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Current Status Bill Number:View additional legislative information at the LPITS web site.3513 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19990211 Primary Sponsor:Kirsh All Sponsors:Kirsh, Gamble and Law Drafted Document Number:l:\council\bills\dka\3193mm99.doc Companion Bill Number:433 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Title Lenders Act, Banks, Consumer Affairs, Protection Code, Motor Vehicles, Acts Cited By Popular Name History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ House 19990211 Introduced, read first time, 26 HLCI referred to Committee Versions of This Bill
TO AMEND TITLE 37, OF THE SOUTH CAROLINA CODE OF LAWS, 1976, RELATING TO THE CONSUMER PROTECTION CODE, BY ADDING CHAPTER 17 SO AS TO ENACT THE "SOUTH CAROLINA TITLE LENDERS ACT", WHICH ESTABLISHES A LICENSURE AND REGULATION FRAMEWORK FOR A PERSON IN THE BUSINESS OF LENDING MONEY ON THE SECURITY OF A MOTOR VEHICLE CERTIFICATE OF TITLE, INCLUDING CIVIL AND CRIMINAL PENALTIES FOR VIOLATIONS OF THE ACT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 37 of the 1976 Code is amended by adding:
Section 37-17-10. This act may be cited as the 'South Carolina Title Lenders Act'.
Section 37-17-20. As used in this chapter:
(1) 'Person' means an individual, a partnership, a corporation, a joint venture, a trust, an association, or another legal entity, however organized.
(2) 'Title lender' means a person engaged in the business of lending money on the security of a motor vehicle certificate of title.
(3)(a) 'Motor vehicle certificate of title' or 'title' means a certificate of title to a motor vehicle as defined in Section 56-1-10(7), except as otherwise provided in this chapter.
(b) 'Motor vehicle certificate of title' does not include a certificate of title to a mobile home or a certificate of title to any other item, regardless of whether it is motorized or self-propelled, which is designed as a dwelling unit.
(4) 'Title loan transaction' means the lending of money by a title lender pursuant to this chapter to a borrower who uses a motor vehicle certificate of title as security for the loan of money.
(5) 'Department' means the Department of Consumer Affairs.
(6) 'Location' means the entire space in which title loan transactions are undertaken. The space must be completely separate from space where goods or services are sold or leased. The location must be separately staffed and may not have a common entrance with any other business not permitted by this chapter.
(7) 'Certificate of authority' means written authorization from the department to a title lender to do business pursuant to this chapter.
Section 37-17-30. (A) A title lender shall conduct business in this State only as provided in this chapter and pursuant to regulations promulgated by the department as necessary to carry out the conditions and intent of this chapter.
(1) A person may not carry on the business of title lending in any location in this State without first obtaining from the department a certificate of authority for each location. Upon receipt of the application for the certificate of authority, the department shall notify the law enforcement agency having jurisdiction where the applicant intends to do business. The law enforcement agency shall conduct a criminal background investigation of the applicant and make the results of the investigation known to the department, along with a recommendation on the issuance of the certificate of authority.
(2) The provisions of this chapter do not apply to a supervised financial organization, as defined in Section 37-1-301(27).
(B) A title lender may not engage in the business of making restricted loans or supervised loans at the same location where title loan transactions are conducted or engage in the retail sale of goods or services at the same location where title loan transactions are conducted.
(C) A person convicted of a felony may not:
(1) be issued a certificate of authority to carry on the business of a title lender;
(2) act as a party to a title loan transaction on behalf of a person to whom a certificate of authority to carry on the business of a title lender has been issued; or
(3) in any manner engage in the business of a title lender.
Section 37-17-40. A title lender may not conduct his business in any location other than the one designated in his certificate of authority.
Section 37-17-50. A title lender may not charge or collect any fees, costs, or assessments other than those specifically allowed by this chapter.
Section 37-17-60. (A) A person seeking a certificate of authority to carry on the business of a title lender shall file with the department, at the time of application for the title lender's certificate of authority, a bond in favor of the department in the amount of five thousand dollars. The bond must be executed by the applicant and by two responsible sureties or a surety company licensed to do business in this State and must be approved by the department. The bond must ensure the faithful performance of the duties and obligations pertaining to the authorized business.
(B) Other evidence of financial responsibility approved by the department may be submitted instead of the surety bond as described in subsection (A), including, but not limited to, a letter of credit or a certificate of deposit.
(C) Each applicant also shall file proof of a net worth in a minimum of thirty-five thousand dollars until he obtains liability insurance covering the contents of the title loan locations. The amount of the liability insurance required must be provided by regulations promulgated by the department.
Section 37-17-70. A person applying for a certificate of authority shall pay to the department a processing fee of two hundred seventy-five dollars for each location and other fees as may be required by investigating law enforcement agencies. The department may promulgate regulations establishing the criteria for obtaining the certificate of authority. A certificate of authority must be renewed on a yearly basis, if the title lender continues to meet the requirements for initial certification, upon payment of a renewal fee of two hundred seventy-five dollars for each location.
Section 37-17-80. (A) A title lender shall record, at the time of a title loan transaction, an account and description of the motor vehicle for which a motor vehicle certificate of title is given, the amount of money loaned on the title, the time of pledging of the title, the charges or the rate of interest on the loan, and the name and residential address of the borrower.
(B) A motor vehicle certificate of title is not effective as security for a loan from a title lender unless he:
(1) has the title deposited with him or otherwise delivered into his possession in the course of his business in connection with a title loan transaction; and
(2) records a lien in accordance with Article 5, Chapter 19, Title 56.
Section 37-17-90. A title lender, at the time of each title loan transaction, shall deliver at no charge to the borrower a written agreement signed by both the title lender and the borrower containing the substance of the entry required by Section 37-17-80(A).
Section 37-17-100. Records kept by a title lender pursuant to this chapter must be open at reasonable times to inspection by court officials, law enforcement officers, the department, and their designees. A loan record identifying an individual must be handled in a confidential manner at all times.
Section 37-17-110. (A) A title lender may charge interest on loans at rates not exceeding:
(1) two dollars and fifty cents for each thirty-day period for every ten dollars lent for the first fifty dollars;
(2) two dollars for each thirty-day period for every ten dollars lent on that portion of the loan which is more than fifty dollars but less than one hundred one dollars;
(3) one dollar and fifty cents for each thirty-day period for every ten dollars lent on that portion of the loan which is more than one hundred dollars but less than two hundred one dollars;
(4) one dollar for each thirty-day period for every ten dollars lent on that portion of the loan which is more than two hundred dollars but less than one thousand one dollars;
(5) fifty cents for each thirty-day period for every ten dollars lent on that portion of the loan which is more than one thousand dollars but less than two thousand one dollars.
(B) A title lender may not separate or divide a title loan transaction into two or more transactions for the purpose, or with the effect, of obtaining a total interest rate in excess of the rate authorized for an amount financed as provided in subsection (A).
(C) A title lender may not make a loan in excess of two thousand dollars.
(D) A title lender shall post the rates provided in subsection (A) in a form prescribed by the department. The following statement must be included in the posted rate schedule:
'Consumers: All title lenders operating in South Carolina are required by law to post a schedule showing the maximum lawful rate of LOAN FINANCE CHARGES, stated as dollars for every ten dollars for each thirty-day period.
NOTE: Title lenders are prohibited from granting credit at rates higher than these, but a title lender may be willing to grant you credit at rates that are lower than these, depending on the amount and terms of the loan, the collateral, and your credit worthiness.
The purpose of this requirement is to assist you in comparing the maximum rates that title lenders charge and in your understanding of the terms of title loan transactions, and to help you to avoid the uninformed use of credit.'
Section 37-17-120. If a title loan transaction is a renewal, a title lender may charge the maximum interest allowed by Section 37-17-100 only during the first ninety days of the title loan transaction. After ninety days, the title lender may charge interest on renewals only at the rate of one-half of the amount for each thirty-day period allowed by Section 37-17-110.
Section 37-17-130. (A) If a title loan remains unpaid sixty days from the due date or any renewal or extension of the due date, the title lender and the borrower have the same rights as the parties to a secured transaction as provided in Part 5, Chapter 9, Title 36, and a collection, taking of possession, and disposition of collateral after default must be conducted pursuant to Part 5, Chapter 9, Title 36, except at provided in subsection (B).
(B)(1) A title lender may not exercise rights or remedies provided in subsection (A):
(a) unless the loan amount for the initial title loan transaction is at least fifty-five percent of the fair market value of the motor vehicle at the time of the title loan transaction; or
(b) if the borrower has made payments on the principal amount of the original title loan transaction equal to at least one hundred percent of the principal amount of the original title loan transaction, plus thirty percent of the interest accrued from the time of the original title loan transaction. A title lender may not refuse a partial payment of principal offered by a borrower.
(2) For purposes of the subsection, the fair market value of the motor vehicle is its value as determined by the county auditor for property tax purposes pursuant to Section 12-36-2640.
Section 37-17-140. A title lender shall comply with the Federal Truth in Lending Act, and the department may exercise the administrative powers in Section 108 of the Federal Truth in Lending Act.
Section 37-17-150. A title lender may not accept a motor vehicle certificate of title from a borrower if there is evidence of ownership by a third party without first taking reasonable steps to ascertain true ownership. A title accepted by a title lender in the face of evidence of ownership by a third party must be returned on demand and without fee to the third party owner.
Section 37-17-160. (A) The department may suspend or revoke a certificate of authority issued pursuant to this chapter if, after notice and opportunity for hearing, the department issues written findings that the title lender has:
(1) violated this chapter or applicable state or federal law;
(2) made a false statement on the application for certificate of authority;
(3) refused to permit investigation by the department as authorized by this chapter;
(4) failed to comply with an order of the department;
(5) demonstrated incompetency or untrustworthiness to engage in the business of title loan transactions; or
(6) been convicted of a felony or misdemeanor involving fraud, misrepresentation, or deceit.
(B) The department may not suspend or revoke a certification of authority issued pursuant to this chapter unless the title lender has been given notice and opportunity for hearing in accordance with the Administrative Procedures Act.
Section 37-17-170. If the department determines that a title lender has violated this chapter or regulations promulgated pursuant to it, the department, upon notice and opportunity for hearing in accordance with the Administrative Procedures Act, may order the title lender to cease and desist from the violations and to comply with this chapter. The department may conduct hearings or take other action as necessary pursuant to this chapter and may seek the assistance of the Attorney General in enforcing compliance with this chapter. The department may enforce compliance with an order issued pursuant to this chapter by the imposition and collection of civil penalties.
Section 37-17-180. The department may order and impose civil penalties upon a title lender for violations of this chapter or its regulations in an amount not to exceed one thousand dollars for each violation. The department also may order repayment of unlawful or excessive fees charged to customers.
Section 37-17-190. The department, upon a determination that a violation of Section 37-17-30 is wilful, may refer the violation to the Attorney General or to the appropriate circuit solicitor for criminal prosecution. A wilful violation of Section 37-17-30 is a Class B misdemeanor, and each transaction constitutes a separate offense.
Section 37-17-200. Title loan transactions conducted in accordance with this chapter are not subject to or controlled by any other state statutory law governing the extension of credit or the imposition of interest, fees, or loan charges.
Section 37-17-210. The department may promulgate regulations pursuant to the Administrative Procedures Act necessary to carry out the provisions of this chapter, provide for the protection of the public, and assist title lenders in interpreting and complying with this chapter."
SECTION 2. This act takes effect upon approval by the Governor except that those title lenders making title loans on the effective date of this act have sixty days to comply with the provisions of this act.
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