(a) Definition. - For purposes of this section, the term "military service member" means a member of the Armed Forces who is either (i) on active duty under a call or order that does not specify a period of 30 days or fewer or (ii) on active Guard and Reserve Duty, as that term is defined in 10 U.S.C. 101(d)(6).
(b) Verification; Requirements for Granting Loan. - Prior to making a loan under this Article, a licensee will confirm whether the borrower is a military service member and document this in the person's loan file. A licensee may not make a loan to a borrower who is a military service member with a rank of E4 or below ("covered member") unless the following requirements are met:
(1) The licensee notifies the borrower's company-level commander or equivalent designee of the covered member before the loan is consummated. Notification may occur verbally, by electronic means, United States mail, or other equivalent methods of notification. The notification method and date shall be recorded in writing and included in the loan file along with the name of the company-level commander or equivalent designee communicated with and the date of the communication with the company-level commander or equivalent designee.
(2) The licensee shall deposit in the United States mail a copy of the federal Truth in Lending Act, 15 U.S.C. 1601, et seq., disclosures and the complete contract for the loan addressed to the borrower's company-level commander or equivalent designee of the covered member within five business days of the consummation of the loan.
(3) A covered member who has entered into a loan contract made pursuant to this Article may, within 30 days of entering into the loan contract, rescind the loan contract by returning to the licensee in cash or by certified bank check the amount advanced to or for the benefit of the covered member under the loan contract, and upon delivery of those funds to the licensee, the borrower shall have no further liability or obligations under the loan contract. Nothing in this provision shall be construed to restrict or eliminate any other penalties provided by State or federal law.
(4) The licensee shall give the covered member a separate disclosure that includes the statements and information required under G.S. 53-181(a). The licensee shall include the name and address of the North Carolina Commissioner of Banks, the Consumer Protection Division of the North Carolina Department of Justice, and the Consumer Financial Protection Bureau. The licensee may include internal compliance information on the same disclosure.
(5) Notwithstanding section 2 of Title 9 of the United States Code, 9 U.S.C. 2, or any other federal or State law, rule, or regulation, no agreement to arbitrate any dispute involving the extension of consumer credit shall be enforceable against any covered member or dependent of such a member or any person who was a covered member or dependent of that member when the agreement was made.
(6) A licensee shall take reasonable precaution to prevent making loans in violation of this section. In the event that a licensee does not take reasonable precautions to identify covered members prior to making a loan, such loans granted to covered members shall have the interest rate on the loan adjusted to eight percent (8%) per annum.
(c) Penalties and Remedies. -
(1) The remedies and rights provided under this section are in addition to and do not preclude any remedy otherwise available under law to the person claiming relief under this section, including any incidental, consequential, or punitive damages.
(2) Any credit agreement, promissory note, or other contract prohibited under this section is null and void.
(3) Nothing in this section may be construed to limit or otherwise affect the applicability of section 207 of the Servicemembers Civil Relief Act, 50 U.S.C. App. 527.
(d) Additional Restriction. - When a military servicemember has been deployed to a theater of combat, combat supporting role, an area where hostile fire and/or when Imminent Danger Pay is authorized to the servicemember, a licensee shall not contact the military servicemember or member's spouse by telephone or electronic mail for purposes of collecting on the loan upon receiving sufficient proof of the military servicemember's deployment. An official copy of the military service member's orders for deployment or written verification from the servicemember's commanding officer shall constitute sufficient proof. (2013-162, s. 7.)
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Last modified: March 23, 2014