CSHB 227(L&C): "An Act relating to the Alaska Small Loans Act and to the disposition of unredeemed property; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 227(L&C) 01 "An Act relating to the Alaska Small Loans Act and to the disposition of unredeemed 02 property; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 06.20.010(a) is amended to read: 05 (a) A person may not engage in the business of making loans of money, credit, 06 goods, or things in action in the amount or of the value of $50,000 [$25,000] or less 07 and charge, contract for, or receive on the loan a greater rate of interest, a discount, or 08 consideration than the lender would be permitted by law to charge if the person were 09 not a licensee under this chapter, except as provided by (b) of this section or as 10 authorized by this chapter, and without first obtaining a license from the department. 11 * Sec. 2. AS 06.20.010(b) is repealed and reenacted to read: 12 (b) The following persons are exempt from the application of (a) of this 13 section: 14 (1) a bank regulated by AS 06.05;
01 (2) a trust company that is regulated by AS 06.26, except for a trust 02 company that is exempt under AS 06.26.200; 03 (3) a credit union that is organized under AS 06.45; 04 (4) a BIDCO corporation licensed under AS 10.13; 05 (5) a financial institution authorized to do business under federal law 06 relating to financial institutions, including a bank, trust company, savings bank, 07 building and loan association, savings and loan company or association, and credit 08 union; 09 (6) the Alaska Commercial Fishing and Agriculture Bank established 10 under AS 44.81; and 11 (7) a person who 12 (A) consummates and funds a loan that is secured by real 13 property; and 14 (B) is named as the payee in the promissory note and as the 15 beneficiary in the deed of trust. 16 * Sec. 3. AS 06.20 is amended by adding a new section to read: 17 Sec. 06.20.015. Types of licenses. The department may issue a license to 18 engage in a small loan business under this chapter at a single location or a license to 19 engage in a small loan business at multiple locations. The department shall issue a 20 separate license endorsement for each location where a licensee will engage in a small 21 loan business under a license. An Internet site requires a separate endorsement under 22 this section. 23 * Sec. 4. AS 06.20.020(a) is repealed and reenacted to read: 24 (a) An application for a license must be in writing under oath, and in the form 25 prescribed by the department. The application must contain 26 (1) the applicant's name, residence address, business address, and 27 mailing address; 28 (2) the street address, including the municipality, if any, of each 29 physical location where the applicant will engage in business under this chapter; 30 (3) the registered domain address of each Internet website location, if 31 any, where the applicant will engage in business under this chapter;
01 (4) if the applicant is not a natural person, the name, residence address, 02 and business address of each partner, director, officer, and member of the applicant; 03 and 04 (5) any other information that the department may require. 05 * Sec. 5. AS 06.20.030(a) is amended to read: 06 (a) Notwithstanding AS 06.01.010, investigation [INVESTIGATION] 07 expenses incurred by the department in processing an application for licensure shall be 08 charged to and paid by the applicant at the rate determined by the department by 09 regulation [UNDER AS 06.01.010]. At the time of submitting the application to the 10 department [COMMISSIONER], the applicant shall pay to the department $1,000 in 11 partial payment of the [THOSE] investigation expenses incurred by the department. 12 * Sec. 6. AS 06.20.030(b) is amended to read: 13 (b) Notwithstanding AS 06.01.010, an [AN] applicant shall pay to the 14 department, at the time of submitting an application, the [A] sum, in addition to that 15 amount required by [SPECIFIED IN] (a) of this section, of $2,500 [$500] for a 16 single location [OFFICE] license, or $10,000 [$2,000] for a multiple location 17 [OFFICE] license as an annual license fee for a period terminating on the last day of 18 the current calendar year. 19 * Sec. 7. AS 06.20.040 is amended to read: 20 Sec. 06.20.040. Liquid assets required. An applicant shall prove, on a [IN] 21 form satisfactory to the department, that the applicant has available for the operation 22 of the business at the location specified in the application, liquid assets of at least 23 $50,000 [$25,000], or, in the case of a multiple location [OFFICE] license, $50,000 24 for [THAT THE EQUIVALENT AMOUNT IS AVAILABLE TO] each office for 25 which a license endorsement is issued, from a central account maintained by the 26 applicant. 27 * Sec. 8. AS 06.20.050 is amended to read: 28 Sec. 06.20.050. Bond. The applicant shall file with the application a bond to be 29 approved by the department in which the applicant shall be the obligor, in the sum of 30 $50,000 [$25,000] with one or more sureties. Only one bond is required for an 31 application for a multiple location [OFFICE] license. The bond shall be for the use of
01 the department for [STATE AND ANY PERSON WHO MAY HAVE] a cause of 02 action against the obligor under this chapter. The bond must state that the obligor will 03 faithfully conform to and abide by the provisions of this chapter and of all regulations 04 lawfully adopted by the department, and will pay to the department [STATE AND 05 TO ANY PERSON] all money that may become due or owing to the department 06 [STATE OR TO THE PERSON] from the applicant under this chapter. 07 * Sec. 9. AS 06.20.050 is amended by adding a new subsection to read: 08 (b) A licensee shall continue the bond required by (a) of this section until the 09 license is revoked or otherwise terminated by the department and 10 (1) until all loans made by the licensee have been paid in full, 11 including payment by renewal; and 12 (2) while litigation about a loan made by the licensee is pending. 13 * Sec. 10. AS 06.20.060 is repealed and reenacted to read: 14 Sec. 06.20.060. Issuance of license. (a) The department shall, within 60 days 15 after the date of filing the application required by AS 06.20.020 and the applicant's 16 payment of the amounts required by AS 06.20.030, disapprove the application or issue 17 a license to the applicant to make loans under this chapter at the location identified in 18 the application. The license is conditioned on the licensee's compliance with the 19 requirements of this chapter. 20 (b) In order to issue a license, the department shall find, after investigation, 21 that 22 (1) the financial responsibility, experience, character, and general 23 fitness of the applicant and of its partners, directors, officers, and members support a 24 determination that the applicant will operate the business honestly and fairly under this 25 chapter; and 26 (2) grounds for disapproval of an application under AS 06.20.063 do 27 not exist. 28 * Sec. 11. AS 06.20 is amended by adding new sections to read: 29 Sec. 06.20.063. Grounds for disapproval of application. In addition to the 30 department's findings under AS 06.20.060(b), with regard to a person named in the 31 application, the department may disapprove an application for a license under
01 AS 06.20.060 if 02 (1) the person's liabilities exceed the person's assets, the person cannot 03 meet the person's obligations as the obligations mature, or the person cannot continue 04 in business with safety for the person's customers due to the person's financial 05 condition; 06 (2) the person has engaged in dishonest, fraudulent, or illegal practices 07 or conduct in a business or profession; 08 (3) the person has been convicted of a crime in which fraud is an 09 essential element; 10 (4) the person is permanently or temporarily enjoined by a court of 11 competent jurisdiction from engaging in or continuing to engage in conduct in 12 business if the conduct is related to providing money or monetary assistance to 13 consumers; or 14 (5) a federal or state regulatory agency has prohibited the person from 15 engaging in, participating in, or controlling activities that involve providing financial 16 services to the public. 17 Sec. 06.20.065. Notice of disapproval and hearing. (a) If the department 18 disapproves an application for a license, the department shall notify the applicant in 19 writing of the disapproval within 60 days after receiving the completed application 20 and the payments required by AS 06.20.030(a) and (b). The notification under this 21 subsection must state the grounds found under AS 06.20.063 for the disapproval. 22 (b) If the department disapproves an application for a license, the applicant 23 may request a hearing within 10 days after receiving notification of the disapproval. If 24 the applicant requests a hearing, the department shall conduct the hearing under 25 AS 44.62. 26 Sec. 06.20.067. Duration of license and license endorsements. A license 27 issued under AS 06.20.060 is a continuing license and the license and its license 28 endorsements remain in effect until they are surrendered by the licensee under 29 AS 06.20.130, revoked under AS 06.20.110, or suspended under AS 06.20.110. 30 * Sec. 12. AS 06.20.070 is amended to read: 31 Sec. 06.20.070. Form, posting, and transfer of license. The license must be
01 in a form prescribed by the department and state the address where [AT WHICH] 02 the business is to be conducted and the full name of the licensee. [IF THE LICENSEE 03 IS A COPARTNERSHIP OR ASSOCIATION, THE LICENSE MUST STATE THE 04 NAMES OF ITS MEMBERS, AND IF A CORPORATION, THE DATE AND 05 PLACE OF ITS INCORPORATION.] The license endorsement shall be 06 conspicuously posted in each [THE] place of business of the licensee. The license and 07 the license endorsement are [IS] not transferable or assignable. 08 * Sec. 13. AS 06.20.070 is amended by adding a new subsection to read: 09 (b) If a licensee conducts business through an Internet website, the license 10 must also state the registered domain address through which the licensee conducts the 11 business and the address of the physical location, if any, of the principal place where 12 the licensee conducts the business. 13 * Sec. 14. AS 06.20.090 is repealed and reenacted to read: 14 Sec. 06.20.090. Change of business location. When a licensee wishes to 15 change a location where the licensee engages in a small loan business, the licensee 16 shall submit a written notice to the department 45 days before the proposed change. 17 Within 45 days after receiving the written notice, the department may approve the 18 change of location and issue a new license endorsement to the licensee to reflect the 19 new location. 20 * Sec. 15. AS 06.20.110 is amended to read: 21 Sec. 06.20.110. Grounds for revocation or suspension of license. The 22 department may [SHALL, UNDER THE ADMINISTRATIVE PROCEDURE ACT 23 (AS 44.62),] revoke or suspend a [ANY] license issued under this chapter if it finds 24 that 25 (1) the licensee has failed to pay the annual license fee or to 26 [MAINTAIN THE REQUIRED BOND IN EFFECT OR HAS FAILED TO] comply 27 with any [LAWFUL] demand, ruling, or requirement of the department made under 28 [AND WITHIN THE AUTHORITY OF] this chapter or to comply with this 29 chapter; 30 (2) the licensee has violated a provision of this chapter or a regulation 31 [LAWFULLY] adopted by the department under [AND WITHIN THE AUTHORITY
01 OF] this chapter; or 02 (3) a [ANY] fact or condition exists that, if it had existed at the time of 03 the original application for the license, clearly would have warranted the 04 department's refusal to issue the original [CONSTITUTED GROUND FOR 05 DENIAL OF THE ISSUANCE OF THE] license. 06 * Sec. 16. AS 06.20.120 is repealed and reenacted to read: 07 Sec. 06.20.120. Revocation or suspension for multiple location license. If a 08 licensee has a multiple location license, the department may only revoke or suspend 09 the license endorsement that applies to the location for which grounds for revocation 10 or suspension exist. However, if the department finds that the grounds for revocation 11 or suspension apply generally to more than one of the locations authorized by the 12 license, the department may revoke or suspend the entire license and all license 13 endorsements. 14 * Sec. 17. AS 06.20 is amended by adding a new section to read: 15 Sec. 06.20.125. Conditions during suspension or revocation proceedings. 16 During a suspension or during revocation proceedings, the department may place 17 restrictions on the business activities of the licensee that the department determines are 18 necessary to protect the public. These restrictions may include requiring the licensee to 19 sell the loans made by the licensee to another licensee or, if the licensee is a 20 corporation, to transfer the loans to another licensee who is owned by the same parent 21 corporation as the licensee who is surrendering the license. 22 * Sec. 18. AS 06.20.130 is amended to read: 23 Sec. 06.20.130. Surrender. A licensee may surrender a license or a license 24 endorsement by delivering written notice of the surrender to the department. [THE 25 SURRENDER DOES NOT AFFECT THE LICENSEE'S CIVIL OR CRIMINAL 26 LIABILITY FOR ACTS COMMITTED BEFORE THE SURRENDER.] 27 * Sec. 19. AS 06.20.130 is amended by adding new subsections to read: 28 (b) Unless the licensee complies with the bond requirement of AS 06.20.050, 29 the annual report requirement of AS 06.20.190, and the annual license fee requirement 30 of AS 06.20.030(b), the licensee shall surrender a license endorsement for a location if 31 the licensee has not engaged in loan activity under the license endorsement at the
01 location for a period of 24 consecutive months. 02 (c) A licensee may not surrender a license until all outstanding loans made by 03 the licensee under this chapter have been 04 (1) transferred to another location at which the licensee engages in a 05 small loan business under a multiple location license; 06 (2) sold to another licensee; or 07 (3) if the licensee is a corporation, transferred to another licensee who 08 is owned by the same parent corporation as the licensee who is surrendering the 09 license. 10 * Sec. 20. AS 06.20.140 is amended to read: 11 Sec. 06.20.140. Effect of revocation, suspension, or surrender. A 12 revocation, suspension, or surrender of a license or of a license endorsement does not 13 impair or affect the rights or obligations [LEGALLY ENFORCEABLE 14 OBLIGATION] of any preexisting lawful [PRE-EXISTING] contract between the 15 licensee and a [ANY] borrower. 16 * Sec. 21. AS 06.20.140 is amended by adding a new subsection to read: 17 (b) Surrender of a license or a license endorsement under AS 06.20.130 does 18 not affect the licensee's civil or criminal liability for acts committed before the 19 surrender. 20 * Sec. 22. AS 06.20.150 is repealed and reenacted to read: 21 Sec. 06.20.150. Reinstatement of license. The department may reinstate a 22 license or license endorsement revoked under this chapter if the licensee complies 23 with this chapter and with any demand, ruling, or other requirement made by the 24 department under this chapter. For reinstatement of the revoked license or license 25 endorsement, the licensee shall pay the department a fee that may not exceed $500. 26 * Sec. 23. AS 06.20 is amended by adding a new section to article 2 to read: 27 Sec. 06.20.155. Procedure for revocation or suspension. If the department 28 proposes to revoke or suspend a license or a license endorsement, the department shall 29 proceed under AS 44.62 (Administrative Procedure Act) to revoke or suspend the 30 license or license endorsement. 31 * Sec. 24. AS 06.20.160 is repealed and reenacted to read:
01 Sec. 06.20.160. Inspection and examination of licensees. (a) A licensee is 02 subject to inspection by the department. The department shall conduct an examination 03 of each licensee to determine whether the licensee is complying with the provisions of 04 this chapter and the regulations adopted under this chapter and to secure information 05 required by the department under this chapter. The department shall make the first 06 examination of a licensee within 18 months after the licensee receives a license, and, 07 notwithstanding AS 06.01.015(a), the examinations of a licensee shall be conducted a 08 maximum of 18 months apart. 09 (b) In addition to examinations under (a) of this section, the department may 10 conduct examinations or investigations of a licensee at other times that the department 11 considers necessary. 12 (c) During an examination under this section, the licensee shall provide the 13 department with free access to the licensee's place of business and the books, 14 accounts, safes, and vaults of the licensee. 15 (d) The department may conduct an examination under this section without 16 giving prior notice to the licensee. 17 (e) The department may examine under oath all persons whose testimony the 18 department may require in order to conduct an examination under this section. 19 (f) Notwithstanding AS 06.01.010, the licensee shall pay the department $75 20 for each examiner hour used for an examination under this section, plus any expenses 21 incurred by the department for travel, housing, and meals. 22 * Sec. 25. AS 06.20.180 is repealed and reenacted to read: 23 Sec. 06.20.180. Books, accounts, and records of licensee. (a) A licensee shall 24 keep and use in the small loan business licensed under this chapter those books, 25 accounts, and records that will enable the department to determine whether the 26 licensee is complying with this chapter and with the regulations adopted by the 27 department under this chapter. 28 (b) A licensee shall maintain a separate electronic record or a separate paper 29 record for the account of each borrower who receives a loan from the licensee and for 30 each loan that the borrower receives. In each record, the licensee shall state the 31 amount of the cash advance, the total amount of interest and charges, the interest rate,
01 the repayment amount, the date and amount of each payment received from the 02 borrower, a description of the collateral, if any, that secures the loan, any insurance 03 coverage, and any fees or other charges allowed under this chapter. 04 (c) A licensee shall preserve all of its books, accounts, and records for at least 05 two years after making the final entry in the books, accounts, and records. 06 (d) A licensee who operates in another state a business similar to a small loan 07 business shall, if requested by the department, make available at a physical location 08 within this state the books, accounts, records, and files of the business to the 09 department or a representative of the department. 10 * Sec. 26. AS 06.20.190 is amended to read: 11 Sec. 06.20.190. Annual reports of licensees. Each licensee shall, on or before 12 March 15 of each year or on another annual date established by the department by 13 regulation, file a report with the department containing relevant information that 14 [AS] the department requires [MAY REASONABLY REQUIRE] concerning the 15 business and operations during the preceding calendar year of each licensed place of 16 business conducted by the licensee inside the state. The report shall be made under 17 oath and must [SHALL] be in the form prescribed by the department [, AND SHALL 18 BE KEPT AVAILABLE AS A PUBLIC RECORD]. 19 * Sec. 27. AS 06.20.200(a) is amended to read: 20 (a) A licensee [PERSON] may not advertise, print, display, publish, distribute, 21 or broadcast or cause or permit to be advertised, printed, displayed, published, 22 distributed, or broadcast, in any manner any statement or representation with regard to 23 the rates, terms, or conditions for the lending of money, credit, goods, or things in 24 action in the amount or of the value of $50,000 [$25,000] or less, that [WHICH] is 25 false, misleading, or deceptive. [THE DEPARTMENT MAY ORDER A LICENSEE 26 TO DESIST FROM CONDUCT THAT IT FINDS TO BE IN VIOLATION OF THIS 27 SECTION.] 28 * Sec. 28. AS 06.20.210 is repealed and reenacted to read: 29 Sec. 06.20.210. Restriction on operation of business of making loans. (a) A 30 licensee may not conduct the business of making loans under this chapter as a 31 common operation unless the licensee notifies the department 45 days before engaging
01 in the common operation and the department does not prohibit the licensee from 02 engaging in the common operation within 45 days after receiving the notification. 03 (b) If the department finds that the common operation facilitates evasion of 04 this chapter or the regulations adopted under this chapter, the department shall, within 05 45 days after receiving the licensee's notification, inform the licensee that the common 06 operation is not allowed. 07 (c) In this section, "common operation" means operating a small loan business 08 in an office, a suite, a room, or another place in which another business is solicited or 09 engaged in, or in association with another business. 10 * Sec. 29. AS 06.20.230 is repealed and reenacted to read: 11 Sec. 06.20.230. Maximum interest permitted. (a) A licensee may charge, 12 contract for, and receive on a loan under this chapter interest at a rate that does not 13 exceed the greater of 14 (1) 24 percent; or 15 (2) 10 percent above the annual rate charged member banks for 16 advances by the 12th Federal Reserve District on the day on which the contract or loan 17 commitment is made. 18 (b) The computation of interest authorized under this section shall be 19 calculated as provided by 12 C.F.R. 226.17. 20 * Sec. 30. AS 06.20.240 is amended to read: 21 Sec. 06.20.240. Loans for purpose of obtaining higher interest. A licensee 22 may not induce or permit a person, or a husband and wife jointly or severally, to split 23 up or divide a loan or to become obligated, directly or contingently or both, under 24 more than one loan contract at the same time, for the purpose or with the result of 25 obtaining a higher rate of interest than would otherwise be permitted by this chapter 26 [AS 06.20.230]. However, a licensee may enter into new or different loan transactions 27 with the borrower or the borrower's spouse at a different time so long as the purpose of 28 the additional transaction does not violate this section. 29 * Sec. 31. AS 06.20.250(c) is amended to read: 30 (c) Except for open-end loans under AS 06.20.285, a licensee may not enter 31 into a contract for a loan that provides for a scheduled repayment of principal over
01 more than the maximum terms set out below opposite the respective size of loans. 02 Principal amount of loan Maximum term 03 up to $1,000......................................................................................24 and 1/2 month 04 Over $1,000 to $2,500......................................................................48 and 1/2 months 05 Over $2,500 to $5,000......................................................................60 and 1/2 months 06 Over $5,000 to $25,000................................................................180 and 1/2 months 07 Over $25,000.......................................................................as agreed to by the parties 08 * Sec. 32. AS 06.20.260 is repealed and reenacted to read: 09 Sec. 06.20.260. Charges. (a) A licensee may not directly or indirectly charge, 10 contract for, or receive a higher, an additional, or another charge or amount for an 11 examination, service, brokerage commission, expense, fee, bonus, or other thing for a 12 loan subject to this chapter, except 13 (1) a fee authorized by law and actually paid out by the licensee 14 (A) to a public officer for filing, recording, or releasing an 15 instrument securing the loan, or for transferring a certificate of title to a motor 16 vehicle to secure the loan or to add a lien to the certificate of title; or 17 (B) to an insurance company for a premium for insurance 18 obtained in place of perfecting a security interest if the premiums do not 19 exceed the fees that would otherwise normally be incurred for perfecting, 20 filing, recording, and releasing the security interest; 21 (2) premiums actually paid out for insurance for property of the 22 borrower securing the loan or for consumer credit insurance; in this paragraph, 23 "consumer credit insurance" means credit insurance, credit disability insurance, credit 24 unemployment insurance, or another insurance product the department authorizes by 25 regulation; 26 (3) for loans secured by an interest in real estate, reasonable costs and 27 fees paid by a licensee for appraisals, surveys, title reports, and title insurance; 28 (4) if a payment is not received by a licensee within 10 days after the 29 day on which the payment is due, a late fee of five percent of the payment amount, or 30 $15, whichever amount is greater; if a late fee is charged, the licensee shall disclose 31 the charge to the borrower on the monthly statement or by first class mail;
01 (5) damages for dishonored checks not to exceed, for each dishonored 02 check, the amount allowed under AS 09.68.115; 03 (6) reasonable attorney fees and actual expenses incurred in connection 04 with the collection of a delinquent debt or a foreclosure if the collection or foreclosure 05 is referred to an attorney who is not a salaried employee of the licensee; and 06 (7) actual expenses and costs incurred in connection with a 07 repossession of property that secures the loan. 08 (b) A licensee may collect the charges permitted under (a)(1) - (3) of this 09 section when the loan is made or at any time after the loan is made. If interest, 10 consideration, or charges in excess of those permitted by AS 06.20.230 and 06.20.250 11 are charged, contracted for, or received, except as the result of an accidental and good 12 faith error in computation, the loan contract is modified so that all interest, 13 consideration, or charges involved are voided and the same amount is credited to the 14 debtor on the principal of the loan. If the unpaid principal is less than the total of the 15 interest, consideration, and charges, the lender shall refund the difference to the 16 borrower. 17 (c) In addition to the other charges allowed under this section, the licensee 18 may charge an origination fee at the time a loan contract is signed by the borrower. 19 The amount of the origination fee may not exceed three percent of the loan amount or 20 $500, whichever amount is less, except that this limitation on the amount of the 21 origination fee does not apply if the loan amount is over $25,000 but less that $50,000. 22 (d) In addition to the other charges allowed under this section, the licensee 23 may impose a charge that does not exceed $5 for each payment if the borrower 24 requests that payments be originated and processed by the licensee through an 25 automated clearing house electronic payment process or a similar process, but the 26 lender may not require the borrower to have loan payments processed in this manner. 27 * Sec. 33. AS 06.20.270 is repealed and reenacted to read: 28 Sec. 06.20.270. Licensee duties toward borrowers. (a) A licensee shall 29 display prominently at each location where the licensee engages in a small loan 30 business a full and accurate schedule that is approved by the department of all of the 31 charges that may be made by the licensee under this chapter and the method of
01 computing the charges. 02 (b) A licensee shall, at the time a loan is made, deliver to the borrower a 03 contract that is in the form approved by the department, is in the English language, and 04 shows, in clear and distinct terms, 05 (1) the names and addresses of the borrower and of the licensee; 06 (2) the amount and the date of the loan and its maturity or terms of 07 payment; 08 (3) the rate of interest agreed to or consideration to be charged 09 including the annual percentage rate; 10 (4) all charges and fees that may be assessed by the licensee; and 11 (5) the nature of the security for the loan. 12 (c) A licensee shall make available to the borrower on request of the borrower 13 a plain and complete receipt for all payments made on account of the loan at the time 14 the payments are received by the licensee. The receipt must specify the amount, if any, 15 applied to interest, the date to which the interest is paid, the amount, if any, applied to 16 the principal, and the unpaid principal balance, if any, of the loan. 17 (d) A licensee shall permit a borrower to make payment in advance in any 18 amount on any loan at any time. 19 (e) A licensee shall, when the borrower repays a loan in full, including 20 repayment by renewal, 21 (1) to the extent and in the manner required by law, release a lien that 22 secured the loan if the lien does not secure another loan, and restore any property held 23 as security for the loan to the borrower if the property does not secure another loan; 24 (2) release any financing statement under AS 45.29 that secured the 25 loan if the financing statement does not secure another loan, to the extent and in the 26 manner required by AS 45.29; in this paragraph, "financing statement" has the 27 meaning given under AS 45.29.102; 28 (3) return an assignment given by the borrower; 29 (4) return to the borrower the canceled note that evidenced the loan 30 and mark the contract that represents the obligation 31 (A) "paid in full" if the loan is paid in full other than by
01 renewal; 02 (B) "paid by renewal" if the loan is paid in full by renewal. 03 (f) In this section, "renewal" means paying off the balance owed on a loan and 04 replacing that loan obligation with a new loan 05 (1) when the loan reaches its maturity date with a balance due; or 06 (2) at any time during the life of the original loan. 07 * Sec. 34. AS 06.20.285 is repealed and reenacted to read: 08 Sec. 06.20.285. Open-end loan plans. (a) A licensee may make loans under 09 an open-end loan plan and may contract for and receive interest or consideration as 10 provided in AS 06.20.230 and 06.20.250. 11 (b) A licensee may take a security interest in real or personal property to 12 secure an open-end loan plan. A licensee shall promptly release a security interest in 13 real or personal property if 14 (1) the borrower has not incurred a loan on the open-end loan plan for 15 24 months and the borrower does not have or surrenders a right to create a new 16 outstanding balance; 17 (2) the borrower terminates the account and the account is paid in full; 18 or 19 (3) the licensee terminates the account. 20 (c) The licensee shall deliver a copy of the open-end loan agreement to the 21 borrower at the time the open-end loan account is opened. The open-end loan 22 agreement must contain the name and address of the licensee and the borrower and 23 must contain disclosures of finance charges and agreed terms as may be required by 24 regulations adopted by the department and the Board of Governors of the Federal 25 Reserve System. 26 (d) At the end of each billing cycle in which there is an outstanding balance in 27 the account for which a finance charge is imposed, the licensee shall deliver to the 28 borrower a statement in the form required by regulations adopted by the department 29 and the Board of Governors of the Federal Reserve System. This subsection does not 30 apply to accounts that the licensee considers uncollectible or for which an action to 31 collect past due amounts has been filed.
01 * Sec. 35. AS 06.20.290 is repealed and reenacted to read: 02 Sec. 06.20.290. Assignment of earnings. (a) For the purposes of this chapter, 03 the payment of $50,000 or less in money, credit, goods, or things in action by a 04 licensee as consideration for the assignment of earnings, whether earned or to be 05 earned, is considered a loan and governed by this chapter, and the difference between 06 the payment and the amount of the compensation assigned is considered to be interest 07 or a charge on the loan from the date of the payment to the date the compensation is 08 payable. 09 (b) A licensee may not take an assignment of earnings as payment of or as 10 security for payment of a loan. This subsection is not intended to prevent an employee 11 from authorizing deductions from the earnings of the employee if the authorization is 12 revocable. 13 (c) If a licensee violates (b) of this section, the licensee may not enforce the 14 assignment, and the assignor may revoke the assignment. 15 (d) In this section, "earnings" means salary, wages, or other compensation for 16 service. 17 * Sec. 36. AS 06.20.320 is repealed and reenacted to read: 18 Sec. 06.20.320. Civil penalties. (a) The department may assess a civil penalty 19 in an amount determined by the director and consistent with AS 06.01.035 against a 20 person who violates a provision of this chapter, a regulation adopted under this 21 chapter, or an order of the department under this chapter. 22 (b) In addition to any other penalty provided by law, the director may assess a 23 civil penalty in an amount equal to the interest received that exceeds the interest rate 24 authorized under AS 45.45.010 against a person who engages in a small loan business 25 without the license required under this chapter. 26 (c) Under (a) of this section, the department may assess a civil penalty of $100 27 a day for each day that a licensee fails to file a report under AS 06.20.190 within the 28 time specified. 29 * Sec. 37. AS 06.20.340 is repealed and reenacted to read: 30 Sec. 06.20.340. Notice. In addition to the notice requirements of AS 06.01, 31 before the department adopts a regulation under this chapter, the department shall
01 submit a copy of the proposed regulation to each licensee. 02 * Sec. 38. AS 06.20 is amended by adding new sections to read: 03 Sec. 06.20.370. Removal or suspension of officer. If the department finds that 04 an owner, partner, officer, director, or member of a licensee is dishonest or reckless in 05 the operation of a small loan business of a licensee or refuses or fails to comply with 06 this chapter, the regulations adopted under this chapter, or an order of the department, 07 the department may issue a written order to the 08 (1) individual who is the owner, partner, officer, director, or member 09 that removes or suspends the individual from the individual's office or position with 10 the licensee; 11 (2) licensee to remove the owner, partner, officer, director, or member 12 of the licensee from working in the business authorized by the license. 13 Sec. 06.20.380. Cease and desist order. (a) Notwithstanding AS 06.01.030, 14 the department may issue and serve upon a licensee or a partner, a director, an officer, 15 a member, an employee, or an agent of a licensee an order to cease and desist from a 16 violation when the department has reasonable cause to believe that the person to 17 whom the order is directed is violating, has violated, or is about to violate a provision 18 of this chapter, a regulation adopted under this chapter, or an order of the department. 19 (b) Notwithstanding AS 06.01.030, if a person named in an order issued under 20 this section fails to comply with the order, the department may issue an order 21 removing or suspending the person from the office or position held by the individual. 22 The removal or suspension is in addition to any penalty provided by AS 06.20.320 for 23 failure to comply with an order issued under this section. 24 Sec. 06.20.390. False information prohibited. A person may not knowingly 25 give or cause to be given to the department a document, an oral statement, or a written 26 statement or report that is false in any respect in the course of an investigation or 27 examination by the department under this chapter. 28 Sec. 06.20.400. Department rulings. The department may make rulings, 29 demands, and findings that are necessary for the proper conduct of the business 30 regulated by this chapter and for the enforcement of this chapter. 31 Sec. 06.20.410. Enforcement actions. (a) The department may file an action
01 in court or begin another proceeding that the department considers necessary for 02 enforcing a provision of this chapter, a regulation adopted under this chapter, an order 03 of the department, or another action taken by the department under this chapter. 04 (b) A person, including a partner, a member, an officer, a director, an agent, 05 and an employee of the person, who knowingly violates or participates in the violation 06 of a provision of this chapter is guilty of a class A misdemeanor. 07 Sec. 06.20.420. Relationship to federal law. If a provision of this chapter is 08 preempted by or conflicts with federal law in a particular situation, the provision does 09 not apply to the extent of the preemption or conflict. 10 * Sec. 39. AS 06.20.900 is amended by adding new paragraphs to read: 11 (4) "knowingly" has the meaning given in AS 11.81.900(4); 12 (5) "license" means a license issued under this chapter; 13 (6) "licensee" means a person licensed under this chapter; 14 (7) "license endorsement" means a license endorsement issued under 15 AS 06.20.015; 16 (8) "location" means a physical location or an Internet website; 17 (9) "member" means a member of a limited liability company; 18 (10) "multiple location license" means a license that entitles a licensee 19 to engage in a small loan business at more than one location; 20 (11) "single location license" means a license that entitles a licensee to 21 engage in a small loan business at one location; 22 (12) "small loan business" means a business for which a license is 23 required under AS 06.20.010. 24 * Sec. 40. AS 08.76.040(b) is amended to read: 25 (b) If a pawnbroker sells property bought or received in pledge and not 26 redeemed within 30 days after the date of mailing notice under (a) of this section, the 27 pawnbroker shall pay the pledgor one-half of the amount that is [IN EXCESS OF 28 $400] received for the property and that exceeds two times the maximum amount 29 allowed under AS 06.20.330 for individual loans by pawnbrokers and loan shops 30 to be exempt from AS 06.20. 31 * Sec. 41. AS 18.80.250(c) is amended to read:
01 (c) An action by a financial institution or other commercial institution 02 extending credit taken in compliance with (a) of this section, including the extension 03 of credit or the making of a loan, is not a violation of AS 06.20.240, unless done with 04 the intent or purpose of obtaining a higher rate of interest than would otherwise be 05 permitted by AS 06.20 [AS 06.20.230]. 06 * Sec. 42. AS 43.70.020(a) is amended to read: 07 (a) For the privilege of engaging in a business in the state, a person shall first 08 apply, upon forms prescribed by the commissioner, and obtain a license, and, except 09 as provided in AS 06.20.030(c), pay the license fee provided for in AS 43.70.030. A 10 license issued to a firm for a particular line of business covers all its operations in the 11 state in the line of business regardless of the number of its establishments. A license 12 issued under this subsection must include 13 (1) the name and address of the licensee; 14 (2) the line of business to be conducted; 15 (3) the dates for which the license is issued; and 16 (4) the business name to be used by the licensee. 17 * Sec. 43. AS 06.20.080, 06.20.100, 06.20.170, 06.20.200(b), 06.20.220, 06.20.250(b), 18 06.20.280, 06.20.300, and 06.20.310 are repealed. 19 * Sec. 44. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 REGULATIONS. The Department of Commerce, Community, and Economic 22 Development may proceed to adopt regulations to implement secs. 1 - 43, and 45 of this Act. 23 A regulation adopted under this section takes effect under AS 44.62 (Administrative 24 Procedure Act) but not before the effective date of secs. 1 - 43, and 45 of this Act. 25 * Sec. 45. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 TRANSITION. The Department of Commerce, Community, and Economic 28 Development shall issue a license under AS 06.20.010, as amended by secs. 1 and 2 of this 29 Act, to a person who is licensed under AS 06.20 immediately before the effective date of secs. 30 1 - 43, and 45 of this Act and who applies to the department under AS 06.20.020, as amended 31 by secs. 4 and 43 of this Act, on or before July 1, 2009. A person who, immediately before the
01 effective date of secs. 1 - 43, and 45 of this Act, holds a license issued under AS 06.20, as that 02 chapter exists before the effective date of secs. 1 - 43, and 45 of this Act, may continue to 03 operate until July 1, 2009, under the license issued under AS 06.20 before the effective date of 04 secs. 1 - 43, and 45 of this Act. 05 * Sec. 46. Section 44 of this Act takes effect immediately under AS 01.10.070(c). 06 * Sec. 47. Sections 1 - 43 and 45 of this Act take effect January 1, 2007.