Compliance Alerts

 

March 2019

 

Effective State Changes

ALABAMA

The State of Alabama proposed a new rule regarding the processing of registrations and other records for persons applying to be vehicle protection product warrantors. The Insurance Commissioner propagated this rule and the fee for registration and yearly renewal is $250.00—Chapter 482-1-162.  Effective April 21, 2019.

 

KENTUCKY

Governor Matt Bevin signed House Bill 285 on March 26, 2019. The law applies to consumer loan companies and creates a new application and appeal process for licensure. Additionally, it requires applicants to submit specific information for licensure, increases the licensing application fee, and establishes other financial requirements. The statute also changes how the commissioner may take adverse action against a licensee. The rates for supervised lending did not change, but HB 285 replaces a credit investigation fee with a loan processing fee. This new loan processing fee is 5% of the original principal amount up to $150.00.  Effective date 90 days after the end of the legislative session.

 

MISSISSIPPI

House Bill 925 was signed by Governor Phil Bryant on March 21, 2019. The act revises the definition of a vehicle service contract and defines road hazards subject to those contracts.  Effective July 1, 2019.

 

NORTH DAKOTA

House Bill 1204 allows a collection agency to collect a transaction fee of up to two and one-half percent of a payment over and beyond the principal amount owed by a debtor.  In order to collect the transaction fee, a collection agency must provide a no-cost payment option that it discloses to the debtor at the time when credit card information is taken.  The bill was signed by Governor Doug Burgum on March 6, 2019.  Effective August 1, 2019.

House Bill 1181 was signed by the governor on March 20, 2019. This bill clarifies that Guaranteed Asset Protection (“GAP”) Waiver agreements can be sold in North Dakota. These GAP Waiver agreements are not considered insurance and are exempt from insurance laws. Additionally a free-look period must be offered to the consumer and the agreement is subject tonumerous disclosures.

 

PENNSYLVANIA

The Pennsylvania Department of Banking and Securities released a comment letter on January 31, 2019 regarding the sale of GAP insurance products offered by licensees operating under the Consumer Discount Company Act. The letter clarifies the conditions that must be in place for the offer of a GAP product. The most important aspect of the sale of this GAP product wasthe licensee charged nothing in excess of the premium it was given under the GAP Master Policy. Effective immediately.

 

UTAH

The State of Utah joins a growing list of states creating their own financial technology regulatory sandbox. Governor Gary Herbert signed House Bill 378 on March 25, 2019.

 

VIRGINIA

House Bill 2600 was signed into law by Governor Ralph Northam on March 8, 2019. The bill is meant to crack down on unsolicited telemarketing calls. The law also establishes certain communications which would be exempt from prosecution, such as calls regarding debt collection, state and federal elections, and charity drives.  Effective July 1, 2019.

House Bill 2109 and its counterpart legislation Senate Bill 1325 both passed their respective caucuses in the Virginia General Assembly. Signed by the governor on March 26, 2019, this law applies to GAP Waivers. These products are agreements and not considered insurance under Virginia's insurance laws. The measure prohibits a creditor from conditioning an extension or term of credit on the purchase of a GAP Waiver, requires a GAP Waiver to include particular disclosures, and allows for a free-look period for a purchaser. Finally, the law also establishes requirements for the cancellation of GAP Waivers and the refunding of consumers.  Effective July 1, 2019.

 

WEST VIRGINIA

On March 26, 2019, Governor Jim Justice signed House Bill 3143 into law. The bill alters the rate structure of regulated consumer lenders under the West Virginia Consumer Credit and ProtectionAct. Previously the law had limits of $2,000 and $10,000 to serve as boundaries for different applied interest rates.

Those rates have not changed but the limit amounts have been increased to $3,500 and $15,000 respectively. For loans up to and including $3,500, a regulated consumer lender may contract for an amount of 31% per year on the unpaid balance of the principal amount.  For loans from $3,500.01 up to and including $15,000, a regulated consumer lender may contract for an amount of 27% per year on the unpaid balance of the principal amount. For loans of $15,000.01 and greater, a regulated consumer lender may contract for an amount of 18% per year on the unpaid balance of the principal amount.  Effective Date July 1, 2019.

 

WYOMING

Wyoming’s Governor Mark Gordon signed HB 57 on February 19, 2019. This bill creates a financial technology sandbox and authorizes the Banking Commissioner or the Secretary of State to waive specified statutes or rules which impede the testing of innovative financial products or services. Only financial products or services which cannot be made available under existing law are eligible. The envisioned products or services can be tested in the financial sandbox for up to two years with the possibility of extension.  Effective January 1, 2020.