SENATE BILL 340
49th legislature - STATE OF NEW MEXICO - first session, 2009
INTRODUCED BY
Howie C. Morales
AN ACT
RELATING TO FINANCIAL INSTITUTIONS; ENACTING THE TAX REFUND ANTICIPATION LOAN ACT; REQUIRING THE LICENSURE OF TAX REFUND ANTICIPATION LOAN FACILITATORS; REQUIRING DISCLOSURES REGARDING TAX REFUND ANTICIPATION LOANS AND CHECKS; PROHIBITING CERTAIN PRACTICES; PROVIDING FOR PENALTIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the "Tax Refund Anticipation Loan Act".
Section 2. DEFINITIONS.--As used in the Tax Refund Anticipation Loan Act:
A. "advertise" means to produce, distribute, broadcast or otherwise display or have displayed written materials, oral statements or visual materials describing a facilitator's products or services;
B. "creditor" means a person who makes a tax refund anticipation loan or who takes assignment of a tax refund anticipation loan;
C. "customer" means a resident of New Mexico who files a federal or state personal income tax return and who applies for a tax refund anticipation loan;
D. "department" means the regulation and licensing department;
E. "director" means the director of the division;
F. "division" means the financial institutions division of the department;
G. "facilitate tax refund anticipation loans" means to:
(1) make, process, receive or accept for delivery an application for a tax refund anticipation loan;
(2) issue a check in payment for the proceeds of a tax refund anticipation loan; or
(3) act in any other manner to further the making of a tax refund anticipation loan;
H. "facilitator" means a person acting individually, or in conjunction or cooperation with another person for money or other consideration, who facilitates a tax refund anticipation loan or tax refund anticipation check for a customer. A facilitator shall be primarily engaged in the business of preparing tax returns and shall be authorized by the federal internal revenue service to file federal income tax returns electronically;
I. "person" includes an individual, copartner, association, trust, corporation and any other legal entity;
J. "subsidiary" means:
(1) any company twenty-five percent or more of whose voting shares are directly or indirectly owned or controlled by a banking corporation, savings and loan association or credit union or are held by them with power to vote;
(2) any company the election of a majority of whose directors is controlled in any manner by a banking corporation, savings and loan association or credit union; or
(3) any company with respect to the management of policies of which a banking corporation, savings and loan association or credit union has the power, directly or indirectly, to exercise a controlling influence, as determined by the director;
K. "tax refund anticipation check" means a check or other payment mechanism:
(1) representing the proceeds of a customer's federal or state personal income tax refund;
(2) issued by a depository institution or other person that received a direct deposit of the consumer's federal or state personal income tax refund or credits; and
(3) for which the consumer has paid a fee or other consideration; and
L. "tax refund anticipation loan" means a loan that is secured by or that the lender arranges to be repaid directly or indirectly from the proceeds of a customer's federal or state personal income tax refund.
Section 3. LICENSE REQUIRED--APPLICABILITY OF ACT.--
A. A person shall not facilitate tax refund anticipation loans in New Mexico or facilitate tax refund anticipation loans for customers in New Mexico without first having obtained a license pursuant to the Tax Refund Anticipation Loan Act.
B. A banking corporation, savings and loan association or credit union and its subsidiaries operating under the laws of the United States or of a state is exempt from the licensing requirements of the Tax Refund Anticipation Loan Act.
Section 4. LICENSE APPLICATION--FEES--LICENSE ISSUANCE--LICENSE RENEWAL.--
A. An application for a license to facilitate tax refund anticipation loans in New Mexico or for a renewal of a license shall be made under oath, in writing in a form prescribed by the director, and shall include:
(1) the full name and business address of the applicant;
(2) evidence that the applicant is authorized by the federal internal revenue service to electronically file federal income tax returns;
(3) a list of the locations at which the applicant engages in or will engage in the business of facilitating tax refund anticipation loans; and
(4) any other pertinent data that the director may require by regulation.
B. An application for a license and for the renewal of a license shall be accompanied by an application or renewal fee of one thousand dollars ($1,000). No license application or renewal fee shall be refunded.
C. Upon the filing of a complete application, whether it is an initial or a renewal application, the director shall investigate the facts concerning the application and the requirements provided in this section. An applicant for an initial license or for a license renewal shall, within twenty days of receipt of a written request by the director, furnish the director in writing and under oath all additional information required by the director that may be relevant or, in the opinion of the director, helpful in conducting the investigation. Failure to comply with the director's requirement for supplemental information or the willful furnishing of false information is sufficient grounds for denial of a license or license renewal. The willful and intentional furnishing of false or misleading information to the director shall constitute grounds for the denial of any license or license renewal application and for the suspension or revocation of any license in accordance with the procedures for license suspension or revocation as set forth in the Tax Refund Anticipation Loan Act.
D. A written application for the renewal of a license shall be filed on or before November 30 of the year following its date of issue. In the event that an application for the renewal of a license is delinquent, the licensee shall also pay a delinquency fee of ten dollars ($10.00) per day for each day the licensee is delinquent in filing the renewal application.
E. The director shall grant or deny an application for an initial or renewal license within sixty days from the filing of a complete application with the required information and fees, unless the period is extended by written agreement between the applicant and the director.
F. 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 Tax Refund Anticipation Loan Act governing issuance of a single license; provided that when more than one license is issued to any person, each licensed office of the person shall be operated under the same trade name.
G. No licensee shall facilitate tax refund anticipation loans under any name, or at any place of business within this state, other than that stated in the license.
H. Each license shall state the address at which the business is to be conducted and shall state fully the name of the licensee if an individual, and if a corporation the name, date and place of incorporation, and if a copartnership, trust or association or other legal entity, the names of all the copartners and all the members and beneficiaries thereof, and the trade name under which the licensee may desire to conduct such business. Each license shall be kept conspicuously posted in the licensed place of business and shall not be transferable or assignable.
I. By accepting a license that is issued or renewed or by acting as a facilitator licensed pursuant to the Tax Refund Anticipation Loan Act, a licensee shall by such actions be deemed to have consented to be bound by the provisions of that act and all lawful requirements, regulations and orders of the director promulgated or issued pursuant to that act.
Section 5. DUTIES OF LICENSEES--DISCLOSURES.--
A. A facilitator shall disclose the following information to the customer at the time that an application for a tax refund anticipation loan or a tax refund anticipation check is submitted:
(1) the tax refund anticipation loan fee schedule that is used by the facilitator; and
(2) a written statement or, if the transaction is conducted using electronic commerce, an electronic statement containing the following information:
(a) that the tax refund anticipation loan is a loan that creates a legally enforceable debt and that the loan is not the customer's actual tax refund;
(b) that the customer may file a personal income tax return electronically without applying for the tax refund anticipation loan and that the federal internal revenue service and the taxation and revenue department do not charge for the electronic filing of personal income tax returns;
(c) that neither the federal internal revenue service nor the taxation and revenue department guarantees that a person will be paid the full amount of an anticipated tax refund nor do they guarantee that an anticipated tax refund will be deposited into a person's account or mailed to a person on a specific date;
(d) that the customer is responsible for repayment of the tax refund anticipation loan and payment of related fees and charges if the anticipated tax refund is not paid in the full anticipated amount;
(e) the estimated time frame within which the proceeds of the tax refund anticipation loan will be paid to the customer if the loan is approved;
(f) the fee or charge that will be imposed, if any, if the tax refund anticipation loan is not approved;
(g) the estimated total fees and charges to be incurred by the customer if the tax refund anticipation loan is approved;
(h) the estimated annual percentage rate for the tax refund anticipation loan; and
(i) for tax refund anticipation loans or for tax refund anticipation checks, a written or electronic document containing the following: 1) a legend, centered, in bold capital letters in eighteen-point type stating "NOTICE"; and 2) in at least twelve-point type the statement "This is a loan. This loan is borrowing money against your tax refund. If your tax refund is less than expected, you will be required to repay the entire amount of the loan. If your refund is delayed, you may incur additional fees or costs. YOU CAN GET YOUR PERSONAL INCOME TAX REFUND JUST AS FAST WITHOUT GETTING THIS LOAN IF YOU FILE YOUR RETURN ELECTRONICALLY. You can have your tax return filed electronically and your refund direct deposited into your own bank account without obtaining a loan or other paid product.".
B. The full disclosures required pursuant to this section shall be made in a fourteen-point or larger bold type and shall be provided in English, Spanish or other language as determined by the director.
C. The full disclosures required pursuant to this section shall be prominently posted at any place of business at which a person facilitates a tax refund anticipation loan for customers. The posting shall be at least fourteen inches by twenty inches in size, shall be in at least sixty-point font and shall be posted in English, Spanish or other language as determined by the director.
D. If a customer applies for a tax refund anticipation loan or a tax refund anticipation check, a facilitator shall promptly notify the customer in writing if the application is denied and shall provide the customer with a written or electronic copy of the tax refund anticipation loan or tax refund anticipation check application and, if approved, of any tax refund anticipation loan or tax refund anticipation check agreement.
Section 6. PROHIBITED ACTIVITIES.--A facilitator shall not:
A. engage in unfair or deceptive acts or practices in the facilitating of a tax refund anticipation loan or tax refund anticipation check, including misrepresenting a factor or condition of such loan or check or making any oral statements contradicting any of the information required to be disclosed pursuant to the Tax Refund Anticipation Loan Act;
B. fail to comply with any provision of the Tax Refund Anticipation Loan Act;
C. threaten to take any action that is prohibited by the Tax Refund Anticipation Loan Act or by any other law;
D. include any of the following provisions in any document provided or signed in connection with a tax refund anticipation loan or tax refund anticipation check, including a loan or check application or agreement:
(1) a hold harmless clause;
(2) a confession of judgment clause;
(3) a waiver of the right to a jury trial, if applicable, in any action brought by or against the customer;
(4) an assignment of or order for payment of wages or other compensation for services;
(5) a provision in which the customer agrees not to:
(a) assert any claim or defense arising out of a tax refund anticipation loan agreement or tax refund anticipation check agreement; or
(b) seek any remedies pursuant to Section 10 of the Tax Refund Anticipation Loan Act;
(6) a waiver of any provision of the Tax Refund Anticipation Loan Act; any such waiver shall be deemed null, void and of no effect;
(7) a waiver of the right to injunctive, declaratory or other equitable relief, or relief on a class-wide basis;
(8) a provision requiring that any aspect of a resolution of a dispute between the parties to a tax refund anticipation loan agreement or tax refund anticipation check agreement be kept confidential. This provision shall not affect the right of the parties to agree that certain specified information is a trade secret or otherwise confidential or to later agree, after the dispute arises, to keep a resolution confidential; or
(9) a mandatory arbitration clause;
E. take or arrange for a lender to take a security interest in any property of a customer other than the proceeds of the customer's federal or state personal income tax refund to secure repayment of a tax refund anticipation loan or tax refund anticipation check;
F. collect on an outstanding or delinquent tax refund anticipation loan or tax refund anticipation check for any other lender, creditor or assignee;
G. facilitate, refer or solicit customers on behalf of a third party engaged in check cashing for a fee, or permit third party check cashing for a fee in any place of business identified on the facilitator's license application; or
H. make a misrepresentation of fact in obtaining or attempting to obtain a license pursuant to the Tax Refund Anticipation Loan Act.
Section 7. ADVERTISING.--
A. A facilitator shall not advertise tax refund anticipation loans without including the following language:
"You can get your personal income tax refund without a loan or without incurring fees or costs if you file electronically and authorize the direct deposit of your refund into your bank account.".
B. A facilitator shall not advertise tax refund anticipation checks without including the following language:
"A tax refund anticipation check is a loan. You can get your personal income tax refund without a loan or without incurring fees or costs if you file electronically and authorize the direct deposit of your refund into your bank account.".
C. For print advertisements, the information required in Subsections A and B of this section shall be in a type size that is at least one-half as large as the largest type size used in the advertisement. For radio and television advertisements, the information required in Subsections A and B of this section shall receive at least seven seconds of air time.
Section 8. DUTIES OF DIRECTOR.--
A. The director may at any time examine all the books, records, papers, assets and liabilities of every kind of a licensee to determine the licensee's financial condition and business methods. The licensee shall pay a fee of one hundred fifty dollars ($150) for each day or any portion of a day thereof for the conduct of the examination.
B. The director may at any time suspend or revoke a license on any ground on which the director might refuse to grant a license, for failure to pay an annual fee or for the violation of any provision of the Tax Refund Anticipation Loan Act.
C. No license shall be denied except on fifteen days' notice to the applicant. Upon receipt of notice, the applicant may, within five days of its receipt, make written demand for a hearing at the applicant's cost. The director shall thereafter with reasonable promptness hear and determine the matter, and the director's decision shall be subject to judicial review in accordance with Section 58-1-45 NMSA 1978.
D. The director may promulgate rules for the administration and enforcement of the Tax Refund Anticipation Loan Act.
Section 9. REVOCATION, SUSPENSION AND REINSTATMENT OF LICENSE.--
A. The director shall not suspend or revoke a license issued pursuant to the Tax Refund Anticipation Loan Act unless the director first serves upon the licensee a written notice that states in general the grounds therefor, together with the time and place of hearing, which shall be held not less than fifteen days after the mailing of such notice to the licensee by registered mail as provided in this section. Following the hearing, the director shall suspend or revoke a license if the director finds that:
(1) the licensee, either knowingly or without the exercise of due care to prevent the same, has violated a provision of the Tax Refund Anticipation Loan Act or a regulation or order made pursuant to and within the authority of that act; or
(2) a fact or condition exists at the time of the proposed suspension or revocation that, if it had existed at the time of the initial application for the license or for a renewal thereof, clearly would have justified the director in refusing to issue or renew the license.
B. If the director finds that probable cause exists and that enforcement of the Tax Refund Anticipation Loan Act requires immediate suspension of a license pending investigation, the director may, upon three days' written notice by registered mail and a hearing, enter an order suspending a license for a period not exceeding thirty days.
C. Whenever the director revokes or suspends a license issued pursuant to the Tax Refund Anticipation Loan Act, the director shall enter an order to that effect and shall forthwith in writing notify the licensee of the revocation or suspension by registered mail, which notice shall state the grounds therefor.
D. A licensee may surrender a license by delivering it to the director with written notice of its surrender, but such surrender shall not affect any civil or criminal liability of the licensee for acts committed prior thereto.
E. No revocation, suspension or surrender of a license shall impair or affect the obligation of a preexisting lawful contract between the licensee and an obligor thereon.
F. The director may reinstate a 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 clearly would have justified the director in initially refusing to issue the license pursuant to the Tax Refund Anticipation Loan Act.
G. Whenever the Tax Refund Anticipation Loan Act provides for service of notice by registered 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 pursuant to the Tax Refund Anticipation Loan Act or to the manager or person in charge of the licensed office shall be sufficient.
Section 10. CIVIL PENALTIES--INJUNCTIVE RELIEF--CRIMINAL PENALTIES.--
A. Whoever violates a provision of the Tax Refund Anticipation Loan Act or a rule promulgated pursuant to that act shall be punished by a fine of not more than one thousand dollars ($1,000) for each day during which a violation continues.
B. The director may bring an action in a court of competent jurisdiction to enjoin a person from violating the provisions of the Tax Refund Anticipation Loan Act.
C. If a person has a license suspended or revoked pursuant to Section 9 of the Tax Refund Anticipation Loan Act, is required to pay a fine pursuant to Subsection A of this section or is enjoined pursuant to Subsection B of this section, that person shall be liable for the reasonable expenses incurred by the department in investigating and enforcing the provisions of the Tax Refund Anticipation Loan Act against that person and for reasonable attorney fees and court costs incurred by the department in an action pursuant to Subsection B of this section.
D. A person who facilitates tax refund anticipation loans in New Mexico or who facilitates tax refund anticipation loans for customers in New Mexico without a license required pursuant to Subsection A of Section 3 of the Tax Refund Anticipation Loan Act is guilty of a misdemeanor and upon conviction shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.
Section 11. PRIVATE RIGHT OF ACTION.--A violation of a provision of the Tax Refund Anticipation Loan Act constitutes an unfair or deceptive trade practice pursuant to the Unfair Practices Act.
Section 12. SEVERABILITY.--If any part or application of this act is held invalid, the remainder or its application to other situations or persons shall not be affected.
Section 13. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2010.
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