(Division of Consumer Services)
Title of Rule and Other Identifying Information: Check
Cashers and Sellers Act, chapter 208-630 WAC. Specific sections
of the rules are proposed for amendment to be consistent with the
law, chapter 31.45 RCW.
THIS RULE IS BEING PROPOSED UNDER AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS USE OF THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO Sara Rietcheck, Department of Financial Institutions, 150 Israel Road S.W., Tumwater, WA 98501, P.O. Box 41200, Olympia, WA 98504-1200 , AND RECEIVED BY February 5, 2013.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: A definition in the rules is inconsistent with the same definition in the law. If not cured, the inconsistency may cause confusion as to what activity requires a license under the act.
Reasons Supporting Proposal: Clarifying the law in the rules.
Statutory Authority for Adoption: Chapter 43.320 RCW and RCW 31.45.200.
Statute Being Implemented: Chapter 31.45 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of financial institutions, governmental.
Name of Agency Personnel Responsible for Drafting: Cindy Fazio, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8800; Implementation and Enforcement: Deborah Bortner, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-0511.
December 4, 2012
Deborah Bortner, Director
Division of Consumer Services
"ACH" means automated clearing house, an electronic network for financial transactions that processes credit and debit transactions.
"Act" means chapter 31.45 RCW.
"Affiliate" means any person who directly or indirectly through one or more intermediaries, controls, or is controlled by, or is in common control with another person.
"Agent" for purposes of RCW 31.45.079 means a person who((
pursuant to the terms of a written agreement and for
compensation,)) engages in the business of making small loans by
perform(( s))ing small loan agent services on behalf of a(( n))
licensee or exempt entity.
"Annual percentage rate" or "APR" means the cost of credit expressed as a yearly rate, determined in accordance with the federal Truth in Lending Act (15 U.S.C. Sec. 1601 et seq.), and Regulation Z (12 C.F.R. Part 226 et seq.), as amended.
The Office of the Comptroller of the Currency (OCC) has developed an APR calculator (APRWIN) that licensees may download and use without charge. APRWIN is available on the OCC's web site at http://www.occ.treas.gov/aprwin.htm.
"Board director" means a director of a corporation or a person occupying a similar status and performing a similar function with respect to an organization, whether incorporated or unincorporated.
"Check" means the same as defined in RCW 62A.3-104(f) and, for purposes of conducting the business of making small loans, includes other electronic forms of payment, including stored value cards, internet transfers, and automated clearing house transactions.
"Check casher" means an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of cashing checks, drafts, money orders, or other commercial paper serving the same purpose.
"Check seller" means an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of selling checks, drafts, money orders, or other commercial paper serving the same purpose.
"Close of business" for the purposes of RCW 31.45.86 and these regulations means the actual time a licensee closes for business at the location from which a small loan was originated or 11:59 p.m. Pacific Time, whichever is earlier.
(1) The borrower's failure to repay a small loan in compliance with the terms contained in the small loan agreement or note; or
(2) Failure to pay any installment plan payment within ten days after the date upon which the installment was scheduled to be paid. See WAC 208-630-556 (12)(b).
"Department" means the department of financial institutions.
"Exempt entity" means a person described in RCW 31.45.020 that is engaged in the business of making small loans.
"Gross monthly income" means an individual's total personal income earned during a month prior to any taxes or deductions.
"Installment plan" is a contract between a licensee and borrower that provides that the loaned amount will be repaid in substantially equal installments scheduled on or after a borrower's pay dates and no less than fourteen days apart.
"Investigation" means an examination undertaken for the purpose of detecting violations of chapter 31.45 RCW or these rules or obtaining information lawfully required under chapter 31.45 RCW or these rules.
"License" means a license issued by the director to engage in the business of check cashing or check selling under the provision of chapter 31.45 RCW.
"Loaned amount" means the outstanding principal balance and any fees authorized under RCW 31.45.073 that have not been paid by the borrower.
"Monetary instrument" means a check, draft, money order or other commercial paper serving the same purpose.
"Paid" means that moment in time when the licensee deposits the borrower's check, accepts cash, or initiates an ACH withdrawal from the borrower's account for the full amount owed on a valid small loan. If the borrower's check is dishonored and returned unpaid by the borrower's bank, the loan is not paid. If an ACH authorization is denied, the loan is not paid.
"Payday advance lender" or "payday lender" means a licensee under this chapter who has obtained a small loan endorsement under RCW 31.45.073.
"Payday advance loan," "payday loan" or "deferred deposit loan" means the same as a small loan.
"Postdated check" means a check delivered prior to its date, generally payable at sight or on presentation on or after the day of its date. "Postdated check" does not include any promise or order made or submitted electronically by a borrower to a licensee.
"RCW" means the Revised Code of Washington.
"Small loan" or "loan" means a loan of up to the maximum amount and for a period of time up to the maximum term specified in RCW 31.45.073.
"Small loan agent services" ((
means all or substantially all
of the following services)) include but are not limited to:
(1) Marketing and advertising small loans;
(2) Taking small loan applications;
(3) Assisting customers in completing small loan documentation;
(4) Providing required disclosures;
(5) Disbursing small loan proceeds;
(6) Collecting small loans;
(7) Retaining documents and records; and
(8) Making reports.
"State" means the state of Washington.
"Unsafe or unsound financial practice" means any action, or lack of action, the likely consequences of which, if continued, would materially impair the net worth of a licensee or create an abnormal risk of loss to its customers.
[Statutory Authority: RCW 43.320.040, 31.45.200, and 2009 c 510. 09-24-089, § 208-630-110, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 07-23-094, § 208-630-110, filed 11/20/07, effective 12/21/07. Statutory Authority: RCW 31.04.165, 43.320.040, 31.45.030, 31.45.050, 31.45.200. 05-22-009, § 208-630-110, filed 10/21/05, effective 11/21/05.]
Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
AMENDATORY SECTION(Amending WSR 09-24-089, filed 12/1/09, effective 1/1/10)
WAC 208-630-610 What accounting and financial records must I keep? You must maintain the records in this section for at least two years.
(1) Generally, you must maintain the books, accounts, records, papers, documents, files, and other information relevant to the business.
1))2) Specifically, you must maintain (( A)) a record of
transactions conducted. The record may be limited to the
following provided a sufficient audit trail is available through
records obtainable from your bank of account:
(a) Amount of the checks cashed;
(b) Amount of fees charged for cashing the check;
(c) Amount of cash deducted from the transaction for the sales of other services or products;
(d) Amount of each check or monetary instrument sold;
(e) Amount of fee charged for the monetary instrument;
(f) Amount of small loan proceeds disbursed;
(g) Fees charged for small loans;
(h) Amount of payments on small loans received;
(i) Origination date of each small loan;
(j) Termination date of each small loan;
(k) Installment plan payment due dates;
(l) Application information as required by rule;
(m) Records of cash payments made on small loans. The record must include the date of the payment, the borrower's name, the amount of cash received, the identity of the employee who received the cash, and whether the payment was applied to a loan or installment plan;
(n) Copies of receipts required under WAC 208-630-505.
2))3) You must maintain a cash reconciliation summarizing
each day's activity and reconciling cash on hand at the opening
of business to cash on hand at the close of business. Such
reconciliation must separately reflect cash received from the
sale of checks, redemption of returned items, bank cash
withdrawals, cash disbursed in cashing of checks, cash disbursed
in making small loans, cash received in payment of small loans
and bank cash deposits.
3))4) You must keep records of the disbursement of loan
proceeds and the receipts of all payments on the balance of small
loans. The receipt must indicate the date of the transaction,
the borrower's name, amount of receipt, and whether the
disbursement or payment is on a loan or installment plan.
(5) You must maintain copies of any service agreements with agents.
[Statutory Authority: RCW 43.320.040, 31.45.200, and 2009 c 510. 09-24-089, § 208-630-610, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 07-23-094, § 208-630-610, filed 11/20/07, effective 12/21/07. Statutory Authority: RCW 31.04.165, 43.320.040, 31.45.030, 31.45.050, 31.45.200. 05-22-009, § 208-630-610, filed 10/21/05, effective 11/21/05.]
[Statutory Authority: RCW 43.320.040, 31.45.200, and 2009 c 510. 09-24-089, § 208-630-740, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 31.04.165, 43.320.040, 31.45.030, 31.45.050, 31.45.200. 05-22-009, § 208-630-740, filed 10/21/05, effective 11/21/05.]
(a) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead any borrower, to defraud or mislead any lender, or to defraud or mislead any person;
(b) Directly or indirectly engage in any unfair or deceptive practice toward any person;
(c) Directly or indirectly obtain property by fraud or misrepresentation;
(d) Make a small loan to any person physically located in Washington through use of the internet, facsimile, telephone, kiosk, or other means without first obtaining a small loan endorsement;
(e) Accept applications or referrals from an agent or pay for any services provided on your behalf by an agent without first verifying that the agent is licensed under the act;
e))f) Directly or indirectly refer a borrower, or
encourage a borrower, to use the services of more than one payday
lending business that results in an amount outstanding that
exceeds the loan limit in RCW 31.45.073;
f))g) Directly or indirectly structure a loan transaction
in order to exceed the loan limit in RCW 31.45.073;
g))h) Directly or indirectly pressure a borrower to not
enter into an installment plan;
h))i) Directly or indirectly pressure an applicant or
borrower to borrow more money than they state they want;
provided, it is not a violation of this subsection for a licensee
to inform a borrower as to his or her maximum loan amount or that
he or she is subject to a limit of eight loans per twelve-months
i))j) Cash a postdated check before the date written on
the check except as permitted by RCW 31.45.070(2);
j))k) Make a loan without processing it through the data
base system except as specifically allowed in law or rule;
k))l) Refuse to provide an installment plan to a borrower
who has notified you before the due date of the small loan that
they cannot pay the small loan; and
l))m) Engage in any device or subterfuge to evade the
requirements of the act.
(2) In addition to any other penalties, any transaction in violation of subsection (1)(d) of this section is uncollectible and unenforceable.
[Statutory Authority: RCW 43.320.040, 31.45.200, and 2009 c 510. 09-24-089, § 208-630-8201, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 07-23-094, § 208-630-8201, filed 11/20/07, effective 12/21/07.]