VA ST T. 59.1,
Chapter
25.1. Virginia Credit Services Businesses Act
§ 59.1-335.1. Title
This chapter may be cited as the "Virginia Credit Services
Businesses Act."
§ 59.1-335.2.
Definitions
In this chapter the following words have the following meanings:
"Attorney General" means the Office of the Attorney
General of Virginia.
"Commissioner" means the Commissioner of Agriculture and
Consumer Services, or a member of his staff to whom he may delegate his duties
under this chapter.
"Consumer" means any individual who is solicited to
purchase or who purchases the services of a credit services business.
"Consumer report" means any written, oral, or other
communication of any information by a consumer reporting agency bearing on a
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of living
which (i) is furnished or (ii) is used or expected to be used or collected in
whole or in part for the purpose of serving as a factor in establishing the
consumer's eligibility for:
1. Credit or insurance to be used primarily for personal, family,
or household purposes; or
2. Employment purposes; or
3. Other purposes which shall be limited to the following
circumstances:
a. In response to the
order of a court having jurisdiction to issue the order.
b. In accordance with
the written instructions of the consumer to whom the report
relates.
c. To a person which the
agency has reason to believe:
(i) Intends to use the
information in connection with a credit transaction involving the consumer on
whom the information is to be furnished and involving the extension of credit
to or review or collection of an account of, the consumer; or
(ii) Intends to use the
information for employment purposes; or
(iii) Intends to use the
information in connection with the underwriting of insurance involving the
consumer; or
(iv) Intends to use the
information in connection with a determination of the consumer's
eligibility for a license or other benefit granted by a governmental instrumentality
required by law to consider an applicant's financial responsibility or status;
or
(v) Otherwise has a
legitimate business need for the information in connection with a business
transaction involving the consumer.
The term "consumer report" does not include:
1. Any report containing information solely as to transactions or
experiences between the consumer and the person making the report;
2. Any authorization or approval of a specific extension of credit
directly or indirectly by the issuer of a credit card or similar device; or
3.
Any report in which a person who has been requested by a third party to make a
specific extension of credit directly or indirectly to a consumer conveys his
decision with respect to the request, if the third party advises the consumer
of the name and address of the person to whom the request was made and the
person makes the disclosures to the consumer as to the exact nature of the
request and the effect of the report on its decision to extend credit.
"Consumer reporting agency" means any person which, for
monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in
whole or in part in the practice of assembling or evaluating consumer credit
information or other information on consumers for the purpose of furnishing
consumer reports to third parties, and which uses any means or facility of
commerce for the purpose of preparing or furnishing consumer reports.
"Consumer reporting agency" does not include a private detective or
investigator licensed under the provisions of Article 4 (§ 9.1-138 et seq.) of
Chapter 1 of Title 9.1.
"Credit services business" means any person who, with
respect to the extension of credit by others, sells, provides, or performs, or
represents that such person can or will sell, provide, or
perform, any of the following services in return for the payment of money or
other valuable consideration:
1. Improving a consumer's
credit record, history, or rating;
2. Obtaining an extension of
credit for a consumer; or
3. Providing advice or
assistance to a consumer with regard to either subdivision 1 or 2 herein.
"Credit services business" does not include:
(i) The making,
arranging, or negotiating for a loan or extension of credit under the laws of
this Commonwealth or the United States;
(ii) Any bank, trust company,
savings bank, or savings institution whose deposits or accounts are eligible
for insurance by the Federal Deposit Insurance Corporation or other federal
insurance agency, or any credit union organized and chartered under the laws of
this Commonwealth or the United States;
(iii) Any nonprofit
organization exempt from taxation under § 501 (c) (3) of the
Internal Revenue Code (26 U.S.C. § 501 (c) (3));
(iv) Any person licensed
as a real estate broker by this Commonwealth where the person is acting within
the course and scope of that license;
(v) Any person licensed
to practice law in this Commonwealth where the person renders services within
the course and scope of that person's practice as a lawyer;
(vi) Any broker-dealer
registered with the Securities and Exchange Commission or the Commodity Futures
Trading Commission where the broker-dealer is acting within the course and
scope of that regulation;
(vii) Any consumer
reporting agency as defined in the Federal Fair Credit Reporting Act (15 U.S.C. §§ 1681-1681v); or
(viii) Any person
selling personal, family, or household goods to a consumer who, in connection
with the seller's sale of its goods to the consumer, assists the consumer in
obtaining a loan or extension of credit or extends credit to the consumer.
"Extension of credit" means the right to defer payment
of debt or to incur debt and defer its payment, offered or granted primarily
for personal, family, or household purposes.
"File" when used in connection with information on any
consumer, means all of the information on that consumer recorded and retained
by a consumer reporting agency regardless of how the information is stored.
"Investigative consumer report" means a consumer report
or portion of it in which information on a consumer's character, general
reputation, personal characteristics, or mode of living is obtained through
personal interviews with neighbors, friends, or associates of the consumer
reported on or with others with whom he is acquainted or who may have knowledge
concerning any items of information. However, the information does not include
specific factual information on a consumer's credit record obtained directly
from a creditor of the consumer or from a consumer reporting agency when the
information was obtained directly from a creditor of the consumer or from the
consumer.
"Person" includes an individual, corporation, government
or governmental subdivision or agency, business trust, estate, trust,
partnership, association, two or more persons having a joint or common
interest, and any other legal or commercial entity.
§ 59.1-335.3.
Registration; fees
A. It shall be unlawful for any credit services business to offer,
advertise, or execute or cause to be executed by a consumer any contract in
this Commonwealth unless the credit services business at the time of the offer,
advertisement, sale or execution of a contract has been properly registered
with the Commissioner. The Commissioner may charge the credit services business
a reasonable fee not exceeding $100 to cover the costs of filing.
B. The registration shall contain (i) the name and address of the
credit services business, (ii) the name and address of the registered agent
authorized to accept service of process on behalf of the credit services
business, (iii) the name and address of any person who directly or indirectly
owns or controls a ten percent or greater interest in the credit services
business, and (iv) the name and address of the surety company that issued a
bond pursuant to § 59.1-335.4 or
the name and address of the bank that issued a letter of credit pursuant to § 59.1-335.4.
The registration statement shall also contain either a
full and complete disclosure of any litigation or unresolved complaint filed
within the preceding five years with a governmental authority of the
Commonwealth, any other state or the United States relating to the operation of
the credit services business, or a notarized statement that there has been no litigation
or unresolved complaint filed within the preceding five years with the
governmental authority of the Commonwealth, any other state or the United
States relating to the operation of the credit services business.
C. The credit services business shall attach to the registration
statement a copy of (i) the information statement required under § 59.1-335.6, (ii) a copy of the contract which the credit services business intends to execute
with its consumers, and (iii) evidence of the bond or trust account required
under § 59.1-335.4.
D. The credit services business shall update the registration
statement required under this section not later than ninety days after the date
from which a change in the information required in the statement occurs.
E. Each credit services business registering under this section
shall maintain a copy of the registration statement in its files. The credit
services business shall allow a buyer to inspect the registration statement on
request.
§ 59.1-335.4. Bond or
letter of credit required
A. Every credit services business, before it enters into a
contract with a consumer, shall file and maintain with the Commissioner, in
form and substance satisfactory to him, a bond with corporate surety from a
company authorized to transact business in the Commonwealth, or a letter of
credit from a bank insured by the Federal Deposit Insurance Corporation in an
amount equal to 100 times the standard fee charged by the credit services
business but in no event shall the bond or letter of credit required under this
section be less than $5,000 or greater than $50,000.
B. The required bond or letter of credit shall be in favor of the
C. The bond or letter of credit shall be maintained for a period
of two years after the date that the credit services business ceases operation.
§ 59.1-335.5.
Prohibited practices
A credit services business, and its salespersons, agents and
representatives, and independent contractors who sell or attempt to sell the
services of a credit services business, shall not do any of the following:
1. Charge or receive any
money or other valuable consideration prior to full and complete performance of
the services that the credit services business has agreed to perform for or on
behalf of the consumer;
2. Charge or receive any money or other valuable consideration
solely for referral of the consumer to a retail seller or to any other credit
grantor who will or may extend to the consumer, if the credit that is or will
be extended to the consumer is upon substantially the same terms as those
available to the general public;
3. Make, or counsel or advise any consumer to make, any statement
that is untrue or misleading and which is known, or which by the exercise of reasonable
care should be known, to be untrue or misleading, to a consumer reporting
agency or to any person who has extended credit to a consumer or to whom a
consumer is applying for an extension of credit, with respect to a consumer's
creditworthiness, credit standing, or credit capacity; or
4. Make or use any untrue or misleading representations in the
offer or sale of the services of a credit services business or engage, directly
or indirectly, in any act, practice, or course of business which operates or
would operate as a fraud or deception upon any person in connection with the
offer or sale of the services of a credit services business.
§ 59.1-335.6.
Information statement required
Before (i) the execution of a contract or agreement between a
consumer and a credit services business or (ii) the receipt by the credit
services business of any money or other valuable consideration, whichever
occurs first, the credit services business shall provide the consumer with an
information statement in writing containing all of the information required
under § 59.1-335.7.
The credit services business shall maintain on file or microfilm for a period
of two years from the date of the consumer's acknowledgement an exact copy of
the information statement personally signed by the consumer acknowledging
receipt of a copy of the information statement.
§ 59.1-335.7. Contents
of information statement
The information statement required under § 59.1-335.6 of
this chapter shall include all of the following:
1. a. A complete and
accurate statement of the consumer's right to review any file on the consumer
maintained by any consumer reporting agency, and the right of the consumer to
receive a copy of a consumer report containing all information in that file as
provided under the Federal Fair Credit Reporting Act (15 U.S.C. § 1681g);
b. A statement that a
copy of the consumer report containing all information in the consumer's file
will be furnished free of charge by the consumer reporting agency if requested
by the consumer within thirty days of receiving a notice of a denial of credit
as provided under the Federal Fair Credit Reporting Act (15 U.S.C. § 1681j);
and
c. A statement that a
nominal charge may be imposed on the consumer by the consumer reporting agency
for a copy of the consumer report containing all information in the consumer's
file, if the consumer has not been denied credit within thirty days from
receipt of the consumer's request;
2. A complete and
accurate statement of the consumer's right to dispute the completeness or
accuracy of any item contained in any file on the consumer that is maintained
by any consumer reporting agency, as provided under the Federal Fair Credit
Reporting Act (15 U.S.C. § 1681i);
3. A complete and
detailed description of the services to be performed by the credit services
business for or on behalf of the consumer, and the total amount the consumer
will have to pay, or become obligated to pay, for the services. Such statement
shall include the following notice in at least ten-point bold type:
IMPORTANT NOTICE
YOU HAVE NO OBLIGATION TO PAY ANY FEES OR
CHARGES UNTIL ALL SERVICES HAVE BEEN
PERFORMED COMPLETELY FOR YOU.
; and
4. The notice prescribed
by subdivision 3 of this section shall also be posted by means of a conspicuous
sign so as to be readily noticeable and readable at the location within the
premises of the credit services business where consumers are interviewed by
personnel of the business.
§ 59.1-335.8. Contents
of contracts
A. Every contract between a consumer and a credit services
business for the purchase of the services of the credit services business shall
be in writing, dated, signed by the consumer, and shall include all of the
following:
1. A conspicuous statement in size equal to at least ten-point
bold type, in immediate proximity to the space reserved for the signature of
the consumer as follows:
"You, the buyer, may cancel this contract at any time prior
to midnight of the third business day after the date of the transaction. See
the attached notice of cancellation form for an explanation of this
right.";
2. The terms and conditions of payment, including the total of all
payments to be made by the consumer, whether to the credit
services business or to some other person;
3. A complete and
detailed description of the services to be performed and the results to be
achieved by the credit services business for or on behalf of the consumer,
including all guarantees and all promises of full or partial refunds and a list
of the adverse information appearing on the consumer's credit report that the
credit services business expects to have modified;
4. The principal
business address of the credit services business and the name and address of
its agent in this Commonwealth authorized to receive service of process;
5. A statement asserting
the buyer's right to proceed against the bond or letter of credit required
under § 59.1-335.4;
and
6. The name and address of the surety company which issued the
bond, or the name and address of the bank which issued the letter of credit.
B. 1. The contract shall
be accompanied by a completed form in duplicate, captioned "NOTICE OF
CANCELLATION," which shall be attached to the contract and easily
detachable, and which shall contain in at least ten-point bold type the
following statement:
"NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation,
at any time prior to midnight of the third business day after the date the
contract is signed.
If you cancel, any payment made by you under this contract will be
returned within ten days following receipt by the seller of your cancellation
notice.
To cancel this contract, mail or deliver a signed and dated copy
of this cancellation notice, or any other written notice, to
........................................................................
(Name of Seller)
At .....................................................................
(Address of Seller)
........................................................................
(Place of Business)
Not later than midnight ................................................
(Date)
I HEREBY CANCEL THIS TRANSACTION
........................................................................
(Date) (Buyer's Signature)"
2. A copy of the fully
completed contract and all other documents the credit services
business requires the consumer to sign shall be given by the credit services
business to the consumer at the time they are signed.
§ 59.1-335.9. Breach;
null and void contract
A. Any breach by a credit services business of a contract under
this chapter, or of any obligation arising under it, shall constitute a
violation of this chapter.
B. Any contract for services from a credit services business that
does not comply with the applicable provisions of this chapter shall be void
and unenforceable as contrary to the public policy of this Commonwealth.
C. Any waiver by a consumer of any of the provisions of this
chapter shall be deemed void and unenforceable by a credit services business as
contrary to public policy of this Commonwealth, and any attempt by a credit
services business to have a consumer waive rights given by this chapter shall
constitute a violation of this chapter.
D. In any proceeding involving this chapter the burden of proving
an exemption or an exception from a definition is upon the person claiming it.
§ 59.1-335.10.
Liability to consumer
A. Any credit services business which willfully fails to comply
with any requirement imposed under this chapter with respect to any consumer is
liable to that consumer in an amount equal to the sum of:
1. Any actual damages
sustained by the consumer as a result of the failure; and
2. Such amount of
punitive damages as the court may allow.
B. Any credit services business which is negligent in failing to
comply with any requirement imposed under this chapter with respect to any
consumer is liable to that consumer in an amount equal to the sum of any actual
damages sustained by the consumer as a result of the failure.
§ 59.1-335.11. Statute
of limitations
An action to enforce any liability created under this chapter may
be brought within two years from the date on which the liability arises, except
that where a defendant has materially and willfully misrepresented any information
required under this chapter to be disclosed to a consumer and the information
so misrepresented is material to the establishment of the defendant's liability
to that consumer under this chapter, the action may be brought at any time
within two years after discovery by the consumer of the misrepresentation.
§ 59.1-335.12.
Violations of chapter; enforcement
A. Each sale of the services of a credit services business that
violates any provision of this chapter is a prohibited practice under § 59.1-200.
B. If the Attorney General, any attorney for the Commonwealth, or
any attorney for a county, city or town has reason to believe that any credit
services business, or any salesperson, agent, representative, or independent
contractor acting on behalf of a credit services business, has violated any
provision of this chapter, the Attorney General, the attorney for the
Commonwealth, or attorney for the county, city or town may institute a
proceeding under Chapter 17 (§ 59.1-196 et seq.) of
Title 59.1.
Case Law
I identified no significant cases construing the Act.