• Pennsylvania Department of Banking: Enforcement Update
  • March 31, 2008 | Author: Travis P. Nelson
  • Law Firm: Pepper Hamilton LLP - Princeton Office
  • During the first two months of 2008, the Pennsylvania Department of Banking (the Department) has settled a number of enforcement actions against automobile dealers, mortgage brokers, and check cashers.

    Motor Vehicle Sales Finance Act (MVSFA)

    The Department has settled seven enforcement actions against automobile dealers for violation of the MVSFA. The MVSFA provides that “no person shall engage or continue to engage in this Commonwealth either as principal, employee, agent or broker, in the business of an installment seller of motor vehicles under installment sales contracts, except as authorized in this act, under license issued by the Department.” Violation of the licensure provision carries a possible fine of $2,000 per offense. In the recent enforcement actions, defendants generally failed to renew their MVSFA licenses, or renewed them late. The number of violations occurring during the period for which there was no active license, ranged from four sales to 111 sales, carrying total assessed fines ranging from $400 to $10,000 per defendant.

    Mortgage Bankers and Brokers & Consumer Equity Protection Act (MBBCEPA); Secondary Mortgage Loan Act (SMLA)

    The MBBCEPA requires that any person acting as a mortgage banker, loan correspondent, mortgage broker or limited mortgage broker must obtain a license. Failure to obtain a license when so required, or directing or consenting to violations of the licensure requirement by a subordinate or other related party, is also a violation of the act. Similarly, the SMLA requires licensure, and penalizes any director, officer, or agent “who shall violate any provision of this act or shall direct or consent to such violations.” Violations of either the MBBCEPA or the SMLA carry a penalty of $2,000 per violation.

    In two January enforcement actions the Department found that personnel at the defendant companies had engaged in covered activities without a license, resulting in fines of $4,000 and $2,000, and corrective action.

    Check Casher Licensing Act (CCLA)

    The Department settled two enforcement actions against check cashers in January. The CCLA provides that “no person or business entity shall engage in the business of cashing checks for a fee without first obtaining a license under this act for each fixed location or mobile unit.” Violation of the act carries penalties of $2,000 per violation.

    In one of the enforcement actions, the violation was based on a check casher that operated under the license of another check cashier while the defendant’s license application was pending, pursuant to a management agreement. The defendant violated the terms of the management agreement, and therefore the CCLA, by advertising check cashing services under its own name instead of under the name of the licensee, among other activities. The Department imposed no fines, rather only requiring corrective action going-forward.

    In the second action, the defendant owned two check-cashing facilities, one in York, Pa., the other in Lancaster, Pa., but only the Lancaster location was licensed. The Department imposed a $5,000 fine and corrective action.