2016 North Dakota Century Code Title 13 Debtor and Creditor Relationship Chapter 13-08 Deferred Presentment Service Providers
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CHAPTER 13-08
DEFERRED PRESENTMENT SERVICE PROVIDERS
13-08-01. Definitions.
As used in this chapter, unless the context otherwise requires:
1. "Check" means a personal check signed by the maker and made payable to a
licensee.
2. "Commissioner" means the commissioner of financial institutions.
3. "Completed deferred presentment service transaction" means a transaction that is
completed when a check is redeemed by the maker by payment in full to the licensee
in cash, money order, or certified check or by negotiation or deposit by the licensee, or
when an electronic funds transfer or other transfer of money has taken place to repay
the contracted debt.
4. "Customer" means a person to which funds are advanced under a deferred
presentment service transaction.
5. "Deferred presentment service transaction" means a transaction by which a person:
a. Pays to a customer the amount of a check, less the fees permitted under this
chapter, and accepts a check from the customer dated on the date of the
transaction and agrees to hold the check for a period of time before negotiation or
presentment;
b. Accepts a check dated after the date of the transaction and agrees to hold the
check for deposit until the date written on the check; or
c. Pays to the customer an agreed-upon amount, and obtains the customer's
authorization to transfer or withdraw, electronically or otherwise, funds from a
customer's account in repayment at some future, agreed-upon date.
6. "Licensee" means a person licensed under this chapter to provide deferred
presentment services.
13-08-02. License requirements.
A person may not engage in the business of deferred presentment service without a license
issued under this chapter. A separate license is required for each location from which the
business of deferred presentment service is conducted. A person is considered to be engaging
in the business of deferred presentment service if the customer is located in this state.
13-08-03. Qualifications for license.
To qualify for a license, an applicant shall satisfy the following requirements:
1. Each applicant shall maintain a net worth of at least twenty-five thousand dollars per
licensed location, determined in accordance with generally accepted accounting
principles.
2. The financial responsibility, financial condition, business experience, character, and
general fitness of the applicant must reasonably warrant the belief that the applicant's
business will be conducted lawfully and fairly. In determining whether this qualification
is met and for the purpose of investigating compliance with this chapter, the
commissioner may review and consider the relevant business records and the capital
adequacy of the applicant and the competence, experience, integrity, and financial
ability of any person who is a member, partner, director, officer, or twenty-five percent
or more shareholder of the applicant, and whether the applicant has filed the
appropriate registration with the North Dakota secretary of state, if so required.
3. Each applicant shall establish that neither the applicant nor any principal of the
applicant has been convicted of a felony. A deferred sentence or federal pretrial
diversion must be considered a conviction for purposes of this section.
4. Each applicant shall maintain a bond issued by a surety company authorized to do
business in this state, in the amount of twenty thousand dollars, and the commissioner
may require a larger bond if the commissioner determines the larger bond is
necessary based on the volume of the applicant's business.
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13-08-04. Application for license.
1. Each application for a license must be in the form prescribed by the commissioner and
must include:
a. The legal name of the applicant, residence of the applicant, business address of
the applicant, and address at which deferred presentment service is provided if
different from the business address and, if the applicant is a partnership,
association, or corporation, the name and address of every member, officer, and
director;
b. The location at which the registered office of the applicant is located; and
c. Other data and information the commissioner may require with respect to the
applicant and the applicant's directors, officers, members, and shareholders.
2. To fulfill the purposes of this chapter, the commissioner may establish relationships or
contracts with a nationwide multistate licensing system and registry or other entities
designated by a nationwide multistate licensing system and registry to collect and
maintain records and process transaction fees or other fees related to licensees or
other persons subject to the chapter. The applicant shall pay directly to such
nationwide multistate licensing system any additional fee relating to participation in
such nationwide multistate licensing system.
3. In connection with an application for licensing as a deferred presentment service
provider, or any license renewals, the applicant shall furnish to the nationwide
multistate licensing system information concerning the applicant's identity, which may
include:
a. Fingerprints for submission to the federal bureau of investigation and any
governmental agency or entity authorized to receive such information for a state,
national, and international criminal history background check;
b. Personal history and experience in a form prescribed by the nationwide multistate
licensing system, including the submission of authorization for the nationwide
multistate licensing system and the commissioner to obtain:
(1) An independent credit report obtained from a consumer reporting agency
described in section 603(p) of the Fair Credit Reporting Act; and
(2) Information related to any administrative, civil, or criminal findings by any
governmental jurisdiction; and
c. Any other documents, information, or evidence the commissioner deems relevant
to the application regardless of the location, possession, control, or custody of
such documents, information, or evidence.
4. For the purposes of this section and in order to reduce the points of contact which the
federal bureau of investigation may have to maintain for purposes of subsection 3, the
commissioner may use the nationwide multistate licensing system and registry as a
channeling agent for requesting information from and distributing information to the
department of justice or any governmental agency.
5. For the purposes of this section and in order to reduce the points of contact which the
commissioner may have to maintain for purposes of subsection 3, the commissioner
may use the nationwide multistate licensing system and registry as a channeling agent
for requesting and distributing information to and from any source so directed by the
commissioner.
13-08-05. Application fees - Financial statements - Annual fee - Deposit of fees.
Each applicant for licensure shall include with the application an application and
background investigation fee of eight hundred fifty dollars, which is not subject to refund but
which, if the license is granted, constitutes the license fee for the first license year or part of the
first license year, and each applicant for licensure shall include with the application proof of the
required surety bond. The annual license fee is four hundred fifty dollars. Each fee set forth in
this section is applicable to each location. The commissioner shall deposit fees and costs
collected by the commissioner under this chapter in the department of financial institutions
regulatory fund.
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13-08-05.1. Change of name or address.
A licensee shall submit within twenty business days of the date of change, notification of a
change of name or change of address. The notification must be in the form prescribed by the
commissioner. In addition, the licensee shall submit the original license certificate for reissue.
13-08-05.2. Automatic six-month extension of license during 2014 calendar year.
All current licensees who have made payment of a fee in accordance with section 13-08-05,
for a deferred presentment service provider license effective after July 1, 2013, shall be granted
an extension of their current license until December 31, 2014. If at any time prior to
December 31, 2014, a licensee's license expires or otherwise terminates under this chapter, the
applicant shall be required to pay licensing fees in accordance with section 13-08-05, and that
license will expire on December 31, 2014.
13-08-06. Issuance of license - Posting.
1. Upon receipt of a complete application, the commissioner shall determine whether the
qualifications prescribed under this chapter are satisfied. If the commissioner
determines the qualifications are satisfied and approves the documents, the
commissioner shall issue to the applicant a license to engage in the deferred
presentment service business.
2. A licensee shall keep the license conspicuously posted in the place of business of the
licensee, and shall provide notice to its customers in this state of the license number
under which it is operating.
3. A license issued under this section is effective through the remainder of the fiscal year
ending June thirtieth after the license's date of issuance unless earlier surrendered,
suspended, or revoked under this chapter.
13-08-07. Nontransferability - Change in control of license.
A license issued under this chapter is not transferable or assignable. The prior written
approval of the commissioner is required for the continued operation of a deferred presentment
service business if a change in control of a licensee occurs. Control in the case of a corporation
means direct or indirect ownership; the right to control twenty-five percent or more of the voting
shares of the corporation; or the ability of any person to elect a majority of the directors or
otherwise affect a change in policy. Control in the case of any other entity means the ability to
exchange the principals of the organization, whether active or passive. In the case of a change
of control request, the commissioner may require information the commissioner deems
necessary to determine whether a new application is required. A licensee shall notify the
commissioner fifteen days before any proposed change in the licensee's business location or
name.
13-08-08. Reports of commissioner.
Within fifteen days of the occurrence of any one of the following events, a licensee shall file
a written report with the commissioner describing the event and the event's expected impact on
the activities of the licensee in the state:
1. The filing for bankruptcy or reorganization by the licensee;
2. The institution of revocation or suspension proceedings against the licensee by any
governmental authority;
3. Any felony charges of the licensee or any of the licensee's members, directors,
officers, or shareholders; and
4. Any other event the commissioner identifies by rule.
13-08-09. Expiration of license - Renewal.
Licenses issued under this chapter expire as of December thirty-first of each year. A license
may be renewed for the ensuing twelve-month period upon application and the payment to the
commissioner of the annual license fee, which is not subject to refund, before December first of
each year. The form and content of renewal applications must be determined by the department
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of financial institutions and a renewal application may be denied upon the same grounds as
would justify denial of an initial application. When a licensee has been delinquent in renewing
the licensee's license, the department may charge an additional fee of fifty dollars for the
renewal of such license.
13-08-10. Regulations - Examinations.
The commissioner may adopt rules for the implementation and enforcement of this chapter.
A copy of a rule adopted by the commissioner must be mailed to each licensee at least thirty
days before the date the rule takes effect. To assure compliance with this chapter, the
commissioner may examine the relevant business, books, and records of any licensee. The
licensee shall pay an examination or visitation fee, and the commissioner shall charge the
licensee for the actual cost of the examination or visitation at an hourly rate set by the
commissioner which is sufficient to cover all reasonable expenses associated with the
examination or visitation.
13-08-11. Retention of records.
Each licensee shall keep and use in the licensee's business any books, accounts, and
records the commissioner may require to carry into effect the provisions of this chapter and the
rules issued under this chapter. Every licensee shall preserve required books, accounts, and
records for at least six years. The records of a licensee may be maintained electronically
provided they can be reproduced upon request by the department of financial institutions and
within the required statutory time period provided in this section. When a licensee ceases
operations for any reason, the licensee shall inform the department of the location of the
records. In addition, the licensee shall provide the name of the individual responsible for
maintenance of the records. The licensee shall notify the department within ten business days
of the change of the location of the records or the change of the individual responsible for
maintenance of the records.
13-08-11.1. Response to department requests.
An applicant, licensee, or other person subject to the provisions of this chapter shall comply
with requests for information, documents, or other requests from the department of financial
institutions within the time specified in the request, which must be a minimum of ten days, or, if
no time is specified, within thirty days of the mailing of the request by the department of financial
institutions. If the request for information is in regard to a new application or renewal of an
existing application and is not received within the time specified in the request, or within thirty
days of the mailing of the request, the department may deny the application.
13-08-11.2. Confidentiality.
To promote more effective regulation and reduce regulatory burden through supervisory
information sharing, the commissioner or commissioner's designee may furnish information to or
receive information from a nationwide multistate licensing system for the purpose of regulation
of the financial services industry. Information furnished by the commissioner to any third party
which is confidential or privileged in the commissioner's possession remains confidential or
privileged in the possession of the third party. Information received by the commissioner from
any third party which is confidential or privileged in the third-party's possession remains
confidential or privileged in the commissioner's possession.
13-08-12. Fees for service - Deferred presentment service transaction procedures Penalty.
1. Before disbursing funds under a deferred presentment service transaction, a licensee
shall provide to the customer a clear and conspicuous printed notice indicating:
a. That a deferred presentment service transaction is not intended to meet
long-term financial needs.
b. That the customer should use a deferred presentment service transaction only to
meet short-term cash needs.
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c.
2.
3.
4.
5.
6.
That the customer will be required to pay additional fees if the deferred
presentment service transaction is renewed rather than paid in full when due. If
the transaction is renewed, any amount paid in excess of the fee applies to the
payoff amount.
d. A schedule of fees charged for deferred presentment service.
e. Any information required under federal law.
f. No property, titles to any property, or mortgages may be received or held directly
or indirectly by the licensee as a condition of a deferred presentment service
transaction or as a method of collection on a defaulted deferred presentment
service transaction without proper civil process.
A licensee may charge a fee for the deferred presentment service, not to exceed
twenty percent of the amount paid to the customer by the licensee. This fee may not
be deemed interest for any purpose of law. No other fee or charge may be charged for
the deferred presentment service, except that a fee, not to exceed the cost to the
licensee, may be charged for registering a transaction on a database administered or
authorized by the commissioner. No property, titles to any property, or mortgages may
be received or held directly or indirectly by the licensee as a condition of a deferred
presentment service transaction or as a method of collection on a defaulted deferred
presentment service transaction without proper civil process.
A licensee may not disburse more than five hundred dollars to the customer in a
deferred presentment service transaction.
A licensee may not engage in a deferred presentment service transaction with a
customer who has an aggregate value of all outstanding obligations from any one
customer exceeding six hundred dollars which is payable to the same or any other
licensee. A licensee may not enter a new deferred presentment service transaction
with a customer within three business days of that customer's completion of a previous
deferred presentment service transaction. A licensee may rely on a written or
electronic representation of a customer regarding the existence of any outstanding
obligations for deferred presentment held by a licensee other than the licensee
receiving the representation until the database provided for under this subsection is in
operation, and after that time may not rely on a customer's representation but must
verify the fact using the database. However, if a licensee has multiple locations, that
licensee may not rely on the representation of a customer regarding the existence of
any outstanding obligation for deferred presentment held by that licensee, or one of
the licensee's multiple locations, unless the licensee and the licensee's multiple
locations use a point of sale registry or some other accounting system to attempt to
prevent violations of this subsection. The commissioner shall administer or authorize
the development of a database in which each transaction must be recorded for the
purpose of preventing violations of this section. The commissioner shall adopt rules
governing the creation, structure, and use of the database.
Before a licensee may negotiate or present a check for payment, the check must be
endorsed with the actual name under which the licensee is doing business.
Each deferred presentment service transaction, including a renewal, must be
documented by a written agreement signed or similarly authenticated by the customer.
The original agreement must contain the name of the licensee; the transaction date;
the amount of the obligation; a statement of the total amount of fees charged,
expressed as a dollar amount and as an annual percentage rate; the name and
signature of the individual who signs the agreement on behalf of the licensee; the
name and address of the check maker; the transaction number assigned by the
database; the date of negotiation of the check; the signature of the check maker; a
statement that a licensee may not renew a transaction more than once; a statement
that the renewal fee may not exceed twenty percent of the amount being renewed; a
statement that the maximum term of the transaction, including the renewal, may not
exceed sixty calendar days; a statement that the term of the renewal period may not
be less than fifteen calendar days; and a statement containing the right of rescission
printed immediately above the signature line of the written agreement in a minimum of
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7.
8.
9.
10.
11.
12.
ten-point font and providing a space for the check maker to initial that the notice to the
right of rescission was received. The original agreement may not include a hold
harmless clause; a confession of judgment clause; any assignment of or order for
payment of wages or other compensation for services; a provision in which the check
maker agrees not to assert any claim or defense arising out of the agreement; a
waiver of any provision of this chapter; any representation from the check maker as to
the sufficiency of funds regarding any past deferred presentment service transactions;
or any statement regarding criminal prosecution with respect to the agreement. A
renewal agreement must be contained in a separate section, as part of the original
written agreement or in other form as approved by the commissioner. The renewal
agreement must restate the original transaction date, the renewal transaction date, the
amount of the check paid to the check maker, the fee charged in dollars, and the
maturity date. The agreement must authorize the licensee to defer presentment or
negotiation of the check, or electronic debit of the customer's account, until a specified
date. The maker of a check may redeem the check from the licensee at any time
before the negotiation or presentment of the check by making payment to the licensee.
A customer agreeing to an electronic deferred presentment service transaction may
repay the obligation at any time before the agreed-upon date. A customer may rescind
any transaction by the close of the business day following the day on which the
customer receives payment from the licensee at no cost. If a customer agreeing to an
electronic deferred presentment service transaction rescinds the transaction, the
licensee must facilitate the repayment of the funds through the same electronic means
the licensee used to deliver the funds to the customer.
If a check or electronic debit is returned to the licensee from a payer financial
institution due to insufficient funds, closed account, or a stop payment order, the
licensee has the right to all civil remedies available to collect the obligation. The
licensee may contract for and collect a returned check or electronic debit charge not to
exceed the collection fees and costs authorized in subdivision c of subsection 2 of
section 6-08-16. No other fee or charge may be collected as a result of a returned
check or electronic debit or as a result of default by the customer in timely payment to
the licensee.
A customer who has authority to make a check or authorize an electronic debit and
enters a deferred presentment service agreement is not subject to a criminal penalty
relating to the check, electronic debit, or the deferred presentment service agreement
unless the customer's account was closed on the original date of the transaction. At
the time of entering a transaction involving a written check, a licensee shall verify that
the account on which the check is written is open. A licensee may not pursue or
threaten to pursue criminal penalties against a customer for criminal penalties
prohibited by this subsection.
A licensee may not engage in unfair or deceptive acts, practices, or advertising in the
conduct of a deferred presentment service business.
The amount paid to the customer by the licensee in a deferred presentment service
transaction must be paid in the form of cash, check, or an electronic credit to the
customer's account.
Each licensee must conspicuously post in the licensee's licensed location a notice of
the fees imposed for the deferred presentment service. A licensee that engages in a
deferred presentment service transaction via the internet shall require its customers to
acknowledge the fees imposed using a click-through or other method that prevents
customers from completing the transaction without reviewing the licensee's fees.
A licensee may not renew a deferred presentment service transaction more than once.
A licensee's renewal fee may not exceed twenty percent of the amount being renewed.
The renewal fee must be paid in cash, money order, or cashier's check. The total
period of deferral, including the initial deferral and one renewal, may not exceed sixty
days. An individual renewal period may not be less than fifteen days. After sixty days
the renewed deferred presentment service transaction must be paid off in cash, money
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13.
14.
15.
16.
order, electronic payment, or cashier's check by the customer or, if a check is used,
the check must be deposited by the licensee.
A licensee may not renew, repay, refinance, or consolidate a deferred presentment
service transaction with the proceeds of another deferred presentment service
transaction with that licensee by the same maker or customer. It is presumed that a
deferred presentment service transaction initiated within three business days before
completion of a deferred presentment service transaction is a violation of this
subsection.
A licensee may not conduct another business, other than a bona fide pawnbroking
business, within the same office, suite, room, or place of business at which the
licensee engages in deferred presentment service transactions unless the
commissioner provides written authorization after a determination the other business is
not contrary to the best interests of consumers.
A licensee shall provide a notice in a prominent place on each deferred presentment
service agreement in no less than ten-point type in substantially the following form:
State law prohibits this business from allowing customers to have outstanding at
any one time, deferred presentment service transactions totaling more than six
hundred dollars.
A licensee or any agent of a licensee who willfully violates this section is guilty of a
class A misdemeanor.
13-08-13. Denial of license - Hearing.
If the commissioner determines an applicant is not qualified to receive a license, the
commissioner shall notify the applicant in writing stating that the application is denied and
stating the basis for denial. If the commissioner denies an application, or if the commissioner
fails to act on an application within thirty days after the filing of a properly completed application,
the applicant may make written demand to the commissioner for a hearing before the
commissioner on the question of whether the license should be granted. The hearing must be
held within thirty days after receipt of the written demand by the applicant. In the event of a
hearing, the commissioner shall reconsider the application and, after hearing, issue a written
order granting or denying the application. If an applicant who is denied a license requests a
hearing and the commissioner's denial is upheld, the commissioner may assess the applicant
for the commissioner's costs incurred for the hearing, in an amount not exceeding two thousand
dollars.
13-08-14. Suspension - Revocation.
1. The commissioner may issue and serve upon any licensee an order suspending or
revoking a license if the commissioner finds that the licensee or any principal of the
licensee has been convicted of a felony or that the licensee knowingly or through lack
of due care:
a. Failed to pay the annual license fee imposed under this chapter or any
examination fee imposed by the commissioner under the authority of this chapter;
b. Committed any fraud, engaged in any dishonest activities, or made any
misrepresentations;
c. Violated this chapter or any rule adopted under this chapter or violated any other
law in the course of the licensee's business activities as a licensee;
d. Made false statements in the application for the license;
e. Engaged in any unfair or deceptive acts, practices, or advertising in the conduct
of a deferred presentment service business;
f. Failed to maintain the required bond; or
g. Failed to maintain registration with the secretary of state if so required.
2. The order must contain a notice of opportunity for hearing pursuant to chapter 28-32.
3. If a hearing is not requested within twenty business days of the date the order is
served upon the licensee or if a hearing is held and the commissioner finds that the
record so warrants, the commissioner may enter a final order suspending or revoking
the license.
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4.
If the commissioner finds that probable cause for revocation of any license exists and
that enforcement of the chapter requires immediate suspension of such license
pending investigation, it may upon written notice enter an order temporarily
suspending such license for a period not exceeding sixty days, pending the holding of
a hearing as prescribed in this chapter.
13-08-14.1. Suspension and removal of deferred presentment service provider
officers and employees.
1. The commissioner of financial institutions may issue and serve upon any current or
former deferred presentment service provider officer or employee and upon the
licensee involved an order stating:
a. That the current or former officer or employee is willfully engaging or has willfully
engaged in any of the following conduct:
(1) Violating a law, rule, order, or written agreement with the commissioner.
(2) Engaging in harassment or abuse, the making of false or misleading
representations, or engaging in unfair practices involving lending activity.
(3) Performing an act of commission or omission or practice, which is a breach
of trust or a breach of fiduciary duty.
b. The term of suspension or removal from employment and participation within the
conduct or the affairs of a deferred presentment service provider.
2. The order must contain a notice of opportunity for hearing pursuant to chapter 28-32.
3. If a hearing is not requested within twenty business days of the date the order is
served, or if a hearing is held and the commissioner finds that the record so warrants,
the commissioner may enter a final order suspending or removing the current or
former employee or officer from office. The current or former officer or employee may
request a termination of the final order after a period of no less than three years.
4. A contested or default suspension or removal order is effective immediately upon
service of the final order on the current or former officer or employee and upon the
licensee. A consent order is effective as agreed. Any current or former officer or
employee suspended or removed from employment and participation within the
conduct or the affairs of a deferred presentment service provider pursuant to this
section is not eligible, while under suspension or removal, to be employed or otherwise
participate in the affairs of any financial corporation, financial institution, credit union,
or any other entity licensed by the department of financial institutions.
5. When any current or former officer or employee or other person participating in the
conduct of the affairs of a licensee is charged with a felony in state or federal court
which involves dishonesty or breach of trust, the commissioner may immediately
suspend the person from office or prohibit the person from further participation in the
deferred presentment service provider affairs, or both. The order is effective
immediately upon service of the order on the licensee and the person charged and
remains in effect until the criminal charge is finally disposed of or until modified by the
commissioner. If a judgment of conviction, federal pretrial diversion, or similar state
order or judgment is entered, the commissioner may order that the suspension or
prohibition be made permanent. A finding of not guilty or other disposition of the
charge does not preclude the commissioner from pursuing administrative or civil
remedies.
6. Under this section, a person engages in conduct "willfully" if the person acted
intentionally in the sense that the person was aware of what the person was doing.
13-08-15. Violations - Cease and desist orders - Penalties.
Except as otherwise provided in this chapter, any person who willfully provides deferred
presentment services without a license is guilty of a class C felony and any person who violates
any other provisions of this chapter or any rule adopted to implement this chapter is guilty of an
infraction. If the commissioner finds, whether without a hearing or after a hearing if a hearing is
requested within twenty days of notice of an action by the commissioner under this section, that
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a person violated this chapter or any rule adopted to implement this chapter, the commissioner
may do any one or more of the following:
1. Order the person to cease and desist violating this chapter or the rule.
2. Require the refund of any fees collected by the person in violation of this chapter.
3. Impose a civil penalty not to exceed five thousand dollars per violation upon a person
or agency who willfully violates a law, rule, written agreement, or order under this
chapter. An interested party may appeal the assessment of a civil money penalty
under the provisions of chapter 28-32 by filing a written notice of appeal within twenty
days after service of the assessment of civil money penalties. A civil money penalty
collected under this section must be paid to the state treasurer and deposited in the
financial institutions regulatory fund.
13-08-16. Disclosure of customer information.
Except for provisions of chapter 6-08.1 which are inconsistent with this chapter, chapter
6-08.1 applies to all persons licensed under this chapter.
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