GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION LAW 2023-61
SENATE BILL 331
AN ACT to amend the North Carolina consumer finance act.
The General Assembly of North Carolina enacts:
SECTION 1. Article 15 of Chapter 53 of the General Statutes reads as rewritten:
"North Carolina Consumer Finance Act.
"§ 53‑164. Title.
This Article shall be known and may be cited as the North Carolina Consumer Finance Act.
"§ 53‑165. Definitions.
The following definitions apply in this Article:
of the loan" shall mean the aggregate of the cash advance and Amount
financed. The amount of cash or its equivalent the borrower actually receives
or is paid out at the borrower's discretion or on the borrower's behalf,
including the charges authorized by G.S. 53‑173 and G.S. 53‑176.G.S. 53‑173,
53‑176, 53‑177(a) and (d), 53‑177.1, and 53‑189. The
term includes both of the following:
a. Fees and charges prescribed by law that actually are or will be paid by a licensee for determining the existence of or for perfecting, releasing, or satisfying a security interest related to a loan under this Article.
b. Premiums payable for insurance in lieu of perfecting a security interest otherwise required by a licensee in connection with a loan under this Article if the premium does not exceed the fees and charges described in sub‑subdivision a. of this subdivision that would otherwise be payable.
shall mean any Borrower. Any person who that borrows
money from any licensee or who that pays or obligates himself oneself
to pay any money or otherwise furnishes any valuable consideration to any
licensee for any act of the licensee as a licensee. (c) "Cash advance" shall mean the amount
of cash or its equivalent that the borrower actually receives or is paid out at
his discretion or on his behalf. (d)(3) "Commission"
shall mean the Commission. The State Banking Commission. (e)(4) "Commissioner"
shall mean the Commissioner. The Commissioner of Banks. (f) "Deputy commissioner" shall mean the deputy
commissioner of banks.
(5) Electronic payment. An electronic or digital means of transferring funds as an alternative to a cash payment. The term includes a payment using an automated clearing house (ACH) transaction, a credit or debit card, a mobile wallet, a unified payments interface (UPI), internet banking, or mobile banking.
shall mean the License. The certificate issued by the Commissioner
under the authority of this Article to conduct a consumer finance business. (h)(7) "Licensee"
shall mean a Licensee. A person to whom which one or
more licenses have been issued.
(8) Loan amount. The aggregate of the amount financed and all charges authorized by this Article.
assets" shall mean cash Loanable assets. Cash or bank
deposits or installment loans made as a licensee pursuant to this Article or
installment loans made as a licensee pursuant to the Article which that
this Article supersedes or such other loans payable on an
installment basis as approved by the Commissioner of Banks may
approve, Commissioner, or any combination of two or more thereof. (j)(10) "Person"
shall include Person. Includes any person, firm, partnership, association
association, or corporation.
(11) Servicing loans. Receiving any scheduled periodic payments from a borrower regarding a loan made pursuant to this Article and making the payments to the owner of the loan or another third party.
"§ 53‑166. Scope of Article; evasions; penalties; loans in violation of Article void.
(a) Scope. No person shall
engage in the business of lending or servicing a loan in
amounts of fifteen
thousand dollars ($15,000) an amount of twenty‑five thousand
dollars ($25,000) or less and contract for, exact, or receive, directly or
indirectly, on or in connection with any such the loan, any
charges whether for interest, compensation, consideration, or expense, or any
other purpose whatsoever, which that in the aggregate are greater
than permitted by Chapter 24 of the General Statutes, except as provided in and
authorized by this Article, and without first having obtained a license from
the Commissioner. The word "lending" as used in this section,
includes, but is not limited to, endorsing or otherwise securing loans or
contracts for the repayment of loans.
(b) Evasions. Subsection (a) of this section applies to any person that seeks to avoid its application by any device, subterfuge, or pretense whatsoever. Devices, subterfuges, and pretenses include any transaction in which a cash rebate or other advance of funds is offered and all of the following apply:
(1) The cash
or other advance of funds is made contemporaneously with the transaction or
(2) The amount of the cash
rebate or other advance of funds is required to be repaid at a later
(3) The selling or providing of any item, service, or commodity with the transaction is incidental to, or a pretext for, the advance of funds.
(c) Penalties; Commissioner to Provide Facts and Testify. Any person not exempt from this Article, or any officer, agent, employee, or representative thereof, that fails to comply with or that otherwise violates any of the provisions of this Article is guilty of a Class 1 misdemeanor. Each violation is a separate offense. The Commissioner shall provide the district attorney of the court having jurisdiction of any offense under this subsection with all facts and evidence in the Commissioner's actual or constructive possession and shall testify as to these facts upon the trial of any person for the offense.
(d) Additional Penalties.
Any contract of loan, the
making making, servicing, or collecting
of which violates any provision of this Article, or rule thereunder, adopted
under it, except as a result of accidental or bona fide error of
computation is void, and the licensee or any other party in violation shall not
collect, receive, or retain any principal or charges whatsoever with respect to
the loan. If an affiliate operating in the same office or subsidiary operating
in the same office of a licensee makes a loan in violation of G.S. 53‑180(i),
the affiliate or subsidiary may recover only its principal on the loan.
"§ 53‑167. Expenses of supervision.
For the purpose of defraying
necessary expenses of the Office of Commissioner of Banks for supervision, each
licensee shall pay to the Commissioner an assessment not to exceed eighteen
dollars ($18.00) per one hundred thousand dollars ($100,000) of assets, or
fraction thereof, plus a fee of three hundred dollars ($300.00) per office;
however, a consumer finance licensee shall pay a minimum annual assessment
of not less than five hundred dollars ($500.00). one thousand dollars
($1,000). The assessment shall be determined on a consumer finance
licensee's total assets as shown on its report of condition made to the
Commissioner as of December 31 of each year, or the date most nearly
approximating that date. If the Commissioner determines that the financial
condition or manner of operation of a consumer finance licensee warrants
further examination or an increased level of supervision, the licensee may be
subject to assessment not to exceed the amount determined in accordance with
the schedule set forth in this section.
"§ 53‑168. License required; showing of convenience,
advantage, and financial responsibility; investigation of
applicants; hearings; existing businesses; contents of license; transfer;
(a) Necessity for License;
Prerequisites to Issuance. No person shall engage in or offer to engage in
the business regulated by this Article unless and until a license has been
issued by the
Commissioner of Banks, Commissioner, and the
Commissioner shall not issue any such the license unless and
until the Commissioner finds:finds all of the following:
(1) That authorizing the
applicant to engage in
such the business will promote the
convenience and advantage of the community in which the applicant proposes to
engage in business; andbusiness.
(2) That the financial
character character, and general
fitness of the applicant are such as to command the confidence of the
public and to warrant the belief that the business will be operated
lawfully and fairly, within the purposes of this Article; andArticle.
(3) That the applicant has
available for the operation of
such the business at the specified
location loanable assets of at least fifty thousand dollars ($50,000).
(b) Investigation of
Applicants. Upon the receipt of an application, the Commissioner shall
investigate the facts. If the Commissioner determines from
such this preliminary
investigation that the applicant does not satisfy the conditions set forth in
subsection (a), (a) of this section, the Commissioner shall so
notify the applicant who shall then be applicant. The applicant is entitled
to an informal hearing thereon provided he so on the matter if the
applicant requests in writing within 30 days after the Commissioner has
caused the above‑referred to notification to be mailed the notice to
the applicant. In the event of a hearing, to be held in the offices of the
Commissioner of Banks in Raleigh, the Commissioner shall reconsider the
application and, after the hearing, shall issue a written order granting
or denying such the application. At the time of making such the
application, the applicant shall pay the Banking Department Office
of the Commissioner of Banks the sum of two hundred fifty dollars
($250.00) five hundred dollars ($500.00) as a fee for investigating
the application, which shall to be retained irrespective of
whether or not a license is granted to the applicant.
(c) Repealed by Session Laws 2001‑519, s. 2.
(d) Required Assets
Available. Each licensee shall continue at all times to have available for
the operation of the business at the specified location loanable assets of at
least fifty thousand dollars ($50,000). The requirements and standards of this
subsection subdivision (a)(2) of this section
shall be maintained throughout the period of the license and failure to
maintain such these requirements or and standards shall
be are grounds for the revocation of a license under the
provisions of G.S. 53‑171 of this Article.G.S. 53‑171.
(e) License, Posting, and
Continuing. Each license shall state the address at which the business is
to be conducted and shall state fully the name of the licensee, and if the
licensee is a
copartnership, partnership or association, the
names of the members thereof, and if a corporation, the date and place of its
incorporation. Transfer or assignment of a license by one person to another by
sale or otherwise is prohibited without the prior approval of the Commissioner.
A licensee shall provide the Commissioner notice of the proposed transfer or
assignment not less than 30 days before the date the transaction is set to
close, and the Commissioner shall promptly render a decision in the matter.
Purchase of a loan made under this Article by an existing licensee shall be
reported to the Commissioner within 30 days after the transaction is completed.
Each license shall be kept posted in the licensed place of business.
business or on the licensee's website. Each license shall remain remains
in full force and effect until surrendered, revoked, or suspended as
(a) Business Location. A
licensee may conduct and carry on
his the licensee's business
only at such location or one or more locations as may be approved
by the Commissioner of Banks, Commissioner, and no changes shall
be made from one location to another without the approval of the Commissioner.
(b) Additional Places of Business. Not more than one place of business shall be maintained under the same license, but the Commissioner may issue more than one license to the same licensee upon compliance with all the provisions of this Article governing issuance of a single license.
(c) Change of Location,
Ownership, or Management. If any change occurs in the name and
address of the licensee or of the president, secretary secretary, or
agent of a corporation, corporation holding a license, or in the
membership of any partnership under said sections, holding a license,
a true and full statement of such the change, sworn to in the
manner required by this Article in the case of the original application, shall forthwith
be filed with the Commissioner.Commissioner within 90 days of the
"§ 53‑171. Revocation,
or surrender of license.
(a) If the Commissioner
find, finds, after due notice and hearing, or opportunity for
hearing, that any such a licensee, or an officer, agent,
employee, or representative thereof thereof, has violated any of
the provisions of this Article, or has failed to comply with the rules,
regulations, instructions or orders promulgated rules adopted or orders
issued by the Commission pursuant to the powers and duties prescribed
therein, or Commission, has failed or refused to make its reports to
the Commissioner, or has failed to pay the fees for its examination and
supervision, or has furnished false information to the Commissioner or the
Commission, the Commissioner may issue an order revoking or suspending the
right of such the licensee and such or the officer,
agent, employee employee, or representative to do business in
North Carolina as a licensee, and upon receipt of such an the order
from the Commissioner, the licensee shall immediately surrender his the
licensee's license to the Commissioner. Within five days after the entry of
such an the order the Commissioner shall place on file his the
Commissioner's findings of fact and mail or otherwise deliver a copy to the
licensee. Any licensee who fails to make any loans during any period of 90
consecutive days after being licensed shall surrender his license to the
Any A licensee
may surrender any license by delivering it to the Commissioner with written
notice of its surrender, but such the surrender shall does
not affect his the licensee's civil or criminal liability for
acts committed prior thereto.to the surrender.
(c) No revocation,
suspension, or surrender of any license shall impair or affect impairs
or affects the obligation of any preexisting lawful contract between the
licensee and any obligor.
(d) The Commissioner, in
the Commissioner's discretion, may reinstate suspended licenses or
issue new licenses to a person whose license or licenses have been revoked, revoked
or surrendered if and when he the Commissioner determines no
fact or condition exists which that clearly would have justified
the Commissioner in refusing originally to issue such the license
under this Article.
"§ 53‑172. Conduct of other business in same office.
(a) No licensee shall conduct the business of making loans under this Article within any office, suite, room, or place of business in which any other business is solicited or transacted.
Installment paper dealers as
defined in G.S. 105‑83, the collection by a licensee of loans
legally made in North
Carolina Carolina, including loans made under
Chapter 24 or Chapter 25A of the General Statutes, or legally made in another
state by another government regulated government‑regulated lender
or lending agency, and the collection by a licensee of claims of, payments to,
or payments for an insurance company licensed in North Carolina and arising in
any way from a nonfiling or nonrecording insurance policy approved by the
Commissioner of Insurance shall not be are not considered as
being any other business within the meaning of this section.
(c) The Commissioner may
require, consistent with the provisions of 12 C.F.R. Part 226 (Regulation Z) of
Truth‑In‑Lending Act, Truth in Lending Act, the
other business authorized under subsection (b) of this section to:to
do both of the following:
(1) Disclose the cost of
consumer credit of goods and services
(2) Provide the purchaser with a reasonable cancellation period for goods and services purchased.
(d) No licensee
do either of the following:
(1) Make the purchase of
goods and services sold under the authorization of subsection (b) of this
section a condition of making a
(2) Consider the borrower's
decision to purchase, or not purchase, goods and services sold under the
authorization of subsection (b) of this section a factor in its approval or
credit, credit or in its determination of the amount of
or terms of credit for the borrower.
(g) This section
not be construed as authorizing does not authorize the collection of
any loans or charges in violation of the prohibitions contained in G.S. 53‑190.
(h) The books, records, and
accounts relating to loans shall be kept in
such manner as the Commissioner
of Banks prescribes a manner prescribed by the Commissioner so as to
delineate clearly the loan business from any other business authorized by the
"§ 53‑173. Computation of interest; application of payments; limitation on interest after judgment; limitation on interest after maturity of the loan.
(a), (a1) Repealed by Session Laws 2013‑162, s. 3, effective July 1, 2013.
(b) Computation of Interest.
Interest on loans made pursuant to this section shall not be paid, deducted,
or received in advance.
Such The interest shall not be compounded
but interest on loans shall (i) be computed and paid only as a percentage of
the unpaid principal balance or portion thereof of the amount
financed and (ii) computed on the basis of the number of days actually
elapsed; provided, however, if part or all of the consideration for a
loan contract is the unpaid principal balance of a prior loan, then the principal
amount payable amount financed under the loan contract may include
any unpaid interest on the prior loan which have that has accrued
within 90 days before the making of the new loan contract. For the purpose of
computing interest, a day shall equal equals 1/365th of a year.
(b1) Application of Payments. Any payment made on a loan shall be applied first to late charges and other permissible charges under this Article, then to any accrued interest, and then to principal. Any portion or all of the principal balance may be prepaid at any time without penalty.
(c) Limitation on Interest
after Judgment. If a money judgment is obtained against any party on any loan
the provisions of this section section, neither
the judgment nor the loan shall carry, carries, from the date of
the judgment, any interest in excess of eight percent (8%) per annum.
(d) Limitation of Interest
after Maturity of Loan. After the maturity date of any loan contract made
the provisions of this section and until the loan contract is paid
in full by cash, new loan, refinancing or otherwise, no charges other than
interest at eight percent (8%) per annum shall be computed or collected from
any party to the loan upon the unpaid principal balance of the loan.
(e) Repealed by Session Laws 1989, c. 17, s. 3.
(f) Repealed by Session Laws 2001‑519, s. 3, effective January 1, 2002.
"§ 53‑176. Rates,
maturities maturities, and
(a) A licensee may make
in aggregate with loan amounts not exceeding fifteen
thousand dollars ($15,000) and which shall not be twenty‑five
thousand dollars ($25,000), that are not repayable in fewer than 12 months
or more than 96 months and which shall not be months, that are not secured
by deeds of trust or mortgages on real estate and which estate, and
that are repayable in substantially equal consecutive monthly payments
and to payments. A licensee may charge and collect interest in
connection therewith which shall on these loans, not to exceed
the following actuarial rates:
(1) With respect to a loan with
a loan amount at origination not exceeding
ten thousand dollars
($10,000), thirty percent (30%) twelve thousand dollars ($12,000),
thirty‑three percent (33%) per annum on that part of the unpaid
principal balance not exceeding four thousand dollars ($4,000), twenty‑four
percent (24%) per annum on that part of the unpaid principal balance exceeding
four thousand dollars ($4,000) but not exceeding eight thousand dollars
($8,000), and eighteen percent (18%) per annum on that part of the remainder of
the unpaid principal balance.
(2) With respect to a loan with
a loan amount at origination exceeding
ten thousand dollars ($10,000), twelve
thousand dollars ($12,000), eighteen percent (18%) per annum on the
outstanding principal balance.
Interest shall be contracted for
and collected at the
single applicable simple interest rate
applied to the outstanding balance that would earn the same amount of
interest as the above rates for payment according to schedule.unpaid
portion of the amount financed.
(b) In addition to the
interest permitted in this section, a licensee may assess at closing a fee for
processing the loan as agreed upon by the parties, not to exceed
dollars ($25.00) for loans up to two thousand five hundred dollars ($2,500) thirty
dollars ($30.00) for loan amounts up to three thousand dollars ($3,000) and
one percent (1%) of the cash advance for loans above two thousand five
hundred dollars ($2,500), not to exceed a total fee of forty dollars ($40.00),
provided that such amount financed, exclusive of the loan processing
fee, for loan amounts more than three thousand dollars ($3,000), not to exceed
a total fee of one hundred fifty dollars ($150.00). These charges may shall
not be assessed more than twice in any 12‑month period.
The provisions of G.S. 53‑173(b),
(b1), (c) (c), and (d) and G.S. 53‑180(b), (c), (d),
(e), (f), (g), (h) (h), and (i) shall apply to loans made
pursuant to this section.
(d) Repealed by Session Laws 2013‑162, s. 4, effective July 1, 2013.
(e) The due date of the
first monthly payment shall not be more than 45 days following the disbursement
of funds under
any such the installment loan. A borrower under
this section may prepay all or any part of a loan made under this section the
loan without penalty. Except as otherwise provided for pursuant to in
G.S. 75‑20(a), no more than twice in a 12‑month period, a
borrower may cancel a loan with the same licensee within three business days
after disbursement of the loan proceeds without incurring or paying interest so
long as the amount financed, minus any fees or charges, is returned to and
received by the licensee within that time.
(f) Repealed by Session Laws 2013‑162, s. 4, effective July 1, 2013.
"§ 53‑177. Fees.
(a) Recording Fees. The
licensee may collect from the borrower the amount of any fees necessary to file
or record its security interest with any public official or agency of a county
or the State as may be required pursuant to Article 9 of Chapter 25 of the
General Statutes or G.S. 20‑58
et seq. through G.S. 20‑58.8.
Upon full disclosure to the borrower on how the fees will be applied, such
the fees may either (i) be paid by the licensee to such the
public official or agency of the county or State or (ii) in lieu of
recording or filing, applied by the licensee to purchase nonfiling or
nonrecording insurance on the instrument securing the loan; provided, however,
the amount collected by the licensee from the borrower for the purchase of a
nonfiling or nonrecording insurance policy shall be the premium amount for such
the insurance as fixed by the Commissioner of Insurance. Such The
premium shall be at least one dollar ($1.00) less than the cost of recording
or filing a security interest. Provided further, a A licensee
shall not collect or permit to be collected any notary fee in connection with
any loan made under this Article, nor may shall a licensee
collect any fee from the borrower for the cost of releasing a security interest
except such the fee as actually paid to any public official or
agency of the county or State for such this purpose.
(b) Late Payment Fees.
(1) A licensee may charge a
late payment fee for any payment
which that remains past due for
10 days or more after the due date.
(2) No licensee
charge a late payment fee in an amount greater than fifteen dollars
($15.00) eighteen dollars ($18.00) nor charge a late payment fee
more than once with respect to a single late payment.
(3) If a late payment fee has
been once imposed with respect to a particular late payment, no
payment fee shall be imposed with respect to any future payment which that
would have been timely and sufficient but for the previous default.
(4) A licensee may apply a borrower's most recent payment to the oldest installment due.
(5) A licensee shall not collect more than one late payment fee from any full or partial payment made toward a particular scheduled installment payment. However, a licensee may collect more than one late payment fee from any payment made toward more than one installment payment so long as the number of late payment fees collected does not exceed the number of different installment payments that were past due for 10 days or more and to which the payment was applied.
(6) If a licensee declares a borrower in default and accelerates a loan, the licensee may collect a late payment fee for each installment payment that was, as of the date of acceleration, past due for 10 days or more. A licensee shall not collect a late payment fee for any installment that becomes due solely because the licensee has declared a borrower in default and accelerated a loan.
(7) If a licensee refinances a loan, a licensee may include in the amount financed late payment fees for each installment payment that was, as of the date of the refinancing, past due for 10 days or more.
(8) If a loan reaches maturity, a licensee may include in the final balance owed a late payment fee for each installment payment that remains past due for 10 days or more.
(c) Deferral Charges. A
licensee may, by agreement with the borrower, collect a deferral charge and defer
the due date of all or part of one or more installments under an existing loan
contract as permitted
in the provisions of by G.S. 25A‑30.
A licensee may assess a deferral charge for each month of the remaining loan
term on each installment owed after the date of deferral. A licensee may also charge
a late payment fee on deferred payments that remain past due for 10 days or
more after the agreed upon due date. A deferral shall not alter the maturity
date of the loan contract, even if a payment is deferred beyond maturity.
(d) Insurance Policy. If a
licensee, in lieu of recording, collects a fee to purchase a nonfiling or
nonrecording insurance policy as authorized under subsection (a) of this
section, to be valid, any claim arising from
such the policy
shall only be used to compensate the licensee for damages arising from failure
to record or file its security interest in accordance with Article 9 of Chapter
25 of the General Statutes. Following payment of such the claim,
the licensee shall do the following:
(1) Properly credit the full
claim amount posted to the balance of the
loan loan, effective
the date the proceeds were received.
(e) Recovery of Costs. If
a borrower requests in writing of the lender to take a voluntary dismissal of
an action to recover a loan made under this Article, and both parties agree to
a the dismissal, the lender shall obtain in writing from the
borrower an acknowledgment that (i) the borrower will be liable for the
statutory court costs and (ii) any other reasonable and bona fide costs
incurred in the course of bringing the action, and the lender may recover the
statutory court costs incurred as well as any other reasonable and bona fide
costs incurred in the course of bringing the action. Nothing in this section shall
be construed to authorize authorizes the collection of attorney fees
otherwise prohibited by G.S. 53‑180(e). Provided further, that
this section shall This section does not apply if the borrower, in
written documentation raises an affirmative defense to an action to collect a
loan under this Article. Nothing in this section shall in any way affect or
prohibit affects or prohibits a magistrate, judge, or arbitrator
from awarding filing fees and fees for service of process incurred by the
lender in bringing the civil action if a judgment is awarded or the
other bona fide costs set forth above and the recovery of said costs and
fees is expressly authorized in the event judgment is entered against the
borrower.in this subsection.
"§ 53‑180. Limitations and prohibitions on practices and agreements.
(a) Time and Payment
Limitation. Every loan contract shall provide for repayment of the amount
loaned in substantially equal installments, either of principal or of principal
and charges in the aggregate, at approximately equal periodic intervals of
contained herein shall prevent in this section prevents
a loan being considered a new loan because the proceeds of the loan are
used to pay an existing contract.
(b) No Assignment of
Earnings. A licensee
may shall not take an assignment of
earnings of the borrower for payment or as security for payment of a loan. An
assignment of earnings in violation of this section is unenforceable by the
assignee of the earnings and is revocable by the borrower. unenforceable.
A sale of unpaid earnings made in consideration of the payment of money to
or for the account of the seller of the earnings is deemed to be a loan to the
seller by an assignment of earnings.
(d) Prohibitions on
Discrimination. No licensee shall deny any extension of credit or
discriminate in the fixing of the amount, duration, application
or other terms or conditions of such the extension of credit
because of the race, color, religion, national origin, sex sex, or
marital status of the applicant or any other person connected with the
(e) Limitation on
Attorney Fees. With respect to a loan made pursuant to the
provisions of G.S. 53‑176, the agreement may shall not
provide for payment by the borrower of attorney fees.
(f) No Real Property as
Security. No licensee shall make any loan within this State
which shall in
any way be that is secured by real property.
(i) Limitation on
Conditions to Making Loans. A licensee or an affiliate operating in the same
office or subsidiary operating in the same office of a licensee shall not make
as a condition of any loan the refinancing of a borrower's home loan as defined
in G.S. 24‑1.1A(e)
which that is not currently in
(j) No Solicitation of
Deposits. No licensee
may shall directly or indirectly solicit
from any borrower funds to be held on deposit in any bank; provided, however,
a borrower may at his the borrower's option, by way of a military
allotment or other such similar program, designate a depository
to receive and disburse funds for a designated purpose.
(k) Loans made pursuant to
this Article solicited using a facsimile or negotiable check
shall be are
subject to the provisions of G.S. 75‑20(a).
"§ 53‑181. Statements and information to be furnished to borrowers; power of attorney or confession of judgment prohibited.
(a) Contents of Statement
Furnished to Borrower. At the time a loan is made, the licensee shall
deliver, or make available electronically, to the borrower, or if there
be are two or more borrowers, to one of them a copy of the loan contract,
contract or a written statement, showing all of the following in
clear and distinct terms:
(1) The name and address of
the licensee and one of the primary obligors on the
(2) The date of the loan
installments or descriptions thereof;A schedule or description of the
amount. (5) The face amount of the note evidencing the loan;
(6) The amount collected or
paid for insurance, if
(7) The amount collected or
paid for filing or other fees allowed by this
(8) The collateral or
security for the
(9) If the loan refinances a previous loan, the following relating to the refinanced loan: (i) the principal balance due; (ii) interest charged that is included in the new loan; and (iii) rebates on any credit insurance, listed separately.
(10) In addition to any disclosures otherwise provided by law, a licensee soliciting loans using a facsimile or negotiable check shall provide the disclosures required by G.S. 75‑20(a).
(11) The following statement: "This loan is regulated by the provisions of the North Carolina Consumer Finance Act, Article 15 of Chapter 53 of the North Carolina General Statutes."
(b) Schedule of Charges, etc., to Be Made Available;
Copy Filed with Commissioner. Each licensee doing business in North Carolina
shall make readily available to the borrower at each place of business such
full and accurate schedule of charges and insurance premiums, including refunds
and rebates, on all classes of loans currently being made by such licensee, as
the Commissioner shall prescribe, and a copy thereof shall be filed in the
office of the Commissioner of Banks.
(c) Power of Attorney or
Confession of Judgment Prohibited. No licensee shall take any confession of
judgment or permit any borrower to execute a power of attorney in favor of any
licensee or in favor of any third person to confess judgment or to appear for the
borrower in any judicial
proceeding proceeding, and any such a
confession of judgment or power of attorney to confess judgment shall be
absolutely is void. Nothing in this subsection prohibits a
licensee from taking a confession of judgment from a borrower following the
borrower's failure to make a payment as required under the loan contract.
"§ 53‑182. Payment of loans; receipts.
(a) After each cash payment
made on account of any loan, the licensee shall give to the person making
the payment a signed, dated receipt showing the amount paid and the
balance due on the loan. No receipt shall be required in the case of electronic
payments or payments made by the borrower's check or money order, where if
the entire proceeds of the check or money order are applied to the loan.
The use of a coupon book system shall be is deemed in compliance
with this section.
(b) Upon payment of any loan
in full, a licensee shall cancel and
return either return or make
available electronically to the borrower, within a reasonable length of
time, originals or copies of any note, assignment, mortgage, deed of trust, or
other instrument securing such loan, which the loan that no
longer secures any indebtedness of the borrower to the licensee.
"§ 53‑184. Securing of information; records and reports; allocations of expense.
(a) Each licensee shall
all keep the books and records required by subsection (e) of this
section relating to loans made under this Article required by the
Commissioner of Banks to be kept, and the Commissioner, his deputy, or duly
authorized examiner or agent or employee is authorized and empowered to Article,
and the Commissioner, or an agent of the Commissioner, may examine such these
books and records at any reasonable time. Such These books
and records may be maintained in the form of magnetic tape, magnetic disk,
optical disk, or other form of computer, electronic electronic, or
microfilm media available for examination on the basis of computer printed
reproduction, video display display, or other medium acceptable
to the Commissioner of Banks; provided, Commissioner; however, that
such these books and records so kept must shall be
convertible into clearly legible tangible documents within a reasonable time.
Any licensee having more than one licensed office may maintain such these
books and records at a location other than the licensed office location if such
the location is approved by the Commissioner; provided that, upon
such requirements as may be imposed by the Commissioner of Banks, Commissioner.
In accordance with any requirements imposed by the Commissioner, there
shall be available to the borrower at each licensed location or such other
location convenient to the borrower, as designated by the licensee, complete
loan information; and provided further that such information. These books
and records of each licensed office shall be clearly segregated. When a
licensee maintains its books and records outside of North Carolina, the
licensee shall make them available for examination at the place where they are
maintained and shall pay for all reasonable and necessary expenses incurred by
the Commissioner in conducting such an examination. Where the
data processing for any licensee is performed by a person other than the licensee,
the licensee shall provide to the Commissioner of Banks a copy of a
binding agreement between the licensee and the data processor which that
expressly allows the Commissioner of Banks, his deputy, or duly
authorized examiner or agent or employee Commissioner, or an agent of
the Commissioner, access to examine that particular the data
processor's activities pertaining to the a particular licensee to
the same extent as if such these services were being performed by
the licensee on its own premises; and, notwithstanding the provisions of G.S. 53‑167,
when billed by the Commissioner of Banks, Commissioner, the
licensee shall reimburse the Commissioner of Banks for all costs and
expenses incurred by the Commissioner in such the examination.
(b) Each licensee shall file
annually with the Commissioner
of Banks on or before the thirty‑first
31st day of March for the 12 months' period ending the preceding
December 31, reports on forms prescribed by the Commissioner. Reports shall
disclose in detail and under appropriate headings the assets and liabilities of
the licensee, the income, expense, gain, loss, and any other information as
the Commissioner may require. required by the Commissioner. Reports
shall be verified by the oath or affirmation of the owner, manager, president,
vice‑president, cashier, secretary secretary, or treasurer
of the licensee.
(c) If a licensee conducts
another business or is affiliated with other licensees under this Article, or
if any other situation exists under which allocations of expense are necessary,
the licensee or licensees shall make
such the allocation
according to appropriate and reasonable accounting principles.
(d) Repealed by Session Laws 1997‑285, s. 3, effective January 1, 1998.
(e) A licensee shall maintain separate loan ledgers and accounts related to the making and collecting of loans under this Article. Allocation of expenses shall be made monthly according to generally accepted accounting principles. All books and records required by this section shall be retained for a period of two years after the last transaction consistent with the Federal Trade Commission Safeguards Rule, Part 314 of Title 16 of the Code of Federal Regulations. The books and records to be kept are as follows:
(1) General ledger. The general ledger shall be double entry, showing in detail the total of assets, liabilities, capital, income, and expenses. Each account shall be individually designated. No net or "wash" entries shall be made to any account. The general ledger shall be posted once each month, and the posting shall include all transactions through the last business day of the month. The actual posting shall be completed by the 30th day of each ensuing month for the previous month's business. A licensee shall maintain a description of each general ledger entry, including adjusting and closing entries. If any account on the general ledger does not agree with the corresponding account on the annual report to the Commissioner, a supplement to the annual report shall be furnished that reconciles or explains any differences.
(2) Loan documents. Documentation of all loans to each individual, including the date made, account number, loan amount, and date of cancellation.
(3) Judgments. When a loan has been reduced to a final judgment, a licensee shall comply with all of the following provisions:
a. The individual account record maintained pursuant to subdivision (2) of this subsection shall be designated as a judgment account.
b. Payments received shall be identified and applied on the judgment account record.
c. The licensee shall maintain a copy of the final judgment and any other court documents that are necessary to disclose all of the following information:
1. The final judgment date.
2. The name of the licensee.
3. The final judgment debtor's name.
4. The date the suit was filed.
5. The nature of the suit.
6. The name and location of the court.
7. The amount of the final judgment, specifying principal, interest charges, any fees authorized by statute, and court costs.
8. The disposition of the case.
d. A licensee that charges a borrower for court costs incurred in obtaining a final judgment or pursuant to any ancillary proceeding related to an account shall itemize these costs on the individual account record and retain a receipt or other document showing the costs.
e. A licensee shall retain a copy of the sheriff's return of execution issued when property is sold pursuant to a final judgment.
(4) Repossessions. When property is taken in accordance with the terms of a security agreement, by judicial process, or abandonment, the individual account record shall be designated as a repossession account and shall state when and how possession of the security was obtained and shall identify the proceeds of the sale of the property. The licensee shall also retain all of the following:
a. A copy of any agreement entered into with the borrower with respect to the terms of surrender.
b. A copy of the notice of sale, together with proof of mailing or personal delivery.
c. An inventory of the property taken, unless it appears on the notice of sale.
d. A signed bill of sale or a statement from the purchaser, or from the auctioneer if the sale was public, describing the collateral purchased and showing the amount paid.
e. Evidence that the sale took place on the date set forth in any notice of public sale, or a date after the date set forth in any notice of private sale, including a notice of any bids received.
f. A copy of a final accounting sent to the borrower, setting forth the disposition of the proceeds of sale and the principal balance due, if any, on the account prepared in accordance with G.S. 25‑9‑616.
g. Paid receipts showing the costs incurred in the repossession and sale of the security that have been charged to the borrower.
"§ 53‑190. Loans made elsewhere.
(a) No loan contract made
outside this State in the amount or of the value of
fifteen thousand dollars
($15,000) twenty‑five thousand dollars ($25,000) or less, for
which greater consideration or charges than are authorized by G.S. 53‑173
and G.S. 53‑176 of this Article have been charged, contracted
for, or received, shall be enforced in this State. Provided, the foregoing
shall This subsection, however, does not apply to loan contracts in
which all contractual activities, including solicitation, discussion,
negotiation, offer, acceptance, signing of documents, and delivery and receipt
of funds, occur entirely outside North Carolina.this State.
(b) If any lender or agent
of a lender
who that makes loan contracts outside this State in
the amount or of the value of fifteen thousand dollars ($15,000) twenty‑five
thousand dollars ($25,000) or less, less comes into this
State to solicit or otherwise conduct activities in regard to such the
loan contracts, then such the lender shall be is subject
to the requirements of this Article.
(c) No lender licensed to do
business under this Article
may shall collect, or cause to be
collected, any loan made by a lender in another state to a borrower, who borrower
that was a legal resident of North Carolina this State at
the time the loan was made. The purchase of a loan account shall does
not alter this prohibition."
SECTION 2. G.S. 53C‑1‑4 reads as rewritten:
"§ 53C‑1‑4. Definitions and application of terms.
Unless the context requires otherwise, the following definitions apply in this Chapter:
(20a) Consumer finance licensee.
An individual associated with a "licensee," as that term is defined
G.S. 53‑165(h).G.S. 53‑165.
SECTION 3. This act becomes effective October 1, 2023, and applies to contracts entered into, modified, or renewed on or after that date.
In the General Assembly read three times and ratified this the 8th day of June, 2023.
s/ Phil Berger
President Pro Tempore of the Senate
s/ Tim Moore
Speaker of the House of Representatives
VETO Roy Cooper
Became law notwithstanding the objections of the Governor at 1:47 p.m. this 27th day of June, 2023.
s/ Mr. James White
House Principal Clerk