§ 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
Commonwealth of Virginia for the benefit of any person who is damaged by any
violation of this Act. The bond or letter of credit shall also be in favor of
any person damaged by such practices. Any person claiming against the bond or
letter of credit for a violation of this Act may maintain an action at law
against the credit services business and against the surety or bank. The surety
or bank shall be liable only for actual damages and attorneys fees and not for
penalties permitted under §§ 59.1-206 and 59.1-335.12 or punitive damages
permitted under § 59.1-335.10. The aggregate liability of the surety or bank to
all persons damaged by a credit services business violation of this chapter
shall in no event exceed the amount of the bond or letter of credit.
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.
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