46th legislature - STATE OF NEW MEXICO - first session, 2003
RELATING TO FINANCIAL TRANSACTIONS; ENACTING THE DEFERRED DEPOSIT LOAN ACT; REGULATING THE TERMS OF DEFERRED DEPOSIT LOANS; PROVIDING FOR LICENSING OF PERSONS PROVIDING DEFERRED DEPOSIT LOANS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the "Deferred Deposit Loan Act".
Section 2. DEFINITIONS.--As used in the Deferred Deposit Loan Act:
A. "branch" means an office or location operated by a licensee to provide loans;
B. "consumer" means an individual to whom credit is granted in a loan;
C. "director" means the director of the financial institutions division of the regulation and licensing department or a person in the division acting under his lawfully delegated authority;
D. "division" means the financial institutions division of the regulation and licensing department;
E. "engage in business" means:
(1) advertising to or any other solicitation of a resident of this state that offers deferred deposit loans and that occurs within this state; or
(2) providing three or more loans within a calendar year to residents of this state;
F. "instrument" or "check" means a personal check or draft, unless otherwise stated, drawn upon a bank and payable on demand, signed by the maker or drawer, containing an unconditional promise to pay a sum certain in money to the order of the payee;
G. "lender" means any person who offers, originates or makes a loan; arranges a loan for a third party; assists a third party in the origination of a loan; or acts as an agent for a third party, regardless of whether the third party is exempt pursuant to the provisions of the Deferred Deposit Loan Act or whether approval, acceptance or ratification by the third party is necessary to create a legal obligation for the third party;
H. "licensee" means a lender licensed by the
director pursuant to provisions of the Deferred Deposit Loan Act to engage in the business of providing loans; and
I. "deferred deposit loan" includes any advance of money or arrangement or extension of credit whereby the lender, for a fee, finance charge or any other consideration, does the following:
(1) accepts a dated instrument from a consumer or any authorization signed by the consumer to transfer or withdraw funds from an account;
(2) agrees to hold the instrument for a period of time prior to the negotiation or deposit of the instrument;
(3) pays to the consumer, credits to the consumer's account or pays to another person on the consumer's behalf the amount of the instrument actually paid or to be paid pursuant to the Deferred Deposit Loan Act; and
(4) an overdraft product or service offered by a financial institution shall not be considered a deferred deposit loan.
Section 3. EXEMPTIONS.--The Deferred Deposit Loan Act does not apply to the activities of federal, state and local governments; a retail seller selling tangible consumer goods, including consumables; a retail buyer that cashes checks or issues money orders as a service to its consumers, which service is incidental to its main purpose or business; or a federally chartered or state-chartered bank, savings and loan association, credit union or trust company. The Deferred Deposit Loan Act does not, however, exempt individuals that originate, broker or service deferred deposit loans for third parties, or by participation in or pools in deferred deposit loans for third parties. A product offered by a federally insured depository institution that provides overdraft protection to depositors shall not be considered a deferred deposit loan.
Section 4. LICENSING.--
A. Unless exempt pursuant to Section 3 of the Deferred Deposit Loan Act, a person shall not engage in or offer to engage in the business of providing deferred deposit loans unless the person has been issued a license by the director. The director shall not issue or renew a license until an applicant meets all the requirements for licensing and licensee conduct required pursuant to the Deferred Deposit Loan Act. A license shall:
(1) if the licensee is an individual, state the address at which the business is to be conducted and the name of the licensee; if the licensee is a corporation, state the name, date and place of incorporation; and if the licensee is a partnership, trust or association or other legal entity, state the names of all the partners and all the members and beneficiaries thereof and the trade name under which the licensee desires to conduct such business;
(2) be kept conspicuously posted in the licensed place of business and shall not be transferable or assignable;
(3) remain in full force until June 30 next following its date of issue, unless sooner surrendered, revoked or suspended as provided in the Deferred Deposit Loan Act, but shall terminate on June 30 following its issue unless renewed; and
(4) entitle the person whose name appears on the face of the license to enjoy and exercise the revocable privileges and immunities provided for in the Deferred Deposit Loan Act.
B. Application for a license and any annual license renewal shall be in writing under oath and in the form prescribed by the director, and shall contain at least the following:
(1) the name and address of the applicant;
(2) the name of the business;
(3) the exact location where the business is to be conducted; and
(4) identification of all parties in interest and the names and addresses of all the partners, officers, directors, trustees and beneficiaries of any trust and of such principal owners and members as will provide the basis for an investigation and findings necessary.
C. The application shall also include a statement accepting the license, if granted, as a privilege to be enjoyed and exercised only under the terms and conditions of the Deferred Deposit Loan Act and under all lawful regulations promulgated by the director under that act.
D. The applicant shall pay to the director at the time of making application an original application fee of one thousand dollars ($1,000).
E. The application shall be accompanied by, and the licensee shall at all times maintain on file with the director, a written power of attorney appointing some person, a resident of this state, as the licensee's agent for service of all judicial or other process or legal notice and notices provided for by the Deferred Deposit Loan Act, unless the licensee has appointed an agent for service of process under another statute of this state. In case of noncompliance with this subsection, the service, including service of all notices provided for in the Deferred Deposit Loan Act, may be made on an employee of the registered office or place of business of the licensee, and the director may by order suspend the license pending compliance with this section.
F. Upon the filing of an application for an original license or the renewal of a licence, the director shall investigate the facts concerning the application.
G. At the time of application, the applicant shall furnish a twenty-five thousand dollar ($25,000) surety bond per location, not to exceed two hundred fifty thousand dollars ($250,000), issued by a bonding company or insurance company authorized in this state and in a form satisfactory to the director, to secure the performance of the obligations of the applicant with respect to the receipt of money in connection with the cashing of checks.
H. An applicant for license, upon written notice to do so by the director, within twenty days after service of the notice shall furnish in writing, under oath, to the director all additional information required by the director that may be relevant or, in the opinion of the director, helpful to him in conducting his investigation.
I. Failure to comply with the director's requirement for supplemental information or the willful furnishing of false information is sufficient ground for denial of a license. False or misleading information willfully furnished to the director prior to the issuance of a license is ground for suspension or revocation of the license.
J. The director shall grant or deny each application for an original license within sixty days from the date of filing of the application with the required information and fees, unless the period is extended by written agreement between the applicant and the director.
K. By accepting a license that is issued or by continuing to operate any licensed branch under the Deferred Deposit Loan Act, the licensee shall be deemed to have consented to be bound by the lawful provisions of the Deferred Deposit Loan Act and all lawful rules of the director promulgated or issued pursuant to any authorization granted in that act.
L. The director shall enter an order granting the application, file his findings and, upon payment of the original license fee of seven hundred fifty dollars ($750), in addition to five hundred dollars ($500) for each branch license, issue and deliver a license and branch license or licenses, if applicable, to the applicant if the director finds that:
(1) the financial responsibility, character and general fitness of the applicant for an original license and of the individual members and beneficiaries thereof, if the applicant is a partnership, association or trust, and of the officers and directors thereof, if the applicant is a corporation, are such as to command the confidence of the public and to warrant belief that the business will be operated lawfully, honestly and fairly within the declared purposes and spirit of the Deferred Deposit Loan Act;
(2) allowing the applicant to engage in business will promote the convenience and advantage of the community in which the business of the applicant is to be conducted; and
(3) the applicant has available for operation of the business at the specified location cash or its equivalent, convertible securities or receivables of thirty thousand dollars ($30,000) or any combination thereof.
M. If the director does not make the findings enumerated in Subsection L of this section, he shall enter an order denying the license, notify the applicant of the denial and retain the application fee. Within thirty days after the entry of the order, he shall prepare written findings and deliver a copy to the applicant.
N. Written application for renewal licenses shall be filed on or before March 31 of each year, and upon receipt of an application the director shall investigate the facts and review files of examinations of the applicant made by the division and of complaints filed by borrowers, if any. Thereafter, the director shall deliver a renewal license upon payment of the renewal license fee of seven hundred fifty dollars ($750) in addition to five hundred dollars ($500) for each branch applying to receive a renewal license, if the director finds that:
(1) no valid complaints reflecting a pattern or practice of willful conduct of violations or abuses of the Deferred Deposit Loan Act or of the rules of the director promulgated pursuant to that act have been filed by borrowers;
(2) examinations of the affairs of the applicant indicate that the business has been conducted and operated lawfully within the declared purposes and spirit of the Deferred Deposit Loan Act; and
(3) the financial responsibility, experience and general fitness and character of the applicant command the confidence of the public and warrant the belief that the business will continue to be operated lawfully within the purposes and spirit of the Deferred Deposit Loan Act.
O. If the findings enumerated in Paragraphs (1), (2) and (3) of Subsection N of this section are not made, the director may grant a temporary extension of the license not exceeding sixty days pending a hearing. If the extension is granted, the director shall:
(1) enter an order fixing a date for hearing upon the application;
(2) notify the licensee, specifying the particular complaints, violations or abuses or other reasons for his contemplated refusal to renew the license; and
(3) afford to the applicant an opportunity to be heard.
P. At the hearing, the director shall produce evidence to establish the truth of the charges of violation or other grounds specified in the notice, and the applicant shall have the right to produce evidence or other matters of defense. If after the hearing the director finds that the complaints of violations or other grounds specified in the notice are not well-founded, he shall issue the renewal license. If the director finds that the complaints of violations or other grounds are well founded, he shall:
(1) enter an order denying the renewal application;
(2) notify the applicant of the denial;
(3) return the renewal license fee tendered with the application; and
(4) within thirty days after the entry of the order, prepare written findings and deliver a copy of the findings to the applicant.
Q. In the event that an application for annual renewal of the license is delinquent, the licensee shall also pay a delinquency fee of fifty dollars ($50.00) per location or branch for each day the licensee is delinquent in filing the application for renewal.
R. The licensee or a person aggrieved by an act or order of the director pursuant to the Deferred Deposit Loan Act may file an appeal in district court in the first judicial district pursuant to the provisions of Section 39-3-1.1 NMSA 1978. The court in its discretion and upon proper showing may order a temporary extension of the license pending disposition of the review proceedings.
Section 5. REVOCATION OF LICENSES--EMERGENCY REVOCATION.--
A. The director shall not revoke a license unless the licensee is first served with a written notice that states the grounds for revocation with the time and place of the hearing, which shall be held not less than fifteen days after the mailing of the notice to the licensee by certified mail.
B. After the hearing, the director shall revoke any license issued pursuant to the Deferred Deposit Loan Act if he finds that:
(1) the licensee has violated a provision of the Deferred Deposit Loan Act or a rule made pursuant to that act either knowingly or without the exercise of due care to prevent the violation; or
(2) a fact or condition exists at the time of the proposed revocation that, if it had existed at the time of the original application for the license or any application for renewal of the license, would have justified the director in refusing to issue or renew the license.
C. If the director finds that probable cause for revocation of any license exists and that enforcement of the Deferred Deposit Loan Act requires immediate suspension of the license pending investigation, he may, upon three days' written notice by certified mail and after hearing, enter an order suspending the license for a period not exceeding thirty days.
D. When revoking or suspending a license, the director shall enter an order to that effect and notify the licensee in writing of the revocation or suspension by certified mail. The notice shall state the grounds for the revocation or suspension.
E. Any licensee may surrender any license by delivering it to the director with written notice of its surrender, but the surrender shall not affect his civil or criminal liability for acts committed prior to the surrender.
F. No revocation, suspension or surrender of a license shall impair or affect the obligation of a party to a preexisting lawful contract between the licensee and another.
G. The director may reinstate any suspended license or issue a new license to a person whose license or licenses have been revoked if no fact or condition then exists that would have justified the director in refusing originally to issue such license under the Deferred Deposit Loan Act.
H. Wherever in the Deferred Deposit Loan Act provision is made for service of any notice by certified mail, such service shall be deemed complete upon deposit of such notice in the post office. For the purpose of this section, mailing of notice addressed to the person designated as the agent for service of process under Section 4 of the Deferred Deposit Loan Act or an employee of the licensed office shall be sufficient.
Section 6. ADMINISTRATION AND OPERATIONS.--
A. On application of any person and payment of the cost for the service, the director shall furnish, under his seal and signed by him or his deputy, a certified copy of any license, rule or order.
B. At least once each year, the director or his designee shall make an examination of the place of business of each licensee and the loans, transactions, books, papers and records of the licensee insofar as they pertain to the business licensed under the Deferred Deposit Loan Act as he may deem necessary.
C. A licensee shall pay to the director an assessment reflecting costs and expenses reasonably incurred in the administration of the Deferred Deposit Loan Act, as estimated by the director based on comparable assessments for banks, savings and loans associations and credit unions not to exceed two thousand five hundred dollars ($2,500) per location, for the ensuing year and any deficit actually incurred or anticipated in the administration of the program in the year in which the assessment is made. The assessment shall be based on the number of locations of the licensee.
D. On or before March 31 in each year in which a licensee holds a license, the director shall notify each licensee by mail of the amount assessed and levied against it and that amount shall be paid within thirty days thereafter. If payment is not made within thirty days, the director may assess and collect a penalty, in addition to the assessment, of one percent of the assessment for each month or part of a month that the payment is delayed or withheld.
E. If a licensee fails to pay the assessment on or before June 30 following the date upon which payment is due, the director may consider this alone sufficient grounds to revoke the license.
Section 7. INFORMATION REQUIRED AND ANNUAL REPORTS--PROHIBITED ACTS.--
A. False or misleading information willfully furnished to the director by a licensee in any annual report or pursuant to any notice or requirement of the director is sufficient grounds for suspension and revocation of a license in accordance with the procedures for suspension or revocation of a license in the Deferred Deposit Loan Act.
B. A licensee shall not transact the business or make any loan provided for by the Deferred Deposit Loan Act under any other name or at any other place of business than that named in the license except pursuant to a currently effective written order of the director authorizing the other name or place of business.
C. A licensee shall keep and use books, accounts and records that will enable the director to determine if the licensee is complying with the provisions of the Deferred Deposit Loan Act and with the rules promulgated by the director. A licensee shall maintain any other records required by the director. The director or a designee of the director may examine such records at any time. All records shall be kept for two years following the last entry on a deferred deposit loan and shall be maintained according to generally accepted accounting procedures, so that an examiner may review the record keeping and reconcile each deferred deposit loan with documentation maintained in the consumer's loan file records.
D. The director shall maintain a toll-free telephone number for consumers to make complaints and express concerns regarding the product or a specific licensee.
E. On or before March 31 of each year beginning in 2005, a licensee shall file an annual report with the director for the preceding twelve-month period on forms prescribed by the director. These reports shall include the following:
(1) the licensee's resources, assets and liabilities at the beginning and end of the period;
(2) the income, expense, gain, loss and a reconciliation of surplus or net worth with the balance sheets, and the ratios of the profits to the assets reported, provided the director shall ensure that this information shall be treated as proprietary information;
(3) the total number and dollar amount of deferred deposit loans made by the licensee;
(4) the minimum, maximum and average amount of loans;
(5) the average annual percentage rate of loans;
(6) the average number of days of loans;
(7) the total number and dollar amount of returned checks;
(8) the total number and dollar amount of checks recovered;
(9) the total number and dollar amount of loans charged off; and
(10) information as required by the director about other business conducted:
(a) on the same premises; and
(b) by a licensee or an affiliation with another licensee under the Deferred Deposit Loan Act, or any other situation that exists in which allocations of expense are necessary.
F. The director shall prepare an annual consolidated report and make the report available to interested parties and to the general public.
G. The director may:
(1) require that schedules of charges, interest or fees and other information about loans be stated fully and clearly and in the manner that the director deems necessary to give adequate information to consumers;
(2) require that each licensee post complete, detailed and unambiguous schedules of charges, interest or fees in a form to be determined by the director in a clear, conspicuous and legible manner, and in a conspicuous location in the unobstructed view of the public within the licensee's location;
(3) require that schedules of charges, interest or fees and notice information be approved and submitted for filing with the director prior to the date of commencement of business at each location;
(4) require each licensee to maintain a file of all advertising material for a specific period, to be made available to the director upon request; or
(5) upon written notice to the licensee, prohibit the use of advertising material that is false, misleading or deceptive.
Section 8. CONDITIONS OF LOANS.--
A. The following notices shall be clearly and conspicuously posted in the unobstructed view of the public by a licensee in each location of a business providing loans:
(1) a notice that the licensee cannot use the criminal process against a consumer to collect any loan;
(2) the schedule of all charges, interest and fees to be charged on loans, with an example of all charges, interest and fees that would be charged on at least a one hundred dollar ($100) and a two hundred dollar ($200) loan, payable in fourteen days and sixty days respectively, and giving the corresponding annual percentage rate; and
(3) a notice that any consumer entering into a deferred deposit loan has the right of rescission with no charge if the amount borrowed is returned no later than 5:00 p.m. on the first day of business conducted by the licensee following the execution of the deferred deposit loan.
B. Before entering into a deferred deposit loan, a licensee shall:
(1) deliver to the consumer a pamphlet, in a form to be approved by the director that is written and available in English and Spanish that, explains in simple language all of the consumer's rights and responsibilities in a loan transaction, that includes a toll-free telephone number to the director for consumer concerns or complaints and that informs the consumer that the director can provide information about whether a lender is licensed, whether complaints have been filed with the division and how any complaints were resolved;
(2) distribute a plainly worded notice in English and Spanish that shall include the following disclosures, which shall be more prominently displayed and segregated from other information contained in the notice:
(a) schedule information about all charges and fees associated with making a deferred deposit loan;
(b) that if the consumer's check is returned unpaid, the consumer may be charged an additional fee of up to but never more than thirty dollars ($30.00) per instance of unpaid check, and not more than two times per loan, excluding collection actions that may seek no more than the face amount of the check;
(c) that the consumer cannot be prosecuted in a criminal action in conjunction with a loan for a returned check or be threatened with prosecution or legal action;
(d) the toll-free telephone number established by Subsection D of Section 7 of the Deferred Deposit Loan Act;
(e) that the licensee may not accept or require any collateral in conjunction with a loan;
(f) that a loan may not be rolled over, refinanced or renewed on the same unpaid balance more than three times; and
(g) that a consumer shall be permitted to make partial payments or prepayments in any amount on the loan at any time prior to maturity, without charge. A receipt shall be given to the consumer for any partial payments or prepayments made. A new check and loan agreement in writing shall be required for the outstanding balance of the loan for each payment made; however, such action does not constitute a rollover, refinance or renewal.
C. An agreement to enter into a deferred deposit loan shall be in writing and shall be provided by the licensee to the consumer. The agreement shall:
(1) authorize the licensee to accept and defer presentment of the consumer's check issued for the loan;
(2) be signed by the consumer; and
(3) include all of the following information, which shall be more prominently displayed and segregated from other terms contained in the agreement:
(a) a full disclosure of the total amount of charges, interest or fees charged for the loan, expressed in both United States currency and as an annual percentage rate as required under the federal Truth In Lending Act and regulations promulgated under that act;
(b) a clear description of the consumer's payment obligations as required under the federal Truth In Lending Act and regulations promulgated under that act;
(c) the name, address and telephone number of the licensee;
(d) the consumer's name and address;
(e) the due date, the date to which deposit of check has been deferred;
(f) the payment plan, rollover, refinance, renewal or extension, if applicable, allowed under this section;
(g) an itemization of the amount financed as required under the federal Truth In Lending Act and regulations promulgated under that act;
(h) disclosure of any returned check charges, which shall not exceed amounts permitted by the Deferred Deposit Loan Act;
(i) that the consumer cannot be prosecuted or threatened with prosecution to collect;
(j) that the licensee cannot accept or require collateral in connection with the transaction;
(k) that a licensee may not charge or receive from a consumer, directly or indirectly, interest, fees or charges to exceed twenty-five percent of the principal loan amount per loan, excluding any returned check fees or fees for the collection of the loan;
(l) that the licensee cannot make a loan contingent on the purchase of another product or service;
(m) spaces for signatures of the consumer and the licensee or authorized representative of the licensee and the date of the transaction;
(n) that a consumer shall be permitted to make partial payments or prepayments in any amount on the loan at any time prior to maturity, without charge;
(o) that a receipt shall be given to the consumer for any partial payments or prepayments made and a new check and loan agreement in writing shall be required for the outstanding balance of the loan for each payment made; however, such action does not constitute a rollover, refinance or renewal;
(p) that a loan may not be rolled over refinanced or renewed on the same unpaid balance more than three times;
(q) that each rollover, refinance or renewal requires a new and separate check and loan agreement in writing;
(r) that the consumer may incur fees for each loan rollover, refinance or renewal;
(s) that the consumer has a right to rescind the transaction by returning in cash, or through certified funds, one hundred percent of the amount advanced by a licensee for a deferred deposit agreement no later than 5:00 p.m. on the first day of business conducted by the licensee following the execution of the deferred deposit agreement. Unless the provisions of this subsection are followed, a deferred deposit loan shall not be subject to the consumer's right of rescission unless both the consumer and the licensee agree to the rescission. If a consumer exercises the right of rescission under this subparagraph, no fee for the rescinded transaction shall be charged to the consumer, nor shall any licensee charge or impose on any consumer a fee for exercising the right of rescission pursuant to this subparagraph;
(t) any other limitations or requirements set by the lender to enter into a deferred deposit loan; and
(u) any other information that the director shall deem necessary by rule.
D. The notices required pursuant to Subsection A of this section shall be written and available in English and Spanish.
E. The agreement required by Subsection C of this section shall be written in English and Spanish and shall not be vague, unclear or misleading.
F. The aggregate amount for any interest, charges or fees received by the licensee for a deferred deposit loan shall not exceed twenty-five percent of the principal loan amount, excluding any returned check fees or fees for collection of the loan.
G. A licensee, for a fee not to exceed amounts set forth in Subsection F of this section, may rollover, refinance or renew a deferred deposit loan no more than three consecutive times and shall require a new check and loan agreement in writing for each rollover.
H. A licensee may allow an extension or payment plan for repayment of an existing deferred deposit loan but may not charge any additional interest, fee or charge of any kind in conjunction with the extension or payment plan.
Section 9. PROHIBITED ACTS.--
A. No person shall:
(1) use or threaten to use criminal process in this or any other state to collect on a deferred deposit loan;
(2) accept or use the same check for a subsequent transaction or loan, or permit a consumer to pay off all or a portion of one loan with the proceeds of another loan made between that licensee, regardless of location, and the same individual;
(3) accept or require any collateral for a deferred deposit loan;
(4) make any deferred deposit loan contingent on the purchase of insurance or any other goods or services;
(5) enter into a deferred deposit loan with a consumer lacking the capacity to consent;
(6) alter the date or any other information on a check;
(7) charge an additional charge or fee for cashing the lender's business check representing the proceeds of the deferred deposit loan;
(8) engage in any unfair, deceptive or fraudulent practices or make any statement that is likely to mislead consumers in offering, making or collecting loans;
(9) advertise, display, distribute or
broadcast or cause or permit to be advertised, displayed, distributed or broadcast, in any manner whatsoever, any false, misleading or deceptive statement or representation with regard to the charges, terms or conditions for deferred deposit loans;
(10) take any check, instrument or form in which blanks are left to be filled in after execution;
(11) prevent a consumer from making partial payments or prepayments in any amount on the deferred deposit loan at any time prior to maturity, without charge;
(12) offer, arrange, act as an agent for or assist a third party in any way in the making of a deferred deposit loan unless the third party complies with all applicable federal and state laws and regulations, including the provisions of the Deferred Deposit Loan Act;
(13) accept deposits or issue certificates of deposit, provided, however, that the foregoing prohibition shall not limit the right of any licensee to borrow money or to issue notes, bonds, debentures or similar evidences of indebtedness labeled as such for the purpose of obtaining capital for use in its business;
(14) provide a deferred deposit loan of three hundred dollars ($300) or more for a period of less than sixty days;
(15) charge or receive from a consumer, directly or indirectly, any charges, interest or fees other than those authorized in the Deferred Deposit Loan Act;
(16) use a device or agreement that would have the effect of charging or collecting more fees, charges or interest than allowed by entering into a different type of transaction with the consumer that has that effect, except as permitted by the Deferred Deposit Loan Act; or
(17) fail to maintain cash or its equivalent, convertible securities or receivables of less than thirty thousand dollars ($30,000), or any combination thereof, at any single branch.
B. No deferred deposit loan shall exceed five hundred dollars ($500).
C. No deferred deposit loan shall be continued in a manner that results in the original principal balance of the loan being rolled over or continued more than three times.
D. A consumer who enters into a deferred deposit loan and offers a check to a licensee pursuant to an agreement shall not be subject to any criminal penalty for the failure to comply with the terms of that agreement.
E. Under no circumstances shall a deferred deposit loan agreement include any of the following:
(1) a hold harmless clause;
(2) a confession of judgment clause or power of attorney;
(3) an assignment of or order for payment of wages or other compensation for services;
(4) an acceleration provision;
(5) a prohibition on, or penalty for, partial payments or prepayments;
(6) a waiver of the right to a jury trial, if applicable, in an action brought by or against a consumer;
(7) a mandatory arbitration clause;
(8) a provision in which the consumer agrees not to assert a claim or defense arising out of the contract;
(9) a waiver of a provision of the Deferred Deposit Loan Act; or
(10) any deceptive or unconscionable provision.
F. A licensee shall not enter into an agreement for a deferred deposit loan with a consumer during the period of time that an earlier agreement for a loan for the same consumer is in effect.
G. No amount in excess of the amounts authorized by the Deferred Deposit Loan Act shall be directly or indirectly charged by a licensee pursuant to a deferred deposit loan.
H. Not more than one place of business shall be maintained under the same license, but the director may issue additional licenses to the same licensee upon compliance with all the provisions of the Deferred Deposit Loan Act governing issuance of a single license, but when more than one license is issued to a person, each licensed branch of the person shall be operated under the same trade name.
I. A change in the place of business of a licensee to a location outside of the municipality for which the license was issued shall not be permitted under the same license. When a licensee wishes to change his place of business within the same municipality, he shall give written notice thereof to the director who shall investigate the facts. The director shall enter an order permitting the change and amend the license accordingly if:
(1) allowing the licensee to engage in business in the proposed location is not detrimental to the convenience and advantage of the community; and
(2) the proposed location is reasonably accessible to borrowers under existing loan contracts.
J. A licensee shall not engage in the business of making loans provided for by the Deferred Deposit Loan Act under any name or at any place of business within this state other than that stated in the license.
Section 10. ENFORCEMENT AND REMEDIES.--
A. The remedies provided in this section apply to licensees and to persons to whom the Deferred Deposit Loan Act applies and who are not licensed.
B. The violation of a provision of the Deferred Deposit Loan Act or a rule adopted pursuant to that act, except as the result of an accidental or bona fide error in computation, to be determined using a preponderance of the evidence standard, renders the loan void, and the person attempting to enforce the loan shall not have a right to collect, receive or retain principal, interest or other charges whatsoever with respect to the loan.
C. A person found to have violated the Deferred Deposit Loan Act shall be liable to the consumer for actual, consequential and punitive damages, plus statutory damages of five thousand dollars ($5,000) for each violation, plus costs and attorney fees.
D. The remedies provided in this section are not the exclusive remedies available to a consumer, and the consumer is not required to exhaust any administrative remedies provided pursuant to the Deferred Deposit Loan Act or any other applicable law before resorting to the remedies provided in this section.
Section 11. FUND CREATED.--There is created in the state treasury the "financial literacy and consumer lending education and training fund" to be administered by the director. All or any portion of civil penalties, costs of investigation and other administrative assessments collected by the division pursuant to enforcement actions under the Deferred Deposit Loan Act shall be credited to the fund. Money deposited in the fund is appropriated to the division and shall be used solely for education and training of New Mexico residents in matters concerning financial literacy and consumer lending issues. Disbursements from the fund shall be made pursuant to vouchers executed by the director on warrants issued by the secretary of finance and administration. All interest earned on the money in the fund shall be credited to the fund. No part of the fund shall revert at the end of a fiscal year.
Section 12. RULES.--The director may promulgate rules for administration and enforcement of the Deferred Deposit Loan Act.
Section 13. CONSTRUCTION OF ACT.--Meeting the requirements of the Deferred Deposit Loan Act shall be sufficient to meet the requirements of the New Mexico Small Loan Act of 1955; however, meeting the requirements of the New Mexico Small Loan Act of 1955 shall not be sufficient to meet the requirements of the Deferred Deposit Loan Act.
Section 14. LIBERAL INTERPRETATION.--The Deferred Deposit Loan Act shall be liberally construed as a consumer protection statute.
Section 15. SEVERABILITY.--If any part or application of the Deferred Deposit Loan Act is held invalid, the remainder or its application to other situations or persons shall not be affected.
Section 16. APPLICABILITY.--The provisions of the Deferred Deposit Loan Act apply to a person who seeks to evade its applicability by any device, subterfuge or pretense.
Section 17. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2003.