RICHMOND — The State Corporation Commission (SCC) has adopted revisions to the regulations governing licensed payday lenders in Virginia. The changes coincide with extensive amendments to the Payday Loan Act that take effect January 1, 2009. The SCC held a hearing on the changes on August 5.

The 2008 General Assembly directed the SCC to certify and contract with one or more third parties to develop, implement, and maintain a real-time, Internet-accessible database that licensed payday lenders will be required to transmit data to and query prior to making payday loans. Early adoption of the revised regulations enables the database to be developed in advance of the law’s effective date.

Many of the reforms are complex and required substantial changes to the SCC’s rules. As amended, the Act modifies the amount of interest and fees that may be charged by a licensed payday lender.

The revised law and the rules prevent individual borrowers from obtaining payday loans under various circumstances, such as if they have outstanding payday loans or repaid previous payday loans on the same day they are seeking new payday loans. Payday loans are also prohibited to members of the military services of the United States, their spouses, or other dependents.

Under the new law, borrowers are to be provided the option, under certain circumstances, to repay their payday loans by means of extended payment plans or extended term loans. Borrowers who elect such options must wait a period of time after repaying their loans before obtaining new payday loans. The revised rules set forth how payday lenders are to advise borrowers of their options. And, the rules establish the time periods for repayment that are dependent upon the borrower’s pay cycle.

The SCC’s Bureau of Financial Institutions offers a consumer’s guide to payday lending on its website at http://www.scc.virginia.gov/bfi/cons_guide.aspx. The guide is based on the current law and regulations. A revised guide incorporating the changes to the law and the revised regulations will be available by December.

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Case Number BFI-2008-00295

Order Adopting Final Regulations