The working group of the Virginia Bureau of Financial Institutions (the “Bureau”), which was established at the direction of the Virginia General Assembly to consider potential legislation to regulate internet lending, held its second meeting on July 15th. The focus of the group is primarily on online closed-end and open-end loans made by non-depository lenders, particularly out-of-state lenders. Such lenders are not subject to the licensing and other requirements under Virginia’s current consumer finance statutes.
At the outset of the meeting, representatives from both the Bureau and the Virginia Attorney General’s office expressed their view that all non-depository lenders making loans to Virginia consumers should operate under the same Virginia statutory provisions, whether they make such loans from a physical location in Virginia or over the internet. They do not believe a separate statutory section for online lending is advisable, as had been suggested at the working group’s first meeting. The working group was in agreement with the Bureau and the Attorney General’s office on this point.
The Bureau next discussed potential legislation to require the licensing of online lenders. While there was not much resistance from online lending industry representatives to a simple licensing requirement, there was opposition to new interest rate caps that would result from bringing online loans within the scope of Virginia’s consumer finance statutes. There was particular resistance to any interest rate restrictions on open-end loans, as such loans generally are not subject to any interest rate or fee limitations (other than a 25-day grace period) under Virginia law. Finally, industry participating in the working group expressed general concerns about new consumer protection provisions that might be added to the consumer finance statutes as part of this effort. The Bureau will work on proposed legislative language for the working group to consider in upcoming meetings.
The next meeting of the working group is August 24th. Stay tuned.