2march95.....1152h
1995 SESSION 0469L
95-0568
09/02
HOUSE BILL 244
AN ACT relative to refund anticipation loans and authorizing fees for such loans.
SPONSORS: Rep. Hunt, Ches 10; Sen. Fraser, Dist 4
COMMITTEE: Commerce, Small Business, Consumer Affairs and Economic Development
AMENDED ANALYSIS
This bill requires persons who facilitate refund anticipation loans to be registered with the banking department as facilitators of refund anticipation loans. The bill establishes regulations for such facilitators and grants rulemaking authority to the bank commissioner to further regulate such facilitators.
This bill was requested by the banking department.
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EXPLANATION: Matter added to current law appears in bold italics.
Matter removed from current law appears in [brackets].
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
2march95.....1152h
0469L
95-0568
09/02
HB 244
STATE OF NEW HAMPSHIRE
In the year of Our Lord
One Thousand Nine Hundred and Ninety-Five
AN ACT
relative to refund anticipation loans and
authorizing fees for such loans.
Be it Enacted by the Senate and House of
Representatives in General Court convened:
1 New Subdivision; Refund Anticipation Loans. Amend RSA 399-A by inserting after section 26 the following new subdivision:
Refund Anticipation Loans
399-A:27 Definitions. In this subdivision:
I. "Applicant" means a person who applies for registration as a facilitator of refund anticipation loans.
II. "Creditor" means a person who makes a refund anticipation loan.
III. "Facilitator" means a person who individually or in conjunction or cooperation with another person processes, receives, or accepts for delivery an application for a refund anticipation loan or a check in payment of refund anticipation loan proceeds or in any other manner facilitates the making of a refund anticipation loan.
IV. "Refund anticipation loan" means a small loan that a registrant arranges to be repaid directly from the proceeds of the borrower's income tax refund.
V. "Refund anticipation loan fee" means the charges, fees, or other consideration charged or imposed by the creditor for the making of the refund anticipation loan. This term does not include any charge, fee, or other consideration usually charged or imposed by the registrant in the ordinary course of business for nonloan services, such as fees for tax return preparation and fees for electronic filing of tax returns.
VI. "Registrant" means a person who is registered as a facilitator of refund anticipation loans under this subdivision.
399-A:28 Purpose; Scope. The purpose of this subdivision is to ensure that the borrowing public is provided with disclosures and protections in
negotiating and consummating refund anticipation loans. In furtherance of that end, any person brokering or facilitating refund anticipation loans, whether compensated for services by the borrower or otherwise, shall be registered as a facilitator under this subdivision.
399-A:29 Registration Requirement. No person may individually or in conjunction or cooperation with another person process, receive, or accept for delivery an application for a refund anticipation loan or a check in payment of refund anticipation loan proceeds without first being registered under this subdivision with the banking department.
399-A:30 Registration Procedure.
I. An application to become registered as a facilitator shall be in writing, under oath, and in a form prescribed by the commissioner. The application shall contain all information prescribed by the commissioner. Each application for registration shall be accompanied by a fee of $250 for each office where the registrant intends to facilitate refund anticipation loans.
II. Upon the filing of an application for registration, if the commissioner finds that the responsibility and general fitness of the applicant are such as to command the confidence of the community and to warrant belief that the business of facilitating refund anticipation loans will be operated within the purposes of this subdivision, the commissioner shall register the applicant as a facilitator of refund anticipation loans and shall issue and transmit to the applicant a certificate attesting to the registration. If the commissioner does not so find, the commissioner shall not register the applicant and shall notify the applicant of the reasons for the denial.
III. Each registration as a facilitator of refund anticipation loans shall expire on December 31 following the date it was issued, unless it is renewed for the succeeding year. Before the registration expires, the registrant may renew the registration by filing an application for renewal with the commissioner in the form and containing all information prescribed by the commissioner. Each application for renewal of registration shall be accompanied by a fee of $100 for each office where the registrant intends to facilitate refund anticipation loans during the succeeding year.
Upon the filing of an application for renewal of registration, the commissioner shall renew the registration unless the commissioner determines that the fitness of the registrant or the operations of the registrant would not support registration of the registrant under this subdivision. If the commissioner makes such a determination, the commissioner shall notify the registrant, stating the reasons for the determination.
IV. Each registrant shall prominently display a certificate of registration issued under this subdivision in each place of business in New Hampshire where the registrant facilitates the making of refund anticipation loans.
399-A:31 Exemptions. The provisions of this subdivision shall not apply to any bank, trust company, savings and loan association, profit sharing and pension trust, credit union or thrift institution which may be chartered by this state or any other state or by any agency of the United States. The subsidiaries and service corporations of such entities shall not be exempt from the provisions of this subdivision. The provisions of this subdivision shall also not apply to a person who does not deal directly with borrowers but who acts solely as an intermediary by processing or transmitting, electronically or otherwise, tax or credit information or by preparing for a facilitator refund anticipation loan checks to be delivered by the facilitator to the borrower.
399-A:32 Filing and Posting of Loan Fees; Disclosures.
I. On or before January 2 of each year, each registrant shall file with the commissioner a schedule of the refund anticipation loan fees for refund anticipation loans to be facilitated by the registrant during the succeeding year. Immediately upon learning of any change in the refund anticipation loan fee for that year, the registrant shall file an amendment with the commissioner setting out the change. Filing is effective upon receipt by the commissioner.
II. Every registrant shall prominently display at each office where the registrant is facilitating refund anticipation loans a schedule showing the current refund anticipation loan fees for refund anticipation loans facilitated at the office and the current electronic filing fees for the
electronic filing of the taxpayer's tax return. Every registrant shall also prominently display on each fee schedule a statement to the effect that the taxpayer may have the tax return filed electronically without also obtaining a refund anticipation loan. No registrant may facilitate a refund anticipation loan unless:
(a) The required fee schedule is displayed; and
(b) The refund anticipation loan fee actually charged is the same as the fee displayed on the schedule and the fee filed with the commissioner pursuant to paragraph I.
III. At the time a borrower applies for a refund anticipation loan, the registrant shall disclose to the borrower on a form separate from the application:
(a) The fee for the loan.
(b) The fee for the electronic filing of a tax return.
(c) The time within which the proceeds of the loan will be paid to the borrower if the loan is approved.
(d) That the borrower is responsible for repayment of the loan and related fees in the event the tax refund is not paid or is not paid in full.
(e) The availability of electronic filing of the taxpayer's tax return, along with the average time announced by the appropriate taxing authority within which a taxpayer can expect to receive a refund if the taxpayer's return is filed electronically and the taxpayer does not obtain a refund anticipated loan.
(f) Examples of the annual percentage rates, as defined by the Truth In Lending Act, 15 U.S.C. 1607 and 12 C.F.R. Section 226.22, for refund anticipation loans of $500, $750, $1,000, $1,500, $2,000, and $3,000.
IV. In calculating the disclosures of the annual percentage rate required by the Truth In Lending Act, the maturity of the loan for the purpose of determining the annual percentage rate disclosure under this section shall be assumed to be no more than 60 days.
399-A:33 Prohibited Activities. A facilitator of refund anticipation loans shall not engage in any of the following activities:
I. Misrepresenting a material factor or condition of a refund
anticipation loan.
II. Failing to arrange for or make a refund anticipation loan promptly after the borrower applies for the loan.
III. Engaging in any transaction, practice, or course of business that operates a fraud upon any person in connection with a refund anticipation loan.
IV. Facilitating a refund anticipation loan for which the refund anticipation loan fee is:
(a) Different from the fee posted or the fee filed with the commissioner; or
(b) In an amount that the commissioner has notified the facilitator is, in the commissioner's determination, excessive.
V. Directly or indirectly taking or arranging for payment of any portion of the refund anticipation loan for check cashing, credit insurance, or any other goods or services not expressly approved by the commissioner.
VI. Taking, or arranging for a creditor to take, a security interest in any property of the borrower other than the proceeds of the borrower's tax refund to secure payment of the loan.
399-A:34 Rules; Enforcement.
I. The commissioner shall adopt rules, pursuant to RSA 541-A, as necessary to effectuate the purposes of this subdivision and to provide for the protection of the borrowing public. In order to enforce this subdivision, the commissioner may make investigations, subpoena witnesses, require audits and reports, and conduct hearings regarding possible violations of its provisions.
II. In addition to any other provisions of this chapter, the commissioner may, in accordance with RSA 541-A, issue cease and desist orders or revoke or suspend a registration issued under this subdivision, or both, if the commissioner is satisfied that the registrant has violated any provisions of this subdivision or this chapter, or has not met the standards established in this chapter.
399-A:35 Penalties. Any person who violates any provision of this subdivision shall be guilty of a misdemeanor for each violation if a
natural person, or guilty of a felony if any other person. In addition to the foregoing, and except in the case of a refund anticipation loan that is not approved by the creditor, a facilitator who fails to deliver to the borrower the proceeds of a refund anticipation loan within 48 hours after the time period promised by the facilitator when the borrower applied for the loan, shall pay to the borrower an amount equal to the refund anticipation loan fee. A facilitator who engages in an activity prohibited under RSA 399-A:33 in connection with a refund anticipation loan is liable to the borrower for damages of 3 times the amount of the refund anticipation loan fee or other unauthorized charge, plus reasonable attorney's fees.
2 Effective Date. This act shall take effect July 1, 1995.
HB 244
LBAO
LSR 95-0568
3/7/95
FISCAL NOTE for an act relative to refund anticipation loans and authorizing fees for such loans.
FISCAL IMPACT:
The Banking Department has determined that this bill, as amended by the House, will have an indeterminable minor fiscal impact on state restricted revenue and expenditures. There will be no fiscal impact on county and local revenues and expenditures.
METHODOLOGY:
The Banking Department states that a fiscal impact cannot be determined since the department does not currently license or otherwise regulate entities which would be subject to the licensing requirements of the bill. Consequently, there are no means available to calculate or estimate the total number of licenses that would be issued under the statutory scheme contemplated by the bill.
Based upon the department's current experience in issuing over 900 licenses a year, the registration fees contemplated by the bill are believed to be sufficient to cover any additional operating expenses the department would incur as a result of registering the limited number of companies anticipated to apply for licenses. It is assumed that this limited additional expense would be incurred by the department in investigating initial and renewal applications; recordkeeping; telephone expense; mailing costs for applications, registration certificates, consumer inquiries and general correspondence; and similar direct costs. These expenses would be offset by the proposed licensing fees. It is projected that general administrative expense (for such items as rent, salaries, etc.) can be absorbed in the current budget without additional funding.