Title of Regulation: 10VAC5-200. Short-Term Lending (amending 10VAC5-200-10).

Statutory Authority: §§ 6.2-1815 and 12.1-13 of the Code of Virginia.

Public Hearing Information: A hearing will be scheduled upon request.

Public Comment Deadline: November 19, 2021.

Agency Contact: Dustin Physioc, Commissioner, Bureau of Financial Institutions, State Corporation Commission, P.O. Box 640, Richmond, VA 23218, telephone (804) 786-0831, or email dustin.physioc@scc.virginia.gov.

Summary:

The proposed amendment adds the definition of "business check" to mean a paper check, an electronic check, or an electronic funds transfer through the Automated Clearing House system.

AT RICHMOND, OCTOBER 12, 2021

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. BFI-2021-00101

Ex Parte: In the Matter of Defining the

Term "Business Check" in the Regulations

Governing Short-Term Lending

ORDER TO TAKE NOTICE

Chapters 1215 and 1258 of the 2020 Virginia Acts of Assembly made extensive revisions to Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia ("Chapter 18") that became effective on January 1, 2021. Based on this legislation, the State Corporation Commission ("Commission") conducted a rulemaking proceeding and adopted amendments to its regulations governing short-term lending under Chapter 18, which are set forth in Chapter 200 of Title 10 of the Virginia Administrative Code ("Chapter 200").¹

The Commission has received inquiries regarding whether licensed short-term lenders who make loans over the Internet are allowed to disburse loan proceeds to borrowers by means of an electronic funds transfer through the Automated Clearing House ("ACH") system.² In order to clarify that disbursing loan proceeds in this manner is now permitted under Chapter 18, the Bureau of Financial Institutions ("Bureau") has proposed an amendment to 10 VAC 5-200-10 that would define the term "business check" for purposes of Chapter 18 and Chapter 200 to mean a paper check, an electronic check, or an electronic funds transfer through the ACH system.

NOW THE COMMISSION, having considered the Bureau's proposal, is of the opinion and finds that the proposed regulation should be considered for adoption.

Accordingly, IT IS ORDERED THAT:

(1) The proposed regulation is attached hereto and made a part hereof.

(2) Comments or requests for a hearing on the proposed regulation must be submitted in writing to the Clerk of the Commission, State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218, on or before November 19, 2021. Requests for a hearing shall state why a hearing is necessary and why the issues cannot be adequately addressed in written comments. All correspondence shall contain a reference to Case No. BFI-2021-00101. Interested persons desiring to submit comments or request a hearing electronically may do so by following the instructions available at the Commission's website: scc.virginia.gov/casecomments/Submit-Public-Comments.

(3) This Order and the attached proposed regulation shall be made available on the Commission's website: scc.virginia.gov/pages/Case-Information.

(4) The Commission's Division of Information Resources shall provide a copy of this Order, including a copy of the attached proposed regulation, to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

A COPY of this Order and the attached proposed regulation shall be sent by the Clerk of the Commission to the Commission's Office of General Counsel and to the Commissioner of Financial Institutions, who shall send by e-mail or U.S. mail a copy of this Order and the attached proposed regulation to all licensees under Chapter 18 and such other interested persons as he may designate.

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¹Commonwealth of Virginia, ex rel. State Corporation Commission, Ex Parte: In the matter of Adopting Revisions to the Regulations Governing Licensees under Chapter 18 of Title 6.2 of the Code of Virginia. Case No. BFI-2020-00109, Order Adopting Regulations (July 12, 2021).

²Section 6.2-1816 (14) of the Code of Virginia states in pertinent part that "[l]oan proceeds shall be disbursed in cash or by the licensee's business check."

10VAC5-200-10. Definitions.

A. The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Act" means Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia.

"Advertisement" means a commercial message in any medium that promotes, directly or indirectly, a short-term loan. This includes a communication sent to a consumer as part of a solicitation of business, but excludes messages on promotional items such as pens, pencils, notepads, hats, and calendars.

"Business check," for purposes of the Act and this chapter, means a paper check, an electronic check, or an electronic funds transfer through the Automated Clearing House system.

"Business day" for purposes of the Act and this chapter means a day on which the licensee is able to make loans pursuant to the Act.

"Duplicate original" means an exact copy of a signed original, an exact copy with signatures created by the same impression as the original, or an exact copy bearing an original signature.

"Good funds instrument" for purposes of the Act and this chapter means a certified check, cashier's check, money order or, if the licensee is equipped to handle such payments, payment effected by use of a credit card, prepaid card, debit card, or the Automated Clearing House system.

"Liquid assets" for purposes of the Act and this chapter means funds held in a checking account or savings account at a depository institution, money market funds, commercial paper, and treasury bills.

"Member of the military services of the United States" for purposes of the Act and this chapter means a regular or reserve member of the United States Army, Navy, Marine Corps, Air Force, Coast Guard, or National Guard serving on active duty under a call or order that does not specify a period of 30 days or fewer.

"Other dependent of a member of the military services of the United States" for purposes of the Act and this chapter means (i) an individual under the age of 18 whose mother or father is a member of the military services of the United States or (ii) an individual for whom a member of the military services of the United States provided more than one-half of the individual's financial support for 180 days immediately preceding the date the individual applied for a short-term loan.

"Payday loan" means a loan made pursuant to the Act and this chapter prior to January 1, 2021.

"Prepaid card" means a card with a network logo (e.g., Visa, MasterCard, American Express, or Discover) that is used by a cardholder to access money that has been loaded onto the card in advance.

B. Other terms used in this chapter shall have the meanings set forth in § 6.2-100 or 6.2-1800 of the Code of Virginia.