Engrossed Version, House Bill 1359

    January 16, 2008, read first time and referred to Committee on Financial Institutions.
    January 24, 2008, amended, reported _ Do Pass.
    January 28, 2008, read second time, amended, ordered engrossed.
    January 29, 2008, engrossed.
    January 30, 2008, read third time, passed. Yeas 94, nays 0.

SENATE ACTION

    February 5, 2008, read first time and referred to Committee on Insurance and Financial Institutions.
    February 18, 2008, amended, reported favorably _ Do Pass.
    February 21, 2008, read second time, amended, ordered engrossed.

Reprinted

February 22, 2008

Second Regular Session 115th General Assembly (2008)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in ~~this~~ ~~style~~ ~~type.~~
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or ~~this~~ ~~style~~ ~~type~~ reconciles conflicts between statutes enacted by the 2007 Regular Session of the General Assembly.

ENGROSSED

HOUSE BILL No. 1359

A BILL FOR AN ACT to amend the Indiana Code concerning financial institutions.

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

SOURCE: IC 4-22-2-37.1; (08)EH1359.2.1. -->     SECTION 1. IC 4-22-2-37.1, AS AMENDED BY HEA 1137-2008, SECTION 9, AS AMENDED BY SEA 156-2008, SECTION 1, AND AS AMENDED BY SEA 190-2008, SECTION 17, IS CORRECTED AND AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 37.1. (a) This section applies to a rulemaking action resulting in any of the following rules:
        (1) An order adopted by the commissioner of the Indiana department of transportation under IC 9-20-1-3(d) or IC 9-21-4-7(a) and designated by the commissioner as an emergency rule.
        (2) An action taken by the director of the department of natural resources under IC 14-22-2-6(d) or IC 14-22-6-13.
        (3) An emergency temporary standard adopted by the occupational safety standards commission under IC 22-8-1.1-16.1.
        (4) An emergency rule adopted by the solid waste management board under IC 13-22-2-3 and classifying a waste as hazardous.

        (5) A rule, other than a rule described in subdivision (6), adopted by the department of financial institutions under IC 24-4.5-6-107 and declared necessary to meet an emergency.
        (6) A rule required under IC 24-4.5-1-106 that is adopted by the department of financial institutions and declared necessary to meet an emergency under IC 24-4.5-6-107.
        (7) A rule adopted by the Indiana utility regulatory commission to address an emergency under IC 8-1-2-113.
        (8) An emergency rule adopted by the state lottery commission under IC 4-30-3-9.
        (9) A rule adopted under IC 16-19-3-5 or IC 16-41-2-1 that the executive board of the state department of health declares is necessary to meet an emergency.
        (10) An emergency rule adopted by the Indiana finance authority under IC 8-21-12.
        (11) An emergency rule adopted by the insurance commissioner under IC 27-1-23-7.
        (12) An emergency rule adopted by the Indiana horse racing commission under IC 4-31-3-9.
        (13) An emergency rule adopted by the air pollution control board, the solid waste management board, or the water pollution control board under IC 13-15-4-10(4) or to comply with a deadline required by or other date provided by federal law, provided:
            (A) the variance procedures are included in the rules; and
            (B) permits or licenses granted during the period the emergency rule is in effect are reviewed after the emergency rule expires.
        (14) An emergency rule adopted by the Indiana election commission under IC 3-6-4.1-14.
        (15) An emergency rule adopted by the department of natural resources under IC 14-10-2-5.
        (16) An emergency rule adopted by the Indiana gaming commission under IC 4-32.2-3-3(b), IC 4-33-4-2, IC 4-33-4-3, or IC 4-33-4-14, or IC 4-35-4-2.
        (17) An emergency rule adopted by the alcohol and tobacco commission under IC 7.1-3-17.5, IC 7.1-3-17.7, or IC 7.1-3-20-24.4.
        (18) An emergency rule adopted by the department of financial institutions under IC 28-15-11.
        (19) An emergency rule adopted by the office of the secretary of family and social services under IC 12-8-1-12.

        (20) An emergency rule adopted by the office of the children's health insurance program under IC 12-17.6-2-11.
        (21) An emergency rule adopted by the office of Medicaid policy and planning under IC 12-15-41-15. or IC ~~12-15-44-19(b).~~
        (22) An emergency rule adopted by the Indiana state board of animal health under IC ~~15-2.1-18-21.~~ IC 15-17-10-9.
        (23) An emergency rule adopted by the board of directors of the Indiana education savings authority under IC 21-9-4-7.
        (24) An emergency rule adopted by the Indiana board of tax review under IC 6-1.1-4-34 (repealed).
        (25) An emergency rule adopted by the department of local government finance under IC 6-1.1-4-33 (repealed).
        (26) An emergency rule adopted by the boiler and pressure vessel rules board under IC 22-13-2-8(c).
        (27) An emergency rule adopted by the Indiana board of tax review under IC 6-1.1-4-37(l) (repealed) or an emergency rule adopted by the department of local government finance under IC 6-1.1-4-36(j) (repealed) or IC 6-1.1-22.5-20.
        (28) An emergency rule adopted by the board of the Indiana economic development corporation under IC 5-28-5-8.
        (29) A rule adopted by the department of financial institutions under IC 34-55-10-2.5.
        (30) A rule adopted by the Indiana finance authority:
            (A) under IC 8-15.5-7 approving user fees (as defined in IC 8-15.5-2-10) provided for in a public-private agreement under IC 8-15.5;
            (B) under IC 8-15-2-17.2(a)(10):
                (i) establishing enforcement procedures; and
                (ii) making assessments for failure to pay required tolls;
            (C) under IC 8-15-2-14(a)(3) authorizing the use of and establishing procedures for the implementation of the collection of user fees by electronic or other nonmanual means; or
            (D) to make other changes to existing rules related to a toll road project to accommodate the provisions of a public-private agreement under IC 8-15.5.
        (31) An emergency rule adopted by the board of the Indiana health informatics corporation under IC 5-31-5-8.
    (b) The following do not apply to rules described in subsection (a):
        (1) Sections 24 through 36 of this chapter.
        (2) IC 13-14-9.
    (c) After a rule described in subsection (a) has been adopted by the

agency, the agency shall submit the rule to the publisher for the assignment of a document control number. The agency shall submit the rule in the form required by section 20 of this chapter and with the documents required by section 21 of this chapter. The publisher shall determine the format of the rule and other documents to be submitted under this subsection.
    (d) After the document control number has been assigned, the agency shall submit the rule to the publisher for filing. The agency shall submit the rule in the form required by section 20 of this chapter and with the documents required by section 21 of this chapter. The publisher shall determine the format of the rule and other documents to be submitted under this subsection.
    (e) Subject to section 39 of this chapter, the publisher shall:
        (1) accept the rule for filing; and
        (2) electronically record the date and time that the rule is accepted.
    (f) A rule described in subsection (a) takes effect on the latest of the following dates:
        (1) The effective date of the statute delegating authority to the agency to adopt the rule.
        (2) The date and time that the rule is accepted for filing under subsection (e).
        (3) The effective date stated by the adopting agency in the rule.
        (4) The date of compliance with every requirement established by law as a prerequisite to the adoption or effectiveness of the rule.
    (g) Subject to subsection (h), IC 14-10-2-5, IC 14-22-2-6, IC 22-8-1.1-16.1, and IC 22-13-2-8(c), and except as provided in subsections (j), (k), and (l), a rule adopted under this section expires not later than ninety (90) days after the rule is accepted for filing under subsection (e). Except for a rule adopted under subsection (a)(13), (a)(24), (a)(25), or (a)(27), the rule may be extended by adopting another rule under this section, but only for one (1) extension period. The extension period for a rule adopted under subsection (a)(28) may not exceed the period for which the original rule was in effect. A rule adopted under subsection (a)(13) may be extended for two (2) extension periods. Subject to subsection (j), a rule adopted under subsection (a)(24), (a)(25), or (a)(27) may be extended for an unlimited number of extension periods. Except for a rule adopted under subsection (a)(13), for a rule adopted under this section to be effective after one (1) extension period, the rule must be adopted under:
        (1) sections 24 through 36 of this chapter; or
        (2) IC 13-14-9;

as applicable.
    (h) A rule described in subsection ~~(a)(6),~~ (a)(8), (a)(12), or (a)(29) expires on the earlier of the following dates:
        (1) The expiration date stated by the adopting agency in the rule.
        (2) The date that the rule is amended or repealed by a later rule adopted under sections 24 through 36 of this chapter or this section.
    (i) This section may not be used to readopt a rule under IC 4-22-2.5.
    (j) A rule described in subsection (a)(24) or (a)(25) expires not later than January 1, 2006.
    (k) A rule described in subsection (a)(28) expires on the expiration date stated by the board of the Indiana economic development corporation in the rule.
    (l) A rule described in subsection (a)(30) expires on the expiration date stated by the Indiana finance authority in the rule.
     (m) A rule described in subsection (a)(5) or (a)(6) expires on the date the department is next required to issue a rule under the statute authorizing or requiring the rule.

SOURCE: IC 5-10.3-5-5; (08)EH1359.2.2. -->     SECTION 2. IC 5-10.3-5-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 5. (a) The custodians must be banks or trust companies that are domiciled in the United States and approved by the ~~Indiana~~ ~~department~~ of ~~financial~~ ~~institutions~~ ~~under~~ IC ~~28-1-2-39~~ board to:
        (1) act in a fiduciary capacity; and
        (2) manage custodial accounts;
in ~~Indiana.~~ on behalf of the fund.
    (b) The board is authorized to accept safekeeping receipts for securities held by the custodians. Each custodian must have a combined capital and surplus of at least ten million dollars ($10,000,000) according to the last published report of condition for the bank or trust company and have physical custody of such securities. The state board of accounts is authorized to rely on safekeeping receipts from the custodian. The custodian may be authorized by the agreement to:
        (1) hold securities and other investments in the name of the fund, in the name of a nominee of the custodian, or in bearer form;
        (2) collect and receive income, interest, proceeds of sale, maturities, redemptions, and all other receipts from the securities and other investments;
        (3) deposit all the receipts collected and received under subdivision (2) in a custodian account or checking account as instructed by the board;

        (4) reinvest the receipts collected and received under subdivision (2) as directed by the board;
        (5) maintain accounting records and prepare reports which are required by the board and the state board of accounts; and
        (6) perform other services for the board as are customary and appropriate for custodians.
    (c) The custodian is responsible for all securities held in the name of its nominee for the fund.

SOURCE: IC 24-4.5-1-102; (08)EH1359.2.4. -->     SECTION 4. IC 24-4.5-1-102, AS AMENDED BY P.L.217-2007, SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 102. Purposes; Rules of Construction_(1) This article shall be liberally construed and applied to promote its underlying purposes and policies.
    (2) The underlying purposes and policies of this article are:
        (a) to simplify, clarify, and modernize the law governing retail installment sales, consumer credit, small loans, and usury;
        (b) to provide rate ceilings to assure an adequate supply of credit

to consumers;
        (c) to further consumer understanding of the terms of credit transactions and to foster competition among suppliers of consumer credit so that consumers may obtain credit at reasonable cost;
        (d) to protect consumer buyers, lessees, and borrowers against unfair practices by some suppliers of consumer credit, having due regard for the interests of legitimate and scrupulous creditors;
        (e) to permit and encourage the development of fair and economically sound consumer credit practices;
        (f) to conform the regulation of consumer credit transactions to the policies of the Federal Consumer Credit Protection Act; and
        (g) to make uniform the law including administrative rules among the various jurisdictions.
    (3) A reference to a requirement imposed by this article includes reference to a related rule of the department adopted pursuant to this article.
    (4) A reference to a federal law in IC 24-4.5 is a reference to the law in effect December 31, ~~2006.~~ 2007.
    (5) This article applies to a transaction if the director determines that the transaction:
        (a) is in substance a disguised consumer credit transaction; or
        (b) involves the application of subterfuge for the purpose of avoiding this article.
A determination by the director under this paragraph must be in writing and shall be delivered to all parties to the transaction. IC 4-21.5-3 applies to a determination made under this paragraph.

SOURCE: IC 24-4.5-1-201; (08)EH1359.2.5. -->     SECTION 5. IC 24-4.5-1-201, AS AMENDED BY P.L.217-2007, SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 201. (1) Except as otherwise provided in this section, this article applies to sales, leases, and loans made in this state and to modifications, including refinancings, consolidations, and deferrals, made in this state, of sales, leases, and loans, wherever made. For purposes of this article, the following apply:
        (a) A sale or modification of a sale agreement is made in this state if the buyer's agreement or offer to purchase or to modify is received by the seller or a person acting on behalf of the seller in this state.
        (b) A lease or modification of a lease agreement is made in this state if the lessee's agreement or offer to lease or to modify is received by the lessor or a person acting on behalf of the lessor in this state.

        (c) A loan or modification of a loan agreement is made in this state if a writing signed by the debtor and evidencing the debt is received by the lender or a person acting on behalf of the lender in this state.
        (d) Except as provided in subdivision (e), a sale, lease, or loan transaction occurs in Indiana if a consumer who is a resident of Indiana enters into a consumer sale, lease, or loan transaction with a creditor or a person acting on behalf of the creditor in another state and the creditor or the person acting on behalf of the creditor has advertised or solicited sales, leases, or loans in Indiana by any means, including by mail, brochure, telephone, print, radio, television, the Internet, or electronic means. However, during the period beginning July 1, 2007, and ending June 30, 2009, this subdivision does not apply to an affiliate or a subsidiary of a financial corporation issued a certificate of authority to operate as an industrial loan and investment company under IC 28-5 if all of the following apply:
            (i) The industrial loan and investment company notifies the department in writing that an affiliate or a subsidiary of the industrial loan and investment company engages or plans to engage in activity involving Indiana residents at an out of state location. The notification required by this clause must list all states other than Indiana in which consumer loans may be made and must describe the nature of the proposed transactions.
            (ii) The industrial loan and investment company provides written consent allowing the department to consult with and review information provided by other state regulators, as may be requested by the department, concerning the activities identified in clause (i) of any affiliate or subsidiary engaging in consumer lending to Indiana residents in the states identified under clause (i).
            (iii) The industrial loan and investment company provides written consent allowing the department to inspect or examine all out of state locations in which an affiliate or a subsidiary of the industrial loan and investment company engages in the activities identified under clause (i) for the purpose of investigating the affiliate's or subsidiary's consumer lending practices involving Indiana residents. An inspection or examination performed by the department under this clause is subject to the schedule of fees established by the department under IC 28-11-3-5.

         (e) A sale, lease, or loan transaction does not occur in Indiana if a consumer who is a resident of Indiana enters into a consumer sale, lease, or loan transaction secured by an interest in land located outside Indiana.
For purposes of subdivisions (a) through (c), an offer is received by a creditor or a person acting on behalf of the creditor in Indiana if the offer is physically delivered, or otherwise transmitted or communicated, to a person who has actual or apparent authority to act for the creditor or the person acting on behalf of the creditor in Indiana, regardless of whether approval, acceptance, or ratification by any other agent or representative of the creditor or the person acting on behalf of the creditor in another state is necessary to give legal consequence to the consumer credit transaction.
    (2) IC 24-4.5-5-101 through IC 24-4.5-5-108 apply to actions or other proceedings brought in this state to enforce rights arising from consumer credit sales, consumer leases, or consumer loans, or extortionate extensions of credit, wherever made.
    (3) Except as provided in subsection (2), a sale, lease, loan, or modification thereof, made in another state to a person who was not a resident of this state when the sale, lease, loan, or modification was made is valid and enforceable in this state according to its terms to the extent that it is valid and enforceable under the laws of the state applicable to the transaction.
    (4) For the purposes of this article, the residence of a buyer, lessee, or debtor is the address given by the buyer, lessee, or debtor as the buyer's, lessee's, or debtor's residence in any writing or electronic communication made by the buyer, lessee, or debtor in connection with a credit transaction. Until the buyer, lessee, or debtor notifies the creditor or the person acting on behalf of the creditor of a new or different address, the given address is presumed to be unchanged.
    (5) Notwithstanding other provisions of this section:
        (a) except as provided in subsection (2), this article does not apply if the buyer, lessee, or debtor is not a resident of this state at the time of a credit transaction and the parties then agree that the law of the buyer's, lessee's, or debtor's residence applies; and
        (b) this article applies if the buyer, lessee, or debtor is a resident of this state at the time of a credit transaction and the parties then agree that the law of this state applies.
    (6) Except as provided in subsection (5), the following agreements by a buyer, lessee, or debtor are invalid with respect to consumer credit sales, consumer leases, consumer loans, or modifications thereof, to which this article applies:

        (a) that the law of another state shall apply;
        (b) that the buyer, lessee, or debtor consents to the jurisdiction of another state; and
        (c) that fixes venue.
    (7) The following provisions of this article specify the applicable law governing certain cases:
        (a) applicability (IC 24-4.5-6-102) of the provisions on powers and functions of the department; and
        (b) applicability (IC 24-4.5-6-201) of the provisions on notification and fees.
    (8) If a creditor or a person acting on behalf of the creditor has violated the provisions of this article that apply to the authority to make consumer loans (IC 24-4.5-3-502), the loan is void and the debtor is not obligated to pay either the principal or loan finance charge, as set forth in IC 24-4.5-5-202.

SOURCE: IC 24-4.5-1-301; (08)EH1359.2.6. -->     SECTION 6. IC 24-4.5-1-301, AS AMENDED BY P.L.57-2006, SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 301. General Definitions . In addition to definitions appearing in subsequent chapters in this article:
    (1) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance.
    (2) "Agricultural purpose" means a purpose related to the production, harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, plants, propagates, or nurtures the agricultural products; "Agricultural products" includes agricultural, horticultural, viticultural, and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any and all products raised or produced on farms and any processed or manufactured products thereof.
    (3) "Average daily balance" means the sum of each of the daily balances in a billing cycle divided by the number of days in the billing cycle, and if the billing cycle is a month, the creditor may elect to treat the number of days in each billing cycle as thirty (30).
    (4) "Closing costs" with respect to a debt secured by an interest in land includes:
        (a) fees or premiums for title examination, title insurance, or similar purposes, including surveys;
        (b) fees for preparation of a deed, settlement statement, or other documents;
        (c) escrows for future payments of taxes and insurance;
        (d) fees for notarizing deeds and other documents;

        (e) appraisal fees; and
        (f) credit reports.
    (5) "Conspicuous": A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it.
    (6) "Consumer credit" means credit offered or extended to a consumer primarily for a personal, family, or household purpose.
    (7) "Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.
    (8) "Creditor" means a person:
        (a) who regularly engages in the extension of consumer credit that is subject to a credit service charge or loan finance charge, as applicable, or is payable by written agreement in more than four (4) installments (not including a down payment); and
        (b) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is not a note or contract.
    (9) "Earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments under a pension or retirement program.
    (10) "Lender credit card or similar arrangement" means an arrangement or loan agreement, other than a seller credit card, pursuant to which a lender gives a debtor the privilege of using a credit card, letter of credit, or other credit confirmation or identification in transactions out of which debt arises:
        (a) by the lender's honoring a draft or similar order for the payment of money drawn or accepted by the debtor;
        (b) by the lender's payment or agreement to pay the debtor's obligations; or
        (c) by the lender's purchase from the obligee of the debtor's obligations.
    (11) "Official fees" means:
        (a) fees and charges prescribed by law which actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest related to a consumer credit sale, consumer lease, or consumer loan; or
        (b) premiums payable for insurance in lieu of perfecting a security interest otherwise required by the creditor in connection with the sale, lease, or loan, if the premium does not exceed the fees and charges described in paragraph (a) which would otherwise be payable.

    (12) "Organization" means a corporation, a government or governmental subdivision, or an agency, a trust, an estate, a partnership, a limited liability company, a cooperative, or an association, a joint venture, an unincorporated organization, or any other entity, however organized.
    (13) "Payable in installments" means that payment is required or permitted by written agreement to be made in more than four (4) installments not including a down payment.
    (14) "Person" includes a ~~natural~~ ~~person~~ or an individual, ~~and~~ or an organization.
    (15) "Person related to" with respect to an individual means:
        (a) the spouse of the individual;
        (b) a brother, brother-in-law, sister, sister-in-law of the individual;
        (c) an ancestor or lineal descendants of the individual or the individual's spouse; and
        (d) any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual.
    "Person related to" with respect to an organization means:
        (a) a person directly or indirectly controlling, controlled by, or under common control with the organization;
        (b) an officer or director of the organization or a person performing similar functions with respect to the organization or to a person related to the organization;
        (c) the spouse of a person related to the organization; and
        (d) a relative by blood or marriage of a person related to the organization who shares the same home with the person.
    (16) "Presumed" or "presumption" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.
    (17) "Mortgage transaction" means a transaction in which a first mortgage or a land contract which constitutes a first lien is created or retained against land.
    (18) "Regularly engaged" means a person who extends consumer credit more than:
        (a) twenty-five (25) times; or
        (b) five (5) times for transactions secured by a dwelling;
in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year.
    (19) "Seller credit card" means an arrangement which gives to a buyer or lessee the privilege of using a credit card, letter of credit, or

other credit confirmation or identification for the purpose of purchasing or leasing goods or services from that person, a person related to that person, or from that person and any other person. The term includes a card that is issued by a person, that is in the name of the seller, and that can be used by the buyer or lessee only for purchases or leases at locations of the named seller.
    (20) "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 a state or of the United States which authorizes 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 a state or of the United States.
    (21) "Mortgage servicer" means the last person to whom a mortgagor or the mortgagor's successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage.
    (22) "Affiliate", with respect to any person subject to this article, means a person that, directly or indirectly, through one (1) or more intermediaries:
        (a) controls;
        (b) is controlled by; or
        (c) is under common control with;
the person subject to this article.

SOURCE: IC 24-4.5-3-402; (08)EH1359.2.8. --> SECTION 8. IC 24-4.5-3-402, AS AMENDED BY P.L.217-2007, SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 402. (1) This section does not apply to a first lien mortgage transaction.
(2) Except as provided in IC 24-9-4-3 with respect to a high cost home loan (as defined in IC 24-9-2-8), with respect to a consumer loan, other than one pursuant to a revolving loan account or one on which only loan finance charges are payable prior to the time that the final

scheduled payment is due, if any scheduled payment is more than twice as large as the average of earlier scheduled payments, the debtor has the right to refinance the amount of that payment at the time it is due without penalty. The terms of the refinancing shall be no less favorable to the debtor than the terms of the original loan. This section does not apply to the extent that the payment schedule is adjusted to the seasonal or irregular income of the debtor.
    ~~(2)~~ (3) For the purposes of this section, .terms of the refinancing. means:
        (a) in the case of a fixed-rate consumer loan, the individual payment amounts, the charges as a result of default by the debtor, and the rate of the loan finance charge; and
        (b) in the case of a variable rate consumer loan, the method used to determine the individual payment amounts, the charges as a result of default by the debtor, the method used to determine the rate of the loan finance charge, the circumstances under which the rate of the loan finance charge may increase, and any limitations on the increase in the rate of the loan finance charge.
    ~~(3)~~ (4) If a consumer loan is made under the authority of the Alternative Mortgage Transaction Parity Act (12 U.S.C. 3802 et seq.), the note evidencing the mortgage must contain a reference to the applicable federal law.

SOURCE: IC 24-4.5-3-503; (08)EH1359.2.9. -->     SECTION 9. IC 24-4.5-3-503, AS AMENDED BY P.L.217-2007, SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 503. License to Make Consumer Loans_(1) The department shall receive and act on all applications for licenses to make consumer loans. Applications must be as prescribed by the director of the department of financial institutions.
    (2) A license shall not be issued unless the department finds that the financial responsibility, character, and fitness of:
         (a) the applicant and any significant affiliate of the applicant;
        (b) each executive officer, director, or manager of the applicant, or any other individual having a similar status or performing a similar function for the applicant; and
        (c) if known, each person directly or indirectly owning of record or owning beneficially at least ten percent (10%) of the outstanding shares of any class of equity security of the applicant;
of ~~the~~ ~~members~~ of ~~the~~ ~~applicant~~ ~~(if~~ ~~the~~ ~~applicant~~ is a ~~copartnership~~ or an ~~association)~~ ~~and~~ of ~~the~~ ~~officers~~ ~~and~~ ~~directors~~ of ~~the~~ ~~applicant~~ ~~(if~~ ~~the~~ ~~applicant~~ is a ~~corporation)~~ are such as to warrant belief that the business will be operated honestly and fairly within the purposes of this

article.
     (3) The director is entitled to request evidence of compliance with this section at:
        (a) the time of application;
        (b) the time of renewal of a license; or
        (c) any other time considered necessary by the director.
    ~~(3)~~ (4) Evidence of compliance with this section may include:
        (a) criminal background checks, including a national criminal history background check (as defined in IC 10-13-3-12) by the Federal Bureau of Investigation, for any individual described in subsection (2);
        (b) credit histories; and
        (c) other background checks considered necessary by the director.
If the director requests a national criminal history background check under subdivision (a) for an individual described in subsection (2), the director shall require the individual to submit fingerprints to the department or to the state police department, as appropriate, at the time evidence of compliance is requested under subsection (3). The individual to whom the request is made shall pay any fees or costs associated with the fingerprints and the national criminal history background check. The national criminal history background check may be used by the director to determine the individual's compliance with this section. The director or the department may not release the results of the national criminal history background check to any private entity.
    ~~(4)~~ (5) The department may deny an application under this section if the director of the department determines that the application was submitted for the benefit of, or on behalf of, a person who does not qualify for a license.
    ~~(5)~~ (6) Upon written request, the applicant is entitled to a hearing on the question of the qualifications of the applicant for a license as provided in IC 4-21.5.
    ~~(6)~~ (7) The applicant shall pay the following fees at the time designated by the department:
        (a) An initial license fee as established by the department under IC 28-11-3-5.
        (b) An initial investigation fee as established by the department under IC 28-11-3-5.
        (c) An annual renewal fee as established by the department under IC 28-11-3-5.
    ~~(7)~~ (8) A fee as established by the department under IC 28-11-3-5 may be charged for each day the annual renewal fee under subsection

~~(6)(c)~~ (7)(c) is delinquent.
    ~~(8)~~ (9) The applicant may deduct the fees required under subsection ~~(6)(a)~~ (7)(a) through ~~(6)(c)~~ (7)(c) from the filing fees paid under IC 24-4.5-6-203.
    ~~(9)~~ (10) A loan license issued under this section is not assignable or transferable.
    ~~(10)~~ (11) Subject to subsection ~~(11),~~ (12), the director may designate an automated central licensing system and repository, operated by a third party, to serve as the sole entity responsible for:
        (a) processing applications and renewals for licenses under this section; and
        (b) performing other services that the director determines are necessary for the orderly administration of the department's licensing system.
    ~~(11)~~ (12) The director's authority to designate an automated central licensing system and repository under subsection ~~(10)~~ (11) is subject to the following:
        (a) The director or the director's designee may not require any person exempt from licensure under this article, or any employee or agent of an exempt person, to:
            (i) submit information to; or
            (ii) participate in;
        the automated central licensing system and repository.
        (b) Information stored in the automated central licensing system and repository is subject to the confidentiality provisions of IC 28-1-2-30 and IC 5-14-3. A person may not:
            (i) obtain information from the automated central licensing system and repository, unless the person is authorized to do so by statute; or
            (ii) initiate any civil action based on information obtained from the automated central licensing system if the information is not otherwise available to the person under any other state law; or
            (iii) initiate any civil action based on information obtained from the automated central licensing system if the person could not have initiated the action based on information otherwise available to the person under any other state law.
        (c) Documents, materials, and other forms of information in the control or possession of the automated central licensing system and repository that are confidential under IC 28-1-2-30 and that are:
            (i) furnished by the director, the director's designee, or a

licensee; or ~~that~~ ~~are~~
             (ii) otherwise obtained by the automated central licensing system and repository;
        are confidential and privileged by law and are not ~~(i)~~ subject to inspection under IC 5-14-3, ~~(ii)~~ subject to subpoena, ~~(iii)~~ subject to discovery, or ~~(iv)~~ admissible in evidence in any civil action. However, the director or the director's designee may use the documents, materials, or other information available to the director or the director's designee in furtherance of any action brought in connection with the director's duties under this article.
        (d) Disclosure of documents, materials, and information:
            (i) to the director or the director's designee; or
            (ii) by the director or the director's designee;
        under this subsection does not result in a waiver of any applicable privilege or claim of confidentiality with respect to the documents, materials, or information.
        (e) Information provided to the automated central licensing system and repository is subject to IC 4-1-11.
        (f) This subsection does not limit or impair a person's right to:
            (i) obtain information;
            (ii) use information as evidence in a civil action or proceeding; or
            (iii) use information to initiate a civil action or proceeding;
        if the information may be obtained from the director or the director's designee under any law.
        (g) The director may require a licensee required to submit information to the automated central licensing system and repository to pay a processing fee considered reasonable by the director.

SOURCE: IC 24-4.5-3-504; (08)EH1359.2.10. -->     SECTION 10. IC 24-4.5-3-504, AS AMENDED BY P.L.217-2007, SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 504. Revocation or Suspension of License_(1) The department may issue to a person licensed to make consumer loans an order to show cause why the license should not be revoked or suspended for a period determined by the department. The order shall state the place and time for a meeting with the department that is no less than ten (10) days from the date of the order. After the meeting, the department shall revoke or suspend the license if the department finds that:
        (a) the licensee has repeatedly and willfully violated this article or any rule or order lawfully made pursuant to this article; or
         (b) the licensee has repeatedly and willfully violated federal

consumer credit laws; or
        ~~(b)~~ (c) facts or conditions exist which would clearly have justified the department in refusing to grant a license had these facts or conditions been known to exist at the time the application for the license was made.
    (2) Except as provided in section 503.5 of this chapter, no revocation or suspension of a license is lawful unless prior to institution of proceedings by the department notice is given to the licensee of the facts or conduct which warrant the intended action, and the licensee is given an opportunity to show compliance with all lawful requirements for retention of the license.
    (3) If the department finds that probable cause for revocation of a license exists and that enforcement of this article requires immediate suspension of the license pending investigation, the department may, after a ~~meeting~~ ~~with~~ ~~the~~ ~~licensee~~ hearing upon five (5) days written notice to the licensee, enter an order suspending the license for not more than thirty (30) days.
    (4) Whenever the department revokes or suspends a license, the department shall enter an order to that effect and forthwith notify the licensee of the revocation or suspension. Within five (5) days after the entry of the order the department shall deliver to the licensee a copy of the order and the findings supporting the order.
    (5) Any person holding a license to make consumer loans may relinquish the license by notifying the department in writing of its relinquishment, but this relinquishment shall not affect the person's liability for acts previously committed.
    (6) No revocation, suspension, or relinquishment of a license shall impair or affect the obligation of any preexisting lawful contract between the licensee and any debtor.
    (7) The department may reinstate a license, terminate a suspension, or grant a new license to a person whose license has been revoked or suspended if no fact or condition then exists which clearly would have justified the department in refusing to grant a license.
    (8) If the director:
        (a) has just cause to believe an emergency exists from which it is necessary to protect the interests of the public; or
        (b) determines that the license was obtained for the benefit of, or on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license under IC 4-21.5-3-6.

SOURCE: IC 24-4.5-3-505; (08)EH1359.2.11. --> SECTION 11. IC 24-4.5-3-505, AS AMENDED BY P.L.217-2007, SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

JULY 1, 2008]: Sec. 505. Records; Annual Reports_(1) Every licensee shall maintain records in conformity with 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 article. The record keeping system of a licensee shall be sufficient if the licensee makes the required information reasonably available. The department shall determine the sufficiency of the records and whether the licensee has made the required information reasonably available. The department shall be given free access to the records wherever located. The records pertaining to any loan shall be retained for two (2) years after making the final entry relating to the loan, but in the case of a revolving loan account the two (2) years is measured from the date of each entry. A person licensed or required to be licensed under this chapter is subject to IC 28-1-2-30.5 with respect to any records maintained by the person.
    (2) Every licensee shall file with the department a composite report as required by the department, but not more frequently than annually, in the form prescribed by the department relating to all consumer loans made by the licensee. The department shall consult with comparable officials in other states for the purpose of making the kinds of information required in the reports uniform among the states. Information contained in the reports shall be confidential and may be published only in composite form. The department may impose a fee in an amount fixed by the department under IC 28-11-3-5 for each day that a licensee fails to file the report required by this subsection.
    (3) Every licensee shall file notification with the department if the licensee:
        (a) has a change in name, address, or principals;
        (b) opens a new branch, closes an existing branch, or relocates an existing branch;
        (c) files for bankruptcy or reorganization; or
        (d) is subject to revocation or suspension proceedings by a state or governmental authority with regard to the licensee's activities;
not later than thirty (30) days after the date of the event described in this subsection.
    (4) Every licensee shall file notification with the department if a ~~key~~ ~~officer~~ or ~~director~~ of ~~the~~ ~~licensee:~~ an individual described in section 503(2)(b) or 503(2)(c) of this chapter:
        (a) is under indictment for a felony involving fraud, deceit, or misrepresentation under the laws of Indiana or any other jurisdiction; or
        (b) has been convicted of or pleaded guilty or nolo contendere to

a felony involving fraud, deceit, or misrepresentation under the laws of Indiana or any other jurisdiction;
not later than thirty (30) days after the date of the event described in this subsection.

SOURCE: IC 24-4.5-4-108; (08)EH1359.2.12. -->     SECTION 12. IC 24-4.5-4-108, AS AMENDED BY P.L.217-2007, SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 108. Refund or Credit Required; Amount _ (1) Upon prepayment in full of a consumer credit sale or consumer loan by the proceeds of consumer credit insurance, the debtor or the debtor's estate is entitled to a refund of:
        (a) any portion of a separate charge for insurance which by reason of prepayment is retained by the creditor or returned to the creditor by the insurer unless the charge was computed from time to time on the basis of the balances of the debtor's account; and
        (b) any portion of an additional charge that is:
            (i) assessed in accordance with IC ~~24-4.5-2-202~~ IC 24-4.5-2-202(1)(c) or IC ~~24-4.5-3-202~~ IC 24-4.5-3-202(1)(e); and
            (ii) subject to rebate upon prepayment.
    (2) This chapter does not require a creditor to grant a refund or credit to the debtor if all refunds and credits due to the debtor under this chapter amount to less than one dollar ($1), and except as provided in subsection (1) does not require the creditor to account to the debtor for any portion of a separate charge for insurance because:
        (a) the insurance is terminated by performance of the insurer's obligation;
        (b) the creditor pays or accounts for premiums to the insurer in amounts and at times determined by the agreement between them; or
        (c) the creditor receives directly or indirectly under any policy of insurance a gain or advantage not prohibited by law.
    (3) Except as provided in subsection (2), the creditor or the creditor's assignee shall promptly make an appropriate refund or credit to the debtor for any separate charge made for insurance or for an additional charge described in subsection (1)(b) if:
        (a) the insurance is not provided or is provided for a term shorter than the term for which the charge to the debtor for insurance was computed; or
        (b) the insurance or the protection provided in exchange for the additional charge described in subsection (1)(b) terminates prior to the end of the scheduled term of the ~~insurance~~ coverage because of prepayment in full or otherwise.

     (4) An initial creditor, a subsequent creditor, or an assignee of an initial or a subsequent creditor shall maintain documentation of any account that is subject to a refund or credit under this section. The information maintained under this subsection shall be made available to the department as necessary to determine compliance with this section.
    ~~(4)~~ (5) A refund or credit required by subsection (3) is appropriate as to amount if it is computed according to a method prescribed or approved by the insurance commissioner or a formula filed by the insurer with the insurance commissioner at least thirty (30) days before the debtor's right to a refund or credit becomes determinable, unless the method or formula is used after the insurance commissioner notifies the insurer that it is disapproved.
    ~~(5)~~ (6) If a refund or credit required by subsection (1) or (3) is not made to the debtor within sixty (60) days after the date the debt is terminated, due to prepayment in full or otherwise, the creditor shall pay to the debtor for each day after the sixty (60) day period has expired an amount equal to the daily interest at the contracted annual percentage rate on the amount of the refund required by subsection (1) due at the time of prepayment or termination. The director may impose an additional civil penalty of not greater than one thousand dollars ($1,000) per occurrence if a creditor engages in a pattern or practice of failing to comply with ~~the~~ this subsection.

SOURCE: IC 24-4.5-6-203; (08)EH1359.2.13. --> SECTION 13. IC 24-4.5-6-203, AS AMENDED BY P.L.217-2007, SECTION 18, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 203. (1) Persons required to file notification who are sellers, lessors, or lenders shall pay a fee in an amount and at intervals to be prescribed by the director under IC 28-11-3-5. The fee shall be a uniform amount for each one hundred thousand dollars ($100,000), or part thereof, in excess of one hundred thousand dollars ($100,000), of the original unpaid balances arising from consumer credit sales, consumer leases, and consumer loans made in Indiana and held either by the seller, lessor, or lender for more than thirty (30) days after the inception of the sale, lease, or loan giving rise to the obligations, or by an assignee who has not filed notification. A refinancing of a sale, lease, or loan resulting in an increase in the amount of an obligation is a new sale, lease, or loan to the extent of the increase. In prescribing the fee, the department shall consider the costs and expense incurred or estimated to be incurred by the department in the administration of this article, including, but not limited to, the supervision, regulation, and examination of persons subject to the provisions of the article.

    (2) Persons required to file notification who are assignees shall pay a fee as prescribed and fixed by the department under subsection (1) on the unpaid balances at the time of the assignment of obligations arising from consumer credit sales, consumer leases, and consumer loans made in Indiana taken by assignment during the preceding calendar year, but an assignee need not pay a fee with respect to an obligation on which the assignor or other person has already paid a fee.
    (3) Persons required to file notification who are assignors shall pay a fee as prescribed by the department under subsection (1) on the unpaid balances at the time of the assignment of obligations arising from consumer credit sales, consumer leases, and consumer loans made in Indiana during the preceding calendar year unless the assignee has already paid the fees.
    (4) Persons required to renew a license under IC 24-4.5-3-503 may deduct the fees paid under IC ~~24-4.5-3-503(6)(a)~~ IC 24-4.5-3-503(7)(a) through IC ~~24-4.5-3-503(6)(c)~~ IC 24-4.5-3-503(7)(c) from fees paid under this section.
    (5) A person that is required to file notification under IC 24-4.5-6-202 shall pay a fee at the same rate as prescribed and fixed by the department under subsection (1) on the original unpaid balances of all closed end credit obligations originating from the person's place of business during the time preceding the notification as specified under subsection (1), unless the fees for the obligations have been paid by another person.

SOURCE: IC 24-4.5-7-404; (08)EH1359.2.15. -->     SECTION 15. IC 24-4.5-7-404, AS AMENDED BY P.L.217-2007, SECTION 26, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 404. (1) As used in this section, .commercially reasonable method of verification. means ~~one~~ ~~(1)~~ or ~~more~~ a private consumer credit reporting ~~services~~ service that the department determines to be capable of providing a lender with adequate verification information necessary to ensure compliance with subsection (4).
    (2) With respect to a small loan, no lender may permit a person to become obligated under more than one (1) loan agreement with the lender at any time.
    (3) A lender shall not make a small loan that, when combined with the outstanding balance on another outstanding small loan owed to another lender, exceeds a total of five hundred fifty dollars ($550), excluding finance charges. A lender shall not make a small loan to a borrower who has two (2) or more small loans outstanding, regardless of the total value of the small loans. The amount of five hundred fifty dollars ($550) in this subsection is subject to change under the provisions on adjustment of dollar amounts (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the Reference Base Index to be used under this subsection is the Index for October 2006.
    (4) A lender complies with subsection (3) if the borrower represents in writing that the borrower does not have any outstanding small loans with the lender, another lender, an affiliate of the lender or another lender, or a separate entity involved in a business association with the lender or another lender in making small loans, and the lender independently verifies the accuracy of the borrower's written representation through a commercially reasonable method of verification. A lender's method of verifying whether a borrower has any outstanding small loans will be considered commercially reasonable if the method includes a manual investigation or an electronic query of:
        (a) the lender's own records, including both records maintained at the location where the borrower is applying for the transaction and records maintained at other locations within the state that are owned and operated by the lender; and
        (b) an available third party ~~databases~~ data base provided by a private consumer reporting ~~services.~~ service.
    (5) The department shall monitor the effectiveness of private consumer credit reporting services in providing the verification

information required under subsection (4). If the department determines that ~~one~~ ~~(1)~~ or ~~more~~ a commercially reasonable ~~methods~~ method of verification ~~are~~ is available, the department shall:
        (a) provide reasonable notice to all lenders identifying the commercially reasonable ~~methods~~ method of verification that ~~are~~ is available; and
        (b) require each lender to use, consistent with the policies of the department, ~~one~~ ~~(1)~~ of the identified commercially reasonable ~~methods~~ method of verification as a means of complying with subsection (4).
    (6) If a borrower presents evidence to a lender that a loan has been discharged in bankruptcy, the lender shall cause the record of the borrower's loan to be updated in the database described in subsection (4)(b) to reflect the bankruptcy discharge.
    (7) A lender shall cause the record of a borrower's loan to be updated in the database described in subsection (4)(b) to reflect:
        (a) presentment of the borrower's check for payment; or
        (b) exercise of the borrower's authorization to debit the borrower's account.
If a check is returned or an authorization is dishonored because of insufficient funds in the borrower's account, the lender shall reenter the record of the loan in the database.
    (8) A lender shall update information in a database described in subsection (4)(b) to reflect partial payments made on an outstanding loan, the record of which is maintained in the database.
    (9) If a lender ceases doing business in Indiana, the director may require ~~one~~ ~~(1)~~ or ~~more~~ ~~operators~~ the operator of the ~~databases~~ data base described in subsection (4)(b) to remove records of the lender's loans from the operator's database.
    (10) The director may impose a civil penalty not to exceed one hundred dollars ($100) for each violation of:
        (a) this section; or
        (b) any rule or policy adopted by the director to implement this section.
    (11) The excess amount of loan finance charge provided for in agreements in violation of this section is an excess charge for purposes of the provisions concerning effect of violations on rights of parties (IC 24-4.5-5-202) and the provisions concerning civil actions by the department (IC 24-4.5-6-113).

SOURCE: IC 24-4.5-7-406; (08)EH1359.2.16. --> SECTION 16. IC 24-4.5-7-406, AS AMENDED BY P.L.57-2006, SECTION 18, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 406. ~~(a)~~ (1) An agreement with respect to a small

loan may not provide for charges as a result of default by the borrower other than those specifically authorized by this chapter. A provision in a small loan agreement in violation of this section is unenforceable.
    ~~(b)~~ (2) A lender or an assignee of a small loan may seek only the following remedies upon default by a borrower:
        ~~(1)~~ (a) Recovery of:
            ~~(A)~~ (i) the contracted principal amount of the loan; and
            ~~(B)~~ (ii) the loan finance charge.
        ~~(2)~~ (b) Collection of a fee for:
            ~~(A)~~ (i) a returned check, negotiable order of withdrawal, or share draft; or
            ~~(B)~~ (ii) a dishonored authorization to debit the borrower's account;
        if contracted for under section 202 of this chapter.
        ~~(3)~~ (c) Collection of postjudgment interest, if awarded by a court.
        ~~(4)~~ (d) Collection of court costs, if awarded by a court.
    ~~(c)~~ (3) A lender or an assignee of a small loan may not seek any of the following damages or remedies upon default by a borrower:
        ~~(1)~~ (a) Payment of the lender's attorney's fees.
        ~~(2)~~ (b) Treble damages.
        ~~(3)~~ (c) Prejudgment interest.
        ~~(4)~~ (d) Damages allowed for dishonored checks under any statute other than this chapter.
        ~~(5)~~ (e) Any damages or remedies not set forth in subsection ~~(b).~~ (2).
    ~~(d)~~ (4) A contractual agreement in a small loan transaction must include a notice of the following in 14 point bold type:
        ~~(1)~~ (a) The remedies available to a lender or an assignee under subsection ~~(b).~~ (2).
        ~~(2)~~ (b) The remedies and damages that a lender or an assignee is prohibited from seeking in a small loan transaction under subsection ~~(c).~~ (3).

SOURCE: IC 24-4.5-7-410; (08)EH1359.2.18. -->     SECTION 18. IC 24-4.5-7-410, AS AMENDED BY P.L.57-2006, SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 410. A lender making small loans, or an assignee of a small loan, shall not commit nor cause to be committed any of the following acts:
        (a) Threatening to use or using the criminal process in any state to collect on a small loan.
        (b) Threatening to take action against a borrower that is prohibited by this chapter.
        (c) Making a misleading or deceptive statement regarding a small loan or a consequence of taking a small loan.
        (d) Contracting for or collecting attorney's fees on small loans made under this chapter.
        (e) Altering the date or any other information on a check or an authorization to debit the borrower's account held as security.
        (f) Using a device or agreement that the department determines would have the effect of charging or collecting more fees, charges, or interest than allowed by this chapter, including, but not limited to:
            (i) entering a different type of transaction with the borrower;
            (ii) entering into a sales/leaseback arrangement;
            (iii) catalog sales;
            (iv) entering into transactions in which a customer receives a

purported cash rebate that is advanced by someone offering Internet content services, or some other product or service, when the cash rebate does not represent a discount or an adjustment of the purchase price for the product or service; or
            (v) entering any other transaction with the borrower that is designed to evade the applicability of this chapter.
        (g) Engaging in unfair, deceptive, or fraudulent practices in the making or collecting of a small loan.
        (h) Charging to cash a check representing the proceeds of a small loan.
        (i) Except as otherwise provided in this chapter:
            (i) accepting the proceeds of a new small loan as payment of an existing small loan provided by the same lender; or
            (ii) renewing, refinancing, or consolidating a small loan with the proceeds of another small loan made by the same lender.
        (j) Including any of the following provisions in a loan document:
            (i) A hold harmless clause.
            (ii) A confession of judgment clause.
            (iii) A mandatory arbitration clause, unless the terms and conditions of the arbitration have been approved by the director of the department.
            (iv) An assignment of or order for payment of wages or other compensation for services.
            (v) A provision in which the borrower agrees not to assert a claim or defense arising out of contract.
            (vi) A waiver of any provision of this chapter.
        (k) Selling insurance of any kind in connection with the making or collecting of a small loan.
        (l) Entering into a renewal with a borrower.

SOURCE: IC 28-1-2-30.5; (08)EH1359.2.20. -->     SECTION 20. IC 28-1-2-30.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 30.5. (a) This section applies to the following:
        (1) Any:
            (A) financial institution;
            (B) person required to file notification with the department under IC 24-4.5-6-202;
            (C) person subject to IC 24-7; or
            (D) other person subject to regulation by the department under this title.
        (2) Any person licensed or required to be licensed under IC 24-4.5.
    (b) As used in this section, "customer", with respect to a person described in subsection (a), means an individual consumer, or the individual's legal representative, who obtains or has obtained from the person a financial:
        (1) product; or
        (2) service;
that is to be used primarily for personal, family, or household purposes. The term does not include an affiliate of the person.
    (c) As used in this section, "personal information" includes any of the following:
        (1) An individual's first and last names or first initial and last name.
        (2) Any of the following data elements:
            (A) A Social Security number.
            (B) A driver's license number.
            (C) A state identification card number.
            (D) A credit card number.
            (E) A financial account number or debit card number.
        (3) With respect to an individual, any of the following:
            (A) Address.
            (B) Telephone number.
            (C) Information concerning the individual's:
                (i) income or other compensation;
                (ii) credit history;
                (iii) credit score;
                (iv) assets;
                (v) liabilities; or
                (vi) employment history.
    (d) As used in this chapter, personal information is "encrypted" if the personal information:
        (1) has been transformed through the use of an algorithmic process into a form in which there is a low probability of assigning meaning without use of a confidential process or key; or
        (2) is secured by another method that renders the personal information unreadable or unusable.
    (e) As used in this chapter, personal information is "redacted" if the personal information has been altered or truncated so that

not more than the last four (4) digits of:
        (1) a Social Security number;
        (2) a driver's license number;
        (3) a state identification number; or
        (4) an account number;
are accessible as part of the personal information.
    (f) As used in this chapter, "personal records" means any records that:
        (1) are maintained, whether as a paper record or in an electronic or a computerized form, by a person to whom this section applies; and
        (2) contain the unencrypted, unredacted personal information of one (1) or more customers or potential customers.
    (g) A person to whom this section applies shall keep and handle personal records in a manner that:
        (1) reasonably safeguards the personal records from destruction, theft, or other loss; and
        (2) protects the personal records from misuse.
    (h) If a breach of the security of any personal records occurs, the person maintaining the records is subject to the disclosure requirements under IC 24-4.9-3, unless the person is exempt from the disclosure requirements under IC 24-4.9-3-4.
    (i) A person to whom this section applies may not dispose of personal records without first:
        (1) shredding, incinerating, or mutilating the personal records; or
        (2) erasing or otherwise rendering illegible or unusable the personal information contained in the records.
    (j) If a person to whom this section applies ceases doing business, the person shall, as part of the winding up of the business, safeguard any personal records maintained by the person in accordance with this section until such time as the person is entitled or required to destroy the records under:
        (1) applicable law; or
        (2) the person's own records maintenance policies.

SOURCE: IC 28-1-7-4; (08)EH1359.2.21. --> SECTION 21. IC 28-1-7-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 4. (a) After the resolutions approving a joint agreement of merger have been adopted by the board of directors of each of the corporations, such resolutions and joint agreement shall be submitted for approval by the department. ~~before~~ ~~the~~ ~~joint~~ ~~agreement~~ is ~~submitted~~ to a ~~vote~~ of ~~the~~ ~~shareholders~~ of ~~the~~ ~~corporations.~~ The department may, in its discretion, approve or

disapprove the resolution and joint agreement.
    (b) In deciding whether to approve or disapprove a resolution and joint agreement under this section, the department shall consider the following factors:
        (1) Whether the institutions subject to the proposed transaction are operated in a safe, sound, and prudent manner.
        (2) Whether the financial condition of any institution subject to the proposed transaction will jeopardize the financial stability of any other institutions subject to the proposed transaction.
        (3) Whether the proposed transaction under this chapter will result in an institution that has inadequate capital, unsatisfactory management, or poor earnings prospects.
        (4) Whether the management or other principals of the institution that will result from the proposed transaction under this chapter are qualified by character and financial responsibility to control and operate in a legal and proper manner the resulting institution.
        (5) Whether the public convenience and advantage will be served by the resulting institution after the proposed transaction.
        (6) Whether the institutions subject to the proposed transaction under this chapter furnish all the information the department requires in reaching the department's decision.

SOURCE: IC 28-1-7-12; (08)EH1359.2.23. --> SECTION 23. IC 28-1-7-12 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 12. (a) After the resolution approving a joint agreement of consolidation has been adopted by the board of directors of each of the corporations, the resolutions and joint agreement shall be submitted to the department. ~~for~~ ~~approval~~ ~~before~~ ~~the~~ ~~joint~~ ~~agreement~~ is ~~submitted~~ to a ~~vote~~ of ~~the~~ ~~shareholders~~ of ~~the~~ ~~corporations.~~ The department may, in its discretion, approve or disapprove the resolutions and joint agreement.
(b) In deciding whether to approve or disapprove a transaction under this chapter, the department shall consider the following factors:

        (1) Whether the institutions subject to the proposed transaction are operated in a safe, sound, and prudent manner.
        (2) Whether the financial condition of any institution subject to the proposed transaction will jeopardize the financial stability of any other institutions subject to the proposed transaction.
        (3) Whether the proposed transaction under this chapter will result in an institution that has inadequate capital, unsatisfactory management, or poor earnings prospects.
        (4) Whether the management or other principals of the institution that will result from the proposed transaction under this chapter are qualified by character and financial responsibility to control and operate in a legal and proper manner the resulting institution.
        (5) Whether the public convenience and advantage will be served by the resulting institution after the proposed transaction.
        (6) Whether the institutions subject to the proposed transaction under this chapter furnish all the information the department requires in reaching the department's decision.

SOURCE: IC 28-1-20-4; (08)EH1359.2.26. --> SECTION 26. IC 28-1-20-4, AS AMENDED BY P.L.57-2006, SECTION 31, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 4. (a) Except as provided in subsections (c), (d), (g), ~~and~~ ~~(k),~~ and (o), it is unlawful for any person, firm, limited liability company, or corporation (other than a bank or trust company, a bank holding company, a subsidiary of a bank or trust company, a subsidiary of a bank holding company, a subsidiary of a savings bank, or a subsidiary of a savings association or a ~~corporate~~ ~~fiduciary~~ organized or reorganized under IC 28 or statutes in effect at the time of

organization or reorganization or under the laws of the United States):
        (1) to use the word "bank", "banc", or "banco" as a part of the name or title of the person, firm, limited liability company, or corporation; or
        (2) to advertise or represent the person, firm, limited liability company, or corporation to the public:
            (A) as a bank or trust company or a corporate fiduciary; or
            (B) as affording the services or performing the duties which by law only a bank or trust company or a corporate fiduciary is entitled to afford and perform.
    (b) A financial institution organized under the laws of any state or the United States is authorized to do business in Indiana:
        (1) at its principal office;
        (2) at any branch office; or
        (3) otherwise;
using a name other than its official entity name if the financial institution notifies the department at least ten (10) days before using the other name.
    (c) Notwithstanding the prohibitions of this section, an out-of-state financial institution with the word "bank" in its legal name may use the word "bank" if the financial institution is insured by the Federal Deposit Insurance Corporation or its successor.
    (d) Notwithstanding subsection (a), a building and loan association organized under IC 28-4 (before its repeal) may include in its name or title:
        (1) the words "savings bank"; or
        (2) the word "bank" if the name or title also includes either the words "savings bank" or letters "SB".
A building and loan association that includes "savings bank" in its title under this section does not by that action become a savings bank for purposes of IC 28-6.1.
    (e) The name or title of a savings bank governed by IC 28-6.1 must include the words "savings bank" or the letters "SB".
    (f) A savings association may include in its name the words "building and loan association".
    (g) Notwithstanding subsection (a), a bank holding company (as defined in 12 U.S.C. 1841) may use the word "bank" or "banks" as a part of its name. However, this subsection does not permit a bank holding company to advertise or represent itself to the public as affording the services or performing the duties that by law a bank or trust company only is entitled to afford and perform.
    (h) The department is authorized to investigate the business affairs

of any person, firm, limited liability company, or corporation that uses "bank", "banc", or "banco" in its title or holds itself out as a bank, corporate fiduciary, or trust company for the purpose of determining whether the person, firm, limited liability company, or corporation is violating any of the provisions of this article, and, for that purpose, the department and its agents shall have access to any and all of the books, records, papers, and effects of the person, firm, limited liability company, or corporation. In making its examination, the department may examine any person and the partners, officers, members, or agents of the firm, limited liability company, or corporation under oath, subpoena witnesses, and require the production of the books, records, papers, and effects considered necessary. On application of the department, the circuit or superior court of the county in which the person, firm, limited liability company, or corporation maintains a place of business shall, by proper proceedings, enforce the attendance and testimony of witnesses and the production and examination of books, papers, records, and effects.
    (i) The department is authorized to exercise the powers under IC 28-11-4 against a person, firm, limited liability company, or corporation that improperly holds itself out as a financial institution.
    (j) A person, firm, limited liability company, or corporation who violates this section is subject to a penalty of five hundred dollars ($500) per day for each and every day during which the violation continues. The penalty imposed shall be recovered in the name of the state on relation of the department and, when recovered, shall be paid into the financial institutions fund established by IC 28-11-2-9.
    (k) The word "bank", "banc", or "banco" may not be included in the name of a corporate fiduciary.
    (l) A person, firm, limited liability company, or corporation may not use the name of an existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company~~ depository financial institution or holding company of a depository financial institution, or a name confusingly similar to that of an existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company~~ depository financial institution or holding company of a depository financial institution, when marketing to or soliciting business from a customer or prospective customer if the reference to the existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company~~ depository financial institution or holding company of a depository financial institution is:
        (1) without the consent of the existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company;~~ depository financial institution or holding company of a depository financial institution; and
        (2) in a manner that could cause a reasonable person to believe

that the marketing material or solicitation:
            (A) originated from;
            (B) is endorsed by; or
            (C) is in any other way the responsibility of;
the existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company~~ depository financial institution or holding company of a depository financial institution.
    (m) An existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company~~ depository financial institution or holding company of a depository financial institution may, in addition to any other remedies available under the law, report an alleged violation of subsection (l) to the department. If the department finds that the marketing material or solicitation in question is in violation of subsection (l), the department may direct the person, firm, limited liability company, or corporation to cease and desist from using that marketing material or solicitation in Indiana. If that person, firm, limited liability company, or corporation persists in using the marketing material or solicitation, the department may impose a civil penalty of up to fifteen thousand dollars ($15,000) for each violation. Each instance in which the marketing material or solicitation is sent to a customer or prospective customer constitutes a separate violation of subsection (l).
    (n) Nothing in subsection (l) or (m) prohibits the use of or reference to the name of an existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company~~ depository financial institution or holding company of a depository financial institution in marketing materials or solicitations, if the use or reference does not deceive or confuse a reasonable person regarding whether the marketing material or solicitation:
        (1) originated from;
        (2) is endorsed by; or
        (3) is in any other way the responsibility of;
the existing ~~bank~~ or ~~bank~~ ~~holding~~ ~~company.~~ depository financial institution or holding company of a depository financial institution.
    (o) A person, firm, limited liability company, or corporation may use the word "bank", "banc", or "banco" if it would not create a substantial likelihood of misleading the public by implying that the person, firm, limited liability company, or corporation is a state or federally chartered bank or savings bank.
    (p) As used in this section, "depository financial institution" has the meaning set forth in IC 28-1-1-6.
    ~~(o)~~ (q) The department may adopt rules under IC 4-22-2 to implement this section.

SOURCE: IC 28-1-29-1; (08)EH1359.2.27. --> SECTION 27. IC 28-1-29-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 1. The following words,

when used in this chapter, shall have the meaning ascribed to them unless the context clearly requires a different meaning:
        (1) "Person" includes individuals, sole proprietorships, partnerships, ~~associations,~~ limited liability ~~company,~~ ~~and~~ companies, trusts, joint ventures, corporations, unincorporated organizations, and other entities, however organized.
        (2) ~~"Budget~~ ~~service~~ ~~company"~~ "Debt management company" is any person doing business as a budget counseling, credit counseling, debt management, or debt pooling service or holding ~~himself~~ the person out, by words of similar import, as providing services to debtors in the management of their finances and debts, and contracting with the debtor for a fee to receive from the debtor and disburse money or anything of value. ~~"Budget~~ ~~service~~ ~~company"~~ The term includes the following:
            (A) An entity that simply holds any check, personal check, money order, personal money order, draft, or any other instrument for the transmission of money.
             (B) A person or an entity known as a "budget service company".
        (3) "License" means a license issued under the provisions of this chapter.
        (4) "Licensee" means any person to whom a license has been issued pursuant to the provisions of this chapter.
        (5) "Contract debtor" means a debtor who has entered into a contract with a licensee.
        (6) "Debt" means an obligation arising out of personal, family, or household use.
        (7) "Debtor" means an individual whose principal debts and obligations arise out of personal, family, or household use and shall not apply to persons whose principal indebtedness arises out of business purpose transactions.
        (8) "Department" means the members of the department of financial institutions.
        (9) "Finances" means a savings deposit that is:
            (A) made on behalf of a contract debtor;
            (B) owned and controlled exclusively by the contract debtor and not a licensee who has a power of attorney of the contract debtor; and
            (C) placed in a bank or savings institution chartered by the state or federal government.

SOURCE: IC 28-1-29-3; (08)EH1359.2.28. --> SECTION 28. IC 28-1-29-3, AS AMENDED BY P.L.217-2007, SECTION 42, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

JULY 1, 2008]: Sec. 3. (a) No person shall operate a ~~budget~~ ~~service~~ debt management company in Indiana without having obtained a license from the department. For purposes of this section, a person is operating in Indiana if:
        (1) the person or any of the person's employees or agents are located in Indiana; or
        (2) the person:
            (A) contracts with debtors who are residents of Indiana; or
            (B) solicits business from residents of Indiana by advertisements or other communications sent or delivered through any of the following means:
                (i) Mail.
                (ii) Personal delivery.
                (iii) Telephone.
                (iv) Radio.
                (v) Television.
                (vi) The Internet or other electronic communications.
                (vii) Any other means of communication.
    (b) The director may request evidence of compliance with this section at:
        (1) the time of application;
        (2) the time of renewal of a license; or
        (3) any other time considered necessary by the director.
    (c) For purposes of subsection (b), evidence of compliance with this section may include:
        (1) criminal background checks, including a national criminal history background check (as defined in IC 10-13-3-12) by the Federal Bureau of Investigation for any individual described in section 5(b)(2) or 5(b)(3) of this chapter;
        (2) credit histories; and
        (3) other background checks considered necessary by the director.
If the director requests a national criminal history background check under subdivision (1) for an individual described in that subdivision, the director shall require the individual to submit fingerprints to the department or to the state police department, as appropriate, at the time evidence of compliance is requested under subsection (b). The individual to whom the request is made shall pay any fees or costs associated with the fingerprints and the national criminal history background check. The national criminal history background check may be used by the director to determine the individual's compliance with this section. The director or the department may not release the results of the

national criminal history background check to any private entity.
(d) The fee for a license or renewal shall be fixed by the department under IC 28-11-3-5 and shall be nonrefundable. A ~~licensee~~ ~~fail~~