Journal of the House of Representatives
of the First Session of the 111th General Assembly
of the State of South Carolina
being the Regular Session Beginning Tuesday, January 10, 1995

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RETURNED TO THE SENATE WITH AMENDMENTS

The following Bills were taken up, read the third time, and ordered returned to the Senate with amendments.

S. 126 -- Senators Land and Washington: A BILL TO AMEND SECTION 9-8-110(2), CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PAYMENTS ON THE DEATH OF A MEMBER OR BENEFICIARY OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, SO AS TO DELETE THE PROVISION TERMINATING BENEFITS PAID TO THE SURVIVING SPOUSE OF A MEMBER ON HER REMARRIAGE.

S. 547 -- Senator Peeler: A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 5 TO CHAPTER 15, TITLE 56 SO AS TO PROVIDE REQUIREMENTS FOR WHOLESALE MOTOR VEHICLE AUCTIONS AND FOR WHOLESALE MOTOR VEHICLE AUCTION LICENSE PLATES.

S. 285 -- Senators Passailaigue, Rose and McConnell: A BILL TO AMEND SECTION 12-7-20, AS AMENDED, OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS FOR PURPOSES OF THE STATE INCOME TAX, SO AS TO UPDATE THE REFERENCE DATE WHEREBY THIS STATE ADOPTS VARIOUS PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986.

ORDERED ENROLLED FOR RATIFICATION

The following Joint Resolution was read the third time, passed and, having received three readings in both Houses, it was ordered that the title be changed to that of an Act, and that it be enrolled for ratification.

S. 687 -- Finance Committee: A JOINT RESOLUTION TO APPROVE REGULATIONS OF THE DEPARTMENT OF REVENUE, RELATING TO VIDEO GAME MACHINES, DESIGNATED AS REGULATION DOCUMENT NUMBER 1827, PURSUANT TO THE PROVISIONS OF ARTICLE 1, CHAPTER 23, TITLE 1 OF THE 1976 CODE.

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S. 602--AMENDED AND ORDERED TO THIRD READING

The following Bill was taken up.

S. 602 -- Senators Short, Jackson, Gregory and Giese: A BILL TO AMEND SECTION 34-29-100, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO RECORDS AND REPORTS OF RESTRICTED LENDERS, BY ADDING INFORMATION REQUIRED TO BE REPORTED IN THE ANNUAL REPORT MADE BY RESTRICTED LENDERS; TO AMEND SECTION 34-29-140 OF THE 1976 CODE, RELATING TO CHARGES PERMITTED TO RESTRICTED LENDERS, SO AS TO REVISE THE FINANCE CHARGES AND TO PROVIDE LIMITATIONS ON LOAN RENEWALS; TO AMEND SECTION 37-1-301 OF THE 1976 CODE, RELATING TO DEFINITIONS UNDER THE CONSUMER PROTECTION CODE, SO AS TO ADD A DEFINITION FOR "DEBT COLLECTOR"; TO AMEND SECTION 37-1-303 OF THE 1976 CODE, RELATING TO THE INDEX OF DEFINITIONS IN TITLE 37, SO AS TO ADD "DEBT COLLECTOR"; TO AMEND SECTION 37-3-201 OF THE 1976 CODE, RELATING TO LOAN FINANCE CHARGES FOR SUPERVISED LOANS, SO AS TO PROVIDE THAT SUPERVISED LOANS NOT EXCEEDING SIX HUNDRED DOLLARS SHALL BE MADE IN ACCORDANCE WITH SECTION 34-29-140 RELATING TO FINANCE CHARGES FOR RESTRICTED LOANS; TO AMEND SECTION 37-3-305 OF THE 1976 CODE, RELATING TO THE POSTING AND FILING OF MAXIMUM RATE SCHEDULES BY SUPERVISED LENDERS, SO AS TO PROVIDE THAT FOR LOANS NOT EXCEEDING SIX HUNDRED DOLLARS, A RATE MAY NOT BE POSTED WHICH EXCEEDS THE CHARGES IMPOSED IN SECTION 34-29-140; TO AMEND SECTION 37-3-505 OF THE 1976 CODE, RELATING TO RECORDS AND ANNUAL REPORTS FOR SUPERVISED LENDERS, SO AS TO ADD INFORMATION REQUIRED TO BE INCLUDED IN THE ANNUAL REPORT OF SUPERVISED LENDERS; TO AMEND PART 5, CHAPTER 3, TITLE 37 OF THE 1976 CODE, BY ADDING SECTION 37-3-515 SO AS TO PROVIDE A LIMITATION ON LOAN RENEWALS; TO AMEND SECTION 37-5-108 OF THE 1976 CODE, RELATING TO UNCONSCIONABILITY UNDER THE CONSUMER PROTECTION CODE, BY ADDING PARTICULAR CIRCUMSTANCES WHICH CONSTITUTE UNCONSCIONABILITY AND PROVIDING REMEDIES; TO AMEND SECTION 37-6-117 OF THE 1976 CODE, RELATING TO THE ADMINISTRATIVE RESPONSIBILITIES OF THE

Printed Page 3392 . . . . . Thursday, May 11, 1995
ADMINISTRATION OF THE DEPARTMENT OF CONSUMER AFFAIRS, SO AS TO REQUIRE THE ADMINISTRATION TO DEVISE A PAMPHLET FOR DISTRIBUTION TO CERTAIN CONSUMERS INFORMING THEM OF THEIR RIGHTS; AND TO AMEND SECTION 37-9-102 OF THE 1976 CODE, RELATING TO THE LICENSURE ELECTION, SO AS TO PROVIDE THAT CERTAIN SUPERVISED LENDERS MAY ELECT TO BE RESTRICTED LENDERS.

The Labor, Commerce and Industry Committee proposed the following Amendment No. 1 (Doc Name L:\council\legis\amend\GJK\21762SD.95), which was adopted.

Amend the bill, as and if amended, by striking SECTION 3, beginning on line 19, page 6, and inserting:

/SECTION 3. Section 34-29-140 of the 1976 Code is amended by adding an appropriately numbered subsection to read:
"( ) Dollar Limits on Renewals. A licensee under this chapter may not renew a loan more than one time during any fifteen-month period where the actual dollars given to the customer is less than ten percent of the net outstanding loan balance at the time of renewal."/

Amend the bill further, as and if amended, by striking SECTION 4, beginning on line 27, page 6, and inserting:

/SECTION 4. Section 37-1-301 of the 1976 Code is amended by adding appropriately numbered subsections to read:

"( ) `Debt Collector' means any person who collects, attempts to collect, directly or indirectly, debts due or asserted to be owed or due another. The term also includes a creditor who collects, attempts to collect, directly or indirectly, his own debts.

( ) `Licensee' means a supervised lender licensed under Section 37-3-503.

( ) `Cash Advance' means the amount of cash or its equivalent that the borrower actually receives or is paid out at his direction or on his behalf."/

Amend the bill further, as and if amended, by striking SECTION 5, beginning on line 35, page 6, and inserting:

/SECTION 5. Section 37-1-303 of the 1976 Code is amended to read:

"Section 37-1-303. Definitions in this title and the sections in which they appear are:

`Actuarial method'-Section 37-1-301(1)

`Administrator'-Section 37-1-301(2)

`Administrator'-Section 37-6-103

`Agreement'-Section 37-1-301(3)

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`Agricultural purpose'-Section 37-1-301(4)

`Alternative mortgage loan'-Section 37-1-301(5)

`Amount financed'-Section 37-2-111

`Assumption'-Section 37-1-301(5A)

`Billing cycle'-Section 37-1-301(6)

`Card holder'-Section 37-1-301(7)

`Card issuer'-Section 37-1-301(8)

`Cash price'-Section 37-2-110

`Cash Advance'-Section 37-1-301( )

`Conspicuous'-Section 37-1-301(9)

`Consumer'-Section 37-1-301(10)

`Consumer credit insurance'-Section 37-4-103

`Consumer credit sale'-Section 37-2-104

`Consumer credit transaction'-Section 37-1-301(11)

`Consumer lease'-Section 37-2-106

`Consumer loan'-Section 37-3-104

`Contested case'-Section 37-6-402(1)

`Credit'-Section 37-1-301(12)

`Credit Insurance Act'-Section 37-4-103

`Creditor'-Section 37-1-301(13)

`Credit service charge'-Section 37-2-109

`Debt Collector'-Section 37-1-301( )

`Debtor'-Section 37-1-301(14)

`Earnings'-Section 37-1-301(15)

`Federal Truth-in-Lending Act'-Section 37-1-302

`Goods'-Section 37-2-105(1)

`Home solicitation sale'-Section 37-2-501

`Lender'-Section 37-3-107(1)

`Lender credit card or similar

arrangement'-Section 37-1-301(16)

`License'-Section 37-6-402(2)

`Licensee'- Section 37-1-301( )

`Licensing'-Section 37-6-402(3)

`Loan'-Section 37-3-106

`Loan finance charge'-Section 37-3-109

`Merchandise certificate'-Section 37-2-105(2)

`Official fees'-Section 37-1-301(17)

`Organization'-Section 37-1-301(18)

`Party'-Section 37-6-402(4)

`Payable in installments'-Section 37-1-301(19)

`Person'-Section 37-1-301(20)

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`Person related to'-Section 37-1-301(21)

`Precomputed' (loan)-Section 37-3-107(2)

`Precomputed' (sale)-Section 37-2-105(7)

`Presumed' or `presumption'-Section 37-1-301(22)

`Principal'-Section 37-3-107(3)

`Residence'-Section 37-1-301(23)

`Residential manufactured home'-Section 37-1-301(24)

`Residential real property'-Section 37-1-301(25)

`Restricted lender'-Section 37-3-501(4)

`Restricted loan'-Section 37-3-501(3)

`Revolving charge account'-Section 37-2-108

`Revolving loan account'-Section 37-3-108

`Rule'-Section 37-6-402(5)

`Sale of an interest in land'-Section 37-2-105(6)

`Sale of goods'-Section 37-2-105(4)

`Sale of services'-Section 37-2-105(5)

`Seller'-Section 37-2-107

`Seller credit card'-Section 37-1-301(26)

`Services'-Section 37-2-105(3)

`Supervised financial organization'-Section 37-1-301(27)

`Supervised lender'-Section 37-3-501(2)

`Supervised loan'-Section 37-3-501(1)."/

Amend the bill further, as and if amended, by striking SECTION 6, beginning on line 40, page 6, and inserting:

/SECTION 6. Section 37-3-201(2) of the 1976 Code is amended to read:

"(2) With respect to a consumer loan, including a loan pursuant to open-end credit, a supervised lender may contract for and receive a loan finance charge, calculated according to the actuarial method, not exceeding the greater of either of the following:

(a) any rate filed and posted pursuant to Section 37-3-305; or

(b) eighteen percent per year on the unpaid balances of principal. as provided:

(a) on loans with a cash advance not exceeding six hundred dollars, a maximum charge not exceeding the maximum charges imposed in Section 34-29-140 as disclosed as an annual percentage rate, provided that a supervised lender may impose a finance charge at a rate less than provided in Section 34-29-140, and provided further that the maximum charge shall not exceed the rate posted and filed pursuant to Section 37-3-305;

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(b) on loans with a cash advance exceeding six hundred dollars, and on all loans, regardless of the dollar amount, made by Supervised Financial Organizations, any rate filed and posted pursuant to Section 37-3-305; or

(c) on loans of any amount, eighteen percent per year on the unpaid balances of principal."/

Amend the bill further, as and if amended, by striking SECTION 7, beginning at line 18, page 7, and inserting:

/SECTION 7. Section 37-3-305 of the 1976 Code is amended by adding an appropriately numbered subsection to read:

"( ) On loans with a cash advance not exceeding six hundred dollars, a licensed lender may not post a rate which exceeds the maximum charges imposed in Section 34-29-140 as disclosed as an annual percentage rate or that rate filed and posted pursuant to this section, whichever is less."/

Amend the bill further, as and if amended, by striking SECTION 9, beginning at line 29, page 8, and inserting:

/SECTION 9. Chapter 3 of Title 37 of the 1976 Code is amended by adding:

"Section 37-3-515. A licensed lender may not renew a loan of one thousand dollars or less more than one time during any fifteen-month period where the dollars actually given to the customer is less than ten percent of the net outstanding loan balance at the time of renewal."/

Amend the bill further, as and if amended, by striking SECTION 10, and inserting:

/SECTION 10. Section 37-5-108 of the 1976 Code is amended to read:

"Section 37-5-108. (1) With respect to a transaction that is, gives rise to, or leads the debtor to believe will give rise to, a consumer credit transaction, if the court as a matter of law finds:

(a) the agreement or transaction to have been unconscionable at the time it was made, or to have been induced by unconscionable conduct, the court may refuse to enforce the agreement; or

(b) any term or part of the agreement or transaction to have been unconscionable at the time it was made, the court may refuse to enforce the agreement, enforce the remainder of the agreement without the unconscionable term or part, or so limit the application of any unconscionable term or part as to avoid any unconscionable result and award the consumer any actual damages he has sustained.

(2) With respect to a consumer credit transaction, if the court as a matter of law finds that a person has engaged in, is engaging in, or is likely to engage in unconscionable conduct in collecting a debt arising from that transaction, the court may grant an injunction and award the

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consumer any treble damages he has sustained. In addition, the consumer has a cause of action to recover actual damages and, in an action other than a class action, a right to recover from the person violating this section a penalty in the amount determined by the court of not less than one hundred dollars nor more than one thousand dollars. For purposes of this subsection and subsection (3), the term `collecting a debt' in a consumer credit transaction includes the collection or the attempt to collect any rental charge or any other fee or charge or any item rented to a lessee in connection with a consumer rental-purchase agreement as described in Section 37-2-701(6).

(3) If it is claimed or appears to the court that the agreement or transaction or any term or part thereof may be unconscionable, or that a person has engaged in, is engaging in, or is likely to engage in unconscionable conduct in collecting a debt, the parties shall be afforded a reasonable opportunity to present evidence as to the setting, purpose, and effect of the agreement or transaction or term or part thereof, or of the conduct, to aid the court in making the determination.

(4) In applying subsection (1), consideration must be given to each of the following factors, among others, as applicable:

(a) belief by the seller, lessor, or lender at the time a transaction is entered into that there is no reasonable probability of payment in full of the obligation by the consumer or debtor; provided, however, that the rental renewals necessary to acquire ownership in a consumer rental-purchase agreement shall not be construed to be the obligation contemplated in this code section;

(b) in the case of a consumer credit sale, consumer lease, or consumer rental-purchase agreement, knowledge by the seller or lessor at the time of the sale or lease of the inability of the consumer to receive substantial benefits from the property or services sold or leased;

(c) in the case of a consumer credit sale, consumer lease, consumer rental-purchase agreement, or consumer loan, gross disparity between the price of the property or services sold, leased, or loaned and the value of the property, services, or loan measured by the price at which similar property, services, or loans are readily obtainable in consumer credit transactions by like consumers;

(d) the fact that the creditor contracted for or received separate charges for insurance with respect to a consumer credit sale, consumer loan, or consumer rental-purchase agreement with the effect of making the sale or loan considered as a whole, unconscionable, including the sale of insurance where the consumer could receive no potential benefit as referenced in Section 37-4- 106(1)(a);

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(e) the fact that the seller, lessor, or lender has knowingly taken advantage of the inability of the consumer or debtor reasonably to protect his interests by reason of physical or mental infirmities, ignorance, illiteracy, inability to understand the language of the agreement, or similar factors.
(f) taking a nonpurchase money nonpossessory security interest in household goods defined as the following: clothing, furniture, appliances, one radio and one television, linens, china, crockery, kitchenware, and personal effects (including wedding rings) of the consumer and his or her dependents; provided, that when a purchase money consumer credit transaction is refinanced or consolidated, the security lawfully collateralizing the prior consumer credit transaction can continue to secure the new consumer credit transaction, even if the new consumer credit transaction is for a larger amount or is in other respects a nonpurchase money consumer credit transaction; and provided further, that a nonpurchase money, nonpossessory security interest may be taken in the following:

(i) work of art;

(ii) electronic entertainment equipment (except one television and one radio);

(iii) items acquired as antiques which are over 100 years of age;

(iv) jewelry (except wedding rings).

In construing subsection (f), the courts shall be guided by the interpretations and rulings of the federal courts and the Federal Trade Commission to the Credit Trade Regulation Rule (16 C.F.R. PART 444).
 (5) In applying subsection (2), consideration shall be given to each of the following factors, among others, as applicable:

(a) using or threatening to use force, violence, or criminal prosecution against the consumer or members of his family, including harm to the physical person, reputation, or property of any person;

(b) communicating with the consumer or a member of his family at frequent intervals during a twenty-four hour period or at unusual hours or under other circumstances so that it is a reasonable inference that the primary purpose of the communication was to harass the consumer;. The term `communication' means the conveying of information regarding a debt directly or indirectly to any person through any medium. A creditor or debt collector may not:

(i) communicate with a consumer at any unusual time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary,

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it may be assumed that a convenient time to communicate with a consumer is between 8 a.m. and 9 p.m.;

(ii) communicate with a consumer who is represented by an attorney when such fact is known to the creditor or debt collector unless the attorney consents to direct communication or fails to respond within ten days to a communication;

(iii) contact a consumer at his place of employment after the consumer or his employer has requested in writing that no contacts be made at such place of employment or except as may be otherwise permitted by statute or to verify the consumer's employment;

(iv) communicate with anyone other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the attorney of the creditor or debt collector, unless the consumer or a court of competent jurisdiction has given prior direct permission;

(v) use obscene or profane language or language the natural consequence of which is to abuse the hearer or reader;

(vi) publish a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency;

(vii) cause a telephone to ring repeatedly during a twenty-four hour period or engage any person in a telephone conversation with intent to annoy, abuse, or harass any person at the called number;

(viii) advertise for sale any debt to coerce payment of the debt;

(ix) communicate with a consumer regarding a debt by postcard;

(x) deposit or threaten to deposit any postdated check or other postdated payment instrument requested by the creditor prior to the date on such check or instrument;

(xi) take or threaten to take any nonjudicial action to effect dispossession or disablement of property if:

(aa) there is no present right to possession of the property claimed as collateral through an enforceable security interest or other ownership interest;

(bb) there is no present intention to take possession of the property; or

(cc) the property is exempt by law from such dispossession or disablement; or

(xii) cause charges to be incurred by any person for communications to the consumer by concealment of the true purpose of the communication, such charges include, but are not limited to, collect telephone calls and telegram fees.

(c) using fraudulent, deceptive, or misleading representations such as a communication which simulates legal process or which gives the

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appearance of being authorized, issued, or approved by a government, governmental agency, or attorney at law when it is not, or threatening or attempting to enforce a right with knowledge or reason to know that the right does not exist; in connection with the collection of a consumer credit transaction. Such false representations shall include:

(i) the character, amount, or legal status of any debt;

(ii) any services rendered or fees which may be received, unless such fees are expressly authorized by law;

(iii) a claim of an individual that he is an attorney or that any communication is from an attorney;

(iv) any claim or implication that nonpayment of any debt will result in arrest, imprisonment, garnishment, seizure, or attachment;

(v) a claim or implication that the consumer committed any crime or other conduct to disgrace the consumer;or

(vi) any written communication which simulates or appears to be a document authorized, issued, or approved by any state or federal agency or court or creates a false impression as to its source.

(d) causing or threatening to cause injury to the consumer's reputation or economic status by disclosing information affecting the consumer's reputation for credit-worthiness with knowledge or reason to know that the information is false; communicating with the consumer's employer before obtaining a final judgment against the consumer, except as permitted by statute or to verify the consumer's employment; disclosing to a person, with knowledge or reason to know that the person does not have a legitimate business need for the information, or in any way prohibited by statute, information affecting the consumer's credit or other reputation; or disclosing information concerning the existence of a debt known to be disputed by the consumer without disclosing that fact;

(e) engaging in conduct with knowledge that like conduct has been restrained or enjoined by a court in a civil action by the administrator against any person pursuant to the provisions on injunctions against fraudulent or unconscionable agreements or conduct (Section 37-6-111).

(6) No action at law claiming unconscionable debt collection may be commenced in any court until at least thirty days after the facts and circumstances of any claim of unconscionable conduct in collecting a debt arising out of a consumer credit transaction has been filed in writing with the administrator of the Department of Consumer Affairs. The administrator shall immediately provide to the person or organization complained against with a copy of any complaint alleging unconscionable debt collection practices filed with the Department of Consumer Affairs. The administrator shall immediately provide to the Director of the

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Consumer Finance Division of the Board of Financial Institutions a copy of any written claim of unconscionable conduct in collecting a debt filed against a supervised lender under this title or a restricted lender under Title 34. A creditor or debt collector may only take such action as is authorized by law to protect its collateral during the thirty-day state agency review period. The administrator shall take immediate steps to investigate, evaluate, and attempt to resolve such complaints. The administrator and director shall jointly take immediate steps to investigate, evaluate, and attempt to resolve complaints involving supervised and restricted lenders. If in an action, properly filed after the thirty-day state agency review period with regard to conduct in collecting a debt arising out of a consumer credit transaction, in which unconscionability is claimed the court finds unconscionability pursuant to subsection (1) or (2), the court shall award reasonable fees to the attorney for the consumer or debtor. If the court does not find unconscionability and the consumer or debtor claiming unconscionability has brought or maintained an action he knew to be groundless, the court may award reasonable fees to the attorney for the party against whom the claim is made. In determining attorney's fees, the amount of the recovery on behalf of the consumer is not controlling.

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