Capital letters indicate new material to be added to existing statute.

Dashes through the words indicate deletions from existing statute.

First Regular Session

Sixty-first General Assembly

LLS NO. 97­0626.01 GWF HOUSE BILL 97­1287

STATE OF COLORADO

BY REPRESENTATIVE G. Berry;

also SENATOR Bishop. REREVISED

BUSINESS AFFAIRS & LABOR

A BILL FOR AN ACT

CONCERNING REGULATIONS RELATING TO CONSUMER CREDIT TRANSACTIONS THAT ARE ENFORCED BY THE UNIFORM CREDIT CODE ADMINISTRATOR.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

Makes the following changes to the Uniform Consumer Credit Code (UCCC):

$ Increases the maximum amount of a consumer credit sale that is subject to the UCCC from $25,000 to $72,500. Expands the sales of goods or services that are subject to the UCCC from debts of $52,500 or less secured by a mobile home to any sale secured by an interest in land.

$ Increases the amount of a consumer loan that is subject to UCCC from $25,000 to $72,500 and eliminates the separate requirement for a debt secured by a mobile home.

$ Changes the amount of the delinquency charge the parties to a consumer credit sale may agree to by contract. Requires sellers to notify debtors in writing of the amount of a delinquency charge before the due date of the next scheduled payment. Requires sellers to assess delinquency charges within 30 days of the due date of any unpaid instalment payment. Prohibits sellers from imposing a credit service charge on a delinquency charge.

$ Makes all consumer loans, precomputed or otherwise, subject to maximum delinquency charges on unpaid instalment of $15 or, if the loan is secured by an interest in land, 5% of the unpaid instalment. Eliminates certain prohibitions on the collection of delinquency charges.

$ Adds state­chartered, out­of­state financial institutions conducting interstate branch banking in Colorado to the definition of "supervised financial organization". Specifies that such institutions shall be subject to the power of examination and investigation exercised by the division of banking and the division of financial services.

$ Modifies the parties that are required to pay specified fees.

$ Makes a lender's notice of change in the terms of a revolving loan account subject to disapproval upon written notice by the debtor. Allows a change in terms to be effective if provided in the lender's notice. Allows a debtor who disapproves a change to make repayment under the existing terms.

Requires collection agencies collecting debts to disclose that they are collecting a debt when communicating orally with individuals, rather than only when communicating in writing. Requires debt collectors to disclose that they are collecting debts in subsequent communications rather than only in initial communications.

Eliminates certain requirements contained in the "Colorado Credit Services Organization Act". Repeals the surety bond requirements for credit services organizations. Eliminates certain requirements to be provided in a credit services organization disclosure statement to a buyer. Eliminates the ability of a person who is entitled to recover from a credit services organization to petition to the secretary of state for relief under such bond.


Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  5­2­104 (1) (e), Colorado Revised Statutes, 1992 Repl. Vol., is amended to read:

5­2­104.  Definition: "consumer credit sale". (1)  Except as provided in subsection (2) of this section, "consumer credit sale" is a sale of goods, services, a mobile home, or an interest in land in which:

(e)  With respect to a sale of goods or services, UNLESS A HIGHER AMOUNT IS PROVIDED IN THE FEDERAL CONSUMER CREDIT PROTECTION ACT, 15 U.S.C. 1603 (3), AS IT MAY BE AMENDED FROM TIME TO TIME, the amount financed does not exceed twenty­five thousand dollars, or, if the debt is secured by a mobile home which is used as the primary residence of the debtor, the amount financed does not exceed fifty­two thousand five hundred dollars, OR THE DEBT IS SECURED BY AN INTEREST IN LAND.

SECTION 2.  5­3­104 (1) (d), Colorado Revised Statutes, 1992 Repl. Vol., is amended to read:

5­3­104.  Definition: "consumer loan". (1)  Except as provided in subsection (2) of this section and except with respect to a loan primarily secured by an interest in land (section 5­3­105), "consumer loan" is a loan made or arranged by a person regularly engaged in the business of making loans in which:

(d)  UNLESS A HIGHER AMOUNT IS PROVIDED IN THE FEDERAL CONSUMER CREDIT PROTECTION ACT, 15 U.S.C. 1603 (3), AS IT MAY BE AMENDED FROM TIME TO TIME, either the principal does not exceed twenty­five thousand dollars or the debt is secured by an interest in land, or, if the debt is secured by a mobile home which is used as the primary residence of the debtor, the principal does not exceed fifty­two thousand five hundred dollars.

SECTION 3.  5­2­203 (1), (2), and (3), Colorado Revised Statutes, 1992 Repl. Vol., are amended to read:

5­2­203.  Delinquency charges. (1)  With respect to a precomputed consumer credit sale, refinancing, or consolidation, the parties may contract for a delinquency charge on any instalment not paid in full within ten days after its scheduled due date in an amount not exceeding: the greater of:

(a)  An amount, not exceeding ten FIFTEEN dollars which is five percent of the unpaid amount of the instalment FOR A NON­REAL ESTATE SECURED TRANSACTION; or

(b)  The deferral charge (subsection (1) of section 5­2­204) that would be permitted to defer the unpaid amount of the instalment for the period that it is delinquent. FIVE PERCENT OF THE UNPAID AMOUNT OF THE INSTALMENT IF THE TRANSACTION IS SECURED BY AN INTEREST IN LAND.

(2)  A delinquency charge under paragraph (a) of subsection (1) of this section may be collected only once on an instalment however long it remains in default. No delinquency charge may be collected if the instalment has been deferred and a deferral charge (section 5­2­204) has been paid or incurred until ten days after the deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter. A SELLER WHO HAS IMPOSED A DELINQUENCY CHARGE PURSUANT TO SUBSECTION (1) OF THIS SECTION SHALL NOTIFY THE DEBTOR IN WRITING OF THE AMOUNT OF THE DELINQUENCY CHARGE ASSESSED BEFORE THE DUE DATE OF THE NEXT SCHEDULED PAYMENT. A SELLER SHALL NOT ASSESS A DELINQUENCY CHARGE UNLESS THE DELINQUENCY CHARGE IS ASSESSED WITHIN THIRTY DAYS OF THE SCHEDULED DUE DATE OF ANY INSTALMENT NOT PAID IN FULL.

(3)  No delinquency charge may be collected on an instalment which THAT is paid in full within ten days after its scheduled instalment due date even though an earlier maturing instalment or a delinquency charge on an earlier instalment may not have been paid in full. For purposes of this subsection (3), payments are applied first to current instalments and then to delinquent instalments. NO CREDIT SERVICE CHARGE MAY BE ASSESSED ON THE DELINQUENCY CHARGE.

SECTION 4.  5­3­203 (1), (2), (3), (5) (a), and (5) (b), Colorado Revised Statutes, 1992 Repl. Vol., as amended, are amended to read:

5­3­203.  Delinquency charges. (1)  EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, with respect to a precomputed consumer loan, refinancing, or consolidation, the parties may contract for a delinquency charge on any instalment not paid in full within ten days after its scheduled due date. in an amount not exceeding the greater of:

(a)  An amount, not exceeding ten dollars, which is five percent of the unpaid amount of the instalment, or

(b)  The deferral charge (subsection (1) of section 5­3­204) that would be permitted to defer the unpaid amount of the instalment for the period that it is delinquent.

(2)  A delinquency charge under paragraph (a) of subsection (1) or subsection (5) of this section may be collected only once on an instalment however long it remains in default. No delinquency charge may be collected if the instalment has been deferred and a deferral charge (section 5­3­204) has been paid or incurred until ten days after the deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter.

(3)  No delinquency charge may be collected on an instalment which is paid in full within ten days after its scheduled instalment due date even though an earlier maturing instalment or a delinquency charge on an earlier instalment may not have been paid in full. For purposes of this subsection (3), payments are applied first to current instalments and then to delinquent instalments.

(5) (a)  Except as provided in paragraph (b) of this subsection (5), with respect to a consumer loan, refinancing, or consolidation which is not precomputed, including a revolving loan account, the parties may contract for a delinquency charge on any instalment not paid in full within ten days after its scheduled due date in an amount not exceeding fifteen dollars; except that the provisions of this paragraph (a) shall not apply to a revolving loan account for which a lender credit card is issued by the lender to the debtor.

(b)  With respect to a consumer loan, refinancing, or consolidation which is not precomputed and which THAT is secured by an interest in land, including a revolving loan account, the parties may contract for a delinquency charge on any instalment not paid in full within ten days after its scheduled due date in an amount not exceeding five percent of the unpaid amount of the instalment.

SECTION 5.  5­1­301 (17), Colorado Revised Statutes, 1992 Repl. Vol., is amended to read:

5­1­301.  General definitions.  In addition to definitions appearing in subsequent articles, in this code:

(17)  "Supervised financial organization" means a person, other than an insurance company or other organization primarily engaged in an insurance business,

(a)  Organized, chartered, or holding an authorization certificate under the laws of this state or of the United States OR, AS OF JUNE 1, 1997, OF ANY OTHER STATE IN THE CASE OF AN OUT­OF­STATE, STATE­CHARTERED FINANCIAL INSTITUTION THAT IS CONDUCTING INTERSTATE BRANCHING IN COLORADO PURSUANT TO ARTICLE 6.4 OR 25 OF TITLE 11, C.R.S., which authorize the person to make loans and to receive deposits, including a savings, share, certificate, or deposit account, and

(b)  Subject to supervision by an official or agency of this state or of the United States OR, AS OF JUNE 1, 1997, OF ANY OTHER STATE IN THE CASE OF AN OUT­OF­STATE, STATE­CHARTERED FINANCIAL INSTITUTION THAT IS CONDUCTING INTERSTATE BRANCHING IN COLORADO PURSUANT TO ARTICLE 6.4 OR 25 OF TITLE 11, C.R.S.

SECTION 6.  5­6­105 (1), Colorado Revised Statutes, 1992 Repl. Vol., is amended to read:

5­6­105.  Administrative powers with respect to supervised financial organizations. (1)  With respect to supervised financial organizations, the powers of examination and investigation (sections 5­3­506 and 5­6­106) and administrative enforcement (section 5­6­108) shall be exercised by the official or agency to whose supervision the organization is subject. AS OF JUNE 1, 1997, WITH REGARD TO OUT­OF­STATE, STATE­CHARTERED FINANCIAL INSTITUTIONS THAT ARE CONDUCTING INTERSTATE BRANCHING IN COLORADO PURSUANT TO ARTICLE 6.4 OR 25 OF TITLE 11, C.R.S., THESE POWERS SHALL BE EXERCISED BY THE DIVISION OF BANKING AND THE DIVISION OF FINANCIAL SERVICES, AS APPROPRIATE. All other powers of the administrator under this code may be exercised by him THE ADMINISTRATOR with respect to a supervised financial organization.

SECTION 7.  5­6­203 (1) (a), the introductory portion to 5­6­203 (1) (b), and 5­6­203 (3), Colorado Revised Statutes, 1992 Repl. Vol., are amended to read:

5­6­203.  Fees. (1) (a)  A person required to file notification shall, with the first notification and on or before January 31 of each year thereafter, pay to the administrator a nonrefundable annual notification fee of twenty dollars; except that a supervised lender other than a supervised financial organization, WHICH ONLY MAKES OR TAKES ASSIGNMENT OF SUPERVISED LOANS, shall pay, with the filing of the first notification and on or before January 31 of each year thereafter, a nonrefundable annual license fee, of four hundred dollars for each license issued. and except that a person licensed pursuant to part 5 of article 3 of this title which does not make consumer loans and which is licensed pursuant to article 14 of title 12, C.R.S., shall pay, with the filing of the first notification and on or before January 31 of each year thereafter, a nonrefundable annual notification fee of twenty dollars for each license issued pursuant to part 5 of article 3 of this title.

(b)  A person engaged in making consumer credit sales shall be required to pay the notification fee specified in this subsection (1) only if he OR SHE HOLDS CONSUMER CREDIT SALES OBLIGATIONS FOR MORE THAN THIRTY DAYS AFTER THE INCEPTION OF THE SALES AND:

(3)  Except as to a supervised financial organization, or other supervised lender, persons required to file notification who are assignees shall pay an additional nonrefundable annual volume fee on or before January 31 of each year in the amount of twelve dollars for each one hundred thousand dollars, or part thereof, of the unpaid balances at the time of the assignment of obligations arising from consumer credit sales, consumer leases, and consumer loans made in this state taken by assignment during the preceding calendar year, but an assignee need not pay a volume fee with respect to an obligation on which the assignor or other person has already paid a volume fee.

SECTION 8.  12­14­107 (1) (l), Colorado Revised Statutes, 1991 Repl. Vol., as amended, is amended to read:

12­14­107.  False or misleading representations. (1)  A debt collector or collection agency shall not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, including, but not limited to, the following conduct:

(l)  Except as otherwise provided for communications to acquire location information under section 12­14­104, the failure to disclose clearly, in the initial written communication made to collect a debt or obtain information about a consumer, AND IF THE INITIAL COMMUNICATION IS ORAL, IN THAT INITIAL ORAL COMMUNICATION, that the debt collector or collection agency is attempting to collect a debt and that any information obtained will be used for that purpose AND THE FAILURE TO DISCLOSE IN SUBSEQUENT COMMUNICATIONS THAT THE COMMUNICATION IS FROM A DEBT COLLECTOR OR COLLECTION AGENCY; EXCEPT THAT THIS PARAGRAPH (l) SHALL NOT APPLY TO A FORMAL PLEADING MADE IN CONNECTION WITH A LEGAL ACTION;

SECTION 9.  12­14.5­103 (5), Colorado Revised Statutes, 1991 Repl. Vol., is repealed as follows:

12­14.5­103.  Definitions. As used in this article, unless the context otherwise requires:

(5)  "Surety bond" means a bond issued by a company qualified to issue surety bonds pursuant to title 10, C.R.S.

SECTION 10.  12­14.5­104 (1) (a), Colorado Revised Statutes, 1991 Repl. Vol., is amended to read:

12­14.5­104.  Prohibited acts. (1)  A credit services organization, its salespersons, agents, and representatives, and independent contractors who sell or attempt to sell the services of a credit services organization shall not:

(a)  Charge or receive any money or other valuable consideration prior to full and complete performance of the services the credit services organization has agreed to perform for the buyer; unless the credit services organization has obtained a surety bond of ten thousand dollars issued by a surety company authorized to do business in this state and is in compliance with the requirements of section 12­14.5­105;

SECTION 11.  12­14.5­105, Colorado Revised Statutes, 1991 Repl. Vol., is repealed as follows:

12­14.5­105. Surety bond. (1)  If a credit services organization elects, pursuant to section 12­14.5­104 (1) (a), to obtain a surety bond, the following requirements shall be met:

(a)  Such surety bond shall be payable to the state of Colorado.

(b)  A copy of a current surety bond shall be on file with the office of the secretary of state at all times during which such credit services organization is doing business in this state. Fees shall be established by the secretary of state in accordance with the provisions of section 24­21­104, C.R.S.

(c)  If such credit services organization later terminates doing business in this state, it shall file a notice of termination with the secretary of state and maintain a current surety bond for at least six months after the filing of such notice.

SECTION 12.  12­14.5­107 (1), Colorado Revised Statutes, 1991 Repl. Vol., as amended, is amended to read:

12­14.5­107.  Content of written disclosure. (1)  The information statement required pursuant to section 12­14.5­106 shall be printed in at least ten­point type and shall include:

(a)  The following statements concerning consumer credit reports and consumer credit agencies:

"RIGHTS UNDER COLORADO AND FEDERAL LAW

You have a right to obtain a copy of your credit report from a credit bureau for a small fee. You have a right to dispute inaccurate information by contacting the credit bureau directly. However, you have no right to have accurate information removed from your credit bureau report. Under the federal "Fair Credit Reporting Act", the credit bureau must remove accurate negative information from your report only if it is over 7 years old. Bankruptcy can be reported for 10 years. Even when a debt has been completely repaid, your report can show that it was paid late if that is accurate. You have a right to sue a credit repair company that violates the "Colorado Credit Services Organization Act". This law prohibits deceptive practices by repair companies. The "Colorado Credit Services Organization Act" also gives you a right to cancel your contract for any reason within 5 working days from the date you sign it.

The Federal Trade Commission enforces the federal "Fair Credit Reporting Act". For more information, call or write the Denver regional office of the Federal Trade Commission. The administrator of the uniform consumer credit code enforces the "Colorado Credit Services Organization Act". For more information, call or write the Colorado attorney general's office."; AND

(b)  A complete and detailed description of the services to be performed by the credit services organization for the buyer and the total amount the buyer will have to pay, or become obligated to pay, for the services.

(c)  A statement of the buyer's right to proceed against the bond required under section 12­14.5­104 (1) (a) in the event of any violation of this article; and

(d)  The name and address of the surety company that issued the bond.

SECTION 13.  12­14.5­111 (3), Colorado Revised Statutes, 1991 Repl. Vol., is repealed as follows:

12­14.5­111.  Damages. (3)  Any person who is entitled to recover damages, costs, or attorney fees from a credit services organization may petition the secretary of state for relief under any surety bond established pursuant to section 12­14.5­104 (1) (a).

SECTION 14.  Effective date.  This act shall take effect July 1, 1997.

SECTION 15.  Safety clause.  The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.