§ 24-4.5-7-404 — Limits and number and amounts of outstanding loans; lender's verification; third party data base; civil penalties; excess finance charges; verification of Social Security number

(1) As used in this section, "commercially
reasonable method of verification" means a private consumer credit
reporting 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 lender
independently verifies the total number of outstanding small loans and
the total outstanding balance of those small loans for a customer
through a commercially reasonable method of verification. A lender's
method of verifying whether a borrower has any outstanding small
loans and the total outstanding balance of any 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 data base provided by a private
consumer reporting service, subject to the identification
verification requirements set forth in subsection (12).
(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 a commercially reasonable method of verification is
available, the department shall:
(a) provide reasonable notice to all lenders identifying the
commercially reasonable method of verification that is available;
and
(b) require each lender to use, consistent with the policies of the
department, the identified commercially reasonable 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 data base 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 data base 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 data base.
(8) A lender shall update information in a data base described in
subsection (4)(b) to reflect partial payments made on an outstanding
loan, the record of which is maintained in the data base.
(9) If a lender ceases doing business in Indiana, the director may
require the operator of the data base described in subsection (4)(b) to
remove records of the lender's loans from the operator's data base.
(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).
(12) If a borrower provides the borrower's Social Security number
to a lender in connection with any transaction or proposed transaction
under this chapter, the lender shall:
(a) maintain procedures to verify that the Social Security number
provided is legitimate and belongs to the borrower; and
(b) retain copies of any documents used to verify the borrower's
Social Security number. Documentation under this subdivision
may be in electronic form and the numbers may be truncated.
If a borrower does not have a Social Security number, the lender may
require and accept another valid form of government issued
identification, subject to the requirements of subdivisions (a) and (b)
with respect to the government issued identification accepted.

Legislative History

As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.28; P.L.10-2006, SEC.17 and P.L.57-2006, SEC.17; P.L.213-2007, SEC.27; P.L.217-2007, SEC.26; P.L.90-2008, SEC.15; P.L.35-2010, SEC.85.