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Sponsors: Reps. Sandifer, Leach, Bedingfield, Cato, Chellis, Ott, Owens, Whitmire, Parks, Howard and J.H. Neal
Document Path: l:\council\bills\agm\18801mm07.doc
Introduced in the House on May 9, 2007
Introduced in the Senate on March 4, 2008
Last Amended on May 22, 2008
Currently residing in the House
Summary: Embalmers and funeral directors
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 5/9/2007 House Introduced and read first time HJ-12 5/9/2007 House Referred to Committee on Labor, Commerce and Industry HJ-12 5/16/2007 House Member(s) request name added as sponsor: Parks, Howard, J.H.Neal 2/27/2008 House Committee report: Favorable Labor, Commerce and Industry HJ-4 2/28/2008 House Read second time HJ-10 2/28/2008 House Unanimous consent for third reading on next legislative day HJ-12 2/28/2008 Scrivener's error corrected 2/29/2008 House Read third time and sent to Senate HJ-2 3/4/2008 Senate Introduced and read first time SJ-8 3/4/2008 Senate Referred to Committee on Judiciary SJ-8 3/17/2008 Senate Referred to Subcommittee: Gregory (ch), Elliott, Anderson, Ritchie, Cleary, Ceips 5/14/2008 Senate Committee report: Favorable with amendment Judiciary SJ-9 5/15/2008 Scrivener's error corrected 5/15/2008 Senate Committee Amendment Adopted SJ-106 5/21/2008 Senate Special order, set for May 21, 2008 SJ-75 5/22/2008 Senate Amended SJ-65 5/22/2008 Senate Read second time SJ-65 5/22/2008 Senate Unanimous consent for third reading on next legislative day SJ-65 5/23/2008 Scrivener's error corrected 5/23/2008 Senate Read third time and returned to House with amendments SJ-3 5/27/2008 House Pursuant to Rule 4.8, Referred to Committee on Labor, Commerce and Industry
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VERSIONS OF THIS BILL
Indicates Matter Stricken
Indicates New Matter
May 22, 2008
Introduced by Reps. Sandifer, Leach, Bedingfield, Cato, Chellis, Ott, Owens, Whitmire, Parks, Howard and J.H. Neal
S. Printed 5/22/08--S. [SEC 5/23/08 1:38 PM]
Read the first time March 4, 2008.
TO AMEND CHAPTER 7 OF TITLE 32, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PRENEED FUNERAL CONTRACTS, SO AS TO CONFORM THE PROVISIONS TO REFLECT THAT THE PREVIOUS POWERS AND DUTIES OF THE STATE BOARD OF FINANCIAL INSTITUTIONS RELATING TO THOSE CONTRACTS HAS BEEN TRANSFERRED TO THE DEPARTMENT OF CONSUMER AFFAIRS, TO PROVIDE FOR A CONTESTED CASE HEARING BEFORE THE REVOCATION OR SUSPENSION OF A LICENSE FOR VIOLATION OF THE CHAPTER, TO PROVIDE FOR ADMINISTRATIVE PENALTIES, AND TO MAKE TECHNICAL CHANGES; AND TO AMEND SECTION 40-19-290, AS AMENDED, RELATING TO LICENSED EMBALMERS AND FUNERAL DIRECTORS RECEIVING PAYMENTS FOR PRENEED FUNERAL CONTRACTS, SO AS TO CHANGE "STATE BOARD OF FINANCIAL INSTITUTIONS" TO "SOUTH CAROLINA DEPARTMENT OF CONSUMER AFFAIRS".
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 7 of Title 32 of the 1976 Code is amended to read:
Section 32-7-10. As used in this chapter, unless the context requires otherwise:
(1) 'Board' means the State Board of Financial Institutions;
(1) 'Administrator' means the administrator of the South Carolina Department of Consumer Affairs.
(2) 'Department' means the South Carolina Department of Consumer Affairs.
(2) (3) 'Financial institution' means a bank, trust company, or savings and loan association authorized by law to do business in this State ;.
(3) (4) 'Preneed funeral contract' means a contract, which has for its purpose the furnishing or performance of funeral services, or the furnishing or delivery of personal property, merchandise, services of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of the person whose body is to be disposed of, but does not mean the furnishing of a cemetery lot, crypt, niche, mausoleum, grave marker or monument ;.
(4) (5) 'Seller' means a licensed funeral director in this State who is directly employed by the provider ;.
(5) (6) 'Provider' means a funeral home licensed in this State which is the entity providing services and merchandise pursuant to item (3) (4) and is designated trustee of all funds ;.
(6) (7) 'Purchaser' means the person who is obligated to make payments under a preneed contract ;.
(7) (8) 'Beneficiary' means the person who is to be the subject of the disposition, services, facilities, or merchandise described in a Preneed Contract subject to item (3) (4).
(8) (9) 'Common trust fund' means a trust in which the proceeds of more than one funeral contract may be held by the trustee.
Section 32-7-20. (A)(1) All payments of money made to
any a person upon any agreement or contract or any a series or combination of agreements or contracts, but not including the furnishing of cemetery lots, crypts, niches, mausoleums, grave markers or monuments, which has for a purpose the furnishing or performance of funeral services , or the furnishing or delivery of personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of the person whose body is to be disposed of, are held to be trust funds.
(2) When a vault is sold preneed by a seller in accordance with this chapter, one hundred percent of
all the funds received by the seller at the time of payment must be held as trust funds and deposited in a financial institution.
(3) The provider receiving the payments is declared to be a trustee of
it them, and shall deposit all those payments in a financial institution. All of the interest, dividends, increases, or accretions of whatever nature earned by the funds deposited in a trust account must remain with the principal of the account and become a part of it, subject to all of the regulations concerning the principal of the fund contained in this section. After the death of the beneficiary, the principal and all accrued earnings must be applied to the cost, in effect at the time of death, of the services and merchandise specified in the contract. Any A shortfall in the funds must be paid by the next of kin or the estate of the beneficiary and any an excess must be refunded to the estate of the beneficiary. All taxes on the fund must be paid in accordance with the Internal Revenue Code and applicable rules and regulations.
(B) The provider may enter into a contract and guarantee to provide services and merchandise as provided for in Section 32-7-10
(3) (4) in the future at no additional cost to the purchaser when the full contract price amount is paid to the provider. After the death of the beneficiary of a guaranteed-price contract, the principal and all accrued earnings must be paid to the provider to cover the costs, in effect at the time of death, of the services and merchandise specified in the contract.
(C) All payments made under the agreement, contract, or plan
are and remain trust funds with the financial institution until the death of the beneficiary and until the delivery of all merchandise and full performance of all services called for by the agreement, contract, or plan, except where unless payment is made pursuant to Section 32-7-30.
(D) The funds
may must not be paid by the financial institution until a certified death certificate and a certified statement is that all of the terms and conditions of the agreement have been fully performed are furnished by the provider to the financial institution setting forth that all of the terms and conditions of the agreement have been fully performed. The provider has no obligation to deliver any merchandise or perform any services for which a service unless payment in full for it has not been deposited in the financial institution. Any amounts An amount deposited which do not constitute is not payment in full may be credited against the cost of merchandise or services contracted for by representatives of the deceased. Any A balance remaining in the fund after the payment for the merchandise and services as set forth provided in the agreement, contract, or plan must be paid to the estate of the beneficiary of the agreement, contract, or plan pursuant to Section 32-7-20(A) or paid to the provider of a contract pursuant to Section 32-7-20(B).
(E) Subsections (A), (B), (C), and (D) do not apply to contracts for funeral
service services or merchandise funded by insurance policies which that are otherwise regulated by law; however, Section 38-55-330 governs the conduct of a licensed funeral director employed by a licensed funeral home in South Carolina, who also is licensed as an agent for a life insurer doing business in this State, except a licensed funeral director employed by a licensed funeral home owned by a company not chartered in the United States , who also is licensed as an agent for a life insurer doing business in this State.
board department shall approve forms for preneed funeral contracts. All contracts must be in writing, and no a contract form may must not be used without prior approval of the board department. Any The use or attempted use of an oral preneed funeral contract or any a written preneed funeral contract in a form not approved by the board department is considered to be a violation of this chapter by the person selling services or merchandise under its provisions; provided, however, except that minor modifications to a contract form furnished or approved by the board shall department does not invalidate the contract.
(G) All contracts must contain the name and Funeral Service License Number of the provider and seller.
(H) All funds received by the provider pursuant to the provisions of a contract governed by this chapter must be placed in trust in a federally insured account. The trustee may establish an individual trust for each contract or a common trust fund may be established with a financial institution
which that would maintain accounting for each individual deposit and furnish a quarterly report to the provider. The trust accounts must be carried in the name of the provider but accounting records must be maintained showing the amounts deposited and invested, and interest, dividends, increases, and accretions earned on it, with respect to each purchaser's contract. The trustee has the authority to transfer trust funds from one financial institution to another ; provided, except that the trustee must notify the purchaser, or the beneficiary of a deceased purchaser, within thirty days thereafter, or the beneficiary, if the purchaser dies after the transfer.
(I) All earnings accrue
in to the trust except that the provider may withdraw ten percent of the annual earnings of the trust to cover trust administration.
No preneed Preneed trust funds or earnings may must not be used as collateral, pledged, or in any way encumbered or placed at risk.
(K) If the purchaser fails to make payments as provided in the contract, the contract is voidable at the option of the provider and he may retain ten percent of the amount paid on the contract as a fee and return the remaining funds to the purchaser.
(L) If the merchandise selected is not available at the time of need, the provider shall make available merchandise of equal or greater value to the purchaser or his representative
merchandise of equal or greater value. The purchaser or his representative is entitled to approve any substitutions a substitution.
Section 32-7-25. The contracts governed by the provisions of this chapter may be made irrevocable at the option of the purchaser. If the purchaser selects an irrevocable contract he must be allowed thirty days to examine the contract. Within that period, the purchaser may revoke his decision to enter into this contract and all monies paid by the purchaser must be refunded. An irrevocable trust-funded preneed funeral contract executed under Chapter 7 of Title 32
may must not be converted to an insurance-funded preneed funeral contract. If a premium is paid on an insurance-funded preneed irrevocable contract and the contract is revoked within thirty days, the full premium must be refunded.
Section 32-7-30. (A) Within thirty days of receipt of a written demand for refund by
any a purchaser who has paid funds for a preneed funeral contract pursuant to Section 32-7-20(A) or (B) the trustee shall refund to the purchaser the entire amount paid together with all interest, dividends, increases, or accretions earned on the fund, except that the provider will may retain ten percent of the earnings in the portion of the final year before termination.
(B) After making refund to the trustee pursuant to the provisions of
subsection Section 32-70-20(A) or (B), the financial institution is relieved from further liability to any party.
(C) This section does not apply if the contract is irrevocable.
Section 32-7-35. (A) A preneed funeral contract may be transferred to another provider only
at upon the prior written request of the purchaser or the beneficiary if the purchaser dies before the beneficiary, of a deceased purchaser or pursuant to Section 32-7-45. The selling provider must be paid a fee equal to ten percent of the contract face amount. The selling provider also must be paid ten percent of the earnings in that portion of the final year before transfer.
(B) A preneed funeral contract, whether revocable or irrevocable, funded by an insurance policy
, may be transferred to another provider only at upon the prior written request of the purchaser or the beneficiary if the of a deceased purchaser dies before the beneficiary or pursuant to Section 32-7-45. The selling provider may not collect, charge, or receive a fee in connection with this transfer of a preneed funeral contract funded by an insurance policy. An irrevocable preneed funeral contract funded by an insurance policy may be transferred to another provider only at upon the prior written request of the purchaser or the beneficiary if the of a deceased purchaser dies before the beneficiary or pursuant to Section 32-7-45.
Section 32-7-40. All trust funds
mentioned described in this chapter must be deposited in the name of the trustee, as trustee, within thirty days after receipt.
Section 32-7-45. (A) If a provider goes out of business or the provider's license issued by the State Board of Funeral Service is cancelled or the license to sell preneed funeral contracts is cancelled and application for a replacement license
has not been is not filed, the provider shall, within thirty days, shall submit to the board department a complete listing of names and addresses of all active contracts in its possession. The provider shall also shall notify all contract purchasers in writing that their contracts are to be transferred to another licensed provider of the purchaser's choice. The former licensee shall then shall transfer the contracts and notify the board department of the providers selected within sixty days of the cancellation of the preneed license. All contracts funded by burial insurance or trust funds, together with interest, are to be transferred. The selling provider forfeits its right to any monies it otherwise would be entitled to. If the provider fails to provide for the transfer of contracts within sixty days, the purchasers may directly request directly the financial institution to transfer the account balance to another provider selected by the purchaser with payment jointly to the provider and its financial institution. The purchaser may also may request that an insurance company assign another provider as beneficiary for the insurance policy.
board department has jurisdiction over the provider and the burial insurance policy or trust funds, together with interest, of all active contracts and has the authority to accomplish the necessary transfer of preneed funeral contracts in all cases in which the purchaser has failed to effectuate the transfer to a licensed provider within six months of the date the provider's license issued by the State Board of Funeral Service is cancelled or the license to sell preneed funeral contracts is cancelled and an application for a replacement license has not been filed.
Section 32-7-50. (A) Without first securing a license from the
board department, a person no one, except a financial institution, may not accept or hold payments made on a preneed funeral contract , except financial institutions.
(1) The State Board of Funeral Service must revoke the license of a funeral home or funeral director, or both, if the funeral home or funeral director: (a) accepts funds for a preneed funeral contract or other prepayment of funeral expenses without a license to sell preneed funeral contracts, or (b) is licensed to sell preneed funeral contracts and fails to deposit the funds collected in trust in a federally insured account as required by Section 32-7-20(H).
(2) Application for a license must be in writing, signed by the applicant and verified on forms furnished by the
board department. Each application must contain at least the following: the full name and address, both residence and place of business, of the applicant and every member, officer, and director of it if the applicant is a firm, partnership, association, or corporation. A license issued pursuant to the application is valid only at the address stated in the application for the applicant or at a new address approved by the board department.
(3) If a licensee cancels the license and later applies for a new license, the
board department must investigate the applicant's books, records, and accounts to determine if the applicant violated the provisions of this chapter during the time he did not have a license.
(B) Upon receipt of the application, a one-time payment of a license fee, and the deposit in an amount to be determined by the
board department of the security or proof of financial responsibility as the board department may determine, the board department shall issue a license unless it determines that the applicant has made false statements or representations in the application, or is insolvent, or has conducted his business in a fraudulent manner, or is not duly authorized to transact business in this State, or if, in the judgment of the board department, the applicant should be denied a license for some other good and sufficient reason.
(C) A person selling a preneed funeral contract shall collect from each purchaser a service charge
, and all fees collected must be remitted by the person collecting them to the board department at least once each month.
(1) With the fees collected, the person also must provide the
board department with a listing of each contract sold. If the listing or fees collected are not sent to the board department within sixty days of the last day of the month when the contract was sold, the board department must assess a civil penalty of ten dollars for each contract not reported to the board it. The monies collected as civil penalties must be deposited in the Preneed Funeral Loss Reimbursement Fund. Upon its own initiative or upon complaint or information received, the board department must investigate a person's books, records, and accounts if the board department has reason to believe that fees are being collected and either not remitted or not timely remitted.
(2) The service charge for each contract
must may not exceed a total of thirty dollars, twenty-five dollars of which for the board department to use in administering the provisions of this chapter and five dollars to be allocated to the Preneed Funeral Loss Reimbursement Fund.
board department must keep a record of each preneed funeral contract for which it receives a service charge.
Section 32-7-60. (A) There is established the Preneed Funeral Loss Reimbursement Fund which must be administered by the
board department. The purpose of the fund is to reimburse the estates of beneficiaries of preneed funeral contracts or, in the absence of an estate filing, the purchaser or applicant, with payment jointly to the funeral home providing services or merchandise or both, of beneficiaries of preneed funeral contracts who have suffered financial loss as a result of the misfeasance, fraud, default, failure, or insolvency of a South Carolina funeral home or South Carolina funeral director.
(B) From the service charge for each preneed contract as required by Section 32-7-50 (C), the
board department shall deposit into the fund that portion of the charge as established by the board department. The board department may suspend or resume deposits into the fund at any time and for any period to ensure that a sufficient amount is available to meet likely disbursements and to maintain an adequate reserve. The maximum amount of the service charge to be allocated to the Preneed Funeral Loss Reimbursement Fund as required by Section 32-7-50(C)(2) must may not exceed the amount of five dollars per for each preneed contract. The maximum amount of the fund is to be five hundred thousand dollars with a five percent adjustment compounded annually.
(C) All sums received by the
board department pursuant to this section must be held in a separate account maintained by the Office of State Treasurer to be used solely as provided in this section. All interest or other income earned on the fund must be retained by the fund.
(D) Reimbursements from the fund
must may not exceed the total payment made for preneed funeral services or merchandise or both. No interest Interest or future graduated insurance benefits may must not be reimbursed. Upon the death of the beneficiary and the applicant's compliance with all applicable rules of the board department, reimbursement from the fund may be made to the estate of the beneficiary, the purchaser, or applicant, with payment jointly to the funeral home providing services or merchandise or both, only to the extent to which losses are not bonded or otherwise covered. If the board department makes payments from the fund under this section, the board department is subrogated in the reimbursed amount and may bring an action against a person, including a preneed licensee. The board department may enforce claims it may have for restitution or otherwise and may employ and compensate from the fund consultants, legal counsel, accountants, and other persons it considers appropriate to assure compliance with this statute.
board department shall investigate all applications made and may reject or allow claims in whole or in part. Payment must be made to the extent that monies become available in the fund. Reimbursements for completed claims must be processed in the order in which they are received subject to availability of monies in the fund. The board department has complete discretion to determine the order and manner of payment of approved applications. All payments are a matter of privilege and not a right, and no a person has does not have a right in the fund as a third party beneficiary or otherwise.
board department shall furnish a form of application for reimbursement which shall require the following minimum information:
(1) the name and address of the applicant;
(2) the name and address of the funeral service or funeral director, or both, who caused the loss;
(3) the amount of the alleged loss for which application for reimbursement is made;
(4) a copy of a preneed funeral contract or written agreement which was the basis of the alleged loss;
(5) a copy of payment receipts or cancelled checks, or both;
(6) a copy of the death certificate;
(7) a general statement of facts relative to the application;
(8) supporting documents, including copies of court proceedings and other papers indicating the efforts of the applicant to obtain reimbursement from the provider, insurance companies, or others;
(9) documentation of
any receipt of funds in partial payment of the loss; and
(10) name and address of the funeral home that provided services or merchandise, or both.
(G) This fund and all interest earned may be used only as prescribed in this section and may not be used for
any other purposes another purpose. The board department may expend monies from the fund to:
(1) make reimbursements on approved applications;
(2) purchase insurance to cover losses and
board department liability as considered appropriate by the board department and not inconsistent with the purpose of the fund;
(3) invest portions of the fund as are not currently needed to reimburse losses and maintain adequate reserves, as are permitted to be made by fiduciaries under state law; and
(4) pay the expenses, other than normal operating expenses, of the
board department for administering the fund, including employment of legal counsel, accountants, consultants, and other persons the board department considers necessary to assure compliance with this section.
No A person may not make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, poster or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which that uses the existence of the fund for the purpose of sales, solicitation, or inducement to purchase any form of preneed contract covered under by this chapter.
board department may establish procedures and promulgate regulations it determines necessary to implement the purposes of the section.
Section 32-7-70. (A) The provider must keep accurate accounts, books, and records in this State of all transactions, copies of all agreements, dates, and amounts of payments made and accepted on them, the names and addresses of the contracting parties, the persons for whose benefit funds are accepted, and the names of the depositories of the funds. The provider must make all books and records pertaining to the trust funds available to the
board department for examination.
board department may, at any reasonable time, and must shall, at least once every two years, investigate the books, records, and accounts of each provider with respect to its trust funds and for that purpose may require the attendance of and examine under oath all persons whose testimony it may require. The board must department shall investigate a provider's books, records, and accounts if the board department has reason to believe or has received a complaint alleging that the provider has violated the provisions of this chapter.
Section 32-7-90. (A)
Any A contract seller, provider, agent, employee, or person acting in behalf of one of these persons may not:
(1) directly or indirectly call upon individuals or persons in hospitals, rest homes, nursing homes, or similar institutions for the purpose of soliciting preneed funeral contracts or making funeral or final disposition arrangements without first having been specifically requested by the person to do so;
(2) directly or indirectly employ
any an agent, assistant, employee, independent contracting person, or any other person to call upon individuals or persons in hospitals, rest homes, nursing homes, or similar institutions for the purpose of soliciting preneed funeral contracts or making funeral or final disposition arrangements without first having been specifically requested by the person to do so;
(3) solicit relatives of persons whose death is apparently pending or whose death has recently occurred for the purpose of providing funeral services, final disposition, burial, or funeral goods for the person;
(4) solicit or accept or pay
any consideration for recommending or causing a dead human body to be provided funeral services and funeral and burial goods by specific persons, or the services of a specific crematory, mausoleum, or cemetery except where unless the arrangement is the subject of a preneed funeral contract;
(5) solicit by telephone call or by visit to a personal residence
, unless the solicitation has been previously requested by the person solicited or by a family member residing at the residence.
Nothing in this This chapter may be construed to does not restrict the right of a person to lawfully to advertise, to use direct mail, or otherwise communicate in a manner not within the above prohibition of solicitation or to solicit the business of anyone responding to the communication or otherwise initiating discussion of the goods or services being offered.
Nothing in this This chapter may be construed to does not prohibit general advertising.
Anyone A person making a personal or written solicitation for a preneed funeral contract shall, as soon as possible, shall divulge the real reason for the contract or solicitation.
board department may adopt regulations regulating for the solicitation of preneed contracts by sellers and providers and their agents and employees to protect the public from solicitation practices which that utilize undue influence or which that take undue advantage of a person's ignorance or emotional vulnerability.
Section 32-7-95. The prohibitions of Section 32-7-90 as to solicitations and advertising relating to preneed funeral contracts apply equally to a funeral director licensed
under pursuant to this title as an agent for a life insurer, as well as to the life insurer doing business in this State.
Any A person wilfully violating the provisions of this chapter is guilty of a misdemeanor and, upon conviction, must be fined not less than five hundred one thousand dollars nor more than one five thousand dollars, or be imprisoned for not less than ten days nor more than six months, or both. In addition, this person may be prohibited from entering into any further preneed funeral contracts if the board department, in its discretion, finds that the offense is sufficiently grievous. The revocation of a license under this section may be appealed to the circuit court in the licensee's county of residence. Before the suspension, revocation, or other action by the department involving a license to sell preneed funeral contracts becomes final, the licensee is entitled to request a contested case hearing before the Administrative Law Court in accordance with the Administrative Procedures Act.
Section 32-7-110. (A) The
board department shall enforce the provisions of this chapter and has the power to make investigations, subpoena witnesses and documents, require audits and reports, and conduct hearings as to violations of any provisions, and to promulgate such regulations as are necessary to carry out the provisions of this chapter.
(B) Upon its own initiative or upon receipt of a complaint, the
board department must investigate any funeral home, funeral director, individual, or business the board department has reason to believe is acting as a provider without a license. In order to conduct its investigation, the board department must review the books, records, and accounts of: (1) any a funeral home or funeral director licensed by the State Board of Funeral Service, even if the funeral home or funeral director is not licensed to sell preneed funeral contracts, or (2) any individual or business the board department has reason to believe is acting as a provider without a license. If the board department discovers that a violation of this chapter has occurred by any funeral home, funeral director, individual, or business that is not licensed to sell preneed funeral contracts, the department may initiate an action for a violation of this chapter in the Administrative Law Court for a cease and desist order or an administrative fine not to exceed ten thousand dollars.
(C) Whether or not enforcement action is taken by the department, the
board department must report the a violation it discovers to the State Board of Funeral Service or for an action pursuant to Section 40-19-110(12) and to the Attorney General, a circuit solicitor, or an appropriate law enforcement agency.
Nothing in this This chapter of Title 32 modifies, abridges does not modify, abridge, or repeals repeal any provision of Chapter 55 of Title 39. This chapter shall apply applies only to preneed funeral contracts sold by funeral homes licensed in this State and their licensed directors.
Nothing in this Neither this chapter or in nor Chapter 55 of Title 39 precludes the sale at need of granite, memorials, or vaults by a licensed funeral director. However, a licensed funeral director may sell only vaults preneed in accordance with this chapter."
SECTION 2. A. Chapter 39 of Title 34 is amended by adding:
"Section 34-39-175. (A) The Consumer Finance Division of the Board of Financial Institutions shall implement a common database with real-time access through an internet connection for deferred presentment providers, as provided in this subsection. The board is authorized to enter into a contract with a single source private vendor to develop and operate the database. The database must be accessible to the board and the deferred presentment providers to verify if deferred presentment transactions are outstanding for a particular person. Deferred presentment providers shall submit that data before entering into a deferred presentment transaction and once a deferred presentment transaction has been paid in full, in a format the board requires by rule including the drawer's name, social security number or employment authorization alien number, address, driver's license number, amount of the transaction, date of transaction, the date that the transaction is closed, and additional information required by the board. The board may impose a fee not to exceed one dollar for each transaction for data required to be submitted by a licensee. A licensee may rely on the information contained in the database as accurate and is not subject to any administrative penalty or civil liability as a result of relying on inaccurate information contained in the database. The board may adopt rules to administer and enforce the provisions of this section and to ensure that the database is used by licensees in accordance with this section.
(B) The information provided in the database is limited for the use in determining if a customer is eligible or ineligible to enter into a new deferred presentment transaction and to describe the reason for the determination of eligibility or ineligibility."
B. Chapter 39, Title 34 of the 1976 Code is amended by adding:
"Section 34-39-270. (A) A licensee may not enter into a deferred presentment transaction with a person:
(1) who has an outstanding deferred presentment transaction with any licensee;
(2) who has entered into an extended payment plan agreement as provided in Section 34-39-280 which has not been paid in full or terminated; or
(3) sooner than the seventh day after the date upon which the person last closed out a deferred presentment transaction with any licensee.
(B) Before entering into a deferred presentment transaction with a person, a licensee shall verify whether the person is eligible to enter into the transaction by inquiring of the person, checking the licensee's records, and accessing the deferred presentment transaction database established pursuant to subsection (C).
(C) The board shall contract with a single third party database provider to establish and operate a deferred presentment transaction database for the purpose of verifying whether a person is eligible to enter into a deferred presentment transaction. The board shall supervise the establishment and operation of the database and shall ensure that the database provider establishes and operates the database pursuant to the provisions of this section. The board shall have full access to the database and all records related to the database for purposes of supervising the establishment and operation of the database. If the database provider violates a provision of this section, the board shall terminate the contract. The database must have real-time access through an internet connection and be accessible at all times to the board and licensees. The database provider shall establish and maintain a process for responding to transaction verification requests when technical difficulties prevent the licensee from accessing the database through the internet including, but not limited to, verification by telephone. The database must be set up so as to notify the board if a licensee or a person enters into a transaction in violation of the provisions of this section.
(D) To conduct an inquiry as to whether a person is eligible to enter into a deferred presentment transaction, a licensee shall submit to the database provider such information as the board may require. The response to an inquiry to the database provider by a licensee must state only that a person is eligible or ineligible to enter into a transaction and describe the reason for that determination. The person seeking to enter into the transaction may make a direct inquiry to the database provider to request a more detailed explanation of the basis for the database provider's determination that the person is ineligible to enter into the transaction.
(E) A licensee shall notify the database provider immediately when the licensee enters into a deferred presentment transaction with a person. The licensee shall submit to the database provider such information as the board requires. When the transaction is closed, the licensee shall designate the transaction as closed and immediately notify the database provider. When the database provider receives notification that the transaction is closed, the database provider immediately shall designate the transaction as closed in the database.
(F) A licensee shall notify a person seeking to enter into a deferred presentment transaction that the licensee shall access the database to verify whether the person is eligible to enter into a transaction. The licensee also shall notify the person that information related to a new transaction must be entered into the database.
(G) The database provider may charge a database verification fee to a licensee for an inquiry as to whether a person is eligible to enter into a deferred presentment transaction, if that transaction is consummated by the licensee. The fee must be established by the board and may not exceed the actual cost of verifying a person's eligibility. A licensee may charge a person seeking to enter into a deferred presentment transaction one-half of the actual cost of the verification fee.
(H) Except as otherwise provided in this section, all personally identifiable information regarding a person contained within or obtained by way of the database is strictly confidential and is exempt from disclosure under the Freedom of Information Act. The database provider and licensees shall use the information collected pursuant to this section only as prescribed in this section and for no other purpose.
(I) A licensee may rely on the information contained in the database as accurate and is not subject to any administrative penalty or civil liability as a result of relying on inaccurate information contained in the database.
Section 34-39-280. (A) Subject to the terms and conditions contained in this section, a customer may pay any outstanding deferred presentment transaction by means of an extended payment plan.
(B) A licensee must enter into a written plan agreement with the customer if the customer, on or before the deferred presentment transaction's due date, requests a plan and signs an amendment to the written agreement that memorializes the plan's terms and must enter the information into the database established in Section 34-29-175 that the customer has an extended payment plan.
(C) The plan's terms must allow the customer, at no additional cost, to repay the deferred presentment transaction in substantially equal installments over not less than sixty days. Each plan installment must coincide with a date on which the customer receives regular income. The customer may prepay a plan in full at any time without penalty. If the customer fails to pay any plan installment when due, the plan is terminated and the licensee immediately may accelerate and collect the unpaid transaction balance. The licensee may, with each payment under the plan by a customer, provide for the return of the customer's prior held check and require a new check for the remaining balance under the plan.
(D) A licensee must notify the customer of his plan rights by displaying the following statement, in at least 12-point bold type, on the first page of the written agreement:
'You should use a deferred presentment transaction only for a short-term credit need. If you have a long-term credit need, you should consider a less costly way to borrow money or seek the advice of a nonprofit credit counselor. You may repay this contract through an extended payment plan. If you choose this right, then you must, on or before the date this contract is due, ask for an extended payment plan. You will be asked to sign a new agreement for this extended payment plan. The extended payment plan must let you repay this contract in substantially equal installments over the next sixty days. There will be no additional cost. Each extended payment plan installment must match with a date on which you receive regular income. You may prepay an extended payment plan in full at any time without penalty. If you fail to pay an extended payment plan installment when due, the extended payment plan will end and we may collect immediately the unpaid contract balance.'
Section 34-29-290. Based upon data provided by the database vendor, the Board of Financial Institutions annually shall report to the General Assembly the following information for loans made in South Carolina in the previous reporting year, specifically the number of:
(1) loans made in South Carolina by loan amount and the dollar amount of fees collected by loan amount;
(2) individual borrowers by loan amount and the number of borrowers by the number of times each borrower took out a loan;
(3) borrowers who chose to pay off their loans through an Extended Payment Plan by loan amount;
(4) loans that were not paid off in the previous year by loan amount; and
(5) loans on which the lender submitted the check for collection by loan amount and the number of loans on which the lender took action for collection."
C. Section 34-39-130 of the 1976 Code is amended by adding at the end:
"(C) A person may not engage in the business of deferred presentment services with a customer residing in this State, whether or not that person has a location in South Carolina, except in accordance with the provisions of this chapter and without having first obtained a license pursuant to this chapter.
(D)(1) A licensee pursuant to this chapter may not offer, arrange, act as an agent for, or assist a deferred deposit originator in any way in the making of a deferred deposit transaction unless the deferred deposit originator complies with all applicable federal and state laws and regulations including this chapter.
(2) This prohibition does not apply to the arranger, agent, or assistant to a state or federally chartered bank, thrift, savings association, or credit union if, upon review of the entire circumstances, the state or federally chartered bank, thrift, savings association, or credit union:
(a) initially advanced the loan proceeds to the customer;
(b) maintained a preponderant economic interest in the loan after its initiation; and
(c) developed the deferred deposit transaction product or products on its own without involvement of the licensee.
(3) If a licensee offers, arranges, acts as an agent for, or assists a state or federally chartered bank, thrift, savings association, or credit union in the making of a deferred deposit transaction and the licensee demonstrates that the standards in item (2)(a), (b), and (c) are met, the licensee must comply with all other provisions of this chapter to the extent that they are not preempted by other federal or state law."
D. Section 34-39-150(C) and (D) of the 1976 Code is amended to read:
"(C) The application must be accompanied by payment of an application fee of
two hundred fifty dollars five hundred dollars and an investigation fee of five hundred dollars. These fees are not refundable or abatable. If the license is granted, however, payment of the application fee satisfies the fee requirement for the first license year or its remainder.
(D) A license expires annually and may be renewed upon payment of a license fee of
two hundred fifty dollars five hundred dollars. The annual license renewal fee for an applicant with more than one location is two hundred fifty five hundred dollars for the first location and fifty one hundred dollars for each additional location. All license fees collected must be remitted to the general fund."
E. Section 34-39-180 of the 1976 Code, as added by Act 433 of 1998, is amended to read:
"Section 34-39-180. (A)
A licensee may defer the presentment or deposit of a check for up to thirty-one days pursuant to the provisions of this section. The total amount advanced by all licensees to any customer for deferred presentment or deposit may not exceed the lesser of twenty-five percent of the customer's gross income during the term of the loan or five hundred dollars, exclusive of the fees allowed in Section 34-39-180(E). A licensee may not advance to a customer an amount for deferred presentment or deposit which causes this limit to be exceeded by that customer.
(B) Each check must be documented by a written agreement signed by both the customer and the licensee. The written agreement must contain the name or trade name of the licensee, the transaction date, the amount of the check, and a statement of the total amount of fees charged, expressed both as a dollar amount and as an effective annual percentage rate (APR). The written agreement must authorize expressly the licensee to defer presentment or deposit of the check until a specific date, not later than thirty-one days from the date the check is accepted by the licensee. The written agreement also must contain plain language developed by the board which sufficiently informs the customer regarding the nature of deferred presentment services, the deferred presentment service process, the customer's rights pursuant to this chapter, information to file complaints with the South Carolina Department of Consumer Affairs, and other information the board may require.
(C) The board shall require each licensee to issue a standardized consumer notification and disclosure form in compliance with state and federal truth-in-lending laws before entering into a deferred presentment agreement with a customer.
(D) A licensee
shall may not charge, directly or indirectly, a fee or other consideration in excess of fifteen percent of the face amount of the check advanced for accepting a check for deferred presentment or deposit. The fee or other consideration authorized by this subsection may be imposed only once for each written agreement. Records must be kept by each licensee with sufficient detail to ensure that the fee or other consideration authorized by this subsection may be is imposed only once for each written agreement.
(E) A check accepted for deferred presentment or deposit pursuant to this chapter
may must not be repaid from the proceeds of another check accepted for deferred presentment or deposit by the same licensee or an affiliate of the licensee. A licensee shall may not renew or otherwise extend presentment of a check or withhold the check from deposit, for old or new consideration, for a period beyond the time set forth in the written agreement with the customer. A licensee shall not enter into a deferred presentment agreement with a customer who has entered into an extended payment plan agreement with any licensee as provided in Section 34-39-280.
(F) If a check is returned to the licensee from a payer financial institution due to insufficient funds, closed account, or stop payment order, the licensee may pursue all legally available civil means to collect the check including, but not limited to, the imposition of a returned check charge as provided in Section 34-11-70(a), except that the service charge imposed by the licensee
shall may not exceed the lesser of ten dollars or the fee imposed by the financial institution on the licensee for the returned check. An individual who issues a personal check to a licensee under a deferred presentment agreement is not subject to criminal penalty.
(G) If a check is returned to the licensee from a payer financial institution due to insufficient funds, closed account, or stop payment order, the licensee may pursue all legally available civil means to collect the check including, but not limited to, the imposition of a returned check charge as provided in Section 34-11-70(a), except that the service charge imposed by the licensee shall not exceed the lesser of ten dollars or the fee imposed by the financial institution on the licensee for the returned check. An individual who issues a personal check to a licensee under a deferred presentment agreement is not subject to criminal penalty.
(H) The board shall develop a form that must be used by all licensees to calculate the maximum amount of funds it may lend a customer based on the customer's income during the term of the loan as required by subsection (A). The form and copies of the documentation verifying the customer's income shall be maintained by the licensee and a copy of both attached to the written agreement signed by the customer."
F. Section 34-39-200 of the 1976 Code is amended to read:
"Section 34-39-200. A person required to be licensed pursuant to this chapter may not:
(1) charge fees in excess of those authorized by this chapter;
(2) engage in the business of:
(i) making loans of money or extension of credit;
(ii) discounting notes, bills of exchange, items, or other evidences of debt; or
(iii) accepting deposits or bailments of money or items, except as expressly provided by Section 34-39-180;
(3) use or cause to be published or disseminated advertising communication which contains false, misleading, or deceptive statements or representations;
(4) conduct business at premises or locations other than locations licensed by the board;
(5) engage in unfair, deceptive, or fraudulent practices, including unconscionable conduct in violation of Section 37-5-108;
(6) alter or delete the date on a check accepted by the licensee;
(7) accept an undated check or a check dated on a date other than the date on which the licensee accepts the check;
(8) require a customer to provide security for the transaction or require the customer to provide a guaranty from another person;
(9) engage in the retail sale of goods or services, other than deferred presentment services and Level I check-cashing services as defined in Section 34-41-10, at the location licensed pursuant to this chapter,
provided, however except, that a sale of money orders , or postage stamps, and the payment of utility bills with no additional a fee to the customer that does not exceed one percent of the bill being paid, vending machines for food or beverage, facsimile services, Western Union wire transfer or money transmitter services, or rental of postal boxes at rates not higher than allowed by the United States Postal Service is are not the sale sales of goods or services prohibited by this subsection;
(10) be licensed pursuant to Section 12-21-2720(a)(3) to operate a video poker machine;
(11) permit others to engage in an activity prohibited by this section at a location licensed pursuant to this chapter
. ; or
(12) broker or arrange a deferred presentment transaction on behalf of a third-party lender, unless the transaction complies with the provisions of this chapter and is not preempted by federal law."
G. Chapter 39, Title 34 of the 1976 Code is amended by adding:
"Section 39-34-205. On-premises advertising by a licensee may not contain false, misleading, or deceptive statements or representations. The board must promulgate regulations necessary to administer and enforce this section."
H. Section 34-39-170 of the 1976 Code is amended by adding an appropriately numbered new item to read:
"( ) A licensee and a customer may not enter into an electronic funds transfer agreement to make automatic debited loan payments for any portion of a deferred presentment agreement."
I. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
J. This SECTION takes effect January 1, 2009.
SECTION 3. Section 40-19-290(E) of the 1976 Code, as last amended by Act 188 of 2004, is further amended to read:
"(E) All payments received by
any an establishment licensed under pursuant to this chapter for funeral merchandise being purchased must be placed in a trust account in a federally insured institution until the merchandise is delivered and in the physical possession of the purchaser for use as provided in the contract in accordance with the sales agreement. Upon its own initiative or upon receipt of a complaint, the State Board of Financial Institutions South Carolina Department of Consumer Affairs must undertake investigations; review the books, records, and accounts of any an establishment licensed under pursuant to this chapter; subpoena witnesses; require audits and reports; and conduct hearings to determine if payments are being received in violation of the provisions of Chapter 7 of Title 32."
SECTION 4. This act takes effect July 1, 2008.
This web page was last updated on Monday, October 10, 2011 at 1:36 P.M.