§§ 1-5. Repealed. 1999, No. 153 (Adj. Sess.), § 27.

§ 6. Repealed. 1979, No. 85 (Adj. Sess.).

§ 10. Declaration of policy.

It is declared to be the policy of the State of Vermont that:

1. the business of organizations that offer financial services and products shall be supervised by the Commissioner in a manner to assure the solvency, liquidity, stability, and efficiency of all such organizations, to assure reasonable and orderly competition, thereby encouraging the development, expansion, and availability of financial services and products advantageous to the public welfare and to maintain close cooperation with other supervisory authorities;
2. all such organizations shall be supervised in such a way as to protect consumers against unfair and unconscionable practices and to provide consumer education.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001.

§ 11. Department.

1. General.  The Department of Financial Regulation created by 3 V.S.A. § 212 shall have jurisdiction over and shall supervise:
   1. Financial institutions, credit unions, licensed lenders, mortgage brokers, insurance companies, insurance agents, broker-dealers, investment advisors, and other similar persons subject to the provisions of this title and 9 V.S.A. chapters 59, 61, and 150.
   2. The administration of health care as provided in 18 V.S.A. chapter 221.
2. Conflicts of Interest.
   1. Neither the Commissioner nor any employee of the Department shall, during his or her term of office or while employed by the Department, be an officer, director, organizer, employee of, or attorney for any institution subject to supervision or regulation by the Department.
   2. The Commissioner and employees of the Department shall not, during their terms of office, receive directly or indirectly any payment or gratuity from any institution subject to supervision or regulation by the Department or be engaged in the negotiation of loans for others with any such institution. The prohibitions contained in this subdivision shall not be construed as prohibiting a person from being a depositor, equity interest owner, or member in any financial institution or credit union or an insurance policyholder or equity interest owner on the same terms as are available to the public generally.
   3. If the Commissioner, or any employee of the Department or the spouse of any of them or the son or daughter of any of them residing at their respective homes obtains a loan from or holds an equity interest in any financial institution or credit union subject to supervision or regulation by the Department, the fact of the loan or of the holding, together with the appropriate terms and conditions, shall be disclosed immediately to the Commissioner in writing by the person obtaining the loan or holding.
   4. A record of the indebtedness or holding described in subdivision (3) of this subsection shall be kept on file in the Department and shall be open to inspection by the public.
   5. The Commissioner shall investigate the loan or equity interest to ensure that no preferential treatment has been given the Department employee in the process of granting the loan or issuing the interest and that the loan or interest will not compromise the employee's effectiveness in carrying out his or her departmental duties. Where the loan has been obtained by or where the interest is held by the Commissioner, the investigation shall be conducted by the State Treasurer.
3. Retention of documents.  The Commissioner shall keep on file for a reasonable period of time such instruments, papers, and documents required by law to be filed with the Commissioner.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2007, No. 49 , § 18, eff. July 1, 2006; 2011, No. 78 (Adj. Sess.), §§ 2, 3, eff. April 2, 2012; 2013, No. 79 , § 45.

§ 12. Commissioner.

The Department shall be administered by a Commissioner of Financial Regulation who shall be appointed by the Governor biennially, in the month of February, with the advice and consent of the Senate. Commissioner, as used in this title, shall mean the Commissioner of Financial Regulation.

Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.

§ 13. Powers and penalties.

1. In addition to any other penalties, and in order to enforce this title, 9 V.S.A. chapters 131 and 150, Title 9A, and 18 V.S.A. chapter 221, the Commissioner may issue subpoenas, examine persons, administer oaths, and require production of papers and records. Any subpoena or notice to produce may be served by registered or certified mail or in person by an agent of the Commissioner. Service by registered or certified mail shall be effective three business days after mailing. Any subpoena or notice to produce shall provide at least six business days' time from service within which to comply, except that the Commissioner may shorten the time for compliance for good cause shown. Any subpoena or notice to produce sent by registered or certified mail, postage prepaid, shall constitute service on the person to whom it is addressed. Each witness who appears before the Commissioner under subpoena shall receive a fee and mileage as provided for witnesses in civil cases in Superior Courts; provided, however, any person subject to regulation under this title shall not be eligible to receive fees or mileage under this section.
2. A person who fails or refuses to appear, to testify, or to produce papers or records for examination before the Commissioner, upon properly being ordered to do so, may be assessed an administrative penalty by the Commissioner of Financial Regulation of not more than $2,000.00 for each day of noncompliance and proceeded against as provided in the Administrative Procedure Act, and that person's authority to do business may be suspended for not more than six months.
3. If an appeal or other petition for judicial review of a final order is not filed in connection with an order of the Commissioner under this title, or 18 V.S.A. chapter 22, the Commissioner may file a certified copy of the final order with the clerk of a court of competent jurisdiction. The order so filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.
4. In addition to any other penalties or powers, the Commissioner may order a person to make restitution or provide disgorgement of any sums shown to have been obtained in violation of provisions of this title and 18 V.S.A. chapter 221, plus interest at the legal rate.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2007, No. 49 , § 19; eff. July 1, 2006; 2009, No. 42 , § 4; 2011, No. 78 (Adj. Sess.), § 4, eff. April 2, 2012.

§ 14. Repealed. 2009, No. 33, § 83(d).

§ 15. Rules, orders, and administrative interpretations.

1. In addition to other powers conferred by this title and 18 V.S.A. chapter 221, the Commissioner may adopt rules and issue orders as shall be authorized by or necessary to the administration of this title and of 18 V.S.A. chapter 221, and to carry out the purposes of such titles.
2. The Commissioner may, whether or not requested by any person, issue written advisory interpretations, advisory opinions, non-objection letters, and no action letters under this title and regulations issued under it, including interpretations of the applicability of any provision of this title and regulations issued under it. Such interpretations shall be presumed to be correct unless found to be clearly erroneous by a court of competent jurisdiction. The Commissioner may make public all or a portion of an advisory interpretation.
3. The Commissioner may waive the requirements of 15 V.S.A. § 795(b) as the Commissioner deems necessary to permit the Department to participate in any national licensing or registration systems with respect to any person or entity subject to the jurisdiction of the Commissioner under this title, Title 9, or 18 V.S.A. chapter 221.
4. Upon written request by the Office of Child Support and after notice and opportunity for hearing to the licensee as required under any applicable provision of law, the Commissioner may revoke or suspend any license or other authority to conduct a trade or business (including a license to practice a profession) issued to any person under this title, 9 V.S.A. chapter 150, and 18 V.S.A. chapter 221, if the Commissioner finds that the applicant or licensee is subject to a child support order and is not in good standing with respect to that order or is not in full compliance with a plan to pay any and all child support payable under a support order as of the date the application is filed or as of the date of the commencement of revocation proceedings, as applicable. For purposes of such findings, the written representation to that effect by the Office of Child Support to the Commissioner shall constitute prima facie evidence. The Office of Child Support shall have the right to intervene in any hearing conducted with respect to such license revocation or suspension. Any findings made by the Commissioner based solely upon the written representation with respect to that license revocation or suspension shall be made only for the purposes of that proceeding and shall not be relevant to or introduced in any other proceeding at law, except for any appeal from that license revocation or suspension. Any license or certificate of authority suspended or revoked under this section shall not be reissued or renewed until the Department receives a certificate issued by the Office of Child Support that the licensee is in good standing with respect to a child support order or is in full compliance with a plan to pay any and all child support payable under a support order.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2009, No. 42 , § 33a; 2013, No. 73 , § 58, eff. June 5, 2013; 2015, No. 63 , § 3, eff. June 17, 2015; 2019, No. 20 , § 106.

§ 15a. Insurance regulatory sandbox; innovation waiver; sunset. Repealed effective July 1, 2023.

1. Subject to the limitations specified in subsection (g) of this section, the Commissioner may grant a variance or waiver (innovation waiver or waiver) with respect to the specific requirements of any insurance law, regulation, or bulletin if a person subject to that law, regulation, or bulletin demonstrates to the Commissioner's satisfaction that:
   1. the application of the law, regulation, or bulletin would prohibit the introduction of an innovative or more efficient insurance product or service that the applicant intends to offer during the period for which the proposed waiver is granted;
   2. the public policy goals of the law, regulation, or bulletin will be or have been achieved by other means;
   3. the waiver will not substantially or unreasonably increase any risk to consumers; and
   4. the waiver is in the public interest.
2. An application for an innovation waiver shall include the following information:
   1. the identity of the person applying for the waiver;
   2. a description of the product or service to be offered if the waiver is granted, including how the product or service functions and the manner and terms on which it will be offered;
   3. an explanation of the potential benefits to consumers of the product or service;
   4. an explanation of the potential risks to consumers posed by the product or service and how the applicant proposes to mitigate such risks;
   5. an identification of the statutory or regulatory provision that prohibits the introduction, sale, or offering of the product or service; and
   6. any additional information required by the Commissioner.
3. 1. An innovation waiver shall be granted for an initial period of up to 12 months, as deemed appropriate by the Commissioner. (c) (1)  An innovation waiver shall be granted for an initial period of up to 12 months, as deemed appropriate by the Commissioner.
   2. Prior to the end of the initial waiver period, the Commissioner may grant a one-time extension for up to an additional 12 months. An extension request shall be made to the Commissioner at least 30 days prior to the end of the initial waiver period and shall include the length of the extension period requested and specific reasons why the extension is necessary. The Commissioner shall grant or deny an extension request before the end of the initial waiver period.
4. An innovation waiver shall include any terms, conditions, and limitations deemed appropriate by the Commissioner, including limits on the amount of premium that may be written in relation to the underlying product or service and the number of consumers that may purchase or utilize the underlying product or service; provided that in no event shall a product or service subject to an innovation waiver be purchased or utilized by more than 10,000 Vermont consumers.
5. A product or service offered pursuant to an innovation waiver shall include the following written disclosures to consumers in clear and conspicuous form:
   1. the name and contact information of the person providing the product or service;
   2. that the product or service is authorized pursuant to an innovation waiver for a temporary period of time and may be discontinued at the end of the waiver period, the date of which shall be specified;
   3. contact information for the Department, including how a consumer may file a complaint with the Department regarding the product or service; and
   4. any additional disclosures required by the Commissioner.
6. The Commissioner's decision to grant or deny a waiver or extension shall not be subject to the contested-case provisions of the Vermont Administrative Procedures Act.
7. 1. Pursuant to the authority granted by this section, the Commissioner shall not grant a waiver with respect to any of the following: (g) (1)  Pursuant to the authority granted by this section, the Commissioner shall not grant a waiver with respect to any of the following:
      1. any law, regulation, bulletin, or other provision that is not subject to the Commissioner's jurisdiction under Title 8;
      2. section 3304, section 3366, or subsections 6004(a)-(b) of this title or any other requirement as to the minimum amount of paid-in capital or surplus required to be possessed or maintained by any person;
      3. chapter 107 (concerning health insurance), 112 (concerning the Vermont Life and Health Insurance Guaranty Association Act), 117 (concerning workers' compensation insurance), 129 (concerning insurance trade practices), or 131 (concerning licensing requirements), and chapter 154 (concerning long-term care insurance) of this title or any regulations or bulletins directly relating thereto;
      4. section 4211 (concerning volunteer drivers) of this title;
      5. any law, regulation, or bulletin required for the Department to maintain its accreditation by the National Association of Insurance Commissioners unless the law or regulation permits variances or waivers;
      6. the application of any taxes or fees; and
      7. any other law or regulation deemed ineligible by the Commissioner.
   2. The authority granted to the Commissioner under this section shall not be construed to allow the Commissioner to grant or extend a waiver that would abridge the recovery rights of Vermont policyholders.
8. A person who receives a waiver under this section shall be required to make a deposit of cash or marketable securities with the State Treasurer in an amount subject to such conditions and for such purposes as the Commissioner determines necessary for the protection of consumers.
9. 1. At least 30 days prior to granting an innovation waiver, the Commissioner shall provide public notice of the draft waiver by publishing the following information: (i) (1)  At least 30 days prior to granting an innovation waiver, the Commissioner shall provide public notice of the draft waiver by publishing the following information:
      1. the specific statute, regulation, or bulletin to which the draft waiver applies;
      2. the proposed terms, conditions, and limitations of the draft waiver;
      3. the proposed duration of the draft waiver; and
      4. any additional information deemed appropriate by the Commissioner.
   2. The notice requirement of this subsection may be satisfied by publication on the Department's website.
10. 1. If a waiver is granted pursuant to this section, the Commissioner shall provide public notice of the existence of the waiver by providing the following information: (j) (1)  If a waiver is granted pursuant to this section, the Commissioner shall provide public notice of the existence of the waiver by providing the following information:
       1. the specific statute, regulation, or bulletin to which the waiver applies;
       2. the name of the person who applied for and received the waiver;
       3. the duration of and any other terms, conditions, or limitations of the waiver; and
       4. any additional information deemed appropriate by the Commissioner.
    2. The notice requirement of this subsection may be satisfied by publication on the Department's website.
11. The Commissioner, by regulation, shall adopt uniform procedures for the submission, granting, denying, monitoring, and revocation of petitions for a waiver pursuant to this section. The procedures shall set forth requirements for the ongoing monitoring, examination, and supervision of, and reporting by, each person granted a waiver under this section and shall permit the Commissioner to attach reasonable conditions or limitations on the conduct permitted pursuant to a waiver. The procedures shall provide for an expedited application process for a product or service that is substantially similar to one for which a waiver has previously been granted by the Commissioner. The procedures shall include an opportunity for public comment on draft waivers under consideration by the Commissioner.
12. Upon expiration of an innovation waiver, the person who obtained the waiver shall cease all activities that were permitted only by the waiver and comply with all generally applicable laws and regulations.
13. The ability to grant a waiver under this section shall not be interpreted to limit or otherwise affect the authority of the Commissioner to exercise discretion to waive or enforce requirements as permitted under any other section of this title or any regulation or bulletin adopted pursuant thereto.
14. Biannually, beginning on January 15, 2020, the Commissioner shall submit a report to the General Assembly providing the following information:
    1. the total number of petitions for waivers that have been received, granted, and denied by the Commissioner;
    2. for each waiver granted by the Commissioner, the information specified under subsection (f) of this section;
    3. a list of any regulations or bulletins that have been adopted or amended as a result of or in connection with a waiver granted under this section;
    4. with respect to each statute to which a waiver applies, the Commissioner's recommendation as to whether such statute should be continued, eliminated, or amended in order to promote innovation and establish a uniform regulatory system for all regulated entities; and
    5. a list of any waivers that have lapsed or been revoked and, if revoked, a description of other regulatory or disciplinary actions, if any, that resulted in, accompanied, or resulted from such revocation.
15. No new waivers or extensions shall be granted after July 1, 2021.
16. This section shall be repealed on July 1, 2023.

    Added 2019, No. 57 , § 1.

§ 16. Judicial review.

Any person aggrieved and directly affected by an order of the Commissioner may appeal to the Supreme Court of Vermont, except as otherwise expressly provided in this title or in 9 V.S.A. chapters 131 and 150. The filing of an appeal for review or injunctive relief shall not stay enforcement of an order, but the Court may order a stay on such terms as it deems proper. The Court may affirm the order of the Commissioner, may direct him or her to take the action withheld, or may reverse or modify the order if it:

1. was issued pursuant to unconstitutional statutory provisions;
2. was in excess of statutory authority;
3. was issued on unlawful procedure; or
4. is not supported by substantial evidence in the record.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2007, No. 49 , § 20; eff. July 1, 2006.

§ 17. Liability for acts.

A person serving in any official capacity under this title, 9 V.S.A. chapter 131 or 150, or 18 V.S.A. chapter 221, including the Commissioner and any officer, employee, or agent of the Department, shall not be liable in any civil action for damages for any act done or omitted in good faith in performing the functions of his or her office. No person may be subjected to any civil or criminal liability for any act or omission to act done in good faith in reliance on a subsisting order, regulation, or rule of the Commissioner, notwithstanding a subsequent decision by a court invalidating the order, regulation, or rule.

Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2007, No. 49 , § 21; eff. July 1, 2006.

§ 18. Charges for examinations, applications, reviews, and investigations.

1. Every person subject to regulation by the Department shall pay the Department the reasonable costs of any examination, review, or investigation that is conducted or caused to be conducted by the Department of such person, or of any application or filing made by such person, or of any examination, review, or investigation of any order, decision, or certificate issued by the Commissioner, at a rate to be determined by the Commissioner. The Department may retain experts or other persons who are independently practicing their professions to assist in such examination, review, or investigation. The Department shall be reimbursed for all reasonable costs and expenses, including the reasonable costs and expenses of such persons retained by the Department, by the person examined, submitting the application or filing reviewed, investigated, or subject to or under the jurisdiction of an order, decision, or certificate issued by the Commissioner under this title or under Title 18. An examination, review, or investigation subject to this section shall include an examination, review, or investigation of any application, information, rate filing, or form filing submitted, or any order, decision, or certificate issued under this title or under Title 18. In unusual circumstances, the Commissioner may waive reimbursement for the costs and expenses of any review in the interests of justice. Except as set forth in subsection (b) of this section, those institutions subject to assessment or fees for services provided under section 19 of this title shall not be billed for a regular examination performed under subsection 11501(a) or 30601(a) of this title or for services for which such fees under subsection 19(a) of this title have been paid.
2. Merchant banks established under section 12603 of this title, uninsured banks established under section 12604 of this title, and independent trust companies subject to assessment under subdivision 2405(f)(1) of this title shall pay the Department the costs and expenses of all examinations, including regular and special or expanded scope examinations.
3. The authority granted to the Commissioner by this section is in addition to any other authority granted to the Commissioner by law.
4. The Commissioner shall bill costs incurred by the Department in connection with any examination, review, or investigation conducted or caused to be conducted by the Department to the EB-5 projects subject to regulatory oversight under 10 V.S.A. chapter 3. It is the intent of the General Assembly that the costs of regulation of EB-5 projects be borne by project developers and not by the State General Fund or special funds.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended 2003, No. 53 , § 21, eff. June 4, 2003; 2005, No. 16 , § 2, eff. July 1, 2005; 2011, No. 21 , § 6; 2011, No. 78 (Adj. Sess.), § 5, eff. April 2, 2012; 2013, No. 29 , § 1; 2015, No. 149 (Adj. Sess.), § 34e.

§ 19. Fees and departmental expenses.

1. The Commissioner shall charge each financial institution or financial institution applicant for Department services rendered. Charges for Department services shall be billed as follows:
   1. New financial institution application or new independent trust company application, $5,000.00.
   2. Interim reorganization application, $2,000.00.
   3. Merger, change in control, or other reorganization, share exchange, consolidation, or acquisition, $2,000.00.
   4. Conversion of a charter, $2,500.00.
   5. Establishment of a branch in the State, $500.00.
   6. Establishment of a remote service unit, $250.00. Where more than one remote service unit performing identical services on single premises are petitioned at the same time, the total charge shall be $250.00. This fee shall not apply if the remote service unit is placed at an existing branch.
   7. Relocation of main office, branch, or remote service unit, $250.00.
   8. For trust powers subsequent to the granting of the authority as financial institution, $2,000.00.
   9. Sale of branch, $500.00.
   10. Sale, lease, or exchange of all an institution's assets, $5,000.00.
   11. Voluntary dissolution or liquidation of an institution, $5,000.00.
   12. Establishment of a special purpose financial institution, $5,000.00.
   13. Establishment of a temporary agency, $150.00.
   14. Activity at a school, $250.00.
   15. Establishment of a loan production office or engaging in loan production activity in the State, $750.00.
   16. Permit a foreign exchange activity, $500.00.
   17. Purchase or establish a subsidiary or service corporation, $2,500.00.
   18. Certificate (good standing), $100.00.
   19. Establish a development credit corporation, $1,000.00.
   20. Permission to use "bank" in name, $100.00.
   21. Advisory interpretations, advisory opinions, non-objection letters, and no action letters, $250.00, plus expenses.
   22. Increase or reduction in permanent capital, $250.00.
   23. New credit union application, new credit union service organization application, or new corporate credit union application, $2,500.00.
   24. Extension of a certificate of general good or extension of a certificate of approval, $50.00.
   25. Contract with another financial institution as agent, $500.00.
   26. Any other corporate organizational changes not covered in this subsection, $250.00 plus expenses. No petition or application shall be considered by the Commissioner until payment for the enumerated charge has been received.
2. Merchant banks established under section 12603 of this title, uninsured banks established under section 12604 of this title, and independent trust companies assessed as provided in subdivision 2405(f)(1) of this title shall be billed for all examinations. All other institutions subject to assessment under subsection (d) of this section shall not be billed for regular examinations.
3. Each person, except as otherwise provided in subsection (d) of this section, within 30 days of notification, shall pay the Department fees as prescribed by section 18 of this title, which fees shall be billed when they are incurred.
4. The Commissioner shall apportion the expenses allowed under the title "Department of Financial Regulation - Banking" in the annual appropriation bill among the several financial institutions, credit unions, and independent trust companies directly regulated under this title, including the operations in Vermont of any such entity organized in another jurisdiction. Annually, on or before November 1, the Commissioner shall notify the institutions of the proposed assessment. The assessment shall consider surpluses or shortfalls from prior year assessments, increases, and decreases in entity deposits and assets under management, and any other factor that may affect the Banking Division's expenditures and revenues. The Commissioner shall send each entity a bill for such entity's portion of the assessment on or before March 1 of each year, which bill shall be paid into the State Treasury on or before April 1.
   1. Financial institutions and credit unions that accept deposits will be assessed based on the amount of their deposits held in this State on the preceding June 30.
   2. In the case of merchant banks established under section 12603 of this title, the assessment shall be based on assets in this State on the preceding June 30.
   3. In the case of nondepository trust companies established under section 12602 of this title, the assessment will be based on assets under management in this State on the preceding June 30.
   4. In the case of an uninsured bank established under section 12604 of this title:
      1. an uninsured bank whose primary activity is transactional shall pay to the Department an annual assessment equal to $0.0001 per dollar volume of activity performed for the most recent year ended December 31, which assessment shall not be greater than $50,000.00; and
      2. an uninsured bank whose primary activity is accepting uninsured deposits shall be assessed based on the amount of deposits on the preceding June 30.
   5. No financial institution, credit union, nondepository trust company, merchant bank, or uninsured bank subject to assessment under subdivision (1), (2), (3), or (4) of this subsection may pay less than $2,000.00 per annual assessment.
   6. Loan production offices or persons engaged in an approved loan production activity authorized under prior law that do not pay an assessment under subdivision (1), (2), (3), or (4) of this subsection shall pay an annual fee of $1,200.00.
   7. In the case of independent trust companies organized under chapter 77 of this title:
      1. an independent trust company whose primary activity in this State is transactional shall pay an assessment calculated under subdivision 2405(f)(1) of this title; and
      2. an independent trust company whose primary activity in this State is asset management shall pay an assessment based on assets under management, provided the annual assessment shall not be less than $2,000.00.
5. If any entity fails to pay fees or expenses as provided in this section or section 18 of this title, within 45 days after notice from the Department of the amount due, the Commissioner may issue an execution against the property of the delinquent for an amount equal to 150 percent of the amount of the overdue payment. Such execution shall be enforced as an execution of a court.
6. There is hereby created a fund to be known as the Financial Institution Supervision Fund for the purpose of providing the financial means for the Commissioner of Financial Regulation to administer Parts 2, 4, and 5 of this title, 9 V.S.A. Parts 1 and 3, and Title 9A. All fees and assessments received by the Department pursuant to such administration shall be deposited in this Fund.
7. All payments from the Banking Supervision Fund for the maintenance of staff and associated expenses, including contractual services as necessary, shall be disbursed from the State Treasury only upon warrants issued by the Commissioner of Finance and Management after receipt of proper documentation regarding services rendered and expenses incurred.
8. Any entity, subject to the assessment under subsection (d) of this section, that converts or relinquishes its State charter or closes all of its branches or offices in this State will be responsible for a pro rata share of the assessment made under subsection (d) of this section for the final period it was authorized to conduct business under this title.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001; amended No. 155 (Adj. Sess.), § 7, eff. Jan. 1, 2001; 2005, No. 72 , § 1; 2009, No. 42 , § 1; 2011, No. 21 , §§ 7-9; 2011, No. 78 (Adj. Sess.), §§ 2, 6-8, eff. April 2, 2012; 2013, No. 29 , § 2, eff. May 13, 2013; 2015, No. 63 , § 4, eff. June 17, 2015; 2019, No. 20 , § 107.

§ 20. Uniform Commercial Code.

1. All commercial transactions of financial institutions doing business in this State shall be governed by and conducted in accordance with Title 9A.
2. In any conflict between the provisions of Title 9A and any other provisions of law, including organizational documents of financial institutions, dealing with the same subject matter, Title 9A shall prevail unless otherwise specifically provided by law.

   Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001.

§ 21. Applicability of laws governing business organizations.

Depending on the permitted type of organizational form, the provisions of Titles 11, 11A, and 11B, relating to corporations, limited liability companies, limited liability partnerships, limited partnerships, partnerships, mutual and cooperative organizations and other organizations, shall apply to business organizations regulated under this title. In the case of a conflict and to the extent that such provisions may be inconsistent with the provisions of Titles 11, 11A, and 11B, the provisions of this title shall control.

Added 1999, No. 153 (Adj. Sess.), § 1, eff. Jan. 1, 2001.

§ 22. Confidentiality and information sharing agreements.

1. Except as expressly provided in subsection (b) of this section, all documents, material, or other information reported to, or developed or maintained by the Commissioner may be used by the Commissioner in the furtherance of legal or regulatory proceedings brought as a part of the Commissioner's official duties.
2. In order to assist in the performance of the Commissioner's duties, the Commissioner:
   1. may share documents, materials, or other information, including confidential and privileged documents, materials, or other information with other state, federal, or international agencies; the National Association of Insurance Commissioners; the North American Securities Administrators Association; the International Association of Insurance Supervisors; the Conference of State Bank Supervisors; the National Association of State Credit Union Supervisors; self-regulatory organizations organized under 15 U.S.C. §§ 78f, 78o-3, and 78q-1; other self-regulatory organizations and their affiliates or subsidiaries; and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information;
   2. may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from other state, federal, and international agencies; the National Association of Insurance Commissioners; the North American Securities Administrators Association; the International Association of Insurance Supervisors; the Conference of State Bank Supervisors; the National Association of State Credit Union Supervisors; self-regulatory organizations organized under 15 U.S.C. §§ 78f, 78o-3, and 78q-1; other self-regulatory organizations and their affiliates or subsidiaries; and from state, federal, and international law enforcement authorities; and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information;
   3. may enter into agreements governing sharing and use of information consistent with this section; and
   4. shall determine, prior to sharing information about an individual pursuant to subdivision (1) of this subsection, that sharing the information will substantially further the performance of the regulatory or law enforcement duties of the recipient.
3. Any information furnished pursuant to this section by or to the Commissioner that has been designated confidential by the furnisher of the information shall not be subject to public inspection under 1 V.S.A. chapter 5, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
4. Neither the Commissioner nor any person who received documents, material, or information while acting under the authority of the Commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, material, or information.
5. No waiver of an existing privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure or sharing as authorized under this section.
6. The provisions of this section shall apply to information relating to persons that engage in activities that are financial in nature, or incidental or complementary to such financial activity within the meaning of 12 U.S.C. § 1843(k) and to credit unions; provided, however, this section shall apply to captives formed or licensed under the provisions of chapter 141 or 142 of this title only to the extent contemplated by 15 U.S.C. § 6716.

   Added 2001, No. 71 , § 1, eff. June 16, 2001; amended 2009, No. 42 , § 5; 2017, No. 1 , § 1, eff. Feb. 23, 2017.

§ 23. Confidentiality of investigation and examination reports.

1. This section shall apply to all persons licensed, authorized, or registered, or required to be licensed, authorized, or registered, under Parts 2 and 4 of this title.
2. Regardless of source, all records of investigations, including information pertaining to a complaint by or for a consumer, and all records and reports of examinations by the Commissioner, whether in the possession of a supervisory agency or another person, shall be confidential and privileged, shall not be made public, and shall not be subject to discovery or introduction into evidence in any private civil action. No person who participated on behalf of the Commissioner in an investigation or examination shall be permitted or required to testify in any such civil action as to any findings, recommendations, opinions, results, or other actions relating to the investigation or examination.
3. The Commissioner may, in his or her discretion, disclose or publish or authorize the disclosure or publication of any such record or report or any part thereof in the furtherance of legal or regulatory proceedings brought as a part of the Commissioner's official duties. The Commissioner may, in his or her discretion, disclose or publish or authorize the disclosure or publication of any such record or report or any part thereof, to civil or criminal law enforcement authorities for use in the exercise of such authority's duties, in such manner as the Commissioner may deem proper.
4. For the purposes of this section, records of investigations and records and reports of examinations shall include joint examinations by the Commissioner and any other supervisory agency. Records of investigations and reports of examinations shall also include records of examinations and investigations conducted by:
   1. any agency with supervisory jurisdiction over the person; and
   2. any agency of any foreign government with supervisory jurisdiction over any person subject to the jurisdiction of the Department, when such records are considered confidential by such agency or foreign government and the records are in the possession of the Commissioner.

      Added 2001, No. 55 , § 3, eff. June 12, 2001; amended 2015, No. 63 , § 5, eff. June 17, 2015.

§ 24. Senior investor protection.

1. The Commissioner may, in addition to other powers conferred on the Commissioner by law, adopt rules and issue orders necessary to protect senior investors from being misled by false or misleading certifications, licenses, professional designations, or other credentials that imply or indicate a special level of knowledge with regard to senior investors or their needs in the sale of securities or insurance, or both, in the providing of investment advice.
2. To implement the protections described in subsection (a) of this section, the Commissioner may:
   1. establish standards for senior-specific certifications, licenses, professional designations, and other credentials;
   2. develop initiatives to investigate and take action against fraudulent, misleading, dishonest, or unethical marketing practices directed toward seniors;
   3. develop educational materials and training aimed at reducing such marketing practices; and
   4. accept grants from government or private entities to fund the activities set forth in this section.
3. Any rules adopted or orders issued by the Commissioner under this section shall conform to the extent practicable to the North American Securities Administrators Association Model Rule on the Use of Senior-Specific Certifications and Professional Designation, as amended, and the National Association of Insurance Commissioners Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities, as amended.
4. 1. A violation of a rule adopted or orders issued under this section with respect to the business of insurance shall constitute an unfair or deceptive act or practice in the business of insurance, and the Commissioner may enforce such violations pursuant to the Commissioner's authority conferred by the Insurance Trade Practices Act, chapter 129 of this title, and pursuant to any other authority conferred upon the Commissioner by law. (d) (1)  A violation of a rule adopted or orders issued under this section with respect to the business of insurance shall constitute an unfair or deceptive act or practice in the business of insurance, and the Commissioner may enforce such violations pursuant to the Commissioner's authority conferred by the Insurance Trade Practices Act, chapter 129 of this title, and pursuant to any other authority conferred upon the Commissioner by law.
   2. A violation of a rule adopted or order issued under this section with respect to the business of securities and investment advice shall constitute a violation of 9 V.S.A. § 5412(d)(13) , and the Commissioner may enforce such violations pursuant to the Commissioner's authority conferred by the Vermont Uniform Securities Act, 9 V.S.A. chapter 150, and pursuant to any other authority conferred upon the Commissioner.
5. The Commissioner, in addition to other powers conferred on the Commissioner by law, may increase the amount of an administrative penalty by not more than $5,000.00 per violation for violations involving a person who is a vulnerable adult as defined in 33 V.S.A. § 6902(14) .

   Added 2009, No. 53 , § 3; amended 2017, No. 80 , § 2.

§§ 71-79. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§ 80. Insurance Regulatory and Supervision Fund.

1. There is hereby created a fund to be known as the Insurance Regulatory and Supervision Fund for the purpose of providing the financial means for the Commissioner of Financial Regulation to administer Parts 3 and 6, except chapter 133 of this title, and except as provided under subsection 6017(a) of this title. All fees and assessments received by the Department pursuant to such administration shall be credited to this Fund. All fines and administrative penalties, however, shall be deposited directly into the General Fund.
2. All payments from the Insurance Regulatory and Supervision Fund for the maintenance of staff and associated expenses, including contractual services as necessary, shall be disbursed from the State Treasury only upon warrants issued by the Commissioner of Finance and Management, after receipt of proper documentation regarding services rendered and expenses incurred.
3. Annually, $30,000.00 shall be transferred from the Fund to the Fire Service Training Council Special Fund established in 20 V.S.A. § 3157 .
4. At the end of each fiscal year, the balance in the Insurance Regulatory and Supervision Fund shall be transferred to the General Fund.
5. The Commissioner of Finance and Management may anticipate receipts to the Insurance Regulatory and Supervision Fund and issue warrants based thereon.

   Added 1985, No. 242 (Adj. Sess.), § 310; amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 1999, No. 49 , § 216; 1999, No. 87 (Adj. Sess.), § 4; 2003, No. 80 (Adj. Sess.), § 75, eff. March 8, 2004; 2005, No. 71 , § 268; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.

§§ 501-510. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 521-526. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 551-703. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 801-1025. Repealed. 1999, No. 153 (Adj. Sess.), § 27, effective January 1, 2001.

§§ 1051-1064. Repealed. 1995, No. 54, § 6, eff. Sept. 29, 1995.

§§ 1101-1307. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 1351-1361. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 1401-1412. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 1451, 1452. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 1471-1478. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 1551-1709. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§ 1801. Purposes.

The expression "development credit corporation" hereinafter called the corporation, as used in this chapter shall mean a corporation, incorporated under the general laws of the State, the purposes of which shall be:

1. to provide financial assistance to industrial, agricultural, recreational, or other enterprises potentially valuable to the State or its citizens, when and to the extent which, such financing shall lie beyond the prescribed limits of laws governing banks of deposit;
2. to assist by research and counsel such enterprises;
3. to conduct ex parte inquiries into ways and means of improving, promoting, or increasing the general welfare of the State, its political subdivisions, and its citizens by financial aid, counsel, or otherwise; and
4. to dedicate its energies to the discovery of ways and means of returning to maximum productivity any and all presently nonproducing assets in the State, for the dual purpose of increasing the welfare of the owner and of augmenting the taxable potential of the State.

   Added 1969, No. 64 , § 1, eff. Jan. 1, 1970; amended 1999, No. 153 (Adj. Sess.), § 3, eff. Jan. 1, 2001.

§ 1802. General and specific power.

A development credit corporation shall have such general and specific rights and powers, within the limitations of its charter, as are enjoyed by other Vermont corporations, and, in addition, such rights and powers as are granted hereafter.

Added 1969, No. 64 , § 1, eff. Jan. 1, 1970.

§ 1803. Determination of public good.

Prior to the granting of a charter to a development credit corporation, the Commissioner shall find that such grant shall promote the general good of the State.

Added 1969, No. 64 , § 1, eff. Jan. 1, 1970; amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 2003, No. 105 (Adj. Sess.), § 9.

§ 1804. Tax exempt status.

Being an institution of public welfare created primarily to increment, augment, and increase sources of taxation within the State, and, in order to induce continuing public support to the corporation, earnings of the corporation shall be exempt from State income taxes, and the holder or holders of any security issued by the corporation shall, in like manner, be exempt from payment of income taxes on dividends or interest paid thereon.

Added 1969, No. 64 , § 1, eff. Jan. 1, 1970.

§§ 1831-1917. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§§ 1921-1927. Repealed. 1985, No. 38, § 4.

§§ 1931-1935. Repealed. 1985, No. 38, § 4.

§ 1941. Repealed. 1985, No. 38, § 4.

§§ 2051-2087. Repealed. 2005, No. 16, § 4.

§ 2100. Application of chapter.

1. Except as otherwise provided in this part, this chapter applies to a person doing or soliciting business in this State as described in this part.
2. This chapter does not apply to:
   1. development credit corporations subject to chapter 65 of this title; or
   2. independent trust companies subject to chapter 77 of this title.

      Added 2019, No. 20 , § 2; amended 2019, No. 103 (Adj. Sess.), § 1.

§ 2101. Definitions.

Except as otherwise provided in this part:

1. "Commercial loan" means a loan or extension of credit that is described in 9 V.S.A. § 46(1) , (2), or (4). The term does not include a loan or extension of credit secured in whole or in part by an owner occupied one- to four-unit dwelling.
2. "Commissioner" means the Commissioner of Financial Regulation.
3. "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10 percent or more of the voting securities or other interest of any other person.
4. "Depository institution" has the same meaning as in 12 U.S.C. § 1813 and includes any bank and any savings association as defined in 12 U.S.C. § 1813. The term also includes a credit union organized and regulated as such under the laws of the United States or any state.
5. "Dwelling" has the same meaning as in 15 U.S.C. § 1602.
6. "Federal banking agencies" means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation or any successor of any of these.
7. "Holder" means:
   1. the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession;
   2. the person in possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession; or
   3. the person in control of a negotiable electronic document of title.
8. "Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild, aunt, uncle, nephew, niece, including stepparents, stepchildren, stepsiblings, step grandparents, step grandchildren, and adoptive relationships. The term also includes former spouses dividing property in connection with a divorce or separation.
9. "Individual" means a natural person.
10. "Insurance company" means an institution organized and regulated as such under the laws of any state.
11. "Licensee" means a person required to be licensed or registered under this part.
12. "Material litigation" means a litigation that according to generally accepted accounting principles is deemed significant to an applicant's or a licensee's financial health and is required to be disclosed in the applicant's or licensee's annual audited financial statements, report to shareholders, or similar records.
13. "Mortgage loan" means a loan secured primarily by a lien against real estate.
14. "Nationwide Multistate Licensing System and Registry" or "Nationwide Mortgage Licensing System and Registry" or "NMLS" means a multistate licensing system developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and operated by the State Regulatory Registry LLC for the licensing and registration of non-depository financial service entities in participating state agencies, or any successor to the Nationwide Multistate Licensing System and Registry.
15. "Person" has the same meaning as in 1 V.S.A. § 128 .
16. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
17. "Residential mortgage loan" means a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on either a dwelling or residential real estate, upon which is constructed or intended to be constructed a dwelling.
18. "Residential real estate" means real property located in this State, upon which is constructed or intended to be constructed a dwelling.
19. "Responsible individual" means an individual who is employed by a licensee and has principal, active managerial authority over the provision of services in this State.
20. "State" means a state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States, except that when capitalized the term means the State of Vermont.
21. "Unique identifier" means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.
22. "Unsafe or unsound practice" means a practice or conduct by a person licensed to do business in this State that creates the likelihood of material loss, insolvency, or dissipation of the licensee's assets, or otherwise materially prejudices the interests of its customers.

    Added 2019, No. 20 , § 2.

§ 2102. Application for license.

1. Application for a license or registration shall be in writing, under oath, and in the form prescribed by the Commissioner, and shall contain the legal name, any fictitious name or trade name, and the address of the residence and place of business of the applicant, and if the applicant is a partnership or an association, of every member thereof, and if a corporation, of each officer and director thereof; also the county and municipality with street and number, if any, where the business is to be conducted and such further information as the Commissioner may require.
2. At the time of making an application, the applicant shall pay to the Commissioner a fee for investigating the application and a license or registration fee for a period terminating on the last day of the current calendar year. The following fees are imposed on applicants:
   1. For an application for a lender license under chapter 73 of this title, $1,000.00 as a license fee and $1,000.00 as an application and investigation fee for the initial license. For each additional lender license from the same applicant, $500.00 as a license fee and $500.00 as an application and investigation fee.
   2. For an application for a lender license under chapter 73 of this title for a lender only making commercial loans, $500.00 as a license fee and $500.00 as an application and investigation fee.
   3. For an application for a mortgage broker license under chapter 73 of this title, other than a mortgage broker that meets each of the requirements of subdivisions (b)(4)(A)-(B) of this section, $500.00 as a license fee and $500.00 as an application and investigation fee.
   4. For an application for a mortgage broker license under chapter 73 of this title that meets each of the following requirements, $250.00 as a license fee and $250.00 as an application and investigation fee:
      1. the applicant is an individual sole proprietor; and
      2. no person, other than the applicant, shall be authorized to act as a mortgage broker under the applicant's license.
   5. For an application for a mortgage loan originator license under chapter 73 of this title, $50.00 as a license fee and $50.00 as an application and investigation fee.
   6. For an application for a sales finance company license under chapter 73 of this title, $350.00 as a license fee and $350.00 as an application and investigation fee.
   7. For an application for a loan solicitation license under chapter 73 of this title, $500.00 as a license fee and $500.00 as an application and investigation fee.
   8. For an application for any combination of lender license under chapter 73 of this title, mortgage broker license under chapter 73 of this title, loan solicitation license under chapter 73 of this title, or loan servicer license under chapter 85 of this title, $1,500.00 as a license fee and $1,500.00 as an application and investigation fee.
   9. For an application for a consumer litigation funding company registration under chapter 74 of this title, $200.00 as a registration fee and $300.00 as an application and investigation fee.
   10. For an application for a money transmission license under chapter 79 of this title, $1,000.00 as a license fee, $1,000.00 as an application and investigation fee, and $25.00 as a license fee for each authorized delegate location.
   11. For an application for a check cashing and currency exchange license under chapter 79 of this title, $500.00 as a license fee and $500.00 as an application and investigation fee.
   12. For an application for a debt adjuster license under chapter 83 of this title, $250.00 as a license fee and $500.00 as an application and investigation fee.
   13. For an application for a loan servicer license under chapter 85 of this title, $1,000.00 as a license fee and $1,000.00 as an application and investigation fee.
   14. For an application for a personal information protection company license under chapter 78 of this title, $500.00 as a license fee and $500.00 as an application and investigation fee.
3. In connection with an application for a license, the applicant, each officer, director, and responsible individual of the applicant, each person in control of the applicant, and any other person the Commissioner requires in accordance with NMLS guidelines or other multistate agreements, shall furnish to the Nationwide Multistate Licensing System and Registry information concerning each person's identity, including:
   1. fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check;
   2. personal history and experience in a form prescribed by the Nationwide Multistate Licensing System and Registry, including the submission of authorization for the Nationwide Multistate Licensing System and Registry and the Commissioner to obtain:
      1. an independent credit report and credit score obtained from a consumer reporting agency described in 15 U.S.C. § 1681a for the purpose of evaluating the applicant's financial responsibility at the time of application; and the Commissioner may obtain additional credit reports and credit scores to confirm the licensee's continued compliance with the financial responsibility requirements of this part;
      2. information related to any administrative, civil, or criminal findings by any governmental jurisdiction; and
   3. any other information required by the Nationwide Multistate Licensing System and Registry or the Commissioner.
4. The applicant shall provide a list of any material litigation in which the applicant has been involved in the 10-year period preceding the submission of the application.
5. If an applicant is a corporation, limited liability company, partnership, or other entity, the applicant shall also provide:
   1. the date of the applicant's incorporation or formation and state or country of incorporation or formation;
   2. if applicable, a certificate of good standing from the state or country in which the applicant is incorporated or formed;
   3. a brief description of the structure or organization of the applicant, including any parent or subsidiary of the applicant, and whether any parent or subsidiary is publicly traded;
   4. the legal name, any fictitious or trade name, all business and residential addresses, and the employment, in the 10-year period preceding the submission of the application, of each executive officer, manager, responsible individual, director of, or person in control of, the applicant;
   5. a list of any criminal convictions, material litigation, or disciplinary actions in which any executive officer, manager, responsible individual, director of, or individual in control of, the applicant has been involved in the 10-year period preceding the submission of the application;
   6. a copy of the applicant's audited financial statements for the most recent fiscal year and, if available, for the two-year period preceding the submission of the application;
   7. a copy of the applicant's unconsolidated financial statements for the current year, whether audited or not, and, if available, for the two-year period preceding the submission of the application;
   8. if the applicant is publicly traded, a copy of the most recent 10-K report filed with the U.S. Securities and Exchange Commission; and
   9. if the applicant is a wholly owned subsidiary:
      1. a copy of audited financial statements for the parent company for the most recent fiscal year; and
      2. of a corporation publicly traded in the United States, a copy of the parent corporation's most recent 10-K report filed with the U.S. Securities and Exchange Commission, or if the applicant is a wholly owned subsidiary of a corporation publicly traded outside the United States, a copy of similar documentation filed with the regulator of the parent corporation's domicile outside the United States.
6. If the applicant is not an individual, the name and address of the applicant's registered agent in this State.
7. Upon the filing of an application, the Commissioner shall investigate the financial condition and responsibility, financial and business experience, character, and general fitness of the applicant and any person named in the application. The Commissioner may conduct an on-site investigation of the applicant, the cost of which the applicant shall bear pursuant to section 18 of this title.
8. This section does not apply to a person applying for a commercial lender license under section 2202a of this title.

   Added 2019, No. 20 , § 2; 2019, No. 70 , § 1; amended 2019, No. 103 (Adj. Sess.), § 2.

§ 2103. Approval of application and issuance of license.

1. Upon the filing of an application, payment of the required fees, and satisfaction of any applicable bond and liquid asset requirements, the Commissioner shall issue a license to the applicant if the Commissioner finds:
   1. 1. The financial responsibility, experience, character, and general fitness of the applicant command the confidence of the community and warrant belief that the business will be operated honestly, fairly, and efficiently pursuant to the applicable chapter of this title. (1) (A) The financial responsibility, experience, character, and general fitness of the applicant command the confidence of the community and warrant belief that the business will be operated honestly, fairly, and efficiently pursuant to the applicable chapter of this title.
         1. If the applicant is a partnership or association, such findings are required with respect to each partner, member, and responsible individual of, and each person in control of, the applicant.
         2. If the applicant is a corporation, such findings are required with respect to each officer, director, and responsible individual of, and each person in control of, the applicant.
      2. For purposes of assessing whether a person is financially responsible, the Commissioner may consider how the person has managed his or her own financial condition, which may include factors such as whether the person has:
         1. current outstanding judgments, except judgments solely as a result of medical expenses;
         2. current outstanding tax liens or other government liens and filings;
         3. foreclosures within the past three years; or
         4. a pattern of seriously delinquent accounts within the past three years.
   2. Allowing the applicant to engage in business will promote the convenience and advantage of the community in which the applicant will conduct its business.

      The applicant, each officer, director, and responsible individual of, and each person in control of, the applicant, has never had a financial services license or similar license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation.

      The applicant, each officer, director, and responsible individual of, and each person in control of, the applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:

      1. 1. during the seven-year period preceding the date of the application for licensing and registration; or (A) (i) during the seven-year period preceding the date of the application for licensing and registration; or
         2. at any time preceding such date of application, if such felony involved an act of fraud or dishonesty, a breach of trust, or money laundering; and
      2. provided that any pardon or expungement of a conviction shall not be a conviction for purposes of this subsection.

         The applicant has satisfied the applicable surety bond and liquid asset requirement as follows:

         (A) for an application for a lender license, mortgage broker license, mortgage loan originator license, or loan solicitation license, the applicable bond and liquid asset requirements of sections 2203 and 2203a of this title;

         (B) for an application for a litigation funding company registration, the financial stability requirement of section 2252 of this title;

      3. for an application for a money transmitter license, the bond and net worth requirements of sections 2507 and 2510 of this title;
      4. for an application for a debt adjuster license, the bond requirement of section 2755 of this title; and
      5. for an application for a loan servicer license, the bond requirement of sections 2903 and 2907 of this title.

         For an application for a mortgage loan originator license, the applicant has satisfied the prelicense education requirement of section 2204a of this title and the prelicensing testing requirement of section 2204b of this title.

2. 1. If the Commissioner finds the applicant does not meet the requirements of subsection (a) of this section, the Commissioner shall not issue a license. (b) (1)  If the Commissioner finds the applicant does not meet the requirements of subsection (a) of this section, the Commissioner shall not issue a license.
   2. Not later than 60 days after an applicant files a complete application, the Commissioner shall notify the applicant of the denial, stating the reason or reasons therefor.
   3. If the applicant does not file a timely request for reconsideration pursuant to section 2104 of this title, the Commissioner shall:
      1. return to the applicant any amounts paid for the applicable bond requirement and license fee; and
      2. retain the investigation fee to cover the costs of investigating the application.
3. 1. If the Commissioner finds that an applicant meets the requirements of subsection (a) of this section, he or she shall issue the license not later than 60 days after an applicant submits a complete application. (c) (1)  If the Commissioner finds that an applicant meets the requirements of subsection (a) of this section, he or she shall issue the license not later than 60 days after an applicant submits a complete application.
   2. Except as otherwise provided in this title, a license is valid until the licensee surrenders the license or the Commissioner revokes, suspends, terminates, or refuses to renew the license.
4. For good cause shown and consistent with the purposes of this section, the Commissioner may waive or modify the requirements of subdivision (a)(3) of this section; provided, however, that the Commissioner may not waive the requirement of subdivision (a)(3) of this section for applicants for a mortgage loan originator license.
5. If an application remains incomplete for 120 days, the Commissioner may deem the application abandoned or withdrawn.
6. This section does not apply to a person applying for a commercial lender license under section 2202a of this title.

   Added 2019, No. 20 , § 2; amended 2019, No. 103 (Adj. Sess.), § 7.

§ 2104. Request for reconsideration; review of denial of application.

1. 1. If the Commissioner denies an application, not later than 15 days after the date of denial the applicant may request that the Commissioner reconsider the application. (a) (1)  If the Commissioner denies an application, not later than 15 days after the date of denial the applicant may request that the Commissioner reconsider the application.
   2. The applicant shall submit his or her request in writing and shall respond specifically to the Commissioner's stated reason or reasons for denial.
2. 1. The Commissioner shall reconsider the application in light of the applicant's request and response and issue a decision not later than 60 days after the date of the request. (b) (1)  The Commissioner shall reconsider the application in light of the applicant's request and response and issue a decision not later than 60 days after the date of the request.
   2. If the Commissioner finds that the applicant meets the requirements of subsection 2103(a) of this title, he or she shall issue a license.
   3. If the Commissioner finds that the applicant does not meet the requirements of subsection 2103(a) of this title, the Commissioner shall not issue a license and shall:
      1. return to the applicant the bond, if any, and any amounts paid for the applicable license fee; and
      2. retain the investigation fee to cover the costs of investigating the application.
3. The applicant may appeal the Commissioner's decision by filing an action in the civil division of the Washington County Superior Court not later than 15 days after the date the Commissioner denied the request for reconsideration.

   Added 2019, No. 20 , § 2; amended 2019, No. 103 (Adj. Sess.), § 8.

§ 2105. Contents of license; nontransferable.

1. A license shall state the address at which a licensee will conduct its business, shall state fully the name of the licensee, and, if the licensee is not an individual, shall state the date and place of its organization or incorporation.
2. A mortgage loan originator license shall state fully the name of the individual, his or her sponsoring company, and the licensed location at which he or she is employed.
3. A licensee shall not transfer or assign a license.
4. The Commissioner, in his or her discretion, may issue a license through the NMLS.

   Added 2019, No. 20 , § 2.

§ 2106. Additional place of business; change of place of business.

1. 1. A license is required for each place of business. (a) (1)  A license is required for each place of business.
   2. Except as otherwise provided in this title, the Commissioner may issue more than one license to the same licensee for additional places of business if the licensee meets the requirements for each place of business.
2. 1. A licensee shall provide written notice to the Commissioner and fee of $100.00 not less than 30 days before changing or closing a place of business. (b) (1)  A licensee shall provide written notice to the Commissioner and fee of $100.00 not less than 30 days before changing or closing a place of business.
   2. Upon receiving the notice and fee, the Commissioner shall record the change of location and the date, and the licensee may operate at the new location.

      Added 2019, No. 20 , § 2.

§ 2107. Change of control.

1. A licensee shall give the Commissioner notice of a proposed change of control within 30 days of the proposed change and request approval of the acquisition. A money transmitter licensee shall also submit with the notice a nonrefundable fee of $500.00.
2. After review of a request for approval under subsection (a) of this section, the Commissioner may require the licensee to provide additional information concerning the proposed persons in control of the licensee. The additional information shall be limited to the same categories of information required of the licensee or persons in control of the licensee as part of its original license or renewal application.
3. The Commissioner shall approve a request for change of control under subsection (a) of this section if, after investigation, the Commissioner determines that the person or group of persons requesting approval has the competence, experience, character, and general fitness to operate the licensee or person in control of the licensee in a lawful and proper manner, and that the interests of the public will not be jeopardized by the change of control.
4. The Commissioner shall approve or deny a request for change of control not later than 60 days after a complete request is filed and notify the licensee of the decision in a record. The Commissioner for good cause may extend the review period.
5. The following persons are exempt from the prefiling requirements of subsection (a) of this section, but the licensee shall notify the Commissioner of the change of control and request the Commissioner's approval using the standards in subsection (b) of this section for a change of control:
   1. a person that acts as a proxy for the sole purpose of voting at a designated meeting of the security holders or holders of voting interests of a licensee or person in control of a licensee;
   2. a person that acquires control of a licensee by devise or descent;
   3. a person that acquires control as a personal representative, custodian, guardian, conservator, or trustee, or as an officer appointed by a court of competent jurisdiction or by operation of law; and
   4. a person that the Commissioner, by rule or order, exempts in the public interest.
6. Subsection (a) of this section does not apply to public offerings of securities.
7. Before filing a request for approval to acquire control, a person may request in a record a determination from the Commissioner as to whether the person would be considered a person in control of a licensee upon consummation of a proposed transaction. If the Commissioner determines that the person would not be a person in control of a licensee, the Commissioner shall enter an order to that effect, and the proposed person and transaction is not subject to the requirements of subsections (a) through (c) of this section.

   Added 2019, No. 20 , § 2.

§ 2108. Notification of material change.

1. A licensee shall notify the Commissioner in writing within 30 days of any material change in the information provided in a licensee's application.
2. A licensee shall notify the Commissioner in writing within 30 days of any change in the list of executive officers, managers, directors, or responsible individuals.
3. A licensee shall file a report with the Commissioner within 15 business days after the licensee has reason to know of the occurrence of any of the following events involving the licensee, or any executive officer, manager, director, person in control, responsible individual, or equivalent of the licensee:
   1. the filing of a petition by or against the licensee or such person under the U.S. Bankruptcy Code for bankruptcy or reorganization;
   2. the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors;
   3. the commencement of a disciplinary proceeding or a license denial against the licensee or such person in a state or country in which the licensee engages in business or is licensed, including any action by the Attorney General of any state;
   4. the cancellation or other impairment of the licensee's bond or other security;
   5. a charge or conviction against the licensee or such person for a felony;
   6. a charge against or conviction of an authorized delegate for a felony;
   7. receiving notification of the initiation of a class action lawsuit against the licensee; or
   8. any change in the organizational structure of the licensee or any parent company of the licensee.

      Added 2019, No. 20 , § 2.

§ 2109. Annual renewal of license.

1. On or before December 1 of each year, every licensee shall renew its license or registration for the next succeeding calendar year and shall pay to the Commissioner the applicable renewal of license or registration fee. At a minimum, the licensee or registree shall continue to meet the applicable standards for licensure or registration. At the same time, the licensee or registree shall maintain with the Commissioner any required bond in the amount and of the character as required by the applicable chapter. The annual license or registration renewal fee shall be:
   1. For a lender license under chapter 73 of this title, $1,200.00.
   2. For a lender license under chapter 73 of this title for a lender only making commercial loans, $500.00.
   3. For a mortgage broker license under chapter 73 of this title, other than a mortgage broker that meets each of the requirements of subdivisions (4)(A)-(C) of this section, $500.00.
   4. For a mortgage broker license under chapter 73 of this title that meets each of the following requirements, $250.00:
      1. the mortgage broker license is held by an individual sole proprietor;
      2. no person, other than the individual sole proprietor, shall be authorized to act as a mortgage broker under this license; and
      3. the mortgage broker originated five or fewer loans within the last calendar year.
   5. For a mortgage loan originator license under chapter 73 of this title, $100.00.
   6. For a sales finance company license under chapter 73 of this title, $350.00.
   7. For a loan solicitation license under chapter 73 of this title, $500.00.
   8. For any combination of lender license under chapter 73 of this title, mortgage broker license under chapter 73 of this title, loan solicitation license under chapter 73 of this title, or loan servicer license under chapter 85 of this title, $1,700.00.
   9. For a consumer litigation funding company registration under chapter 74 of this title, $200.00.
   10. For a money transmission license under chapter 79 of this title, $1,000.00, plus an annual renewal fee of $25.00 for each authorized delegate, provided that the total renewal fee of all authorized delegate locations shall not exceed $3,500.00.
   11. For a check cashing and currency exchange license under chapter 79 of this title, $500.00.
   12. For a debt adjuster license under chapter 83 of this title, $250.00.
   13. For a loan servicer license under chapter 85 of this title, $1.000.00.
   14. For a personal information protection company license under chapter 78 of this title, $500.00.
2. A license originally issued on or after November 1 of the current year is valid for the next succeeding year.
3. In addition to the annual renewal fee, on or before April 1 of each year a money transmission licensee shall pay the Department an annual assessment equal to $0.0001 per dollar volume of money services activity performed for, or sold or issued to, Vermont customers for the most recent year ending December 31, which assessment shall not be less than $100.00 and shall not be greater than $15,000.00.
4. An individual holding a mortgage loan originator license shall also satisfy the annual continuing education requirement of section 2204c of this title.
5. Notwithstanding any other provision of this title, the license of a mortgage loan originator who fails to pay the annual renewal fee or fails to satisfy all of the minimum license renewal standards by December 1 shall automatically expire on December 31.
6. Notwithstanding any other provision of this title, the registration of a litigation funding company that fails to pay the annual renewal fee or fails to satisfy all of the minimum registration renewal requirements by December 1 shall automatically expire on December 31.

   Added 2019, No. 20 , § 2; 2019, No. 70 , § 1a; amended 2019, No. 103 (Adj. Sess.), § 3.

§ 2110. Revocation, suspension, termination, or nonrenewal of license; cease and desist orders.

1. The Commissioner may deny, suspend, terminate, revoke, condition, or refuse to renew a license or order that any person or licensee cease and desist in any specified conduct if the Commissioner finds:
   1. the licensee failed to pay the renewal of license fee or an examination fee as provided in this part, or to maintain in effect the required liquid assets or the bond or bonds required under the provisions of this part, or to file any annual report or other report, or to comply with any lawful demand, ruling, or requirement of the Commissioner;
   2. the licensee violated any applicable provision of this part; chapter 200 of this title; 9 V.S.A. chapter 4, 59, or 61; or any rule, order, or directive, adopted pursuant to those provisions;
   3. the licensee engages in fraud, intentional misrepresentation, or gross negligence;
   4. the licensee engages in an unsafe or unsound practice;
   5. the licensee is convicted of a violation of a state or federal anti-money-laundering statute;
   6. the competence, experience, character, or general fitness of the licensee, person in control of a licensee, or responsible individual of the licensee indicates that it is not in the public interest to permit the person to provide services in this State;
   7. the licensee fails to continue to meet the initial licensing requirements of this title, or withholds information, or fails to cooperate with an examination or investigation, or makes a material misstatement in a license application, license renewal, or any document submitted to the Commissioner or to the Nationwide Multistate Licensing System and Registry;
   8. any cause for which issuance of the license could have been refused had it then existed and been known to the Commissioner at the time of issuance, including unconscionable conduct that takes advantage of a borrower's lack of bargaining power or lack of understanding of the terms or consequences of the transaction.
   9. the licensee has demonstrated a pattern of failure or refusal to promptly pay obligations on payment instruments or transmissions of money, is insolvent, suspends payment of its obligations, or makes an assignment for the benefit of its creditors; or
   10. a money transmission licensee does not remove an authorized delegate after the Commissioner issues and serves upon the licensee a final order including a finding that the authorized delegate has violated this part.
2. The Commissioner may issue orders or directives to any person:
   1. to cease and desist from conducting business;
   2. to cease any harmful activities or violations of this part; chapter 200 of this title; 9 V.S.A. chapter 4, 59, or 61; or any order, directive, or rule adopted pursuant to those provisions;
   3. to cease business under a license or any conditional license if the Commissioner determines that such license was erroneously granted or the licensee is currently in violation of this part; chapter 200 of this title; 9 V.S.A. chapter 4, 59, or 61; or any order, directive, or rule, adopted pursuant to those provisions;
   4. enjoining or prohibiting any person from engaging in the financial services industry in this State;
   5. to remove any officer, director, employee, responsible individual, or control person; or
   6. regarding any other action or remedy as the Commissioner deems necessary to carry out the purposes of this part.
3. The Commissioner shall provide not less than 15 days' notice and an opportunity to be heard before he or she issues an order or directive pursuant to subsection (b) of this section. Mailing notice to the licensee's current address as stated on the license shall be presumptive evidence of its receipt by the licensee. However, if the Commissioner finds that the public safety or welfare imperatively requires emergency action, action with no prior notice or prior opportunity to be heard may be taken, pending proceedings for revocation or other action.

   Added 2019, No. 20 , § 2.

§ 2111. Revocation, suspension, termination, or nonrenewal where more than one place of business.

The Commissioner may revoke, suspend, terminate, or refuse to renew only the license for a particular place of business at which grounds for revocation, suspension, termination, or refusal to renew may occur or exist, or if the Commissioner finds that such grounds for revocation, suspension, termination, or refusal to renew are of general application to all licensed places of business, or to more than one licensed place of business, operated by such licensee, the Commissioner shall revoke, suspend, terminate, or refuse to renew all of the licenses issued to the licensee or such licenses as such grounds apply to, as the case may be.

Added 2019, No. 20 , § 2.

§ 2112. Surrender of license; no effect on liability; reinstatement.

1. A licensee may surrender a license by delivering to the Commissioner notice that the licensee surrenders the license.
2. Surrender shall not affect the licensee's administrative, civil, or criminal liability for acts committed prior to surrender. A revocation, suspension, termination, refusal to renew, or surrender of a license does not impair or affect the obligation of a preexisting lawful contract.
3. The Commissioner may reinstate a revoked, suspended, terminated, expired, inactive, or nonrenewed license or issue a new license to a licensee whose license was revoked, suspended, terminated, expired, inactive, or nonrenewed if no fact or condition then exists that would have warranted the Commissioner to refuse to issue the license under this part; provided, however, that the Commissioner shall not issue a new license or reinstate a license to a mortgage loan originator whose license was revoked unless the revocation order is vacated.

   Added 2019, No. 20 , § 2.

§ 2113. Appeal of final order.

1. The Commissioner shall serve his or her findings and order of suspension, termination, revocation, or to cease and desist in specified conduct on the licensee by mail at the licensee's current address as stated on the license, which shall be presumptive evidence of its receipt by the licensee.
2. The licensee may appeal the Commissioner's decision by filing an action in the civil division of the Washington County Superior Court not later than 15 days after the date of service.

   Added 2019, No. 20 , § 2.

§ 2114. Rules.

The Commissioner may adopt rules and issue orders, rulings, demands, and findings as is necessary to perform his or her duties under this part.

Added 2019, No. 20 , § 2.

§ 2115. Penalties.

1. The Commissioner may:
   1. impose an administrative penalty of not more than $10,000.00, plus the State's cost and expenses of investigating and prosecution of the matter, including attorney's fees, for each violation upon any person who violates or participates in the violation of this part; chapter 200 of this title; 9 V.S.A. chapter 4, 59, or 61; or any lawful rule adopted, or directive or order issued, pursuant to those sections; and
   2. order any person to make restitution to another person for a violation of this part, chapter 200 of this title, or 9 V.S.A. chapter 4, 59, or 61.
2. Each violation, or failure to comply with any directive or order of the Commissioner, is a separate and distinct violation.
3. It shall be a criminal offense, punishable by a fine of not more than $100,000.00, or not more than a year in prison, or both, for any person, after receiving an order that directs the person to cease exercising the duties and powers of a licensee and imposes an administrative penalty under this part, to perform the duties or exercise the powers of a licensee until the penalty has been satisfied, or otherwise satisfactorily resolved between the parties, or the order is vacated by the Commissioner or by a court of competent jurisdiction.
4. 1. A loan contract made in knowing and willful violation of subdivision 2201(a)(1) of this title is void, and the lender shall not collect or receive any principal, interest, or charges; provided, however, in the case of a loan made in violation of subdivision 2201(a)(1) of this title, where the Commissioner does not find a knowing and willful violation, the lender shall not collect or receive any interest or charges, but may collect and receive principal. (d) (1)  A loan contract made in knowing and willful violation of subdivision 2201(a)(1) of this title is void, and the lender shall not collect or receive any principal, interest, or charges; provided, however, in the case of a loan made in violation of subdivision 2201(a)(1) of this title, where the Commissioner does not find a knowing and willful violation, the lender shall not collect or receive any interest or charges, but may collect and receive principal.
   2. If a person who receives an order that directs the person to cease exercising the duties and powers of a licensee and imposes an administrative penalty under this part continues to perform the duties or exercise the powers of a licensee without satisfying the penalty, or otherwise reaching a satisfactory resolution between the parties, or securing a decision vacating the order by the Commissioner or by a court of competent jurisdiction, a loan contract made by the person after receipt of such order is void and the lender shall not collect or receive any principal, interest, or charges.
5. The powers vested in the Commissioner in this part are in addition to any other powers to enforce penalties, fines, or forfeitures authorized by law.

   Added 2019, No. 20 , § 2; amended 2019, No. 103 (Adj. Sess.), § 9.

§ 2116. Administrative procedure.

All administrative proceedings under this part shall be conducted in accordance with 3 V.S.A. chapter 25 and any rules adopted by the Commissioner on hearing procedure.

Added 2019, No. 20 , § 2.

§ 2117. Examinations and investigations; examination fees.

1. In addition to any authority allowed under this part or other law, and for the purpose of examination, or discovering or investigating violations or complaints of or arising under this part; chapter 200, subchapter 2 of this title; chapter 200 of this title; 9 V.S.A. chapter 4, 59, or 61; or a rule adopted, or an order or directive issued pursuant to those sections, or securing information required or useful thereunder, and for purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation, the Commissioner or his or her representative may:
   1. conduct investigations and examinations;
   2. access, receive, and use any books, accounts, records, files, documents, information, or evidence including:
      1. criminal, civil, and administrative history information, including nonconviction data;
      2. personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in 15 U.S.C. § 1681a ; and
      3. any other documents, information, or evidence the Commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence.
2. 1. The Commissioner may review, investigate, or examine any person, regardless of whether the person has obtained a license under this part, as often as necessary in order to carry out the purposes of this part. (b) (1)  The Commissioner may review, investigate, or examine any person, regardless of whether the person has obtained a license under this part, as often as necessary in order to carry out the purposes of this part.
   2. The Commissioner may direct, subpoena, or order the attendance of, and examine under oath, a person whose testimony is required about the loans or the business or subject matter of an examination or investigation, and may direct, subpoena, or order the person to produce books, accounts, records, files, and any other documents the Commissioner deems relevant to the inquiry.
3. 1. A person subject to this part shall make available to the Commissioner upon request the books and records relating to the operations of the person. (c) (1)  A person subject to this part shall make available to the Commissioner upon request the books and records relating to the operations of the person.
   2. The Commissioner shall have access to the books and records and to interview the officers, principals, responsible individuals, control persons, mortgage loan originators, employees, independent contractors, agents, and customers of the person concerning its business.
4. A person subject to this part shall make or compile reports or prepare other information as directed by the Commissioner in order to carry out the purposes of this section, including:
   1. accounting compilations;
   2. information lists and data concerning transactions in a format prescribed by the Commissioner; and
   3. any other information as the Commissioner deems necessary to carry out the purposes of this part.
5. 1. In making any examination or investigation authorized by this part, the Commissioner may control access to the documents and records of the person under examination or investigation. (e) (1)  In making any examination or investigation authorized by this part, the Commissioner may control access to the documents and records of the person under examination or investigation.
   2. The Commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept.
   3. During the period of control, a person shall not remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the Commissioner.
   4. Unless the Commissioner has reasonable grounds to believe the documents or records of the person have been or are at risk of being altered or destroyed for purposes of concealing a violation of this part, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
6. In order to carry out the purposes of this part, the Commissioner may:
   1. retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations;
   2. enter into agreements or relationships with other government officials or regulatory associations to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this section;
   3. use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate a person subject to this part;
   4. accept and rely on examination or investigation reports made by other government officials within or outside this State; or
   5. accept audit reports made by an independent certified public accountant for the person subject to this part in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation, or other writing of the Commissioner.
7. The authority of this section shall remain in effect, whether a person subject to this part acts or claims to act under any licensing or registration law of this State, acts without such authority, or surrenders his or her license.
8. No person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.
9. The Commissioner may, in the case of any person subject to this part who does not maintain a Vermont office, accept reports of examinations prepared by another state or federal regulatory agency as substitutes if such reports are available to the Commissioner and are determined to be adequate in exercising his or her powers and discharging his or her responsibilities under this part.
10. 1. A person subject to this part shall pay to the Department all fees, costs, and expenses of any examination, review, and investigation as prescribed by section 18 of this title, which fees, costs, and expenses shall be billed when they are incurred. (j) (1)  A person subject to this part shall pay to the Department all fees, costs, and expenses of any examination, review, and investigation as prescribed by section 18 of this title, which fees, costs, and expenses shall be billed when they are incurred.
    2. In addition to the powers set forth in section 2110 of this title, the Commissioner may maintain an action for the recovery of examination, review, and investigation fees, costs, and expenses as prescribed in section 18 of this title in any court of competent jurisdiction.
11. Information obtained during an examination or investigation under this part shall be confidential and privileged and shall be treated as provided in section 23 of this title.

    Added 2019, No. 20 , § 2.

§ 2118. Joint examinations.

1. 1. The Commissioner may conduct an on-site examination in conjunction with representatives of other state agencies or agencies of another state or of the federal government. (a) (1)  The Commissioner may conduct an on-site examination in conjunction with representatives of other state agencies or agencies of another state or of the federal government.
   2. Instead of an examination, the Commissioner may accept the examination report of an agency of this State or of another state or of the federal government or a report prepared by an independent certified public accountant.
2. 1. A joint examination or an acceptance of an examination report does not preclude the Commissioner from conducting an examination as provided by law. (b) (1)  A joint examination or an acceptance of an examination report does not preclude the Commissioner from conducting an examination as provided by law.
   2. A joint report or a report accepted under this subsection is an official report of the Commissioner for all purposes.

      Added 2019, No. 20 , § 2.

§ 2119. Records required of licensee.

1. 1. A licensee shall keep, use in the licensee's business, and make available to the Commissioner upon request, the books, accounts, records, and data compilations as will enable the Commissioner to determine whether the licensee is complying with the provisions of this part and with the rules adopted by the Commissioner. (a) (1)  A licensee shall keep, use in the licensee's business, and make available to the Commissioner upon request, the books, accounts, records, and data compilations as will enable the Commissioner to determine whether the licensee is complying with the provisions of this part and with the rules adopted by the Commissioner.
   2. A licensee shall preserve the books, accounts, records, and data compilations in a secure manner for not less than seven years after making the final entry on any loan recorded therein.
   3. After the seven-year retention period, the licensee shall dispose of the books, accounts, records, and data compilations in accordance with 9 V.S.A. § 2445 .
2. A licensee may maintain records in any form permitted in subsection 11301(c) of this title.

   Added 2019, No. 20 , § 2.

§ 2120. Annual report; call reports.

1. 1. In addition to any specific information required by the applicable chapter, annually, on or before April 1, a licensee shall file a report with the Commissioner to provide the information the Commissioner reasonably requires concerning the business and operations conducted in this State during the preceding calendar year. (a) (1)  In addition to any specific information required by the applicable chapter, annually, on or before April 1, a licensee shall file a report with the Commissioner to provide the information the Commissioner reasonably requires concerning the business and operations conducted in this State during the preceding calendar year.
   2. The licensee shall submit the report under oath and in the form the Commissioner requires.
   3. For good cause, the Commissioner may extend the due date for the annual report required by this subsection.
   4. If a licensee does not file its annual report on or before April 1, or within any extension of time granted by the Commissioner, the licensee shall pay to the Department $100.00 for each month or part of a month that the report is past due.
2. 1. Annually, not later than 90 days after the end of its fiscal year, a licensee shall file financial statements with the Commissioner in a form and substance acceptable to the Commissioner, which financial statements shall include a balance sheet and income statement. (b) (1)  Annually, not later than 90 days after the end of its fiscal year, a licensee shall file financial statements with the Commissioner in a form and substance acceptable to the Commissioner, which financial statements shall include a balance sheet and income statement.
   2. This subsection does not apply to a lender making only commercial loans.
3. A licensee shall submit to the Nationwide Multistate Licensing System and Registry reports of condition in a form and including the information the Nationwide Multistate Licensing System and Registry requires, if applicable.
4. The Commissioner may require more frequent reports from any licensee.

   Added 2019, No. 20 , § 2; amended 2019, No. 103 (Adj. Sess.), § 10.

§ 2121. Deceptive advertising.

1. A person subject to this part shall not advertise, print, display, publish, distribute, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, or broadcast, a statement or representation that is false, misleading, or deceptive.
2. The Commissioner may order a person to cease conduct that violates this section.

   Added 2019, No. 20 , § 2.

§ 2122. Use of other names or business places.

1. A licensee shall not conduct business or make a loan subject to regulation under this part under any other name or at any other place of business than as specified in its license.
2. This section does not apply to a commercial loan made to a borrower located outside Vermont for use outside Vermont.

   Added 2019, No. 20 , § 2.

§ 2123. Licenses modified, amended, or repealed by amendment to this part.

The State of Vermont may amend or repeal this chapter so as to effect a cancellation or alteration of a license or right of a licensee, provided that such an amendment or repeal shall not impair or affect an obligation under a preexisting lawful contract.

Added 2019, No. 20 , § 2.

§ 2124. Nationwide Multistate Licensing System and Registry.

1. In furtherance of the Commissioner's duties under this part, the Commissioner may participate in the Nationwide Multistate Licensing System and Registry and may take such action regarding participation in the licensing system as the Commissioner deems necessary to carry out the purposes of this part, including:
   1. issue rules or orders, and establish procedures, to further participation in the Nationwide Multistate Licensing System and Registry;
   2. facilitate and participate in the establishment and implementation of the Nationwide Multistate Licensing System and Registry;
   3. establish relationships or contracts with the Nationwide Multistate Licensing System and Registry or other entities designated by the Nationwide Multistate Licensing System and Registry;
   4. authorize the Nationwide Multistate Licensing System and Registry to collect and maintain records and to collect and process any fees associated with licensure on behalf of the Commissioner;
   5. require persons engaged in activities that require a license under this part to utilize the Nationwide Multistate Licensing System and Registry for license applications, renewals, amendments, surrenders, and such other activities as the Commissioner may require and to pay through the System all fees provided for under this part;
   6. authorize the Nationwide Multistate Licensing System and Registry to collect fingerprints on behalf of the Commissioner in order to receive or conduct criminal history background checks;
   7. in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of this part, use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting information from and distributing information to the Department of Justice or any governmental agency; and
   8. in order to reduce the points of contact that the Commissioner may have to maintain for purposes of subsection 2102(c) of this chapter, use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the Commissioner.
2. 1. The Commissioner may require persons engaged in activities that require a license under this part to submit fingerprints, and the Commissioner may utilize the services of the Nationwide Multistate Licensing System and Registry to process the fingerprints and to submit the fingerprints to the Federal Bureau of Investigation, the Vermont State Police, or any equivalent state or federal law enforcement agency for the purpose of conducting a criminal history background check. (b) (1)  The Commissioner may require persons engaged in activities that require a license under this part to submit fingerprints, and the Commissioner may utilize the services of the Nationwide Multistate Licensing System and Registry to process the fingerprints and to submit the fingerprints to the Federal Bureau of Investigation, the Vermont State Police, or any equivalent state or federal law enforcement agency for the purpose of conducting a criminal history background check.
   2. The licensee or applicant shall pay the cost of such criminal history background check, including any charges imposed by the Nationwide Multistate Licensing System and Registry.
3. A person engaged in an activity that requires a license under this part shall pay all applicable charges to utilize the Nationwide Multistate Licensing System and Registry, including the processing charges the administrator of the Nationwide Multistate Licensing System and Registry establishes, in addition to the fees required under this part.
4. The Nationwide Multistate Licensing System and Registry is not intended to and does not replace or affect the Commissioner's authority to grant, deny, suspend, terminate, revoke, or refuse to renew licenses.

   Added 2019, No. 20 , § 2.

§ 2125. Report to Nationwide Multistate Licensing System and Registry.

1. Subject to State privacy and confidentiality laws, and subject to section 2126 of this title, the Commissioner shall report regularly violations of this part, enforcement actions, and other relevant information to the Nationwide Multistate Licensing System and Registry.
2. A licensee may challenge information the Commissioner reports to the Nationwide Multistate Licensing System and Registry in accordance with 3 V.S.A. chapter 25 and any rules adopted by the Commissioner on hearing procedures.

   Added 2019, No. 20 , § 2.

§ 2126. Confidentiality.

In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing:

1. 1. The privacy or confidentiality of any information or material provided to the Nationwide Multistate Licensing System and Registry, and any privilege arising under federal or state law with respect to such information or material, including the rules of any federal or state court, shall continue to apply to the information or material after the information or material is disclosed to the Nationwide Multistate Licensing System and Registry. (1) (A) The privacy or confidentiality of any information or material provided to the Nationwide Multistate Licensing System and Registry, and any privilege arising under federal or state law with respect to such information or material, including the rules of any federal or state court, shall continue to apply to the information or material after the information or material is disclosed to the Nationwide Multistate Licensing System and Registry.
   2. The Commissioner may share the information and material with state and federal regulatory officials who have oversight authority without affecting the privilege or confidentiality protections provided by federal law or state law.
2. The Commissioner may enter agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators, State Regulatory Registry LLC, or other associations representing governmental agencies.
3. Information or material that is subject to privilege or confidentiality under subdivision (1) of this section is not subject to:
   1. disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the respective state; or
   2. subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to a privilege held by the Nationwide Multistate Licensing System and Registry, the person to whom such information or material pertains waives the privilege.
4. This section does not apply to information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators that are included in the Nationwide Multistate Licensing System and Registry for access by the public.

   Added 2019, No. 20 , § 2.

§ 2200. Definitions.

As used in this chapter:

1. 1. "Employee" means, subject to subdivision (B) of this subdivision (1), an individual whose manner and means of work are subject to the right of control of, or are controlled by a person and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by: (1) (A) "Employee" means, subject to subdivision (B) of this subdivision (1), an individual whose manner and means of work are subject to the right of control of, or are controlled by a person and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by:
      1. the controlling person;

         an entity that directly or indirectly owns 100 percent of the controlling person; or

         (iii) an entity that is directly or indirectly 100 percent owned by the same parent company as the controlling person.

   2. For purposes of a registered mortgage loan originator, the term "employee" has such binding definition as may be issued by the federal banking agencies in connection with their responsibilities under the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

      "Engage in the business of a mortgage loan originator" means to act as, or to hold oneself out as acting as, or to represent to the public that one can provide the services of, a mortgage loan originator, in a commercial context, and with some degree of habitualness or repetition. Habitualness or repetition is met if either the individual who acts as a mortgage loan originator does so with a degree of habitualness or repetition or the source of the prospective financing provides such financing or performs other phases of origination of residential mortgage loans with a degree of habitualness or repetition. Acting in a commercial context is met if either the individual or an entity for which the individual acts does so for the purpose of obtaining profit rather than exclusively for governmental or family purposes.

      "Housing finance agency" means any authority:

      (A) that is chartered by a state to help meet the affordable housing needs of the residents of the state;

      (B) that is supervised directly or indirectly by the state government;

   3. that is subject to audit and review by the state in which it operates; and
   4. whose activities make it eligible to be a member of the National Council of State Housing Agencies.

      "Lead" means any information identifying a potential consumer of a loan.

      "Lead generation" means to:

      (A) initiate consumer interest or inquiry in a loan by online marketing, direct response advertising, telemarketing, or other similar consumer contact;

      (B) engage in the business of selling leads for loans;

      (C) generate or augment leads for other persons for, or with the expectation of, compensation or gain; or

      (D) refer Vermont borrowers to other persons for loans for, or with the expectation of, compensation or gain.

      (6) "Loan processor or underwriter" means an individual who performs clerical or support duties as an employee at the direction and subject to the supervision and instruction of a person licensed, or exempt from licensing, under this chapter.

      (A) For purposes of this subdivision (6), the term "clerical or support duties" may include, subsequent to the receipt of a residential mortgage loan application:

      1. the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and
      2. communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.

         (B) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

         "Loan solicitation" means, for compensation or gain or with the expectation of compensation or gain, to:

         (i) offer, solicit, broker, directly or indirectly arrange, place, or find a loan for a prospective Vermont borrower;

         (ii) engage in any activity intended to assist a prospective Vermont borrower in obtaining a loan, including lead generation;

      3. arrange, in whole or in part, a loan through a third party, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party, through any method, including mail, telephone, Internet, or any electronic means; or
      4. represent to the public through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that a person can or will provide a loan or any of the services described in subdivisions (i)-(iii) of this subdivision (7)(A).

         (B) As used in this subdivision (7), "loan solicitation" does not:

         (i) apply to residential mortgage loans;

         (ii) include a broker-dealer registered or exempt from registration under 9 V.S.A. § 5401 when the broker-dealer provides the services described in subdivision (A) of this subdivision (7) and the broker-dealer is not compensated by the consumer for those services;

         (iii) include an agent registered or exempt from registration under 9 V.S.A. § 5402 when the agent provides the services described in subdivision (A) of this subdivision (7) and the individual agent is not compensated by the consumer for those services;

         (iv) include an insurance producer licensed under 8 V.S.A. § 4800 when the insurance producer provides the services described in subdivision (A) of this subdivision (7) and the individual insurance producer is not compensated by the consumer for those services;

      5. include a seller of goods or services that provides the services described in subdivision (A) of this subdivision (7) in connection with financing the sale or proposed sale of the seller's goods or services and the seller is not compensated by the consumer for the services described in subdivision (A) of this subdivision (7); or
      6. include other categories of loans or service providers as determined by the Commissioner by rule or order.

         "Mortgage broker" means any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, or finds, or offers to negotiate, place, assist in placement, or find mortgage loans, other than commercial loans, on real property for others. The term shall not include real estate brokers or salespersons, as defined in 26 V.S.A. § 2211 , who in connection with services performed in a prospective real estate transaction, provide mortgage information or assistance to a buyer, if such real estate broker or real estate salesperson is not compensated for providing such mortgage information or assistance in addition to the compensation received from the seller or buyer for such real estate brokerage activity. The term shall not include attorneys licensed to practice law in this State acting in their professional capacity. The term shall not include persons engaged in the foregoing activities solely in connection with the sale, assignment, or other transfer of one or more previously originated loans.

         "Mortgage loan originator":

         (A) Means an individual who for compensation or gain or in the expectation of compensation or gain:

         (i) takes a residential mortgage loan application;

         (ii) offers or negotiates terms of a residential mortgage loan;

         (iii) represents to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform the services described in subdivision (i) or (ii) of this subdivision (9)(A).

         (B) An individual "takes a residential mortgage loan application" if the individual receives a residential mortgage loan application for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower, or to accept the terms offered by a borrower or prospective borrower in response to a solicitation, whether the application is received directly or indirectly from the borrower or prospective borrower.

         (C) An individual "offers or negotiates terms of a residential mortgage loan for compensation or gain" if the individual:

         (i) (I) presents for consideration by a borrower or prospective borrower particular residential mortgage loan terms;

         communicates directly or indirectly with a borrower or prospective borrower for the purpose of reaching a mutual understanding about prospective residential mortgage loan terms; or

         (III) recommends, refers, or steers a borrower or prospective borrower to a particular lender or set of residential mortgage loan terms, in accordance with a duty to or incentive from any person other than the borrower or prospective borrower; and

         (ii) receives or expects to receive payment of money or anything of value in connection with the activities described in subdivision (i) of this subdivision (9)(C) or as a result of any residential mortgage loan terms entered into as a result of such activities.

         (D) Does not include:

         (i) an individual engaged solely as a loan processor or underwriter, except as otherwise provided in subsection 2201(g) of this chapter;

         a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with Vermont law, unless the person or entity is compensated by a buyer or a seller in addition to the compensation received for such real estate brokerage activity or is compensated by a lender, mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator; or

         (iii) a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101(53D).

         "Nontraditional mortgage product" means any mortgage product other than a 30-year fixed rate mortgage.

         "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including:

         (A) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

         (B) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

         (C) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property,other than in connection with providing financing with respect to any such transaction;

         (D) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and

   5. offering to engage in any activity or act in any capacity described in subdivision (A), (B), (C), or (D) of this subdivision (11).

      (12) "Registered mortgage loan originator" means any individual who:

      meets the definition of mortgage loan originator and is an employee of:

      a depository institution;

      a subsidiary that is:

      owned and controlled by a depository institution, as determined by a federal banking agency; and

      regulated by a federal banking agency; or

      (iii) an institution regulated by the Farm Credit Administration; and

      (B) is registered with, and maintains a unique identifier through, the Nationwide Multistate Licensing System and Registry.

      (13) "Residential mortgage loan application" means a request, in any form, for an offer, or a response to a solicitation of an offer, of residential mortgage loan terms, and information about the borrower or prospective borrower that is customary or necessary in a decision on whether to make such an offer.

      (14) "Sales finance company" means any person who has purchased one or more retail installment contracts, as defined in 9 V.S.A. §§ 2351(5) and 2401(7), from one or more retail sellers located in this State. Taking one or more retail installment contracts as security for a loan or loans shall not be construed as purchasing for purposes of this definition.

      Added 1995, No. 162 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 1995, No. 180 (Adj. Sess.), § 38(a); 1997, No. 98 (Adj. Sess.), § 2, eff. April 16, 1998; 1999, No. 153 (Adj. Sess.), § 11, eff. Jan. 1, 2001; 2009, No. 29 , § 1; 2009, No. 134 (Adj. Sess.), § 24a; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2011, No. 85 (Adj. Sess.), § 1, eff. April 20, 2012; 2013, No. 34 , § 3; 2015, No. 128 (Adj. Sess.), § F.3, eff. May 24, 2016; 2017, No. 22 , § 18, eff. May 4, 2017; 2019, No. 20 , § 3.

§ 2201. Licenses required.

1. Without first obtaining a license under this chapter from the Commissioner, a person shall not:
   1. Engage in the business of making loans of money, credit, goods, or things in action and charge, contract for, or receive on any such loan interest, a finance charge, discount, or consideration therefor.
   2. Act as a mortgage broker.
   3. Engage in the business of a mortgage loan originator.
   4. Act as a sales finance company.
   5. Engage in the business of loan solicitation. A person licensed as a lender, sales finance company, or mortgage broker is not required to obtain a separate loan solicitation license when acting on the person's own behalf.
2. A licensed mortgage loan originator shall register and maintain a valid unique identifier with the Nationwide Multistate Licensing System and Registry and shall be either:
   1. An employee actively employed at a licensed location of, and supervised and sponsored by, only one licensed lender or licensed mortgage broker operating in this State.
   2. An individual sole proprietor who is also a licensed lender or licensed mortgage broker.
   3. An employee engaged in loan modifications employed at a licensed location of, and supervised and sponsored by, only one third-party loan servicer licensed to operate in this State pursuant to chapter 85 of this title. As used in this subsection, "loan modification" means an adjustment or compromise of an existing residential mortgage loan. The term "loan modification" does not include a refinancing transaction.
3. A person licensed pursuant to subdivision (a)(1) of this section may engage in mortgage brokerage and sales finance if such person informs the Commissioner in advance that he or she intends to engage in sales finance and mortgage brokerage. Such person shall inform the Commissioner of his or her intention on the original license application under section 2102 of this title, any renewal application under sections 2109 of this title, or pursuant to section 2106 of this title, and shall pay the applicable fees required by subsection 2102(b) of this title for a mortgage broker license or sales finance company license.
4. A lender license, mortgage broker license, sales finance company license, or loan solicitation license shall not be required of:
   1. A state agency, political subdivision, or other public instrumentality of a state.
   2. A federal agency or other public instrumentality of the United States.
   3. A gas or electric utility subject to the jurisdiction of the Public Utility Commission engaging in energy conservation or safety loans.
   4. A depository institution or a financial institution as defined in subdivision 11101(32) of this title.
   5. A pawnbroker.
   6. An insurance company.
   7. A seller of goods or services that finances the sale of such goods or services, other than a residential mortgage loan.
   8. Any individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as the individual's residence, including a vacation home, or inherited property that served as the deceased's dwelling, provided that the individual does not act as a mortgage loan originator or provide financing for such sales so frequently and under such circumstances that it constitutes a habitual activity and acting in a commercial context.
   9. Lenders that conduct their lending activities, other than residential mortgage loan activities, through revolving loan funds, that are nonprofit organizations exempt from taxation under 26 U.S.C. § 501(c) and that register with the Commissioner of Economic Development under 10 V.S.A. § 690a .
   10. Persons who lend, other than residential mortgage loans, an aggregate of less than $250,000.00 in any one year at rates of interest of no more than 12 percent per annum.
   11. A seller who, pursuant to 9 V.S.A. § 2355(f)(1)(D) , includes the amount paid or to be paid by the seller to discharge a security interest, lien interest, or lease interest on the traded-in motor vehicle in a motor vehicle retail installment sales contract, provided that the contract is purchased, assigned, or otherwise acquired by a sales finance company licensed pursuant to this title to purchase motor vehicle retail installment sales contracts or a depository institution.
   12. 1. A person making an unsecured commercial loan, which loan is expressly subordinate to the prior payment of all senior indebtedness of the commercial borrower regardless of whether such senior indebtedness exists at the time of the loan or arises thereafter. The loan may or may not include the right to convert all or a portion of the amount due on the loan to an equity interest in the commercial borrower. (12) (A) A person making an unsecured commercial loan, which loan is expressly subordinate to the prior payment of all senior indebtedness of the commercial borrower regardless of whether such senior indebtedness exists at the time of the loan or arises thereafter. The loan may or may not include the right to convert all or a portion of the amount due on the loan to an equity interest in the commercial borrower.
       2. As used in this subdivision (12), "senior indebtedness" means:
          1. all indebtedness of the commercial borrower for money borrowed from depository institutions, trust companies, insurance companies, and licensed lenders, and any guarantee thereof; and
          2. any other indebtedness of the commercial borrower that the lender and the commercial borrower agree shall constitute senior indebtedness.
   13. Nonprofit organizations established under testamentary instruments, exempt from taxation under 26 U.S.C. § 501(c) (3) and which make loans for postsecondary educational costs to students and their parents, provided that the organizations provide annual accountings to the Probate Division of the Superior Court.
   14. Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
   15. A housing finance agency.
   16. A person who makes no more than three mortgage loans in any consecutive three-year period beginning on or after July 1, 2011.
5. A mortgage loan originator license shall not be required of:
   1. Registered mortgage loan originators, when employed by and acting for an entity described in subdivision 2200(12) of this chapter.
   2. Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
   3. Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual's residence, including a vacation home, or inherited property that served as the deceased's dwelling, provided that the individual does not act as a mortgage loan originator or provide financing for such sales so frequently and under such circumstances that it constitutes a habitual activity and acting in a commercial context.
   4. An individual who is an employee of a federal, state, or local government agency, or an employee of a housing finance agency, who acts as a mortgage loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency or housing finance agency.
   5. A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator. To the extent an attorney licensed in this State undertakes activities that are covered by the definition of a mortgage loan originator, such activities do not constitute engaging in the business of a mortgage loan originator, provided that:
      1. such activities are considered by the State governing body responsible for regulating the practice of law to be part of the authorized practice of law within this State;
      2. such activities are carried out within an attorney-client relationship; and
      3. the attorney carries them out in compliance with all applicable laws, rules, ethics, and standards.
   6. A person who makes no more than three mortgage loans in any consecutive three-year period beginning on or after July 1, 2011.
6. If a person who offers or negotiates the terms of a mortgage loan is exempt from licensure pursuant to subdivision (d)(16) or (e)(6) of this section, there is a rebuttable presumption that he or she is not engaged in the business of making loans or being a mortgage loan originator.
7. Independent contractor loan processors or underwriters. A loan processor or underwriter who is an independent contractor may not engage in the activities of a loan processor or underwriter unless such independent contractor loan processor or underwriter obtains and maintains a mortgage loan originator license. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.
8. This chapter shall not apply to commercial loans of $1,000,000.00 or more.

   Amended 1969, No. 243 (Adj. Sess.), § 1; 1979, No. 173 (Adj. Sess.), § 2, eff. April 30, 1980; 1985, No. 38 , § 2; 1991, No. 1 , § 1, eff. Feb. 27, 1991; 1995, No. 162 (Adj. Sess.), § 2, eff. Jan. 1, 1997; 1999, No. 153 (Adj. Sess.), § 12, eff. Jan. 1, 2001; 2001, No. 55 , § 4, eff. June 12, 2001; 2005, No. 143 (Adj. Sess.), § 2; 2007, No. 159 (Adj. Sess.), § 1, eff. May 20, 2008; 2007, No. 178 (Adj. Sess.), § 1; 2009, No. 29 , § 1; 2009, No. 137 (Adj. Sess.), § 1a; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011; 2011, No. 21 , § 1, eff. May 11, 2011; 2011, No. 85 (Adj. Sess.), § 2, eff. April 20, 2012; 2013, No. 29 , § 3; 2013, No. 34 , § 4; 2013, No. 199 (Adj. Sess.), § 21; 2015, No. 51 , § E.4; 2017, No. 22 , § 19, eff. May 4, 2017; 2019, No. 20 , § 4; 2019, No. 103 (Adj. Sess.), § 6.

§ 2201a. Repealed. 1995, No. 162 (Adj. Sess.), § 39(a), eff. Jan. 1, 1997.

§ 2202. Repealed. 2019, No. 20, § 5.

§ 2202a. Application for commercial lender license.

1. Application for a license for a lender making solely commercial loans shall be in writing, under oath, and in the form prescribed by the Commissioner, and shall contain the name and address of the residence and the place of business of the applicant and, if the applicant is a partnership or association, of every member thereof, and, if a corporation, of each officer, director, and control person thereof; the county and municipality with street and number, if any, where the business is to be conducted; and such further information as the Commissioner may require.
2. At the time of making application, the applicant shall pay to the Commissioner an initial licensing fee and an application and investigation fee pursuant to subdivision 2102(b)(2) of this title.
3. In connection with an application for a commercial lender license, the applicant and each officer, director, and control person of the applicant shall furnish to the Nationwide Multistate Licensing System and Registry information concerning the applicant's identity and the identity of each of the applicant's officers, directors, and control persons, including:
   1. fingerprints for submission to the Federal Bureau of Investigation and for any other governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check;
   2. personal history and experience in a form prescribed by the NMLS, including the submission of authorization for the NMLS and the Commissioner to obtain information related to any administrative, civil, or criminal findings by any governmental jurisdiction; and
   3. any other information required by the NMLS or the Commissioner.

      Added 2009, No. 134 (Adj. Sess.), § 24c; amended 2019, No. 20 , § 6.

§ 2202b. Approval of application; issuance of commercial lender license.

1. Upon the filing of an application and payment of the required fees, the Commissioner shall issue a commercial lender license to the applicant if the Commissioner finds:
   1. The experience, character, and general fitness of the applicant command the confidence of the community and warrant belief that the business will be operated honestly, fairly, and efficiently within the purposes of this chapter.
      1. If the applicant is a partnership or association, such findings are required with respect to each partner, member, and person in control of the applicant.
      2. If the applicant is a corporation, such findings are required with respect to each officer, director, and person in control of the applicant.
   2. The applicant and each officer, director, and person in control of the applicant has never had a lender license, mortgage broker license, mortgage loan originator license, or similar license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation.
   3. The applicant and each officer, director, and person in control of the applicant has not been convicted of or pled guilty or nolo contendere to a felony in a domestic, foreign, or military court:
      1. during the seven-year period preceding the date of the application for licensing, except a conviction for driving under the influence or a similarly titled offense in this State or in any other jurisdiction; or
      2. at any time preceding the date of application, if the felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering; and
      3. provided that any pardon of a conviction shall not be a conviction for purposes of this subsection.
2. 1. If the Commissioner finds that the applicant does not meet the requirements of subsection (a) of this section, the Commissioner shall not issue a license. (b) (1)  If the Commissioner finds that the applicant does not meet the requirements of subsection (a) of this section, the Commissioner shall not issue a license.
   2. Not later than 60 days after an applicant files a complete application, the Commissioner shall notify the applicant of the denial, stating the reason or reasons therefor.
   3. If the applicant does not file a timely request for reconsideration pursuant to section 2104 of this title, the Commissioner shall:
      1. return to the applicant the sum paid by the applicant as a license fee; and
      2. retain the investigation fee to cover the costs of investigating the application.
3. 1. If the Commissioner finds that an applicant meets the requirements of subsection (a) of this section, he or she shall issue the license not later than 60 days after the applicant submits a complete application. (c) (1)  If the Commissioner finds that an applicant meets the requirements of subsection (a) of this section, he or she shall issue the license not later than 60 days after the applicant submits a complete application.
   2. Provided that the licensee annually renews the license, the license shall be valid until the licensee surrenders the license or until the Commissioner revokes, suspends, terminates, or refuses to renew the license.
4. For good cause shown and consistent with the purposes of this section, the Commissioner may waive or modify the requirements of subdivision (a)(2) of this section.

   Added 2009, No. 134 (Adj. Sess.), § 24f; amended 2017, No. 22 , § 5, eff. May 4, 2017; 2019, No. 20 , § 7.

§ 2203. Bond; liquid assets required.

1. Prior to issuance of a license, the applicant shall file with the Commissioner, and shall keep in force thereafter for as long as the license remains in effect, a bond in a form and substance to be approved by the Commissioner in which the applicant shall be the obligor, in such sum as the Commissioner may require. The aggregate liability for any and all claims on any bond shall in no event exceed the sum thereof. No surety obligation on a bond shall be terminated unless at least 60 days' prior written notice is given by the surety to the obligor and the Commissioner. When one person is issued licenses to conduct the licensed activity at more than one office, the Commissioner may accept a single bond covering all such offices. The bond shall run to the State for the use of the State and of any person or persons who may have cause of action against the obligor of such bond under the provisions of this chapter. Such bond shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this chapter and of all rules and regulations lawfully made by the Commissioner hereunder, and will pay to the State and to any such person or persons any and all monies that may become due or owing to the State or to such person or persons from such obligor under and by virtue of the provisions of this chapter. The Commissioner shall require that the amount of the bonds shall be based upon the dollar amount of loans originated in Vermont and, at a minimum:
   1. For licensed lenders:
      1. who annually originate $0.00 to $1,000,000.00 in loans, a surety bond not less than $50,000.00;
      2. who annually originate $1,000,000.01 to $15,000,000.00 in loans, a surety bond not less than $100,000.00;
      3. who annually originate $15,000,000.01 or more in loans, a surety bond not less than $150,000.00.
   2. For mortgage brokers:
      1. who annually originate $0.00 to $2,000,000.00 in mortgage loans, a surety bond not less than $25,000.00;
      2. who annually originate $2,000,000.01 to $5,000,000.00 in mortgage loans, a surety bond not less than $50,000.00;
      3. who annually originate $5,000,000.01 to $15,000,000.00 in mortgage loans, a surety bond not less than $75,000.00;
      4. who annually originate $15,000,000.01 or more in mortgage loans, a surety bond not less than $100,000.00.
   3. The Commissioner may adopt regulations modifying the minimum bond requirements set forth in this subsection.
2. Each mortgage loan originator shall be covered by a surety bond in accordance with this section. In the event that the mortgage loan originator is an employee of a person subject to this chapter, the surety bond of such licensed lender or licensed mortgage broker can be used in lieu of the mortgage loan originator's surety bond requirement, provided that the surety bond shall provide coverage for each mortgage loan originator in an amount as prescribed in this section.
3. A loan solicitation licensee shall maintain a surety bond in an amount not less than $25,000.00 or in such other amount as the Commissioner may require.
4. When an action is commenced on a licensee's bond, the Commissioner may require the filing of a new bond. Immediately upon recovery upon any action on the bond, the licensee shall file a new bond.
5. Every applicant for a lender's license shall also prove, in form satisfactory to the Commissioner, that the applicant has liquid assets of $25,000.00, or such greater amount as the Commissioner may require, available for the operation of such business at the location specified in the application. Every applicant wishing to make commercial loans shall prove liquid assets in an amount of $50,000.00 or such greater amount as the Commissioner may require.
6. Notwithstanding subsections (a) and (e) of this section, the Commissioner may waive or modify the requirement for or amount of a bond or liquid asset set forth in this section, or accept other appropriate means of assuring the financial responsibility of a licensee.
7. This section does not apply to a lender making only commercial loans.

   Amended 1983, No. 35 , § 2; 1995, No. 162 (Adj. Sess.), § 4, eff. Jan. 1, 1997; 2005, No. 36 , § 3; 2009, No. 29 , § 1; 2009, No. 134 (Adj. Sess.), § 24d; 2017, No. 22 , § 21, eff. May 4, 2017.

§ 2203a. Additional bond; liquid assets to be maintained.

1. If the Commissioner finds at any time that a licensee's bond is insecure, exhausted, insufficient, or otherwise doubtful, the Commissioner shall require one or more additional bonds meeting the standards set forth in section 2203 of this title. The licensee shall file the bond within 10 days of the Commissioner's written demand to do so.
2. Every licensee, except as set forth in subsection (c) of this section, shall maintain at all times assets in amounts as set forth in section 2203 of this title, or in such greater amount deemed necessary by the Commissioner. Assets must be either in liquid form available for the operation of or actually used in the conduct of such business at the location specified in the license.
3. Every licensee making commercial loans shall maintain liquid assets in an amount deemed necessary by the Commissioner, but in no event less than $50,000.00.

   Amended 1983, No. 35 , § 3; 1989, No. 244 (Adj. Sess.), § 3; 1995, No. 162 (Adj. Sess.), § 8, eff. Jan. 1, 1997; 2009, No. 29 , § 1; 2019, No. 20 , § 8.

§ 2204. Repealed. 2019, No. 20, § 9.

§ 2204a. Mortgage loan originator prelicensing and relicensing education requirement.

1. In order to meet the prelicensing education requirement for a mortgage loan originator, a person shall complete at least 20 hours of education approved in accordance with subsection (b) of this section, which shall include at least:
   1. three hours of federal law and regulations;
   2. three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues;
   3. two hours of training related to lending standards for the nontraditional mortgage product marketplace; and
   4. two hours of Vermont law and regulations.
2. For purposes of subsection (a) of this section, prelicensing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a prelicensing education course shall include review and approval of the course provider.
3. Nothing in this section shall preclude any prelicensing education course, as approved by the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the applicant or an entity which is affiliated with the applicant by an agency contract, or any subsidiary or affiliate of such employer or entity.
4. Prelicensing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry.
5. The prelicensing education requirements approved by the Nationwide Multistate Licensing System and Registry in subdivisions (a)(1), (2), and (3) of this section for any state shall be accepted as credit toward completion of prelicensing education requirements in Vermont.
6. A person previously licensed as a mortgage loan originator under this chapter applying to be licensed again must prove that he or she has completed all of the continuing education requirements for the year in which the license was last held. This subsection does not apply to an individual who is required to retake 20 hours of prelicensing education pursuant to subsection (g) of this section.
7. A person who has completed 20 hours of prelicensing education under 12 U.S.C. § 5104(c) must retake such prelicensing education to be eligible to apply for a Vermont loan originator license if he or she:
   1. within three years of completing the prelicensing education, does not acquire a valid mortgage loan originator license in any state or does not become a federally registered mortgage loan originator; or
   2. within three years of completing the prelicensing education, obtains a valid mortgage loan originator license in any state or becomes a federally registered mortgage loan originator and subsequently does not maintain an approved mortgage loan originator license in any state or an approved federal registration for a period of three years or more.
8. A person who has completed two hours of Vermont prelicense education as required by subdivision (a)(4) of this section must retake such prelicensing education to be eligible to apply for a Vermont mortgage loan originator license if he or she:
   1. does not acquire a valid Vermont mortgage loan originator license within three years of completing the prelicense education; or
   2. obtains a valid Vermont mortgage loan originator license and then subsequently does not maintain an approved Vermont mortgage loan originator license for a period of three years or more.

      Added 2009, No. 29 , § 1; amended 2013, No. 29 , § 4, eff. May 13, 2013; 2017, No. 22 , § 4, eff. May 4, 2017; 2019, No. 20 , § 10.

§ 2204b. Testing of mortgage loan originators.

1. An individual applying for a mortgage loan originator license shall pass, in accordance with the standards established under this section, a qualified written test developed by the Nationwide Multistate Licensing System and Registry and administered by a test provider approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards.
2. A written test shall not be treated as a qualified written test for purposes of subsection (a) of this section unless the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including:
   1. ethics;
   2. federal law and regulation pertaining to mortgage origination;
   3. State law and regulation pertaining to mortgage origination; and
   4. federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
3. Nothing in this section shall prohibit a test provider approved by the Nationwide Multistate Licensing System and Registry from providing a test at the location of the employer of the applicant or the location of any subsidiary or affiliate of the employer of the applicant.
4. An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent correct answers to questions.
5. An individual may take a test three consecutive times, with each consecutive test occurring at least 30 days after the preceding test. After failing three consecutive tests, an individual shall wait at least six months before taking the test again.
6. A licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer shall retake the test, not taking into account any time during which such individual is a registered mortgage loan originator.

   Added 2009, No. 29 , § 1; amended 2011, No. 85 (Adj. Sess.), § 4, eff. April 20, 2012; 2019, No. 20 , § 11.

§ 2204c. Continuing education for mortgage loan originators.

1. In order to meet the annual continuing education requirements, a licensed mortgage loan originator shall complete at least eight hours of education approved in accordance with subsection (b) of this section, which shall include at least:
   1. three hours of federal law and regulations;
   2. two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and
   3. two hours of training related to lending standards for the nontraditional mortgage product marketplace.
2. For purposes of subsection (a) of this section, continuing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.
3. Nothing in this section shall preclude any education course, as approved by the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the mortgage loan originator or an entity that is affiliated with the mortgage loan originator, or any subsidiary or affiliate of the employer.
4. Continuing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry.
5. A licensed mortgage loan originator:
   1. except for subsection (i) of this section, may only receive credit for a continuing education course in the year in which the course is taken; and
   2. may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
6. A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive credit for the licensed mortgage loan originator's own annual continuing education requirement at the rate of two hours of credit for every one hour taught.
7. A person having successfully completed the education requirements approved by the Nationwide Multistate Licensing System and Registry in subdivisions (a)(1), (2), and (3) of this section for any state shall be accepted as credit toward completion of continuing education requirements in Vermont.
8. A licensed mortgage loan originator who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of a new or renewed license. This subsection does not apply to an individual who is required to retake 20 hours of prelicensing education pursuant to subsection 2204a(g) of this title.
9. A person who otherwise meets the requirements for renewal of a license may make up any deficiency in continuing education as established by order or rule of the Commissioner.

   Added 2009, No. 134 (Adj. Sess.), § 24f; amended 2017, No. 22 , § 5, eff. May 4, 2017; 2019, No. 20 , § 12.

§ 2204d. Mortgage loan originator license inactive status.

The license of a mortgage loan originator that has satisfied all of the requirements of licensure, other than being employed by a licensed lender or licensed mortgage broker, may be placed in an approved inactive status.

Amended 1995, No. 162 (Adj. Sess.), § 7, eff. Jan. 1, 1997; 2009, No. 29 , § 1; 2013, No. 29 , § 5, eff. May 13, 2013; ; 2019, No. 20 , § 13.

§ 2205. Repealed. 2019, No. 20, § 14.

§ 2206. Recodified. 2019, No. 20, § 13.

§ 2207. Recodified. 2019, No. 20, § 8.

§ 2208. Repealed. 2019, No. 20, § 15.

§ 2208a. Mortgage loan originator change of employer or sponsor.

1. No mortgage loan originator may be employed, supervised, and sponsored by more than one licensed lender or licensed mortgage broker operating in this State. Alternatively, a mortgage loan originator may be an individual sole proprietor who is also licensed as a lender or mortgage broker in this State.
2. A mortgage loan originator shall notify the Commissioner and update its status on the Nationwide Mortgage Licensing System and Registry within 15 days of any change in the employer and sponsor of the mortgage loan originator subsequent to the initial employer and sponsor. A fee of $50.00 payable to the Commissioner shall accompany notice of such change of employer and sponsor.

   Added 2009, No. 134 (Adj. Sess.), § 19.

§ 2209. Repealed. 2019, No. 20, § 16.

§ 2209a. Recodified. 2019, No. 20, § 12.

§ 2210. Repealed. 2019, No. 20, § 17.

§ 2211. Repealed. 2019, No. 20, § 18.

§ 2212. Repealed. 2019, No. 20, § 19.

§ 2213. Repealed. 2019, No. 20, § 20.

§ 2214. Repealed. 2019, No. 20, § 21.

§ 2215. Repealed. 2019, No. 20, § 22.

§ 2216. Mortgage lending; specific requirements; exceptions.

Every licensee engaging in the making of loans secured by a lien against real estate located in this State, whether conducting its affairs as an agent or principal and whether operating from facilities within the State or by mail, telephone, or by electronic means, shall comply with the general provisions of this chapter unless exempted herein. A licensee making such loans through a third person shall only make loans through a person licensed as a mortgage broker and as a mortgage loan originator under this chapter, unless such third person is exempt from such licensing provisions. Any lender who makes such loans through a third person required to be licensed and not so licensed, in addition to being subject to all applicable penalties under Vermont law, shall be responsible for the acts or omissions of the third person as a principal is responsible for the acts and omissions of its agent. Every licensee making loans secured by a lien against real estate shall comply with sections 10403 and 10404, and subchapter 2 of chapter 200 of this title, and shall also be subject to the following specific limitations:

1. For loans secured by a first lien, the term shall not exceed 480 months, and the licensees may not exceed the interest rate permitted by 9 V.S.A. § 41a(b)(8) . All such lien documents shall include a power of sale pursuant to 12 V.S.A § 4531a et seq. The limitations on permitted charges contained in sections 2231 and 2233 of this title and 9 V.S.A. §§ 42 , 44, and 46 shall not apply to any loan within the scope of 12 U.S.C. § 1735f -7a. Permitted charges shall be as specified in 9 V.S.A. § 42 , 44, and 46 for any loan secured by a first lien on real estate that is not included within the scope of 12 U.S.C. § 1735f -7a, instead of sections 2231 and 2233 of this title.
2. For loans secured by a subordinate lien, the term shall not exceed 360 months, and the licensees may not exceed the interest rate permitted by 9 V.S.A. chapter 4. All such lien documents shall include a power of sale pursuant to 12 V.S.A. § 4531a et seq. Permitted charges for loans secured by a subordinate lien shall be as specified in 9 V.S.A. §§ 42 , 44, and 46, instead of sections 2231 and 2233 of this title.
3. No licensee shall take a lien upon real estate as security for any loan made under this chapter, except such lien as is created by law upon the recording of a judgment or such lien as secures a loan in principal amount in excess of $3,000.00 at the time of making.
4. Interest shall be computed by the actuarial method in accordance with 9 V.S.A. 41a(d).
5. Any loan secured by a lien on real estate, except a commercial loan, which does not contain a fixed rate or substantially equal payments for full amortization within the repayment period shall conform to federal regulations on alternative mortgages where applicable by reason of federal law or action of the Commissioner.
6. This section shall not apply to commercial loans.

   Added 1983, No. 35 , § 1; amended 1989, No. 244 (Adj. Sess.), § 1; 1995, No. 162 (Adj. Sess.), § 17, eff. Jan. 1, 1997; 1997, No. 23 , § 12, eff. Jan. 1, 1997; 1997, No. 98 (Adj. Sess.), § 3, eff. April 16, 1998; 1999, No. 153 (Adj. Sess.), § 15, eff. Jan. 1, 2001; 2009, No. 29 , § 1.

§ 2217. Mortgage brokers.

1. No licensee or other person shall act as a mortgage broker in any transaction in which the licensee or such other person is acting as a mortgage lender.
2. Each mortgage broker required to be licensed under this chapter shall retain for a minimum of six years after a contract is executed pursuant to section 2219 of this title, the original contract between the mortgage broker and the prospective borrower, a copy of the settlement statement, an account of fees received in connection with the loan, correspondence, papers, or records relating to the loan and such other documents as the Commissioner may require.
3. A mortgage broker and a mortgage loan originator shall only negotiate, place, or assist in placement of Vermont mortgage loans with lenders licensed pursuant to this chapter, or with depository institutions authorized to do such business in Vermont.

   Added 1995, No. 162 (Adj. Sess.), § 18, eff. Jan. 1, 1997; amended 2009, No. 29 , § 1.

§ 2218. Segregated accounts.

1. All permitted charges paid by loan applicants or borrowers to a lender or a mortgage broker subject to this chapter shall be deposited in one or more accounts maintained at a bank approved by the Commissioner, and with respect to such funds the lender or mortgage broker shall act as a fiduciary. Such account or accounts shall be segregated from all other accounts of the lender or broker. No permitted charges shall be used in the conduct of a lender's or a broker's personal affairs, nor in a lender's or a broker's business affairs not specifically related to the applicant or borrower.
2. Such lender or mortgage broker may withdraw funds from the segregated account for payment directly to third parties for authorized fees.
3. Such lender or mortgage broker may withdraw funds from the segregated account for commissions to which it is entitled for services actually performed. Services are deemed to have been performed when a loan has closed, the loan applicant has withdrawn the loan application in writing, or such mortgage broker or lender has provided to the loan applicant or borrower written notice that the loan has been denied.
4. Such lender or mortgage broker may return funds from the segregated account to the borrower if not prohibited by the application or contract.
5. Such lender or mortgage broker shall maintain complete and accurate account records, including, at a minimum, the source of all deposits, the nature of all disbursements, the date and amount of each transaction, and the name of the loan applicant or borrower. All documents pertaining to account activity shall be produced upon request of the Commissioner.

   Added 1995, No. 162 (Adj. Sess.), § 19, eff. Jan. 1, 1997; amended 2009, No. 29 , § 1.

§ 2219. Contract required of mortgage broker.

1. In advance of taking any fee or collecting any charges or at the time the prospective borrower submits a signed application, a written agreement in a form approved by the Commissioner shall be prepared by the mortgage broker and shall be signed by both the mortgage broker and the prospective borrower. The agreement shall set forth the particulars of the service to be performed by the mortgage broker, including specifics as to what shall constitute reasonable efforts on the part of the mortgage broker to perform the agreed upon services, shall state clearly that the mortgage broker shall represent the interests of the prospective borrower rather than those of any lender, and shall state the fee for the services.
2. A mortgage broker who acts as an independent contractor loan processor or an underwriter who performs loan processing or underwriting activities for a licensed or exempt mortgage broker or lender is not required to provide a mortgage broker agreement to the prospective borrower, provided:
   1. the mortgage broker is acting as an independent contractor loan processor or underwriter as described in subsection 2201(g) of this chapter;
   2. the mortgage broker's activities are limited to loan processor or underwriting activities as described in subdivision 2200(6) of this chapter;
   3. the mortgage broker is paid a fee solely by the licensed or exempt mortgage broker or lender, is not paid by the prospective borrower, and is not paid a commission based upon the dollar amount of the loan; and
   4. if the mortgage broker is acting as an independent contractor loan processor or underwriter on behalf of a mortgage broker, such mortgage broker has already entered into a written mortgage broker agreement with the prospective borrower.
3. A mortgage broker that engages solely in lead generation and does not employ or sponsor any mortgage loan originators is not required to provide a mortgage broker agreement but must include clearly and conspicuously in all advertisements of loans and solicitation of leads, the following disclosure: THIS IS A LOAN SOLICITATION ONLY. [INSERT LICENSEE NAME] IS NOT THE LENDER. INFORMATION RECEIVED WILL BE SHARED WITH ONE OR MORE THIRD PARTIES IN CONNECTION WITH YOUR LOAN INQUIRY. THE LENDER MAY NOT BE SUBJECT TO ALL VERMONT LENDING LAWS. THE LENDER MAY BE SUBJECT TO FEDERAL LENDING LAWS.

   Added 1995, No. 162 (Adj. Sess.), § 20, eff. Jan. 1, 1997; amended 2009, No. 29 , § 1; 2013, No. 29 , § 6, eff. May 13, 2013; 2017, No. 22 , § 24; 2019, No. 20 , § 23.

§ 2220. Disclosure required by mortgage lender.

In advance of taking any fee or collecting any charges for a mortgage loan, or at the time the prospective borrower submits a signed application, a written disclosure shall be provided by the lender to the prospective borrower setting forth all provisions relating to interest rates applicable to the loan, and specific disclosure regarding any possibility that the lender may change its role to that of a mortgage broker. This section shall not apply to commercial loans.

Added 1995, No. 162 (Adj. Sess.), § 21, eff. Jan. 1, 1997; amended 2009, No. 29 , § 1.

§ 2220a. Disclosure required by loan solicitation licensee.

Each loan solicitation licensee shall include clearly and conspicuously in all advertisements of loans and solicitations of leads, the following statement: THIS IS A LOAN SOLICITATION ONLY. [INSERT LICENSEE NAME] IS NOT THE LENDER. INFORMATION RECEIVED WILL BE SHARED WITH ONE OR MORE THIRD PARTIES IN CONNECTION WITH YOUR LOAN INQUIRY. THE LENDER MAY NOT BE SUBJECT TO ALL VERMONT LENDING LAWS. THE LENDER MAY BE SUBJECT TO FEDERAL LENDING LAWS.

Added 2017, No. 22 , § 25.

§ 2221. Out-of-state mortgage loans.

A mortgage loan made outside Vermont for use outside Vermont shall be deemed to be made outside the state of Vermont and shall not be subject to this chapter except upon written agreement of the borrower and the licensee.

Added 1995, No. 162 (Adj. Sess.), § 22, eff. Jan. 1, 1997; amended 2009, No. 29 , § 1.

§ 2222. Examinations.

The Commissioner shall examine the affairs, business, and records of each licensee under this chapter, other than a loan solicitation company, at least once every three years. The Commissioner shall examine the affairs, business, and records of each loan solicitation company as often as the Commissioner deems necessary to carry out the purposes of this part.

Amended 1979, No. 157 (Adj. Sess.), § 6; 1987, No. 119 , § 6; 1995, No. 162 (Adj. Sess.), § 23, eff. Jan. 1, 1997; 1997, No. 23 , § 6a; 1999, No. 153 (Adj. Sess.), § 16, eff. Jan. 1, 2001; 2009, No. 29 , § 1; 2019, No. 20 , § 24.

§ 2223. Additional records required of loan solicitation licensees.

1. In addition to any records required by section 2119 of this title, a licensee that engages in loan solicitation activity shall maintain the following records for not less than seven years:

   copies of all solicitation materials used in its business, regardless of medium, including business cards, telephone scripts, mailers, electronic mail, and radio, television, and Internet advertisements;

   (2) records of any contact or attempted contact with a consumer, including the name, date, method, and nature of contact, and any information provided to or received from the consumer; and

   the name, address, and, if applicable, unique identifier of any person who received, requested, or contracted for leads or referrals and any fees or consideration charged or received for such services.

   Thereafter, the licensee shall dispose of such records in accordance with 9 V.S.A. § 2445 .

   Amended 1995, No. 162 (Adj. Sess.), § 24, eff. Jan. 1, 1997; 2009, No. 29 , § 1; 2017, No. 22 , § 26, eff. May 4, 2017; 2019, No. 20 , § 25.

§ 2223a. Repealed. 1969, No. 243 (Adj. Sess.), § 8.

§ 2224. Repealed. 2019, No. 20, § 26.

§ 2225. Statement of rates of charge.

Rates of charge shall be stated fully and clearly in such manner as necessary to prevent misunderstanding thereof by prospective borrowers.

Amended 1995, No. 162 (Adj. Sess.), § 26, eff. Jan. 1, 1997; 2009, No. 29 , § 1.

§ 2226. Repealed. 2019, No. 20, § 27.

§ 2227. Conduct of unrelated business.

No licensee shall conduct the business of making noncommercial loans under this chapter within any office, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction therewith, except as may be authorized in writing by the Commissioner upon his or her finding that the character of such other business is such that the granting of such authority would not facilitate evasions of this chapter or of the rules and regulations lawfully made hereunder.

Amended 1995, No. 162 (Adj. Sess.), § 28, eff. Jan. 1, 1997; 2009, No. 29 , § 1.

§ 2228. Repealed. 2019, No. 20, § 28.

§ 2229. Confessions of judgment; powers of attorney; contents of notes.

No licensee shall take any confession of judgment. No licensee shall take any power of attorney excepting such as may be incorporated in a form of note approved by the Commissioner for use in the financing of insurance premiums. No licensee shall take any note, promise to pay, or security that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate of interest, nor any instrument in which blank spaces are left to be filled in after execution. Notwithstanding the foregoing provisions of this section, the Commissioner may by rule exempt from all or part of this section commercial loans.

Amended 1987, No. 142 (Adj. Sess.), § 1, eff. April 11, 1988; 1989, No. 244 (Adj. Sess.), § 7; 2009, No. 29 , § 1.

§ 2230. Rate of interest.

1. Every licensee may charge, contract for, and receive thereon interest, calculated according to the actuarial method as set forth in 9 V.S.A. § 41a(d) , not exceeding the rates permitted by 9 V.S.A. chapter 4, except that the rate of interest on loans secured by motor vehicles, mobile homes, travel trailers, aircraft, watercraft and farm equipment may not exceed the rate permitted by 9 V.S.A. § 41a(b)(4) .
2. Interest may be charged, contracted for, and received at the single annual percentage rate that would earn the same interest as the graduated rates when the loan is paid according to its agreed terms and the calculations are made according to the actuarial method. Interest shall not be paid, deducted, received, or added to principal in advance, except that the advance collection of interest for a period not to exceed 30 days shall be permitted upon the origination of a mortgage loan. Except for loans made pursuant to section 2216 of this title, the maximum interest permitted on loans made under this chapter shall be computed on the basis of the number of days actually elapsed. For the purpose of these computations, a year is any period of 365 consecutive days and 366 days during a leap year.
3. No licensee shall induce or permit any person jointly or severally to become obligated, directly or contingently or both, under more than one contract of loan made under this section at the same time, for the purpose of obtaining a higher rate of interest than would otherwise be permitted by law.
4. This section shall not apply to commercial loans.

   Amended 1969, No. 243 (Adj. Sess.), § 3; 1979, No. 173 (Adj. Sess.), § 6, eff. April 30, 1980; 1981, No. 26 , § 1; 1981, No. 89 , § 5, eff. May 13, 1981; 1983, No. 35 ,§§ 5, 9; 1995, No. 162 (Adj. Sess.), § 30, eff. Jan. 1, 1997; 2009, No. 29 , § 1.

§ 2231. Contracts to be repayable in monthly installments; maximum term; additional charges prohibited; invalidity of loan contract.

1. Except for loans made pursuant to section 2216 of this title and in compliance with applicable regulations of the Commissioner, all loan contracts made under the provisions of this chapter shall require repayment in substantially equal consecutive monthly installments of principal and interest combined.
2. In addition to the interest and charges herein provided for no further or other charge or amount for any examination, service, brokerage, commission, expense, fee, bonus, or other thing or otherwise shall be directly or indirectly charged, contracted for, or received except filing, recording, releasing, or termination fees paid or to be paid to a public officer; the premium or identifiable charge for credit life or disability insurance obtained, provided, or sold by the licensee subject to the provisions of sections 4101-4115 or sections 3805 and 3806 of this title and any gain or advantage to the licensee from such shall not be deemed in violation of this chapter nor an additional charge in violation of this section or section 2230 of this title. For loans subject to this subsection, if any interest, consideration, or charges in excess of those permitted by this subsection, except as the result of an accidental or bona fide error are charged, contracted for, or received, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest, or charges whatsoever.
3. This section shall not apply to commercial loans.
4. The provisions of subsection (b) of this section shall not apply to mortgage loans.

   Amended 1969, No. 243 (Adj. Sess.), § 4; 1979, No. 173 (Adj. Sess.), § 7, eff. April 30, 1980; 1981, No. 26 , § 2; 1981, No. 89 , § 6, eff. May 13, 1981; 1983, No. 35 , §§ 6, 9; 1995, No. 162 (Adj. Sess.), § 31, eff. Jan. 1, 1997; 1997, No. 98 (Adj. Sess.), §§ 4, 5, eff. April 16, 1998; 2009, No. 29 , § 1.

§ 2232. Repealed. 1995, No. 162 (Adj. Sess.), § 39(a), eff. Jan. 1, 1997.

§ 2232a. Requirements regarding the borrower.

1. Each licensed lender shall deliver to the borrower at the time any loan is made a statement showing in clear and distinct terms the amount and date of the loan and of its maturity, the nature of the security, if any, for the loan, the name and address of the borrower and of the licensee, and the agreed rate of charge.
2. Each licensed lender shall, in advance of any loan closing, deliver to each prospective borrower, based on the type of loan applied for, a full and accurate schedule of the charges to be made and the method of computing the same.
3. Each licensed lender or holder shall give to the borrower a plain and complete statement of all payments made on account of any such loan specifying the amount applied to finance charges and the amount, if any, applied to principal, and stating the unpaid principal balance, if any, of such loan. When payment is made, a licensee shall provide the borrower with a statement therefor within 30 days after the payment is received, or shall provide, on an annual basis, statements setting forth the information required herein. Each licensed lender or holder shall provide a transaction history of the loan to the borrower upon request.
4. Each licensed lender or holder shall permit payment to be made in advance without prepayment premium or penalty in any amount on any contract of loan at any time, but the licensee or holder may apply such payment first to all finance charges in full at the agreed rate up to the date of such payment.
5. Each licensed lender or holder shall, upon repayment of the loan in full, promptly mark indelibly every obligation and security signed by the borrower with the word "Paid" or "Canceled," and within 30 days release any mortgage, restore any pledge, cancel and return any note, record or file any necessary release or discharge, cancel and return any assignment given to the licensee by the borrower, and refund to the borrower, in accordance with rules adopted by the Commissioner any unearned portion of the premium for credit life or disability insurance if a premium for such insurance was disbursed on behalf of the borrower at the time the loan was originally made. The provisions of this subsection shall not affect the right of action created by 27 V.S.A. § 464 .
6. This section shall not apply to commercial loans.

   Amended 1979, No. 173 (Adj. Sess.), § 8, eff. April 30, 1980; 1981, No. 26 , § 3; 1981, No. 89 , § 7, eff. May 13, 1981; 1983, No. 35 , §§ 7-9; 1995, No. 162 (Adj. Sess.), § 32, eff. Jan. 1, 1997; 2009, No. 29 , § 1; 2015, No. 97 (Adj. Sess.), § 9.

§ 2233. Charges; loan solicitation; specialized financing.

1. Other than a mortgage broker fee pursuant to section 2219 of this title, no person who is required to be licensed under this chapter, shall directly or indirectly charge, contract for, or receive any interest, discount, consideration, or charge greater than is authorized by 9 V.S.A. § 41a or 46. No such loan for which a greater rate of interest, finance charge, consideration, or charges than is authorized by 9 V.S.A. § 41a or 46 has been charged, contracted for, or received shall be enforced in this State, and every person in any way participating therein in this State shall be subject to the provisions of this chapter. However, any loan legally made in any state which then had in effect a regulatory loan law similar in principle to this chapter may be enforced in this State only to the extent of collecting the principal amount owed and interest thereon at a rate not greater than that authorized by  9 V.S.A. § 41a or 46.
2. A loan solicited or made by mail, telephone, or electronic means to a Vermont resident shall be subject to the provisions of this chapter notwithstanding where the loan was legally made. No person shall engage in the business of soliciting or making loans by mail, telephone, or electronic means to residents of this State unless duly licensed. Such licensee shall be subject to the applicable provisions of this title and  9 V.S.A. chapters 4, 59, and 61, but shall not be required to have or maintain a place of business in the State.
3. No person other than a depository institution, pawnbroker, insurance company, or seller of merchandise or services shall engage in specialized financing, including tuition plans or other such financing, but not including insurance premium financing, for residents of this State unless duly licensed. Such licensee shall be subject to the applicable provisions of this title and  9 V.S.A. chapters 4, 59, and 61, but shall not be required to maintain a place of business in this State. Such financing may include more than one loan per borrower. A license granted to such lenders shall be explicit in its authority with respect to the types of business permitted.

   Amended 1969, No. 243 (Adj. Sess.), § 7; 1975, No. 76 ; 1979, No. 173 (Adj. Sess.), § 10, eff. April 30, 1980; 1983, No. 77 , § 2; 1995, No. 162 (Adj. Sess.), § 33, eff. Jan. 1, 1997; 2009, No. 29 , § 1.

§ 2234. Assignment of wages.

The payment in money, credit, goods, or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, for the purpose of regulation under this chapter, shall be deemed a loan secured by such assignment. The amount by which such assigned compensation exceeds the amount of such consideration actually paid, for the purposes of regulation under this chapter, shall be deemed finance charges or charges upon such loan from the date of such payment to the date such compensation is payable. Such transactions shall be governed by and subject to applicable provisions of this title and 9 V.S.A. chapters 4, 59, and 61.

Amended 1969, No. 243 (Adj. Sess.), § 6; 1979, No. 173 (Adj. Sess.), § 9, eff. April 30, 1980; 1995, No. 162 (Adj. Sess.), § 34, eff. Jan. 1, 1997; 2009, No. 29 , § 1.

§ 2235. Requirements for assignment of wages.

No assignment of or order for payment of any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any licensee under this chapter, shall be valid unless the amount of such loan is paid to the borrower simultaneously with its execution. Such assignment or order, or any chattel mortgage or other lien on household furniture then in the possession and use of the borrower, shall not be valid unless it is in writing, signed in person by the borrower, nor shall it be valid if the borrower is married unless it is signed in person by both husband and wife. However, written assent of a spouse shall not be required if the borrower has title as a result of a court order.

Amended 1995, No. 162 (Adj. Sess.), § 35, eff. Jan. 1, 1997; 2009, No. 29 , § 1.

§ 2236. Repealed. 1995, No. 162 (Adj. Sess.), § 39(a).

§ 2236a. Extent of assignment; service upon employer.

Under any such assignment or order for the payment of future salary, wages, commissions, or other compensation for services given as security for a loan made by any licensee under this chapter, a sum not to exceed 10 percent of the borrower's salary, wages, commissions, or other compensation for services shall be collectible from the employer of the borrower by the licensee at the time of each payment to the borrower of such salary, wages, commissions, or other compensation for services, from the time that a copy of such assignment, verified by the oath of the licensee or the licensee's agent, together with a similarly verified statement of the amount unpaid upon such loan, is served upon the employer.

Amended 2009, No. 29 , § 1.

§ 2237. Repealed. 2019, No. 20, § 29.

§ 2238. Out-of-state commercial loans.

A commercial loan made to a borrower located outside Vermont for use outside Vermont shall be deemed to be made outside the State of Vermont and shall not be subject to this chapter except upon written agreement of the licensee and borrower.

Amended 2009, No. 29 , § 1.

§ 2239. Commercial leases.

This chapter shall not apply to commercial leases as defined in 9 V.S.A. chapters 59 and 61.

Amended 2009, No. 29 , § 1.

§ 2240. Repealed. 2019, No. 20, § 30.

§ 2241. Prohibited acts and practices.

It is a violation of this chapter for a person or individual to:

1. directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person;
2. engage in any unfair or deceptive practice toward any person;
3. obtain property by fraud or misrepresentation;
4. solicit or enter into a contract with a borrower that provides in substance that the person or individual may earn a fee or commission through "best efforts" to obtain a loan even though no loan is actually obtained for the borrower;
5. solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting;
6. conduct any business covered by this chapter without holding a valid license as required under this chapter, to assist or aid and abet any person in the conduct of business under this chapter without a valid license as required under this chapter, or to refer a person to, or receive a fee from, any person who must be licensed but was not licensed as of the time the licensee's services were provided;
7. fail to make disclosures as required by this chapter and any other applicable State or federal law, including regulations thereunder;
8. fail to comply with this chapter or rules adopted under this chapter, or fail to comply with any orders or directives from the Commissioner, or fail to comply with any other State or federal law, including the rules thereunder, applicable to any business authorized or conducted under this chapter;
9. make, in any manner, any false or deceptive statement or representation, including with regard to the rates, points, or other financing terms or conditions for a mortgage loan, to engage in bait and switch advertising, or to represent to the public that the licensee is able to perform an activity requiring licensure unless such licensee is duly licensed or is exempt from licensure;
10. negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the Commissioner or another governmental agency;
11. make any payment, threat, or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property;
12. collect, charge, attempt to collect or charge, or use or propose any agreement purporting to collect or charge any fee prohibited by this chapter;
13. cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer;
14. fail to account truthfully for monies belonging to a party to a mortgage loan transaction;
15. fail to identify clearly and conspicuously the licensee and the purpose of the contract in its written and oral communications with a consumer; or
16. fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an e-mail address; to initiate an unsolicited advertisement via e-mail to a consumer more than 10 business days after the receipt of a request from such consumer to opt out of such unsolicited advertisements; or to sell, lease, exchange, or otherwise transfer or release the e-mail address or telephone number of a consumer who has requested to opt out of future solicitations.

    Added 2009, No. 29 , § 1; amended 2017, No. 22 , § 28, eff. May 4, 2017.

§ 2242. Repealed. 2019, No. 20, § 31.

§ 2243. Repealed. 2019, No. 20, § 32.

§ 2244. Unique identifier shown.

1. The unique identifier issued by the Nationwide Mortgage Licensing System and Registry of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations, or advertisements, including business cards or websites, and any other documents as established by rule or order of the Commissioner.
2. The unique identifier issued by the Nationwide Mortgage Licensing System and Registry of any person engaging in the business of lending or acting as a mortgage broker, sales finance company, or loan solicitation licensee shall be clearly shown on all loan application forms, solicitations, or advertisements, including business cards and websites, and any other documents as established by rule or order of the Commissioner.

   Added 2009, No. 29 , § 1; amended 2013, No. 29 , § 7, eff. May 13, 2013; 2017, No. 22 , § 29, eff. May 4, 2017.

§ 2245. Pension loans.

Any person who engages in the business of offering consideration in exchange for a secured interest in all or part of pension proceeds in the possession of a participant, beneficiary, or member of a pension plan, program, or system shall be deemed to be engaged in the business of making loans pursuant to subdivision 2201(a)(1) of this chapter and shall be subject to 9 V.S.A. chapters 4 and 63.

Added 2013, No. 109 (Adj. Sess.), § 2.

§ 2246. Repealed. 2015, No. 55, § 5A.

§ 2251. Definitions.

As used in this chapter:

1. "Charges" means the amount a consumer owes to a company in addition to the funded amount and includes an administrative fee, origination fee, underwriting fee, processing fee, and any other fee regardless of how the fee is denominated, including amounts denominated as interest or rate.

   "Consumer" means a natural person who is seeking or has obtained consumer litigation funding for a pending legal claim, provided:

   1. the claim is in Vermont; or
   2. the person resides or is domiciled in Vermont, or both.

      "Consumer litigation funding" or "funding" means a nonrecourse transaction in which a company purchases and a consumer assigns to the company a contingent right to receive an amount of the potential net proceeds of a settlement or judgment obtained from the consumer's legal claim. If no proceeds or net proceeds are obtained, the consumer is not required to repay the company the funded amount or charges.

      (4) "Consumer litigation funding company," "litigation funding company," or "company" means a person that provides consumer litigation funding to a consumer. The term does not include an immediate family member of the consumer.

      "Funded amount" means the amount of monies provided to, or on behalf of, the consumer pursuant to a litigation funding contract. The term excludes charges.

      "Health care facility" has the same meaning as in 18 V.S.A. § 9402(6) .

      "Health care provider" has the same meaning as in 18 V.S.A. § 9402(7) .

      "Litigation funding contract" or "contract" means a contract between a company and a consumer for the provision of consumer litigation funding.

      (9) (A) "Net proceeds" means the amount recovered by a consumer as a result of a legal claim less costs associated with the legal claim or the underlying events giving rise to the legal claim, including:

      1. attorney's fees, attorney liens, litigation costs;
      2. claims or liens for related medical services owned and asserted by the provider of such services;
      3. claims or liens for reimbursement arising from third parties who have paid related medical expenses, including claims from insurers, employers with self-funded health care plans, and publicly financed health care plans; and
      4. liens for workers' compensation benefits paid to the consumer.

         (B) This definition of "net proceeds" shall in no way affect the priority of claims or liens other than those for payments to the consumer litigation funding company under a consumer litigation funding contract subject to this chapter.

         Added 2015, No. 128 (Adj. Sess.), § A.1; amended 2019, No. 20 , § 33.

§ 2252. Registration; financial stability.

1. A company shall not engage in the business of consumer litigation funding without first filing a registration with the Commissioner on a form prescribed by the Commissioner and submitting a registration fee and proof of financial stability.

   A company shall file with the Commissioner evidence of its financial stability which shall include proof of a surety bond or irrevocable letter of credit issued and confirmed by a financial institution authorized by law to transact business in Vermont that is equal to double the amount of the company's largest funded amount in Vermont in the prior three calendar years or $50,000.00, whichever is greater.

   Added 2015, No. 128 (Adj. Sess.), § A.1; amended 2017, No. 22 , § 1, eff. May 4, 2017; 2019, No. 20 , § 34.

§ 2253. Contracts; disclosures and requirements.

1. A contract shall be written in a clear and coherent manner using words with common, everyday meanings to enable the average consumer who makes a reasonable effort under ordinary circumstances to read and understand the terms of the contract without having to obtain the assistance of a professional.
2. Each contract shall include consumer disclosures on the front page. The consumer disclosures shall be in a form prescribed by the Commissioner and shall include:
   1. a description of possible alternatives to a litigation funding contract, including secured or unsecured personal loans, and life insurance policies;
   2. notification that some or all of the funded amount may be taxable;
   3. a description of the consumer's right of rescission;
   4. the total funded amount provided to the consumer under the contract;
   5. an itemization of charges;
   6. the annual percentage rate of return;
   7. the total amount due from the consumer, including charges, if repayment is made any time after the funding contract is executed;
   8. a statement that there are no fees or charges to be paid by the consumer other than what is disclosed on the disclosure form;
   9. in the event the consumer seeks more than one litigation funding contract, a disclosure providing the cumulative amount due from the consumer for all transactions, including charges under all contracts, if repayment is made any time after the contracts are executed;
   10. a statement that the company has no right to make any decisions regarding the conduct of the legal claim or any settlement or resolution thereof and that the right to make such decisions remains solely with the consumer and his or her attorney;
   11. a statement that, if there is no recovery of any money from the consumer's legal claim, the consumer shall owe nothing to the company and that, if the net proceeds of the claim are insufficient to repay the consumer's indebtedness to the company, then the consumer shall owe the company no money in excess of the net proceeds; and
   12. any other statements or disclosures deemed necessary or appropriate by the Commissioner.
3. Each contract shall include the following provisions:
   1. Definitions of the terms "consumer," "consumer litigation funding," and "consumer litigation funding company."
   2. A right of rescission, allowing the consumer to cancel the contract without penalty or further obligation if, within five business days following the execution of the contract or the consumer's receipt of any portion of the funded amount, the consumer gives notice of the rescission to the company and returns any funds provided to the consumer by the company.
   3. A provision specifying that, in the event of litigation involving the contract and at the election of the consumer, venue shall lie in the Vermont Superior Court for the county where the consumer resides.
   4. An acknowledgment that the consumer is represented by an attorney in the legal claim and has had an opportunity to discuss the contract with his or her attorney.

      Added 2015, No. 128 (Adj. Sess.), § A.1.

§ 2254. Prohibited acts.

1. A consumer litigation funding company shall not engage in any of the following conduct or practices:
   1. Pay or offer to pay commissions, referral fees, or any other form of consideration to any attorney, law firm, health care provider, health care facility, or an employee of a law firm, health care provider, or health care facility for referring a consumer to the company.
   2. Accept any commissions, referral fees, or any other form of consideration from any attorney, law firm, health care provider, health care facility, or an employee of a law firm, health care provider, or health care facility.
   3. Advertise false or misleading information regarding its products or services.
   4. Receive any right to nor make any decisions with respect to the conduct of the consumer's legal claim or any settlement or resolution. The right to make such decisions shall remain solely with the consumer and his or her attorney.
   5. Knowingly pay or offer to pay for court costs, filing fees, or attorney's fees either during or after the resolution of the legal claim.
   6. Refer a consumer to a specific attorney, law firm, health care provider, or health care facility.
   7. Fail to provide promptly copies of contract documents to the consumer or to the consumer's attorney.
   8. Obtain a waiver of any remedy the consumer might otherwise have against the company.
   9. Provide legal advice to the consumer regarding the funding or the underlying legal claim.
   10. Assign a contract in whole or in part to a third party. Provided, however, if the company retains responsibility for collecting payment, administering, and otherwise enforcing the consumer litigation funding contract, the prohibition in this subdivision (10) shall not apply to an assignment:
       1. to a wholly owned subsidiary of the company;
       2. to an affiliate of the company that is under common control with the company; or
       3. granting a security interest under Article 9 of the Uniform Commercial Code or as otherwise permitted by law.
   11. Report a consumer to a credit reporting agency if insufficient funds remain from the net proceeds to repay the company.
   12. Require binding arbitration in the event of a dispute between the consumer and the company. A consumer has the right to a trial in the event of a contractual dispute.
2. An attorney or law firm retained by a consumer shall not have a financial interest in a company offering litigation funding to the consumer and shall not receive a referral fee or other consideration from such company, its employees, or its affiliates.

   Added 2015, No. 128 (Adj. Sess.), § A.1.

§ 2255. Effect of communication on privileges.

A communication between a consumer's attorney and the company shall not be discoverable or limit, waive, or abrogate the scope or nature of any statutory or common-law privilege, including the work-product doctrine and the attorney-client privilege.

Added 2015, No. 128 (Adj. Sess.), § A.1.

§ 2256. Examinations.

For the purpose of protecting consumer interests and determining a company's financial stability and compliance with the requirements of this chapter, the Commissioner may conduct an examination of a company engaged in the business of consumer litigation funding as often as the Commissioner deems necessary.

Added 2015, No. 128 (Adj. Sess.), § A.1; amended 2019, No. 20 , § 35.

§ 2257. Repealed. 2019, No. 20, § 36.

§ 2258. Repealed. 2019, No. 20, § 37.

§ 2259. Violations an unfair or deceptive act.

1. A company's failure to comply with the requirements of this part, including this chapter, shall constitute an unfair or deceptive act in commerce enforceable under 9 V.S.A. chapter 63, the Consumer Protection Act.
2. The powers vested in the Commissioner by this chapter shall be in addition to any other powers or rights of consumers or the Attorney General or others under any other applicable law or rule, including the Vermont Consumer Protection Act and any applicable rules adopted thereunder, provided the Commissioner's determinations concerning the interpretation and administration of the provisions of this part, including this chapter, and rules adopted thereunder shall carry a presumption of validity.

   Added 2015, No. 128 (Adj. Sess.), § A.1; amended 2019, No. 20 , § 38.

§ 2260. Annual reports.

1. Annually, on or before April 1, each company registered under this chapter shall file a report with the Commissioner under oath and in the form and manner prescribed by the Commissioner. In addition to information required by section 2120 of this title, the report shall include any information the Commissioner requires concerning the company's business and operations during the preceding calendar year within Vermont and, in addition, shall include:
   1. the number of contracts entered into;
   2. the dollar value of funded amounts to consumers;
   3. the dollar value of charges under each contract, itemized and including the annual rate of return;
   4. the dollar amount and number of litigation funding transactions in which the realization to the company was as contracted; and
   5. the dollar amount and number of litigation funding transactions in which the realization to the company was less than contracted.
2. Subsection (b) repealed effective December 31, 2021.  To assist the general public with more fully understanding the nature of consumer litigation funding in Vermont, the Commissioner shall summarize and analyze relevant data submitted under this section and publish the summary and analysis on a web page maintained by the Department of Financial Regulation, as well as on a web page maintained by the Office of the Attorney General.
3. Subsection (c) repealed effective December 31, 2021.  Annually, beginning on or before October 1, 2017, the Commissioner and Attorney General shall report jointly to the General Assembly on the status of consumer litigation funding in Vermont and make any recommendations they deem necessary to improve the regulatory framework of consumer litigation funding, including a recommendation on whether Vermont should limit charges imposed under a consumer litigation funding contract.

   Added 2015, No. 128 (Adj. Sess.), § A.1; amended 2019, No. 20 , § 39; 2019, No. 20 , § 109(b), eff. Dec. 31, 2021.

§§ 2301-2304. Repealed. 1999, No. 153 (Adj. Sess.), § 27, eff. January 1, 2001.

§ 2401. Definitions.

As used in this chapter:

1. "Act as fiduciary" or "acting as a fiduciary" means to:
   1. accept or execute trusts, including to:
      1. act as trustee under a written agreement;
      2. receive money or other property in its capacity as trustee for investment in real or personal property;
      3. act as trustee and perform the fiduciary duties committed or transferred to it by order of a court of competent jurisdiction;
      4. act as trustee of the estate of a deceased person; or
      5. act as trustee for a minor or incapacitated person;
   2. administer in any other fiduciary capacity real or tangible personal property; or
   3. act pursuant to order of a court of competent jurisdiction as executor or administrator of the estate of a deceased person or as a guardian or conservator for a minor or incapacitated person.
2. "Company" means corporation or limited liability company.
3. "Independent trust company" means a company formed in this or any other state, that is chartered to act as a fiduciary or engages in a trust business, but is neither a depository institution nor a foreign bank as defined in Section 1(b)(7) of the International Banking Act of 1978.
4. "Trust business" means the holding out by a person to the public by advertising, solicitation or other means that the person is available to act as a fiduciary in this or another state for hire or compensation.

   Added 1997, No. 98 (Adj. Sess.), § 8b.

§ 2402. Authority to organize; powers; limitations; prohibitions; exemptions.

1. A company organized in this State may form an independent trust company in accordance with the provisions of this chapter. A company shall obtain a certificate of authority from the Commissioner before it may act as a fiduciary or engage in a trust business in this State.
2. An independent trust company formed and authorized under this chapter shall have the same fiduciary powers, duties, and obligation as a financial institution operating a trust department under subchapter 4 of chapter 204 of this title. An independent trust company formed under this title shall have the privileges and be subject to the provisions granted or contained in the general law governing the company and in this chapter, except where the general law governing the company is inconsistent with this chapter. In case of conflict between the general law governing the company and this chapter, this chapter shall control. Such companies shall not be required to make any annual report except as provided in this chapter. Except as provided in this chapter, subchapter 4 of chapter 204, and section 12602 of this title, no person shall engage in a trust business in this State without first obtaining a certificate of authority from the Commissioner.
3. An independent trust company shall not accept deposits or make loans or conduct any other business except that which is incidental to and consistent with a trust business.
4. An independent trust company may prudently invest its capital and surplus in stocks, bonds, mortgages, mutual funds, and other securities. An independent trust company may invest in, purchase, hold, convey, and lease real estate.
5. An independent trust company may issue or sell capital notes or debentures with the written approval of the Commissioner.
6. An independent trust company formed and authorized under this chapter shall:
   1. maintain its principal place of business in this State;
   2. appoint a registered agent to accept service of process and to otherwise act on its behalf in this State, provided that whenever such registered agent cannot with reasonable diligence be found at the Vermont registered office of the independent trust company, the Secretary of State shall be an agent of such independent trust company upon whom any process, notice, or demand may be served;
   3. hold at least four meetings of its governing body each year, including once quarterly, and at least one such meeting each year shall be held in Vermont; and
   4. have at least one Vermont resident as a member of its governing body.
7. For the purposes of this chapter, a person does not engage in a trust business merely by:
   1. rendering services as an attorney-at-law or an accountant;
   2. acting as trustee under a deed of trust made only as security for the payment of money or for the performance of another act;
   3. acting as a trustee in bankruptcy or as a receiver;
   4. holding trusts of real estate for the primary purpose of subdivision, development, or sale, or to facilitate any business transaction with respect to such real estate, provided the person is not regularly engaged in the business of acting as a trustee for such trusts;
   5. holding assets as trustee of trusts created for charitable purposes;
   6. receiving rents and proceeds of sale as a licensed real estate broker on behalf of a principal;
   7. engaging in securities transactions as a broker-dealer or a sales representative registered under 9 V.S.A. chapter 131;
   8. engaging in the sale of insurance policies and annuity or endowment contracts in this State issued by an insurance company authorized to write such policies or contracts and subject to regulation and control of the Commissioner;
   9. if an individual, acting as a guardian, conservator, special conservator, trustee, or personal representative pursuant to a court order or other statutory authority;
   10. acting under the authority of 11A V.S.A. § 15.01(d); or
   11. if an individual, serving as trustee of any of the following:
       1. one or more trusts for each of which at least one settlor is a member of the trustee's family;
       2. not more than five trusts if the individual has not solicited appointment as trustee for any trusteeships.

          Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 18, eff. Jan. 1, 2001; 2011, No. 78 (Adj. Sess.), § 11, eff. April 2, 2012; 2017, No. 134 (Adj. Sess.), § 7.

§ 2403. Formation.

1. One or more persons may form an independent trust company in accordance with the provisions of this chapter.
2. The organizers forming an independent trust company shall apply to the Commissioner for a certificate of authority on prescribed forms containing information as may be required by the Commissioner. The application shall include the proposed name of the business for approval under section 2404 of this title and the basic organizational documents including any operating agreement for the company prepared in compliance with Title 11 or 11A.
3. Upon receiving a completed application for a certificate of authority and the proposed basic organizational documents, the Commissioner shall investigate and examine the proposed independent trust company to determine whether it will be adequately staffed, equipped, and able to furnish trust services and that its establishment and maintenance will promote the general good of the State.
4. If the Commissioner finds that the establishment and maintenance of the proposed trust company will promote the general good of the State, the Commissioner shall deliver to the organizers a certificate of authority under the Commissioner's seal. The certificate of authority, basic organizational documents except the operating agreement and the organizational fee shall be transmitted to the Secretary of State, who shall thereupon proceed according to the provisions of law. If the organizational documents are recorded by the Secretary, the certificate of the Commissioner shall be recorded therewith.
5. Each application for a certificate of authority shall be accompanied by an application fee as provided in section 19 of this title for new financial institutions.
6. If the proposed independent trust company fails to open for business within six months after the date the certificate of authority is granted, the certificate of authority shall be void. The Commissioner may extend the time within which the independent trust company may open for business for good cause and upon written application filed prior to the expiration of the six-month period.
7. At the time it commences business, an independent trust company shall have unimpaired capital in an amount not less than $250,000.00 or one-quarter of one percent of its assets under management, whichever is greater. Thereafter, an independent trust company shall maintain unimpaired capital in an amount not less than $250,000.00 or one-quarter of one percent of its assets under management, whichever is greater, up to a maximum of $1,000,000.00. The unimpaired capital and surplus of an independent trust company shall be held as security for the faithful discharge of the fiduciary duties undertaken as well as for the claims of other creditors. The Commissioner may from time to time require or allow increases or decreases to the unimpaired capital otherwise required by this subsection, up to such $1,000,000.00 maximum, as deemed necessary or desirable for the protection of customers and the safety of the trust business. The safety and soundness factors to be considered by the Commissioner in the exercise of such discretion include:
   1. the nature and type of business conducted;
   2. the nature and degree of liquidity in assets held in a corporate or company capacity;
   3. the amount of fiduciary assets under management;
   4. the complexity of fiduciary duties and degree of discretion undertaken; and
   5. the extent and adequacy of internal controls.
8. The Commissioner, in addition to the capital requirements provided in subsection (g) of this section, may require any independent trust company authorized to do a trust business in this State to post bond in an amount acceptable to the Commissioner.

   Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 19, eff. Jan. 1, 2001; 2003, No. 105 (Adj. Sess.), § 11; 2009, No. 42 , § 2; 2009, No. 137 (Adj. Sess.), § 1.

§ 2404. Name; multiple locations.

1. An independent trust company shall file any name proposed to be used in connection with a trust business or establishing a principal office or trust office in this State pursuant to this chapter. The Commissioner shall not approve a proposed name if the Commissioner determines that the name may be misleading or likely to confuse the public, or deceptively similar to any name in use in this State.
2. An independent trust company organized or regulated under this chapter may petition the Commissioner for permission to establish and maintain new or additional offices for the transaction of its trust business.
3. An independent trust company shall not operate any new or additional office unless the Commissioner has determined that the establishment of the office will promote the general good of the State, applying the standards and procedures contained in subsection 2403(c) of this title, as applicable. If the Commissioner determines that the establishment will promote the general good, the Commissioner shall approve the new or additional office.

   Added 1997, No. 98 (Adj. Sess.), § 8b.

§ 2405. Periodic reports; examinations; cooperative agreements.

1. Each independent trust company shall annually file a report on its financial condition with the Commissioner on or before February 15 for the preceding year ending December 31 containing such information and in such format as the Commissioner may prescribe. The Commissioner may require additional reports from any independent trust company that is doing a trust business in this State. The Commissioner may accept a copy of any report from the primary regulator of the independent trust company if the Commissioner determines that the report is substantially similar to a report required under this section.
2. The Commissioner may make such examination of any person or location as the Commissioner may deem necessary to determine whether an independent trust company is being operated in compliance with the laws of this State and in accordance with safe and sound business and trust practices, to the extent consistent with subsection (c) of this section.
3. The Commissioner may enter into cooperative, coordinating and information-sharing agreements with any other supervisory agencies or any organization affiliated with or representing one or more supervisory agencies with respect to the periodic examination or other supervision of any independent trust company not formed in this State or any office of an independent trust company in any state. The Commissioner may accept reports of examination or investigation from such agencies in lieu of conducting an independent examination or investigation.
4. The Commissioner may enter into joint examinations or joint enforcement actions with other supervisory agencies having concurrent jurisdiction over any independent trust company or any office of an independent trust company established and maintained in this State; provided, that the Commissioner may at any time take such actions independently if the Commissioner deems such actions to be necessary or appropriate to carry out the responsibilities under this chapter or to ensure compliance with the laws of this State.
5. The independent trust company shall provide the Commissioner with written notice of any regulatory action taken against it in any other jurisdiction within 30 days of receipt of such action by the independent trust company.
6. Any independent trust company that maintains one or more offices in this State shall be assessed by the following applicable method:
   1. an independent trust company whose primary activity is transactional shall pay to the Department an annual assessment equal to $0.0001 per dollar volume of activity performed for the most recent year ending December 31, which assessment shall not be less than $2,000.00 or greater than $50,000.00, and which shall be paid on or before April 1 of each year; or
   2. an independent trust company whose primary activity in the State is asset management shall pay to the Department an assessment based on assets under management in this State on the preceding June 30 as provided under subsection 19(d) of this title.
7. An independent trust company assessed pursuant to subdivision (f)(1) of this section shall pay to the Department the costs and expenses of all examinations, including both regular examinations and special or expanded scope examinations as provided under section 18 of this title. An independent trust company assessed pursuant to subdivision (f)(2) of this section shall not be billed for regular examinations, but shall pay to the Department the costs and expenses of all special or expanded scope examinations as provided under sections 18 and 19 of this title.

   Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 20, eff. Jan. 1, 2001; 2011, No. 21 , § 5, eff. May 11, 2011; 2011, No. 78 (Adj. Sess.), § 9, eff. April 2, 2012; 2013, No. 29 , § 8, eff. May 13, 2013.

§ 2406. Reciprocity.

1. An independent trust company organized under the laws of a jurisdiction other than Vermont shall be authorized to engage in a trust business in this State, to the same extent and under the same conditions that an independent trust company formed in this State may operate in such other jurisdiction. The independent trust company organized under the laws of a jurisdiction other than Vermont must obtain the Commissioner's written authorization before it may engage in a trust business in this State.
2. For purposes of this section, an independent trust company organized under the laws of a jurisdiction other than Vermont shall mean an entity that is organized and regulated in a manner that is substantially similar to an independent trust company formed under this chapter by whatever name, but which is not a financial institution within the meaning of subdivision 11101(32) of this title.

   Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 21, eff. Jan. 1, 2001.

§ 2407. Discontinuing trust business; merger and consolidation; sale of trust business; change in control.

1. Discontinuance.  An independent trust company that intends to discontinue its trust business in this State shall furnish notice to the Commissioner of its intention not less than 60 days before the discontinuance. It shall also mail written notice to the principals of each trust account affected. For purposes of this section, the term "principal" with respect to a trust account shall mean the individual or entity to whom the independent trust company ordinarily furnishes statements of account and other customer communications regarding such trust account. The form of notice required by this subsection shall be approved by the Commissioner and shall include a plain statement of the intended plans for discontinuance of the business of the independent trust company, and shall include the name, mailing address and telephone number of one or more officers, managers, employees, or agents of the company available during regular business hours to answer customer questions regarding the proposed discontinuance. The company shall furnish an affidavit of the mailing of the notice to the principals affected, and the affidavit shall constitute the company's compliance with the customer notice requirement of this section. Following the mailing of the notice and prior to the effective date of the discontinuance, the company shall furnish the Commissioner with satisfactory evidence that all affected trust accounts have been transferred to one or more entities with authority to engage in a trust business in this State in accordance with subsections (c) through (j) of this section, that the principal has released and discharged the independent trust company of any further obligation with respect to the account or that all accounts are otherwise protected. The independent trust company shall surrender its certificate of authority to the Commissioner upon the effective date of the discontinuance, and thereafter the company may not use the word "trust" in its company or trade name or in connection with its business. After surrender of the certificate, the Commissioner shall have continuing jurisdiction over the company with respect to compliance with applicable law.
2. Merger or consolidation.  An independent trust company formed in this State may merge or consolidate with another entity. The independent trust company must obtain the Commissioner's prior written approval of the transaction. The Commissioner shall approve the transaction if the Commissioner determines that the resulting entity is qualified to do a trust business in this State and that the transaction will promote the general good of the State. Whenever an independent trust company merges or consolidates under this section, the resulting entity shall have, possess, and own, all property, rights, powers, franchises, privileges, and appointments of every nature whatsoever of each of the merging or consolidating entities. If any of the merging or consolidating entities are acting or have been acting as a fiduciary or in any like capacity, the resulting entity shall have, possess, and be vested with and succeed to all of the property, rights, powers, privileges, duties, and obligations appertaining to each such fiduciary capacity, without further or additional appointment, obligation, or designation, provided the independent trust company or resulting entity, as the case may be, has complied with the provisions of subsections (d) through (j) of this section. The resulting entity shall be a continuation of the entity of each and all of the entities so merged or consolidated. Except as provided in this chapter, it shall hold, exercise, and perform all rights, powers, privileges, duties, and obligations appertaining to any and all trust, representative, or fiduciary relationships of each of the merged or consolidated entities, and shall be liable for all of the debts, contracts, and obligations of each of the merged or consolidated companies. Any such debt, undertaking, or obligations of any merged or consolidated entity may be enforced against it as fully and effectively as it could have been against the merged or consolidated entity.
3. Sale of assets or trust business.  An independent trust company may transfer all or substantially all of its assets or all or a portion of its trust business to another entity qualified to do a trust business in this State. Prior to transferring all or substantially all of its assets or any portion or all of its trust business to another entity, an independent trust company shall obtain the Commissioner's written approval. The Commissioner shall approve the transaction if the Commissioner determines that the transferee entity is qualified to do a trust business in this State and that the transaction will promote the general good.
4. Petition; notice to the Commissioner; order.  Whenever an independent trust company intends to merge into, consolidate with, or transfer all or substantially all of its assets or any of its trust business to another entity qualified to do a trust business in this State as provided in subsection (b) or (c) of this section, it shall file a petition in the Probate Division of the Superior Court of the Probate District in which its main office is located requesting that the Court substitute the resulting or transferee entity, except as may be specifically excluded in such petition, in every fiduciary capacity specified in the petition. The petition may be made ex parte and need not list the fiduciary capacities in which substitution is made. A copy of the petition shall be furnished to the Commissioner prior to filing with the Probate Division of the Superior Court. Upon a finding that the resulting or transferee entity is authorized to engage in a trust business by the Commissioner, the Commissioner has approved the transaction, and that independent trust company has complied with the notification requirements in this subsection and subsection (e) of this section, the Court shall enter an order substituting the resulting or transferee entity in every fiduciary capacity for the independent trust company, except as otherwise specified in the independent trust company's petition. The petition made pursuant to this section shall be considered in a summary fashion by the Court, and the Court shall act on the petition within 30 days of filing. Upon entry of the Court's substitution order, the resulting or transferee entity shall, without further act, be deemed substituted by operation of law in every such fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of the Probate Division of the Vermont Superior Court in each Probate District in which the independent trust company served in a fiduciary capacity prior to the entry of the order. The order shall be accompanied by written notification to the Court of each fiduciary appointment previously made by the Court that is affected by the substitution order, and evidence of compliance with subsection (h) of this section. The order of substitution shall be indexed in the records of the courts in the manner in which substitutions of fiduciaries are indexed.
5. Notice of petition to customer.  After the entity that will be the resulting or transferee entity under subsection (b) or (c) of this section is authorized to do a trust business in this State by the Commissioner, but at least 30 days before the filing of the petition referred to in subsection (d) of this section, the independent trust company shall mail written notice of the proposed substitution to the principals of each trust account affected. The form of notice required by this subsection shall be approved by the Commissioner and shall include a statement that the independent trust company intends to merge or consolidate with, or transfer all or substantially all of its assets or all or a portion of its trust business, to a resulting or transferee entity, as the case may be, and intends to substitute the resulting or transferee entity as or for the independent trust company. The notice shall include the name, mailing address, and telephone number of one or more officers, managers, employees, or agents of the independent trust company available during regular business hours to answer customer questions regarding the proposed substitution. The independent trust company shall furnish an affidavit of the mailing of the notice to the Probate Division of the Superior Court in conjunction with the filing of the independent trust company's petition referred to in subsection (d) of this section, and the affidavit shall constitute the independent trust company's compliance with this section. Following the mailing of the notice and prior to the effective date of the substitution order, each prospective trust customer of the independent trust company or of the resulting or transferee entity shall be furnished with a copy of the notice required by this subsection before the customer and the company enter into a trust account relationship.
6. Post-order notice.  Within 30 days after the entry of the substitution order referred to in subsection (d) of this section, the resulting or transferee entity shall mail written notice of the entry of the order of substitution to the principals of each trust account affected. The notice shall specify that the substitution has been effected and shall include the name, mailing address, and telephone number of one or more officers, managers, or employees of the resulting or transferee entity available during regular business hours to answer customer questions regarding the substitution.
7. Effect of substitution order.  Each fiduciary designation in a will, trust, or other instrument executed before or after the entry of an order of substitution, shall be deemed by operation of law to be a designation of the resulting or transferee entity, substituted pursuant to this section, without further act or amendment of the will, trust, or other instrument, unless the will, trust, or other instrument is executed after the date of entry of the order of substitution and specifically negates application of this section.
8. Bonds.  If any company for which the resulting or transferee entity has been substituted pursuant to this section has given bond in any fiduciary capacity, the resulting or transferee entity shall be required to furnish to the Court or authority making the appointment a substitute bond in like amount and terms before the company shall be released from liability on its bond.
9. Accounting.  Any company, for which the resulting or transferee entity has been substituted pursuant to this section, shall account jointly with the resulting or transferee entity for the accounting period during which the effective date of the substitution occurs. Upon substitution pursuant to this section, the company shall deliver to the resulting or transferee entity all assets addressed in the substitution order held by the company as fiduciary and upon the substitution, all the assets shall become the property of the resulting or transferee entity as fiduciary without the necessity of any instrument of transfer or conveyance.
10. Affiliated transactions.  Upon substitution of the resulting or transferee entity pursuant to this section, the resulting or transferee entity shall pay fair consideration to any affiliated independent trust company for which it has been substituted as fiduciary for the trust business it has acquired from the affiliate as a result of the substitution.
11. Change in control.  Any person that intends to transfer 10 percent or more of the voting interests in an independent trust company regulated under this chapter to any other person shall provide the Commissioner with at least 30 days' written notice.

    Added 1997, No. 98 (Adj. Sess.), § 8b; amended 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.

§ 2408. Laws applicable; matters of contract.

1. An independent trust company exercising trust powers under this chapter shall be subject to the same responsibilities, liabilities, and penalties as an individual acting in like capacity, and the company shall have the same powers and shall receive the same compensation as individuals acting in like capacity, if fixed by law.
2. The exercise of powers not listed in subsection (a) of this section, and the performance of the other duties by the company may be as contracted for by the parties interested.
3. In performing its duties under a trust, an independent trust company shall be subject to all applicable provisions of 14 V.S.A. chapter 105.

   Added 1997, No. 98 (Adj. Sess.), § 8b.

§ 2409. Financial transactions.

1. No assets held in a fiduciary capacity shall be mingled with the investments of the independent trust company or be liable for the debts or obligations of the independent trust company. Independent trust companies shall keep all monies, property, or securities held separate and apart from the assets of the company and all assets held by the independent trust company as a fiduciary shall be designated in a manner that the owner, trust, or estate to which such assets belong may be clearly identified.
2. Consistent with its fiduciary obligations, every independent trust company holding funds awaiting investment or distribution may deposit or leave on deposit such funds with a federally insured state or national bank. The funds shall not be deposited or left with the same corporation or association depositing or leaving on deposit such funds, nor with a corporation or association holding or owning a majority of the capital stock of or other voting interest in the independent trust company making or leaving the deposit, unless the corporation or association shall first pledge, as security for the deposit, securities eligible for investment by state banks that have a market value equal to that of the deposited funds. No security shall be required with respect to any portion of such deposits which are insured under the provisions of any law of the United States.
3. An independent trust company acting in any capacity under a trust, unless the instrument creating the trust provides otherwise, may cause any securities or other property held by it in its representative capacity to be registered in the name of a nominee or nominees of the independent trust company.
4. An independent trust company when acting as depositary or custodian for the personal representative of a trust, unless the instrument creating the trust provides otherwise, may with the consent of the personal representative of the trust, cause any securities or other property held by it to be registered in the name of a nominee or nominees of the independent trust company.
5. An independent trust company shall be liable for any loss occasioned by the acts of any of its nominees with respect to securities or other property registered under subsections (c) and (d) of this section.
6. No corporation or the registrar or transfer agent thereof shall be liable for registering or causing to be registered upon the books of the corporation any securities in the name of any nominee of an independent trust company or for transferring or causing to be transferred upon the books of the corporation any securities theretofore registered by the corporation in the name of any nominee of an independent trust company, as provided in this section, when the transfer is made on the authorization of the nominee.
7. In its discretion, and subject to provisions of subsection (h) of this section, an independent trust company may associate together for common investment the funds of individual trusts held by it whether created by order of court or otherwise, if the terms of the trust do not require a separate investment. Without limiting the generality of the foregoing, an independent trust company may collectively invest funds received or held as fiduciary as follows:
   1. in a common trust fund maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as executor, administrator, guardian, or trustee under a will or deed;
   2. in a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus, or other trusts which are exempt from federal income taxation under the Internal Revenue Code; or
   3. in a common trust fund, maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as managing agent.
8. An independent trust company may create a trust investment account to which may be entrusted for investment the whole or any part of the funds of trust permissible to be associated as provided in subsection (g) of this section. Where an independent trust company which has established an associated trust investment account is the cotrustee of a trust permissible to be associated as provided in subsection (g) of this section, the whole or any part of the funds of the trust may be entrusted to that account for investment if all cotrustees of the trust consent thereto. An individual trust whose funds are thus associated shall at all times be the equitable owner of its pro rata share of the funds of the associated trust investment account and shall share pro rata the net income of that account and the net increase or decrease of its principal for any reason during the time its funds are a part of the associated trust investment account. The net income shall be distributed pro rata to the individual trust accounts at reasonable intervals. Funds of individual trusts transferred to that account or withdrawn therefrom shall be on the basis of the market value of the total funds of the account at the time being.
9. The board or similarly functioning unit of a limited liability company of an independent trust company is responsible for the proper exercise of fiduciary powers by the independent trust company and each matter pertinent to the exercise of fiduciary powers. The board shall adopt and follow written policies and procedures adequate to maintain its fiduciary activities in compliance with applicable law. The policies and procedures shall include, for the company and its directors, officers, managers, members, employees, and agents, methods for preventing conflicts of interest, self-dealing, and the improper use of material inside information in connection with any decision or recommendation made as a fiduciary. The written policies and procedures shall also prescribe the investment and disposition of property held in a fiduciary capacity.

   Added 1997, No. 98 (Adj. Sess.), § 8b.

§ 2410. Powers of the Commissioner.

1. In addition to other powers conferred by this chapter, the Commissioner may:
   1. Restrict the transaction of any trust account when the Commissioner finds that extraordinary circumstances make the restriction necessary for the proper protection of the trust customers of the independent trust company.
   2. Order the holders of shares or other voting interest in an independent trust company to refrain from voting those shares or other voting interest on any matter if the Commissioner finds that the order is necessary to protect the company against reckless, incompetent, or careless management, safeguard the assets of trust customers, or prevent the wilful violation of this chapter or of any lawful order issued under it, and in such a case, the shares or other voting interest of such a holder shall not be counted in determining the existence of a quorum or a percentage of the outstanding shares or voting interest necessary to take any company action.
   3. Order any person to cease violating this title or a lawful regulation issued under it or to cease engaging in any unsound trust or fiduciary practice.
   4. 1. Impose a penalty of not more than $15,000.00 for each violation upon any independent trust company which, or any director, member, trustee, officer, manager, or employee of an independent trust company who: (4) (A) Impose a penalty of not more than $15,000.00 for each violation upon any independent trust company which, or any director, member, trustee, officer, manager, or employee of an independent trust company who:
         1. knowingly violates this title or a lawful regulation or order issued under it; or
         2. has knowingly engaged or participated in any materially unsafe or unsound practice in connection with the independent trust company; or
         3. has knowingly committed or engaged in any act, omission, or practice which constitutes a breach of fiduciary duty to the independent trust company.
      2. In determining the amount of a penalty assessed pursuant to this subsection, the Commissioner shall consider the following factors:
         1. the appropriateness of the penalty with respect to the financial resources and good faith of the person or independent trust company charged;
         2. the gravity of the violation or practice;
         3. the history of previous violations or practices of a similar nature;
         4. the economic benefit derived by the person from the violation or practice; and
         5. other factors as justice may require.
      3. An independent trust company shall not indemnify a director, member, officer, manager or employee for a penalty imposed under this subsection.
   5. Suspend or revoke the certificate of authority of an independent trust company if, after notice and opportunity for a hearing, the Commissioner determines that:
      1. the independent trust company has failed or refused to comply with any law or regulation or an order issued pursuant to this title;
      2. the application for certificate of authority contained a false representation or omission of a material fact; or
      3. any officer or manager or agent of the independent trust company, in connection with an application for a certificate of authority, knowingly made a false representation of a material fact or failed to disclose a material fact to the Commissioner or the duly authorized agent of the Commissioner.
   6. 1. Remove a director, member, trustee, officer, manager, or employee of an independent trust company who: (6) (A) Remove a director, member, trustee, officer, manager, or employee of an independent trust company who:
         1. knowingly violates this title or a lawful regulation or an order issued under this title;
         2. is convicted of a crime involving dishonesty;
         3. has knowingly engaged or participated in any materially unsafe or unsound practice in connection with the independent trust company; or
         4. has knowingly committed or engaged in any act, omission, or practice which constitutes a breach of fiduciary duty to the independent trust company.
      2. Provided further, with respect to the acts or omissions under subdivisions (A)(iii) and (iv) of this subdivision (5) that the Commissioner finds:
         1. the independent trust company has suffered or probably will suffer substantial financial loss or other damage;
         2. the interest of its trust customers or accounts could be seriously prejudiced by such violation, practice or breach of fiduciary duty; or
         3. the director, member, trustee, officer, manager, or employee has received material financial gain by reason of such violation, practice or breach.
2. The Commissioner shall provide notice of any order proposed pursuant to this chapter and the grounds thereof by mail to the independent trust company and any affected director, member, trustee, officer, manager, or employee. The independent trust company or any person so served may, within 30 days of service on the independent trust company, request that a hearing be held by the Commissioner. The provisions of 3 V.S.A. chapter 25 shall govern any hearing held by the Commissioner under this chapter. The hearing shall be private unless the Commissioner determines that a public hearing is necessary to protect the public interest. If no hearing is requested, the proposed order shall become final 30 days after service on the independent trust company. If it is deemed necessary to assure the continued safety and soundness of the independent trust company, the Commissioner may order an immediate suspension of the certificate of authority of the independent trust company or, in the case of a removal, immediate suspension of the director, member, trustee, officer, manager, or employee pending completion of further administrative proceedings on removal pursuant to subdivision (a)(6) of this section.
3. It shall be a criminal offense, punishable by a fine of $1,000.00 or a year in prison, or both, for any person to violate this title, to violate any order of the Commissioner, or, after receipt of a removal order, or an order assessing a penalty, to perform any duty or exercise any power of any independent trust company until the penalty has been satisfied, or otherwise satisfactorily resolved between the parties, or the removal or penalty order is vacated by the Commissioner or by a court of competent jurisdiction.

   Added 1997, No. 98 (Adj. Sess.), § 8b.

§ 2411. Unsafe condition; receivership.

If the Commissioner finds a deficiency in capital or other unsafe or unsound condition of an independent trust company has not been remedied within the time prescribed under an order of the Commissioner issued pursuant to this chapter, the Commissioner may apply to the Superior Court in Washington County, to be appointed receiver for the liquidation or rehabilitation of the company. The expense of the receivership shall be paid out of the assets of the independent trust company. The provisions of subchapters 2, 3, and 4 of chapter 209 of this title shall apply to an independent trust company formed or regulated under this chapter as if the independent trust company were a financial institution to the extent applicable.

Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 22, eff. Jan. 1, 2001.

§ 2451. Definitions.

As used in this section:

1. "Personal information" means data capable of being associated with a particular natural person, including gender identification, birth information, marital status, citizenship and nationality, biometric records, government identification designations, and personal, educational, and financial histories.
2. "Personal information protection company" means a business that is organized for the primary purpose of providing personal information protection services to individual consumers.
3. "Personal information protection services" means receiving, holding, and managing the disclosure or use of personal information concerning an individual consumer:
   1. pursuant to a written agreement, in which the person receiving the individual consumer's information agrees to serve as a personal information protection company, and which specifies the types of personal information to be held and the scope of services to be provided on behalf of the consumer; and
   2. in the best interests and for the protection and benefit of the consumer.

      Added 2017, No. 205 (Adj. Sess.), § 2.

§ 2452. Personal information as the subject of a fiduciary relationship.

A personal information protection company that accepts personal information pursuant to a written agreement to provide personal information protection services has a fiduciary responsibility to the consumer when providing personal protection services.

Added 2017, No. 205 (Adj. Sess.), § 2.

§ 2453. Qualified personal information protection company.

1. A personal information protection company shall qualify to conduct its business under the terms of this chapter, chapter 72 of this title, and applicable rules adopted by the Department of Financial Regulation.
2. A person shall not engage in business as a personal information protection company in this State without first obtaining a license from the Department.
3. A personal information protection company shall:
   1. be organized or authorized to do business under the laws of this State;
   2. maintain a place of business in this State;
   3. appoint a registered agent to accept service of process and to otherwise act on its behalf in this State, provided that whenever the registered agent cannot with reasonable diligence be found at the Vermont registered office of the company, the Secretary of State shall be an agent of the company upon whom any process, notice, or demand may be served;
   4. annually hold at least one meeting of its governing body in this State, at which meeting one or more members of the body are physically present; and
   5. develop, implement, and maintain a comprehensive information security program that contains administrative, technical, and physical safeguards sufficient to protect personal information, and which may include the use of blockchain technology, as defined in 12 V.S.A. § 1913 , in some or all of its business activities.

      Added 2017, No. 205 (Adj. Sess.), § 2; amended 2019, No. 103 (Adj. Sess.), § 4.

§ 2454. Name; office.

A personal information protection company shall file with the Department of Financial Regulation the name it proposes to use in connection with its business, which the Department shall not approve if it determines that the name may be misleading, likely to confuse the public, or deceptively similar to any other business name in use in this State.

Added 2017, No. 205 (Adj. Sess.), § 2.

§ 2455. Conduct of business.

1. A personal information protection company may:
   1. operate through remote interaction with the individuals entrusting personal information to the company, and there shall be no requirement of Vermont residency or other contact for any such individual to establish such a relationship with the company; and
   2. subject to applicable fiduciary duties, the terms of any agreement with the individual involved, and any applicable statutory or regulatory provision:
      1. provide elements of personal information to third parties with which the individual seeks to have a transaction, a service relationship, or other particular purpose interaction;
      2. provide certification or validation concerning personal information;
      3. receive compensation for acting in these capacities.
2. An authorization to provide personal information may be either particular or general, provided it meets the terms of any agreement with the individual involved and any rules adopted by the Department of Financial Regulation.

   Added 2017, No. 205 (Adj. Sess.), § 2.

§ 2456. Repealed. 2019, No. 103 (Adj. Sess.), § 5.

§ 2457. Reports; rules.

1. The Department of Financial Regulation may prescribe by rule the timing and manner of reports by a personal information protection company to the Department.
2. The Department may adopt rules to govern other aspects of the business of a personal information protection company, including its protection and safeguarding of personal information and its interaction with third parties with respect to personal information it holds.

   Added 2017, No. 205 (Adj. Sess.), § 2.

§ 2500. Definitions.

As used in this chapter:

"Authorized delegate" means a person located in this State that a licensee designates to provide money services on behalf of the licensee.

"Check cashing" means receiving at least $500.00 compensation within a 30-day period for taking payment instruments or prepaid access, other than traveler's checks, in exchange for money, payment instruments, or prepaid access delivered to the person delivering the payment instrument or prepaid access at the time and place of delivery without any agreement specifying when the person taking the payment instrument will present it for collection.

"Currency exchange" means receipt of revenues equal to or greater than five percent of total revenues from the exchange of money of one government for money of another government.

(4) "Limited station" means private premises where a check casher is authorized to engage in check cashing for not more than two days of each week solely for the employees of the particular employer or group of employers specified in the check casher license application.

"Mobile location" means a vehicle or a movable facility where check cashing occurs.

"Monetary value" means a medium of exchange, whether or not redeemable in money.

"Money" means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.

"Money services" means money transmission, check cashing, or currency exchange.

(9) "Money transmission" means to engage in the business of selling or issuing payment instruments, selling or issuing prepaid access, or receiving money or monetary value for transmission to a location within or outside the United States.

"Outstanding," with respect to a payment instrument, means issued or sold by or for the licensee and which has been reported as sold but not yet paid by or for the licensee.

"Payment instrument" means a check, draft, money order, traveler's check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or instrument that is redeemable by the issuer in goods or services.

(12) "Prepaid access" means funds or monetary value represented in digital electronic format, including virtual currency, whether or not specially encrypted, that are stored or capable of storage on electronic media and are retrievable and transferable electronically.

(13) "Virtual currency" means a digital representation of value that:

1. can be a medium of exchange, a unit of account, or a store of value;
2. has an equivalent value in money or acts as a substitute for money;
3. may be centralized or decentralized; and
4. can be exchanged for money or other convertible virtual currency.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2009, No. 137 (Adj. Sess.), § 1b; 2011, No. 78 (Adj. Sess.), § 14, eff. April 2, 2012; 2017, No. 22 , § 11, eff. May 4, 2017; 2019, No. 20 , § 40.

§ 2501. Exclusions.

1. This chapter does not apply to:
   1. the United States or a department, agency, or instrumentality thereof;
   2. the sale or issuance of payment instruments or prepaid access, or money transmission, by the U.S. Postal Service or by a contractor on behalf of the U.S. Postal Service;
   3. a state, county, city, or any other governmental agency or governmental subdivision within a state;
   4. a financial institution as defined in subdivision 11101(32) of this title, a financial institution holding company as defined in subdivision 11101(33) of this title, a credit union, an office of an international banking corporation, a branch of a foreign bank, a corporation organized pursuant to the Bank Services Company Act, an independent trust company organized under chapter 77 of this title or an entity organized under the laws of another state that is regulated by its home state in an equivalent manner to an independent trust company, or a corporation organized under the Edge Act under the laws of a state or the United States if the person does not issue, sell, or provide payment instruments or prepaid access through an authorized delegate that is not such a person;
   5. electronic funds transfer of governmental benefits for a federal, state, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or a state or governmental subdivision, agency, or instrumentality thereof;
   6. a board of trade designated as a contract market under the Commodity Exchange Act or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board of trade;
   7. a registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant;
   8. a person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from such registration granted under the federal securities laws to the extent of its operation as such a provider;
   9. a person:
      1. operating a payment system that provides processing, clearing, or settlement services, between or among persons excluded by this section or licensees, in connection with wire transfers, credit card transactions, debit card transactions, prepaid access transactions, automated clearing house transfers, or similar funds transfers to the extent of its operation as such;
      2. that is a contracted service provider of an entity in subsection (4) of this section that provides processing, clearing, or settlement services in connection with wire transfers, credit card transactions, debit card transactions, prepaid access transactions, automated clearinghouse transfers, or similar funds transfers; or
      3. that facilitates payment for goods or services, not including money transmission itself, or bill payment through a clearance and settlement process using institutions regulated under the Bank Secrecy Act pursuant to a written contract with the payee and either payment to the person facilitating the payment processing satisfies the payor's obligation to the payee or that obligation is otherwise extinguished;
   10. a person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer;
   11. the sale or issuance of prepaid access by a school to its students and employees;
   12. a seller of goods or services that cashes payment instruments incidental to or independent of a sale and does not charge for cashing the payment instrument in excess of $1.00 per instrument; or
   13. a debt adjuster licensed pursuant to chapter 133 of this title when engaged in the business of debt adjustment.
2. The Commissioner may issue an order exempting any person from this chapter when such person is performing services for the benefit of the United States or a department, agency, or instrumentality thereof, or for the benefit of any state, county, city, or any other governmental agency or governmental subdivision within a state.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2001, No. 143 (Adj. Sess.), § 59, eff. June 21, 2002; 2005, No. 36 , § 1, eff. June 1, 2005; 2017, No. 22 , § 12, eff. May 4, 2017; 2019, No. 20 , § 41.

§ 2502. License required.

1. A person shall not engage in money transmission without:
   1. obtaining a license under subchapter 2 of this chapter; or
   2. being an authorized delegate of a person licensed under subchapter 2 of this chapter.
2. A person shall not engage in check cashing or currency exchange without:
   1. obtaining a license under subchapter 3 of this chapter;
   2. obtaining a license for money transmission under subchapter 2 of this chapter; or
   3. being an authorized delegate of a person licensed under subchapter 2 of this chapter.
3. A person not licensed under this chapter or not an authorized delegate of a licensee is engaged in providing money services if the person advertises those services, solicits to provide those services, or holds itself out as providing those services.
4. A license is not transferable or assignable.
5. A licensee shall file with the Commissioner any name proposed to be used in connection with a money service business or location pursuant to this chapter. The Commissioner shall not approve a proposed name if the Commissioner determines that the name may be misleading or likely to confuse the public, or deceptively similar to any name in use in this State.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2505. License required.

A person licensed under this subchapter or that is an authorized delegate of a person licensed under this subchapter may engage in money transmission and may also engage in check cashing or currency exchange without obtaining a separate license under subchapter 3 of this chapter.

Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2506. Application for license; additional information.

1. In addition to the information required by section 2102 of this title, an application for a license under this subchapter shall state or contain:
   1. a description of any money services previously provided by the applicant and the money services that the applicant seeks to provide in this State;
   2. a list of the applicant's proposed authorized delegates, and the locations in this State where the applicant and its authorized delegates propose to engage in money transmission or provide other money services;
   3. a list of other states in which the applicant is licensed to engage in money transmission or provide other money services and information concerning any bankruptcy or receivership proceedings affecting the licensee;
   4. a sample form of contract for authorized delegates, if applicable, and a sample form of payment instrument or instrument upon which prepaid access is recorded if applicable;
   5. the name and address of any financial institution through which the applicant's payment instruments and prepaid access obligations will be paid; and
   6. a description of the source of money and credit to be used by the applicant to provide money services
2. The Commissioner may waive one or more requirements of this section or permit an applicant to submit substituted information in lieu of the required information.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2009, No. 134 (Adj. Sess.), § 20; 2011, No. 78 (Adj. Sess.), § 15, eff. April 2, 2012; 2019, No. 20 , § 42.

§ 2507. Security.

1. Except as otherwise provided in subsection (b) of this section, the following rules apply:
   1. A surety bond, letter of credit, or other similar security acceptable to the Commissioner of not less than $100,000.00 shall accompany an application for a license.
   2. If an applicant proposes to provide money services at more than one location through authorized delegates or otherwise, the amount of the security shall be increased by $10,000.00 per location, not exceeding a total of $500,000.00.
2. The Commissioner may increase the amount of security required to a maximum of $2,000,000.00 based upon the financial condition of a licensee, as evidenced by reduction of net worth, financial losses, or other relevant criteria.
3. Security shall be in a form satisfactory to the Commissioner, and payable to the State for use of the State and for the benefit of any claimant against the licensee and its authorized delegates to secure the faithful performance of the obligations of the licensee and its authorized delegates with respect to money transmission.
4. The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a licensee or its authorized delegate may maintain an action directly against the bond, or the Commissioner may maintain an action on behalf of the claimant against the bond. The power vested in the Commissioner by this subsection shall be in addition to any other powers of the Commissioner under this chapter.
5. A surety bond shall cover claims effective for as long as the Commissioner specifies, but for at least five years after the licensee ceases to provide money services in this State. However, the Commissioner may permit the amount of security to be reduced or eliminated before the expiration of that time to the extent the amount of the licensee's payment instruments or prepaid access obligations outstanding in this State is reduced. The Commissioner may permit a licensee to substitute another form of security acceptable to the Commissioner for the security effective at the time the licensee ceases to provide money services in this State.
6. In lieu of the security prescribed in this section, an applicant for a license or a licensee may provide security in a form otherwise permitted by the Commissioner.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2019, No. 20 , § 43.

§ 2508. Repealed. 2019, No. 20, § 44.

§ 2509. Repealed. 2019, No. 20, § 45.

§ 2510. Net worth.

A licensee under this subchapter shall maintain a net worth of at least $100,000.00, determined in accordance with generally accepted accounting principles.

Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2511. Activities of money transmitters; receipts and refunds.

1. Every money transmitter licensee and its authorized delegates shall provide a receipt to the customer that clearly states the name, address, and telephone number of the licensee; the amount of money presented for transmission; and the total of any fees charged by the licensee.
   1. If the rate of exchange for a money transmission to be paid in the currency of another country is fixed by the licensee for that transaction at the time the money transmission is initiated, then the receipt provided to the customer shall disclose the rate of exchange for that transaction, and the duration, if any, for the payment to be made at the fixed rate of exchange so specified.
   2. If the rate of exchange for a money transmission to be paid in the currency of another country is not fixed at the time the money transmission is sent, the receipt provided to the customer shall disclose that the rate of exchange for the transaction will be set at the time the recipient of the money transmission picks up the funds in the foreign country.
   3. As used in this section, "fees" does not include revenue that a licensee or its authorized delegate generates, in connection with a money transmission, in the conversion of the money of one government into the money of another government.
2. Every money transmitter licensee and its authorized delegates shall refund to the customer within 10 days of receipt of a written request for a refund all monies received for transmittal unless any of the following occurs:
   1. Prior to receipt of the written request for a refund, the monies have been transmitted and delivered to the person designated by the customer.
   2. Prior to receipt of a written request for a refund, instructions have been given committing an equivalent amount of money to the person designated by the customer.
   3. The licensee or its authorized delegate has reason to believe that a crime has occurred, is occurring, or may potentially occur as a result of transmitting the money as requested by the customer or refunding the money as requested by the customer.
   4. The licensee is otherwise barred by law from making a refund.

      Added 2017, No. 22 , § 13.

§ 2515. Check cashing and currency exchange licenses required.

1. A person licensed under this subchapter may engage in check cashing and currency exchange.
2. A person licensed under subchapter 2 of this chapter may engage in check cashing and currency exchange without first obtaining a separate license under this subchapter.
3. An authorized delegate of a person licensed under subchapter 2 of this chapter may engage in check cashing and currency exchange without first obtaining a license under this subchapter if such money services are within the scope of activity permissible under the contract between the authorized delegate and the licensee.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2516. Application for license; additional information.

In addition to the information required by section 2102 of this title, an application for a license under this subchapter shall state or contain:

1. the complete addresses of locations in this State where the applicant proposes to engage in check cashing or currency exchange, including all limited stations and mobile locations; and
2. a description of the source of money and credit to be used by the applicant to engage in check cashing services and currency exchange.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2011, No. 78 (Adj. Sess.), § 16, eff. April 2, 2012; 2019, No. 20 , § 46.

§ 2517. Repealed. 2019, No. 20, § 47.

§ 2518. Repealed. 2019, No. 20, § 48.

§ 2519. Activities of check cashers and currency exchanges.

1. Check cashing.
   1. A licensee, in every location conducting business under a license issued pursuant to this chapter, shall conspicuously post and at all times display a notice stating all fees charged. A licensee shall file with the Commissioner a statement of the fees charged at every location licensed for services offered there.
   2. Before a licensee shall deposit, with any financial institution, a payment instrument that is cashed by a licensee, each such item shall be endorsed with the actual name under which such licensee is doing business. Additionally, the words "Licensed Check Cashing Business" must be written legibly or stamped immediately after or below the name of the endorser.
   3. A licensee shall comply with all applicable federal statutes governing currency transaction reporting.
   4. A licensee may not alter or delete any information on any payment instrument cashed.
   5. A licensee shall issue a receipt for each check cashing transaction upon request. The receipt shall include, among other matters the licensee may desire to include, the amount of the payment instrument and the total fee charged.
   6. A licensee shall not impose any fee or other charge for bad checks other than as expressly permitted under the provisions of 9 V.S.A. §§ 2311 and 2312.
   7. Within 10 business days after being advised by the payor financial institution that a payment instrument has been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority, or represents the proceeds of illegal activity, the licensee shall notify the police department in the city or town where the payment instrument was cashed.  If a payment instrument is returned to the licensee by the payor financial institution for any of the aforementioned reasons, the licensee may not release or destroy the payment instrument without the consent of the city or town police department, or other investigative law enforcement authority.
   8. No licensee shall issue coupons, gift certificates, or tokens to be used in lieu of money when cashing a payment instrument.
   9. No licensee shall require the customer to receive payment by a method which causes the customer to pay additional or further fees and charges to the licensee or other person, and no licensee shall charge or receive any other charges or fees in addition to the fees listed in this chapter.
   10. A licensee shall pay to every customer tendering a payment instrument to be cashed the entire face amount of such instrument in cash, less any charges permitted by this section, on the same date upon which such instrument is presented to the licensee.
   11. A licensee is prohibited from requiring that a customer cash two or more separate checks in a manner to avoid the limitations on the fees as set forth in this section.
   12. No check casher shall:
       1. charge check cashing fees, except as otherwise provided in this chapter, in excess of five percent of the face amount of the payment instrument or $5.00, whichever is greater;
       2. charge check cashing fees in excess of three percent of the face amount of the payment instrument, or $2.00, whichever is greater, if such payment instrument is the payment of any kind of state public assistance or federal Social Security benefit, if the customer cashing the payment instrument is the named payee of such payment instrument; or
       3. charge check cashing fees for personal checks or money orders in excess of 10 percent of the face amount of the personal check or money order or $5.00, whichever is less.
   13. No licensee shall agree to hold a payment instrument for later deposit.  No licensee shall cash or advance any money on a postdated payment instrument.
   14. Licensees may charge a customer with a one-time membership fee not to exceed $10.00.
2. Currency exchange:
   1. The rate of exchange and fees charged by a licensee for rendering currency exchange services shall be prominently displayed to the public at each business location.
   2. Licensees shall provide each customer with a written receipt sufficient to identify the transaction, the licensee, the rate of exchange, the fees charged and the amount of currency exchanged.

      Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2525. Relationship between licensee and authorized delegate.

1. In this subchapter, "remit" means to make direct payments of money to a licensee or its representative authorized to receive the money, or to deposit money in a depository institution within the meaning of subdivision 11101(24) of this title, in an account specified by the licensee.
2. A contract between a licensee and an authorized delegate shall require the authorized delegate to operate in full compliance with this chapter. The licensee shall furnish in a record to each authorized delegate policies and procedures sufficient to permit compliance with this chapter.
3. An authorized delegate shall remit all money owing to the licensee in accordance with the terms of the contract between the licensee and the authorized delegate.
4. If a license is suspended, revoked, or nonrenewed, the Commissioner shall notify all authorized delegates of the licensee whose names are in a record filed with the Commissioner of the suspension, revocation, or nonrenewal. After notice is sent or publication is made, an authorized delegate shall immediately cease to provide money services as a delegate of the licensee.
5. An authorized delegate may not provide money services outside the scope of activity permissible under the contract between the authorized delegate and the licensee, except for activity in which the authorized delegate is otherwise licensed or authorized to engage.
6. An authorized delegate of a licensee holds in trust for the benefit of the licensee all money less fees earned from money transmission.
7. A person shall not provide money services on behalf of a person not licensed under this chapter. A person that engages in any money services activity under this chapter shall be subject to the provisions of this chapter to the same extent as if the person were a licensee under this chapter.
8. A person may not be an authorized delegate of another authorized delegate. An authorized delegate must enter into a contract directly with a licensee.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2009, No. 134 (Adj. Sess.), § 22.

§ 2530. Examinations.

The Commissioner shall examine the affairs, business, and records of each licensee under this chapter as often as the Commissioner deems necessary to carry out the purposes of this part.

Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2011, No. 78 (Adj. Sess.), § 17, eff. April 2, 2012; 2019, No. 20 , § 49.

§ 2531. Repealed. 2019, No. 20, § 50.

§ 2532. Repealed. 2019, No. 20, § 51.

§ 2532a. Change of authorized delegates; change of location.

A licensee shall notify the Commissioner in writing within 30 days of any change in the list of authorized delegates or locations in this State where the licensee or an authorized delegate of the licensee provides money services, including limited stations and mobile locations. Such notice shall state the name and street address of each authorized delegate or of each location removed or added to the licensee's list. Upon any such change, the licensee shall provide sufficient evidence that it is in compliance with section 2507 of this title. The licensee shall submit with the notice a nonrefundable fee of $25.00 for each new authorized delegate location and for each change in location. There is no fee to remove authorized delegates or to remove locations.

Added 2009, No. 134 (Adj. Sess.), § 24.

§ 2533. Repealed. 2019, No. 20, § 52.

§ 2534. Records.

In addition to the records required by section 2119 of this title, a licensee shall maintain records for determining the licensee's compliance with this chapter. A licensee shall maintain its records for at least five years, which records shall include:

1. a record of each payment instrument or prepaid access obligation sold;
2. a general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;
3. bank statements and bank reconciliation records;
4. records of outstanding payment instruments and prepaid access obligations;
5. records of each payment instrument and prepaid access obligation paid within the five-year period;
6. a list of the last known names and addresses of all of the licensee's authorized delegates; and
7. any other records the Commissioner requires by rule.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2019, No. 20 , § 53.

§ 2535. Money laundering reports.

1. A licensee and an authorized delegate shall file with the Commissioner copies of all reports required by federal currency reporting, record keeping, and suspicious transaction reporting requirements as set forth in 31 U.S.C. § 5311, 31 C.F.R. Part 103, and other federal and State laws pertaining to money laundering.
2. The timely filing of a complete and accurate report required under subsection (a) of this section with the appropriate federal agency is compliance with the requirements of subsection (a) of this section, unless the Commissioner notifies the licensee that reports of this type are not being regularly and comprehensively transmitted by the federal agency to the Commissioner.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2540. Maintenance of permissible investments.

1. A licensee shall maintain at all times permissible investments that have a market value computed in accordance with generally accepted accounting principles of not less than the aggregate amount of all of its outstanding payment instruments and prepaid access obligations issued or sold and money transmitted by the licensee or its authorized delegates.
2. The Commissioner, with respect to any licensee, may limit the extent to which a type of investment within a class of permissible investments may be considered a permissible investment, except for money and certificates of deposit issued by a depository institution within the meaning of subdivision 11101(24) of this title. The Commissioner, by rule, may prescribe or by order allow other types of investments that the Commissioner determines to have a safety substantially equivalent to other permissible investments.
3. Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee's outstanding payment instruments and prepaid access obligations in the event of bankruptcy or receivership of the licensee.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2019, No. 20 , § 54.

§ 2541. Types of permissible investments.

1. Except to the extent otherwise limited by the Commissioner pursuant to section 2540 of this title, the following investments are permissible under section 2540 of this title:
   1. cash, a certificate of deposit, or a senior debt obligation of a depositary institution within the meaning of subdivision 11101(24) of this title;
   2. a banker's acceptance or bill of exchange that is eligible for purchase upon endorsement by a member bank of the Federal Reserve System and is eligible for purchase by a Federal Reserve Bank;
   3. an investment bearing a rating of one of the three highest grades, as defined by a nationally recognized organization that rates securities;
   4. an investment security that is an obligation of the United States or a department, agency, or instrumentality thereof; an investment in an obligation that is guaranteed fully as to principal and interest by the United States; or an investment in an obligation of a state or a governmental subdivision, agency, or instrumentality thereof;
   5. receivables that are payable to a licensee from its authorized delegates, in the ordinary course of business, pursuant to contracts that are not past due or doubtful of collection, if the aggregate amount of investments in receivables under this subdivision does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not have at one time investments in receivables under this subdivision in any one person aggregating more than 10 percent of the licensee's total permissible investments;
   6. a share or a certificate issued by an open-end management investment company that is registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940 ( 15 U.S.C. § 80a -1 et seq.), and whose portfolio is restricted by the management company's investment policy to investments specified in subdivisions (1) through (4) of this subsection; and
   7. virtual currency owned by the licensee, but only to the extent of outstanding transmission obligations received by the licensee in identical denomination of virtual currency.
2. The following investments are permissible under section 2540 of this title, but only to the extent specified:
   1. an interest-bearing bill, note, bond, or debenture of a person whose equity shares are traded on a national securities exchange or on a national over-the-counter market, if the aggregate of investments under this subdivision do not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time have investments under this subdivision in any one person aggregating more than 10 percent of the licensee's total permissible investments;
   2. a share of a person traded on a national securities exchange or a national over-the-counter market or a share or a certificate issued by an open-end management investment company that is registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, and whose portfolio is restricted by the management company's investment policy to shares of a person traded on a national securities exchange or a national over-the-counter market, if the aggregate of investments under this subdivision does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time have investments under this subdivision in any one person aggregating more than 10 percent of the licensee's total permissible investments;
   3. a demand-borrowing agreement made to a corporation or a subsidiary of a corporation whose securities are traded on a national securities exchange, if the aggregate of the amount of principal and interest outstanding under demand-borrowing agreements under this subdivision does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time have principal and interest outstanding under demand-borrowing agreements under this subdivision with any one person aggregating more than 10 percent of the licensee's total permissible investments; and
   4. any other investment the Commissioner determines to be permissible, to the extent specified by the Commissioner.
3. The aggregate of investments under subsection (b) of this section may not exceed 50 percent of the total permissible investments of a licensee calculated in accordance with section 2540 of this title.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2017, No. 22 , § 16, eff. May 4, 2017.

§ 2545. Repealed. 2019, No. 20, § 55.

§ 2546. Termination or suspension of authorized delegate activity.

1. Section 2110 of this title applies to authorized delegates.
2. The Commissioner may issue an order suspending or barring any authorized delegate or any responsible individual, director, officer, member, manager, partner, or person in control of such authorized delegate from continuing to be or becoming an authorized delegate of any licensee during the period for which such order is in effect, or may order that an authorized delegate cease and desist in any specified conduct.
3. Upon issuance of a suspension or bar order, the licensee shall terminate its relationship with such authorized delegate according to the terms of the order.

   Added 2001, No. 55 , § 1, eff. Jan. 1, 2002; amended 2019, No. 20 , § 56.

§ 2547. Repealed. 2019, No. 20, § 57.

§ 2548. Repealed. 2019, No. 20, § 58.

§ 2549. Repealed. 2019, No. 20, § 59.

§ 2550. Repealed. 2019, No. 20, § 60.

§ 2551. Repealed. 2019, No. 20, § 61.

§ 2555. Conservation, liquidation, and insolvency.

To the extent applicable, the provisions of subchapters 2, 3, and 5 of chapter 209 of this title, excluding sections 19207, 19208, 19210, 19306, and 19307 of this title, shall apply to the conservation, liquidation, and insolvency of any licensee under this chapter. Such licensee shall be treated as a financial institution for the purposes of application of those subchapters. If an impaired or insolvent licensee is or becomes a debtor in bankruptcy or the subject of a bankruptcy proceeding under federal law, the Commissioner shall be relieved of any obligation otherwise imposed under this section and subchapters 2, 3, and 5 of chapter 209 of this title, and shall relinquish control of the assets and estate of such debtor to the duly appointed trustee in bankruptcy or the debtor in possession, as the case may be.

Added 2001, No. 55 , § 1, eff. Jan. 1, 2002.

§ 2560. Repealed. 2019, No. 20, § 61.

§ 2561. Repealed. 2019, No. 20, § 62.

§ 2701. Definitions.

As used in this chapter:

1. "Account" means a demand deposit or share draft (checking) account, savings account, or other comparable consumer asset account (other than an occasional or incidental credit balance in a credit plan) regularly maintained by the consumer at a financial institution or at a credit union.
2. "Financial institution" means an institution as defined in subdivision 11101(32) of this title.
3. "Gift certificate" means a record evidencing a promise made for consideration by the seller or issuer of the record that money, goods, or services will be provided to the holder of the record for the value shown in the record. A "gift certificate" includes a record that contains a microprocessor chip, magnetic strip, or other means for the storage of information that is prefunded and for which the value is decremented upon each use; a gift card; an electronic gift card; a prepaid access card or certificate; a store card; or a similar record or card. A gift certificate does not include an access device such as a debit card, code, or other means of access to a consumer's account regularly maintained at a financial institution or credit union that may be used by the consumer to access the funds in his or her account to initiate a withdrawal or to initiate an electronic funds transfer from the consumer's account.
4. "Loyalty, award, or promotional gift certificate" means a gift certificate that is issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in connection with a loyalty, award, or promotional program and that is redeemable upon presentation to one or more merchants for goods or services or that is usable at automated teller machines.
5. "Paid value" means the value of any money or other thing of value given in exchange for a gift certificate.
6. "Promotional value" means any value shown on a gift certificate in excess of the paid value of the gift certificate.

   Added 2005, No. 39 , § 1; amended 2011, No. 136 (Adj. Sess.), § 7, eff. May 18, 2012; 2019, No. 20 , § 64.

§ 2702. Expiration date.

The paid value of a gift certificate sold or offered to be sold shall be valid for not less than five years after its date of issuance or after the date funds were last loaded onto the gift certificate, whichever is later. The date of issuance and the expiration date shall be clearly identified on its face, or, if an electronic card with a banked dollar value, clearly printed upon a sales receipt transferred to the purchaser of the electronic card upon the completed transaction, or otherwise made available to the purchaser or holder of the electronic card through means of an Internet site or a toll free information telephone line. A gift certificate not clearly marked with an expiration date or for which the expiration date is not otherwise made available as provided in this section shall be deemed to have no expiration date. Following the expiration date of the gift certificate, the unused portion of the paid value of the gift certificate shall be returned to the holder of the gift certificate, if requested.

Added 2005, No. 39 , § 1; amended 2011, No. 136 (Adj. Sess.), § 7, eff. May 18, 2012.

§ 2702a. Loyalty, award, or promotional gift certificate.

A loyalty, award, or promotional gift certificate shall clearly and legibly set forth the following disclosures, as applicable:

1. a statement indicating that the gift certificate is issued for loyalty, award, or promotional purposes, which shall be included on the front of the gift certificate;
2. the expiration date for both the paid value of the gift certificate, if any, and the promotional value of the gift certificate, if any, which shall be included on the front of the gift certificate;
3. the amount of any fees that may be imposed in connection with the gift certificate and the conditions under which they may be imposed, which shall be provided on or with the gift certificate; and
4. if any fee is assessed against the gift certificate, a toll-free telephone number and, if one is maintained, a website address that a consumer may use to obtain fee information, which shall be included on the gift certificate.

   Added 2011, No. 136 (Adj. Sess.), § 7, eff. May 18, 2012.

§ 2703. Prohibited fees.

1. Dormancy fees, latency fees, issuance fees, redemption fees, or any other administrative fees or service charges in connection with a gift certificate are prohibited.
2. Notwithstanding subsection (a) of this section, a money transmitter licensed under chapter 79 of this title, financial institution, or credit union may charge a one-time fee upon the issuance of a prepaid access card that is reasonably related to the cost to the issuer of issuing the card, provided that in no event shall the fee exceed $10.00.

   Added 2005, No. 39 , § 1; amended 2019, No. 20 , § 65; 2019, No. 103 (Adj. Sess.), § 11.

§ 2704. Redemption of gift certificate for cash.

If the remaining value of a gift certificate is less than $1.00, the gift certificate shall be redeemable in cash for its remaining value upon the demand of the holder of the gift certificate.

Added 2005, No. 39 , § 1.

§ 2705. Balance inquiry.

The issuer of the gift certificate, at the holder's request, shall inform the holder of the unused balance remaining on the gift certificate and the expiration date of the gift certificate.

Added 2005, No. 39 , § 1.

§ 2706. Penalty.

1. The Commissioner may impose an administrative penalty of not more than $1,000.00 per violation upon any person who violates any provision of this chapter, any applicable rule, or any order issued by the Commissioner, plus the State's costs and expenses for the investigation and prosecution of the matter, including attorney's fees.
2. The Commissioner may order any person to make restitution to any person as a result of a violation of this chapter.
3. Any gift certificate that contains any provision in violation of this chapter is contrary to public policy, and such provision is void and unenforceable against the holder of the gift certificate.
4. The powers vested in the Commissioner by this chapter shall be in addition to any other powers of the Commissioner to enforce any penalties, fines, or forfeitures authorized by law.
5. The powers vested in the Commissioner by this chapter shall be in addition to any other powers or rights of consumers or the Attorney General or others under any other applicable law or rule, including without limitation the Vermont Consumer Protection Act and any applicable rules issued in connection therewith.

   Added 2005, No. 39 , § 1; amended 2011, No. 109 (Adj. Sess.), § 3, eff. May 8, 2012; 2011, No. 136 (Adj. Sess.), § 1b, eff. May 18, 2012.

§ 2707. Exemption.

Except as provided in this section, the provisions of this chapter shall not apply to the following:

1. a loyalty, award, or promotional gift certificate where no money or other thing of value is given in exchange for the gift certificate, provided that the gift certificate complies with section 2702a of this title;
2. the promotional value of a loyalty, award, or promotional gift certificate issued in exchange for paid value, provided that the gift certificate complies with sections 2702 and 2702a of this title;
3. a gift certificate donated to a charitable organization and used for fund-raising activities of a charitable organization, without any money or other thing of value being given in exchange for the gift certificate by the charitable organization, provided that the expiration date is clearly and legibly printed on the gift certificate;
4. prepaid calling cards issued solely to provide an access number and authorization code for prepaid calling services;
5. a season pass, a discount ski card, or a record sold for admission to any seasonal recreational activity; or
6. a payroll card account issued pursuant to and in full compliance with 21 V.S.A. § 342(c) .

   Added 2005, No. 39 , § 1; amended 2009, No. 115 (Adj. Sess.), § 2, eff. May 21, 2010; 2011, No. 136 (Adj. Sess.), § 7, eff. May 18, 2012.

§ 2708. Investigations and complaints; powers of Commissioner.

If the Commissioner has reason to believe that any person has violated any of the provisions of this chapter, the Commissioner may make such investigation as the Commissioner shall deem necessary, and, to the extent necessary for this purpose, the Commissioner's authorized representative may examine such person and shall have the power to compel the production of all relevant books, records, and documents.

Added 2005, No. 39 , § 1.

§ 2709. Vermont Consumer Protection Act.

1. A violation of this chapter shall be deemed also a violation of the Vermont Consumer Protection Act, 9 V.S.A. chapter 63, provided that the Commissioner's determinations concerning the interpretation and administration of the provisions of this chapter and any rules adopted under this chapter shall carry a presumption of validity as to financial institutions, credit unions, and all persons licensed or required to be licensed under this title.
2. A consumer may bring a private action under this chapter or under 9 V.S.A. chapter 63 for any violation of this chapter.

   Added 2005, No. 39 , § 1; amended 2011, No. 109 (Adj. Sess.), § 3, eff. May 8, 2012; 2011, No. 136 (Adj. Sess.), § 1b, eff. May 18, 2012.

§ 2710. Enforcement.

1. The Commissioner may enforce compliance with the requirements of this chapter with respect to financial institutions as defined in subdivision 11101(32) of this title, credit unions, and all persons and entities licensed or required to be licensed under this title.
2. The Attorney General shall cooperate and consult with the Commissioner prior to the commencement of any investigation or enforcement action with respect to any person or entity described in subsection (a) of this section.
3. Nothing contained in subsection (a) or (b) of this section shall prohibit the Commissioner and the Attorney General from bringing a joint enforcement action against any person or entity described in subsection (a) for a violation of this chapter.

   Added 2005, No. 39 , § 1.

§ 2711. Rules.

1. The Commissioner may adopt such rules as are necessary to carry out the purposes of this chapter with respect to financial institutions, credit unions, and all persons and entities licensed or required to be licensed under this title.
2. The Attorney General may adopt such rules as are necessary to carry out the purposes of this chapter with respect to all persons and entities other than financial institutions, credit unions, and all persons or entities licensed or required to be licensed under this title.

   Added 2005, No. 39 , § 1.

§ 2751. Definitions.

As used in this chapter, "debt adjustment" means making an agreement with a debtor whereby the debt adjuster agrees to distribute, supervise, coordinate, negotiate, or control the distribution of money or evidences thereof among one or more of the debtor's creditors in full or partial payment of obligations of the debtor and includes services as an intermediary between a debtor and one or more of the debtor's creditors for the purpose of obtaining concessions. Debt adjustment also includes any program or strategy in which the debt adjuster furnishes services to a debtor which includes a proposed or actual payment or schedule of payments to be made by or on behalf of the debtor and is used to pay debt owed by the debtor. For purposes of this chapter, engaging in debt adjustment in this State shall include:

soliciting debt adjustment business from within this State, whether by mail, by telephone, by electronic means, or by other means regardless of whether the debtor resides within this State or outside this State;

soliciting debt adjustment business with an individual residing in this State, whether by mail, by telephone, by electronic means, or by other means;

entering into, or succeeding to, a debt adjustment contract with an individual residing in this State; or

providing, offering to provide, or agreeing to provide debt adjustment services directly or through others.

Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2005, No. 36 , § 4, eff. June 1, 2005; 2009, No. 137 (Adj. Sess.), §§ 2, 3; 2011, No. 78 (Adj. Sess.), § 19, eff. April 2, 2012; 2019, No. 20 , § 66.

§ 2752. License.

No person shall engage in the business of debt adjustment except as authorized by this chapter and without first obtaining a license from the Commissioner.

Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.

§ 2753. Application for license; additional information.

1. In addition to the information required by section 2102 of this title, an application for a license under this chapter shall state or contain:

   A description of any debt adjustment and related services previously provided by the applicant.

   The debt adjustment and related services that the applicant seeks to provide in this State.

   A description of how the applicant will market its services, along with copies of all scripts, mailings, advertisements, and other marketing materials, provided that submission of these materials shall not waive any legal claim the State may have with respect to the content or use of the materials.

   A description of the nature and amount of the fees, or the method of calculating the fees, charged to the debtor.

   A list of the applicant's locations in this State and outside this State where the applicant proposes to engage Vermont residents in debt adjustment services.

   A list of other states in which the applicant is licensed to engage in debt adjustment services and information concerning any bankruptcy or receivership proceedings affecting the licensee, and any license revocations, suspensions, or criminal or disciplinary action taken against the applicant in other states.

   A blank copy of the contract the applicant intends to use. The applicant shall notify the Commissioner of all changes and amendments thereto. The terms and conditions of all contracts shall be subject to prior approval by the Commissioner.

   The name and address of the federally insured financial institution through which the applicant maintains a separate account for the benefit of debtors.

2. The Commissioner may waive one or more requirements of this section or permit an applicant to submit substituted information in lieu of the required information.

   Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2011, No. 78 (Adj. Sess.), § 20, eff. April 2, 2012; 2019, No. 20 , § 67.

§ 2754. Repealed. 2019, No. 20, § 68.

§ 2755. Bond required.

1. Each applicant shall submit to the Commissioner, with the application for a license, a bond, in such form as the Commissioner shall direct, in the amount of $50,000.00, or such greater amount as the Commissioner may determine is required by the business circumstances of the applicant.
2. The bond shall be in a form and in accordance with such terms and conditions satisfactory to the Commissioner and payable to the State for use of the State and for the benefit of any claimant against the licensee to secure the faithful performance of the obligations of the licensee.
3. The Commissioner may require a larger bond if he or she determines, in his or her sole discretion, that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct and that such increased bond is necessary for the protection of consumers; or the Commissioner may increase or decrease the amount of such bond based upon the applicant's or licensee's financial condition, business plan, number of locations, and the actual or estimated aggregate amount of payments and fees paid by debtors under the debt adjustment contracts.

   Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.

§ 2756. Repealed. 2019, No. 20, § 69. History Former § 2756. Former § 2756, relating to qualification of applicant, was derived from 1969, No. 204 (Adj. Sess.) and amended by 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2013, No. 29, § 14 and 2017, No. 22, § 9.

§ 2757a. Annual report; additional information.

In addition to the information required by section 2120 of this title, the annual report shall state or contain:

1. the number of new debt adjustment contracts entered into with Vermont residents during the preceding year, the number of Vermont residents that have completed the debt adjustment contract during the preceding year, the number of Vermont residents that have cancelled their debt adjustment contract during the preceding year, and the licensee's total number of debt adjustment contracts with Vermont residents; and
2. a list of the locations in this State and outside this State where the licensee engages in debt adjustment activities with Vermont residents.

   Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3; 2019, No. 20 , § 71.

§ 2757b. Repealed. 2019, No. 20, § 72. History Former § 2757b Former § 2757b relating to additional places of business, was derived from 2003, No. 81 (Adj. Sess.), § 1 and amended by 2009, No. 137 (Adj. Sess.), § 3.

§ 2758a. Repealed. 2019, No. 20, § 74. History Former § 2758a. Former § 2758a, relating to surrender of license, was derived from 2003, No. 81 (Adj. Sess.), § 1 and amended by 2009, No. 137 (Adj. Sess.), § 3.

1. Prior to taking any fee or receiving any compensation, either directly or indirectly, or payment of any sum of money by the debtor, each licensee shall make a written contract between the licensee and the debtor, which contract shall be in such form and shall contain such conditions as the Commissioner shall have approved in writing prior to the use of such contract, and the licensee shall immediately furnish the debtor with a true copy of the contract.
2. In addition to such other items as the Commissioner may require, the contract shall:
   1. fully disclose all services to be provided;
   2. fully disclose all fees to be charged to the debtor;
   3. disclose that debt adjustment plans are not suitable for all debtors;
   4. if applicable, disclose that creditors may compensate the licensee;
   5. if applicable, disclose that secured debt is not covered by the contract; and
   6. disclose a list of debts covered by the contract and the interest rate of those debts at the time.

      Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.

§ 2759a. Rescission.

1. Debtor's right to cancel.
   1. In addition to any other right to revoke the contract, the debtor may cancel the debt adjustment contract until midnight of the third business day after the date on which the debtor signed the debt adjustment contract.
   2. Cancellation occurs when notice of cancellation is given to the licensee.
   3. Notice of cancellation, if given by mail, shall be deemed given when deposited in a mailbox properly addressed and postage prepaid.
   4. Notice of cancellation need not take any prescribed form and shall be sufficient if it indicates the intention of the debtor not to be bound.
2. Disclosure obligations.
   1. The licensee shall furnish the debtor with a fully completed copy of the contract at the time the debtor signs the debt adjustment contract. The copy of the contract shall show the date of the debt adjustment contract, shall contain the name and address of the licensee, and in immediate proximity to the space reserved in the contract for the signature of the debtor and in boldface type of a minimum size of 10 points, a statement in substantially the following form:

      You may cancel this transaction at any time prior to midnight of the third business day after the date of this contract. See the attached notice of cancellation for an explanation of this right.

   2. The licensee shall furnish a notice of cancellation to the debtor at the time the debtor signs the debt adjustment contract, which notice shall be attached to the contract and shall be easily detachable.
      1. The notice of cancellation shall contain the following information and statements, printed in not less than ten point boldface type:
      2. Before furnishing copies of the "Notice of Cancellation" to the debtor, the licensee shall complete both copies by entering the name of the licensee, the address of the licensee's place of business, the date of the contract, and the date, not earlier than the third business day following the date of the transaction, by which the debtor may give notice of cancellation.
      3. The licensee shall leave the "Notice of Cancellation" with the debtor.
      4. In addition to the written notice of cancellation, the licensee shall orally inform the debtor of his or her right to cancel at the time of the debt adjustment contract.
   3. Until the licensee has complied with this subsection, the debtor may cancel the debt adjustment contract by notifying the licensee in any manner and by any means of the debtor's intention to cancel. The cancellation period of three business days shall begin to run from the time the licensee complies with this subsection.
3. Restoration of payments.  Within 10 days after the debt adjustment contract has been cancelled, the licensee shall tender to the debtor any payments made by the debtor.
4. If the debt adjustment contract is principally negotiated in a language other than English, all of the disclosures required by this section shall be given in that language.
5. If the debtor is unable to write in his or her own handwriting, any of the statements required to be written by the debtor under this section shall be handwritten by a member of the debtor's household at the request of the debtor. If there is no other member of the debtor's household, such statements must be written by the licensee, at the request of the debtor, and the effect of such statements shall be orally explained to the debtor by the licensee.
6. Use of the cancellation provision provided for in this section shall not prevent any other action being taken under this chapter or otherwise against such licensee.

   Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.

NOTICE OF CANCELLATION (enter date of transaction) .................... (date) You may cancel this transaction, without any penalty or obligation, within three business days from the above date. If you cancel, any payments made by you under the contract will be returned within ten business days following our receipt of your cancellation notice. To cancel the debt adjustment contract, mail or deliver a signed and dated copy of this cancellation notice or any other written notice, or send a telegram, to .................... at (name of licensee) ........................................................................... (address of licensee's place of business) not later than midnight of .................... (date) I hereby cancel this transaction. .................... (date) .................... (debtor's signature)

§ 2759b. Cancellation of contract.

A debtor may cancel a debt adjustment contract at any time without a cancellation premium or penalty.

Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.

§ 2759c. Periodic statements to debtor.

Periodically, but not less frequently than quarterly, the licensee shall provide the debtor with a statement showing the payments made by the debtor, how such payments have been distributed, and for each debt covered by the contract:

1. the beginning amount of such debt;
2. the current amount due on such debt; and
3. the basic terms of such debt.

   Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.

§ 2760. Separate bank account for the benefit of creditors; books and records.

1. Each licensee shall maintain a separate federally insured bank account for the benefit of debtors in which all payments received from debtors for the benefit of creditors shall be deposited and in which all payments shall remain until a remittance is made to either a debtor or a creditor.
2. Every licensee shall keep, and use in its business, books, accounts, and records which will enable the Commissioner to determine whether such licensee is complying with the provisions of this chapter and with the regulations of the Commissioner. Every licensee shall preserve such books, accounts, and records for at least seven years after making the final entry on any transaction recorded therein. The items specified in this subsection may be maintained in any form of record as permitted in subsection 11301(c) of this title.

   Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.

§ 2760a. Timely payments to creditors.

Licensees shall make payments to creditors in a timely manner at least once every 30 days in accordance with the contract between the licensee and the debtor.

Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.

§ 2760b. Prohibited activities.

1. No person, partnership, association, corporation, or other entity, except a licensee, may make any representation, directly or indirectly, orally or in writing that he, she, or it is licensed under this chapter.
2. No licensee shall advertise its services in any media, whether print or electronic, in any manner that may be false or deceptive. All such advertisements shall contain the name and office address of such entity, which shall conform to a name and address on record with the Department and which shall indicate that the licensee is licensed by the Department.
3. No person or any other entity, other than a licensee, shall use the title "debt adjuster," "budget planner," "licensed debt adjuster," or "licensed budget planner" or the term "debt adjuster," "debt reduction," or "budget planning" in any public advertisement, business card, or letterhead.
4. No licensee shall commingle monies received from debtors with any other funds associated with the operation of its business or with any funds associated with any other type of business; provided, however, that for the sole purpose of making a single payment to a creditor, a licensee may commingle monies received from debtors under contract with one or more of its affiliates authorized to engage in debt adjustment in another state.
5. No licensee shall structure an agreement for the debtor that, at the conclusion of the agreement, would result in negative amortization of any of the debtor's obligations to any creditor.
6. No licensee, or a director, manager, or officer of such licensee, or any immediate family member of such individual, or a controlling party of such licensee shall purchase any obligation of a debtor.
7. No licensee, or a director, manager, or officer of such licensee, or any immediate family member of such individual, or a controlling party of such licensee shall lend money or provide credit to the debtor.
8. No licensee, or a director, manager, or officer of such licensee, or any immediate family member of such individual, or a controlling party of such licensee shall obtain a mortgage or other security interest in property of the debtor.
9. No licensee shall operate as a person or entity seeking payment of obligations on behalf of any creditors that are not receiving payments pursuant to a contract between a debtor and a licensee.
10. No licensee shall execute any contract or agreement to be signed by the debtor unless the contract or agreement is fully completed, and the duration of any such contract shall be in conformance with any limitations specified pursuant to rules adopted by the Commissioner.
11. No licensee shall pay any bonus or other consideration to any person or entity for the referral of a debtor to its business, or accept or receive any bonus, commission, or other consideration for referring any debtor to any person or entity for any reason; provided, however, that nothing herein shall prohibit the payment of rebates from creditors to licensees.
12. No licensee shall disclose or threaten to disclose information concerning the existence of a debt or any other conduct which could coerce payment of the debt of a debtor with whom it has a contract.
13. No licensee shall use a communication that simulates in any manner a legal or judicial process, or which gives the false appearance of being authorized, issued, or approved by a government, a governmental agency, or an attorney-at-law.
14. No licensee, or a director, a manager, or an officer of such licensee, or any immediate family member of such individual, or a controlling party of such licensee, shall be a director, a manager, an officer, an owner, or a controlling party of any creditor or a subsidiary of any such creditor, that is receiving or will receive payments from the licensee on behalf of a debtor with whom the licensee has contracted, without the express written consent of the Commissioner.

    Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3; 2015, No. 97 (Adj. Sess.), § 12.

§ 2760c. Financial privacy.

The licensee shall be subject to and shall comply with subchapter 2 of chapter 200 of this title and any rules or regulations adopted in connection therewith.

Added 2003, No. 81 (Adj. Sess.), § 1; amended 2009, No. 137 (Adj. Sess.), § 3.

§ 2761. Examinations.

The Commissioner shall examine or cause to be examined, with or without notice, the condition and affairs of each licensee under this chapter at least once every three years and otherwise as required or determined by the Commissioner.

Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 1979, No. 157 (Adj. Sess.), § 7; 1999, No. 153 (Adj. Sess.), § 26, eff. Jan. 1, 2001; 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2011, No. 78 (Adj. Sess.), § 21, eff. April 2, 2012; 2019, No. 20 , § 75.

§ 2762. Fee of licensee.

The fee charged by the licensee shall be agreed upon in advance. The fee retained shall in no case exceed a $50.00 initial set up fee plus 10 percent of any payment received by the licensee from the debtor for the purpose of distribution to creditors.

Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.

§ 2763. Exceptions.

The provisions of this chapter shall not apply to the following:

1. any attorney admitted to the practice of law in this State, when engaged in such practice;
2. any financial institution as defined in subdivision 11101(32) of this title or a lender licensed under chapter 73 of this title, which performs debt adjustment in the regular course of its principal business;
3. any person acting pursuant to any law of this State or of the United States or acting under the order of a court;
4. any bona fide nonprofit religious, fraternal, or cooperative organization offering debt adjustment services exclusively for members;
5. any employee of a licensee when acting in the regular course of his or her employment; and
6. a certified public accountant licensed in this State, when services are rendered in the course of his or her practice as a certified public accountant.

   Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3.

§ 2764. Private right of action and consumer protection act.

1. A consumer may bring a private action against a licensee or any person that should have been licensed under this chapter for restitution because of a violation of this chapter.
2. The powers vested in the Commissioner by this chapter shall be in addition to any other powers or rights of consumers or the Attorney General or others under any other applicable law or rule, including without limitation the Vermont Consumer Protection Act and any applicable rules issued in connection therewith, provided that the Commissioner's determinations concerning the interpretation and administration of the provisions of this chapter and any rules adopted thereunder shall carry a presumption of validity.

   Added 1969, No. 204 (Adj. Sess.), eff. March 23, 1970; amended 1995, No. 167 (Adj. Sess.), § 21; 2003, No. 81 (Adj. Sess.), § 1; 2009, No. 137 (Adj. Sess.), § 3; 2011, No. 109 (Adj. Sess.), § 3, eff. May 8, 2012; 2011, No. 136 (Adj. Sess.), § 1b, eff. May 18, 2012; 2019, No. 20 , § 76.

§ 2765. Repealed. 2019, No. 20, § 77. History Former § 2765. Former § 2765, relating to administrative procedures, was derived from 2003, No. 81 (Adj. Sess.), § 1 and amended by 2009, No. 137 (Adj. Sess.), § 3.

§ 2767. Repealed. 2019, No. 20, § 79.

§ 2768. Repealed. 2019, No. 20, § 80.

§ 2900. Definitions.

As used in this chapter:

1. "Loan" means a residential mortgage loan.

   "Servicing" means receiving a scheduled periodic payment from a borrower pursuant to the terms of a loan, including amounts for escrow accounts, and making the payments to the owner of the loan or other third party of principal and interest and other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the servicing loan document or servicing contract. In the case of a home equity conversion mortgage or a reverse mortgage, servicing includes making payment to the borrower.

   "Third party loan servicer" means a person who engages in the business of servicing a loan, directly or indirectly, owed or due or asserted to be owed or due another.

   Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011; amended 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2019, No. 20 , § 81.

§ 2901. License required.

1. No person shall act as a third party loan servicer, directly or indirectly, for a loan to a Vermont borrower without first obtaining a license under this chapter from the Commissioner.
2. No license shall be required of:
   1. a depository institution;
   2. a lender licensed under chapter 73 of this title that retains the servicing rights on a loan originally closed in the lender's name and subsequently sold in whole or in part to a third party, provided that the provisions of sections 2916 (segregated accounts) and 2922 (prohibited acts and practices) of this title shall apply to such lender;
   3. a debt adjuster licensed in this State;
   4. an attorney licensed in this State when collecting a debt on behalf of a client; or
   5. bona fide nonprofit organizations, exempt from taxation under Section 501(c) of the Internal Revenue Code, that are approved by the Department of Housing and Urban Development as housing counseling agencies, that have a physical location in Vermont, and that lend state or federal funds.
3. This chapter shall not apply to commercial loans.

   Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.

§ 2902. Repealed. 2019, No. 20, § 82.

§ 2903. Bond.

1. Prior to issuance of a license, the applicant shall file with the Commissioner and shall keep in force thereafter for as long as the license remains in effect, a bond in a form and substance to be approved by the Commissioner in which the applicant shall be the obligor, in the amount of $100,000.00 or in such sum as the Commissioner may require. The aggregate liability for any and all claims on any bond shall in no event exceed the sum thereof. No surety obligation on a bond shall be terminated unless at least 60 days' prior written notice is given by the surety to the obligor and the Commissioner. When one person is issued licenses to conduct the licensed activity at more than one office, the Commissioner may accept a single bond covering all such offices. The bond shall run to the State for the use of the State and of any person or persons who may have a cause of action against the obligor of such bond under the provisions of this chapter. Such bond shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this chapter and of all rules and regulations lawfully made by the Commissioner hereunder, and will pay to the State and to any such person or persons any and all monies that may become due or owing to the State or to such person or persons from such obligor under and by virtue of the provisions of this chapter.
2. When an action is commenced on a licensee's bond, the Commissioner may require the filing of a new bond. Immediately upon recovery upon any action on the bond, the licensee shall file a new bond.
3. Notwithstanding subsections (a) and (b) of this section, the Commissioner may waive or modify the requirement for or the amount of a bond or accept other appropriate means of ensuring the financial responsibility of a licensee.

   Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.

§ 2904. Repealed. 2019, No. 20, § 83.

§ 2905. Repealed. 2019, No. 20, § 84.

§ 2906. Repealed. 2019, No. 20, § 85.

§ 2907. Additional bond.

If the Commissioner finds at any time that a licensee's bond is insecure, exhausted, insufficient, or otherwise doubtful, the Commissioner shall require one or more additional bonds meeting the standards set forth in section 2903 of this chapter. The licensee shall file the bond within 10 days of the Commissioner's written demand to do so.

Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.

§ 2908. Repealed. 2019, No. 20, § 86.

§ 2909. Repealed. 2019, No. 20, § 87.

§ 2910. Repealed. 2019, No. 20, § 88.

§ 2911. Repealed. 2019, No. 20, § 89.

§ 2912. Repealed. 2019, No. 20, § 90.

§ 2913. Repealed. 2019, No. 20, § 91.

§ 2914. Repealed. 2019, No. 20, § 92.

§ 2915. Repealed. 2019, No. 20, § 93.

§ 2916. Segregated accounts.

1. All amounts paid by borrowers to a licensee subject to this chapter shall be deposited in one or more accounts maintained at a federally insured depository institution and with respect to such funds, the licensee shall act as a fiduciary. Such account or accounts shall be segregated from all other accounts of the licensee. Such funds shall not be used in the conduct of the licensee's personal affairs or in the licensee's business affairs.
2. The licensee may withdraw funds from the segregated account for payment directly to the owner of the loan or other third party of principal and interest and other payments as may be required pursuant to the terms of the loan document or servicing contract.
3. The licensee may withdraw funds from the segregated account for commissions to which it is entitled for services actually performed.
4. The licensee may return funds from the segregated account to the borrower if not prohibited.
5. The licensee shall maintain complete and accurate account records, including, at a minimum, the source of all deposits, the nature and recipient of all disbursements, the date and amount of each transaction, and the name of the borrower. All documents pertaining to account activity shall be produced upon request of the Commissioner.

   Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.

§ 2917. Examinations.

The Commissioner shall examine the affairs, business, and records of each licensee under this chapter at least once every three years.

Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011; amended 2019, No. 20 , § 94.

§ 2918. Repealed. 2019, No. 20, § 95.

§ 2919. Repealed. 2019, No. 20, § 96.

§ 2920. Repealed. 2019, No. 20, § 97.

§ 2921. Repealed. 2019, No. 20, § 98.

§ 2922. Prohibited acts and practices.

1. It is a violation of this chapter for a person to:
   1. directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person;
   2. engage in any unfair or deceptive practice toward any person;
   3. obtain property by fraud or misrepresentation;
   4. use any unfair or unconscionable means in servicing a loan;
   5. knowingly misapply or recklessly apply loan payments to the outstanding balance of a loan;
   6. knowingly misapply or recklessly apply payments to escrow accounts;
   7. require the unnecessary forced placement of insurance, when adequate insurance is currently in place;
   8. fail to provide loan payoff information within the time period set forth in 27 V.S.A. § 464 ;
   9. charge excessive or unreasonable fees to provide loan payoff information;
   10. fail to manage and maintain escrow accounts in accordance with section 10404 of this title;
   11. knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a consumer's creditworthiness;
   12. fail to report both the favorable and unfavorable payment history of the consumer to a nationally recognized consumer credit bureau at least annually if the servicer regularly reports information to a credit bureau.;
   13. collect private mortgage insurance beyond the date for which private mortgage insurance is no longer required;
   14. knowingly or recklessly facilitate the illegal foreclosure of real property collateral;
   15. knowingly or recklessly facilitate the illegal repossession of chattel collateral;
   16. fail to respond to consumer complaints in a timely manner;
   17. conduct any business covered by this chapter without holding a valid license as required under this chapter, or assist or aid and abet any person in the conduct of business under this chapter without a valid license as required under this chapter;
   18. fail to comply with any federal or state law, rule, or other legally binding authority relating to the evaluation of loans for modification purposes or the modification of loans;
   19. fail to comply with this chapter or rules adopted under this chapter, or fail to comply with any orders or directives from the Commissioner, or fail to comply with any other state or federal law, including the rules thereunder, applicable to any business authorized or conducted under this chapter.
2. A violation of this section is an unfair and deceptive act or practice under 9 V.S.A. § 2453 , provided that the Commissioner's determinations concerning the interpretation and administration of the provisions of this chapter and any rules adopted thereunder shall carry a presumption of validity. Prior to initiating an action for a violation of this chapter, the Attorney General shall consult with the Commissioner regarding the proposed action.

   Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.

§ 2923. Repealed. 2019, No. 20, § 99.

§ 3301. Purposes.

1. Subject to the additional or varied requirements stated in this subchapter, a corporation may be formed pursuant to the general corporation law to do any and all insurance and reinsurance comprised in any one of the following numbered subdivisions:
   1. "Life insurance" which is insurance on human lives.  The business of life insurance includes also the granting of endowment benefits, additional benefits in event of death or dismemberment by accident or accidental means, additional benefits in event of the insured's disability, and optional modes of settlement of proceeds of life insurance.  Life insurance does not include workers' compensation coverages.
   2. "Health insurance" which is insurance of human beings against bodily injury, disablement, or death by accident or accidental means, or the expense thereof, or against disablement or expense resulting from sickness, and every insurance appertaining thereto.  Health insurance does not include workers' compensation coverages.
   3. "Casualty insurance" which includes:
      1. "Vehicle insurance."  Insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal or to property while contained therein or thereon or being loaded or unloaded therein or therefrom, from any hazard or cause, and against any loss, liability, or expense resulting from or incidental to ownership, maintenance, or use of any such vehicle, aircraft, or animal; and provision of medical, hospital, surgical, disability benefits to injured persons, and funeral and death benefits to dependents, beneficiaries, or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental coverage with or supplemental to insurance on the vehicle, aircraft, or animal.
      2. "Automobile guaranty."  Insurance of the mechanical condition or freedom from defective or worn parts or equipment, of motor vehicles.
      3. "Liability insurance."  Insurance against legal liability for the death, injury, or disability of any human being, or for damage to property; and provision of medical, hospital, surgical, disability benefits to injured persons, and funeral and death benefits to dependents, beneficiaries, or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental coverage with or supplemental to liability insurance.
      4. "Workers' compensation."  Insurance of the obligations accepted by, imposed upon, or assumed by employers under law for death, disablement, or injury of employees.
      5. "Burglary and theft."  Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal or concealment, or from any attempt at any of the foregoing; including supplemental coverage for medical, hospital, surgical, and funeral expense incurred by the named insured or any other person as a result of bodily injury during the commission of a burglary, robbery, or theft by another; also insurance against loss of or damage to monies, coins, bullion, securities, notes, drafts, acceptances, or any other valuable papers and documents, resulting from any cause.
      6. "Personal property floater."  Insurance upon personal effects against loss or damage from any cause, under a personal property floater.
      7. "Glass."  Insurance against loss or damage to glass, including its lettering, ornamentation, and fittings.
      8. "Boiler and machinery."  Insurance against any liability and loss or damage to property or interest resulting from accidents to or explosions of boilers, pipes, pressure containers, machinery, or apparatus, and to make inspection of and issue certificates of inspection upon boilers, machinery, and apparatus of any kind, whether or not insured.
      9. "Leakage and fire extinguishing equipment." Insurance against loss or damage to any property or interest caused by the breakage or leakage of sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus, water pipes or containers, or by water entering through leaks or openings in buildings, and insurance against loss or damage to such sprinklers, hoses, pumps, and other fire extinguishing equipment or apparatus.
      10. "Credit."  Insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured.
      11. "Malpractice."  Insurance against legal liability of the insured, and against loss, damage, or expense incidental to a claim of such liability, and including medical, hospital, surgical, and funeral benefits to injured persons, irrespective of legal liability of the insured, arising out of the death, injury, or disablement of any person or arising out of damage to the economic interest of any person, as the result of negligence in rendering expert, fiduciary, or professional service.
      12. "Congenital defects."  Insurance against congenital defects in human beings.
      13. "Livestock insurance."  Insurance against loss or damage to livestock, and services of a veterinary for such animals.
      14. "Elevator."  Insurance against loss of or damage to any property of the insured, resulting from the ownership, maintenance, or use of elevators, except loss or damage by fire, and to make inspections of and issue certificates of inspection upon, elevators.
      15. "Entertainments."  Insurance indemnifying the producer of any motion picture, television, radio, theatrical, sport, spectacle, entertainment, or similar production, event, or exhibition against loss from interruption, postponement, or cancellation thereof due to death, accidental injury, or sickness of performers, participants, directors, or other principals.
      16. "Failure to file certain instruments."  Insurance against loss resulting from failure to file or record written instruments affecting the title of or creating a lien upon personal property.
      17. "Miscellaneous."  Insurance against any other kind of loss, damage, or liability properly a subject of insurance and not within any other kind of insurance as defined in this chapter, if such insurance is not disapproved by the commissioner as being contrary to law or public policy; provision of medical, hospital, surgical, and funeral benefits, and of coverage against accidental death or injury, as incidental to and part of other insurance as stated under subdivisions (3)(A), (C), (E), (H), (K), and (N) of this subsection shall for all purposes be deemed to be the same kind of insurance to which it is so incidental, and shall not be subject to provisions of this code applicable to life or health insurances.
   4. "Marine and transportation insurance" which includes insurance against any and all kinds of loss or damage to:
      1. Vessels, craft, aircraft, cars, automobiles, and vehicles of every kind, as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, money, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests, and all other kinds of property and interests therein, in respect to, appertaining to, or in connection with any and all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed, or similarly prepared for shipment or while awaiting shipment or during delays, storage, transshipment, or reshipment incident thereto, including marine builder's risks and all personal property floater risks.
      2. A person or to property in connection with or appertaining to a marine, inland marine, transit, or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance, or use of the subject matter of the insurance (but not including life insurance or surety bonds or insurance against loss by reason of bodily injury to the person arising out of the ownership, maintenance, or use of automobiles).
      3. Precious stones, jewels, jewelry, gold, silver, and other precious metals, whether used in business or trade or otherwise and whether in the course of transportation or otherwise.
      4. Bridges, tunnels, and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents, and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion, or both are the only hazards to be covered; piers, wharves, docks, and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion, or both, other aids to navigation and transportation, including dry docks and marine railways.
   5. "Marine protection and indemnity insurance" which is insurance against, or against legal liability of the insured for, loss, damage, or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair, or construction of a vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, or death or for loss of or damage to the property of another person.
   6. "Wet marine and transportation insurance" which is that part of marine and transportation insurance that includes only:
      1. Insurance upon vessels, crafts, hulls, and of interests therein or with relation thereto.
      2. Insurance of marine builder's risks, marine war risks and contracts or marine protection and indemnity insurance.
      3. Insurance of freights and disbursements pertaining to a subject of insurance coming within this section.
      4. Insurance of personal property and interests therein, in the course of exportation from or importation into any country, and in the course of transportation coastwise or on inland waters, including transportation by land, water, or air from point of origin to final destination, in respect to, appertaining to, or in connection with, any and all risks or perils of navigation, transit, or transportation, and while being prepared for and while awaiting shipment, and during delays, storage, transshipment, or reshipment incident thereto.
   7. "Property insurance" which is insurance on real or personal property of every kind and of every interest therein, whether on land, water, or in the air, against loss or damage from any and all hazard or cause, and against loss consequential upon such loss or damage, other than noncontractual legal liability for such loss or damage. Property insurance does not include title insurance, as defined in subdivision (9) of this subsection.
   8. "Surety insurance" which includes:
      1. "Fidelity insurance" which is insurance guaranteeing the fidelity of persons holding positions of public or private trust.
      2. Insurance or guaranty of the obligations of employers under workers' compensation laws.
      3. Insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings, and contracts of suretyship.
      4. Insurance indemnifying banks, bankers, brokers, financial or monied corporations or associations against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts, or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, including any loss while the same are being transported in armored motor vehicles, or by messenger, but not including any other risks of transportation or navigation; also insurance against loss or damage to such an insured's premises or to his or her furniture, furnishings, fixtures, equipment, safes, and vaults therein, caused by burglary, robbery, theft, vandalism, or malicious mischief, or any attempt thereat.
   9. "Title insurance" which is the certification or guarantee of title or ownership, or insurance of owners of property or others having an interest therein or liens or encumbrances thereon, against loss by encumbrance, or defective titles, or invalidity, or adverse claim to title. A title insurer may also insure the identity, due execution, and validity of any note or bond secured by mortgage or deed of trust and the identity, due execution, validity, and recording of any such mortgage or deed of trust. This definition shall not be deemed to apply to the business of preparing and issuing abstracts of title to or ownership of property or certifying to the validity of documents relative to such titles.
   10. "Multiple line insurance" which is insurance combining on a mandatory basis in a single policy coverage coming within two or more of the kinds of insurance as defined in this chapter, other than title insurance, life insurance, or the granting of annuities, and for either a divisible or an indivisible rate or premium.
2. It is intended that certain insurance coverages may come within the definitions of two or more kinds of insurance as defined in this chapter, and the inclusion of such coverage within one definition shall not exclude it as to any other kind of insurance within the definition of which such coverage is likewise reasonably includible. Unless the context requires otherwise, a corporation engaged in the business described in subdivision (a)(1) of this section may also do any and all insurance business comprised in subdivision (a)(2) of this section relating to health insurance and subdivision (a)(3)(D) of this section relating to workers' compensation. A corporation engaged in business comprised in any subdivision except subdivision (a)(1) of this section may do any business comprised in any of the other subdivisions except subdivision (a)(1) of this section, provided the requirements of law are complied with, and provided further, that a company not engaged in writing a particular class of insurance on July 1, 1968, shall not write insurance of such class thereafter without approval of the Commissioner after he or she is satisfied that such insurance will be soundly underwritten on the strength of adequate capital and reserves considering the risks insured against and the experience, resources, and responsibility of the underwriter. In addition to any power to engage in any other kind of business besides an insurance business that may be specifically conferred by this part, an insurance company organized under this section may engage in other kinds of business to the extent necessarily or reasonably incidental to the kind or kinds of insurance business which it is authorized to do under this section.
3. Nothing in this section shall authorize a company to issue a policy of title insurance in this State until the applicant therefor has been notified in writing by such company of all defects in title which will be excluded from coverage under the prospective policy. Such notice shall set forth in descriptive terms the nature of such excluded defects. Upon receipt of such notice, the applicant shall have the option of cancelling his or her application without any liability therefor to said company.
4. Any corporation or organization which on July 1, 1968 had been organized and was existing under a special charter granted by the General Assembly prior hereto, or had been organized and was existing under insurance laws in effect prior hereto, may continue to do a business of insurance specified in this section and authorized by its charter under the continued supervision of the Commissioner.
5. The provisions of this title relating to the regulation of the business of insurance shall not apply to activities engaged in by ambulance services and first responder services for which they are licensed by the Board of Health pursuant to 24 V.S.A. chapter 71.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 1); amended 1981, No. 165 (Adj. Sess.), § 1; 1993, No. 166 (Adj. Sess.), § 1.

§ 3301a. Insurance defined.

As used in this title, "insurance" means an agreement to indemnify or otherwise assume an obligation, provide services or any other thing of value on the happening of a particular event or contingency, or to provide indemnity for loss with respect to a specified subject by specified circumstances in return for a consideration. Without limiting the generality of the term, "insurance" shall include any business defined in section 3301 of this title, annuity contracts, and the business of health maintenance organizations and continuing care retirement communities.

Added 2001, No. 71 , § 2, eff. June 16, 2001.

§ 3302. Plan of organization; incorporators.

For the purpose of this chapter an insurance company may be incorporated as a stock insurer with its capital divided into shares and owned by the stockholders, or a mutual insurer without capital stock the governing body of which is elected by its policyholders. There shall be not less than 15 incorporators of whom not less than two-thirds shall be citizens of this State. Except as provided in sections 4831 through 4856 of this title, no unincorporated association shall be formed after July 1, 1968, for the purpose of doing any insurance business in Vermont. Those domestic unincorporated associations which are doing insurance business of any kind under authority of the Commissioner on July 1, 1968, may continue to carry on their business subject to the provisions of this part.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 2); amended 1971, No. 31 , § 2, eff. March 31, 1971.

§ 3303. Mutual companies; directors, charter provisions as to.

The articles of association or bylaws of a mutual insurer shall set forth the manner in which its board of directors or other governing body shall be elected, and in which meetings of policyholders shall be called, held, and conducted, subject to such procedures as may be required by the Commissioner under section 75 of this title.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 3); amended 1971, No. 51 , § 1, eff. July 1, 1971.

§ 3304. Capital and surplus requirements.

To qualify for authority to transact the business of insurance, a stock insurer seeking such authorization shall possess and thereafter maintain unimpaired paid-in capital of not less than $2,000,000.00 and, when first so authorized, shall possess and maintain free surplus of not less than $3,000,000.00. Such capital and surplus shall be in the form of cash or marketable securities, a portion of which may be held on deposit with the State Treasurer, such securities as designated by the insurer and approved by the Commissioner, in an amount and subject to such conditions determined by the Commissioner. Such conditions shall include a requirement that any interest or other earnings attributable to such cash or marketable securities shall inure to the benefit of the insurer until such time as the Commissioner determines that the deposit must be used for the benefit of the policyholders of the insurer or some other authorized public purpose relating to the regulation of the insurer. The Commissioner may prescribe additional capital or surplus for all stock insurers authorized to transact the business of insurance based upon the type, volume, and nature of insurance business transacted. The Commissioner may reduce or waive the capital and surplus amounts required by this section pursuant to a plan of dissolution for the company approved by the Commissioner.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 4); amended 1991, No. 101 , § 1; 2003, No. 105 (Adj. Sess.), § 2; 2005, No. 36 , § 9, eff. June 1, 2005.

§ 3305. Petition; hearing.

Before the articles of association are transmitted to the Secretary of State, the incorporators shall petition the Commissioner to hold a public hearing, in the county where the proposed corporation is to have its principal office, to determine whether the establishment and maintenance of the proposed corporation will promote the general good of the State. The Commissioner shall thereupon appoint a time and place in such county for hearing the petition and shall make an order for the publication of the substance of the petition and of the time and place of the hearing three weeks successively in a newspaper published in the county, or, for want thereof, in an adjoining county, the last publication to be at least 12 days before the day appointed for the hearing. If, after the hearing, the Commissioner finds and adjudges that the establishment and maintenance of the proposed corporation will promote the general good of the State, he or she shall give the incorporators a certificate to that effect under his or her seal. In determining the general good of the State as herein required, the Commissioner shall consider:

1. The character, reputation, financial standing, and purposes of the organizers, incorporators, and subscribers organizing the proposed insurer or organization.
2. The character, reputation, financial responsibility, insurance experience, and business qualifications of its proposed officers and directors.
3. Such other aspects of the proposed insurer or financing as he or she may deem advisable.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 5).

§ 3306. Duties of Secretary of State, records.

The articles of association, the certificate, and the organization fee shall be transmitted to the Secretary of State, who shall thereupon record both the articles and the certificate.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 6).

§ 3307. Consideration for stock.

1. The capital stock of a corporation doing any and all insurance and reinsurance comprised in any one or more of the subdivisions of section 3301 of this title shall be issued at not less than par and under any of the following conditions, subject to the approval of the Commissioner:
   1. For cash.
   2. For the stock of another insurance company on a reorganization or merger.
   3. For the stock of the same insurance company at the same or a different par value or preference than that of the stock called for exchange.
   4. As a stock dividend.  Any increase in par value under subdivisions (2) and (3) of this subsection and of the stock dividend provided in this subdivision are chargeable against the issuing corporation's surplus, undivided profits or a reserve established for that purpose.  However, the limitations of this subdivision shall not exclude the payment of cash for a part of any increase in par value provided in subdivisions (2) and (3) of this subsection.
2. Whenever the charter or articles of association of an insurance company are so amended as to authorize an increase in its capital stock, it shall not be required to issue the whole amount of authorized increase, nor required to make any statement of capital except to the amount actually paid in or issued in accordance with the provisions of this chapter.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 7).

§ 3308. List of stockholders; certificate to transact business; liability of president and directors.

When the entire capital stock of a corporation having capital stock has been issued, a complete list of the stockholders with the name and post office address of each and the number of shares held by each shall be filed with the Commissioner, who shall examine the corporation. If, after such examination, it appears that the whole capital stock has been paid in cash, and the Commissioner has considered the criteria in section 3361 of this chapter, the Commissioner shall issue a certificate under his or her seal authorizing the corporation to begin the transaction of business, which shall be filed with the Secretary of State. A corporation having capital stock shall not begin the transaction of business until the certificate has been issued and filed. If a corporation commences business before a certificate is issued and filed, the president and directors assenting thereto are personally liable for all debts incurred before the certificate is issued and filed.

Amended 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 8); 2015, No. 15 , § 1, eff. May 1, 2015.

§ 3308a. Reorganization formations.

Notwithstanding sections 3302, 3303, 3304, 3307, 3308, and 3309 of this title, the Commissioner may permit the formation of an insurance company without capital or surplus to be merged with or into or consolidated with an existing insurance company authorized to do business under this chapter for the purpose of facilitating a reorganization or acquisition transaction, including a triangular merger transaction, involving such existing company. There shall be no more than one authorized insurance company surviving reorganization under this section.

Added 1997, No. 54 , § 1, eff. June 26, 1997.

Cross References

Cross references. Capital and surplus requirements, see § 3304 of this title.

Mutual insurers to commence business, see § 3309 of this title.

§ 3309. Mutual insurers to commence business; when.

1. A corporation that, according to its charter, is not to have a capital stock shall not receive authorization to commence business until:
   1. it complies with preliminary requirements for the procurement of an adequate amount of subscriptions for insurance and possesses and thereafter maintains unimpaired basic surplus of not less than $2,000,000.00 and, when first authorized, shall possess free surplus of not less than $3,000,000.00; and
   2. the Commissioner has considered the criteria in section 3361 of this chapter.
2. The Commissioner in his or her discretion may establish lesser surplus amount requirements in the case of affiliated corporations jointly conducting the business of insurance under a pooling agreement. Such surplus shall be in the form of cash or marketable securities, a portion of which may be held on deposit with the State Treasurer, such securities as designated by the insurer and approved by the Commissioner, in an amount and subject to conditions determined by the Commissioner. The conditions shall include a requirement that any interest or other earnings attributable to cash or marketable securities shall inure to the benefit of the insurer until the Commissioner determines that the deposit must be used for the benefit of the policyholders of the insurer or some other authorized public purpose relating to the regulation of the insurer. The Commissioner may prescribe additional surplus based upon the type, volume, and nature of insurance business transacted.

   Amended 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 9); 1991, No. 101 , § 2; 2003, No. 105 (Adj. Sess.), § 3; 2015, No. 15 , § 2, eff. May 1, 2015.

§ 3310. Amendment of charter.

A corporation formed under the provisions of this chapter or by a special act of the Legislature may amend its articles of association or its charter as provided therein or in the absence of such provision by vote of three-fourths of its stockholders (in the case of a stock company) or members (in the case of a mutual company) present at a meeting thereof, provided the Commissioner, in all cases, on petition and after a hearing held substantially as is specified in section 3305 of this title, certifies that such amendment shall not be detrimental to the policyholders and such other persons as have an interest in said corporation. His or her certificate shall be recorded with the certificate of amendment.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 10).

Cross References

Cross references. Amendment of corporate articles of incorporation and bylaws, see § 10.01 et seq. of Title 11A.

§ 3311. Quorum.

In the case of a mutual insurance company, the policyholders or annuitants therein, who attend a duly called meeting, shall constitute a quorum.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 11).

§ 3312. Construction with other laws.

1. Corporations formed under the provisions of this subchapter shall have the privileges and be subject to the provisions of the general corporation law as well as the applicable provisions contained in this part.  In the event of conflict between the provisions of the general corporation law and the provisions of this part, the latter shall control.  Such corporations shall not be required to make any annual report except as provided in this part.
2. A corporation formed prior to July 1, 1968, for any purpose for which a corporation may be formed under this subchapter, with respect to all acts done after such date, shall be deemed to be within the provisions of this subchapter and of the general corporation law, in like manner as a corporation formed under this subchapter.  But the foregoing provisions shall be subject to all such exceptions and qualifications as are contained in 11 V.S.A. § 2 .

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 12).

§ 3313. Proxies.

1. The Commissioner may prescribe by rules and regulations, the form, content and manner of solicitation of any proxy, consent, or authorization in respect of any voting security issued by a domestic insurer as necessary or appropriate in the public interest, or for protection of investors in the securities, or to insure the fair dealing in the securities.
2. The term "voting security" as used in this section shall mean any instrument issued by a domestic stock insurance company which, in law or by contract, gives the holder the right to vote, consent, or authorize any corporate action of the insurer.
3. This section shall not apply to voting securities of a domestic insurer if the securities are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.
4. Any person, domestic insurer, or director, officer, or employee of the insurer, shall not solicit or permit the use of his or her name to solicit, by mail or otherwise, any person to give a proxy, consent, or authorization in respect of a voting security issued by the insurer in contravention of any rule or regulation made under this section.
5. Failure to comply with any rule or regulation made under this section shall be unlawful and any proxy or consent obtained in violation of this section or in contravention of any rule or regulation made thereunder shall be void.  Any domestic insurer or any person who is legally entitled to vote, consent, or authorize by virtue of being the holder of record of such a security, or the Commissioner, if the other parties fail to act within 15 days after the date on which the vote was cast or counted, may enforce compliance with any rule or regulation made under this section, by appropriate civil action, except that no suit shall be brought more than 30 days after the date on which the vote, consent, or authorization was to have been effected.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 1, § 13).

§ 3314. Annual financial statements; reports; filing fee.

Notwithstanding any other provision of law, any insurer, of whatever form and description other than captive insurance companies organized under chapter 141 of this title, that is required by statute to file an annual statement or report of financial condition, shall pay a fee of $100.00 for filing its statement or report with the Commissioner.

Added 1985, No. 236 (Adj. Sess.), § 13.

§ 3315. Coordinated regulation.

Notwithstanding section 5112 of this title and any other provision of this title, the Commissioner may cooperate and coordinate with the insurance supervisory authorities of other states or through the facilities or subsidiaries of a national organization which facilitate regulatory efficiency and cooperation on a nationwide basis. The areas of cooperation and coordination contemplated by this section include the following: solvency oversight; company and producer licensing, appointment, and discipline; rate and forms review and approval; and investigation and examination of persons subject to the insurance laws of this State. The Commissioner may enter into agreements or contracts concerning the coordination and cooperation contemplated by this section with such other state or organization. The Commissioner may adopt, by rule, any uniform standards or procedures as are necessary to fully implement cooperative and coordinated supervision of the business of insurance. In the event of conflict between this provision and other pertinent provisions of parts 3 and 4 of this title, the Commissioner may elect that this provision prevail, if the Commissioner deems that such election is in the best interests of the State.

Added 2001, No. 71 , § 3, eff. June 16, 2001.

§ 3316. Corporate governance; disclosure.

1. Purpose.  The purpose of this section is to:
   1. provide the Commissioner a summary of an insurer or insurance group's corporate governance structure, policies, and practices so the Commissioner may gain and maintain an understanding of the insurer's corporate governance framework;
   2. outline the requirements for completing a corporate governance annual disclosure with the Commissioner; and
   3. provide for the confidential treatment of the corporate governance annual disclosure and related information that contains confidential and sensitive information related to an insurer or insurance group's internal operations and proprietary and trade secret information that, if made public, could potentially cause the insurer or insurance group competitive harm or disadvantage.
2. Scope.  This section shall not be construed to prescribe or impose corporate governance standards and internal procedures beyond that which is required under applicable State corporate law. Nor shall it be construed to limit the Commissioner's authority, or the rights or obligations of third parties, under section 13 of this title.
3. Application.  The requirements of this section shall apply to all insurers domiciled in Vermont.
4. Definitions.  As used in this section:
   1. "Corporate Governance Annual Disclosure" or "CGAD" means a confidential report on corporate governance filed by the insurer or insurance group as required by this section.
   2. "Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in subdivision 3681(4) of this title.
   3. "Insurer" means an insurance company that offers any of the types of insurance itemized under subsection 3301(a) of this chapter, except that it shall not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. It shall also mean an insurance group.
   4. "ORSA Summary Report" means a report as defined in subdivision 3582(6) of this chapter.
5. 1. Disclosure.  On or before June 1 of each year, beginning in the year 2016, an insurer shall submit to the Commissioner a CGAD, which contains the information described in subdivision (g)(2) of this section. Notwithstanding a request from the Commissioner made under subdivision (3) of this subsection, if the insurer is a member of an insurance group, the insurer shall submit the report required by this subsection to the Commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners (NAIC). (e) (1)  Disclosure.  On or before June 1 of each year, beginning in the year 2016, an insurer shall submit to the Commissioner a CGAD, which contains the information described in subdivision (g)(2) of this section. Notwithstanding a request from the Commissioner made under subdivision (3) of this subsection, if the insurer is a member of an insurance group, the insurer shall submit the report required by this subsection to the Commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners (NAIC).
   2. The CGAD shall include a signature of the insurer's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer's board of directors or the appropriate committee thereof.
   3. An insurer not required to submit a CGAD under this section shall do so upon the Commissioner's request.
   4. For purposes of completing the CGAD, the insurer may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level, depending upon how the insurer has structured its system of corporate governance. The insurer is encouraged to make the CGAD disclosures at the level at which: the insurer's risk appetite is determined; the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors is coordinated and exercised; or legal liability for failure of general corporate governance duties would be placed. If the insurer determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.
   5. The review of the CGAD and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent Handbook referenced in subdivision (1) of this subsection.
   6. Insurers providing information substantially similar to the information required by this section in other documents provided to the Commissioner, including proxy statements filed in conjunction with Form B requirements, or other state or federal filings provided to the Commissioner, shall not be required to duplicate that information in the CGAD, but shall only be required to cross reference the document in which the information is included.
6. Rules.  The Commissioner may adopt rules and issue orders necessary to carry out the provisions of this section.
7. 1. CGAD contents.  An insurer has discretion over the responses to CGAD inquiries, provided CGAD contains the material information necessary to permit the Commissioner to gain an understanding of the insurer's corporate governance structure, policies, and practices. The Commissioner may request additional information he or she deems material and necessary to provide the Commissioner with a clear understanding of the corporate governance policies, and the reporting or information system or controls implementing those policies. (g) (1)  CGAD contents.  An insurer has discretion over the responses to CGAD inquiries, provided CGAD contains the material information necessary to permit the Commissioner to gain an understanding of the insurer's corporate governance structure, policies, and practices. The Commissioner may request additional information he or she deems material and necessary to provide the Commissioner with a clear understanding of the corporate governance policies, and the reporting or information system or controls implementing those policies.
   2. Notwithstanding subdivision (1) of this subsection, CGAD shall be prepared consistent with CGAD rules adopted by the Commissioner. Rules adopted by the Commissioner under this subdivision shall be consistent with the NAIC Model Regulation on CGAD. Documentation and supporting information shall be maintained and made available upon examination or upon request of the Commissioner.
8. 1. Confidentiality.  Documents, materials, or other information, including CGAD, in the possession or control of the Department obtained or created by, or disclosed to the Commissioner or any other person under this section, are recognized by this State as being proprietary and to contain trade secrets. All such documents, materials, or other information are confidential and privileged, and are exempt from public inspection and copying under the Public Records Act. In addition, they are not subject to subpoena nor discovery, nor admissible in evidence in any private civil action. However, the Commissioner is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as a part of the Commissioner's official duties. The Commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. Nothing in this subsection shall be construed to require written consent of the insurer before the Commissioner may share or receive confidential documents, materials, or other CGAD-related information pursuant to subdivision (3) of this subsection for the purpose of assisting in the performance of the Commissioner's regular duties. (h) (1)  Confidentiality.  Documents, materials, or other information, including CGAD, in the possession or control of the Department obtained or created by, or disclosed to the Commissioner or any other person under this section, are recognized by this State as being proprietary and to contain trade secrets. All such documents, materials, or other information are confidential and privileged, and are exempt from public inspection and copying under the Public Records Act. In addition, they are not subject to subpoena nor discovery, nor admissible in evidence in any private civil action. However, the Commissioner is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as a part of the Commissioner's official duties. The Commissioner shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer. Nothing in this subsection shall be construed to require written consent of the insurer before the Commissioner may share or receive confidential documents, materials, or other CGAD-related information pursuant to subdivision (3) of this subsection for the purpose of assisting in the performance of the Commissioner's regular duties.
   2. Neither the Commissioner nor any person who receives documents, materials, or other CGAD-related information, through examination or otherwise, while acting under the authority of the Commissioner, or with whom such documents, materials, or other information are shared pursuant to this section, is permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subdivision (1) of this subsection.
   3. In order to assist in the performance of the Commissioner's regulatory duties, the Commissioner may:
      1. Upon request, share documents, materials, or other CGAD-related information including confidential and privileged documents, materials, or information subject to subdivision (1) of this subsection including proprietary and trade secret documents and materials with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in subsection 3695(c) of this chapter, the NAIC, and with third-party consultants pursuant to subsection (i) of this section, provided the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials, or other information and verifies in writing the legal authority to maintain confidentiality.
      2. Receive documents, materials, or other CGAD-related information, including otherwise confidential and privileged documents, materials or information, including proprietary and trade-secret information or documents, from regulatory officials of other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in subsection 3695(c) of this chapter, and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, materials, or information.
   4. The sharing of information and documents by the Commissioner pursuant to this section does not constitute a delegation of regulatory authority or rulemaking, and the Commissioner is solely responsible for the administration, execution, and enforcement of the provisions of this section.
   5. A waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials, or other CGAD-related information shall not occur as a result of disclosure of such CGAD-related information or documents to the Commissioner under this section or as a result of sharing as authorized under this section.
      1. (1)  NAIC and third-party consultants.  The Commissioner may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants, and other experts not otherwise a part of the Commissioner's staff he or she deems reasonably necessary to assist with the review of the CGAD and related information or with the insurer's compliance with this section.

         (2) A person retained under this subsection is under the direction and control of the Commissioner and shall act in a purely advisory capacity.

         (3) The NAIC and third-party consultants are subject to the same confidentiality standards and requirements as the Commissioner.

         (4) As part of the retention process, a third-party consultant shall verify to the Commissioner, with notice to the insurer, that it is free of a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this section.

         (5) A written agreement with the NAIC or a third-party consultant governing the sharing and use of information provided under this section shall contain the following provisions and expressly require the written consent of the insurer prior to making public such information:

      1. Specific procedures and protocols for maintaining the confidentiality and security of CGAD-related information shared with the NAIC or a third-party consultant pursuant to this subdivision (5).
      2. Procedures and protocols for sharing by the NAIC only with other state regulators from states in which an insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality.
      3. A provision specifying that ownership of the CGAD-related information shared with the NAIC or a third-party consultant remains with the Department and that use of such information by the NAIC or a third-party consultant is subject to the direction of the Commissioner.
      4. A provision prohibiting the NAIC and third-party consultants from storing the information in a permanent database after the underlying analysis is completed.
      5. A provision requiring the NAIC and third-party consultants to provide prompt notice to the Commissioner and to the insurer regarding any subpoena, request for disclosure, or request for production of the insurer's CGAD-related information.
      6. A requirement that the NAIC and third-party consultants consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or third-party consultant pursuant to this section.

         (j) Sanctions. An insurer failing, without just cause, to timely file the CGAD as required by this section shall be required, after notice and hearing, to pay a penalty of $10,000.00 for each day's delay, to be recovered by the Commissioner, and the penalty so recovered shall be paid into the General Fund of this State. The maximum penalty under this section is $1,000,000.00. The Commissioner may reduce the penalty if the insurer demonstrates to the Commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

         (k) Severability Clause. If any provision of this section other than subsection (h), or the application thereof to any person or circumstance, is held invalid, such determination shall not affect the provisions or applications of this section which can be given effect without the invalid provision or application, and to that end the provisions of this section, with the exception of subsection (h), are severable.

         Added 2015, No. 10 , § 1, eff. May 1, 2015.

§ 3361. Requirements for license.

1. A foreign or alien insurer shall not transact business in this State unless it first obtains from the Commissioner a license authorizing it to do so.  Before receiving a license, it shall file with the Commissioner a certified copy of its charter and bylaws, a statement under oath of its president and secretary, showing its financial condition, and any other statements required by the Commissioner.
2. An insurer making an application or reapplication for an original license to transact business in this State shall pay to the Commissioner a nonrefundable fee of $200.00 for examining, investigating, and processing the application. In addition, each insurer shall pay a license fee for the year of registration and a renewal fee for each year thereafter of $300.00 not including fees for producers licenses and renewals thereof. The annual renewal fee of $300.00 shall be paid on or before March 1.
3. If the Commissioner is satisfied with the copies and statements that such insurer has complied with the provisions of this part, he or she may grant a license authorizing it to do insurance business by lawfully constituted and licensed agents only, until April 1 thereafter, which license may be renewed. In granting or renewing such license to do business the Commissioner shall consider the criteria established for the approval and certification of domestic insurers hereinabove set forth, within the context of the stated legislative policy. Notwithstanding the provisions of Title 11A, any insurer licensed by the Commissioner under this section may transact insurance business in this State. Such corporations shall not be required to make any annual report except as provided in this title. This section shall not be construed to prohibit residents of this State from procuring insurance at the home office of a foreign insurer.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 1); amended 1977, No. 148 (Adj. Sess.), § 1, eff. date, see note set out below; 1981, No. 42 , § 1; 1993, No. 235 (Adj. Sess.), § 9b, eff. June 21, 1994; 2001, No. 71 , § 4, eff. June 16, 2001; 2005, No. 122 (Adj. Sess.), § 8.

§ 3362. Authority to transact various kinds of insurance business.

A foreign or alien insurer may transact more than one kind of insurance business, provided the charter of such corporation authorizes it to transact such different kinds of insurance business and its capital is sufficient to provide the required capital for each kind of business to be transacted.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 2); amended 2017, No. 134 (Adj. Sess.), § 1.

§ 3363. Revocation of license.

If such insurer violates any of the laws of this State relating to insurance companies, the Commissioner may revoke its license and cause notice thereof to be published at least one week in two daily newspapers, one of general circulation in Montpelier and one of general circulation in Burlington. An agent of such insurer shall not, after the first publication of such notice, issue or renew a policy of insurance in its behalf.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 3).

§ 3364. Authorization for investment purposes only.

Such insurer may make investments in this State without qualifying to do business in this State as a foreign corporation under the general corporation law or as a foreign or alien insurer under this article provided such insurer constitutes the Secretary of State as his or her agent for the service of process and enters into a stipulation with said Secretary to submit to the jurisdiction of the courts of this State.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 4).

§ 3365. Plan of organization.

Such insurers admitted to do business in this State under authority of this article shall be incorporated as stock or mutual companies as defined in section 3302 of this title. Except as provided in sections 4831 through 4856 of this title, no unincorporated or joint stock association shall be admitted after July 1, 1968, for the purpose of doing any insurance business in Vermont. Such unincorporated or joint stock associations which are lawfully admitted and qualified on such date may continue to carry on their business in this State subject to the provisions of this part, but they shall not write any new or additional lines of insurance after such date.

Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 5); amended 1971, No. 31 , § 3, eff. March 31, 1971.

§ 3366. Assets of companies.

1. 1. A foreign or alien insurer authorized to do business in this State shall possess and thereafter maintain unimpaired paid-in capital or basic surplus of not less than $2,000,000.00 and, when first so authorized, shall possess and maintain free surplus of not less than $3,000,000.00. (a) (1)  A foreign or alien insurer authorized to do business in this State shall possess and thereafter maintain unimpaired paid-in capital or basic surplus of not less than $2,000,000.00 and, when first so authorized, shall possess and maintain free surplus of not less than $3,000,000.00.
   2. The capital and surplus shall be in the form of cash or marketable securities, a portion of which may be held on deposit with the State Treasurer, such securities as designated by the insurer and approved by the Commissioner, in an amount and subject to conditions determined by the Commissioner. The conditions shall include a requirement that any interest or other earnings attributable to such cash or marketable securities shall inure to the benefit of the insurer until such time as the Commissioner determines that the deposit must be used for the benefit of the policyholders of the insurer or some other authorized public purpose relating to the regulation of the insurer.

      The Commissioner may prescribe additional capital or surplus for all insurers authorized to transact the business of insurance based upon the type, volume, and nature of insurance business transacted. The Commissioner may reduce or waive the capital and surplus amounts required by this section pursuant to a plan of dissolution for the company approved by the Commissioner.

2. The express purpose of subsection (a) of this section and the Commissioner's power to require the deposit of cash or marketable securities set forth therein is to protect the interests of Vermont policyholders in the event of the insolvency of the insurer. Except to the extent it would contravene applicable provisions of 9A V.S.A. Article 9, the State of Vermont shall be deemed to control the funds on deposit and to have a lien on the funds for the benefit of the Vermont policyholders affected by the insolvency. The lien so created shall be superior to any lien filed by a general creditor of the insurer.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 6); amended 2003, No. 105 (Adj. Sess.), § 4; 2005, No. 36 , § 10, eff. June 1, 2005; 2019, No. 57 , § 3.

§ 3367. Retaliatory provisions.

1. If another state or country imposes upon or requires of a domestic insurer, association, or society, or a surety or guaranty company, or its agents doing business therein, fees, fines, penalties, deposits, obligations, or prohibitions exceeding those imposed by this State upon or required of a foreign or alien insurer, association, or society, or a surety or guaranty company doing business herein, an insurer, association, or society or a surety or guaranty company organized under the laws of such other state or country and its agents doing business in this State, shall be subject to the fees, fines, penalties, deposits, obligations, or prohibitions similar to those so imposed in such other state or country, and the same shall be imposed, required, and enforced as like fees, fines, penalties, deposits, obligations, and prohibitions are under the laws of this State; but this section shall not apply unless the fees required by such other state or country of an insurer, association, or society, or a surety or guaranty company of this State doing business in such other state or country are larger in the aggregate on the same amount of business than the fees required by this State of an insurer, association, or society, or a surety or guaranty company of such other state or country doing business in this State. When any other state prohibits all foreign and domestic insurers and associations from writing therein any line or class of insurance permitted to be written in this State, companies and associations domiciled in such other state or country shall not by reason of this section be prohibited from writing such line or class in this State. The Commissioner need not assert the provisions of this section against a foreign company with respect to its request for a certificate of authority to do business in this State if the Commissioner determines that such company would otherwise comply with the requirements for such certificate.
2. If the Commissioner determines that an insurance department or other similar regulatory entity of any other state or territory of the United States has imposed any sanctions, fines, penalties, financial or deposit requirements, prohibitions, restrictions, regulatory requirements, or other obligations of any kind on domestic companies authorized to transact insurance in this State and licensed to transact business in such other state or territory, (1) because the insurance department of this State is not accredited or otherwise approved by the National Association of Insurance Commissioners, or by any agent or representative of the association; or (2) because the insurance department of this State has not complied with any directive, financial annual statement requirement, model act or regulation, market conduct or financial examination report or requirement, or any report or requirement of any kind imposed directly, or indirectly through the laws or regulations of another state, by the National Association of Insurance Commissioners, or by any agent or representative of the association; or (3) because a domestic insurer has refused to comply with, file, or pay any requirement, report, fee, assessment, or charge determined by the Commissioner to be unreasonable and imposed directly, or indirectly through the laws or regulations of another state, by the National Association of Insurance Commissioners, or by any agent or representative of the association, then the Commissioner shall impose similar sanctions, fines, penalties, financial or deposit requirements, prohibitions, restrictions, regulatory requirements, or other obligations of any kind on the domestic companies of such other state or territory. The Commissioner shall adopt by rule standards and procedures for imposing, calculating, apportioning, or collecting such similar sanctions, fines, penalties, financial or deposit requirements, prohibitions, restrictions, regulatory requirements, or other obligations.
3. If any other state requires a domestic insurer licensed to transact insurance in such state to pay, directly or indirectly, a fee, assessment, or charge of any kind to the National Association of Insurance Commissioners in excess of the fees, assessments, or charges, if any, approved by the Commissioner under section 3552 of this title, such fees, assessments, or charges shall be considered excessive and shall be imposed on the domestic insurers of such other state doing business in this State. The Commissioner shall adopt by rule standards and procedures for imposing, calculating, apportioning, and collecting such excessive fees, assessments, or charges.

   Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 1, subch. 2, § 7); amended 1967, No. 353 (Adj. Sess.), § 7; 1995, No. 83 (Adj. Sess.), § 4.

§ 3368. Transacting business without certificate of authority prohibited.

1. It shall be unlawful for any insurer to enter into a contract of insurance as an insurer or to transact insurance business in this State as set forth in subsection (b) of this section, without a certificate of authority from the Commissioner of Financial Regulation; provided that this subsection shall not apply to:
   1. The lawful transaction of surplus lines insurance.
   2. The lawful transaction of reinsurance by insurers.
   3. Transactions in this State involving a policy lawfully solicited, written, and delivered outside this State covering only subjects of insurance not resident, located, or expressly to be performed in this State at the time of issuance and which transactions are subsequent to the issuance of such policy.
   4. Transactions in Vermont involving group or blanket insurance and group annuities if:
      1. the master policy was lawfully issued and delivered in a state in which the insurer was authorized to do an insurance business;
      2. 1. no more than 25 of the certificate holders are Vermont residents; or (B) (i) no more than 25 of the certificate holders are Vermont residents; or
         2. the master policy covers one or more certificate holders who reside in Vermont, are employed at a workplace located outside Vermont and have obtained insurance coverage through the workplace;
      3. the person or entity holding the master policy exists primarily for purposes other than to procure insurance, is not a Vermont corporation or resident, and does not have its principal office in Vermont; and
      4. the policy is not offered for sale by an agent or broker licensed in Vermont, offered by mail to a Vermont resident, directly advertised to a Vermont resident, or marketed in Vermont in a similar manner.

         An insurer exempted from the requirements of this subsection by the provisions of this subdivision shall not issue or deliver a policy or certificate to a resident of Vermont without including a notice approved by the Commissioner that the policy or certificate is not subject to regulation by Vermont.

   5. Transactions involving contracts issued by a life insurance or annuity company, organized and operated without profit, to any private shareholder or individual exclusively for the purpose of aiding and strengthening educational institutions by issuing insurance and annuity contracts only to or for the benefit of such institutions and individuals engaged in the service of such institution.
   6. Transactions involving any insurance company or underwriter issuing contracts of insurance to industrial insured, or to industrial insureds, or to contracts of insurance issued to an industrial insured.  For purposes of this section, an "industrial insured" is:
      1. an insured who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer; and
      2. whose aggregate annual premiums for insurance on all risks total at least $25,000.00; and
      3. has at least 25 full-time employees.
   7. Transactions involving wet marine and transportation insurance covering property in the course of transportation by land, air, or water, to, from, or through this State and including any preparation or storage incidental thereto.
   8. Transactions in this State involving insurance on the property or operations of aircraft or railroads engaged in interstate or foreign commerce.
   9. Transactions in this State involving a policy of insurance or annuity contract issued prior to July 1, 1968, with regard to subdivisions (1) through (7) of this subsection (a) and prior to July 1, 1980, with regard to subdivision (8) of this subsection (a) of this section.
2. Any of the following acts in this State, effected by mail or otherwise by an unauthorized insurer, shall be included among those deemed to constitute transacting insurance business in this State:
   1. the issuance or delivery of contracts of insurance to residents of this State;
   2. the solicitation of applications for such contracts;
   3. the collection of premium, membership fees, assessments, or other considerations for such contracts; or
   4. the transaction of matters subsequent to the execution of such contracts and arising out of them.
3. Any insurer that violates subsection (a) of this section shall be required to pay an administrative penalty of not less than $500.00 nor more than $5,000.00 for each violation.
4. The failure of an insurer to obtain a certificate of authority shall not impair the validity of any act or contract of such insurer and shall not prevent such insurer from defending any action in any court of this State, but no insurer transacting insurance business in this State without a certificate of authority shall be permitted to maintain an action in any court of this State to enforce any right, claim, or demand arising out of the transaction of such business until such insurer shall have obtained a certificate of authority, and with respect to contracts solicited, issued, or delivered after passage of this act an insurer shall not maintain an action in this State upon such contract if, at the time of soliciting, issuing, or delivering such contract, it was doing business in this State without lawful authority.  Nor shall an action be maintained in any court of this State by any successor or assignee of such insurer on any such right, claim, or demand originally held by such insurer until a certificate of authority shall have been obtained by such insurer or by an insurer which has acquired all or substantially all of its assets, and with respect to contracts solicited, issued, or delivered after passage of this act, a successor or assignee of such contract shall not maintain an action in this State upon such contract if, at the time of soliciting, issuing, or delivering such contract, the insurer was doing business in this State without lawful authority.

   Added 1967, No. 353 (Adj. Sess.), § 1; amended 1979, No. 197 (Adj. Sess.), § 13; 1989, No. 106 , § 1, eff. Sept. 1, 1989; 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 167 (Adj. Sess.), § 1; 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.

§ 3368a. Unauthorized and misleading transactions.

1. No person shall transact insurance business in this State unless the Commissioner has issued a license or certificate of authority to such person as required by section 3361 or 3368 of this title, or by chapters 123, 125, and 139 of this title. The provisions of this section shall not apply to an insurer licensed in this State or in any foreign or alien jurisdiction who is subject to section 3368 of this title.
2. No person shall act as an officer, director, or controlling person for a person who is engaged in a violation of subsection (a) of this section. As used in this subsection, "controlling" is defined by subdivision 3681(3) of this title.
3. No person shall directly or indirectly represent or aid a person in violating subsection (a) of this section.
4. 1. No person shall use in its advertisements or other marketing materials or communications the term "insurance" or any other term in a manner which could reasonably lead a person into believing that the product marketed, offered, or issued is insurance, unless such person is authorized under this title to transact the business of insurance. (d) (1)  No person shall use in its advertisements or other marketing materials or communications the term "insurance" or any other term in a manner which could reasonably lead a person into believing that the product marketed, offered, or issued is insurance, unless such person is authorized under this title to transact the business of insurance.
   2. No person shall use in its advertisements or other marketing materials or communications the terms "health plan," "coverage," "co-pay," "co-payments," "deductible," "preexisting conditions," "guaranteed issue," "premium," "enrollment," "preferred provider organization," or any other term in a manner that could reasonably mislead an individual into believing that the product marketed, offered, or issued is health insurance, unless such person is authorized under this title to transact the business of health insurance.
5. In addition to any other remedies or penalties provided by law:
   1. For each violation of the provisions of subsection (a), (b), or (c) of this section a person shall be imprisoned not more than five years or fined not more than $10,000.00, or both.
   2. For each violation of the provisions of subsection (d) of this section a person shall be imprisoned not more than two years or fined not more than $5,000.00, or both.

      Added 2007, No. 178 (Adj. Sess.), § 6.

§ 3369. Commissioner may enjoin unauthorized insurer.

Whenever the Commissioner believes, from evidence satisfactory to him or her, that any foreign or alien insurer is violating or about to violate the provisions of section 3368 of this title, the Commissioner may, through the Attorney General of this State, cause a complaint to be filed in Superior Court to enjoin and restrain such insurer from continuing such violation or engaging therein or doing any act in furtherance thereof. The Court shall have the power to make and enter an order of judgment awarding such preliminary or final injunctive relief as in its judgment is proper.

Added 1967, No. 353 (Adj. Sess.), § 2; amended 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974.

§ 3370. Service of process upon unauthorized insurer by director.

1. Any act of entering into a contract of insurance as an insurer or transacting insurance business in this State as set forth in subsection (b) of section 3368 of this title, by an unauthorized foreign or alien insurer is equivalent to and shall constitute an appointment by such insurer, of the Secretary of State and his or her successor or successors in office, to be its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against it, arising out of a violation of section 3368 of this title, and the commission of any of these acts constitutes an agreement that any such process so served shall be of the same legal force and validity as if served upon the insurer.
2. Service of such process shall be made by delivering and leaving with the Secretary of State two copies thereof and the payment to the Secretary of State of the fee prescribed by law. The Secretary of State shall forthwith mail by registered mail one of the copies of such process to such insurer at its last known principal place of business, and shall keep a record of all process so served upon him or her. Such process shall be sufficient service upon such insurer provided notice of such service and a copy of the process are, within 14 days thereafter, sent by registered mail or on behalf of the director to such insurer at its last known principal place of business, and such insurer's receipt and the affidavit of compliance herewith by or on behalf of the director are filed with the clerk of the court in which such action or proceeding is pending on or before the return date of such process or within such further time as the court may allow.
3. 1. The court in any action or proceeding in which service is made in the manner provided in subsection (b) of this section may, in its discretion, order such postponement as may be necessary to afford such insurer reasonable opportunity to defend such action or proceeding. (c) (1)  The court in any action or proceeding in which service is made in the manner provided in subsection (b) of this section may, in its discretion, order such postponement as may be necessary to afford such insurer reasonable opportunity to defend such action or proceeding.
   2. Nothing in this section is to be construed to prevent an unauthorized foreign or alien insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in subsection (b) of this section on the ground that such unauthorized insurer has not done any of the acts referred to in subsection (a) of this section.
4. No judgment by default shall be entered in any such action or proceeding until the expiration of 30 days from the date of the filing of the affidavit of compliance.
5. Nothing in this section contained shall limit or affect the right to serve any process, notice or demand required or permitted by law to be served upon any insurer in any other manner now or hereafter permitted by law.

   Added 1967, No. 353 (Adj. Sess.), § 3; amended 2017, No. 11 , § 3.