45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO FINANCE; ENACTING THE REFUND ANTICIPATION LOAN ACT; PROVIDING PENALTIES; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. SHORT TITLE.--This act may be cited as the "Refund Anticipation Loan Act".

Section 2. DEFINITIONS.--As used in the Refund Anticipation Loan Act:

A. "creditor" or "refund anticipation loan creditor" means a person who individually or in conjunction or cooperation with another person makes a refund anticipation loan or processes, receives or accepts for delivery an application for a refund anticipation loan or a check in payment of refund anticipation loan proceeds or in any other manner acts to allow the making of a refund anticipation loan; provided that "creditor" or "refund anticipation loan creditor" does not include a banking corporation, savings and loan association or credit union operating under the laws of the United States or New Mexico;

B. "debtor" means a person who receives the proceeds of a refund anticipation loan;

C. "director" means the director of the division;

D. "division" means the financial institutions division of the regulation and licensing department;

E. "licensee" means a person licensed as a facilitator or creditor pursuant to the Refund Anticipation Loan Act;

F. "refund anticipation loan" means a loan that a creditor arranges to be repaid directly from the proceeds of a debtor's income tax refunds; and

G. "refund anticipation loan fee" means the charges, fees or other consideration charged or imposed by the creditor for the making of a refund anticipation loan. A "refund anticipation loan fee" does not include charges, fees or other consideration charged or imposed in the ordinary course of business by a creditor for services that do not result in the making of a loan, including fees for tax return preparation and fees for electronic filing of tax returns.

Section 3. CREDITOR--LICENSE REQUIRED--APPLICATION--RENEWAL.--

A. No person shall engage in the business of a refund anticipation loan creditor without a creditor's license issued by the division.

B. The application for a license shall be in writing, under oath and in the form prescribed by the director. The application shall contain the name of the applicant; date of incorporation, if incorporated; the address where the business is or is to be conducted and similar information as to any branch office of the applicant; the name and resident address of the owner or partners or, if a corporation or association, of the directors, trustees and principal officers; and such other pertinent information as the director may require.

C. The license fee for each calendar year or part thereof shall be four hundred dollars ($400) for the principal place of business of the licensee and four hundred dollars ($400) for each branch of the licensee maintained in this state.

D. Each license shall specify the location of the office or branch, and the license shall be conspicuously displayed in the office or branch.

E. Upon the filing of an application and the payment of the fee, the director shall issue to the applicant a license to engage in the business of refund anticipation loan creditor in accordance with the provisions of the Refund Anticipation Loan Act for a period expiring on December 31 next following the date of its issuance. The license shall not be transferable or assignable. No licensee shall transact any business provided for by the Refund Anticipation Loan Act under any other name.

F. The director shall deny a license under the Refund Anticipation Loan Act if the director finds that:

(1) the applicant has failed to pay the required fee;

(2) the applicant has willfully furnished false or misleading information in the application; or

(3) there is reason to believe that the financial responsibility, character and general fitness of the applicant are such as to warrant belief that the business will not be operated lawfully, honestly, fairly and efficiently within the declared purposes and spirit of that act. If an original license is denied by the director, the director shall immediately notify the applicant in writing setting forth the reasons for denial.

Section 4. LICENSE SUSPENSION OR REVOCATION--APPEALS.--

A. Renewal of a license originally granted under the Refund Anticipation Loan Act may be denied or a license may be suspended or revoked by the director on any of the following grounds:

(1) material misstatement in the application for license;

(2) willful failure to comply with any provision of that act;

(3) defrauding a debtor to the debtor's detriment while a licensee under that act; or

(4) fraudulent misrepresentation, circumvention or concealment by the licensee through whatever subterfuge or device of any of the material particulars required to be posted or disclosed to a debtor under that act.

B. If a licensee is a firm, association or corporation, it is sufficient cause for the suspension or revocation of a license that any officer, director or trustee of a licensed firm, association or corporation, or any member of a licensed partnership, has acted or failed to act in the conduct of the business under its license as would be cause for suspending or revoking a license to the person as an individual. A licensee shall be responsible for the acts of any of its employees while acting as its agent, if the licensee after actual knowledge of the acts retained the benefits, proceeds, profits or advantages accruing from the acts or otherwise ratified the acts.

C. No license shall be denied, suspended or revoked except after a hearing, conducted with the notice requirements and procedures established by rule of the director.

D. A person aggrieved by the denial, suspension or revocation of a license may file an appeal to the district court pursuant to the provisions of Section 39-3-1.1 NMSA 1978.

Section 5. REFUND ANTICIPATION LOAN FEES--FILING WITH DIVISION--POSTING.--

A. No later than January 2 of 2002 and each year thereafter, each licensee shall file with the division a schedule of the refund anticipation loan fees for refund anticipation loans to be made during that year. If, during the year, a licensee changes the fees, the changed fees shall not be effective until a revised schedule is filed with the division.

B. Each creditor shall prominently display at each office where the creditor conducts business a schedule showing the current refund anticipation loan fees charged by that creditor and the current fees charged by the creditor for preparing and electronically filing an income tax return. Each creditor shall also prominently display on each fee schedule a statement that a taxpayer may have an income tax return prepared and filed electronically without also obtaining a refund anticipation loan.

Section 6. DISCLOSURE REQUIREMENTS.--At the time a debtor applies for a refund anticipation loan, a creditor shall disclose to the debtor on a form separate from the loan application:

A. the refund anticipation loan fee;

B. the fee for preparing and electronically filing a tax return;

C. the date that the loan proceeds will be paid to the debtor if the loan is approved;

D. that the debtor is responsible for repayment of the loan and related fees in the event the tax refund is not paid or not paid in full;

E. the availability of electronic filing for the income tax return of the debtor and the average time announced by the federal internal revenue service within which the debtor can expect to receive a refund if the debtor's return is filed electronically and the debtor does not obtain a refund anticipation loan; and

F. the annual percentage rate, as defined in the federal Truth In Lending Act, computed:

(1) by using the sum of the fee charged to prepare and electronically file the income tax return and the refund anticipation loan fee as the amount of the finance charge; and

(2) by using the average time announced by the federal internal revenue service for the receipt of refunds due on electronically filed returns as the term of the loan.

Section 7. MAXIMUM FEES.--

A. Except as provided in Subsection B of this section, the fees charged a debtor by a refund anticipation loan creditor shall not exceed:

(1) ninety dollars ($90.00) to prepare and file a debtor's state and federal income tax returns;

(2) ninety dollars ($90.00) as a refund anticipation loan fee; or

(3) an annual percentage rate, calculated pursuant to Subsection F of Section 6 of the Refund Anticipation Loan Act, of one hundred twenty percent.

B. The director, by rule, may adjust the maximum fee established in Paragraph (1) or (2) of Subsection A of this section upon a finding that the adjusted fee more accurately compensates a creditor for the actual services rendered.

Section 8. PROHIBITED ACTS.--No refund anticipation loan creditor shall:

A. misrepresent a material factor or condition of a refund anticipation loan;

B. fail to arrange for a refund anticipation loan promptly after a debtor applies for the loan;

C. engage in a transaction, practice or course of business that operates a fraud upon any person in connection with a refund anticipation loan;

D. charge a fee higher than:

(1) the fee schedule filed with the division;

(2) the posted fee schedule; or

(3) the amounts specified in Section 7 of the Refund Anticipation Loan Act;

E. directly or indirectly arrange for payment of any portion of the refund anticipation loan for check cashing, credit insurance or any other good or service unrelated to:

(1) preparing and filing income tax returns; or

(2) refund anticipation loans; or

F. arrange to take a security interest in any property of the debtor other than the proceeds of the debtor's income tax refunds to secure payment of the loan.

Section 9. EXEMPTIONS.--The provisions of the Refund Anticipation Loan Act do not apply to a person who acts solely as an intermediary by processing or transmitting, electronically or otherwise, tax or credit information.

Section 10. CRIMINAL PENALTY.--A person who engages in the business of a creditor without a license is guilty of a misdemeanor and upon conviction shall be punished by a fine not exceeding five hundred dollars ($500). Every refund anticipation loan entered into by the person constitutes a separate offense.

Section 11. CIVIL PENALTIES.--

A. A person who violates any provision of the Refund Anticipation Loan Act is subject to a civil penalty, imposed by the director, in an amount not to exceed three hundred dollars ($300) for each violation.

B. The receiving or charging of a fee in violation of Subsection D of Section 8 of the Refund Anticipation Loan Act shall be deemed a forfeiture of the entire amount of the fee. If the excessive fee has been received, the debtor, in a civil action, may recover twice the amount of the total fee paid.

Section 12. DELAYED EFFECTIVE DATE.--This effective date of the provisions of Sections 3, 4 and 10 of this act is January 1, 2002.

Section 13. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.