CALIFORNIA

Assembly Bill 376 enhances the existing Student Loan Servicing Act. Among many provisions, this law would impose new requirements on a student loan servicer: timely posting, processing, and crediting of student loan payments, applying overpayments consistent with the best financial interest of the borrower, and applying partial payments to minimize late fees and negative credit reporting. Effective July 1, 2021.

The California Consumer Privacy Act of 2018 (“CCPA”), grants California consumers various rights in regards to their personal information being collected by a business. The act grants a consumer the right to request a business delete certain personal information. Assembly Bill 713 excepts from the CCPA information that was deidentified in accordance with federal law, or was derived from medical information, protected health information, individually identifiable health information, or identifiable private information. In addition, the CCPA requires a business to make certain disclosures to consumers in its online privacy policy; AB 713 will now require businesses to update that information once every 12 months. Effective immediately in part, and certain provisions on January 1, 2021.

Governor Gavin Newsome signed a flurry of legislation on September 25, 2020. Assembly Bill 1864 renames the “Department of Business Oversight” as the “Department of Financial Protection and Innovation.” This renamed department will continue its previous mandate and oversee laws relating to financial products and services in California. In addition, this legislation enacts the California Consumer Financial Protection Law (“CCFPL”) to strengthen consumer protections. The new department has the power to bring administrative and civil actions, issue subpoenas, promulgate regulations, hold hearings, issue publications, conduct investigations, and implement outreach and education programs. Finally, this bill establishes a new Financial Technology Innovation Office. Effective January 1, 2021.

Assembly Bill 2196 extends the sunset date for the Pilot Program for Increased Access to Responsible Small Dollar Loans. Effective through January 1, 2028.

Assembly Bill 2524 would repeal prohibitions in the Check Sellers, Bill Payers and Proraters Law, which prohibit a person from engaging in these businesses without a license from the Commissioner of Business Oversight. Effective January 1, 2021.

Also signed on September 25, 2020, Assembly Bill 3254 requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean to deliver a translation of the contract in the language in which the agreement was negotiated before execution to the other party. Effective January 1, 2021.

GEORGIA

Pursuant to the Georgia Administrative Code, the Georgia Department of Banking and Finance adopted Rules on August 19, 2020. Among various provisions, these rules cover License and Supervision Fees for various types of lenders; place of business, advertising, and other requirements; books and records requirements; standards regarding fines and penalties; licensing requirements; disclosure, charge, and debt collection restrictions. Specifically, the Rules require certain notices to consumers to be shown in the written loan agreement, including the number of payments, amount of payments, and due dates of payments. The Rules place restrictions on certain payment profiles, including limiting balloon payments, and requiring all other installment payments to be scheduled at regular intervals and in equal amounts. The Rules allow for monthly maintenance charges on installment loans, pursuant to O.C.G.A. Sec. 7-3-11, but require a refund if the consumer loan is terminated prior to its scheduled maturity date. The Rules further specify that maintenance charges are to be considered an additional charge and shall not be considered in the calculation of any interest, fees, or other charges. The Rules authorize closing fees, convenience fees, unaffiliated third-party fees, and late charges. Effective September 8, 2020.

IOWA

Iowa released new regulations increasing the special annual registration fees for electric vehicles under IA ARC 5178C. The original legislation was enacted because fuel tax revenue is declining as average fuel efficiency increases and electric vehicles become more common. Effective January 1, 2021 and January 1, 2022, respectively.

MISSOURI

Senate Bill 599 allows traditional installment loan lenders to charge a convenience fee or surcharge for payments made by a debit or credit card. Effective August 28, 2020.

NEW JERSEY

Assembly Bill 2669 expands coverage of Service Contracts to leased motor vehicle for excess wear and use protection. This means leased vehicles are now covered under Service Contracts for damage to tires, paint cracks or chips, interior stains, rips, or scratches, exterior dents or scratches, windshield cracks or chips, missing interior or exterior parts, or excess mileage that results in a lease-end charge. In addition, all Service Contracts must now replace a motor vehicle key or key-fob in the event it becomes inoperable, lost, or stolen. Effective immediately.

Effective State Changes

GEORGIA

On June 30, 2020 Senate Bill 462 was signed into law by Governor Brian Kemp. The law changes the Georgia Industrial Loan Act to the Georgia Installment Loan Act. It also makes the regulator of Georgia Bank Installment Loans the Department of Banking and Finance instead of the Industrial Loan Commissioner. The law’s structure is fundamentally the same as the Georgia Industrial Loan Act, but additional changes were needed to provide consistency throughout the Act. Effective immediately, applicable to installment loan agreements entered into on or after July 1, 2020.

House Bill 1039 provides for new written or electronic notifications to consumers who enter service contracts that contain lengthy automatic renewal provisions. Effective January 1, 2021.

SOUTH CAROLINA

On July 31, 2020, the South Carolina Department of Insurance published Bulletins 2020-07, 2020-08, and 2020-09 with proposed Prima Facie Credit A&H and Credit Property rates for 2021. The final rates will be published on or before October 1, 2020. Credit Property Insurance rates remain the same for Household Goods – Single Interest, while Automobile, Fire and Theft, Automobile Collision, and Household Goods – Dual Interest will be decreased by 10 percent from 2020 levels. The A&H rates for insurance sold in conjunction with consumer credit transactions in 2021 will remain unchanged from their current rates in 2020. The 12-month rate for $100 of Initial Insured Indebtedness will be as follows:

• 14-day Retro: $1.53
• 30-day Retro: $1.44

Pursuant to Order 2020-08, the 3-day retroactive A&H rate for insurance sold in conjunction with loans will remain at $0.28 per $5.00 of monthly indemnity. Effective January 1, 2021.

VERMONT

House Bill 942 provides increased incentives for Vermont residents to purchase battery or plug-in electric vehicles. Effective July 1, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

Specific dollar threshold adjustments were announced on July 17, 2020 through the Consumer Protection Financial Bureau. The CPFB is required to make adjustments to dollar thresholds based on annual changes in the Consumer Price Index. Updates to the Ability to Repay/ Qualified Mortgage Rule, (“ATR/QM”) and Home Ownership Equity Protection Act (“HOEPA”), among others, were announced and become effective January 1, 2021.

HOEPA Annual Threshold Adjustments:

• The adjusted total amount of the loan threshold will be $22,052, up from $21,980
• The adjusted points and fees trigger will be $1,103, up from $1,099

ATR/QM Threshold Adjustments – To meet qualified mortgage criteria, the combined points and fees cannot exceed the following:

• 8% of total loan amount for loans less than $13,783
• $1,103 for loans greater than or equal to $13,783 but less than $22,052
• 5% of total loan amount for loans greater than or equal to $22,052 but less than $66,156
• $3,308 for loans greater than or equal to $66,156 but less than $110,260
• 3% of total loan amount for loans greater than or equal to $110,260

FEDERAL TRADE COMMISSION

The Federal Trade Commission released a Staff Report by the Bureau of Consumer Protection in July. Entitled “Buckle Up: Navigating Auto Sales and Financing.” The report highlights results from a previous study related to sales and financing which the Bureau encounters in their enforcement role.

OFFICE OF THE COMPTROLLER OF THE CURRENCY

On July 22, 2020, the Office of the Comptroller of the Currency (“OCC”) proposed a regulation regarding the ”true lender” concept when third parties are involved with banks as marketplace lenders. Under their proposal, a bank makes a loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan. Comments on this new regulation must be received by the OCC on or before September 3, 2020.

CALIFORNIA

On June 29, 2020, Assembly Bill 85 was signed into law requiring used vehicle dealers to collect and remit to the Department of Motor Vehicles (“DMV”) applicable sales tax. Used vehicle dealers must remit applicable sales tax within 30 days from the date of sale. This bill also imposes a penalty for failure to timely remit sales tax. Effective January 1, 2021.

California Assembly Bill 82 requires the DMV to draft regulations in order to establish any additional requirements for implementing AB 85. The bill also eliminated a provision in AB 85 requiring the DMV to withhold vehicle registrations until the dealer pays sales tax and penalties. Effective January 1, 2021.

MARYLAND

Senate Bill 192—the Budget Reconciliation and Financing Act of 2020—increases the processing fee dealers may charge from $300 to $500, in addition to the purchase price of a vehicle. Effective July 1, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

The Consumer Financial Protection Bureau (“CFPB”) is establishing a Pilot Advisory Opinion Program in response to commentary encouraging the Bureau to offer guidance in cases of regulatory uncertainty. The CFPB announced this new program June 22, 2020 after receiving requests submitted under the Request for Information Regarding Bureau Guidance and Implementation Support.

The CFPB released its final “Payday, Vehicle Title, and Certain High-Cost Installment Loans” rule on July 7, 2020. The rule removes the “ability to repay” provisions targeted at payday lenders, which were originally implemented in 2017. Additionally, the CFPB has released compliance aids, FAQs, and an updated Small Entity Compliance Guide.

ILLINOIS

The Payday Loan Reform Act allows an Illinois lender to charge a $3 fee for verifying a borrower’s information. Effective July 1, 2020.

INDIANA

Senate Enrolled Act 395 revises the process for updating the maximum charges under the Indiana Code for both retail sales and consumer loans by reinserting the dollar bracket adjustments to January of odd number years. However, the rates currently remain unchanged from the rates effective through July 1, 2020. Precomputed loans and sales are prohibited as of July 1, 2020. In addition, a Prepaid Finance Charge is now allowed. Effective for sales or loans made on or after July 1, 2020.

MINNESOTA

The Minnesota Commerce Department published their periodic adjustment in dollar brackets effective July 1, 2020 through June 30, 2022. Effective July 1, 2020.

Under Minnesota’s Motor Vehicle Retail Installment Sales Act the motor vehicle document preparation fee rises from $100 to $125. Effective July 1, 2020.

OKLAHOMA

The Department of Consumer Credit published the changes in dollar brackets for Retail Installment Sales and Consumer Loans. Effective July 1, 2020.

SOUTH CAROLINA

The Department of Consumer Affairs released its biannual dollar bracket adjustment effective through June 30, 2022. Among the dollar bracket adjustments are consumer credit sales, consumer leases, and consumer loans. Effective July 1, 2020.

SOUTH DAKOTA

HB 1061 was signed into law by Governor Kristi Noem. The new law provides for the waiver of registration fees on motor vehicles owned by improvement districts. Effective July 1, 2020.

SB 14 defines which data must be included with the registration and plates for motorcycles, snowmobiles, passenger vehicles, and trailers. Effective July 1, 2020.

TEXAS

The dollar amount brackets and ceilings subject to adjustment in the Texas Financial Code for Retail Installment Sales and Consumer Loans. Effective July 1, 2020.

INDIANA

Senate Enrolled Act 395 was signed by Governor Eric Holcomb on March 18, 2020. The act significantly revises the maximum charges allowed under the Indiana Code for both retail sales and consumer loans by reinserting the dollar bracket adjustments to January of odd number years. This is a departure from the UCCC state historical norm of adjusting in July on even-numbered years. In addition, this law allows a creditor to charge a prepaid finance charge. Key changes effective for 2020:

• Loans have a maximum finance charge which is computed on the principal.
• Sales have a maximum credit service charge which is computed on the amount financed.
• Precomputed loans and sales are prohibited after June 30, 2020.
• The prepaid finance charge allowed by this law must be paid separately at consummation or withheld from the transaction proceeds. This prepaid finance charge for loans replaces the $50 origination fee allowed since 2012.

Effective for sales or loans made on or after July 1, 2020.

MINNESOTA

House Bill 4556 modifies deadlines, requirements for in-person appearances, state programs, and other statutory requirements caused by the COVID-19 pandemic. In addition, this bill modifies the motor vehicle registration tax, so that the formula is based on manufacturer’s suggested retail price (“MSRP”) without other costs or adjustments. Included changes in this bill:

• Increases the tax rate used for vehicles being newly registered, from 1.25% to 1.285%;
• Bases the registration tax calculation only on the MSRP;
• Clarifies how MSRP can be determined.

Effective January 1, 2021, or earlier if certain changes are enacted to the information technology system.

The Minnesota Commerce Department published the periodic adjustment in dollar amounts effective July 1, 2020 through June 30, 2022. The adjustments are based on a 10% increase. The dollar amount adjustments include:

• §47.59 Subd. 3                 Principal Subject to 33% Interest                           $1,275.00
• §47.59 Subd. 3                 Minimum Refund                                                             $8.50
• §47.59 Subd. 6                 Default Charges                                                              $8.84
• §47.59 Subd. 6                 Loan Administration Fee Threshold                     $ 7,344.00

Effective July 1, 2020.

Under Minnesota’s Motor Vehicle Retail Installment Sales Act the motor vehicle document preparation fee rises from $100 to $125.

Effective July 1, 2020.

OKLAHOMA

The Department of Consumer Credit published the changes in dollar amounts which will become effective July 1, 2020. Included in the adjustments are the following:

Retail Installment Sales, §2-201:

The greater of:

• 30% of the amount financed up to $1,590; plus
• 21% of the excess to $5,300; plus
• 15% of the remainder to $58,300.
• OR  21% Simple Interest

The dollar amounts under §3-508(A) remain the same.

For loans subject to § 3-508(B) of the Oklahoma Code the maximum charge structure 

Loan Amount	Acquisition Charge	Handling Charge
Up to $158.95		$5.30 per $26.50 of principal
$158.96-$185.50	1/10 of the amount of principal	$15.90 per month
$185.51-$371.00	1/10 of the amount of principal	$18.55 per month
$371.01-$530.00	1/10 of the amount of principal	$21.20 per month
$530.01-$795.00	1/10 of the amount of principal	$23.85 per month
$795.01-$1,060.00	1/10 of the amount of principal	$26.50 per month
$1,060.01-$1,325.00	1/10 of the amount of principal	$29.15 per month
$1,325.01-$1,590.00	1/10 of the amount of principal	$31.80 per month

The maximum delinquency charge for consumer credit sales and consumer loans will increase from $26.00 to $26.50. Effective July 1, 2020.

Oklahoma Senate Bill 1682 was signed into law by Governor Kevin Stitt on May 21, 2020. The bill preempts any local government ordinance that restricts the location of or regulation of the interest rates and fees charged by a business that is licensed or regulated by the Oklahoma Department of Consumer Credit. Effective November 1, 2020.

SOUTH CAROLINA

The Department of Consumer Affairs released its biannual dollar bracket adjustment effective from July 1, 2020 through June 30, 2022. Among the dollar bracket adjustments are:

• The consumer credit sale, consumer lease, and consumer loans defined maximum amount changes from $92,500 to $105,000. (§2.104(1)(e), §2.106(1)(b), and §3.104(d), respectively).
• The maximum delinquency charge for sales and loans transactions changes from $18.50 to $21. (§ 2.203(1) and §3.203(1), respectively).
• The minimum delinquency charge changes from $7.40 to $8.40. (§ 2.203(2)).

Effective July 1, 2020.

UTAH

House Bill 37 defines “Vehicle Service Contracts” for the repair or maintenance of a motor vehicle. The bill addresses registration fees for service providers and conspicuous language requirements. This disclosure provision goes into effect on January 1, 2021 unlike the rest of the statute. Effective in part May 12, 2020; Disclosure requirements effective January 1, 2021. 

House Bill 318  modifies the Utah Code sections pertaining to Check Cashing and Deferred Deposit Lending. The modifications address registration, reporting, operational, and third party debt collection requirements. Effective May 11, 2020.

VIRGINIA

Democratic Governor Ralph Northam signed into law House Bill 789 and its companion Senate Bill 421 on April 22, 2020. The law does the following:

• Allows “access partners” to lend to Virginia citizens, if certain conditions are met.
• Identified various licensing requirements for lenders.
• Installment Loans
  • Sets a single 36% interest rate cap for installment loans between $300-$35,000.
  • Establishing requirements that loans between $300 and $35,000, be repayable in substantially equal installment payments with terms of no fewer than six and no more than 120 months.
  • Changes the allowed late payment fee from 5% of the installment amount to a flat $20 fee.
  • Allows a loan processing fee not to exceed the greater of $50 or 6% of the principal amount of the loan, up to a maximum of $150.
  • Requires specific contract disclosures, including the late fee and loan processing fee.
  • Raises the allowable check return for to $25.
• Open End Credit Plans
  • Sets a 36% rate cap on open-end credit plans.
• Short Term Lenders:
  • Relabels “payday lenders” as “short term lenders.”
  • Sets a 36% interest rate cap on short term loans which may not exceed $2,500.
  • Short term loans may be between 4 months and 24 months, unless certain criteria are met.
  • Allows a maintenance fee not to exceed 8% of the loan amount or $25.
  • Prohibits short term lenders from selling credit insurance and other ancillary products on these transactions.
• Motor Vehicle Title Loans
  • Limits interest to 36% maximum.
  • Allows for a monthly maintenance fee not to exceed 8% of the loan amount or $15.

Effective January 1, 2021.

Senate Bill 77 requires the licensing of qualified education loan servicers. Effective July 1, 2021.

WASHINGTON

On March 18, 2020 Governor Jay Inslee signed Senate Bill 6187 into law. This statute modifies data breach notification requirements for state and local agencies by adding to the definition of “personal information.” Effective June 11, 2020.

House Bill 2374 was signed into law on March 27, 2020. This law enacts changes to certain conditions and requirements between brand owners and their vehicle dealers for the sale of secondary products. A violation of any provision constitutes an unlawful practice under Washington State’s Consumer Protection Act. Some provisions include:

• A brand owner may not require a dealer to offer a secondary product or provide a disclosure not otherwise required by law.
• A brand owner may not prohibit a dealer from offering a secondary product.
• A brand owner may offer an incentive program to a dealer to encourage the dealer to sell or offer a specific secondary product.
• A lender who shares common control with a brand owner may not require a customer to purchase a secondary product from a particular provider, administrator, or insurer.

Effective June 11, 2020.

WEST VIRGINIA

HB 4621 was passed on March 7, 2020. This statute enacts West Virginia’s Fintech Regulatory Sandbox program. Effective June 5, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

On May 1, 2020, the CFPB published Bulletin 2020-02 – Compliance Bulletin and Policy Guidance: Handling of Information and Documents During Mortgage Servicing Transfers. The purpose of this publication is to provide guidance to residential mortgage servicers. The Bulletin includes examples of practices and policies which are designed to achieve success and fulfill regulatory requirements.

NEW MEXICO

New Mexico’s Governor Michelle Grisham signed Senate Bill 151 into law on March 4, 2020. The bill allows an electronic signature for the application of a vehicle’s registration and certificate of title. Effective January 1, 2021.

We are still awaiting a Bulletin from the NM Office of Superintendent of Insurance regarding the revised implementation date for the revised Life and A&H insurance rates. At the time publishing this material, the Bulletin has not been published. The expected implementation date is still April 1, 2020.

SOUTH CAROLINA

Governor Henry McMaster approved House Bill 4244 on February 7, 2020. The law seeks to define service contracts and warranties, as well as road hazards, theft protection programs and theft protection program warranties. Effective May 7, 2020.

SOUTH DAKOTA

House Bill 1061 was signed into law February 24, 2020 by Governor Kristi Noem. The new law provides for the waiver of registration fees on motor vehicles owned by improvement districts. These districts join select government and non-profit entities which waive these fees following the payment of the actual cost of license plates. Effective July 1, 2020.  

South Dakota Senate Bill 14 was signed the same day as House Bill 1061 and defines which data must be included with the registration and plates for motorcycles, snowmobiles, passenger vehicles, and trailers. Effective July 1, 2020. 

TEXAS

The dollar amount brackets and ceilings subject to adjustment in the Texas Financial Code will increase as follows:

Consumer Loans – §342.201

(Add-On Rates)

$18 per $100 per annum of the cash advance to $2,190 plus,

$  8 per $100 per annum of the excess to $18,250

OR

(Simple Melded Rates)

30% per annum of the cash advance to $3,650 plus,

24% of the excess to $7,665 plus,

18% of the remainder to $18,250

Retail Installment Sales (“Other Goods”) – §345.055

$12 per $100 per annum of the principal balance to $3,650 plus,

$10 per $100 per annum of the excess to $7,300 plus,

$  8 per $100 per annum of the remainder.

Effective July 1, 2020.

WEST VIRGINIA

West Virginia joins a trend across state governments to more clearly define motor vehicle warranties, service agreements, and maintenance agreements by defining these provisions more clearly. Governor Jim Justice signed House Bill 4149 on March 7, 2020. Effective June 5, 2020.

WISCONSIN

Senate Bill 162 was signed by Governor Tony Evers on March 3, 2020. This bill waives the title transfer fee when an application for transfer of a title is being made by a surviving spouse or domestic partner. Effective March 3, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

On February 26, 2020 the CFPB published a new Truth in Lending Act (“TILA”) – Real Estate Settlement Procedures Act (“RESPA”) Integrated Disclosures FAQs. This document contains questions and answers regarding the TILA-RESPA Integrated Disclosure Rule, also known as the TRID rules.

DEPARTMENT OF DEFENSE

The Department of Defense has finally amended the controversial Question #2 in its interpretation of the Military Lending Act (“MLA”). This interpretive rule was originally published on December 14, 2017. Specifically, the rule dealt with the extension of credit to a covered person when purchasing a motor vehicle or personal property where the credit extended is more than the purchase price of the vehicle or property. This interpretative rule has been rescinded, meaning it is as if the rule was never published. Now creditors must return to the original interpretative rule published on August 26, 2016. Although the 2016 interpretative rule does not specifically address credit insurance products, credit insurance and GAP sales associated with the purchase money vehicle financing in dealer-arranged sales to covered persons no longer triggers a “per-se” loss of the exemption under MLA. Effective February 28, 2020.

ILLINOIS

Illinois Public Act 101-0031 provides that for sales and purchases of motor vehicles, the “selling price” includes the value of or credit given for a traded-in first division motor vehicle exceeding $10,000. While trade-in credit can exceed $10,000 to reduce the cost of the motor vehicle being purchased, for purposes of calculating Sales Tax or Use Tax due, the credit you can claim for a first division motor vehicle being traded in cannot exceed $10,000. Effective January 1, 2020.

MASSACHUSETTS

On December 4, 2019 the Massachusetts’s Office of the Consumer Affairs and Business Regulation released Bulletin 2019-09 which updated the credit life and credit accident and health rates for motor vehicle dealers. The credit life rates per one thousand dollars of insurance in force per month shall be $0.58 for single life and $0.92 for joint life. The single premium rates for each one hundred dollars of initial indebtedness shall be $0.44 for the first four years of coverage, $0.32 per annum for each of the next three years of term coverage, and $0.16 per annum for each year thereafter. Effective from January 1, 2020 – December 31, 2022. 

MICHIGAN

Signed into law on January 28, 2020, Michigan HB 4411 amends current statutes regarding credit services organizations. The new law details prohibited activities and requires certain disclosures to consumers receiving credit service organization services. Effective immediately.

NEW MEXICO

On December 30, 2019, the Office of Superintendent of Insurance (“OSI”) published Bulletin 2019-018 regarding the presumptively acceptable credit life and credit accident and health premium rates. These rates were scheduled to go into effect on January 1, 2020. Under New Mexico’s regulations, this regulatory change was not properly noticed or calculated correctly. The OSI is currently declining to take into consideration claim loss when calculating insurer’s loss ratio. The implementation of the new rates is now scheduled for April 1, 2020. Insurers can expect a 10% reduction of the prima facia rates for credit life and credit accident and health. Effective April 1, 2020.

NEW JERSEY

Signed on January 9, 2020, New Jersey SB 1712 requires new motor vehicle manufacturers, distributors, and factory branches to provide purchasers with a written statement summarizing vehicle warranty coverage for aftermarket and recycled parts. The statement is required within 90 days after the purchase or lease of a new motor vehicle. Effective immediately.

New Jersey SB 2998 was signed into law by Governor Phil Murphy on January 13. The law requires consumer lenders providing credit agreements that include lender-placed insurance to disclose the insurance. Creditors are also required to send a notice in the mail within 14 days of the placement of any such collateral protection insurance. Creditors that fail to provide these disclosures will be subject to fines of up to $25,000. The law will apply to any contract entered on or after the effective date. Effective April 12, 2020.

With SB 2252, the New Jersey legislature has supported the increased use of plug-in electric vehicles by providing incentives for the purchase or lease of such vehicles and charging equipment. The statute also aims to increase consumer awareness of the availability of incentives through a Statewide public education program. Effective immediately.

New Jersey SB 3206 establishes the “Unbanked and Underbanked Consumers Study Commission.” This Commission will evaluate how to create better access to financial services, review changes needed to address predatory banking practices, and examine the availability of banking locations in underserved areas, among other mandates. Effective immediately.

NEW YORK

New York SB 3631 amends the insurance law and increases the number of covered items under service contracts in order to protect New Yorkers leasing automobiles from unanticipated “lease-end” charges. Effective immediately.

RHODE ISLAND

Rhode Island updated the Documentary Preparation Fee motor vehicle dealers are allowed to collect within the state. 280 RICR 30-20-1 raises the minimum threshold of the vehicle purchase price on which a dealer may charge the Documentary Preparation Fee from $7,500 to $10,000. Additionally, the fee itself has now increased from $200 to $400. Effective January 19, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

On January 21, 2020, the CFPB published a new Policy Statement regarding Section 1031(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This Policy Statement seeks to give greater clarity regarding the meaning of abusive practices under the law. The Bureau wants to ensure that uncertainty surrounding the definition does not impede access to lawful financial products or services. The Policy Statement provides a framework for the exercise of supervisory and enforcement authority by the Bureau in regard to abusive acts or practices. Effective January 24, 2020.

Review of State Changes Effective in 2019

ARIZONA          

HB 2674 clarifies that Guaranteed Asset Protection Waivers are not insurance. Effective 90 days after sine die adjournment.

ARKANSAS

HB 1672 was approved by the Governor on April 8, 2019. The bill specifies that GAP waivers are not insurance. Effective July 23, 2019.

DELAWARE

House Bill 106 codifies existing legal practice which allows the Department of Justice to regulate service contracts and product warranties. Effective June 26, 2019.

FLORIDA

On August 15, 2019 Florida released credit life and disability rules. The new rates for credit disability changed for the first time in 10 years and appear to decrease as much as 20% from current rates. Effective August 15, 2019.

GEORGIA

SB 122 was signed on May 6, 2019. The bill addresses privacy requirements related to the purchase or lease of a motor vehicle. Effective July 1, 2019.

HAWAII

House Bill 154 clarifies the scope of motor vehicle service contracts subject to regulation by the Department of Insurance. Effective in part on July 1, 2019.

ILLINOIS

Senate Bill 1758 makes changes to the Consumer Installment Loan Act by defining “substantially equal installment payments.” Effective August 23, 2019.

INDIANA

The Department of State Revenue published Information Bulletin #28S regarding taxation of documentation fees in January 2019. Effective April 2, 2019.

HB 1136 amends the Indiana Uniform Consumer Credit Code and addresses the allowable delinquency charges. The bill applies to consumer credit sales (§24-4.5-2-203.5) and consumer loans (§24-4.5-3-203.5). Effective July 1, 2019.

HB 1237 became Public Law 245 on May 5, 2019. The bill creates a ceiling of $200 for a document preparation fee. The bill retroactively applies, effective July 1, 2013.

IOWA

HF 260 raises the threshold to a principal balance of $30,000 under the Superintendent’s authority to regulate the interest charge. Effective July 1, 2019.

The Governor signed SF 619 on May 16, 2019. The Act modifies provisions related to service contract providers. Effective May 16, 2019.

KANSAS

The Office of the State Bank Commissioner published an Administrative Interpretation regarding GAP waivers. Provisions effective on or after May 15, 2019.

KENTUCKY

House Bill 285 applies to consumer loan companies. Rates for supervised lending did not change, but HB 285 created a new loan processing fee. Effective 90 days after the adjournment of the legislative session.

Regulation 174143r places restrictions on deferred deposit transactions.

LOUISIANA

Louisiana HB 522 was signed by the Louisiana Governor on May 28, 2018. The Act relates to motor vehicle service contracts. Effective February 1, 2019.

MARYLAND

In 2018, Maryland established the Maryland Financial Consumer Protection Commission. The Commission ceased operations on June 30, 2019.

MASSACHUSETTS

HB 4086 was signed into law on January 10, 2019 and establishes and modifies certain laws regarding consumer financial and credit information.

MICHIGAN

On December 18, 2018, Governor Snyder approved HB 6498. The bill is known as the “Motor Vehicle Franchise Act.” Effective March 28, 2019.

MINNESOTA

The Minnesota Department of Commerce published guidance requiring that a company that purchases retail installment contracts from Minnesota dealers must hold a sales finance company license. Effective for contracts executed after July 1, 2019.

MISSISSSIPI

House Bill 925 revises the definition of a vehicle service contract and defines road hazards subject to those contracts. Effective July 1, 2019.

NEVADA

SB 201 aligns the state code with the federal Military Lending Act. Effective October 1, 2019, with other portions of the bill effective July 1, 2019 or July 1, 2020.

NEW JERSEY

Senate Bill 2994 requires GAP waivers to be cancellable and requires a pro rata refund of the purchase price. Effective October 17, 2019.

NEW MEXICO

HB 6 was signed by the Governor on April 4, 2019. Among other tax-related provisions, the bill increases the rate of the motor vehicle excise tax. Effective July 1, 2019.

HB 150 became law on April 3, 2019. The bill applies to installment loans covered by the Installment Loan Act and the Small Loan Act. Effective July 1, 2019.

SB 350 was signed by the Governor on April 4, 2019. The bill amends definitions related to service contracts. Effective 90 days after adjournment of the legislature.

NEW YORK

NY SB 4019 requires that a retail lessee shall not be financially liable for charges because he or she has passed away before the lease’s conclusion. Passed September 5, 2019.

NY AB 7080 amended current law to include keys or key fobs as falling under the definition of items covered under Service Contracts. Effective September 6, 2019

NORTH CAROLINA

SB 162 modifies the origination fee for a loan or extension of credit not secured by real property. The bill states that a specific loan with a principal amount of less than $5,000, the APR shall not exceed 36%, inclusive of fees. Effective April 1, 2019.

Senate Bill 385 was enacted on July 26, 2019. The law primarily concerns motor vehicle dealer licensing requirements. Effective July 26, 2019

North Carolina Servicemembers Civil Relief Act codifies into state law many provisions of the federal Servicemembers Civil Relief Act. Effective July 25, 2019

On July 5, 2019, Senate Bill 529 became law in North Carolina. This legislation changes the processing fee for a returned check from $25 to $35. Effective October 1, 2019.

NORTH DAKOTA

House Bill 1181 codifies that GAP Waiver agreements can be sold in North Dakota and are exempt from insurance laws. Effective March 21, 2019.

HB 1195 creates contract requirements applicable to service contract providers. Effective on contracts entered into after July 31, 2019.

HB 1292 amends the definition of “purchase price” as it relates to the application of sales or use tax. Effective July 1, 2019.

OKLAHOMA

The Department of Consumer Credit published dollar bracket adjustments for Retail Installment Sales under § 2-201. For loans subject to § 3-508(A), rates remain the same and the § 3-508(B) rates and brackets were updated on July1, 2019.

PENNSYLVANIA

The Pennsylvania Dept. of Banking and Securities released a comment letter clarifying the conditions for the offer of a GAP product. Effective January 31, 2019.

TEXAS

HB 3855 affects consumer loans made under Section 342.201 of the Finance Code. Effective September 1, 2019.

Effective July 1, 2019, the dollar brackets and ceilings subject to adjustment in the Texas Financial Code will increase for Consumer Loans and Retail Installment Sales.

UTAH

Governor Gary Herbert signed House Bill 378 on March 25, 2019 creating a financial technology regulatory sandbox. Enacted March 25, 2019.

VIRGINIA

House Bill 2600 was signed on March 8, 2019. The bill is meant to crack down on unsolicited telemarketing calls. Effective July 1, 2019.

Signed by the governor on March 26, 2019, a new law applies to GAP Waivers which are legal agreements and not considered insurance. Effective July 1, 2019.

SB 1325 establishes requirements for offering GAP Waivers and includes provisions relating to disclosures, cancellation, and refunds. Effective July 1, 2019.

WASHINGTON D.C.

The Washington D.C. City Council passed a bill which establishes rules for the administration and regulation of service contracts. Effective May 22, 2019.

WEST VIRGINIA

House Bill 3143 alters the rate structure of regulated consumer lenders under the Consumer Credit and Protection Act. Effective July 1, 2019.

Review of State Changes Effective in 2020

CALIFORNIA

AB 539 amends the California Financing Law. Once this bill goes into effect, a loan with a principal amount of $2,500 to $10,000 may receive charge on a rate not exceeding 36% plus the Federal Funds Rate. Effective January 1, 2020.

California’s governor signed a series of amendments to the California Consumer Privacy Act on October 11, 2019. Effective January 1, 2020.

On June 8, 2019, California published the fee adjustments to the Vehicle Code under 13 CA ADC § 423.00. Effective January 1, 2020.

HAWAII

Senate Bill 409 establishes an annual registration surcharge of $50.00 for electric and alternative fuel vehicles. Effective January 1, 2020.

ILLINOIS

The State of Illinois has adjusted its document preparation fee for the year 2020 to $300.00. Effective January 1, 2020.

The Payday Loan Reform Act allows an Illinois lender to charge a $3 fee for verifying a borrower’s information. Effective July 1, 2020.

Senate Bill 1624 made changes to the Personal Information Protection Act by putting in place new reporting requirements. Effective January 1, 2020.

NEW YORK

On July 25, 2019 Governor Andrew Cuomo signed the SHIELD Act amending New York’s current data breach notification law. Effective March 21, 2020.

OHIO

The Ohio Department of Insurance has issued a memorandum revising prima facie credit insurance rates effective January 1, 2020.

OKLAHOMA

SB 720 creates the Oklahoma Small Lenders Act. The bill creates a new license for “small lenders,” beginning on January 1, 2020.

RHODE ISLAND

House Bill 5674 defines service contracts and clarifies that service contracts are not insurance and not subject to the insurance code. Effective January 1, 2020.

SOUTH CAROLINA

The South Carolina Dept. of Insurance published orders 2019-04, 2019-05, and 2019-06 confirming Prima Facie Credit A&H and Property rates. Effective January 1, 2020.

WYOMING

Wyoming’s Governor Mark Gordon signed HB 57 on February 19, 2019. This bill creates a financial technology sandbox. Effective January 1, 2020.

ANNUAL TILA THRESHOLD EXEMPTION

The CFPB published its annual Truth in Lending Act threshold adjustment, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. For 2020 the exemption threshold amount for Regulation M and Z is increased from $57,200 to $58,300. Effective January 1, 2020.

HOEPA and ATR/QM

Specific dollar threshold adjustments were announced on August 1, 2019 through the Consumer Protection Financial Bureau. HOEPA Annual Threshold Adjustments will be $21,980, up from $21,549. The adjusted points and fees trigger will be $1,099, up from $1,077. The ATR/QM Threshold Adjustments were also reported in our newsletter:

• 8% of total loan amount for loans less than $13,737
• $1,099 for loans greater than or equal to $13,737 but less than $21,980
• 5% of total loan amount for loans greater than or equal to $21,980 but less than $65,939
• $3,297 for loans greater than or equal to $65,939 but less than $109,898

Effective January 1, 2020.