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.