Compliance Alerts
June 2019
Effective State Changes
ARKANSAS
On April 8, 2019 the Governor signed HB 1672 (Act 787), creating the Guaranteed Asset Protector Waivers subchapter of the Arkansas Code (“GAP Waiver Law”). The Law regulates the sale of GAP waivers in vehicle transactions. It outlines the various requirements and definitions related to the sale of GAP waivers. Motor vehicles are broadly defined to include “a self-propelled or towed vehicle designed for personal or commercial use.” This includes motorcycles, RV's, boats, etc. Effective July 23, 2019.
CALIFORNIA
California is one of the states that has recently instituted regulations for licensing and operational requirements for student loan servicers. These new requirements instituted by the Department of Business Oversight went into effect on March 28. Under the new requirements, all student loan servicers must now register under the state's registry system. Effective March 28, 2019.
On June 8, 2019, California published the fee adjustments to the Vehicle Code under 13 CA ADC § 423.00. These fee adjustments affect, among other fees: processing, registration and title fees. Effective January 1, 2020.
COLORADO
HB 1289 was signed by the Governor on May 23, 2019. The bill amends the definition of “unfair or deceptive trade practices” and modifies the allowable penalty for a violation of Article 1 of the Colorado Revised Statutes (up to $20,000 for a single violation; removing the $500,000 cap for related series of violations). Effective May 23, 2019.
SB 2 enacts Article 20 – the Colorado Student Loan Servicers Act. The Act regulates Student Loan Servicers. A license is required for Student Loan Servicers beginning on January 31, 2020. The Act addresses licensing requirements and prohibited acts of licensees. Effective August 2, 2019.
GEORGIA
SB 122 was signed by the Georgia Governor on May 6, 2019. The bill addresses privacy requirements related to the purchase or lease of a motor vehicle. It includes certain safeguards, notice requirements, and record retention requirements. The bill limits the use of consumer data. Unrelated to privacy requirements, the bill also addresses uniform warranty reimbursement policies among dealers and unlawful activities by franchisors. Effective July 1, 2019.
IOWA
The Governor signed SF 619 on May 16, 2019. The Act modifies provisions related to service contract providers. The bill provides a definition for a “motor vehicle service contract,” listing specified types of services and products. It also clarifies certain licensing requirements. The bill amends and replaces the contract form requirements for service contracts. Effective May 16, 2019.
KANSAS
On April 30, 2019, the Office of the State Bank Commissioner published Amended Administrative Interpretation No. 1004 regarding Guaranteed Asset Protection waiver agreements. The interpretation provided certain guidelines for excluding the cost of GAP waiver agreements from the calculation of the finance charge under the UCCC. If the guidelines are not followed, the cost of GAP products must be included in the finance charge and disclosed accordingly. The interpretation exclusively applies to finance agreements for a consumer vehicle. Effective on GAP waiver agreements executed on or after May 15, 2019.
KENTUCKY
Regulation 174143r places restrictions on deferred deposit transactions. Included in these restrictions are limitations that licensees can only have two deferred deposit transactions from an individual customer at one time and the total proceeds received from a customer cannot exceed $500. The regulation also requires the commissioner to implement a common database for licensees to access and verify deferred deposit transactions.
MARYLAND
Like California and Colorado, Maryland modified its laws relating to Student Loan Servicers under HB 594. Effective October 1, 2019.
NEVADA
AB 477 adds a new chapter to the code entitled “Consumer Protection from the Accrual of Predatory Interest After Default Act.” The Act voids choice-of-law provisions selecting other state jurisdictions for contracts entered into while the consumer resides in Nevada. Enforcement of the contract must be governed by Nevada. Similarly, forum selection clauses are void. The Act adds additional contract provision requirements and restrictions. And it specifies allowable pre-judgment and post-judgment interest. Effective October 1, 2019.
SB 161 establishes a “Regulatory Experimentation Program for Product Innovation” which provides temporary exemptions from some statutory and regulatory requirements related to financial products and services. To participate in the program, the act requires, among other things: a written application, establishment of a physical or virtual location, and a description of how the product or services is innovative. Absent special permission, participants cannot receive or transmit more than $2,500 in any single transaction, or more than $25,000 in any series of transactions. The bill also revises provisions relating to lenders who loan exclusively over the internet. Effective January 1, 2020.
SB 201 adopts certain provisions to align the state code with the federal Military Lending Act. Included in these provisions is the limitation against a lender charging an APR greater than 36%. It also requires specified disclosures and prohibitions on additional loan terms. Effective October 1, 2019, with other portions of the bill effective July 1, 2019 or July 1, 2020.
NEW JERSEY
S52 was approved by the Governor on May 10, 2019. The bill adds additional items to the definition of “personal information” for the purpose of security breaches. The new definition includes user names and email addresses. The bill adds notification requirements specifically related to breaches of security involving user names or passwords. Effective September 1, 2019.
OREGON
HB 2089 affects title loan lenders and payday loan lenders. The bill adds a new restriction that a lender cannot make a loan to a consumer who has not fully repaid an outstanding payday or title loan. Effective on the 91st day following adjournment sine die.
SB 366 was signed by the Governor on May 24. The bill repeals the sunset provision in Section 11 of Chapter 523, which specifies requirements for GAP waivers. The GAP waiver provisions now are still in effect. Effective January 1, 2020.
SB 684 amends data breach notification requirements related to third-party vendors. The bill expands the definition of “Covered Entity” but states this does not include a person acting solely as a vendor. A “Vendor” is defined separately. Under the bill, there are data breach requirements that specifically apply to vendors, including notification provisions. The bill also includes a user name or other identifying data in the definition of “Personal information.” Effective January 1, 2020.
TEXAS
HB 3855 affects consumer loans made under Section 342.201 of the Finance Code. The bill adds language that interest must be charged using the scheduled installment earnings method or the true daily earnings method by either “(1) applying the applicable daily rate to each part of the unpaid principal balance corresponding to the brackets described by Subsection (e) for the actual or scheduled number of days during a payment period; or (2) applying a single equivalent daily rate to the unpaid principal balance for the actual or scheduled number of days during a payment period, where the single equivalent daily rate is determined at the inception of the loan using the scheduled installment earnings method and would earn an amount of interest authorized under Subsection (e) if the debt were paid to maturity according to the schedule of payments.” Effective September 1, 2019.
Reminders
INDIANA
HB 1136 / SB 80 amended the Indiana UCCC by modifying the allowable delinquency charge for consumer credit sales and consumer loans based on the payment frequency. The bill also modifies the allowable transaction fees for a revolving loan account. Effective July 1, 2019.
IOWA
HF 260 updated the threshold for the regulation of consumer loans, increasing the threshold from $10,000 to $30,000. Effective July 1, 2019.
KENTUCKY
HB 285 created new licensing requirements for licensing consumer loan companies. The bill also replaced a credit investigation fee with a loan processing fee. Effective June 27, 2019.
SB 145 was signed on March 19, 2019. This bill creates two distinct licenses for check cashing and deferred deposit services. Effective June 27, 2019.
OKLAHOMA
The Department of Consumer Credit published its dollar bracket adjustments for Retail Installment Sales and Consumer Loans. Effective July 1, 2019.
TEXAS
Texas published its dollar brackets and ceilings subject to adjustment for Retail Installment Sales and Consumer Loans. Effective July 1, 2019.
UTAH
HB 95 increased the collection costs for a dishonored check from $20 to $35. Effective May 14, 2019.
WEST VIRGINIA
HB 3143 altered the rate structure of regulated consumer lenders under the West Virginia Consumer Credit and Protection Act, modifying the limits from $2,000 to $3,500 and $10,000 to $15,000. Effective Date June 7, 2019.