15-60 - Consumer Finance Act

15-60. Consumer Finance Act

(a) Name of Manager: The name of the manager or other officer in charge of the licensed place of business must be filed with the Board of Bank Control and notice of any change in management promptly reported, giving the name of new manager, employment record for previous five-year, with names and addresses of former employers, positions held, and dates covering each position. The immediate superior of such manager shall be responsible for complying with this section.

(b) Purchase of Accounts: Any licensee who purchases loan accounts from another licensee or through any means shall notify the Board of Bank Control ten (10) days before such purchase, stating the name and address of the licensee or other source from whom the purchase is to be made, the number of accounts involved and the total balance due thereon.

(c) Sale of Accounts: Any licensee who sells loan accounts to another licensee shall notify the Board of Bank Control within ten (10) days before such sale, stating the name and address of the person, firm or corporation to whom the sale is to be made, the number of accounts involved and the balance due thereon.

(d) Examination Fees: For each examination by the Board of Bank Control or its representative, with the exception of the first examination in the calendar year, a fee will be charged for the actual cost of such examination in the amount of twenty-five dollars ($25.00) for each day or part thereof.

(e) Books and Records: Every licensee shall keep the following books and accounting records at the place of business designated in the license:

(1) Loan Register: Every licensee must keep the following information readily available and in such form as is acceptable to the Board of Bank Control. Each loan must be recorded and kept currently posted daily in consecutive numerical order showing the following information. This could be individual looseleaf form, one book or a combination form.

A. Loan number.

B. Date of loan.

C. Name of borrower.

D. Brief description of security.

E. Amount of gross note--$150.00 or less.

Amount of gross note--$150.01--$300.00

Amount of gross note--$300.01--$1,000.00

Amount of gross note--$1,000.01--$4,000.00

Amount of gross note--$4,000.01--$7,500.00.

(2) Account Record Card: A separate account record ledger sheet or card must be maintained for each loan made to any one borrower. Each account record card must be posted in ink or typewriter with no erasures in a clear and legible manner, with spaces provided for the following information:

A. Loan register number of loan.

B. Date of loan.

C. Name, address, marital status, date of birth and occupation of borrower.

D. Brief description of security, if any.

E. All charges itemized as follows:

(1) Cash to borrower.

(2) Insurance premium--Life.

Insurance premium--A&H.

Insurance premium--Property.

(3) Initial charge.

(4) Finance charge.

(5) Others (Explain).

F. Total amount of obligation, including all charges.

G. Terms of repaying.

H. All scheduled repayment dates listed on account record (if weekly). On a monthly contract, at least first month repayment date must appear.

I. All payments recorded opposite scheduled repaying dates showing the following:

(a) Date of payment.

(b) Total amount paid.

(c) Delinquent or deferment charge, if any.

(d) Remaining balance.

J. Name and address of co-maker or endorser, if any.

K. All refunds itemized and signed by borrower on account record card or stapled thereto.

L. Date of death of borrower on face of account card in case maker dies during the term of loan contract.

M. All paid-out individual account records, borrower renewals, etc., must be filed alphabetically or by account number, or monthly renewal date, and kept for two (2) years. Violations will be noted when licensees cannot locate an account card within a reasonable time after request.

When an error is made on an individual account record card, a line shall be drawn through the improper entry, the correct entry made on the following line, and the correcting entry initialed by the individual making such correction. The entries on the individual account record shall correspond with the receipts given the borrower. No erasures, whatsoever, may be made on the face of the individual account record. This includes the refund section.

(3) Cash Report: In the cash report, all transactions of receipts and disbursements of any amount whatsoever shall be entered. All such entries must be made as of the exact date of transaction. The cash report must be balanced at least weekly. This report must be sufficient to reflect opposite the borrower's name, or account number, the following information:

A. All charges itemized against loan.

B. Payments received.

C. Late fees received and/or deferment charge.

D. Refunds itemized against appropriate item.

(4) General Ledger: The general ledger must show in full detail the assets and liabilities of the business conducted in the licensed office. If you have a general ledger reserve account for bad debts, all recoveries or collections on accounts previously charged off must be credited to this account. The general ledger shall be posted at least monthly and a trial balance or balance sheet must be prepared within twenty days after a request from the Consumer Finance Division, Board of Bank Control. Organizations operating more than one licensed office may maintain a general ledger at their home office, provided the trial balance or balance sheet of the licensed offices are available to the Consumer Finance Examiner at the licensed offices within twenty days after request.

The Board of Bank Control reserves the right to require that the general ledger maintained at the home office be produced promptly after notice to the licensee. Any charge made to any licensed office by the home office to cover any item of expense must be in such detail as to show the nature of the expense. The use of combination forms of daily reports or special systems must be approved by the Board of Bank Control.

(5) Individual File or Shucks: An envelope or other similar file, commonly called shucks, must be maintained for each borrower, in which shall be filed all of the original notes or other evidences of indebtedness or security. If the original note is not on file, a memo indicating the whereabouts of the original shall be so filed in the said envelope. All legal instruments taken in connection with any loan contracts must bear the consumer finance number.

Only one file shall be maintained for each borrower, regardless of the number of loans closed or outstanding, except where such borrower is a co-maker, guarantor or endorser with other borrowers.

(6) Index to Borrowers: Every licensee will keep an index record filed alphabetically or by account number on which all loans to each individual will be entered. This index may be kept on the face of the individual file or shuck, as per paragraph (5). The following information must be entered in order showing

(1) Loan number.

(2) Date made.

(3) Gross amount of note.

(4) Date of cancellation.

(7) Records: All records and papers, including notes and other evidences of indebtedness or security signed by the borrower, shall be kept in the licensed place of business and made available to the representatives of the Board of Bank Control at any time without previous notice, unless the notes hypothecated or deposited as collateral, in which case they must be under agreement permitting the representatives of the Board of Bank Control to examine the notes so hypothecated at any time. In the event such notes are deposited as collateral, unsigned copies of the same shall be kept on hand for examination.

The records of the licensee, such as individual account records or similar records, shall contain all essential details with respect to court actions involving collection of loans. The amount of court costs charged to the borrower shall be shown thereon. The files of the licensee must show that all pertinent provisions of the law have been complied with.

If any other business than that authorized under the Consumer Finance Act is conducted in the same office, the licensee shall fairly and equitably allocate all expenses for the purpose and with the result that the books relating to the licensee's business under the Act will fairly reflect the expense of conducting such business.

(f) Copy of the S.C. Consumer Finance Act and Regulations: Each licensee will be issued one (1) complete set of the Consumer Finance Act and Regulations, which must be used and kept on file in each licensee's place of business. Additional copies may be obtained from the Consumer Finance Division for the sum of $1.00 per set which must accompany the request.

(g) Deposited Notes: When a note and/or mortgage has been deposited as collateral and is not physically present in the office when a loan is discharged in full, a statement shall be given the borrower, signed by the manager, which states that the loan is terminated and that the note and/or mortgage are cancelled. Within thirty (30) days thereafter, the original note and/or mortgage shall be obtained and returned to the borrower.

(h) Phrases Permissible: No licensee shall state or indicate that he is licensed by or subject to the Board of Bank Control or the State of South Carolina, except by use of the following phrase: "Licensed by the State of South Carolina". This phrase must be widely separated and distinct from any other phrase or information published in sign or letter form.

Advertising or signs shall not be displayed which tend to create the impression that rates, delinquent or deferment charge, etc., are required or demanded by the Consumer Finance Act.

(i) Rate Schedule: If any licensee advertises that loans will be made at a specified schedule, it must include the actual cash given to the borrower, after ALL deductions have been made, together with the total number, time between and the amount of each payment. Loans actually made of the class advertised shall not be subject to any higher schedule of charges.

(j) Consolidating of Other Loans: Licensees shall not state or suggest in any advertising in any manner that they will pay and discharge a loan which the prospective borrower has with another licensee, provided that advertising of loans for the purpose of consolidating outstanding obligations shall be permitted.

(k) Outside Solicitation: No licensee shall advertise for or solicit loans by having an agent or employee of such licensee make a door to door campaign distributing handbills, circulars or loan applications.

(l) Business Hours: The place of business designated in the license shall be open to receive payments from borrowers during customary hours of each business day.

(m) Qualified Personnel: A qualified agent of the company with a working knowledge of the South Carolina Consumer Finance Act must be present during business hours.

(n) Contracts: This Act only permits monthly contracts, but payments may be scheduled weekly for the convenience of the borrower. In no instance should section 14(a)(1) of the Act be interpreted as to assume that the monthly finance charge may be earned in any other method except by full calendar months, or days if pro-rated. This also applies to the delinquent charge which may be computed on the full unpaid dollars on the fifth day or after a full calendar month has expired.

(o) Initial Charge: On loans of $1,000.00 or less, 6% of the cash advance may be assessed up to $18.00. This is not to be construed as an additional finance charge or interest but, as per the Act, this is a charge which is earned for performing certain services and includes reimbursement of certain expenses. The burden of proof of earning this charge will be placed on the lender in case of complaint or legal action. For the purpose of this section, the time element for retaining this charge on renewals is three (3) full calendar months, with the date of month corresponding to the date of contract to be considered the first day of the next period. This charge is either wholly earned or not earned at all, and cannot be divided in any manner. Although not subject to refund, full credit must be given the borrower on the subsequent loan if the account is reopened during the restrictive period.

(p) Refunds: All refunds shall be made in cash. Refunds may be subtracted from the current loan in order to find the net balance the borrower owes. It cannot be credited to the subsequent or new loan.

On loans renewed or refinanced during the first ninety (90) days, refunds are made on a pro-rata basis computed daily. A loan paid out by any method ninety-one (91) days or over shall be refunded under the Rule of 78ths, with one day constituting a month. If a loan is paid out in ninety (90) days or less, refunds may be made under the Rule of 78ths, but if the customer reopens his account within the restricted period, the loan will be considered a "renewal" and the customer should receive the difference in refunds between the Rule of 78ths and pro-rata as of the date of the pay off.

(q) More Than One Contract: No licensee shall induce any person to become obligated directly or contingently, or both, under more than one contract or loan at the same time by referring such person to another licensed place of business in which such licensee has an interest directly or indirectly or by any plan or agreement between two licensees having no interest in the business of the other licensee for the purpose of or with the result of obtaining a higher rate of interest or greater charge than would otherwise be permitted by this Act.

(r) Splitting of Loans: Although not absolutely prohibited, extreme care should be exercised by the licensee to make certain that the charges do not exceed that which would be allowed if only one loan was made for the consolidated amount. This includes the initial and finance charges.

(s) Fees: Notary fees cannot be charged on any loan written under the Consumer Finance Act.

(t) Deferment Charge: When a deferment charge is granted, permitted, or assessed, the borrower must sign a statement on the date of such agreement to the effect that such charge has been paid or will be added to the account, as the case may be. The borrower must be furnished a legible copy of such statement containing all details of the transaction.

When a loan is prepaid prior to the new maturity date, refund of the finance charge shall be computed upon the number of monthly payments outstanding at the time of prepayment under the extended maturity date of the contract.

(u) Receipts or Coupon Book: For each payment made on any loan, the licensee shall furnish a full and complete receipt or coupon showing the following information:

(1) Loan number.

(2) Name or number of borrower.

(3) Principal payment.

(4) Late fee, if any.

(5) Name of licensee.

(6) Name or initial of person issuing the receipt.

(v) Statement of Pay-Off: Each licensee shall upon personal request furnish the borrower a written statement with respect to the amount of money necessary to pay off the account. This statement shall disclose the following information:

(1) Date of request.

(2) Net pay-off, including delinquent charge and refunds, if applicable, (as of the date of request).

(3) Date loan must be paid prior to in order to obtain net pay-off.

(4) Signature of person furnishing statement.

(w) Blanks in Loan Papers: Before the borrower's signature is affixed, all blank spaces on every document which a borrower is required to sign in obtaining a loan must be completed. Where the combination note and mortgage is used and the borrower has to sign at the bottom, the mortgage must be marked NONE, when only the note section is used. The borrower must be furnished a legible copy of the note and mortgage.

(x) Checks as Security: No licensee shall take a check or checks from a borrower for the purpose of holding the same as evidence of the indebtedness incurred by a borrower.

(y) Mortgages' Signatures: All chattel mortgages taken as security on a loan must have the signature of the spouse when the mortgage applies to household furniture. Household furniture can be defined as anything in the house which is used by the whole family and, if taken by legal action, would create a hardship. For example--a bedroom suite, refrigerator, washing machine, living room suite, etc., would be considered household furniture and requires both signatures. Lawn mower, sewing machine, radios, tools, automobile, etc., would not be considered household furniture for the purpose of this section.

(z) Power of Attorney: No power of attorney can be used.

The following state regulations pages link to this page.