Maine’s Governor, Janet Mills, recently signed S.P. 205/L.D. 522, which amended the Consumer Credit Code to protect consumers from predatory and fraudulent lending practices. In particular, the amendments include an anti-evasion provision under which purported bank agents or service providers are deemed “lenders” for the purposes of statute. The amendment contains the following key provisions:
- Covered entities “may not engage in any device, subterfuge or pretense to evade the requirements of this Article, including, but not limited to…making, offering, assisting, or arranging a debtor to obtain a loan with a greater rate of interest, consideration or charge than is permitted by this Article through any method.”
- Loans that violate these provisions are “void and uncollectible as to any principal, fee, interest or charge.”
- A person qualifies as a lender if it:
- holds, acquires or maintains, directly or indirectly, the predominant economic interest in the loan;
- markets, brokers, arranges or facilitates the loan and holds the right, requirement or first right of refusal to purchase the loan or a receivable or interest in the loan; or
- the totality of the circumstances indicate that the person is the lender and the transaction is structured to evade the requirements of this Article.
- The circumstances that would weigh in favor of an entity being deemed the lender include, without limitation, when the entity:
- indemnifies, insures or protects an exempt entity for any costs or risks related to the loan
- predominately designs, controls or operates the loan program, or
- purports to act as an agent or service provider for an exempt entity while acting directly as a lender in other states.
- Lenders who violate these provisions may not furnish information concerning a debt associated with the violation to a consumer reporting agency, nor may it refer the associated debt to a debt collector.
