Chapter 1301:8-11 Rules Relating to Short-Term Loan Act

1301:8-11-01 Definitions and general provisions.

(A) "Net worth," as used in section 1321.37 of the Revised Code and this chapter of the Administrative Code shall mean the difference between total assets and total indebtedness, as determined by generally accepted accounting principles in effect as of November 1, 2008. The division may by written notice require an audited financial statement by an independent certified public accountant, the cost of which shall be paid by the licensee or applicant.

(B) "Senior officer," as used in sections 1321.37 and 1321.43 of the Revised Code shall mean a person who holds an executive or management position within a company or business that allows such person to control and direct the affairs of the licensee or applicant either on his or her own authority or in conjunction with others requiring his or her consent.

(C) "Theft," as used in section 1321.37 of the Revised Code and this chapter of the Administrative Code, means those offenses set forth as a theft offense in division (K) of section 2913.01 of the Revised Code except for those offenses, other than theft, specifically enumerated in division (B)(4) of section 1321.37 of the Revised Code.

Effective: 09/01/2009
R.C. 119.032 review dates: 09/01/2014
Promulgated Under: 119.03
Statutory Authority: 1321.43
Rule Amplifies: 1321.37

1301:8-11-02 Recordkeeping requirements.

(A) All short-term loan records required to be maintained by section 1321.422 of the Revised Code and this rule shall be kept current and shall be available at all times during normal business hours for review by the division of financial institutions. Records shall be legible and maintained in a type size that is clearly readable without magnification, and in conformity with any specific typeface or font size that may be required by state or federal law. Records shall be maintained in English except where otherwise provided by federal or state law. When records are allowed to be in a language other than English, the short-term loan licensee, at its expense, shall be responsible for providing the division with a full and accurate translation. For purposes of recordkeeping, "current" means within thirty days from the date of the occurrence of the event required to be recorded. Pursuant to section 1321.422 of the Revised Code, at a minimum each short-term loan licensee shall maintain the following records for all loans made pursuant to sections 1321.35 to 1321.48 of the Revised Code for at least a period of two years after making the final entry on, or final revision of, any loan at either the licensed office or any other location approved in writing in advance by the superintendent of financial institutions.

(1) A ledger record shall be kept for each outstanding loan paid in full within the last two years upon which a chronological entry of all credits, debits, payments and charges received, assessed or disbursed in connection with the loan shall be recorded in an identifiable manner, in order to show the actual date of receipt, assessment or disbursement and the balance due on the account after each entry.

(2) A loan statement kept in chronological order shall be maintained in one file for at least two years after making the final entry for, or final revision of, each loan made by the licensee. The loan statement shall disclose the following information if applicable:

(a) Account number;

(b) Principal borrower's name and residence address;

(c) Date of loan;

(d) Date finance charges begin to accrue;

(e) Federal annual percentage rate;

(f) Original principal amount;

(g) Scheduled total of finance charges;

(h) Total of payments;

(i) Terms of repayment, including the number of payments, the amount of each payment, the total of payments and the maturity date of the loan;

(j) Check collection charge, if any, that may be levied;

(k) Names of all co-makers, guarantors, or other obligors; and

(l) Types and amount of any credit-related insurance.

(3) All loan agreements, notes, disclosure forms, closing statements and other documents signed by the obligors and taken in connection with loans made, shall be identified by the loan number and maintained in a separate file for each borrower.

(4) An alphabetical index of all borrowers, co-makers, guarantors, and other obligors identified by account number shall be maintained with respect to all persons obligated for interest in excess of the current usury rate.

(5) A record of all loans in litigation shall be maintained in a litigation record. The litigation record shall be maintained for at least two years after the final entry has been made on the loan, be kept current, and include the following information:

(a) Loan number and name of principal borrower;

(b) Date litigation proceedings were initiated, the date and amount of the judgment and the judgment rate of interest;

(c) All original litigation records and documents, including pleadings, court orders, judgments, and documentation of all court costs paid by the borrower to or through the licensee, or copies thereof shall be maintained in the file of original papers; and

(d) In cases of garnishment or attachment, all notices served on employers or copies thereof and the amounts collected shall be maintained in the file of original loan papers.

(6) A credit life claim record shall be maintained for all loans upon which a credit life claim has been paid by the insurer. The credit life claims record shall be maintained for at least two years after the final entry has been made on the loan, be kept current, and include the following information:

(a) Loan number and name of principal borrower;

(b) Date of death and a certified copy of the death certificate or a copy thereof;

(c) Name and address of second beneficiary, if any; and

(d) Copies of all checks received or paid pertaining to a credit life claim.

(7) Histories of nonpublished indices used to establish interest rates for variable rate loans shall be maintained for two years from date of usage, and shall be available for review by the division of financial institutions.

(B) A licensee shall segregate loan records, and keep them separated from the records of any other business, including, but not limited to, records of check cashing business conducted under sections 1315.21 to 1315.30 of the Revised Code.

(C) Due bills, receipts, invoices or other evidence shall be maintained in the file of original loan papers for any amount in excess of twenty dollars paid by the borrower to or through the short-term loan licensee for any dishonored check, negotiable order of withdrawal, share draft or any other negotiable instrument.

(D) Any books, accounts or records required to be maintained by this rule may be maintained in their original form or other electronic media, provided:

(1) The licensee obtains prior written approval from the superintendent; and

(2) Written printouts or hard copies of the required data are readily available upon the request of the division.

(E) In order to reduce the risk of consumer fraud and related harms, including identity theft, short-term loan licensees shall be required to comply with the provisions of the "Fair and Accurate Credit Transactions Act of 2003," 117 Stat. 1952, 15 U.S.C. 1681w as amended, the "Gramm Leach Bliley Act," 113 Stat. 1338 (1999), 15 U.S.C. 6801 as amended, and the rules promulgated pursuant to those federal acts, including 16 C.F.R. 682, as amended, pertaining to the maintenance, security, and disposal of consumer information and records.

(F) Before ceasing to conduct or discontinuing business as a short-term loan licensee, the short-term loan licensee shall arrange for and be responsible for the preservation of the books and records required to be maintained and preserved under this rule for the remainder of the period specified in this rule, and shall notify the division in writing of the exact address where the books and records will be maintained during the required period.

(G) The division of financial institutions may suspend or revoke any short-term loan license issued by the division or bring any other authorized administrative enforcement action against any person for failure to maintain records in accordance with section 1321.422 of the Revised Code or this rule.

Effective: 09/01/2009
R.C. 119.032 review dates: 09/01/2014
Promulgated Under: 119.03
Statutory Authority: 1321.43
Rule Amplifies: 1321.422

1301:8-11-03 Advertising.

(A) Any advertising for business subject to sections 1321.35 to 1321.48 of the Revised Code shall not be false, misleading or deceptive.

(B) In connection with division (P) of section 1321.41 of the Revised Code, every licensee shall maintain in each licensed office or in a central location, approved by the division of financial institutions, a records file of all advertising, including newspaper, magazine, direct mailing, facsimile advertising and solicitations, roadside advertising, internet and scripts of radio and television commercials, for a period of two years from the date disseminated. A record or other file shall be readily available for inspection by the division of financial institutions at all times during normal business hours. Every licensee shall upon the surrender or cancellation of its license notify the division of financial institutions in writing of the location of the record or file.

(C) Every advertisement placed, or caused to be placed, by a licensee shall:

(1) Clearly identify the licensee by stating its name as printed on its license. Provided that, where a licensee has received the approval of the superintendent of the division of financial institutions to conduct business under a trade or alternative name, the licensee may use its true, trade or alternative name, or any combination of them, as they appear on the license issued by the division.

(2) List or disclose its address; and

(3) List or disclose its license number.

Effective: 09/01/2009
R.C. 119.032 review dates: 09/01/2014
Promulgated Under: 119.03
Statutory Authority: 1321.43
Rule Amplifies: 1321.41

1301:8-11-04 Licensing.

(A) No licensee shall transact or solicit business under sections 1321.35 to 1321.48 of the Revised Code under any other name than that set forth on its license.

(B) At least thirty days prior to the effective date of an address change, each licensee shall notify the division of financial institutions of a change in the address shown on its license by filing a relocation application with the division. A new license must be obtained prior to conducting business at the new location. If the licensee is relocating its place of business to a location outside the municipal corporation in which it is currently located, the licensee must also file a license application fee.

Effective: 09/01/2009
R.C. 119.032 review dates: 09/01/2014
Promulgated Under: 119.03
Statutory Authority: 1321.43
Rule Amplifies: 1321.38

1301:8-11-05 Short-term loan license renewal application; issuance of renewal license; expiration.

(A) A license expires on the thirty-first day of December of each year regardless of when the license was issued.

(B) A licensee is responsible for ensuring that its renewal application is received by the division prior to the renewal filing deadline set forth in this rule. The failure of a licensee to receive any reminder notice that the division may send will not relieve the licensee of the renewal deadline.

(C) A renewal application must be received by the division prior to the expiration of the current license to prevent any lapse in licensing and in the ability to act as a short-term lender.

(D) A licensee cannot change its address by filing a renewal application and indicating its new intended address on the renewal application. Address changes shall be made in compliance with paragraph (B) of rule 1301:8-11-04 of the Administrative Code.

(E) Each question on the renewal application is material to the licensing process. Submitting false or incomplete information or omitting information in connection with a renewal application is grounds for denial of the application or revocation of the license and may subject the applicant and those individuals who signed the application to civil or criminal penalties.

(F) If the information contained in a renewal application for a short-term loan license becomes inaccurate for any reason while the renewal application is pending, the applicant shall be responsible for correcting the inaccurate information within ten business days of the change.

(G) An applicant may request the withdrawal of an application prior to a determination being made by the division by submitting a written request that the application be withdrawn. A request to withdraw a renewal application for a short-term loan license can only be submitted by those individuals legally authorized to do so on behalf of the applicant. An application may only be withdrawn with the permission of the superintendent.

(H) All application fees are non-refundable regardless of whether an application is withdrawn or denied.

(I) Upon approval of a renewal application, a license will be issued for the remainder of the annual licensure period, which ends the following thirty-first day of December.

Effective: 09/01/2009
R.C. 119.032 review dates: 09/01/2014
Promulgated Under: 119.03
Statutory Authority: 1321.43
Rule Amplifies: 1321.37

1301:8-11-06 Surety bond.

(A) Each applicant for a short-term loan license shall obtain and each licensee shall continuously maintain a corporate surety bond that conforms to the requirements set forth in division (D) of section 1321.37 of the Revised Code and complies with the following:

(1) The surety bond shall be in a format prescribed by the division.

(2) The surety bond must be issued in the name of the applicant or licensee, and shall state the main office of the applicant or licensee. If the applicant or licensee uses a trade or alternative business name, the trade or alternative name(s) shall be included on the bond.

(3) A bond may be issued for a period of more than one license period, as long as the coverage is continuous and does not expire until the end of a license period.

(B) Surety bonds required as a condition for a license under section 1321.37 of the Revised Code shall be continuously maintained. Should a lapse in coverage occur, in compliance with division (D) of section 1321.37 of the Revised Code, the licensee shall cease all short-term lending activity broker activity governed by sections 1321.35 to 1321.48 of the Revised Code until the licensee can present to the superintendent of the division of financial institutions evidence that the licensee has obtained a proper surety bond which extends through the duration of the licensure period. A licensee that experiences a lapse in or break in coverage of its surety bond shall present evidence which satisfies the superintendent that the licensee conducted no short-term loans or lending activities during the period in question. Failure to obtain a surety bond that complies with section 1321.37 of the Revised Code and the provisions of this rule within sixty days of the first date of a lapse in coverage, or engaging in any short-term lending activity governed by sections 1321.35 to 1321.48 of the Revised Code without a proper bond in place, is grounds for revocation of a short-term lender's license.

(C) Whenever the penal sum of the surety bond is reduced for any reason, in compliance with division (D) of section 1321.37 of the Revised Code, the licensee shall cease all short-term lending activity governed by sections 1321.35 to 1321.48 of the Revised Code until the licensee can restore the bond to the full required value. Failure to obtain a surety bond that complies with section 1321.37 of the Revised Code and the provisions of this rule within sixty days of the first date the penal sum of the bond was reduced, or engaging in any short-term lending activity governed by sections 1321.35 to 1321.48 of the Revised Code without a proper bond in place, is grounds for revocation of a short term lender license.

(D) The liability of the corporate surety on the bond to the superintendent and to any borrower injured by a violation of any provision of sections 1321.35 to 1321.48 of the Revised Code shall not be affected in any way by any misrepresentation, breach of warranty, or failure to pay the premium, by any act or omission upon the part of the licensee, by the insolvency or bankruptcy of the licensee, or by the insolvency of the licensee's estate. The liability for any act or omission that occurs during the term of the corporate surety bond shall be maintained and in effect for at least two years after the date on which the corporate surety bond is terminated or canceled.

(E) The corporate surety bond shall not be canceled by the licensee or the corporate surety except upon notice to the superintendent by certified mail, return receipt requested. The cancellation shall not be effective prior to thirty days after the superintendent receives the notice.

Effective: 09/01/2009
R.C. 119.032 review dates: 09/01/2014
Promulgated Under: 119.03
Statutory Authority: 1321.43
Rule Amplifies: 1321.37