as otherwise provided in this chapter, the repossession and sale of a motor vehicle shall be subject to the provisions of Title 8.9A.

E. Notwithstanding any provision to the contrary, but subject to § 6.2-2216, upon default by a borrower, a licensee may seek a personal money judgment against the borrower for any amounts owed under a loan agreement if the borrower impairs the licensee's security interest by (i) intentionally damaging or destroying the motor vehicle, (ii) intentionally concealing the motor vehicle, (iii) giving the licensee a lien in a motor vehicle that is already encumbered by an undisclosed prior lien, or (iv) subsequently giving a security interest in, or selling, a motor vehicle that secures a title loan to a third party, without the licensee's written consent.

2010, c. 477, § 6.1-497; 2020, cc. 1215, 1258.

§ 6.2-2218. Advertising.

A. No person licensed or required to be licensed under this chapter shall use or cause to be published any advertisement that (i) contains any false, misleading, or deceptive statement or representation or (ii) identifies the person by any name other than the name set forth on the license issued by the Commission.

B. Any advertising materials used to promote the price, cost, or interest rate of motor vehicle title loans shall disclose the amount of any minimum monthly payments and a statement of finance charges, expressed as an annual percentage rate, payable using as an example a $1,000 loan that is repaid over a 12-month period. In any print media advertisement, including any web page, used to promote motor vehicle title loans, the disclosure shall be conspicuous. "Conspicuous" shall have the meaning set forth in subdivision (a) (14) of § 59.1-501.2. If a single advertisement consists of multiple pages, folds, or faces, the disclosure requirement applies only to one page, fold, or face. In a television advertisement used to promote motor vehicle title loans, the visual disclosure legend shall include 20 scan lines in size. In a radio advertisement or advertisement communicated by telephone used to promote motor vehicle title loans, the disclosure statement shall last at least two seconds and the statement shall be spoken so that its contents may be easily understood.

2010, c. 477, § 6.1-498.

§ 6.2-2218.1. Other business.

A licensee shall not conduct the business of making motor vehicle title loans under this chapter at any office, suite, room, or place of business where any other business is solicited or conducted except a registered check cashing business, a short-term loan business licensed under Chapter 18 (§ 6.2-1800 et seq.), 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. No such other business shall be allowed except as permitted by Commission regulation or upon the filing of a written application with the Commission, payment of a $300 fee, or other reasonable amount that the Commissioner may set, and provision of such information as the Commission may deem pertinent. The Commission shall not, however, permit the sale of insurance or the enrolling of borrowers under group insurance policies. This section shall not apply to any other business that is transacted solely with persons residing outside the Commonwealth.

2020, cc. 1215, 1258.

§ 6.2-2219. Suspension or revocation of license.

A. The Commission may suspend or revoke any license issued under this chapter upon any of the following grounds:

1. Any ground for denial of a license under this chapter;

2. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the licensee's business;

3. A course of conduct consisting of the failure to perform written agreements with borrowers;

4. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;

5. Entry of a judgment against the licensee involving fraud, misrepresentation, or deceit;

6. Entry of a federal or state administrative order against the licensee for violation of any law or any regulation applicable to the conduct of his business;

7. Refusal to permit an investigation or examination by the Commission;

8. Failure to pay any fee or assessment imposed by this chapter; or

9. Failure to comply with any order of the Commission.

B. For the purposes of this section, acts of any officer, director, member, partner, trustee, beneficiary, or principal shall be deemed acts of the licensee.

2010, c. 477, § 6.1-499.

§ 6.2-2220. Cease and desist orders.

If the Commission determines that any person has violated any provision of this chapter or any regulation adopted by the Commission pursuant thereto, or violated any other law or regulation applicable to the conduct of a licensee's business, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the Clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at such hearing. Such hearing shall be conducted in accordance with the Commission's Rules of Practice and Procedure. The Commission may enforce compliance with any order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.

2010, c. 477, § 6.1-500.

§ 6.2-2221. Notice of proposed suspension or revocation.

The Commission shall not revoke or suspend the license of any person licensed under this chapter upon any of the grounds set forth in § 6.2-2219 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the licensee or other address authorized under § 12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the Clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules of Practice and Procedure.

2010, c. 477, § 6.1-501.

§ 6.2-2222. Fines for violations.

In addition to the authority conferred under §§ 6.2-2219 and 6.2-2220, the Commission may impose a fine or penalty not exceeding $1,000 upon any person who it determines, in proceedings commenced in accordance with the Commission's Rules of Practice and Procedure, has violated any of the provisions of this chapter or regulations promulgated by the Commission pursuant thereto, or violated any other law or regulation applicable to the conduct of a licensee's business. For the purposes of this section, each separate violation shall be subject to the fine or penalty herein prescribed and, in the case of a violation of § 6.2-2201, each loan made or arranged shall constitute a separate violation.

2010, c. 477, § 6.1-502.

§ 6.2-2223. Criminal penalty.

Any person violating § 6.2-2201 shall, upon conviction, be guilty of a Class 1 misdemeanor. For the purposes of this section, each violation shall constitute a separate offense.

2010, c. 477, § 6.1-503.

§ 6.2-2224. Validity of noncompliant loan agreement; private right of action.

A. If any provision of a motor vehicle title loan agreement violates a requirement of this chapter, such provision shall be unenforceable against the borrower.

B. Any person who suffers loss by reason of a violation of any provision of this chapter may bring a civil action to enforce such provision. Any person who is successful in such action shall recover reasonable attorney fees, expert witness fees, and court costs incurred by bringing such action.

2010, c. 477, § 6.1-504; 2020, cc. 1215, 1258.

§ 6.2-2225. Application of chapter to Internet loans.

The provisions of this chapter, including specifically the licensure requirements of § 6.2-2201, shall apply to persons making motor vehicle title loans over the Internet to Virginia residents or any individuals in Virginia, whether or not the person making the loan maintains a physical presence in the Commonwealth.

2010, c. 477, § 6.1-505; 2011, c. 418.

§ 6.2-2226. Authority of Attorney General; referral by Commission to Attorney General.

A. If the Commission determines that a person is in violation of, or has violated, any provision of this chapter, the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations. With or without such referral, the Attorney General is hereby authorized to seek to enjoin violations of this chapter. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law.

B. The Attorney General may also seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law. Persons entitled to any relief as authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.

C. In any action brought by the Attorney General by virtue of the authority granted in this section, the Attorney General shall be entitled to seek reasonable attorney fees and costs.

2010, c. 477, § 6.1-506; 2020, cc. 1215, 1258.

§ 6.2-2227. Violation of the Virginia Consumer Protection Act.

Any violation of the provisions of this chapter shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).

2010, c. 477, § 6.1-507.