A person, including a person doing business from outside this state, may not engage in the business of making or offering to make deferred deposit advances in this state without having a license under this chapter. A separate license is required for each physical location or Internet website from which the person conducts the business.
AS 06.50.020. Qualifications For License.(a) To qualify for a license, an applicant shall
(1) have cash assets of at least $25,000, as determined under generally accepted accounting principles, except that an applicant who wants to engage in the business of making advances at more than one location in the state shall have cash assets of at least $25,000 for each location;
(2) demonstrate the financial responsibility, financial condition, business experience, character, and general fitness that reasonably warrant the department's belief that the applicant's business will be conducted lawfully and fairly; when determining whether this qualification has been met, and for the purpose of investigating compliance with this chapter, the department may review
(A) the relevant business records of the applicant and the adequacy of the capital of the applicant;
(B) the competence, experience, integrity, and financial ability of the applicant, and, if the applicant is an entity, of any person who is a member, partner, director, senior officer, or owner of 10 percent or more of the equity of the applicant; and
(C) a record of conviction, on the part of the applicant or a person described in (B) of this paragraph, of
(i) criminal activity, fraud, or other act of personal dishonesty;
(ii) an act, an omission, or a practice that constitutes a breach of a fiduciary duty; or
(iii) a suspension, a revocation, a removal, or an administrative act by an agency or a department of the United States or a state from participation in the conduct of a business;
(3) if the person has a physical business location in the state, have a physical business location that is accessible by and convenient to the public;
(4) have a current business license issued under AS 43.70; and
(5) if applicable, have a certificate of incorporation under AS 10.06.218, have a certificate of authority under AS 10.06.705 , have a copy of articles of organization that satisfies AS 10.50.090 , be registered under AS 10.50.605 , have a statement of foreign qualification filed under AS 32.06.922 , have a certificate of limited partnership filed under AS 32.11.060 , or be registered under AS 32.11.420.
(b) The requirements in (a) of this section are continuing in nature and may be reviewed periodically by the department.
AS 06.50.030. Application.(a) An application for a license must be in writing and under oath, in a form prescribed by the department by regulation, and include at least
(1) the legal name, residence, and business address of the applicant and, if the applicant is not a natural person, of each member, partner, director, senior officer, or owner of 10 percent or more of the equity of the applicant;
(2) the address and physical location of the principal place of business named in the application; and
(3) other information the department may require with respect to the applicant and, if the applicant is not a natural person, about the applicant's members, partners, directors, senior officers, or owners of 10 percent or more of the equity of the applicant.
(b) The applicant shall submit with the application the bond required by AS 06.50.040 and a nonrefundable application fee in an amount that is established by the department by regulation and that does not exceed $3,000. The application fee for the initial license may not be prorated.
AS 06.50.040. Bond.(a) An applicant for a license shall file with the application a bond
(1) in a form to be approved by the department;
(2) in which the applicant is the obligor; and
(3) in the sum of $25,000 for a business with one location and $50,000 for a business with more than one location.
(b) Only one bond is required for an application for a business with more than one location.
(c) The bond required by (a) of this section is for the use of the state and a person who may have a cause of action against the obligor under this chapter.
(d) The bond must state that the obligor will
(1) faithfully conform to and abide by the provisions of this chapter and regulations adopted by the department under this chapter; and
(2) pay to the state and to a person all money that may become due or owing to the state or to the person from the applicant under this chapter.
(e) The bond must remain in effect for three years following the denial of a renewal of a license or the expiration of a license.
(f) If, at any time, the department finds that a bond filed under (a) of this section is unsatisfactory for any reason, the department may require the licensee to file, within 10 days after the receipt of a written demand, an additional bond to comply with this section.
(g) The licensee shall file a new bond that complies with this section each time a license is renewed.
AS 06.50.050. Investigation By Department.Within 60 days after an applicant files a completed application, the bond, and an application fee, the department shall investigate whether the applicant satisfies the qualifications of AS 06.50.020 (a). If the department finds that the applicant satisfies the qualifications, it shall approve the application and issue the applicant a license to engage in the business of making deferred deposit advances.
AS 06.50.060. Conditions Precedent to License.The requirements of AS 06.50.030 - 06.50.050 are conditions precedent to the issuance of a license under this chapter. The license permits the applicant to make advances under this chapter at the location specified in the application.
AS 06.50.070. Duration of License.A license issued under this chapter is valid for two calendar years. Each license remains in force through the calendar year after the calendar year in which the license was issued unless surrendered, suspended, or revoked under this chapter.
AS 06.50.080. Renewal of License.A license issued under this chapter shall be renewed on or before the date set by the department by submitting to the department a completed renewal application on a form established by the department and paying a nonrefundable renewal fee established by the department, which may not exceed $3,000.
AS 06.50.090. Denial of License or Renewal.(a) If the department determines that an applicant is not qualified to receive a license or a license renewal, the department shall notify the applicant in writing within 20 days that the application has been denied and state the basis for the denial.
(b) The decision of the department to deny an application or a renewal may be reviewed in the manner provided in AS 44.62.330 - 44.62.630 (Administrative Procedure Act).
(c) If the denial of a renewal is upheld, the former licensee shall return the license to the department within 10 days after the former licensee receives notice of the denial.
(d) A license application shall be considered withdrawn within the meaning of this section if the applicant fails to respond to a written notification of a deficiency in the application within 60 days after the date of the notification.
(e) If a license renewal is denied or if a license is surrendered, suspended, or revoked, all accounts of the licensee remain subject to this chapter until paid in full.
Article 02. LICENSE TRANSFER, ASSIGNMENT, CONTROL, AND CHANGE
AS 06.50.200. Transfer or Assignment.Except for the transfer of a license to a new location under AS 06.50.220, a licensee may not transfer or assign the licensee's license.
AS 06.50.210. Change in Control.The prior written approval of the department is required for the continued operation of a licensee's deferred deposit advance business when a change in control of the licensee is proposed. The department may require the information it considers necessary to determine whether a new application is required. The licensee requesting approval of the change in control shall pay all reasonable expenses incurred by the department to investigate and approve or deny the change in control.
AS 06.50.220. Change in Location or Name.A licensee shall notify the department in writing at least 15 days before any proposed change in the licensee's business location or name, and shall provide the department with the information described in AS 06.50.030(a).
AS 06.50.230. Conduct of Other Business.A licensee may conduct other business at a location where it engages in making advances unless it conducts the other business for the purpose of evading or violating the provisions of this chapter.
Article 03. DEPARTMENT SUPERVISION
AS 06.50.300. Suspension or Revocation of License.(a) The department may suspend or revoke a license under AS 44.62 (Administrative Procedure Act) if the department finds that
(1) the licensee has failed to pay the license fee, failed to maintain the required bond in effect, or failed to comply with a demand, ruling, or requirement of the department made under this chapter;
(2) the licensee has violated a provision of this chapter or a regulation adopted by the department under this chapter; or
(3) a fact or condition exists that, if it had existed at the time of the original application for the license, clearly would have constituted ground for denial of the issuance of the license.
(b) If the reason for suspension or revocation of a licensee's license at one location applies generally to all locations operated by the licensee, the department may suspend or revoke all licenses issued to the licensee.
AS 06.50.310. Reports to Department.(a) On or before March 15 of each year, a licensee shall file with the department a composite annual report for the preceding calendar year in the form prescribed by the department relating to all advances made by the licensee. The department may require that the report be submitted under oath or affirmation, or with notice that false statements made are punishable as unsworn falsification under AS 11.56.210 .
(b) The report must include
(1) the total number and dollar amount of advances made by the licensee;
(2) the total number of individual customers who received advances;
(3) the minimum, maximum, and average amount of advances;
(4) the average annual percentage rate of the fee charged for advances;
(5) the average number of days of the advances;
(6) the total number and dollar amount of returned checks;
(7) the total number and dollar amount of checks paid by advance recipients;
(8) the total number and dollar amount of checks charged off as a loss;
(9) the total dollar amount of outstanding advances as of the last day of the calendar year;
(10) the total number of outstanding advances as of the last day of the calendar year; and
(11) any other information the department determines is required to conduct its review.
(c) Within 15 days after the occurrence of any of the following events, a licensee shall file a written report with the department describing the event and its expected effect on the activities of the licensee in the state:
(1) filing for bankruptcy or reorganization by the licensee;
(2) institution of suspension or revocation proceedings against the licensee by a state or other governmental authority;
(3) a felony indictment or felony conviction of the licensee and, if the licensee is not a natural person, of a member, partner, director, senior officer, or holder of 10 percent or more of the licensee's equity; and
(4) other events that the department determines and identifies by regulation that may impair the ability of the licensee to operate its business under this chapter.
(d) In the discretion of the department, the occurrence of an event in (c) of this section may constitute grounds for suspension or revocation of a license.
AS 06.50.320. Records.(a) A licensee shall maintain all records relating to this chapter at the location for which the licensee has a license. The records must conform to generally accepted accounting principles and practices in a manner that will enable the department to determine whether the licensee is complying with the provisions of this chapter. The department shall have unrestricted access to the records of the licensee.
(b) A licensee shall retain records relating to an advance for at least two years after the last entry on the advance, unless otherwise required by the department.
(c) A licensee shall retain records of an advance that is the subject of a court action for at least two years after a judgment or settlement of the court action.
AS 06.50.330. Examinations and Investigations.(a) The department shall examine the business records of a licensee at intervals the department considers appropriate. In addition, for the purpose of discovering violations of this chapter or securing information lawfully required, the department may, at any time, investigate the advances, business transactions, and records of a licensee. For these purposes, the licensee shall provide the department with unrestricted access to the offices, places of business, and records of the licensee. Within 30 days after the department requests payment, the licensee shall pay the department the cost of examination at a rate of $75 an hour for each examiner.
(b) For the purposes of this section, the department may administer oaths or affirmations and, upon its own motion or upon request of a party, may subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of material that is relevant to the investigation, including the existence, description, nature, custody, condition, and location of books, documents, and other tangible items, and the identity and location of persons having knowledge of relevant facts, or other material reasonably calculated to lead to the discovery of admissible evidence.
(c) Upon failure without lawful excuse to obey a subpoena or to give testimony, and upon reasonable notice to all persons affected by the failure, the department may apply to the superior court for an order compelling compliance.
Article 04. LICENSEE PRACTICES AND RECIPIENT RESCISSION AND PAYMENT
AS 06.50.400. Advance Agreement.(a) An advance shall be documented in a written agreement that is signed by the advance recipient and on a form approved by the department.
(b) The agreement must clearly and conspicuously disclose
(1) the name of the licensee;
(2) the date of the advance;
(3) the principal amount of the advance;
(4) a statement of the total amount of fees that may be charged under AS 06.50.460 (a) as a condition of making the advance, expressed both as a dollar amount and as an annual percentage rate;
(5) the repayment terms;
(6) the due date;
(7) an itemization of all disbursements, including disbursements to third parties;
(8) the name and title of the employee who signs the agreement on behalf of the licensee; and
(9) any other item required to be disclosed under state or federal law.
(c) The written agreement required by (a) of this section may not require an advance recipient to waive any rights under 15 U.S.C. 1692 - 1692o (Fair Debt Collection Practices Act) or other state or federal laws that regulate debt collection practices.
AS 06.50.410. Maximum Amount of Advances.A licensee, including a licensee with more than one location, may not make advances to an advance recipient that exceed $500 outstanding in advances to the recipient at one time.
AS 06.50.420. Prohibition On Dividing Advance Amount or Increasing Number of Advances.A licensee may not induce or permit an advance recipient to divide the amount of an advance, or to become obligated, directly, contingently, or both, for more than one advance at the same time, if the purpose or result is to obtain additional origination fees under AS 06.50.460(a)(1).
AS 06.50.430. Prohibition On Collateral and Services.The licensee may not accept collateral or services as security for or payment of an advance.
AS 06.50.440. Duration of Advances.The minimum duration of an advance is 14 days.
AS 06.50.450. Prohibition On Advances On Behalf of Another.A licensee may not make an advance to a person who purports to be acting on behalf of another person.
AS 06.50.460. Fees.(a) Notwithstanding any other provision of law, except for the fee allowed under AS 06.50.510 (b)(3) and where federal law provides otherwise, a licensee may only charge
(1) a nonrefundable origination fee in an amount not to exceed $5; and
(2) a fee that does not exceed $15 for each $100 of an advance, or 15 percent of the total amount of the advance, whichever is less.
(b) A licensee may not charge a fee other than the fees allowed under (a) of this section.
(c) The fees allowed by (a) of this section are considered earned at the time of the transaction and may not be prorated.
(d) A licensee may not charge the advance recipient an additional fee to access the proceeds of an advance.
AS 06.50.470. Renewal of Advance.(a) The minimum term of a renewal of an advance is 14 days.
(b) A licensee may not renew an advance more than two consecutive times, after which the licensee shall require the advance recipient to repay the advance in full.
(c) A licensee may not renew an advance for fees greater than the fees under AS 06.50.460 (a).
AS 06.50.480. Rescission.A person who receives an advance may rescind an advance without cause and without cost, except for the nonrefundable origination fee, at any time before the close of business on the business day following the day on which the advance was made by paying the principal amount of the advance to the licensee in cash or other immediately available funds.
AS 06.50.490. Prohibited Arbitration Requirement.A licensee may not require a recipient to agree to mandatory arbitration.
AS 06.50.500. Posted Fee Notice.A licensee shall post a notice in each business location that discloses the fees that the licensee charges for advances. The fees in the notice must be expressed as a dollar amount, as an annual percentage rate for 14 days for each $100, and as an annual percentage rate for 30 days for each $100. The notice must also contain any other reasonably necessary information required by the department by regulation. The notice shall be posted so that it is conspicuous to an advance recipient or a potential advance recipient. The lettering in the notice must be legible and at least one inch in height.
AS 06.50.510. Required Disclosures Before Disbursement.(a) Before disbursing funds under an advance, a licensee shall provide a clearly written statement that is separate from the written advance agreement required by AS 06.50.400 (a). This disclosure statement must be reviewed and signed by the advance recipient. The licensee shall keep the signed original in the advance file for the recipient and give a copy to the recipient.
(b) The disclosure statement required by (a) of this section must
(1) indicate the advance is intended to address short-term, not long-term, financial needs;
(2) include an explanation of all fees for advances and renewals of advances;
(3) state that the licensee may charge an advance recipient a bad check fee for costs as allowed under AS 09.68.115 (a)(2) if a payment is returned unpaid;
(4) state that, in the event of the advance recipient's default, the licensee may sue the recipient and recover up to $700 over the amount of the payment and, if the payment is a check, recover as permitted under AS 06.50.550 (b);
(5) give the department's address and telephone number for receiving calls regarding customer complaints and concerns;
(6) state that the licensee may not accept collateral or services for an advance;
(7) state that the check given as security for the advance may be negotiated as part of the advance;
(8) state that
(A) the advance recipient may rescind the advance without cause at any time before the close of business on the business day following the day on which the licensee makes the advance by paying the principal amount of the advance to the licensee in cash or other immediately available funds;
(B) if the advance recipient rescinds under this paragraph, the origination fee is not refundable, but the licensee may not charge the recipient another fee, except for a bad check fee for costs as allowed under AS 09.68.115 (a)(2) if the payment is returned unpaid;
(9) state that a criminal action may not be brought against the advance recipient for failure to pay the advance; and
(10) include other information reasonably required by the department to inform and protect advance recipients.
AS 06.50.520. Payment By Licensee.(a) A licensee may give an advance recipient the amount of the advance in cash, by the licensee's business check, by a money order, or by a reasonable electronic payment mechanism, including an electronic funds transfer to the advance recipient's account.
(b) A licensee may not use another form of payment than the form of payment authorized in (a) of this section to make an advance to an advance recipient. In this subsection, 'another form of payment' includes coupons, merchandise, services, or chattel of any kind.
AS 06.50.530. Payment By Advance Recipient.(a) An advance recipient may repay an advance
(1) in cash;
(2) by negotiation of the recipient's check that secures the advance; or
(3) with the agreement of the licensee, a debit card, a cashier's check, an electronic funds transfer from the recipient's bank account, or a reasonable electronic payment mechanism to which the parties agree.
(b) An advance is paid in full when the advance recipient repays the advance under (a) of this section, or when the advance recipient rescinds the advance under AS 06.50.480 .
(c) A licensee may not accept payment of an advance from the proceeds of another advance provided by the same licensee.
AS 06.50.540. Default Fees.If a payment received from an advance recipient is returned unpaid to a licensee, the licensee may not collect the fees allowed by this chapter unless the fees are disclosed in the agreement for the advance under AS 06.50.400.
AS 06.50.550. Collection or Court Action After Default.(a) If an advance recipient defaults, before assigning the payment obligation to a third party for collection and before initiating a court action against the recipient, a licensee
(1) shall attempt in good faith to contact the advance recipient at reasonable times by telephone or mail to discuss the delinquency and to offer the recipient a payment plan under (2) of this subsection;
(2) shall offer the recipient a payment plan under which
(A) the recipient may repay the delinquent advance over an extended period of time, which may not exceed six months;
(B) at least five percent of the outstanding balance is due when the payment plan is signed;
(C) an additional fee by the licensee is not allowed, except for a bad check fee for costs as allowed under AS 09.68.115 (a)(2);
(3) in addition to the contact required by (1) of this subsection, shall send a certified letter to the recipient's last known address at least 15 days before the action that makes the offer described in (2) of this subsection and that informs the recipient of the licensee's intent to proceed with a court action.
(b) The licensee may initiate a court action against a defaulting recipient to recover damages and costs allowed under AS 09.68.115 if the licensee has complied with (a) of this section. Notwithstanding AS 09.68.115, the total of all damages and costs, including damages recovered under AS 09.68.115 (a), may not exceed the amount of the payment by $700.
AS 06.50.560. Threat of Criminal Action Prohibited.A licensee may not threaten an advance recipient with criminal action as a result of the recipient's default.
Article 05. MISCELLANEOUS PROVISIONS
AS 06.50.600. Regulations.The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.
AS 06.50.610. Relationship to Federal and Other State Law.(a) If a provision of this chapter is preempted by or conflicts with federal law in a particular situation, the provision does not apply to the extent of the preemption or conflict.
(b) If a provision of this chapter conflicts with another state law in a particular situation, the provision in this chapter governs to the extent of the conflict.
Article 06. GENERAL PROVISIONS
AS 06.50.900. Definitions.In this chapter, unless the context requires otherwise,
(1) 'advance' means a deferred deposit advance;
(2) 'advance recipient' means a borrower to whom an advance is made;
(3) 'control,' in the case of a person who is not a natural person, means direct or indirect ownership, the right to vote or otherwise control 10 percent or more of the governance interests of the entity, or the ability of a person to elect a majority of the directors;
(4) 'deferred deposit advance' means a transaction in which a person
(A) accepts a dated check from a person seeking an advance;
(B) agrees to hold the check for a specified period of time before depositing or otherwise negotiating the check; and
(C) pays to the advance recipient, credits to the account of the advance recipient, or pays to another person on behalf of the advance recipient the amount of the check less the charges allowed under this chapter;
(5) 'department' means the Department of Commerce, Community, and Economic Development;
(6) 'license' means a license issued under this chapter;
(7) 'licensee' means a person to whom a license has been issued under this chapter.
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