State Regulation:
Alabama Consumer Credit Act “Mini-Code”
Title 5, Chapter 19
• Chapter 19 Consumer Finance Act
Section 5-19-1 Definitions.
Section 5-19-1.1 Legislative findings.
Section 5-19-3 Maximum finance charges; contracting for
minimum finance charge; alternate per month computed finance
charge.
Section 5-19-4 Additional charges for default or deferral;
prepayment; renewal or refinancing; and real property
transactions.
Section 5-19-5 Acceptance of negotiable instruments as
evidence of consumer debt.
Section 5-19-6 Copies of instruments signed by debtors to be
furnished to debtors; required statement in contracts, etc.;
limitation on disclosure requirements; intent, applicability
of limitation.
Section 5-19-7 Right to refinance amount of certain
scheduled payments.
Section 5-19-8 Assignee of seller subject to claims and
defenses of buyer.
Section 5-19-9 Application of payments when buyer indebted
to same seller for two or more consumer credit sales.
Section 5-19-10 Contract provisions for attorney's fees.
Section 5-19-12 Buyer's right to cancel home solicitation
sale.
Section 5-19-13 Repossession or acceptance of surrender of
goods priced at one thousand dollars or less.
Section 5-19-14 Rebates or discounts, etc., as inducement
for aiding sale to another prohibited.
Section 5-19-15 Garnishment.
Section 5-19-16 Refusal by court to enforce unconscionable
agreement.
Section 5-19-17 Inducing obligation on more than one
contract in order to obtain higher finance charge
prohibited; consolidation of existing precomputed consumer
credit transaction contract and subsequent precomputed
consumer credit transaction.
Section 5-19-18 Installment payment of debt of one thousand
dollars or less.
Section 5-19-19 Liabilities of creditor making excess
finance charge; failure to obtain license; damages for
deliberate violation or reckless disregard; written notice
of violations; oral statements not admissible; fiduciary
duty not created.
Section 5-19-20 Insurance.
Section 5-19-21 Administrator authorized to make rules and
regulations; filing notice of intended action with
Legislative Reference Service; transactions entered into
after May 20, 1996.
Section 5-19-22 License to engage in business of making
consumer loans or taking assignments of consumer credit
contracts - Required; exceptions; application; investigation
of applicant; investigation fee; standards for issuance;
hearing on qualifications of applicant; effect of holding
license under Small Loan Act; form; posting;
nontransferable; license fee; penalty for late payment of
license fee; disposition of license fee.
Section 5-19-23 License to engage in business of making
consumer loans or taking assignments of consumer credit
contracts - Revocation or suspension.
Section 5-19-24 Examinations and investigations of licensees
by administrator.
Section 5-19-25 Cease and desist orders by administrator;
penalties for violation of this chapter; right to counsel at
hearing; judicial review.
Section 5-19-26 Appeals to circuit court from order of
administrator; appeals from decision of circuit court.
Section 5-19-29 Injunctions.
Section 5-19-30 Penalty for violations.
Section 5-19-31 Nonapplicability of chapter to certain
transactions; certain laws not repealed or amended; intent
of section.
Section 5-19-32 Service contracts.
Section 5-19-33 Account maintenance fee. THIS SECTION WAS
ASSIGNED BY THE CODE COMMISSIONER. IT HAS NOT BEEN CODIFIED
BY THE LEGISLATURE.
Chapter 19 Consumer Finance Act
Section 5-19-1
Definitions. For the purposes of this chapter, the following terms shall have the following meanings respectively ascribed to them by this section: (1) FINANCE CHARGE. The sum of all charges, payable directly or indirectly by the person to whom credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit. The amount of the finance charge in connection with any credit transaction (i) shall be determined, and shall include and exclude the fees and charges, as provided by Section 106 of the Federal Truth-in-Lending Act, 15 U.S.C. Section 1605 and the regulations of the Federal Reserve Board promulgated pursuant to the Federal Truth-in-Lending Act, 12 C.F.R. Part 226, and the Official Staff Commentary adopted by the Federal Reserve Board pursuant to that regulation, and without limiting or affecting the foregoing subparagraph (i), (ii) shall exclude, without limitation, late charges and other charges resulting from or arising out of late payment, delinquency, default, or other like occurrence. For the purpose of determining the permissible finance charge, any discount or point paid by the debtor in connection with a consumer credit transaction secured by a mortgage on real estate, even though paid at one time, shall be spread over the stated term of the consumer credit transaction. The administrator from time to time may promulgate regulations pursuant to Section 5-19-21 further establishing charges and fees which constitute a finance charge and the manner in which the finance charge is determined to assure consistency between the meaning of "finance charge" under this chapter and the meaning and application of "finance charge" under the above-referenced Federal Truth-in-Lending Act, regulations and Official Staff Commentary, as the same may be amended from time to time. (2) CONSUMER.When used as an adjective with reference to a credit transaction, characterizes the credit transaction as one in which the party to whom credit is extended is a natural person and the money, property, or services which are the subject of the transaction are primarily for personal, family or household purposes. (3) CREDITOR. A person who regularly extends or arranges for the extension of credit for which the payment of a finance charge is required, whether in connection with loans, sales of property or services, or otherwise. The provisions of this chapter apply to any such creditor irrespective of the creditor's status as a natural person or any type of organization. A person is a creditor only if the
person extended or arranged for the extension of credit more
than 25 times in the preceding calendar year or more than
five times in the preceding calendar year for credit
transactions secured by a residential structure that
contains one to four units.
(4) CREDIT SALE. Any sale with respect to which credit is extended or arranged by a seller who is a creditor. The term includes any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the property or services involved and it is agreed that the bailee or lessee may become for no other or a nominal consideration the owner of the property upon full compliance with the bailee's or lessee's obligations under the contract. A rental-purchase agreement which is subject to the provisions of Chapter 25 of Title 8 is not a credit sale. (5) OPEN-END CREDIT PLAN. A plan prescribing the terms of credit transactions which may be made thereunder from time to time and under the terms of which a finance charge may be charged from time to time on an outstanding unpaid balance. (6) ADMINISTRATOR. The Superintendent of Banks of the State Banking Department. (7) SUPERVISOR OF THE BUREAU OF LOANS. The designated deputy administrator for the purpose of enforcing this chapter as to licensees. (8) HOME SOLICITATION SALE. A consumer credit sale of goods or services, other than motor vehicles, in which the seller or a person acting for the seller engages in a personal solicitation of the sale at a place other than the seller's place of business and the buyer's agreement or offer to purchase is there given to the seller or a person acting for the seller. The term does not include a sale made pursuant to a preexisting open-end credit plan, a closed-end plan providing for a series of sales or a sale made pursuant to prior negotiations between the parties at the seller's place of business where goods or services are offered or exhibited for sale.
(9) CREDIT TRANSACTION. A loan or credit sale made by a
creditor. For purposes only of Sections 5-19-1(1) and
5-19-3, "credit transaction" shall include nonconsumer loans
and credit sales as well as consumer loans and consumer
credit sales with an original amount financed of less than
two thousand dollars ($2,000). Otherwise, the term "credit
transaction" refers only to consumer loans and consumer
credit sales irrespective of whether the term is preceded by
the word "consumer."
(10) AMOUNT FINANCED. The sum determined by adding the
principal loan amount or the cash price in a credit sale,
less any down payment, and any other amounts that are
financed by the creditor.
(Acts 1971, No. 2052, p. 3290, §1; Acts 1979, No. 79-428, p.
673, §1; Acts 1986, No. 86-304, p. 451, §1; Acts 1986, No.
86-497, p. 945, §7; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-1.1 Legislative findings. The Legislature finds as fact and determines that:
(1) The Alabama Consumer Credit Act, Title 5, Chapter 19,
(commonly referred to as the "Mini-Code"), was enacted by
the Legislature by Acts 1971, No. 2052, page 3290. All, or a
portion, of the provisions of the Mini-Code apply to
substantially all consumer credit transactions in Alabama
involving billions of dollars annually.
(2) The availability of consumer credit and certainty of
consumer credit transactions is essential to Alabama
citizens and the economy of Alabama. Disputes have arisen
involving the Mini-Code resulting in significant litigation.
(Acts 1996, No. 96-576, p. 887, §1.)
Section 5-19-3
Maximum finance charges; contracting for minimum finance
charge; alternate per month computed finance charge.
(a) Except under open-end credit plans, the maximum finance
charge for any credit transaction where the original amount
financed is less than two thousand dollars ($2,000), may
equal but may not exceed the total of the following:
(1) Fifteen dollars ($15) per one hundred dollars ($100) per
year for the first seven hundred fifty dollars ($750) of the
original amount financed; and
(2) Ten dollars ($10) per one hundred dollars ($100) per
year for that portion of the original amount financed
exceeding seven hundred fifty dollars ($750) and less than
two thousand dollars ($2,000).
The maximum finance charge under this subsection shall be
determined by computing the maximum rates authorized by this
subsection on the original amount financed for the full term
of the contract without regard to scheduled payments and the
maximum finance charge so determined, or any lesser amount,
may be added to the original amount financed. The finance
charge may be calculated and expressed as a simple interest
charge or by any method which does
not result in a finance charge yield greater than the yield
permitted by this subsection.
(b) A creditor, in connection with any credit sale other
than a sale made under an open-end credit plan, may contract
for and receive a minimum finance charge not in excess of
the following amounts:
(1) Four dollars ($4) on any credit sale in which the amount
financed is twenty-five dollars ($25) or less; and
(2) Six dollars ($6) on any credit sale in which the amount
financed is more than twenty-five dollars ($25).
(c) In an open-end credit plan, if there is an unpaid
balance on the date as of which the finance charge is
applied, a creditor may contract for and receive a minimum
finance charge in an amount not exceeding fifty cents ($.50)
per month.
(d) Other than under an open-end credit plan, in any credit
transaction where the finance charge is computed on the
unpaid balance of the amount financed outstanding from time
to time, for the actual time outstanding:
(1) Each payment shall be applied first to accrued charges
and the remainder of the payment applied to the unpaid
balance of the amount financed, except that if the amount of
the payment is insufficient to pay the accumulated charges,
unpaid charges continue to accumulate to be paid from the
proceeds of subsequent payments and are not added to the
unpaid amount financed.
(2) Except for permissible prepaid finance charges, the
finance charge shall not be payable in advance, or
compounded; however, if part or all of the consideration for
a new credit transaction contract is the unpaid amount
financed and unpaid accrued charges of a prior credit
transaction, then the amount financed under the new credit
transaction contract may include any unpaid accrued charges.
The resulting credit transaction contract shall be deemed a
new and separate credit transaction for all purposes.
(3) Debtors may pay in advance the unpaid balance of the
amount financed and all accrued finance charges without
penalty.
(4) For purposes of computing finance charges for a fraction
of a month, a day may be considered one-thirtieth of a
month, at the option of the creditor.
(e) The provisions of this section shall not apply to any
credit transaction with an original amount financed that is
equal to or greater than two thousand dollars ($2,000). The
finance charge for any credit transaction with an original
amount financed or original principal balance not less than
two thousand dollars ($2,000) and for any open-end credit
plan with a credit limit not less than two thousand
dollars ($2,000) shall be subject to the provisions of
Section 8-8-5, or Sections 5-20-2, et seq., as applicable.
The maximum finance charge for any open-end credit plan with
a credit limit of less than two thousand dollars ($2,000)
shall be determined by Section 8-8-14, or Sections 5-20-2,
et seq., as applicable.
(Acts 1971, No. 2052, p. 3290, §2; Acts 1979, No. 79-328, p.
499, §1; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-4 Additional charges for default or deferral; prepayment; renewal or refinancing; and real property transactions.
(a) When a scheduled payment in a consumer credit
transaction is in default 10 days or more, the creditor may
charge and collect a late charge not exceeding the greater
of ten dollars ($10) or five percent of the amount of the
scheduled payment in default, not to exceed one hundred
dollars ($100). The late charge may be collected only once
on any scheduled payment, regardless of the period during
which the scheduled payment remains in default.
(b) With respect to the deferral of one or more wholly
unpaid scheduled payments in a consumer credit transaction,
in which the finance charge was determined by the
precomputed method, the creditor may collect, by agreement
with the debtor either before or after default, an
additional charge for each full month that any wholly unpaid
scheduled payments are outstanding after the due date of
each scheduled payment equal to that proportion of the
finance charge which the amount of the deferred monthly
scheduled payment bears to the sum of all monthly balances
originally scheduled.
(c) Except as otherwise provided by law, when any debt is
paid in full before the final scheduled payment date, the
debtor may do so without penalty, and the creditor shall
refund or credit the debtor with not less than that portion
of the finance charge which shall be due the debtor as
follows:
(1)a. In the case of a consumer credit transaction with an
original term of more than 61 months according to any
generally accepted actuarial method of computation
established or otherwise approved by the administrator; and
b. In all other consumer credit transactions according to
the rule of 78ths or sum of the digits method, meaning the
amount of the refund or credit shall be as great a
proportion of the finance charge originally contracted for
as the sum of the periodic time balances of the debt
scheduled to follow the date of prepayment bears to the sum
of all the periodic time balances of the debt, both sums to
be determined according to the scheduled payments originally
contracted for.
(2) No refund of less than one dollar ($1) need be made.
(3) If the prepayment is made by the debtor other than on a
scheduled payment date, the nearest scheduled payment date
shall be used in the computation.
(d) Except as otherwise provided by law, when any debt is
renewed or refinanced by any creditor or creditor's
affiliate within a period of 90 days from the date the debt
is made or incurred, the debtor shall be entitled to a pro
rata refund or credit of any unearned portion of the
original finance charge computed as of the date of such
refinancing or renewal. When the renewal or refinancing
occurs after 90 days, any refund or credit shall be
calculated as provided in subsection (c) above. On and after
January 1, 1997, except as otherwise provided by law, when
any debt is renewed or refinanced by any creditor or
creditor's affiliate within a period of 120 days from the
date the debt is made or incurred, the debtor shall be
entitled to a pro rata refund or credit of any unearned
portion of the original finance charge computed as of the
date of such refinancing or renewal. When the renewal or
refinancing occurs after 120 days, any refund or credit
shall be calculated as provided in subsection (c) above.
(e) When any consumer debt is renewed or refinanced by the
creditor or an affiliate of the creditor, any minimum
finance charge for a credit sale shall be reduced to the
finance charge which is otherwise permitted by Section
5-19-3.
(f) A creditor may charge and collect in a transaction
secured by real property the following fees and charges if
bona fide and reasonable in amount, and provided that, other
than the appraisal fees authorized by subdivision (4) and
fees and charges authorized by regulations promulgated by
the administrator, the fees are paid to parties unrelated to
the creditor:
(1) Fees for title examination, abstract of title, title
insurance, property survey, pest inspection, flood
inspection, and similar purposes;
(2) Fees for preparing deeds, mortgages, and reconveyance,
settlement, and similar documents;
(3) Notary fees and credit report fees;
(4) Appraisal fees paid to persons licensed under the
provisions of the Alabama Real Estate Appraisers Act,
whether or not the appraiser is employed by or otherwise
related to the creditor; and
(5) Fees and charges prescribed by law which are or will be
paid to public officials or agencies for recording or
releasing a lien on property which secured the loan,
provided, however, that a releasing fee may only be charged
and collected at or after the time the lien is released.
(6) The administrator may by regulation promulgated pursuant
to Section 5-19-21 authorize other fees and charges.
(g) A creditor may, pursuant to a consumer credit
transaction contract secured by an interest in real
property, charge and collect points in an amount not to
exceed five percent of the original principal balance in the
case of a closed-end consumer credit transaction, or five
percent of the total line of credit in the case of an
open-end credit plan. Points may be paid in cash at the time
of the consumer credit transaction, or may be deducted from
the proceeds and included in the original amount financed
for the purposes of Section 5-19-3 or financed under the
open-end credit plan. Points shall be in addition to all
other charges, are fully earned on the date of the consumer
credit transaction, and may be excluded from the finance
charge for the purpose of computing any finance charge
credit or refund.
(h) Subsections (b), (c), (d), and (e) of this section shall
not apply to open-end credit plans. The requirements of a
refund or credit of any unearned finance charge under
subsections (c) and (d) of this section apply only if and to
the extent the consumer credit transaction includes a
precomputed or prepaid finance charge.
(Acts 1971, No. 2052, p. 3290, §3; Acts 1975, 4th Ex. Sess.,
No. 95, p. 2774, §1; Acts 1986, No. 86-304, p. 451, §2; Acts
1988, No. 88-87, p. 112, §1; Acts 1988, 1st Ex. Sess., No.
88-942, p. 562, §1; Acts 1989, No. 89-525, p. 1074, §1; Acts
1996, No. 96-576, p. 887, §2; Acts 1997, No. 97-440, p. 739,
§1.)
Section 5-19-5 Acceptance of negotiable instruments as evidence of consumer debt.
In a consumer credit sale, the seller may not take as
evidence of the obligation of the buyer, a negotiable
instrument other than (1) a check; or (2) a promise or order
containing a statement, required by applicable statutory or
administrative law, to the effect that the rights of a
holder or transferee are subject to claims or defenses that
the issuer could assert against the original payee. A holder
is not a holder in due course if the holder takes a
negotiable instrument with notice that it is issued in
violation of this section. A holder in due course is not
subject to the liabilities prescribed in this chapter.
(Acts 1971, No. 2052, p. 3290, §4; Acts 1995, No. 95-668, p.
1381, §4; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-6 Copies of instruments signed by debtors to be furnished to debtors; required statement in contracts, etc.; limitation on disclosure requirements; intent, applicability of limitation.
(a) Any creditor, when extending credit with respect to a
consumer credit transaction, other than under an open-end
credit plan, shall at that time furnish to the debtor a copy
of each instrument executed by the debtor in connection with
the consumer credit transaction. The consumer credit
transaction contract or note shall contain the following
statement in eight point or larger type immediately above
the space for the borrower's signature.
"CAUTION - IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT." (b) No disclosures are required by this chapter to be made by a creditor with respect to any transaction other than disclosures required by regulations made by the administrator pursuant to Section 5-19-21 and disclosures required by subsection (a) above and by Sections 5-19-12(a) and 5-19-20(e).
(c) Without limiting the generality of subsection (b), there
is no obligation or duty under this chapter to disclose to a
debtor any agreement to assign or otherwise transfer a
consumer credit transaction contract at a discount or that
the assignee of, or person who funded, the consumer credit
transaction agreed or may agree to pay the creditor or other
person who originated the consumer credit transaction all or
a portion of the prepaid finance charges and other fees
and/or a portion of the finance charge to be paid by the
debtor over the term of the transaction and/or other
compensation irrespective of how the compensation is
determined or described.
(d) Except as modified hereby, the provisions of subsections
(b) and (c) confirm, clarify and are declaratory of existing
law. Except as modified hereby, the provisions of Alabama
Act No. 94-115 remain applicable to consumer credit
transactions entered into on, before, and after February 24,
1994.
(Acts 1971, No. 2052, p. 3290, §4; Acts 1994, No. 94-115, p.
124, §2; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-7 Right to refinance amount of certain scheduled payments.
With respect to a consumer credit transaction, if any
scheduled payment is more than one and one-half times as
large as the average of earlier scheduled payments, the
debtor has the right to refinance the amount of that payment
at the time it is due without penalty. The terms of the
refinancing shall be no less favorable than the terms of the
original transaction. The provisions of this section do not
apply if the debtor's payment schedule has been adjusted to
conform with the seasonal or irregular income of the debtor,
or if a consumer credit transaction is repayable in a single
principal payment irrespective of the scheduled interest
payments.
(Acts 1971, No. 2052, p. 3290, §4; Acts 1989, No. 89-879, p.
1771, §1; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-8 Assignee of seller subject to claims and defenses of buyer.
With respect to a consumer credit sale, an assignee of the
rights of the seller is subject to all claims and defenses
of the buyer against the seller arising out of the sale,
notwithstanding an agreement to the contrary, but the
assignee's liability under this section may not exceed the
amount owing to the assignee at the time the claim or
defense is asserted against the assignee. Rights of the
buyer under this section can only be asserted as a matter of
defense to or setoff against a claim by the assignee.
(Acts 1971, No. 2052, p. 3290, §5; Acts 1996, No. 96-576, p.
887, §2.)
Section 5-19-9 Application of payments when buyer indebted to same seller for two or more consumer credit sales.
When the buyer is indebted to a particular seller for two or
more consumer credit sales of goods and the goods which were
the subject of two or more sales secure the buyer's total
debt to the seller, the security shall be discharged by
applying the buyer's payments as they are received by the
seller or the seller's assignee to the portions of the debt
in the order in which they were incurred. To the extent that
debts are paid according to the preceding sentence, security
interests in items of property terminate as the debt
originally incurred with respect to each item is paid.
Payments received by the seller upon a revolving charge
account are deemed, for the purpose of determining the
amount of the debt secured by the various security
interests, to have been applied first to the payment of
finance charges in the order of their entry to the account
and then to the payment of debts in the order in which the
entries to the account showing the debts were made. If the
debts consolidated arose from two or more consumer sales
made on the same day, payments received by the seller are
deemed, for the purpose of determining
the amount of the debt secured by the various security
interests, to have been applied first to the payment of the
smallest debt. This section shall not apply to two or more
consumer credit sales made by the same seller to the same
buyer when the debts have been assigned to different and
unrelated persons for value and the assignment was bona fide
and not for the purpose of violating this section.
(Acts 1971, No. 2052, p. 3290, §5; Acts 1996, No. 96-576, p.
887, §2.)
Section 5-19-10 Contract provisions for attorney's fees. A contract for a consumer credit transaction with an original amount financed not exceeding three hundred dollars ($300) may not provide for payment by the debtor of attorney's fees after default by the debtor. A contract for a consumer credit transaction with an original amount financed exceeding three hundred dollars ($300) may provide for the payment by the debtor of reasonable attorney's fees not exceeding 15 percent of the unpaid debt after default and referral of the contract to an attorney who is not a salaried employee of the creditor. An open-end credit plan may not provide for attorney's fees when the unpaid balance does not exceed three hundred dollars ($300), but may provide for reasonable attorney's fees after default by the debtor when the unpaid balance exceeds three hundred dollars ($300). In a consumer credit transaction contract where the original amount financed exceeds ten thousand dollars ($10,000) or the credit transaction is secured by real property, the creditor may require the payment by the debtor of attorney's fees prior to default by the debtor in connection with the closing of, amendment to, or modification of the credit transaction, provided that the attorney is not a salaried employee of the creditor.
(Acts 1971, No. 2052, p. 3290, §6; Acts 1996, No. 96-576, p.
887, §2.)
Section 5-19-12 Buyer's right to cancel home solicitation sale.
(a) A buyer has the right to cancel a home solicitation sale
until midnight of the third business day following execution
by the buyer of an agreement or offer to purchase, which
notice is effective when delivered or when deposited in the
mail properly addressed to the seller, postage prepaid. The
seller must deliver to the buyer and obtain the buyer's
written signature to a written agreement or offer to
purchase designating as the date of the transaction the date
on which the buyer actually signs and containing the
following under the conspicuous caption:
"BUYER'S RIGHT TO CANCEL" "If this agreement was solicited at your residence and you do not want the goods or services, you may cancel this agreement by delivering or mailing a notice to the seller. The notice must say that you are cancelling the agreement and must be
delivered or mailed before midnight of the third business
day after you sign this agreement. The notice must be
delivered or mailed to:
_______________________________________________."
(insert name and mailing address of seller)
Alternately, the seller may deliver to the buyer the notice required by the Federal Trade Commission Trade Regulation Rule concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations, Title 16, Code of Federal Regulations, Part 429, as amended from time to time, which shall satisfy the notice requirement of this section. Until the seller has complied with this section the buyer may cancel the home solicitation sale within one year after the date of the sale by notifying the seller in any manner and by any means of the buyer's intention to cancel. (b) The buyer has a duty to take reasonable care of the goods in the buyer's possession before cancellation and for a reasonable time thereafter, during which time the goods are otherwise at seller's risk. Within 10 days after a home solicitation sale has been cancelled or an offer to purchase revoked, the seller must tender to the buyer any payments made or goods traded in by the buyer, or the amount equal to the trade-in allowance stated in the agreement, and any note or other evidence of debt. Within a reasonable time thereafter the buyer, upon demand, must tender at the buyer's residence to the seller any goods delivered by the seller. If the seller fails to demand such possession within 20 days after receipt of the notice, the goods become the property of the buyer without obligation to pay for them.
(c) The provisions of this section shall not apply if the
buyer furnishes the seller with a separate dated and signed
personal statement describing an emergency requiring
immediate remedy and modifying or waiving his right to
cancel. The use of printed forms for this purpose is
prohibited.
(Acts 1971, No. 2052, p. 3290, §8; Acts 1996, No. 96-576, p.
887, §2.)
Section 5-19-13 Repossession or acceptance of surrender of goods priced at one thousand dollars or less.
If any seller or assignee of the seller repossesses or
voluntarily accepts surrender of goods sold in which the
seller or assignee has a security interest and the original
cash price of the goods repossessed or surrendered was one
thousand dollars ($$1,000) or less, the buyer is not
personally liable to the seller or assignee for the unpaid
balance of the debt arising from the sale and the seller or
assignee is not obligated to sell the collateral.
(Acts 1971, No. 2052, p. 3290, §9; Acts 1996, No. 96-576, p.
887, §2.)
Section 5-19-14 Rebates or discounts, etc., as inducement for aiding sale to another prohibited.
With respect to a consumer credit sale, the seller may not
give or offer to give a rebate or discount, or otherwise pay
or offer to pay value to the buyer, as an inducement for a
sale in consideration of the buyer giving to the seller the
names of prospective purchasers, or otherwise aiding the
seller in making a sale to another person, if the earning of
the rebate, discount, or other value is contingent upon the
occurrence of an event subsequent to the time the buyer
agrees to buy. If a buyer is induced by a violation of this
section to enter into a consumer credit sale, the agreement
is unenforceable by the seller and the buyer, at the buyer's
option, may rescind the agreement or retain the goods
delivered and the benefit of any services performed without
any obligation to pay for them.
(Acts 1971, No. 2052, p. 3290, §10; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-15 Garnishment. Prior to entry of judgment on a consumer credit transaction, the creditor may not attach unpaid earnings of the debtor by garnishment. Notwithstanding the garnishment procedure otherwise applicable after judgment, with respect to a consumer credit transaction, the amount of unpaid earnings of the debtor subject to garnishment shall not exceed the lesser of:
(1) Twenty-five percent of the debtor's disposable earnings
for that week; or
(2) The amount by which the debtor's disposable earnings for
that week exceed 30 times the federal minimum hourly wage in
effect when payable.
"Disposable earnings" means that part of the earnings of a
debtor remaining after deduction of amounts required by law
to be withheld, and disposable earnings shall not include
periodic payments pursuant to a pension, retirement, or
disability program.
(Acts 1971, No. 2052, p. 3290, §11; Acts 1988, No. 88-294,
p. 454, §1; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-16 Refusal by court to enforce unconscionable agreement.
With respect to a consumer credit transaction, if the court
as a matter of law finds the contract or any provision of
the contract to have been unconscionable at the time it was
made, the court may refuse to enforce the contract, or it
may enforce
the remainder of the contract without the unconscionable
provision, or it may so limit the application of any
unconscionable provision as to avoid any unconscionable
result.
(Acts 1971, No. 2052, p. 3290, §12; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-17 Inducing obligation on more than one contract in order to obtain higher finance charge prohibited; consolidation of existing precomputed consumer credit transaction contract and subsequent precomputed consumer credit transaction.
(a) No creditor shall induce or permit any person or any
husband and wife, jointly or severally, to become obligated
directly or contingently, or both, on more than one consumer
credit transaction at the same time for the purpose of
obtaining a higher finance charge than would otherwise be
permitted by Section 5-19-3. This subsection shall not apply
to the maintenance of two or more separate consumer credit
transactions where the consumer credit transactions were
created on different dates.
(b) It shall be unlawful for any seller to evade or attempt
to evade this section by inducing a buyer to become
obligated to another creditor in which the initial creditor
has a pecuniary interest or with whom the initial creditor
has an arrangement for exchange of customers.
(c) Subsection (a) does not obligate a creditor to allow any
person to maintain two or more contracts or accounts.
Effective June 19, 1996, an existing precomputed consumer
credit transaction contract and a subsequent precomputed
consumer credit transaction document may be consolidated
provided that the consumer cannot be required to consolidate
the contracts as a condition for the extension of credit nor
can the creditor be required to extend credit; and provided
further, that if such contracts are consolidated, the annual
percentage rate resulting from the consolidation can be no
greater than the annual percentage rate on the prior
existing consumer credit transaction contract nor can the
consumer be charged any duplicate fees or expenses that
originated in the existing consumer credit transaction
contract, provided, however, that finance charges and other
charges and fees rebated in accordance with applicable law
and those charges as permitted by Section 5-19-4(f) and UCC
filing fees or nonfiling insurance premiums in lieu thereof
are excluded from this provision. Nothing herein restricts a
creditor from renewing or refinancing an existing consumer
credit transaction contract.
(Acts 1971, No. 2052, p. 3290, §13; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-18 Installment payment of debt of one thousand dollars or less.
With respect to consumer credit transactions, where the debt
is payable in installments, not made pursuant to an open-end
credit plan and in which the original amount financed is one
thousand dollars ($1,000) or less, the debt shall be
scheduled to be payable in substantially equal installments
at equal periodic intervals, except to the extent that the
schedule of payments is adjusted to the seasonal or
irregular income of the debtor or when the transaction is a
single principal payment obligation irrespective of the
scheduled interest payments, and:
(1) Over a period of not more than 36 months and 15 days if
the original amount financed is more than three hundred
dollars ($300); or
(2) Over a period of not more than 24 months and 15 days if
the original amount financed is three hundred dollars ($300)
or less.
(Acts 1971, No. 2052, p. 3290, §14; Acts 1989, No. 89-879,
p. 1771, §1; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-19 Liabilities of creditor making excess finance charge; failure to obtain license; damages for deliberate violation or reckless disregard; written notice of violations; oral statements not admissible; fiduciary duty not created.
(a)(1)(i) Any creditor charging a finance charge in excess
of the amount authorized herein, except as specified in
subdivision (2), shall forfeit debtor's actual economic
damages not to exceed the finance charge, and shall refund
to the debtor such amount of the actual economic damages,
which may be done by reducing the amount of the debtor's
obligation. If the debtor is entitled to a refund and the
creditor refuses to refund within a reasonable time, not to
exceed 60 days, after written demand, including the filing
of a legal action, the debtor shall recover a penalty of
five times the amount of the actual economic damages not to
exceed the finance charge, but in any event not less than
one hundred dollars ($100). Provided, however, as to any
legal action pending on May 20, 1996, the debtor shall make
a new written demand under this subsection.
(ii) As to transactions occurring after May 20, 1996, any
creditor charging a finance charge in excess of the amount
authorized herein, except as specified in subdivision (2),
shall forfeit to the debtor the amount of the actual
economic damages not to exceed the finance charge, which may
be done by reducing the amount of the debtor's obligation.
If the debtor is entitled to a refund and the creditor
refuses to refund within a reasonable time, not to exceed 60
days, after written demand, including the filing of a legal
action, the debtor shall recover twice the actual economic
damages not to exceed the finance charge, but in any event
not less than one hundred dollars ($100).
(2) If the creditor has made an excess finance charge in
deliberate violation of or in reckless disregard for this
chapter, the creditor shall forfeit the greater of the
entire finance charge imposed or five times the amount of
the actual economic damages, but not less than one hundred
dollars ($100). No action under this subsection may be
brought more than one year after the due date of the last
scheduled payment of the agreement pursuant to which the
charge was made or, in the case of an open-end credit plan,
one year after the excess charge is made.
(3) Any creditor licensed under this chapter adjudged after
May 20, 1996 by a court of competent jurisdiction in any
civil action to be in deliberate violation of or in reckless
disregard for this chapter shall within 10 days of such
adjudication forward a copy of the judgment to the
administrator. Within 10 days of such judgment becoming
final and nonappealable, the creditor shall notify the
administrator and the administrator shall, within 60 days of
such notification, review the creditor's license in view of
the matters on which the judgment was based and determine
whether to conduct a license revocation hearing pursuant to
Section 5-19-23. At any hearing conducted thereon by the
administrator, such judgment shall be prima facie evidence
in support of the revocation of the creditor's license.
(b) A creditor required to obtain a license who fails to
obtain such license may not maintain a proceeding in any
court in this state on a consumer credit transaction for
which a license was required until the creditor obtains the
license required by Section 5-19-22. If a court determines
that an unlicensed creditor should have obtained a license,
the action may be stayed until the creditor obtains the
required license and satisfies the requirements of the next
sentence of this subsection. The creditor shall pay to the
administrator a civil penalty equal to three times the
amount of the investigation fee and the annual license fee
for each year or portion thereof, the creditor, in violation
of Section 5-19-22, has engaged in the business of making
consumer loans or taking assignments of consumer credit
contracts without first having obtained a license, but in no
event shall a civil penalty exceed one hundred thousand
dollars ($100,000). All civil penalties shall be paid into
the special fund set up by the State Treasurer pursuant to
Section 5-2A-20 and used in the supervision and examination
of licensees. After obtaining the required license, and
paying the civil penalty prescribed by this subsection, the
creditor may bring and maintain proceedings in the courts of
this state on consumer credit transaction contracts, and the
enforceability of the contracts shall not be impaired by the
prior failure to obtain a license, irrespective of whether
the consumer credit transaction contracts were made before
or after the license was obtained. No private cause of
action exists against a creditor for failing to obtain a
license required by Section 5-19-22.
(c) Except for the specific remedies and obligations
provided in subsection (a) with respect to excess finance
charges, or subsection (b) with respect to licensing, in
which event the remedy and obligations set forth in
subsection (a) or (b), as
applicable, shall apply, any provision of a consumer credit
transaction which violates this chapter shall be
unenforceable by the creditor to the extent, but only to the
extent, of the violation, and the other remaining provisions
and agreements shall be enforceable and shall not be void
and shall not be affected by the violation. Except as
provided in subsection (a), any creditor who fails to comply
with any requirement imposed under this chapter with respect
to any person is liable to the person only for the actual
economic damages sustained by the person as the result of
the failure. Except as set forth in subsection (a), no
action may be brought by the debtor under this section based
upon a violation of any provision of this chapter more than
two years after the date the violation occurred; provided,
however, this limitation shall not bar a debtor from
asserting a violation of this chapter in an action brought
by the creditor, as a matter of defense by recoupment or
setoff in such action, if otherwise allowed by law.
(d) A creditor or assignee has no liability to the debtor
for any violation of this chapter if, prior to receipt of
written notice from the debtor of a violation, the creditor
or assignee notifies the debtor of the violation and makes
whatever adjustments in the appropriate account, or payments
to the debtor, as are necessary to assure that the debtor
will not be required to pay an amount in excess of the
charges permitted by this chapter.
(e) An oral statement shall not be admissible to contradict
the provisions of a credit transaction document, unless the
debtor establishes by clear and convincing evidence that the
oral statement was made and that it constituted a
misrepresentation of a material fact relating to the
character or essential terms of the transaction that was
made principally to induce the debtor to sign the document
and upon which the debtor reasonably relied in signing the
document or entering into the transaction. This subsection
shall not apply to credit transaction documents in effect on
May 20, 1996, nor to causes of action that arise therefrom;
nor shall this subsection apply to any credit transaction
documents not covered by this chapter.
(f) A consumer credit transaction does not create or give
rise to a fiduciary duty on the part of the creditor.
(Acts 1971, No. 2052, p. 3290, §15; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-20 Insurance. (a) With respect to any consumer credit transaction, the creditor shall not require any insurance other than insurance against loss of or damage to any property in which the creditor is given a security interest and insurance insuring the lien of the creditor on the property which is collateral for the transaction.
(b) (1) Credit life and disability and involuntary
unemployment insurance may be offered and, if accepted, may
be provided by the creditor. The charge to the debtor for
the insurance shall not exceed the premium permitted for the
coverages. Insurance with respect to any credit transaction
shall not exceed the approximate amount and term of the
credit.
(2) This subdivision (2) applies to all consumer credit
transactions entered into on or after June 19, 1996. If the
consumer credit transaction is scheduled to be repaid in
substantially equal installments which include a portion of
the amount financed, the amount of credit life insurance at
any time shall not exceed the greater of the approximate
unpaid balance of the debt, excluding unearned finance
charges, if any, or the approximate unpaid scheduled balance
of the debt, excluding unearned finance charges, if any,
plus the amount of one scheduled payment. The amount of
credit life insurance on single payment consumer credit
transactions and the amount of accident and health insurance
and involuntary unemployment insurance shall not exceed the
approximate amount of the total of payments. The amount of
credit life insurance under an open-end credit plan shall
not exceed the approximate unpaid balance of the debt from
time to time. The debtor's estate or a named beneficiary
shall be entitled to any excess credit life insurance
benefit.
(c) If the debtor fails to provide any required property
insurance, the creditor may, but is not required to,
purchase insurance insuring its interest only, or with the
debtor's written consent, insuring both the creditor's
interest and the debtor's interest, and the premium for the
property insurance together with interest on the premium at
the contract rate or other rate agreed to in writing may be
charged by the creditor to the debtor. The premium charged
to the debtor for any insurance shall not exceed the premium
approved by the administrator or the rates filed by the
insurer with the Alabama Department of Insurance for the
insurance, as applicable. If the insurance insures only the
creditor's interest in the property, the term of the
insurance provided pursuant to this subsection shall not
exceed the approximate remaining term of the credit, and the
amount of insurance shall not exceed the approximate amount
of the unpaid balance of the debt excluding unearned finance
charges, if any. The administrator may promulgate
regulations pursuant to Section 5-19-21 to provide further
for the term and maximum permissible amount of insurance
which covers the creditor's interest in the property.
(d) The premium for nonfiling insurance, insuring the lien
of the creditor on any property which is collateral for the
consumer credit transaction, may not exceed the cost of
filing of a lien on the property and any document necessary
to continue the lien and is nonrefundable. The insurance may
be required in both purchase money and nonpurchase money
secured transactions. A creditor may not charge a debtor the
cost of filing the lien and a premium for nonfiling
insurance in a consumer credit transaction.
(e) If a creditor requires any insurance against loss of or
damage to any property in which the creditor is given a
security interest, the debtor shall have and be given
written notice of the option of obtaining the insurance
through a person of the debtor's choice. If the debtor does
not exercise the option of providing the insurance through
an existing policy or a policy independently obtained and
paid for by the debtor, the creditor may purchase the
insurance on the property and charge the premium for the
insurance to the debtor. The premium or premiums charged for
such required insurance shall not exceed the premium
approved by the administrator or the rates filed by the
insurer with the Alabama Department of Insurance, as
applicable. The creditor may, for reasonable cause, decline
the insurance provided by the debtor.
(f) When property insurance, as permitted herein, is
required by the creditor, is not furnished by the debtor,
and is purchased by the creditor, then upon renewal,
refinancing, or payment of the debt before the final
maturity date, the creditor shall refund or credit the
debtor with that portion of the premium refunded by the
insurance carrier upon the termination of the insurance.
(g) A creditor may not contract for or receive a separate
charge for insurance against loss of or damage to property
or against liability for property damage or personal
injuries unless the original amount financed exclusive of
the charges for insurance is three hundred dollars ($300) or
more and the value of the property is three hundred dollars
($300) or more.
(h) In no event shall the creditor have any responsibility
or liability for the failure to purchase any insurance
permitted by this section unless the creditor has
affirmatively undertaken in writing to purchase the
insurance.
(i) A creditor may offer and finance any other insurance in
connection with any consumer credit transaction upon such
terms as are authorized by regulation of the administrator.
(Acts 1971, No. 2052, p. 3290, §16; Acts 1986, No. 86-304,
p. 451, §3; Acts 1987, No. 87-766, p. 1494; Acts 1996, No.
96-576, p. 887, §2.)
Section 5-19-21 Administrator authorized to make rules and regulations; filing notice of intended action with Legislative Reference Service; transactions entered into after May 20, 1996.
(a) The administrator is authorized and empowered to
promulgate rules and regulations and official
interpretations (collectively "regulations") as may be
necessary or appropriate for the execution and enforcement
of this chapter. The administrator or, if authorized by
regulation, the administrator's designee, or both, may also
issue written interpretations of consumer finance statutes
and regulations and this chapter.
(b)(1) Prior to the adoption, amendment, or repeal of any
regulation, the administrator shall give at least 35 days'
notice of its intended action by filing notice of intended
action with the Legislative Reference Service for
publication in the Alabama Administrative Monthly. The date
of publication in the Alabama Administrative Monthly shall
constitute the date of notice. The notice shall include a
statement of either the terms or substance of the intended
action or a description of the subject and issues involved,
shall specify a notice period ending not less than 35 days
or more than 90 days from the date of the notice, during
which period interested persons may present their views
thereon, and shall specify the place where, and the manner
in which interested persons may present their views thereon.
(2) All interested persons shall have a reasonable
opportunity to submit data, views, or arguments, orally or
in writing. The administrator shall consider all written and
oral submissions respecting the proposed regulation. Upon
adoption of a regulation, the administrator, if conflicting
views are submitted on the proposed regulation and if
requested in writing to do so by an interested person prior
to adoption, shall issue a concise statement of the
principal reasons for and against its adoption,
incorporating therein its reasons for overruling any
considerations urged against its adoption.
(3) Notwithstanding any other provision of this chapter to
the contrary, if the administrator finds that an immediate
danger to the public health, safety, or welfare requires
adoption of a regulation upon fewer than 35 days' notice or
that action is required by or to comply with a federal
statute or regulation which requires adoption of a
regulation upon fewer than 35 days' notice and states in
writing its reasons for that finding, it may proceed without
prior notice or hearing or upon any abbreviated notice and
hearing that it finds practicable, to adopt an emergency
regulation. The regulation shall become effective
immediately, unless otherwise stated therein. The regulation
may be effective for a period of not longer than 120 days
unless within such time the administrator complies with the
procedures set forth in subsections (b)(1) and (b)(2). The
adoption of the same or a substantially similar regulation
following the procedures set forth in subsections (b)(1) and
(b)(2) at any time is not limited by the adoption of a
regulation following the emergency regulation procedure set
forth in this subsection.
(4) A person who has exhausted all administrative remedies
available within the State Banking Department, other than
rehearing, and who is aggrieved by a final decision of the
administrator with respect to a regulation, is entitled to
judicial review under this chapter. All proceedings for
review shall be instituted by filing of notice of appeal or
review and a cost bond with the administrator to cover the
reasonable costs of preparing the transcript of the
proceeding under review, unless waived by the administrator
or the court on a showing of substantial hardship. The
notice of appeal and cost bond must be filed within 42 days
after the date the administrator issued its final
regulation. The appeal shall be filed in the Circuit
Court of Montgomery County. The regulation will be in effect
pending the outcome of any appeal unless the administrator
stays the effective date of the regulation.
(c) As to transactions entered into after May 20, 1996, a
creditor shall have no liability under this chapter for any
act or practice done or omitted in conformity with any (i)
regulation of the administrator, or (ii) any rule,
regulation, interpretation, or approval of any applicable
Alabama or federal agency or any opinion of the Attorney
General, notwithstanding that after such act or omission has
occurred, the regulation, rule, interpretation, opinion, or
approval is amended, rescinded, or determined by judicial or
other authority to be invalid for any reason; provided,
however, that any interpretation or opinion issued after May
20, 1996, shall not have any effect on any litigation
pending on May 20, 1996, nor shall any interpretation or
opinion issued after May 20, 1996, have any effect on
litigation if issued subsequent to filing of the litigation.
The enactment of Act 96-576 shall have no effect on
interpretations or opinions issued prior to May 20, 1996.
(d) A creditor, acting in conformity with a written
interpretation or approval by the administrator or the
administrator's designee, or by the official in charge of
any applicable Alabama agency or department, or by an
official of any federal agency or department, shall be
presumed to have acted in accordance with applicable law,
notwithstanding that after such act has occurred, the
interpretation or approval is amended, rescinded, or
determined by judicial or other authority to be incorrect or
invalid for any reason.
(e) Interpretations, opinions, and approvals shall protect,
to the extent provided in subsections (c) and (d), as
applicable, both the creditor at whose request they were
issued and any other creditor in a materially like
circumstance.
(Acts 1971, No. 2052, p. 3290, §17; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-22 License to engage in business of making consumer loans or taking assignments of consumer credit contracts - Required; exceptions; application; investigation of applicant; investigation fee; standards for issuance; hearing on qualifications of applicant; effect of holding license under Small Loan Act; form; posting; nontransferable; license fee; penalty for late payment of license fee; disposition of license fee.
(a) No creditor having a place of business in Alabama, or
having a resident employee in Alabama whose employment
includes making consumer loans or taking assignments of
consumer credit contracts shall engage in the business of
making consumer loans or taking assignments of consumer
credit contracts without first having obtained a license for
each location in Alabama from the administrator; provided,
however, that a creditor having no place of business in
Alabama but having a resident employee in Alabama whose
employment includes making consumer loans or taking
assignments of consumer credit contracts shall obtain a
license for the location where the creditor maintains its
records regarding Alabama loans or Alabama consumer credit
contracts; and provided further, that, banks chartered by
this state or any other state, banks chartered by the United
States, trust companies, savings or building and loan
associations, savings banks and other thrift institutions,
credit unions, life insurance companies, and federally
constituted agencies shall be exempt from licensing. A
seller, with respect to consumer credit sale transactions
and the financing of charges permitted by this chapter, is
not required to be licensed under this chapter.
(b) The license application shall be in writing, under oath,
in the form prescribed by the administrator, and be
accompanied by an investigation fee of one hundred dollars
($100).
(c) Upon receipt of the application and investigation fee,
the administrator shall investigate the applicant and
determine whether the license should be issued or denied.
(d) No license shall be issued unless the administrator
determines that the financial responsibility, character, and
fitness of the applicant, and of the members thereof if the
applicant is a partnership or association, officers and
directors thereof if the applicant is a corporation are such
as to warrant belief that the business will be operated
honestly and fairly within the purpose of this chapter and
finds that the applicant has assets available for the
operation of business under this chapter of at least
twenty-five thousand dollars ($25,000).
(e) Upon written request, the applicant is entitled to a
hearing on the question of his qualifications for a license
if:
(1) The administrator has notified the applicant in writing
that the application has been denied; or
(2) The administrator has not issued a license within 60
days after the application for the license was filed.
A request for a hearing may not be made more than 15 days
after the administrator has mailed by certified mail a
writing to the applicant notifying him that the application
has been denied stating in substance the administrator's
findings supporting denial of the application.
(f) Any person licensed under the Alabama Small Loan Act may
engage in business under the Alabama Small Loan Act, but
shall not make loans in excess of seven hundred forty-nine
dollars ($749) unless such person is also licensed under
this chapter. The payment of the license and examination
fees required by this chapter shall be in lieu of the
license and examination fees required by the
Alabama Small Loan Act when the licensee is also licensed
under the Alabama Small Loan Act.
(g) The license shall be in the form prescribed by the
administrator, posted conspicuously in the place of business
of the licensee, and shall not be assignable or transferable
or removed to another location without permission of the
administrator.
(h) The annual license fee shall be five hundred dollars
($500) for each office, branch, or place of business of the
licensee, which shall be due on October 1 of each year, and
shall be for a one-year period ending September 30
following, and shall be delinquent on November 1 of each
year, and there shall be a penalty of 10 percent for each
month or part thereof that the licensee is delinquent in the
payment of such license fee. All license fees and
investigation fees collected shall be paid into the special
fund provided by Section 5-2A-20 and used in the supervision
and examination of licensees.
(Acts 1971, No. 2052, p. 3920, §18; Acts 1983, No. 83-747,
p. 1244, §1; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-23 License to engage in business of making consumer loans or taking assignments of consumer credit contracts - Revocation or suspension.
(a) The administrator may issue to a person licensed under
this chapter an order to show cause why his license should
not be revoked or suspended for a period not in excess of
six months. The order shall state the place for a hearing
and set a time for the hearing that is not less than 10 days
from the date of the order. At such hearing, the licensee
shall be entitled to counsel.
(b) After the hearing, the administrator:
(1) Shall revoke the license if he finds that:
a. The licensee has repeatedly and willfully violated this
chapter or any rule or order lawfully made pursuant to this
chapter; or
b. Facts or conditions exist which would clearly have
justified the administrator in refusing to grant a license
had such facts or conditions been known to exist at the time
the application of the license was made.
(2) May suspend the license if he finds that the licensee
has violated this chapter or any rule or order lawfully made
pursuant to this chapter.
(Acts 1971, No. 2052, p. 3290, §23.)
Section 5-19-24 Examinations and investigations of licensees by administrator. (a) For the purpose of determining compliance with this chapter, the administrator may, at any reasonable time, cause an examination to be made at the licensee's place of business of the records and transactions of such licensee. As cost of examination, the licensee shall pay the administrator an examination fee as provided by Section 5-2A-24 which shall be collected and paid into the special fund provided by Section 5-2A-20 and used in the supervision and examination of licensees. Each licensee shall preserve all relevant records for a period of at least two years after making the last entry on any transaction, and the administrator shall have free access thereto at the licensee's place of business at all reasonable times. If the administrator has probable cause to believe that a person has engaged in an activity which violates the provisions of this chapter, the administrator may compel the production of such books and records of the person as he or she has probable cause to believe are relevant to the alleged violation.
(b) If the person's records are located outside this state,
the person may either make them available to the
administrator at a convenient location within this state, or
pay the reasonable and necessary expenses for the
administrator or a representative of the administrator to
examine them at the place where they are maintained. The
administrator may designate representatives, including
comparable officials of the state in which the records are
located, to inspect them on his or her behalf.
(c) Reports of examinations and investigations, all working
papers related thereto and the books and records of
licensees, are to be held strictly confidential, and may not
be produced, reproduced, or otherwise made available by the
State Banking Department to any persons other than those
within the State Banking Department and the licensee, and
their respective counsel. This subsection does not apply to
disclosures in proceedings brought by the administrator
pursuant to this chapter.
(d) A licensee's books and records may be maintained,
produced, and reproduced for examination by photostatic,
photographic, microphotographic, optical imaging, or by any
other generally recognized process for data storage and
reproduction.
(e) Nothing contained herein shall prohibit discovery of
these materials by and through a lawfully issued subpoena
from a court of competent jurisdiction.
(Acts 1971, No. 2052, p. 3290, §19; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-25 Cease and desist orders by administrator; penalties for violation of this chapter; right to counsel at hearing; judicial review.
After notice and hearing, the administrator may order a
licensee under this chapter or a person acting on behalf of
the licensee to cease and desist from engaging in violations
of this chapter. A creditor who is found by the
administrator, after notice and hearing, to have violated
this chapter may be ordered by the administrator to pay a
civil penalty in an amount determined by the administrator
of not more than ten thousand dollars ($10,000) in the
aggregate for all violations of a similar nature or, where
violations are knowing violations, of not more than fifty
thousand dollars ($50,000), in addition to any other
penalties provided by law, including, but not limited to,
license revocation. Violations shall be of a similar nature
if the violations consist of the same or substantially the
same course of action or practice irrespective of the number
of times the course of action or practice occurred. All
civil penalties collected shall be paid into the special
fund provided by Section 5-2A-20 and used in the supervision
and examination of licensees. At the hearing, the licensee
shall be entitled to be represented by counsel. A licensee
aggrieved by an order of the administrator under this
section may obtain judicial review of the order and the
administrator may obtain an order of the court for
enforcement of its order in the circuit court. The
proceedings shall be governed by the provisions of Section
5-19-26.
(Acts 1971, No. 2052, p. 3290, §20; Acts 1996, No. 96-576,
p. 887, §2.)
Section 5-19-26 Appeals to circuit court from order of administrator; appeals from decision of circuit court.
(a) Any interested party or intervener may appeal an order
of the administrator to the Circuit Court of Montgomery
County or to the circuit court of the county in which such
party has its principal place of business in Alabama by
filing notice of appeal with the administrator and with the
register or clerk of the circuit court within 30 days from
the date of said final order. The administrator's findings
shall be prima facie correct, but the circuit court may hear
such appeal according to its own rules and procedure,
including the taking of additional testimony and staying the
order. In the circuit court, the trial shall be de novo. The
court may, if it decides that the Administrator has erred to
the prejudice of appellant's substantial rights in its
application of the law or that the order was based upon
findings of fact contrary to the substantial weight of the
evidence, remand the proceeding to the administrator for
further action in conformity with the direction of the court
or may enter such order as the court deems appropriate.
(b) Either party may appeal from the circuit court to the
Supreme Court within 42 days from the date of entry of the
order of the circuit court.
(Acts 1971, No. 2052, p. 3290, §21.)
Section 5-19-29 Injunctions. (a) The administrator may bring an action to restrain a creditor or a person acting in his behalf from engaging in any business subject to licensing under subsection (a) of Section 5-19-22 without first obtaining a license therefor as provided in Section 5-19-22 and a licensee or any person acting in his behalf from engaging in violations of this chapter or engaging in a course of fraudulent or unconscionable conduct in inducing debtors to enter credit transactions or in the collection of debts.
(b) With respect to an action brought to enjoin violations
of the chapter or fraudulent or unconscionable conduct, the
administrator may apply to the court for appropriate
temporary relief against a defendant, pending final
determination of the proceedings. If the court finds, after
a hearing held upon notice to the defendant, that there is
reasonable cause to believe that the defendant is engaging
in or is likely to engage in conduct which violates this
chapter or which is fraudulent or unconscionable, it may
grant any temporary relief or restraining order it deems
appropriate.
(Acts 1971, No. 2052, p. 3290, §22.)
Section 5-19-30 Penalty for violations. A creditor who willfully makes charges in excess of those permitted by Section 5-19-3 or a creditor who willfully engages in the business of making loans in violation of subsection (a) of Section 5-19-22, or both, is guilty of a misdemeanor and, upon conviction, shall be sentenced to pay a fine not exceeding five hundred dollars ($500) or to imprisonment not exceeding one year, or both.
(Acts 1971, No. 2052, p. 3290, §24; Acts 1982, No. 82-521,
p. 869, §1; Acts 1996, No. 96-576, p. 887, §2.)
Section 5-19-31 Nonapplicability of chapter to certain transactions; certain laws not repealed or amended; intent of section. (a) The provisions of this chapter, except the provisions of subdivision (1) of Section 5-19-1 and Section 5-19-3, shall not apply (i) to any consumer credit transaction or other transaction involving an interest in real property or the sale, lease, or mortgage of an interest in real property where the creditor is an approved mortgagee under the provisions of the National Housing Act irrespective of
whether the consumer credit transaction or other transaction
is made under the provisions of the National Housing Act, or
where the creditor is exempt from licensing under this
chapter, (ii) where the credit transaction is not a consumer
transaction, (iii) where the credit transaction is by a
trust institution as defined in Section 5-12A-1(1), in its
capacity as a fiduciary under any plan or agreement
qualified under 26 USC 401(a) or defined by 5 USC 8437, 26
USC 403(b), or 26 USC 457, or a trust exempt under 26 USC
501, or (iv) to any municipal pension system created under
the laws of the State of Alabama.
(b) This chapter shall not be construed to amend or repeal,
without limitation, Sections 5-18-1 through 5-18-24,
inclusive, Section 8-8-6, Section 8-8-4, Section 8-8-5,
Sections 8-8-1.1, 8-8-14, 8-8-15, or Sections 5-20-2 through
5-20-10, inclusive.
(c) This chapter shall not apply to any lawful, bona fide
pawnbroking business.
(d) This chapter shall not apply to any insurance agent or
agency licensed in Alabama that elects to charge a
collection fee on unpaid balances for insurance premiums
under Section 27-12-17. An election shall be made by stating
such on the premium finance contract.
(e) This section is intended to confirm and clarify existing
law that none of the provisions of this chapter, other than
the provisions of subdivision (1) of Section 5-19-1 and
Section 5-19-3, apply to any transaction that is not a
consumer transaction, or, where provided in subsection (a)
to any transaction involving an interest in real property,
whether or not a consumer transaction, to any transaction of
a trust institution described in subsection (a), or to any
municipal pension system created under the laws of the State
of Alabama described in subsection (a).
(Acts 1971, No. 2052, p. 3290, §25; Acts 1989, No. 89-541,
p. 1132, §1; Acts 1994, No. 94-118, p. 146, §1; Acts 1996,
No. 96-576, p. 887, §2; Act 2002-307, p. 873, §1.)
Section 5-19-32 Service contracts. Any creditor who extends credit with respect to a consumer credit sale, may sell or finance, or both, a service contract covering tangible goods which are the subject of the consumer credit sale. Any other person who was not the creditor with regard to the initial sale of the tangible goods also may sell or finance, or both, a service contract covering the tangible goods. A "service contract" as used in this section is an agreement, for a separately stated consideration, of the service contract offeror to correct, repair, or replace, or to pay for the correction, repair, maintenance, or replacement of tangible goods during the period covered by the service contract, with or without additional provisions for payment of or indemnity under limited circumstances for related expenses including, without
limitation, for towing, rental, and emergency road service,
whether called a service contract, extended warranty or
otherwise. The service contract offeror need not be the
seller or creditor. The service contract may be offered,
sold, and financed at the time of the credit sale or at any
time thereafter, including, without limitation, at or about
the time of the expiration of any original warranty or the
expiration of the period covered by the service contract.
The service contract may, but is not required to, be
renewable from time to time as set forth in the service
contract. A service contract does not constitute insurance
for any purpose, other than for the purpose of a service
contract holder's claim against a service contract provider
for failure to comply with the provisions of the service
contract if so provided by other law.
(Acts 1996, No. 96-576, p. 887, §3.)
Section 5-19-33 Account maintenance fee. THIS SECTION WAS ASSIGNED BY THE CODE COMMISSIONER. IT HAS NOT BEEN CODIFIED BY THE LEGISLATURE. (a) In addition to other lawful charges permitted under various state or federal laws, except under open-end credit plans, a creditor may, if provided in the contract, charge an account maintenance fee of not more than three dollars ($3) for each month of the scheduled period of repayment of the credit transaction. The account maintenance fee shall be determined at the date of the credit transaction and may be charged in full at that time. The account maintenance fee as so determined shall not bear interest and shall constitute a part of the finance charge. In the event of the renewal, refinance, or payment in full of the credit transaction, the debtor shall be entitled to a refund or credit of any unearned portion of the account maintenance fee under subsection (c) of Section 5-19-4, as of the date of such renewal, refinancing, or payment in full.
(b) This section shall not repeal, amend, modify, or
diminish any right or power to charge and collect charges,
fees, interest, or an interest surcharge existing under any
other applicable state or federal statute, nor repeal,
amend, or modify Public Law 96-221, enacted by the United
States Congress and approved March 31, 1980, nor Section
5-2A-24.
(Act 2006-238, §§1, 2.)
|