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Subchapter 002: FINANCIAL PRIVACY
§ 10201. Statement of policy on financial privacy
It is the policy of this State to protect the privacy of customers of financial institutions
without unduly inhibiting the free flow of commerce or legitimate law enforcement
activities. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 10202. Definitions
As used in this subchapter:
(1) “Account verification service” means any person who, for monetary fees, dues, or on
a cooperative nonprofit basis, regularly engages in whole or in part in the practice
of:
(A) assembling information on the frequency and location of depository account openings
or attempted openings by a consumer, or forced closings by a depository institution
of accounts of a consumer; or
(B) authenticating or validating Social Security numbers or addresses for the purpose
of reporting to third parties for use in fraud prevention. Mailing such information
to a customer to the address provided by such customer shall not be prohibited by
this subchapter.
(2) “Credit reporting agency” means any person who, for monetary fees, dues, or on a cooperative
nonprofit basis, regularly engages in whole or in part in the practice of assembling
or evaluating consumer credit information or other information on consumers for the
purpose of reporting to third parties on the credit rating or creditworthiness of
any consumer.
(3) “Customer” means, for purposes of this subchapter, any person who deposits, borrows,
or invests with a financial institution, including a surety or a guarantor on a loan.
(4) “Financial information” means an original or copy of, or information derived from:
(A) a document that grants signature authority over a deposit or share account;
(B) a statement, ledger card, or other record of a deposit or share account that shows
transactions in or with respect to that deposit or account;
(C) a check, clear draft, or money order that is drawn on a financial institution or issued
and payable by or through a financial institution;
(D) any item, other than an institutional or periodic charge, that is made under an agreement
between a financial institution and another person’s deposit or share account;
(E) any information that relates to a loan account or an application for a loan; or
(F) evidence of a transaction conducted by electronic or telephonic means.
(5) “Financial institution” means a financial institution as defined in subdivision 11101(32) of this title, and a credit union, financial institution subsidiary, licensed lender, mortgage
broker, or sales finance company organized or regulated under the laws of this State,
the United States, or any other state or territory.
(6) “Mercantile agency” means any person who, for monetary fees, dues, or on a cooperative
nonprofit basis, regularly engages in whole or in part in the practice of assembling
or evaluating business credit information or other information on businesses for the
purpose of reporting to third parties on the credit rating or creditworthiness of
any business. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 10203. Disclosure of financial records prohibited
Except as otherwise expressly provided in this subchapter, a financial institution,
its officers, employees, agents, and directors shall not disclose to any person any
financial information relating to a customer. Financial institutions shall adopt reasonable
procedures to ensure compliance with this subchapter. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 278, eff. July 1, 2022.)
§ 10204. Exceptions
This subchapter does not prohibit any of the activities listed in this section. This
section shall not be construed to require any financial institution to make any disclosure
not otherwise required by law. This section shall not be construed to require or encourage
any financial institution to alter any procedures or practices not inconsistent with
this subchapter. This section shall not be construed to expand or create any authority
in any person or entity other than a financial institution.
(1) Disclosure of information to the customer after proper identification.
(2) Disclosure authorized by the customer, provided the disclosure is limited to the scope
and purpose that the customer authorizes.
(3) Disclosure of information sought by the Office of Child Support Services pursuant
to its authority and obligations under 33 V.S.A. § 115 and 33 V.S.A. chapter 41, or by an agency of similar function of another state, pursuant
to similar authority.
(4) Disclosure of information sought by the Department for Children and Families pursuant
to its authority and obligations under 33 V.S.A. § 112.
(5) Disclosure sought by the Vermont Student Assistance Corporation pursuant to its authority
and obligations under 16 V.S.A. chapter 87.
(6) The preparation, examination, handling, or maintenance of financial records by any
officer, employee, or agent of a financial institution that has custody of the records.
(7) The examination of financial records by a certified public accountant while engaged
by the financial institution to perform an independent audit.
(8) The disclosure of information to a collection agency, its employees or agents, or
to any person engaged by the financial institution to assist in recovering an amount
owed to the financial institution, if such disclosure is made in the furtherance of
recovering such amount.
(9) The examination of financial records by, or the disclosure of financial records to,
any officer, employee, or agent of a regulatory agency for use only in the exercise
of that person’s duties as an officer, employee, or agent.
(10) The publication of information derived from financial records if the information cannot
be identified to any particular customer, deposit, or account.
(11) The making of reports, disclosures, or returns required by federal or state law.
(12) The disclosure of any information permitted to be disclosed under the laws governing
dishonor of negotiable instruments.
(13) The exchange, in the regular course of business, of credit information between a financial
institution and a credit reporting agency, provided such exchange is in compliance
with the Vermont Fair Credit Reporting Act, 9 V.S.A. chapter 63, subchapter 3, and
the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.
(14) The exchange, in the regular course of business, of information between a financial
institution and an account verification service, provided such exchange is in compliance
with the Vermont Fair Credit Reporting Act, 9 V.S.A. chapter 63, subchapter 3, and
the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.
(15) The exchange, in the regular course of business, of information between a financial
institution and a mercantile agency, provided such exchange is solely for the purpose
of reporting to third parties on the credit rating or creditworthiness of any business
and is in compliance with the Vermont Fair Credit Reporting Act, 9 V.S.A. chapter
63, subchapter 3, and the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.
(16) The exchange of loan information that specifically affects a sale, foreclosure, or
loan closing, provided such exchange is for the purpose of accomplishing such sale,
foreclosure, or loan closing.
(17) The disclosure to civil or criminal law enforcement authorities for use in the exercise
of such authority’s duties, or the sharing of information, within an industry network,
of suspected criminal activities.
(18) Disclosures requested pursuant to a summons for trustee process under Rule 4.2 of
the Vermont Rules of Civil Procedure.
(19) Disclosure requested pursuant to subpoena, provided that no disclosure shall be made
until 14 days after the financial institution has notified the customer that financial
information has been requested by subpoena. Such notice shall be served by first-class
mail to the customer at the most recent address known to the financial institution.
The provisions of this subdivision shall not apply where the subpoena is issued by
or on behalf of a regulatory, criminal, or civil law enforcement agency.
(20) Disclosure required by order of court.
(21) Disclosure of customer financial information among directors, officers, employees,
or agents of affiliated financial institutions, provided that such disclosure is limited
to information necessary or appropriate to the fulfillment of any such persons’ duties
and responsibilities to the financial institution or institutions, and provided further
that such disclosure is made in compliance with the Vermont Fair Credit Reporting
Act, 9 V.S.A. chapter 63, subchapter 3, and the federal Fair Credit Reporting Act,
15 U.S.C. § 1681 et seq.
(22) Disclosure of customer financial information of one financial institution to another
financial institution in connection with a proposed merger, consolidation, acquisition,
or other reorganization transaction involving such institution, provided that no further
disclosure is made except in compliance with this subchapter, and provided further
that such disclosure is made in compliance with the Vermont Fair Credit Reporting
Act, 9 V.S.A. chapter 63, subchapter 3, and the federal Fair Credit Reporting Act,
15 U.S.C. § 1681 et seq.
(23) Disclosure in accordance with rules adopted by the Commissioner, provided that the
Commissioner may permit disclosure by temporary order, until such time as rules under
this subdivision are adopted.
(24) Disclosure sought by the Department of Taxes of this State pursuant to its authority
and obligations under Title 32.
(25) Reports or disclosure of financial or other information to the Department of Disabilities,
Aging, and Independent Living, pursuant to 33 V.S.A. §§ 6903(b), 6904, and 6915.
(26) Disclosure of information sought by the Department of Vermont Health Access or its
agents pursuant to the Department’s authority and obligations under 33 V.S.A. § 403. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2001, No. 115 (Adj. Sess.), § 3, eff. May 28, 2002; 2005, No. 174 (Adj. Sess.), § 12; 2015, No. 91 (Adj. Sess.), § 3, eff. May 16, 2016; 2017, No. 11, § 6; 2017, No. 210 (Adj. Sess.), § 10, eff. June 1, 2018.)
§ 10205. Penalties
In addition to the authority provided under sections 11601, 11602, and 11603 of this title, the Commissioner may impose an administrative penalty of not more than $1,000.00
for each violation of this subchapter resulting from willful conduct or from a failure
by a financial institution to provide reasonable supervision of its employees to prevent
violations of this subchapter. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 10206. Lead solicitations
(a) As used in this section, “consumer” means a natural person residing in this State.
(b) A person shall not use the name, trade name, or trademark of any financial institution
in any written or oral advertisement or solicitation to a specifically identified
consumer, or that contains specific information on the account or loan of a specifically
identified consumer, for products or services, without the express written consent
of the financial institution.
(c) A person shall not include a loan number, loan amount, or any other specific loan
information that is publicly available and relative to a specifically identified consumer
in any written or oral solicitation for products or services unless the solicitation
clearly and conspicuously states on the front page of the correspondence in bold-face
type and in a type size at least equal to the body of the correspondence:
(1) that the person is not affiliated with or sponsored by the financial institution;
(2) that the solicitation is not authorized by the financial institution;
(3) that the financial institution has not supplied the person with any loan information
or personal or financial information referenced in the solicitation; and
(4) the name, address, and telephone number of the person who paid for the solicitation.
(d) The statements required by subsection (c) of this section shall also be given at the
time of any oral solicitation to a specifically identified consumer.
(e) In addition to any other authority provided elsewhere, the Commissioner may enforce
violations of this section against any person and may impose penalties as set forth
in sections 2110 and 2115 of this title; may recover costs and attorney’s fees, including court costs; may order any person
to cease violating this section; and may take such other actions as the Commissioner
deems necessary and appropriate. All administrative proceedings shall be conducted
in accordance with 3 V.S.A. chapter 25 and any rules adopted by the Commissioner on hearing procedures.
(f) A financial institution that has had its name, trade name, or trademark misrepresented
in a solicitation in violation of this section may, in addition to any other remedy
provided by law, bring an action in Superior Court in the county of its primary place
of business or, if its primary place of business is located outside Vermont, in Washington
Superior Court. The court shall award damages for each violation in the amount of
actual damages demonstrated by the financial institution or $5,000.00, whichever is
greater. In any successful action for injunctive relief or for damages, the court
shall award the financial institution reasonable attorney’s fees and costs, including
court costs.
(g) A person’s failure to comply with the requirements of this section shall constitute
an unfair and deceptive act in commerce enforceable under 9 V.S.A. chapter 63.
(h) For purposes of this section, each solicitation sent to each consumer constitutes
a separate violation. (Added 2009, No. 100 (Adj. Sess.), § 1; amended 2019, No. 20, § 100.)
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Subchapter 003: DISCLOSURES AND REPORTS
§ 10301. Community reinvestment reports
Every financial institution subject to the Federal Community Reinvestment Act of 1977
(12 U.S.C. § 2901) as amended shall provide to the Commissioner a copy of any report issued with respect
to such financial institution under that act. If the financial institution is not
a Vermont financial institution, then the requirements of this section shall only
apply to reports that relate to its business in this State. The Commissioner shall
make such reports available for public inspection and copying. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 10302. Automated teller machines
(a) The owner of an automated teller machine or other remote service unit located or to
be located in this State shall, using a form prescribed by the Commissioner:
(1) provide the ownership and location of each machine or unit at least 30 days prior
to the activation of the machine or unit;
(2) obtain Commissioner approval of the form, content, timing, and location of all disclosures
required by subsection (b) of this section prior to their use; and
(3) notify the Commissioner of the deactivation of any machine or unit within 30 days
after its deactivation.
(b) The owner of an automated teller machine or other remote service unit located or to
be located in this State shall disclose prominently and conspicuously, using as high
a contrast or resolution as any other display or graphics on the machine or unit,
prior to the point at which a consumer using the machine or unit is irrevocably committed
to completing any transaction:
(1) on or at the location of each machine or unit, or on the first screen of such machine
or unit, the name, address, and telephone number of the owner of the machine or unit
and the days, time, and means by which a consumer can contact the owner for consumer
assistance; and
(2) on the screen of each machine or unit, the amount of the fees or charges that the
owner will assess to the consumer for the transaction, a clear explanation that the
fees or charges are imposed by the owner of the machine or unit in connection with
the consumer’s transaction and are in addition to any fees or charges that may be
imposed by the issuer of a consumer’s card, and the method by which the consumer may
cancel the transaction to avoid imposition of the fees or charges.
(c) The Commissioner shall act on complete applications for approval of disclosures required
by subsection (b) of this section within 30 days after receipt. The absence of full
ownership and location information for each machine or unit that will use the disclosures
will result in return of the application as incomplete.
(d) To ensure adequate consumer protection, the Commissioner may by order or by rule specify
additional minimum disclosure standards for automated teller machines or other remote
service units, including the form, content, timing, and location of such disclosures.
(e) The Commissioner may impose on the owner of an automated teller machine or other remote
service unit an administrative penalty of not more than $1,000.00 for each day’s failure
of the owner to apply to the Commissioner for approval of disclosures required under
this section, for each day’s failure of the owner to use disclosures approved by the
Commissioner, or for each day’s continuing violation of an order of the Commissioner
relating to the disclosures required by this section.
(f) In addition to an automated teller machine or other remote service unit owned by a
financial institution or credit union, the provisions of this section shall apply
to such machine or unit not owned by a financial institution or credit union, except
it shall not include a money transmission kiosk governed by chapter 79 of this title
or a point-of-sale terminal owned or operated by a merchant who does not charge a
fee for the use of the point-of-sale terminal.
(g) The activities of an automated teller machine or other remote service unit whose owner
is not a financial institution or credit union shall be limited to cash dispensing
or the offer or sale of nonbanking services and products. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2013, No. 29, § 16, eff. May 13, 2013; 2019, No. 20, § 101; 2021, No. 105 (Adj. Sess.), § 279, eff. July 1, 2022; 2023, No. 110 (Adj. Sess.), § 49, eff. July 1, 2024.)
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Subchapter 004: LENDING REPORTS, DISCLOSURES, AND STANDARDS
§ 10401. Repealed. 2003, No. 105 (Adj. Sess), § 16.
§ 10402. Lending reports, disclosures, and standards
An entity subject to this chapter shall be subject to and comply with the provisions
of 9 V.S.A. chapter 4. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 10403. Prohibition on discrimination based on sex, marital status, race, color, religion,
national origin, age, sexual orientation, gender identity, or disability
(a) Discrimination prohibited. No financial institution shall discriminate against any applicant for credit services
on the basis of the sex, marital status, race, color, religion, national origin, age,
sexual orientation, gender identity, or disability of the applicant, provided the
applicant has the legal capacity to contract.
(b) Rulemaking. The Department of Financial Regulation shall adopt rules necessary to carry out the
provisions of this section.
(c) Definitions. As used in this section:
(1) “Adverse action” means denial, revocation, or termination of credit services. The
term does not include a change in the terms of an account expressly agreed to by an
applicant nor any action or forbearance relating to an account taken in connection
with inactivity, default, or delinquency as to that account.
(2) “Applicant” means any person who applies to a financial institution directly for an
extension, renewal, or continuation of credit or applies to a financial institution
indirectly by use of an existing credit plan for an amount exceeding a previously
established credit limit.
(3) “Application” means an oral or written request for an extension of credit that is
made in accordance with procedures established by a financial institution for the
type of credit requested. The term does not include the use of an account or line
of credit to obtain an amount of credit that is within a previously established credit
limit. A completed application means an application in connection with which a financial
institution has received all the information that the financial institution regularly
obtains and considers in evaluating applications for the amount and type of credit
requested, including credit reports, any additional information requested from the
applicant, and any approvals or reports by governmental agencies or other persons
that are necessary to guarantee, insure, or provide security for the credit or collateral.
The financial institution shall exercise reasonable diligence in obtaining such information.
(4) “Credit services” means credit cards, personal loans, mortgage loans, and commercial
loans.
(5) “Financial institutions” means Vermont financial institutions, credit unions, and
licensed lenders.
(6) “Disability” applied to an applicant means a person with a disability as defined in
21 V.S.A. § 495d(5). As used in this section, an applicant with a disability does not include an alcoholic
or drug abuser who, by reason of current alcohol or drug use, constitutes an unacceptable
credit risk.
(7) “Person” means a natural person, a corporation, government or governmental subdivision
or agency, trust, estate, partnership, cooperative, association, or other entity.
(d) Notification requirements.
(1) Within 30 days of reaching a decision on a completed application, a financial institution
shall notify the applicant of its decision on the application.
(2) Each applicant against whom adverse action is taken shall receive a written statement
of reasons for such action from the financial institution.
(3) For commercial credit only, a statement of reasons meets the requirements of this
section only if it contains the specific reasons for the adverse action taken and
cites the specific documentation or business judgment that supports the adverse decision
on the application. Consumer credit shall be governed by the Equal Credit Opportunity
Act (15 U.S.C. § 1691 et seq.) and regulations adopted pursuant to the Act.
(4) Financial institutions shall be required to maintain a copy of all “statements of
reasons” and the documentation upon which the decision was based for 24 months after
the date of issuance.
(e) Civil enforcement. A financial institution that discriminates against an applicant in violation of this
section shall be liable to the applicant for punitive damages, for actual damages
sustained by the applicant as a result of the discrimination, and for costs and reasonable
attorney’s fees as determined by the court. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2007, No. 41, § 10; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 96 (Adj. Sess.), § 24; 2019, No. 131 (Adj. Sess.), § 8; 2021, No. 105 (Adj. Sess.), § 280, eff. July 1, 2022.)
§ 10404. Home loan escrow accounts
(a) As used in this section:
(1) “Borrower” means one or more natural persons who are obligated to make escrow account
payments under the terms of a loan agreement secured by residential real estate occupied
by the borrower.
(2) “Escrow account” means an account into which a borrower is required under the terms
of a residential real estate loan agreement to make periodic payments of property
taxes, insurance premiums, or other similar charges.
(3) “Lender” means a person who services or holds the beneficial interest in a loan secured
by residential real estate located in this State and who requires periodic payments
by a borrower into an escrow account in accordance with the provisions of a residential
real estate loan agreement.
(b) A lender shall pay into an escrow account for the benefit of the borrower interest
on funds deposited into the account under the same conditions as the lender’s regular
savings account, if offered, and otherwise at a rate not less than the prevailing
market rate of interest for regular savings accounts offered by local financial institutions,
calculated on the basis of the average monthly balance in the account and credited
on the first day of each quarter. This subsection shall not apply when a lender requires
payment into an escrow account because a borrower has failed, within the past year,
to make timely payments for property taxes and insurance in accordance with the provisions
of the loan agreement.
(c) A lender shall not require a borrower to deposit into an escrow account any greater
sum than is sufficient to pay taxes, insurance premiums, and other charges with respect
to the residential real estate, subject to the following additional charges:
(1) a lender may require aggregate annual deposits no greater than the reasonably estimated
total annual charges plus one-sixth of such total; and
(2) a lender may require monthly deposits no greater than one-twelfth of the reasonably
estimated total annual charges plus an amount needed to maintain an additional account
balance no greater than one-sixth of such total.
(d) A lender shall make timely payments of all charges with respect to the residential
real estate payable from the escrow account.
(e) The lender shall maintain escrow account funds in a federally insured depository institution.
(f) With respect to borrowers who have maintained escrow accounts in accordance with the
provisions of the loan agreement, the lender shall be primarily obligated for the
payment of any municipal or county taxes, insurance premiums, or other similar charges
with respect to the residential real estate, and any penalties attributable to the
lender’s late payment of such charges.
(g)(1) At least annually, at the completion of the escrow account computation year, a lender
shall conduct an escrow account analysis to determine the borrower’s monthly escrow
account payments for the next computation year based on the borrower’s current tax
liability, if made available to the lender either by the borrower or the municipality,
after any applicable adjustment for a State credit on property taxes.
(2) Upon receipt of a revised property tax bill, the lender shall review the property
tax bill and, upon verifying that it has been reduced since the date of the last escrow
account analysis, the lender shall, within 30 days of receiving the bill, conduct
a new escrow account analysis, recalculate the borrower’s monthly escrow payment,
and notify the borrower of any change.
(3) At least annually, and whenever an escrow account analysis is conducted or upon request
of the borrower, the lender shall provide to the borrower financial statements relating
to the borrower’s escrow account in a manner and on a form consistent with the federal
Real Estate Settlement Procedures Act. The lender shall not charge the borrower for
the preparation and transmittal of such statements.
(h) A borrower aggrieved by a violation of the provisions of this section, or a rule adopted
by the Commissioner in connection with this section, may bring an action for injunctive
relief, three times the amount of any interest unpaid in violation of this section,
other damages, costs, and reasonable attorney’s fees. The Commissioner may bring an
action in the Superior Court of Washington County for injunctive relief, restitution,
and any administrative costs and attorney’s fees incurred as a result of a violation
of this section. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2017, No. 70, § 2.)
§ 10404a. Repealed. 2011, No. 21, § 3.
§ 10405. Debt protection agreements
(a) Debt protection agreements that meet the requirements of this section, including requirements
related to necessary disclosures, prohibited activities, and to the sale, transfer,
and assignment of such agreements, are not insurance as defined by section 3301a of this title and are not governed by the insurance laws of the State of Vermont.
(b) As used in this section:
(1) “Debt protection agreement” means a loan term or contractual arrangement that may
be part of, or separate from, the loan agreement or retail or motor vehicle installment
contract that modifies the loan or retail or motor vehicle installment contract terms
governing the extension of credit under the loan agreement or retail or motor vehicle
installment contract and under which the creditor agrees to provide one or more of
the following protections:
(A) debt cancellation, which is an agreement to cancel all or part of a borrower’s obligation
to repay an extension of credit from that creditor upon the occurrence of a specified
event and shall include a guaranteed asset protection waiver agreement in which the
creditor agrees to cancel all or part of a borrower’s obligation to repay an extension
of credit to the extent that there is an outstanding balance on the loan or retail
or motor vehicle installment contract after application of property insurance proceeds
in the event of total physical damage or theft of the property; or
(B) debt suspension, which is an agreement to suspend all or part of a borrower’s obligation
upon the occurrence of a specified event.
(2) The term “creditor” shall include:
(A) the lender in a credit transaction;
(B) any “retail seller” or “seller” of “motor vehicles” or of other “goods” and “services”
that provides credit to “retail buyers” or “buyers” of such motor vehicles or goods
and services as those terms are all defined in 9 V.S.A. §§ 2351 and 2401, respectively, provided that such entities comply with the provisions of this section,
including the provisions of subdivisions (c)(1) and (2) of this section; and
(C) the assignees of any of the foregoing to whom the credit obligation is payable.
(3) The term “borrower” shall include a debtor, retail buyer of a motor vehicle or other
good or service, or other person who obtains an extension of credit from a creditor.
(4) The term “actuarial method” shall mean the method of allocating payments made on a
debt between the amount financed and the finance charge pursuant to which a payment
is applied first to the accumulated finance charge and any remainder is subtracted
from or any deficiency is added to the unpaid balance of the amount financed.
(c)(1) Requirements. In the case of credit granted by a seller or retail seller of motor vehicles or of
other goods and services that is not required to be licensed under chapter 73 of this
title, such retail seller or seller of motor vehicles or of other goods and services
shall, within 15 business days, sell, assign, or otherwise transfer the loan agreement,
motor vehicle installment contract, or retail sales installment contract, together
with the related debt protection agreement in accordance with the provisions of subdivision
(2) of this subsection.
(2) All assignments, sales, or transfers of a loan agreement or motor vehicle or retail
installment contract to which a debt protection agreement relates and the related
debt protection agreement shall be to a financial institution as defined in subdivision 11101(32) of this title, a credit union, or an entity licensed under subdivision 2201(a)(1) or (4) of this
title to engage in lending or sales financing.
(3) In the event that a retail seller or seller of motor vehicles or of other goods or
services cannot within 15 business days sell, assign, or otherwise transfer the loan
agreement or motor vehicle or retail sales installment contract and the related debt
protection agreement as required by subdivision (1) of this subsection, or in the
event that an assignment is made contrary to subdivision (2) of this subsection, the
provisions of subsection (a) of this section shall not apply and the product shall
be considered to be insurance governed by the insurance laws of the State of Vermont.
(4) The debt protection agreement forms a part of the loan agreement or sales contract
and must be assigned, sold, or transferred together with any assignment, sale, or
transfer of the loan agreement or retail or motor vehicle installment contract to
which it was originally related.
(5) A creditor shall disclose in writing, such disclosures shall be conspicuous, readily
understandable, and designed to call attention to the nature and significance of the
information provided:
(A) that neither the extension of credit, the terms of the credit, nor the terms of the
related sale in the case of a motor vehicle or other good or service are to be conditioned
upon the purchase of a debt protection agreement;
(B) the charge for the debt protection agreement; and
(C) the terms and conditions of coverage, including the eligibility requirements for coverage,
conditions, or exclusions associated with the contract, a clear representation of
the parties to the agreement, procedures for making a claim under the agreement, and
the length of term of coverage.
(6) The buyer signs or initials an affirmative written request to purchase a debt protection
agreement after receiving the disclosures specified in this subsection. Any buyer
in the transaction may sign or initial the request.
(7) Neither the extension of credit, the terms of the credit, nor the terms of the related
sale in the case of a motor vehicle or other good or service are to be conditioned
upon the purchase of a debt protection agreement.
(8) The fees charged for debt protection agreements shall not vary as between individual
borrowers except in relation to the amount and maturity date of the underlying loan
or extension of credit.
(9) Creditors may not offer debt protection agreements where the products contain terms
that allow the creditor to modify unilaterally the contract, unless the modification
is favorable to the borrower and is made without additional charge to the borrower,
or the borrower is notified of the proposed change and can cancel the debt protection
agreement without penalty.
(10) Creditors cannot offer debt protection agreements where the terms require a lump sum,
single payment for the contract payable at the outset and the product is for a residential
mortgage loan, including primary or secondary residences and including first or subordinate
liens. Periodic payments made in relation to a residential home loan must be evenly
distributed over the same term as the term of the residential home loan.
(11) The borrower may cancel the debt protection agreement at any time and for any reason.
In the event of termination or cancellation of the contract, the creditor must refund
any unearned fee according to a formula fully disclosed to the borrower at the time
of entering into the debt protection agreement, unless the contract provides otherwise.
A debt protection agreement that does not provide for a refund may only be offered
if an offer is also made of a bona fide option to purchase a comparable contract that
provides for a refund. The refund must be fair and reasonable, and the method of calculating
the refund must be at least as favorable to the borrower as the “actuarial method”;
provided, however, that if such method produces a result of less than $5.00, no refund
shall be required. Notwithstanding the foregoing, if cancellation by the borrower
occurs within 30 days of entering into the debt protection agreement, the borrower
shall receive a full refund.
(12) The creditor must manage the risks associated with debt protection agreements in accordance
with safe and sound financial principles. The creditor must establish and maintain
effective risk management and control processes over its debt protection agreements.
Such processes include appropriate recognition and financial reporting of income,
expenses, assets, and liabilities, and appropriate treatment of all expected and unexpected
losses associated with the products. The creditor also should assess the adequacy
of its internal control and risk mitigation activities in view of the nature and scope
of its debt protection agreement programs.
(13) Debt protection agreements, as defined in this section, shall not state that the borrower
does not have a right to bring an action to enforce the terms of the debt protection
agreement or otherwise challenge the denial of a claim or that any civil action brought
in connection with a debt protection agreement must be brought in the courts of a
jurisdiction other than Vermont.
(14) Any other requirements prescribed by the Commissioner, in order to further the purposes
of this section, by rules adopted pursuant to this section.
(d) The Commissioner may conduct an examination of any creditor, as defined under this
section, for the purpose of determining compliance with this section and may make
such investigation as the Commissioner deems necessary. To the extent necessary for
such examination or investigation, the Commissioner may, without limiting the foregoing,
compel the production of all relevant books, records, documents, other evidence, or
the attendance of witnesses, and may issue subpoenas with respect to the foregoing.
The expense of any such investigation or examination shall be paid by the entity being
examined or investigated. Nothing contained in this subsection shall limit any other
examination or investigation authority of the Commissioner contained in Title 9 or
this title.
(e) The Commissioner may take any action reasonable, necessary, or desirable for the enforcement
of this section, or any rule adopted pursuant to this section, or the enforcement
of any order issued under this subsection and may:
(1) Order the creditor to cease and desist from offering debt protection agreements.
(2) Revoke or suspend the license or authority under this title of any person, including
creditors offering debt protection agreements.
(3) Impose a penalty of not more than $1,000.00 for each violation that the Commissioner
finds to exist.
(4) Order the creditor to make restitution to the borrower.
(f) The powers vested in the Commissioner under this section are in addition to any other
powers of the Commissioner to enforce penalties, fines, or forfeitures authorized
by law with respect to a violation of any other law under Title 9 or this title. (Added 2005, No. 70, § 4; amended 2021, No. 105 (Adj. Sess.), § 281, eff. July 1, 2022; 2021, No. 139 (Adj. Sess.), § 6, eff. May 27, 2022.)
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Subchapter 005: BANK PRODUCTS; PROHIBITIONS
§ 10501. Basic banking
It is the public policy of this State to promote the economic viability and prosperity
of its residents and to promote, attract, and encourage savings. The General Assembly
finds and declares that access to basic banking services for basic depository transactions
is necessary for the payment of monthly expenses and for the encouragement of thrift
by Vermont consumers. The General Assembly further finds and declares that reasonable
cost basic banking services promote savings on the part of consumers who are young,
old, or have low income and provide, through means of payment by check, draft, negotiable
order of withdrawal, or similar instrument, a viable alternative for cash transactions,
which is essential to all Vermont consumers. Therefore, it is the purpose of this
chapter to ensure that basic banking services remain available to all Vermont consumers. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2013, No. 96 (Adj. Sess.), § 25.)
§ 10502. Definitions relating to basic banking
As used in sections 10501 through 10504 of this title, the following terms shall have the following meanings:
(1) “Basic checking account” means a deposit account on which the consumer is permitted
to make payments or transfers by check, money order, or other negotiable instruments
and that is maintained by such person for personal, family, or household purposes.
(2) “Basic savings account” means a savings account or statement savings that is maintained
by such person for personal, family, or household purposes.
(3) “Consumer” means a natural person. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 10503. Repealed. 2019 No. 20, § 102.
§ 10504. Basic banking rules
The Commissioner may adopt rules to require financial institutions with their principal
place of business in this State to offer basic checking and savings accounts if the
Commissioner finds a material deterioration in the availability and cost of basic
checking and savings account services in the results of any two consecutive surveys.
The rule adopted by the Commissioner under this section shall ensure that any required
basic banking will not impair the safety and soundness of any affected financial institution
and that any such rules shall not adversely affect other consumers of banking services. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 282, eff. July 1, 2022.)
§ 10505. Returned check charges
No depository institution or credit union shall assess a returned check charge or
similar charge against a depositor for the costs of processing a check received by
that depositor and returned for nonsufficient funds by the institution upon which
it was drawn. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2001, No. 73 (Adj. Sess.), § 1, eff. Feb. 2, 2002.)
§ 10506. Unsolicited distribution of cash advance contracts and notes
No person shall distribute by mail, or in any other manner, to a Vermont resident
an unsolicited cash advance contract or note in furtherance of that contract. A person
who violates this section shall also be subject to the provisions of chapter 201,
subchapter 6 of this title. This section does not apply to:
(1) any communication by a lender with a borrower pursuant to a preexisting credit relationship,
including the furnishing on an unsolicited basis of any check, card, plate, or other
means of accessing a preexisting loan or line of credit; or
(2) any unsolicited firm offer of credit made in compliance with the rules of the Federal
Trade Commission relating to prescreening, as in effect from time to time. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)