                                 CODE OF VIRGINIA

REQUIRED AND PROHIBITED BUSINESS METHODS (§ 6.2-1816)

Each licensee shall comply with the following requirements and prohibitions:

1. A licensee shall not make a loan that does not comply with &#xA7; 6.2-1816.1.

2. A licensee shall not charge, collect, or receive, directly or indirectly,
credit insurance premiums, charges for any ancillary product sold, charges for
disbursing loan proceeds or refunds including check-cashing charges and any
other charges for negotiating forms of payment other than cash, charges for
brokering or obtaining a loan, or any fees, interest, or charges in connection
with a loan, other than fees and charges permitted by &#xA7; 6.2-1817.

3. A licensee shall not obtain any agreement from the borrower (i) giving the
licensee or any third person power of attorney or authority to confess judgment
for the borrower; (ii) authorizing the licensee or any third party to bring suit
against the borrower in a court outside the Commonwealth; or (iii) waiving the
borrower&#8217;s right to legal recourse or any other right the borrower has
under any otherwise applicable provision of state or federal law.

4. A licensee shall not make a loan to a person if that person is obligated upon
any loan to a person licensed under Chapter 22 (&#xA7; 6.2-2200 et seq.). Prior
to making a loan, a licensee shall make a reasonable attempt to verify the
borrower&#8217;s eligibility under this subsection that includes reviewing the
files of any affiliate that is licensed under Chapter 22. Unless the Commission
requires otherwise by administrative rule or policy statement, a licensee may
rely on the loan applicant&#8217;s written representations with respect to the
applicant&#8217;s obligations to lenders that are licensed under Chapter 22
(&#xA7; 6.2-2200 et seq.) but are not affiliates of the licensee, and a licensee
is not subject to any administrative penalty or civil liability if such
representations are later determined to be inaccurate.

5. A licensee shall not cause any person to be obligated to the licensee in any
capacity at any time in the principal amount of more than $2,500.

6. Except as provided in &#xA7; 6.2-1818.1, a licensee shall not refinance,
renew, or extend any short-term loan or make a loan to a person if the loan
would cause the person to have more than one short-term loan from any licensee
outstanding at the same time.

7. A licensee shall not cause a borrower to be obligated upon more than one loan
at any time.

8. A check accepted by a licensee as security for any loan shall be dated no
earlier than the date of the first required loan payment shown in the loan
agreement.

9. Notwithstanding any provision of &#xA7; 8.01-226.10 to the contrary, a
licensee shall not threaten, or cause to be instigated, criminal proceedings
against a borrower if a check given as security for a loan is dishonored or for
any reason related to the borrower&#8217;s failure to pay any sum due under a
loan agreement.

10. A licensee shall not (i) accept the title or registration of a vehicle, real
or personal property, or any interest in any property other than a check payable
to the licensee as security for a loan; (ii) create or accept any remotely
created check, as defined in 12 C.F.R. &#xA7; 229.2(fff), in connection with a
loan; (iii) draft funds electronically from a borrower&#8217;s account without
express written authorization from the borrower; or (iv) fail to stop attempts
to draft funds electronically from a borrower&#8217;s account upon request from
the borrower or his agent. Nothing in this section shall prohibit the conversion
of a negotiable instrument into an electronic form for processing through the
automated clearing house system.

11. A licensee shall not present a check, negotiable order of withdrawal, share
draft, or other negotiable instrument that has been previously presented by the
licensee and subsequently returned dishonored for any reason, unless the
licensee obtains new written authorization from the borrower to present the
previously returned item.

12. A licensee shall not attempt to draft funds electronically from a
borrower&#8217;s account after two consecutive attempts have failed, unless the
licensee obtains new written authorization from the borrower to transfer or
withdraw funds electronically from the borrower&#8217;s account.

13. A licensee shall not make a loan to a borrower to enable the borrower to (i)
pay for any other product or service sold at the licensee&#8217;s office
location or (ii) repay any amount owed to the licensee or an affiliate of the
licensee in connection with another credit transaction.

14. Loan proceeds shall be disbursed in cash or by the licensee&#8217;s business
check. No fee shall be charged by the licensee or an affiliate for cashing a
loan proceeds check.

15. A check given as security for a loan shall not be negotiated to a third
party.

16. Upon receipt of a check given as security for a loan, the licensee shall
stamp the check with an endorsement stating: &#8220;This check is being
negotiated as part of a short-term loan pursuant to Chapter 18 (&#xA7; 6.2-1800
et seq.) of Title 6.2 of the Code of Virginia, and any holder of this check
takes it subject to all claims and defenses of the maker.&#8221;

17. Before entering into a short-term loan, the licensee shall provide each
borrower with a pamphlet, in form consistent with regulations adopted by the
Commission, explaining in plain language the rights and responsibilities of the
borrower and providing a toll-free number at the Commission for assistance with
complaints.

18. Each licensee shall conspicuously post in each approved office (i) a
schedule of fees and interest charges, which shall include examples using a $300
loan repaid in three months, a $500 loan repaid in five months, and a $1,000
loan repaid in 10 months, and (ii) a notice containing the following statement:
&#8220;If you wish to file a complaint against us, you may contact the Bureau of
Financial Institutions at [insert contact information].&#8221; The Commission
shall furnish licensees with the appropriate contact information.

19. A licensee shall not knowingly make a short-term loan to a person who is a
member of the military services of the United States or the spouse or other
dependent of a member of the military services of the United States. Prior to
making a short-term loan, every licensee shall inquire of every prospective
borrower if he is a member of the military services of the United States or the
spouse or other dependent of a member of the military services of the United
States. The loan documents shall include verification that the borrower is not a
member of the military services of the United States or the spouse or other
dependent of a member of the military services of the United States.

20. In collecting or attempting to collect a short-term loan, a licensee shall
comply with the restrictions and prohibitions applicable to debt collectors
contained in the Fair Debt Collection Practices Act (15 U.S.C. &#xA7; 1692 et
seq.) regarding harassment or abuse, false or misleading misrepresentations, and
unfair practices in collections.

21. A licensee shall not contact a borrower for any reason other than (i) for
the borrower&#8217;s benefit regarding upcoming payments, options for obtaining
loans, payment options, payment due dates, the effect of default, or, after
default, receiving payments or other actions permitted by the licensee; (ii) to
advise the borrower of missed payments or dishonored checks; or (iii) to assist
the transmittal of payments via a third-party mechanism.

22. A short-term loan agreement shall not be sold or otherwise assigned to any
other person who is not also a licensee, and if a loan agreement or its
servicing is sold or assigned to another licensee, the buyer or assignee of the
loan agreement shall be subject to the same obligations under this chapter that
apply to the selling or assigning licensee. If a licensee sells or assigns a
short-term loan or its servicing, the licensee shall provide to the borrower
written notice and the information needed to make future payments no later than
10 days before the borrower&#8217;s next payment due date.

23. A licensee shall not make a loan to a borrower that includes an acceleration
clause or demand feature that permits the licensee, in the event the borrower
fails to meet the repayment terms for any outstanding balance, to terminate the
loan in advance of the original maturity date and to demand repayment of the
entire outstanding balance, unless both of the following conditions are met: (i)
not earlier than 10 days after the borrower&#8217;s payment was due, the
licensee provides written notice to the borrower of the termination of the loan
and (ii) in addition to the outstanding balance, the licensee collects only
prorated interest and the fees earned up to termination of the loan. For
purposes of this subdivision, the outstanding balance and prorated interest and
fees shall be calculated as if the borrower had voluntarily prepaid the loan in
full on the date of termination.

24. A licensee may not file or initiate a legal proceeding of any kind against a
borrower until 60 days after the date of default on a short-term loan, during
which period the licensee and borrower may voluntarily enter into a repayment
arrangement.

25. A licensee shall not recommend to a borrower that the borrower obtain a loan
for a dollar amount that is higher than the borrower has requested.

26. A licensee may not engage in any unfair, misleading, deceptive, or
fraudulent acts or practices in the conduct of its business.

27. A licensee shall include as part of every loan application a question
regarding whether the potential borrower has been approached, including via
telephone or electronic means, by any person to send money in consideration of
receiving money via a government or lottery organization.

HISTORY: 2002, c. 897, § 6.1-459; 2003, c. 593; 2004, c. 295; 2005, c. 571;
2008, cc. 849, 876; 2010, c. 794; 2016, c. 501; 2020, cc. 1215, 1258; 2023, c.
287.