2011 Kentucky Revised Statutes Subtitle 9. Deferred Deposit Service Business and Check Cashing 286.9.140 Database of outstanding deferred deposit transactions -- Submitting and accessing data.
KY Rev Stat § 286.9.140 (1996 through Reg Sess) What's This?
286.9-140 Database of outstanding deferred deposit transactions -- Submitting and
accessing data.
(1)
(2)
(3)
The commissioner shall, on or before July 1, 2010, implement a common database
with real-time access through an Internet connection for deferred deposit service
business licensees as provided in this subtitle unless implementing the database by
that date would be financially impracticable for the commissioner to design and
operate a database or because a contract with a qualified third-party provider has not
been entered into. The database shall be accessible to the department and the
deferred deposit service business licensee to verify whether any deferred deposit
transactions are outstanding for a particular person. A deferred deposit service
business licensee shall accurately and promptly submit such data before entering
into each deferred deposit transaction in such format as the commissioner may
require by rule or order, including the customer's name, Social Security number or
employment authorization alien number, address, driver's license number, amount
of the transaction, date of transaction, date that the completed transaction is closed,
and any additional information required by the commissioner. The commissioner
may adopt rules to administer and enforce the provisions of this subtitle and to
assure that the database is used by deferred deposit service business licensees in
accordance with this subtitle.
The commissioner shall impose a fee of one dollar () per transaction for data
required to be submitted by a deferred deposit service business licensee, which fee
may be charged to the customer.
The commissioner may operate the database described in subsection (1) of this
section or may select and contract with a third-party provider to operate the
database. If the commissioner contracts with a third-party provider for the operation
of the database, all of the following apply:
(a) The commissioner shall ensure that the third-party provider selected as the
database provider operates the database pursuant to the provisions of this
subtitle;
(b) The commissioner shall consider cost of service and ability to meet all the
requirements of this subtitle in selecting a third-party provider as the database
provider;
(c) In selecting a third-party provider to act as the database provider, the
commissioner shall give strong consideration to the third-party provider's
ability to prevent fraud, abuse, and other unlawful activities associated with
deferred presentment service transactions and provide additional tools for the
administration and enforcement of this subtitle;
(d) The third-party provider shall use the data collected under this subtitle only as
prescribed in this subtitle and the contract with the department and for no
other purpose;
(e) If the third-party provider violates this subtitle, the commissioner may
terminate the contract and the third-party provider may be barred from
becoming a party to any other state contracts;
(f)
(4)
(5)
(6)
(7)
A person injured by the third-party provider's violation of this subtitle may
maintain a civil cause of action against the third-party provider and may
recover actual damages plus reasonable attorney's fees and court costs; and
(g) The commissioner may require that the third-party provider collect the fee
assessed in subsection (2) of this section from the licensee. The third-party
provider shall remit the fee collected from the licensee to the commissioner no
later than the first day of each month. The third-party provider shall deposit
any fee collected in a separate escrow account in a federally insured financial
institution and shall hold the fee deposited in trust for the Commonwealth of
Kentucky.
The database described in subsection (1) of this section shall allow a deferred
deposit service business licensee accessing the database to do all of the following:
(a) Verify whether a customer has any open deferred deposit transactions with
any deferred deposit business service licensee that have not been closed;
(b) Provide information necessary to ensure deferred deposit service business
licensee compliance with any requirements imposed by the United States
Treasury Office of Foreign Assets Control and United States Treasury Office
of Financial Crimes Enforcement Network; and
(c) Track and monitor the number of customers who notify a deferred deposit
service business licensee of violations of this subtitle, the number of times a
deferred deposit service business licensee agreed that a violation occurred, the
number of times that a deferred deposit service business licensee did not agree
that a violation occurred, the amount of restitution paid, and any other
information the commissioner requires by rule or order.
While operating the database, the database provider shall do all of the following:
(a) Establish and maintain a process for responding to transaction verification
requests due to technical difficulties occurring with the database that prevent
the licensee from accessing the database through the Internet;
(b) Comply with any applicable federal and state provisions to prevent identity
theft;
(c) Provide accurate and secure receipt, transmission, and storage of customer
data; and
(d) Meet the requirements of this subtitle.
When the database provider receives notification that a deferred deposit service
transaction has been closed, the database provider shall designate the transaction as
closed in the database immediately, but in no event after 11:59 p.m. on the day the
commissioner or database provider receives notification.
The database provider shall automatically designate a deferred deposit service
transaction as closed in the database five (5) days after the transaction maturity date
unless a deferred deposit service business licensee reports to the database provider
before that time that the transaction remains open because of the customer's failure
to make payment; that the transaction is open because the customer's payment
instrument or an electronic redeposit is in the process of clearing the banking
system; or that the transaction remains open because the customer's payment
instrument is being returned to the deferred deposit service business licensee for
insufficient funds, a closed account, or a stop payment order; or because of any
other factors determined by the commissioner. If a deferred deposit service business
licensee reports the status of a transaction as open in a timely manner, the
transaction remains an open transaction until it is closed and the database provider
is notified that the transaction is closed.
(8) If a deferred deposit service business licensee stops providing deferred deposit
service transactions, the database provider shall designate all open transactions with
that licensee as closed in the database sixty (60) days after the date the deferred
deposit service business licensee stops offering deferred deposit service
transactions, unless the deferred deposit service business licensee reports to the
database provider before the expiration of the sixty (60) day period which of its
transactions remain open and the specific reason each transaction remains open. The
deferred deposit service business licensee shall also provide to the commissioner a
reasonably acceptable plan that outlines how the deferred deposit service business
licensee will continue to update the database after it stops offering deferred
presentment service transactions. The commissioner shall promptly approve or
disapprove the plan and immediately notify the deferred deposit service business
licensee of the commissioner's decision. If the plan is disapproved, the deferred
deposit service business licensee may submit a new plan or may submit a modified
plan for the deferred deposit service business licensee to follow. If at any time the
commissioner reasonably determines that a deferred deposit service business
licensee that has stopped offering deferred deposit service transactions is not
updating the database in accordance with its approved plan, the commissioner shall
immediately close or instruct the database provider to immediately close all
remaining open transactions of that deferred deposit service business licensee.
(9) The response to an inquiry to the database provider by a deferred deposit service
business licensee shall state only that a person is eligible or ineligible for a new
deferred deposit service transaction and describe the reason for that determination.
Only the person seeking the transaction may make a direct inquiry to the database
provider to request a more detailed explanation of a particular transaction that was
the basis for the ineligibility determination. Any information regarding any person's
transaction history is confidential; is not subject to public inspection; is not a public
record subject to the disclosure requirements of the Kentucky Open Records Act,
KRS 61.870 to 61.884; is not subject to discovery, subpoena, or other compulsory
process, except in an administrative or legal action arising under this subtitle; and
shall not be disclosed to any person other than the commissioner.
(10) The commissioner may access the database provided under subsection (1) of this
section only for purposes of an investigation of, examination of, or enforcement
action concerning an individual database provider, licensee, customer, or other
person.
(11) The commissioner shall investigate violations of and enforce this subtitle. The
commissioner shall not delegate his or her responsibilities under this subsection to
any third-party provider.
(12) (a) The commissioner shall make a determination that the database is fully
operational and shall send written notification to each licensee subject to the
provisions of this subtitle:
1.
That the database has been implemented; and
2.
Of the exact date that the database shall be considered operational for
the data entry requirement established in paragraph (b) of this
subsection.
(b) A deferred deposit service business licensee shall promptly and accurately
enter into the database all transactions undertaken by the licensee upon receipt
of the written notification established in paragraph (a) of this subsection.
(13) The commissioner may, by rule or order, do all of the following:
(a) Require that data be retained in the database only as required to ensure
deferred deposit service business licensee compliance with this subtitle;
(b) Require that customer transaction data in the database are archived within
three hundred sixty-five (365) days after the customer transaction is closed
unless needed for a pending enforcement or legal action;
(c) Require that any identifying customer information is deleted from the database
when data are archived; and
(d) Require that data in the database concerning a customer transaction are
deleted from the database three (3) years after the customer transaction is
closed or, if any administrative, legal, or law enforcement action is pending,
three (3) years after the administrative, legal, or law enforcement action is
completed, whichever is later.
(14) The commissioner may maintain access to data archived under subsection (13) of
this section for examination, investigation, or legislative or policy review.
(15) A deferred deposit service business licensee may rely on the information contained
in the database as accurate and is not subject to any administrative penalty or civil
liability as a result of relying on inaccurate information contained in the database,
provided the deferred deposit licensee accurately and promptly submits such data as
required before entering into a deferred deposit transaction with a customer.
(16) The commissioner may use the database to administer and enforce this subtitle.
(17) The commissioner may require a database provider to file a report by March 1 of
each year containing the following information:
(a) The total number and dollar amount of deferred deposit transactions entered
into in the calendar year ending December 31 of the previous year;
(b) The total number and dollar amount of deferred deposit transactions
outstanding as of December 31 of the previous year;
(c) The total dollar amount of fees collected for deferred deposit transactions as
of December 31 of the previous year;
(d)
The minimum, maximum, and average dollar amount of deferred deposit
transactions entered into, the total dollar amount of the net charge-offs and
write-offs, and the net recoveries of licensees as of December 31 of the
previous year;
(e) The average deferred deposit transaction amount, the average number of
transactions, and the average aggregate deferred deposit transaction amount
entered into per customer as of December 31 of the previous year;
(f) The average number of days a customer was engaged in a deferred deposit
transactions for the previous year; and
(g) An estimate of the average total fees paid per customer for deferred deposit
transactions for the previous year.
(18) Enforcement of this section shall be effective ninety (90) days after the database
implementation date established by the commissioner as set forth in subsection (12)
of this section.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 819, effective July 15, 2010. -- Created
2009 Ky. Acts ch. 98, sec. 8, effective June 25, 2009.
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