hb 0711

CHAPTER 129

HB 711-FN - FINAL VERSION

AN ACT relative to the regulation of retail installment sales of motor vehicles.

SPONSORS: Rep. Fraser, Merr 37

This bill makes various changes to laws regarding retail installment sales of motor vehicles.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to the regulation of retail installment sales of motor vehicles.

Be it Enacted by the Senate and House of Representatives in General Court convened:

129:1 New Paragraph; Definitions; "Branch Office" Added. Amend RSA 361-A:1 by inserting after paragraph II the following new paragraph:

II-a. "Branch office" means a business location within this state of a person required to be licensed under this chapter. "Branch office" does not include a person's principal office location.

129:2 New Paragraph; Definitions; "Commissioner" Inserted in Alphabetical Order. Amend RSA 361-A:1 by inserting after paragraph III the following new paragraph:

129:3 New Paragraph; Definitions; "Principal Office" Added. Amend RSA 361-A:1 by inserting after paragraph VIII the following new paragraph:

VIII-a. "Principal office" means the main office location of a person required to be licensed under this chapter.

129:4 Licensing of Sales Finance Companies and Retail Sellers Required; Requirements Added. RSA 361-A:2, II - VI are repealed and reenacted to read as follows:

II.(a) The application for such license shall be in writing, under oath and in the form prescribed by the commissioner. 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; the trade name, if any, under which the applicant proposes to conduct such business; and such other pertinent information as the commissioner may require.

(b) Every applicant for licensing under this chapter shall file with the commissioner, in such form as the commissioner prescribes by rule, irrevocable consent appointing the commissioner to receive service of any lawful process in any non-criminal suit, action, or proceeding against the applicant or the applicant's successor, executor, or administrator which arises under this chapter or any rule or order under this chapter after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. When any person, including any nonresident of this state, engages in conduct prohibited or made actionable by this chapter or any rule or order under this chapter, and such person has not filed a consent to service of process under this section and personal jurisdiction over such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to such person's appointment of the commissioner to receive service of any lawful process. Service may be made by leaving a copy of the process in the office of the commissioner along with $5, but is not effective unless:

(1) The plaintiff, who may be the attorney general in a suit, action, or proceeding instituted by him or her, forthwith sends a notice of the service and a copy of the process by registered mail to the defendant or respondent at such person's last address on file with the commissioner; and

(2) The plaintiff's affidavit of compliance with this paragraph is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

(c) If a person holds a valid license under this section and is in compliance with this chapter and the rules thereunder, such licensee may renew the license by paying the required fee to the banking department on or before December 1 for the ensuing year that begins on January 1. Failure to renew the license shall result in the license terminating on December 31.

III. Sales finance company license applicants shall at the same time file with the commissioner a $25,000 surety bond to the state for the use of the state and any person who may have a cause of action against the principal in the bond under the provisions of this chapter, and conditioned that the principal will conform to and abide by each provision of this chapter and will pay to the state and to any such person any sum that may become due or owing under this chapter from the principal of the bond to the state or to such person. Recovery against the bond may be made by the state after due notice and hearing in accordance with the provisions of RSA 541-A, and by any such person who may have obtained a final judgment in a court of competent jurisdiction naming said principal. The surety bond shall be continuous and shall include a provision requiring the surety to give written notice to the commissioner 20 days in advance of the cancellation or termination of the bond. Every bond shall provide that no recovery may be made against the bond unless the state makes a claim for recovery or the person brings suit naming the principal within 6 years after the act upon which the recovery or suit is based.

IV. Each initial and renewal retail seller application shall be accompanied by a nonrefundable application fee of $50 for the principal place of business of the licensee and the sum of $30 for each branch of such licensee maintained in this state.

V. Each initial and renewal sales finance company application shall be accompanied by a nonrefundable application fee of $350 for the principal place of business of the licensee within this state or outside of this state, and the sum of $100 for each branch of such licensee maintained in this state. A person required to obtain a license under the provisions of this section shall not be required to obtain a license as a retail seller.

VI. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.

VII. Each license shall specify the location of the office or branch and shall be conspicuously displayed there in a public area. In case such location is changed, the commissioner shall endorse the change of location on the license without charge.

VIII.(a) Upon the filing of the complete application for a sales finance company license and payment of the required application fee, if the commissioner determines that the applicant's financial resources and responsibility, experience, personnel, and record of past or proposed conduct warrant the public's confidence and that the business will be operated lawfully, honestly, and fairly within the purposes of this chapter, the commissioner shall enter an order approving such application and shall issue a license to the applicant and shall issue licenses to the applicant's branches to engage in the business of a sales finance company under and in accordance with the provisions of this chapter. Each sales finance company license shall expire on December 31 of each calendar year.

(b) Upon the filing of a complete application for a retail seller license and payment of the required application fee, if the commissioner determines that the applicant's experience and record of past or proposed conduct warrant the public's confidence and that the business will be operated lawfully, honestly and fairly within the purposes of this chapter, the commissioner shall enter an order approving such application and shall issue a license to the applicant and shall issue licenses to the applicant's branches to engage in the business of a retail seller under and in accordance with the provisions of this chapter. Each retail seller license shall expire on December 31 of each calendar year.

IX. No licensee shall transact any business provided for by this chapter under a trade name or any other name different from the name stated in its license or branch office license without immediately notifying the commissioner, who shall then amend the license accordingly.

X. No license shall be issued to any person whose principal place of business is located outside of this state unless that person designates an agent residing within this state for service of process.

XI. Each license issued under the provisions of this chapter shall state the name and address of the principal office of the licensee and, if the license is a branch office license, the name and address of the branch office location for which that license is issued.

XII. Retail sellers and sales finance companies licensed under this chapter are under a continuing obligation to update information on file with the commissioner. If any information filed with the commissioner becomes materially inaccurate, the retail seller and sales finance company licensee must promptly submit to the commissioner an amendment to its application records that will correct the information on file with the commissioner. An amendment shall be considered to be filed promptly if the amendment is filed within 30 days of the event that requires the filing of the amendment.

129:5 Annual Report; Financial Statement Added. Amend RSA 361-A:2-b to read as follows:

I.(a) Each sales finance company licensee shall file, under oath, an annual report with the [~~bank~~] commissioner on or before February 1 each year concerning operations for the preceding year or license period ending December 31 upon a form prescribed by the [~~bank~~] commissioner. [Whenever a licensee operates 2 or more licensed offices or whenever 2 or more affiliated licensees operate licensed offices, then a composite report of such group of licensed offices may be filed in lieu of individual reports.]

(b) Each sales finance company shall also file, under oath, its financial statement with the commissioner within 90 days from the date of its fiscal year end. The financial statement shall be prepared in accordance with generally accepted accounting principles and shall include a balance sheet, income statement, statement of changes in owners' equity, a cash flow statement and note disclosures. If the financial statement is not audited, a certification statement shall be attached and signed by a duly authorized officer of the sales finance company. The certification statement shall state that the financial statement is true and accurate to the best of the officer's belief and knowledge.

(c) In lieu of the requirements of subparagraph (b), licensees may submit copies of their most recent Securities and Exchange Commission Form 10-K and Form 10-Q statements.

II. The [~~bank~~] commissioner shall publish an analysis of the information required [~~under this section~~] in the sales finance company's annual report as part of the [~~bank~~] commissioner's annual report.

III. Any [~~licensee~~]sales finance company failing to file either the annual report or the financial statement required by this section within the time prescribed shall pay to the [~~bank~~] commissioner a penalty of $25 for each calendar day the annual report or financial statement is overdue. [If a licensee elects to file a composite report and the composite report is not filed on or before February 1 as required in this section, the penalty prescribed in this section shall apply separately for each license and branch license included in the composite report.]

IV. In addition to the annual report and financial statement required by this section, the [~~bank~~] commissioner may require such regular or special reports as the commissioner deems necessary to the proper supervision of licensees under this chapter.

V. A licensee who files an annual report under this section which fails to disclose or materially [~~underdiscloses~~] misstates retail installment contracts made during the reporting year may, after notice and opportunity for hearing pursuant to RSA 541-A, be subject to a fine of not more than $1,000 and to license revocation or suspension pursuant to RSA 361-A:3.

129:6 Suspension or Revocation of Licenses; Show Cause Order Added; Nonexistent Businesses Added. RSA 361-A:3 is repealed and reenacted to read as follows:

I. The commissioner may, by order, deny, suspend, or revoke any license or application if the commissioner finds that the order is in the public interest and the applicant, or licensee, any partner, officer or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the applicant or licensee:

(a) Has filed an application for licensing which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;

(b) Has made a false or misleading statement to the commissioner or in any reports to the commissioner;

(c) Has made fraudulent misrepresentations, has circumvented or concealed, through whatever subterfuge or device, any of the material particulars required to be stated or furnished to a borrower under the provisions of this chapter;

(e) Is the subject of an order entered within the past 5 years by this state, any other state, or federal regulator denying, suspending, or revoking licenses or registration;

(f) Is permanently, preliminarily, or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of lending or collection activities;

(g) Is not qualified on the basis of such factors as experience, knowledge, and financial integrity;

(h) Has engaged in dishonest or unethical practices in the conduct of making retail installment transactions or collecting on retail installment contracts;

(i) Has violated this chapter or any rule or order thereunder or has violated applicable federal laws or rules thereunder; or

II. If a licensee is a partnership, association, corporation, or entity however organized it shall be sufficient cause for the suspension or revocation of a license that any officer, director, or trustee of a licensed association or corporation or any member of a licensed partnership has so acted or failed to act in behalf of said licensee as would be cause for suspending or revoking a license to such party as an individual. Each licensee shall be responsible for supervision of its branch offices and for the acts of any or all of his or her employees while acting as his or her agent if such licensee, after actual knowledge of said acts, retained the benefits, proceeds, profits, or advantages accruing from said acts or otherwise ratified said acts.

III. Any license revocation, suspension, or unfavorable action by the department on a license shall comply with the provisions of RSA 541-A. An aggrieved licensee may, pursuant to RSA 541-A and RSA 541, appeal an unfavorable action by the department. The department may take action for immediate suspension of a license, pursuant to RSA 541-A.

IV. If the commissioner finds that any licensee or applicant for license is no longer in existence or has ceased to do business as a retail seller or sales finance company, or cannot be located after reasonable search, the commissioner may by order revoke the license or deny the application. The commissioner may deem abandoned and withdraw any application for licensure made pursuant to this chapter, if any applicant fails to respond in writing within 180 days to a written request from the commissioner requesting a response. Such request shall be sent via certified mail to the last known address of the applicant that is on file with the commissioner.

129:7 Cease and Desist Orders; Grounds Added. Amend RSA 361-A:3-a to read as follows:

361-A:3-a Cease and Desist Orders. Whenever the commissioner has reasonable cause to believe that any person is engaging in the business of a sales finance company or retail seller without obtaining a license as provided in this chapter, or has engaged or is about to engage in any act or practice constituting a violation of this chapter, or any rule or order under this chapter, the commissioner may, in addition to all actions provided for in this chapter, enter an order requiring such person to cease and desist from such violation. If any person refuses to obey such order, an action may be brought by the commissioner or by the attorney general on the commissioner's behalf in any superior court in this state to enjoin such person from engaging in or continuing such violation or from doing any act or acts in furtherance of such violation. In any such action, an order or judgment may be entered awarding a temporary or permanent injunction, and awarding the commissioner or the attorney general or both costs in bringing such action. The court shall have the power to enforce obedience to such injunction, in addition to all the court's customary powers, by a fine not exceeding $10,000 or by imprisonment, or both.

129:8 Consumer Inquires; Certain Terms Replaced. Amend RSA 361-A:4-a to read as follows:

I. Consumer complaints naming [~~licensees~~] retail sellers or sales finance companies under this chapter, which are filed in writing with the office of the [~~bank~~] commissioner, shall be forwarded via certified or registered mail to the [~~licensee~~] retail seller or sales finance company for response within 10 days of receipt by the department. [~~Licensees~~] Retail sellers or sales finance companies shall, within 30 days after receipt of such complaint, send a written acknowledgment thereof to the consumer and the banking department. Not later than 60 days following receipt of such complaint, the [~~licensee~~] retail seller or sales finance company shall conduct an investigation of the complaint and either:

(a) Make appropriate corrections in the account of the consumer and [~~transmit~~] submit to the consumer and the banking department written notification of such corrections, including documentary evidence thereof; or

(b) [~~Transmit~~] Submit a written explanation or clarification to the consumer and the banking department which sets forth, to the extent applicable, the reasons why the licensee believes its actions are correct, including copies of documentary evidence thereof.

II. A [~~licensee~~] retail seller or sales finance company who fails to respond to consumer complaints as required by this section within the time prescribed shall pay to the commissioner the sum of $50 for each day such response is overdue. For purposes of this section, the date of [~~transmission~~] submission shall be the date such response is [~~postmarked~~] received by the banking department.

III.(a) [~~Licensees~~] Retail sellers or sales finance companies who, because of extenuating circumstances beyond the control of the [~~licensee~~] retail seller or sales finance company, are unable to comply with the time frames prescribed in this section, may make written request to the commissioner for a waiver of such time frames. Waivers shall not be granted or considered unless the request for the waiver:

(1) Is received by the banking department within 50 days following the [~~licensee's~~] retail seller's or sales finance company's receipt of the complaint;

(3) Specifies a date certain by which the [~~licensee~~] retail seller or sales finance company shall comply with the provisions of this section.

(b) Requests for waivers shall be either granted or denied within 5 days of receipt by the banking department.

129:9 Powers of Bank Commissioner; Rules, Forms, Orders, Penalty Abatement, Added; Grounds for Acting Added. Amend RSA 361-A:5 to read as follows:

I. The [~~bank~~] commissioner shall have the power to issue a subpoena to compel the attendance of witnesses and the production of documents, papers, books, records, and other evidence before the commissioner in any matter over which the commissioner has jurisdiction, control or supervision pertaining to the provisions of this chapter. The commissioner shall have the power to administer oaths and affirmation to any person whose testimony is required. If any person shall refuse to obey any such subpoena or to give testimony or to produce evidence as required thereby, any justice of the superior court may, upon application and proof of such refusal, order the issuance of a subpoena, or subpoena duces tecum, out of the superior court, for the witness to appear before the superior court to give testimony, and to produce evidence as required thereby. Upon filing such order in the office of the clerk of the superior court, the clerk shall issue such subpoena, as directed, requiring the person to whom it is directed to appear at the time and place therein designated. If any person served with any such subpoena shall refuse to obey the same, and to give testimony, and to produce evidence as required thereby, the [~~bank~~] commissioner may apply to any justice of the superior court who, after proof of such refusal, shall issue such citation, directed to any sheriff, for the arrest of such person, and, upon such person's being brought before such justice, proceed to a hearing of the case. The court shall have power to enforce obedience to such subpoena, and the answering of any question and the production of any evidence that may be proper, by a fine not exceeding $10,000 or by imprisonment, or by both.

II. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the administration and enforcement of this chapter.

III. The commissioner may prepare, alter, or withdraw such forms as are necessary to comply with the provisions of this title.

IV. The commissioner may issue, amend, or rescind such orders as are reasonably necessary to carry out the provisions of this chapter.

V. The commissioner may, for good cause shown, abate all or a portion of delinquency penalties assessed under this chapter.

VI. All actions taken by the commissioner pursuant to this chapter shall be taken only when the commissioner finds such action necessary or appropriate to the public interest or for the protection of consumers and consistent with the purposes fairly intended by the policy and provisions of this title.

129:10 New Paragraphs; Examinations; Recovery of Cost Added. Amend RSA 361-A:6-a by inserting after paragraph IV the following new paragraphs:

V. Every person being examined, and all of the officers, directors, employees, agents, and representatives of such person shall make freely available to the commissioner or his or her examiners the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination and shall facilitate the examination.

(a) Upon receipt of a written report of examination, the licensee shall have 30 days or such additional reasonable period as the commissioner for good cause may allow, within which to review the report, recommend any changes and set forth in writing the remedial course of action the licensee will pursue to correct any reported deficiencies outlined in the report.

(b) If so requested by the person examined, within the period allowed in subparagraph (a), or if deemed advisable by the commissioner without such request, the commissioner shall hold a closed hearing relative to the report and shall not file the report in the department until after such closed hearing and issuance of his or her order thereon. If no such closed hearing has been requested or held, the examination report, with such modifications, if any, thereto as the commissioner deems proper, shall be accepted by the commissioner and filed upon expiration of the review period provided for in subparagraph (a). The report shall be accepted and filed within 6 months after final hearing.

(c) All reports pursuant to this section shall be privileged and although filed in the department as provided in subparagraph (b) shall not be for public inspection. The comments and recommendations of the examiner shall also be confidential information and shall not be available for public inspection.

VI. In any investigation to determine whether any person has violated or is about to violate this chapter or any rule or order under this chapter, upon the commissioner's finding that the person violated this chapter or a rule or order under this chapter, or the person charged with the violation being found in default, the commissioner shall be entitled to recover the cost of the investigation, in addition to any other penalty provided for under this chapter.

129:11 Advertising; Sales Finance Company Replaced with Person. Amend RSA 361-A:10-a, I to read as follows:

I. No [~~sales finance company~~] person shall advertise, print, display, publish, distribute, or broadcast or permit to be advertised, printed, displayed, published, distributed, or broadcast in any manner whatsoever any statement or representation with regard to the rates, terms, or conditions for the lending of money under the provisions of this chapter which is false, misleading, or deceptive. Any reference to the amount of a loan shall refer to the original principal amount. Any statement so made of the amount of an installment, or the rate or amount of interest charges required for any loan, shall comply with the provisions of the federal Consumer Credit Protection Act, as amended (15 U.S.C. 1601 et seq.).

129:12 New Paragraphs; Penalties; Penalties Added. Amend RSA 361-A:11 by inserting after paragraph III the following new paragraphs:

IV. Any person, other than the consumer, who holds or is a party to, in any manner, a retail installment contract that is not in compliance with this chapter may, upon notice and opportunity for hearing, be subject to penalty under this chapter.

V. Any person who knowingly violates any rule or order of the commissioner may, upon notice and opportunity for hearing, except where another penalty is expressly provided, be subject to suspension or revocation of any registration or license, or imposition of an administrative fine not to exceed $2,500 for each violation in lieu of or in addition to such suspension or revocation as may be applicable under this title for violation of the provision to which a rule or order relates. Each of the acts specified shall constitute a separate violation.

VI. Any person who negligently violates any rule or order of the commissioner may, upon notice and opportunity for hearing, except where another penalty is expressly provided, be subject to suspension, revocation, or denial of any registration or license, including the forfeiture of any application fee, or imposition of an administrative fine not to exceed $1,500 for each violation in lieu of or in addition to such suspension or revocation as may be applicable under this title for violation of the provision to which a rule or order relates. Each of the acts specified shall constitute a separate violation.

VII. Any person who, either knowingly or negligently, violates any provision of this chapter may, upon notice and opportunity for hearing, and in addition to any such other penalty provided for by law, be subject to such suspension, revocation, or denial of any registration or license, including forfeiture of any application fee, or imposition of an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and each such administrative action or fine may be imposed in addition to any criminal or civil penalties imposed.

VIII. Every person who directly or indirectly controls a person liable under this section, every partner, principal executive officer or director of such person, every person occupying a similar status or performing a similar function, every employee of such person who materially aids in the act constituting the violation, and every licensee or person acting as a common law agent who materially aids in the acts constituting the violation, either knowingly or negligently, may, upon notice and opportunity for hearing, and in addition to any other penalty provided for by law, be subject to such suspension, revocation, or denial of any registration or license, including the forfeiture of any application fee, or an administrative fine not to exceed $2,500, or both. Each of the acts specified shall constitute a separate violation, and such administrative action or fine may be imposed in addition to any criminal or civil penalties imposed. No person shall be liable under this paragraph who shall sustain the burden of proof that such person did not know, and in the exercise of reasonable care could not have known, of the existence of facts by reason of which the liability is alleged to exist.

129:13 New Section; Records and Filings. Amend RSA 361-A by inserting after section 12 the following new section:

I. A document is filed when it is received by the commissioner. If any filing deadline date falls on a weekend or on a New Hampshire state or federal legal holiday, the due date shall be automatically extended to the next business day following such weekend or holiday.

II. Electronic filings, when received by the commissioner, are deemed filed, and are prima facie evidence that a filing has been duly authorized and made by the signatory on the application or document, are admissible in any civil or administrative proceeding under this chapter, and are admissible in evidence in accordance with the rules of superior court in any action brought by the attorney general under this chapter.

III. A licensee may maintain its records in electronic format if, upon request, the licensee provides the commissioner with:

(a) A full explanation of the programming of any data storage or communications systems in use; and

(b) Information from any books, records, electronic data processing systems, computers or any other information storage system in the form requested by the commissioner.

129:14 Change from Bank Commissioner to Commissioner. Amend the following RSA provisions by replacing "bank commissioner" with "commissioner": 361-A:2-a, I; 361-A:4; 361-A:6; 361-A:6-a, I; and 361-A:8-a, I.

II. RSA 361-A:11, II, relative to an additional penalty for engaging in the business of a retail seller or sales finance company without a license.