2015 Indiana Code TITLE 24. TRADE REGULATION ARTICLE 4.5. UNIFORM CONSUMER CREDIT CODE CHAPTER 7. SMALL LOANS
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IC 24-4.5-7
Chapter 7. Small Loans
IC 24-4.5-7-101
Citation
Sec. 101. This chapter shall be known and may be cited as
Uniform Consumer Credit Code — Small Loans.
As added by P.L.38-2002, SEC.1.
IC 24-4.5-7-102
Applicability; authority to make, take assignment of, or collect
small loans; license required; application; separate license required
for activities involving consumer loans; "regularly engages"
Sec. 102. (1) Except as otherwise provided, all provisions of this
article applying to consumer loans, including IC 24-4.5-3-502.2,
apply to small loans, as defined in this chapter.
(2) Subject to subsection (7), a person may not regularly engage
in Indiana in any of the following actions unless the department first
issues to the person a license under this chapter:
(a) The making of small loans.
(b) Taking assignments of small loans.
(c) Undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from small loans.
(3) Subject to subsection (4), a person that seeks licensure under
this chapter:
(a) shall apply to the department for a license in the form and
manner prescribed by the department; and
(b) is subject to the same licensure requirements and procedures
as an applicant for a license to make consumer loans (other than
mortgage transactions) under IC 24-4.5-3-502.
(4) A person that seeks to make, take assignments of, or undertake
the direct collection of payments from or the enforcement of rights
against debtors arising from both:
(a) small loans under this chapter; and
(b) consumer loans (other than mortgage transactions) that are
not small loans;
must obtain a separate license from the department for each type of
loan, as described in IC 24-4.5-3-502(5).
(5) This chapter applies to:
(a) a lender or to any person who facilitates, enables, or acts as
a conduit for any person who is or may be exempt from
licensing under IC 24-4.5-3-502;
(b) a bank, savings association, credit union, or other state or
federally regulated financial institution except those that are
specifically exempt regarding limitations on interest rates and
fees; or
(c) a person, if the department determines that a transaction is:
(i) in substance a disguised loan; or
(ii) the application of subterfuge for the purpose of avoiding
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this chapter.
(6) A loan that:
(a) does not qualify as a small loan under section 104 of this
chapter;
(b) is for a term shorter than that specified in section 401(1) of
this chapter; or
(c) is made in violation of section 201, 401, 402, 404, or 410 of
this chapter;
is subject to this article. The department may conform the finance
charge for a loan described in this subsection to the limitations set
forth in IC 24-4.5-3-508.
(7) Notwithstanding IC 24-4.5-1-301.5, for purposes of subsection
(2), a person "regularly engages" in any of the activities described in
subsection (2) with respect to a small loan if the person:
(a) performed any of the activities described in subsection (2)
with respect to a small loan at least one (1) time in the preceding
calendar year; or
(b) performs or will perform any of the activities described in
subsection (2) with respect to a small loan at least one (1) time
in the current calendar year if the person did not perform any of
the activities described in subsection (2) with respect to a small
loan at least one (1) time in the preceding calendar year.
As added by P.L.38-2002, SEC.1. Amended by P.L.10-2006, SEC.11
and P.L.57-2006, SEC.11; P.L.213-2007, SEC.21; P.L.217-2007,
SEC.20; P.L.35-2010, SEC.82; P.L.137-2014, SEC.17;
P.L.186-2015, SEC.23.
IC 24-4.5-7-103
Definitions
Sec. 103. The following definitions apply to this chapter:
"Small loan"
Section 7-104
"Principal"
Section 7-105
"Check"
Section 7-106
"Renewal"
Section 7-107
"Consecutive small loan"
Section 7-108
"Paid in full"
Section 7-109
"Monthly gross income"
Section 7-110
"Lender"
Section 7-111
As added by P.L.38-2002, SEC.1. Amended by P.L.2-2005, SEC.61;
P.L.10-2006, SEC.12 and P.L.57-2006, SEC.12.
IC 24-4.5-7-104
Small loan
Sec. 104. (1) "Small loan" means a loan:
(a) with a principal loan amount that is at least fifty dollars
($50) and not more than five hundred fifty dollars ($550); and
(b) in which the lender holds the borrower's check for a specific
period, or receives the borrower's written authorization to debit
the borrower's account (other than as a result of default) under
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an agreement, either express or implied, for a specific period,
before the lender:
(i) offers the check for deposit or presentment; or
(ii) exercises the authorization to debit the borrower's
account.
(2) The amount of five hundred fifty dollars ($550) in subsection
(1)(a) is subject to change under the provisions on adjustment of
dollar amounts (IC 24-4.5-1-106). However, notwithstanding
IC 24-4.5-1-106(1), the Reference Base Index to be used under this
subsection is the Index for October 2006.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.17;
P.L.213-2007, SEC.22; P.L.217-2007, SEC.21; P.L.216-2013,
SEC.13.
IC 24-4.5-7-105
Principal
Sec. 105. "Principal" means the total of:
(a) the net amount paid to, receivable by, or paid or payable
from the account of the borrower; and
(b) to the extent that the payment is deferred, the additional
charges permitted by this chapter that are not included in
subdivision (a).
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.18.
IC 24-4.5-7-106
Check
Sec. 106. For purposes of this chapter, "check" has the meaning
set forth in IC 26-1-3.1-104.
As added by P.L.38-2002, SEC.1.
IC 24-4.5-7-107
Renewal
Sec. 107. "Renewal" refers to a small loan that takes the place of
an existing small loan by:
(a) renewing;
(b) repaying;
(c) refinancing; or
(d) consolidating;
a small loan with the proceeds of another small loan made to the
same borrower by a lender.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.19.
IC 24-4.5-7-108
Consecutive small loan
Sec. 108. "Consecutive small loan" means a new small loan
agreement that the lender enters with the same borrower not later than
seven (7) calendar days after a previous small loan made to that
borrower is paid in full.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.20.
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IC 24-4.5-7-109
Paid in full
Sec. 109. "Paid in full" means the termination of a small loan
through:
(1) the presentment of the borrower's check for payment by the
drawee bank or the exercise by the lender of an authorization to
debit an account of the borrower; or
(2) the return of a check to a borrower who redeems it for
consideration.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.21;
P.L.10-2006, SEC.13 and P.L.57-2006, SEC.13.
IC 24-4.5-7-110
Monthly gross income
Sec. 110. "Monthly gross income" means the income received by
the borrower in the thirty (30) day period preceding the borrower's
application for a small loan under this chapter and exclusive of any
income other than regular gross pay received, or as otherwise
determined by the department.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.22.
IC 24-4.5-7-111
Lender
Sec. 111. "Lender" means a person that acquires and retains a
license issued by the department of financial institutions under this
chapter to engage in small loans.
As added by P.L.10-2006, SEC.14 and P.L.57-2006, SEC.14.
Amended by P.L.186-2015, SEC.24.
IC 24-4.5-7-112
Lender not considered a financial institution
Sec. 112. A lender is not considered a financial institution, except
for purposes of IC 28-1.
As added by P.L.10-2006, SEC.15 and P.L.57-2006, SEC.15.
IC 24-4.5-7-201
Finance charges
Sec. 201. (1) Finance charges on the first two hundred fifty dollars
($250) of a small loan are limited to fifteen percent (15%) of the
principal.
(2) Finance charges on the amount of a small loan greater than two
hundred fifty dollars ($250) and less than or equal to four hundred
dollars ($400) are limited to thirteen percent (13%) of the amount
over two hundred fifty dollars ($250) and less than or equal to four
hundred dollars ($400).
(3) Finance charges on the amount of the small loan greater than
four hundred dollars ($400) and less than or equal to five hundred
fifty dollars ($550) are limited to ten percent (10%) of the amount
over four hundred dollars ($400) and less than or equal to five
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hundred fifty dollars ($550).
(4) The amount of five hundred fifty dollars ($550) in subsection
(3) is subject to change under the provisions on adjustment of dollar
amounts (IC 24-4.5-1-106). However, notwithstanding
IC 24-4.5-1-106(1), the Reference Base Index to be used under this
subsection is the Index for October 2006.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.23;
P.L.141-2005, SEC.3; P.L.213-2007, SEC.23; P.L.217-2007,
SEC.22.
IC 24-4.5-7-202
Fee for dishonored check or debit authorization
Sec. 202. (1) Notwithstanding any other law, the only fee that may
be contracted for and received by the lender or an assignee on a small
loan is a charge, not to exceed twenty-five dollars ($25), for each:
(a) return by a bank or other depository institution of a:
(i) dishonored check;
(ii) negotiable order of withdrawal; or
(iii) share draft;
issued by the borrower; or
(b) time an authorization to debit the borrower's account is
dishonored.
This additional charge may be assessed one (1) time regardless of
how many times a check or an authorization to debit the borrower's
account may be submitted by the lender and dishonored.
(2) A lender may:
(a) present a borrower's check for payment; or
(b) exercise a borrower's authorization to debit the borrower's
account;
not more than three (3) times.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.24;
P.L.213-2007, SEC.24; P.L.217-2007, SEC.23; P.L.90-2008,
SEC.14.
IC 24-4.5-7-301
Disclosures; informational brochure
Sec. 301. (1) For purposes of this section, the lender shall disclose
to the borrower to whom credit is extended with respect to a small
loan the information required by the Federal Consumer Credit
Protection Act.
(2) In addition to the requirements of subsection (1), the lender
must conspicuously display in bold type a notice to the public both
in the lending area of each business location and in the loan
documents the following statement:
"WARNING: A small loan is not intended to meet long term
financial needs. A small loan should be used only to meet short
term cash needs. The cost of your small loan may be higher than
loans offered by other lending institutions. Small loans are
regulated by the State of Indiana Department of Financial
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Institutions.
A borrower may rescind a small loan without cost by paying the
cash amount of the principal of the small loan to the lender not
later than the end of the business day immediately following the
day on which the small loan was made.".
(3) The statement required in subsection (2) must be in:
(a) 14 point bold face type in the loan documents; and
(b) not less than one (1) inch bold print in the lending area of
the business location.
(4) When a borrower enters into a small loan, the lender shall
provide the borrower with a pamphlet approved by the department
that describes:
(a) the availability of debt management and credit counseling
services; and
(b) the borrower's rights and responsibilities in the transaction.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.25;
P.L.35-2010, SEC.83.
IC 24-4.5-7-401
Term of loan; consecutive small loans; extended payment plans
Sec. 401. (1) A small loan may not be made for a term of less than
fourteen (14) days.
(2) If five (5) consecutive small loans have been made to a
borrower after the borrower's initial small loan, another small loan
may not be made to that borrower within seven (7) days after the fifth
consecutive small loan is paid in full. After the borrower's fifth
consecutive small loan, the balance must be paid in full.
(3) Subject to subsection (4), whenever a borrower has entered
into an initial small loan followed by three (3) consecutive small
loans, the lender shall offer the borrower the option to repay:
(a) the third consecutive small loan; and
(b) subject to subsection (2), any small loan entered into after
the third consecutive small loan;
under an extended payment plan. At the time of execution of a small
loan described in subdivision (a) or (b), the lender shall disclose to
the borrower the extended payment plan option by providing the
borrower a written description of the extended payment plan option
in a separate disclosure document approved by the director.
(4) A lender shall offer an extended payment plan under
subsection (3) under the following terms and conditions:
(a) A borrower shall be permitted to request an extended
payment plan at any time during the term of a third or
subsequent consecutive small loan if the borrower has not
defaulted on the outstanding small loan.
(b) An extended payment plan must allow the outstanding small
loan to be paid in at least four (4) equal installments over a
period of not less than sixty (60) days.
(c) An agreement for an extended payment plan may not require
a borrower to pay any amount before the original maturity date
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of the outstanding small loan.
(d) The lender may not assess any fee or charge on a borrower
for entering into an extended payment plan.
(e) An agreement for an extended payment plan must be in
writing and acknowledged by both the borrower and the lender.
(f) A borrower may not enter into another small loan transaction
while engaged in an extended payment plan.
(g) A lender may not compel or require a borrower to pay off an
outstanding small loan that is eligible for an extended payment
plan and to subsequently enter into a new small loan with the
lender if the borrower and lender have not entered into an
extended payment plan with respect to the eligible outstanding
small loan.
(5) An agreement for an extended payment plan under subsection
(3):
(a) shall be considered an extension of the outstanding small
loan; and
(b) may not be considered a new loan.
As added by P.L.38-2002, SEC.1. Amended by P.L.258-2003, SEC.2;
P.L.73-2004, SEC.26; P.L.10-2006, SEC.16 and P.L.57-2006,
SEC.16; P.L.213-2007, SEC.25; P.L.217-2007, SEC.24;
P.L.186-2015, SEC.25.
IC 24-4.5-7-402
Limits based on borrower's income; security; partial payments;
payments; loan documents; recision; renewal prohibited
Sec. 402. (1) A lender is prohibited from making a small loan to
a borrower if the total of:
(a) the principal amount and finance charges of the small loan
to be issued; plus
(b) any other small loan balances that the borrower has
outstanding with any lender;
exceeds twenty percent (20%) of the borrower's monthly gross
income.
(2) A small loan may be secured by only one (1) check or
authorization to debit the borrower's account per small loan. The
check or electronic debit may not exceed the amount advanced to or
on behalf of the borrower plus loan finance charges contracted for
and permitted.
(3) A borrower may make partial payments in any amount on the
small loan without charge at any time before the due date of the small
loan.
(4) After any payment is made on a small loan, whether the
payment is made in part or in full before, on, or after the due date of
the small loan, the lender shall give a signed and dated receipt to the
borrower making a payment showing the amount paid and the
balance due on the small loan.
(5) The lender shall provide to each borrower a copy of the
required loan documents before the disbursement of the loan
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proceeds.
(6) A borrower may rescind a small loan without cost by paying
the cash amount of the principal of the small loan to the lender not
later than the end of the business day immediately following the day
on which the small loan was made.
(7) A lender shall not enter into a renewal with a borrower. If a
loan is paid in full, a subsequent loan is not a renewal.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.27;
P.L.213-2007, SEC.26; P.L.217-2007, SEC.25; P.L.35-2010,
SEC.84; P.L.27-2012, SEC.30.
IC 24-4.5-7-403
Security for loan
Sec. 403. A small loan may not be secured by personal property
other than a check or electronic debit.
As added by P.L.38-2002, SEC.1.
IC 24-4.5-7-404
Limits and number and amounts of outstanding loans; lender's
verification; third party data base; civil penalties; excess finance
charges; verification of Social Security number
Sec. 404. (1) As used in this section, "commercially reasonable
method of verification" means a private consumer credit reporting
service that the department determines to be capable of providing a
lender with adequate verification information necessary to ensure
compliance with subsection (4).
(2) With respect to a small loan, no lender may permit a person to
become obligated under more than one (1) loan agreement with the
lender at any time.
(3) A lender shall not make a small loan that, when combined with
the outstanding balance on another outstanding small loan owed to
another lender, exceeds a total of five hundred fifty dollars ($550),
excluding finance charges. A lender shall not make a small loan to a
borrower who has two (2) or more small loans outstanding, regardless
of the total value of the small loans. The amount of five hundred fifty
dollars ($550) in this subsection is subject to change under the
provisions on adjustment of dollar amounts (IC 24-4.5-1-106).
However, notwithstanding IC 24-4.5-1-106(1), the Reference Base
Index to be used under this subsection is the Index for October 2006.
(4) A lender complies with subsection (3) if the lender
independently verifies the total number of outstanding small loans
and the total outstanding balance of those small loans for a customer
through a commercially reasonable method of verification. A lender's
method of verifying whether a borrower has any outstanding small
loans and the total outstanding balance of any loans will be
considered commercially reasonable if the method includes a manual
investigation or an electronic query of:
(a) the lender's own records, including both records maintained
at the location where the borrower is applying for the
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transaction and records maintained at other locations within the
state that are owned and operated by the lender; and
(b) an available third party data base provided by a private
consumer reporting service, subject to the identification
verification requirements set forth in subsection (12).
(5) The department shall monitor the effectiveness of private
consumer credit reporting services in providing the verification
information required under subsection (4). If the department
determines that a commercially reasonable method of verification is
available, the department shall:
(a) provide reasonable notice to all lenders identifying the
commercially reasonable method of verification that is
available; and
(b) require each lender to use, consistent with the policies of the
department, the identified commercially reasonable method of
verification as a means of complying with subsection (4).
(6) If a borrower presents evidence to a lender that a loan has been
discharged in bankruptcy, the lender shall cause the record of the
borrower's loan to be updated in the data base described in subsection
(4)(b) to reflect the bankruptcy discharge.
(7) A lender shall cause the record of a borrower's loan to be
updated in the data base described in subsection (4)(b) to reflect:
(a) presentment of the borrower's check for payment; or
(b) exercise of the borrower's authorization to debit the
borrower's account.
If a check is returned or an authorization is dishonored because of
insufficient funds in the borrower's account, the lender shall reenter
the record of the loan in the data base.
(8) A lender shall update information in a data base described in
subsection (4)(b) to reflect partial payments made on an outstanding
loan, the record of which is maintained in the data base.
(9) If a lender ceases doing business in Indiana, the director may
require the operator of the data base described in subsection (4)(b) to
remove records of the lender's loans from the operator's data base.
(10) The director may impose a civil penalty not to exceed one
hundred dollars ($100) for each violation of:
(a) this section; or
(b) any rule or policy adopted by the director to implement this
section.
(11) The excess amount of loan finance charge provided for in
agreements in violation of this section is an excess charge for
purposes of the provisions concerning effect of violations on rights
of parties (IC 24-4.5-5-202) and the provisions concerning civil
actions by the department (IC 24-4.5-6-113).
(12) If a borrower provides the borrower's Social Security number
to a lender in connection with any transaction or proposed transaction
under this chapter, the lender shall:
(a) maintain procedures to verify that the Social Security
number provided is legitimate and belongs to the borrower; and
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(b) retain copies of any documents used to verify the borrower's
Social Security number. Documentation under this subdivision
may be in electronic form and the numbers may be truncated.
If a borrower does not have a Social Security number, the lender may
require and accept another valid form of government issued
identification, subject to the requirements of subdivisions (a) and (b)
with respect to the government issued identification accepted.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.28;
P.L.10-2006, SEC.17 and P.L.57-2006, SEC.17; P.L.213-2007,
SEC.27; P.L.217-2007, SEC.26; P.L.90-2008, SEC.15; P.L.35-2010,
SEC.85.
IC 24-4.5-7-405
Conducting other business
Sec. 405. (1) This section does not apply to a business that is
licensed by the department for a purpose other than consumer loans.
(2) A lender shall not conduct the business of making small loans
under this chapter within an office, suite, room, or place of business
where another business is solicited or engaged unless the lender
obtains a written opinion from the director of the department that the
other business would not be contrary to the best interests of
consumers.
As added by P.L.38-2002, SEC.1.
IC 24-4.5-7-406
Borrower's default; permissible and prohibited remedies; notice to
borrower
Sec. 406. (1) An agreement with respect to a small loan may not
provide for charges as a result of default by the borrower other than
those specifically authorized by this chapter. A provision in a small
loan agreement in violation of this section is unenforceable.
(2) A lender or an assignee of a small loan may seek only the
following remedies upon default by a borrower:
(a) Recovery of:
(i) the contracted principal amount of the loan; and
(ii) the loan finance charge.
(b) Collection of a fee for:
(i) a returned check, negotiable order of withdrawal, or share
draft; or
(ii) a dishonored authorization to debit the borrower's
account;
if contracted for under section 202 of this chapter.
(c) Collection of postjudgment interest, if awarded by a court.
(d) Collection of court costs, if awarded by a court.
(3) A lender or an assignee of a small loan may not seek any of the
following damages or remedies upon default by a borrower:
(a) Payment of the lender's attorney's fees.
(b) Treble damages.
(c) Prejudgment interest.
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(d) Damages allowed for dishonored checks under any statute
other than this chapter.
(e) Any damages or remedies not set forth in subsection (2).
(4) A contractual agreement in a small loan transaction must
include a notice of the following in 14 point bold type:
(a) The remedies available to a lender or an assignee under
subsection (2).
(b) The remedies and damages that a lender or an assignee is
prohibited from seeking in a small loan transaction under
subsection (3).
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.29;
P.L.10-2006, SEC.18 and P.L.57-2006, SEC.18; P.L.90-2008,
SEC.16.
IC 24-4.5-7-407
Repealed
(As added by P.L.38-2002, SEC.1. Repealed by P.L.73-2004,
SEC.48.)
IC 24-4.5-7-408
Repealed
(As added by P.L.38-2002, SEC.1. Repealed by P.L.73-2004,
SEC.48.)
IC 24-4.5-7-409
Violations; remedies and damages; equitable relief; exhaustion of
administrative remedies not required
Sec. 409. (1) This section applies to licensees and unlicensed
persons.
(2) A person who violates this chapter:
(a) is subject to the remedies provided in IC 24-4.5-5-202;
(b) commits a deceptive act under IC 24-5-0.5 and is subject to
the penalties listed in IC 24-5-0.5;
(c) has no right to collect, receive, or retain any principal,
interest, or other charges from a small loan; however, this
subdivision does not apply if the violation is the result of an
accident or bona fide error of computation; and
(d) is liable to the borrower for actual damages, statutory
damages of two thousand dollars ($2,000) per violation, costs,
and attorney's fees; however, this subdivision does not apply if
the violation is the result of an accident or bona fide error of
computation.
The remedies described in this subsection are in addition to all other
remedies set forth in this article.
(3) The department may sue:
(a) to enjoin any conduct that constitutes or will constitute a
violation of this chapter; and
(b) for other equitable relief.
(4) The remedies provided in this section are cumulative but are
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not intended to be the exclusive remedies available to a borrower. A
borrower is not required to exhaust any administrative remedies
under this section or any other applicable law.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.30;
P.L.10-2006, SEC.19 and P.L.57-2006, SEC.19; P.L.90-2008,
SEC.17.
IC 24-4.5-7-410
Prohibited acts by lender
Sec. 410. A lender making small loans, or an assignee of a small
loan, shall not commit nor cause to be committed any of the
following acts:
(a) Threatening to use or using the criminal process in any state
to collect on a small loan.
(b) Threatening to take action against a borrower that is
prohibited by this chapter.
(c) Making a misleading or deceptive statement regarding a
small loan or a consequence of taking a small loan.
(d) Contracting for or collecting attorney's fees on small loans
made under this chapter.
(e) Altering the date or any other information on a check or an
authorization to debit the borrower's account held as security.
(f) Using a device or agreement that the department determines
would have the effect of charging or collecting more fees,
charges, or interest than allowed by this chapter, including, but
not limited to:
(i) entering a different type of transaction with the borrower;
(ii) entering into a sales/leaseback arrangement;
(iii) catalog sales;
(iv) entering into transactions in which a customer receives
a purported cash rebate that is advanced by someone offering
Internet content services, or some other product or service,
when the cash rebate does not represent a discount or an
adjustment of the purchase price for the product or service;
or
(v) entering any other transaction with the borrower that is
designed to evade the applicability of this chapter.
(g) Engaging in unfair, deceptive, or fraudulent practices in the
making or collecting of a small loan.
(h) Charging to cash a check representing the proceeds of a
small loan.
(i) Except as otherwise provided in this chapter:
(i) accepting the proceeds of a new small loan as payment of
an existing small loan provided by the same lender; or
(ii) renewing, refinancing, or consolidating a small loan with
the proceeds of another small loan made by the same lender.
(j) Including any of the following provisions in a loan
document:
(i) A hold harmless clause.
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(ii) A confession of judgment clause.
(iii) A mandatory arbitration clause, unless the terms and
conditions of the arbitration have been approved by the
director of the department.
(iv) An assignment of or order for payment of wages or other
compensation for services.
(v) A provision in which the borrower agrees not to assert a
claim or defense arising out of contract.
(vi) A waiver of any provision of this chapter.
(k) Selling insurance of any kind in connection with the making
or collecting of a small loan.
(l) Entering into a renewal with a borrower.
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.31;
P.L.10-2006, SEC.20 and P.L.57-2006, SEC.20; P.L.90-2008,
SEC.18.
IC 24-4.5-7-411
Exemption of finance charges
Sec. 411. Finance charges made in compliance with this chapter
are exempt from IC 24-4.5-3-508 and IC 35-45-7.
As added by P.L.38-2002, SEC.1.
IC 24-4.5-7-412
Endorsement of check
Sec. 412. Upon the receipt of a check from a borrower for a small
loan, unless the check is marked as void at the time of acceptance by
the lender, the lender shall immediately stamp the back of the check
with an endorsement that states:
"This check is being negotiated as part of a small loan under
IC 24-4.5, and any holder of this check takes it subject to the
claims and defenses of the maker.".
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.32;
P.L.35-2010, SEC.86.
IC 24-4.5-7-413
Surety bond; requirements; amount; termination; liability; notices
Sec. 413. (1) A person engaged in making small loans under this
chapter shall post a bond to the department in the amount of fifty
thousand dollars ($50,000) for each location where small loans will
be made, up to a maximum bond in an amount determined by the
director.
(2) A surety bond issued under this section must:
(a) provide coverage for a lender engaged in making small loans
under this chapter in an amount as prescribed in subsection (1);
(b) be in a form prescribed by the director;
(c) be in effect during the term of the lender's license under this
chapter;
(d) remain in effect during the two (2) years after the lender
ceases offering financial services to individuals in Indiana;
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(e) be payable to the department for the benefit of:
(i) the state; and
(ii) individuals who reside in Indiana when they agree to
receive financial services from the lender;
(f) be issued by a bonding, surety, or insurance company
authorized to do business in Indiana and rated at least "A-" by
at least one (1) nationally recognized investment rating service;
and
(g) have payment conditioned upon the lender's or any of the
lender's employees' or agents' noncompliance with or violation
of this article or other applicable federal or state laws or
regulations.
(3) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this chapter.
(4) If the principal amount of a surety bond required under this
section is reduced by payment of a claim or judgment, the lender for
whom the bond is issued shall immediately notify the director of the
reduction and, not later than thirty (30) days after notice by the
director, file a new or an additional surety bond in an amount set by
the director. The amount of the new or additional bond set by the
director must be at least the amount of the bond before payment of
the claim or judgment.
(5) If for any reason a surety terminates a bond issued under this
section, the lender shall immediately notify the department and file
a new surety bond in an amount as prescribed in subsection (1).
(6) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when the
surety bond was in effect.
(7) The director may obtain satisfaction from a surety bond issued
under this section if the director incurs expenses, issues a final order,
or recovers a final judgment under this chapter.
(8) Notices required under this section must be in writing and
delivered by certified mail, return receipt requested and postage
prepaid, or by overnight delivery using a nationally recognized
carrier.
As added by P.L.38-2002, SEC.1. Amended by P.L.258-2003, SEC.3;
P.L.35-2010, SEC.87; P.L.216-2013, SEC.14.
IC 24-4.5-7-414
Rulemaking authority
Sec. 414. The department may adopt rules under IC 4-22-2 to
implement this chapter.
As added by P.L.38-2002, SEC.1.
Indiana Code 2015
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