Bill Text: MS HB1178 | 2022 | Regular Session | Introduced

Mississippi House Bill 1178 (Prior Session Legislation)

Introduced

Bill Title: Commercial Financing Disclosure Law; create.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2022-02-01 - Died In Committee [HB1178 Detail]

Download: Mississippi-2022-HB1178-Introduced.html

MISSISSIPPI LEGISLATURE

2022 Regular Session

To: Banking and Financial Services

By: Representative Carpenter

House Bill 1178

AN ACT TO REQUIRE AN INDIVIDUAL WHO COMPLETES A TRANSACTION OR TRANSACTIONS WITH A BUSINESS LOCATED IN THE STATE OF MISSISSIPPI FOR MORE THAN FIVE COMMERCIAL FINANCIAL PRODUCTS IN ANY CALENDAR YEAR TO DISCLOSE THE TERMS OF SUCH PRODUCT BEFORE THE COMPLETION OF THE TRANSACTION; TO DEFINE CERTAIN TERMS RELATING TO THE COMMERCIAL FINANCIAL DISCLOSURE LAW; TO REQUIRE SUCH INDIVIDUAL TO DISCLOSE CERTAIN INFORMATION IN CONNECTION WITH EACH COMMERCIAL FINANCING PRODUCT; TO PROVIDE CERTAIN EXEMPTIONS FROM THE COMMERCIAL FINANCIAL DISCLOSURE LAW; TO PROVIDE CERTAIN PENALTIES FOR VIOLATIONS OF THE COMMERCIAL FINANCIAL DISCLOSURE LAW; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Commercial Financial Disclosure Law."

SECTION 2. For purposes of this act, the following words and phrases have the following meanings unless context clearly indicates otherwise:

(a) "Account" means a right to payment of a monetary obligation, whether or not earned by performance:

(i) For property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of;

(ii) For services rendered or to be rendered;

(iii) For a policy of insurance issued or to be issued;

(iv) For a secondary obligation incurred or to be incurred;

(v) For energy provided or to be provided;

(vi) For the use or hire of a vessel under a charter or other contract;

(vii) Arising out of the use of a credit or charge card or information contained on or for use with the card; or

(viii) As winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state, or person licensed or authorized to operate the game by a state or governmental unit of a state.

The term "account" includes health-care-insurance receivables. "Account" does not include: rights to payment evidenced by chattel paper or an instrument, commercial tort claims, deposit accounts, investment property, letter-of-credit rights or letters of credit, or rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.

(b) "Accounts receivable purchase transaction" means any transaction in which the business forwards or otherwise sells to the provider all or a portion of the business's accounts or payment intangibles at a discount to their expected value.

(c) "Business" means an individual or group of individuals, sole proprietorship, corporation, limited liability company, trust, estate, cooperative, association, or limited or general partnership engaged in a business activity.

(d) "Business purpose transaction" means any transaction where the proceeds are provided to a business or are intended to be used to carry on a business and not for personal, family or household purposes. For purposes of determining whether a transaction is a "business purpose transaction," the provider may rely on any written statement of intended purpose signed by the business. The statement may be a separate statement or may be contained in an application, agreement or other document signed by the business or the business owner or owners.

(e) "Broker" means any person who, for compensation or the expectation of compensation, obtains a commercial financing product or an offer for a commercial financing product from a third party for a business located in the State of Mississippi.

(f) "Commercial financing product" means any commercial loan, accounts receivable purchase transaction, commercial open-end credit plan, or each to the extent the transaction is a business purpose transaction.

(g) "Commercial Loan" means a loan to a business, whether secured or unsecured.

(h) "Commercial open-end credit plan" means commercial financing extended by any provider under a plan in which:

(i) The provider reasonably contemplates repeat transactions; and

(ii) The amount of financing that may be extended to the business during the term of the plan, up to any limit set by the provider, is generally made available to the extent that any outstanding balance is repaid.

(i) "Depository institution" means:

(i) A bank, trust company, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate, or charter issued by the United States, the State of Mississippi, or any other state, district, territory, or commonwealth of the United States that is authorized to transact business in this state.

(ii) A federally chartered savings and loan association, federal savings bank, or federal credit union that is authorized to transact business in the State of Mississippi.

(iii) A savings and loan association, savings bank, or credit union organized under the laws of the State of Mississippi or any other state that is authorized to transact business in this state.

(j) "General intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. "General intangible" includes payment intangibles and software.

(k) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation.

(l) "Provider" means an individual who completes a transaction or transactions with a business located in the State of Mississippi for more than five (5) commercial financing products in any calendar year. "Provider" includes a person that enters into a written agreement with a depository institution to arrange for the extension of a commercial financing product by the depository institution to a business via an online lending platform administered by the person.

The fact that a provider extends a specific offer for a commercial financing product on behalf of a depository institution shall not be construed to mean that the provider engaged in lending or financing or originated that loan or financing.

SECTION 3. (1) A provider that completes a transaction for a commercial financing product shall disclose the terms of such product as required by this chapter. The disclosures must be provided at or before completion of the transaction and, in the case of a commercial open-end credit plan, the disclosures must also be provided for any disbursement of funds after completion within fifteen (15) days following the last day of the month in which the disbursement of funds occurred under the commercial open-end credit plan.

(2) A provider must disclose the following in connection with each commercial financing product:

(a) The total amount of funds provided to the business under the terms of the commercial financing product. Such disclosure shall be labeled "total amount of funds provided."

(b) The total amount of funds disbursed to the business under the terms of the commercial financing product, if less than the total amount of funds provided, as a result of any fees deducted or withheld at disbursement and any amount paid to a third party on behalf of the business. This disclosure shall be labeled "total amount of funds disbursed."

(c) The total amount to be paid to the provider pursuant to the commercial financing product agreement. This disclosure shall be labeled "total of payments."

(d) The total dollar cost of the commercial financing product under the terms of the agreement, derived by subtracting the total amount of funds provided from the total of payments. This calculation shall include any fees or charges deducted by the provider from the total amount of funds provided. This disclosure shall be labeled "total dollar cost of financing."

(e) The manner, frequency and amount of each payment, which shall be labeled "payments." If the payments may vary, the provider shall instead disclose the manner, frequency and the estimated amount of the initial payment labeled "estimated payments" and the commercial financing product agreement must include a description of the methodology for calculating any variable payment and the circumstances when payments may vary.

(f) A statement of whether there are any costs or discounts associated with prepayment of the commercial financing product including a reference to the paragraph in the agreement that creates the contractual rights of the parties related to prepayment. This disclosure shall be labeled "prepayment."

(g) A statement of whether the provider will pay compensation directly to a broker in connection with the commercial financing product and the amount of compensation.

SECTION 4. This chapter does not apply to any of the following:

(a) A provider that is a depository institution.

(b) A provider that is a lender regulated under the federal Farm Credit Act (12 USC Section 2001 et seq.).

(d) A commercial financing product in which the recipient is a motor vehicle dealer or an affiliate of such a dealer, or a vehicle rental company, or an affiliate of such a company, pursuant to a commercial loan or commercial open-end credit plan of at least Fifty Thousand Dollars ($50,000.00).

(e) A provider that is licensed as a money transmitter in accordance with a license, certificate, or charter issued by the State of Mississippi, or any other state, district, territory, or commonwealth of the United States.

(f) A provider that completes no more than five (5) commercial financing products in the State of Mississippi in a twelve-month period.

SECTION 5. (1) A person who violates any provision of this chapter shall be punishable by a fine of Five Hundred Dollars ($500.00) for each violation, not to exceed Twenty Thousand Dollars ($20,000.00) for all aggregated violations arising from the use of the transaction documentation or materials found to be in violation of this chapter.

A person who violates any provision of this chapter after receiving written notice of a prior violation from the Attorney General shall be punishable by a fine of One Thousand Dollars ($1,000.00) for each violation, not to exceed Fifty Thousand Dollars ($50,000.00) for all aggregated violations arising from the use of the transaction documentation or materials found to be in violation of this chapter.

(2) Violation of any provision of this chapter will not affect the enforceability or validity of the underlying agreement.

(3) Nothing in this chapter is intended to, or does, create a private right of action against any person or other entity based upon compliance or noncompliance with its provisions.

(4) Authority to enforce compliance with this chapter is vested exclusively in the Attorney General.

SECTION 6. This act shall take effect and be in force from and after July 1, 2022.