KRS 286.9-140: Database of outstanding deferred deposit transactions -- Submitting and

accessing data.

(1) (a) A common database with real -time access through an internet connection for

deferred deposit service business licensees implemented in accord ance with

this subtitle shall be accessible to the department and a deferred deposit

service business licensee to verify whether any deferred deposit transactions

are outstanding for a particular person.

(b) A deferred deposit service business licensee sha ll accurately and promptly

submit such data into the database as may be required by the commissioner

before entering into each deferred deposit transaction in such format as the

commissioner may require by administrative regulation or order, including the

customer's name, Social Security number or employment authorization alien

number, address, driver's license number, amount of the transaction, date of

transaction, date that the completed transaction is closed, and any additional

information required by the commissioner.

(c) The commissioner may promulgate administrative regulations in accordance

with KRS Chapter 13A to administer and enforce the provisions of this

subtitle and to assure that the database is used by deferred deposit service

business licensees in accordance with this subtitle.

(2) The commissioner shall impose a fee of three dollars ($3) per transaction for data

required to be submitted by a deferred deposit service business licensee, which fee

may be charged to the customer.

(3) (a) The commissioner may operate the database or may select and contract with a

third-party provider to operate the database.

(b) If the commissioner contracts with a third -party provider for the operation of

the database, all of the following apply:

1. The commissioner shall ensure that the third -party provider selected as

the database provider operates the database pursuant to the provisions of

this subtitle;

2. The commissioner shall consider cost of service and ability to meet all

the requirements of this subtitle in selecting a third -party provider as the

database provider;

3. In selecting a third -party provider to act as the database provider, the

commissioner shall give strong consideration to the third -party

provider's ability to prevent fraud, abuse, and other unlawful activities

associated with deferred deposit transactions and provide additional

tools for the administration and enforcement of this subtitle;

4. The third-party provider shall use the data collected under this subtitle

only as prescribed in this subtitle and the contract with the department

and for no other purpose;

5. If the third -party provider violates this subtitle, the commissioner may

terminate the contract and the third -party provider may be barred from

becoming a party to any other state contracts;

6. A person injured by the third -party provider's violation of this subtitle

may maintain a civil cause of action against the third -party provider and

may recover actual damages plus reasonable attorney's fees and court

costs; and

7. The commissioner may require that the third -party provider collect the

fee assessed in subsection (2) of this section from the licensee. The

third-party provider shall remit the fee collected from the licensee to the

commissioner no later than the first day of each month. The third -party

provider shall deposit any fee collected in a separate escrow account in a

federally insured financial institution and shall hold the fee deposited in

trust for the Commonwealth of Kentucky.

(4) The database shall allow a deferred deposit service business licensee accessing the

database to do all of the following:

(a) Verify whether a customer has any open deferred deposit transacti ons with

any deferred deposit business service licensee that have not been closed;

(b) Provide information necessary to ensure deferred deposit service business

licensee compliance with any requirements imposed by the United States

Treasury Office of Forei gn Assets Control and United States Treasury Office

of Financial Crimes Enforcement Network; and

(c) Track and monitor the number of customers who notify a deferred deposit

service business licensee of violations of this subtitle, the number of times a

deferred deposit service business licensee agreed that a violation occurred, the

number of times that a deferred deposit service business licensee did not agree

that a violation occurred, the amount of restitution paid, and any other

information the commissioner requires by administrative regulation or order.

(5) While operating the database, the database provider shall do all of the following:

(a) Establish and maintain a process for responding to transaction verification

requests due to technical difficultie s occurring with the database that prevent

the licensee from accessing the database through the internet;

(b) Comply with any applicable federal and state provisions to prevent identity

theft;

(c) Provide accurate and secure receipt, transmission, and stor age of customer

data; and

(d) Meet the requirements of this subtitle.

(6) When the database provider receives notification that a deferred deposit transaction

has been closed, the database provider shall designate the transaction as closed in

the database immediately, but in no event after 11:59 p.m. on the day the

commissioner or database provider receives notification.

(7) (a) The database provider shall automatically designate a deferred deposit

transaction as closed in the database five (5) days after t he transaction

maturity date unless a deferred deposit service business licensee reports to the

database provider before that time that the transaction remains open because:

1. Of the customer's failure to make payment;

2. The customer's payment instrument or an electronic redeposit is in the

process of clearing the banking system;

3. The customer's payment instrument is being returned to the deferred

deposit service business licensee for insufficient funds, a closed account,

or a stop payment order; or

4. Of any other factors determined by the commissioner.

(b) If a deferred deposit service business licensee reports the status of a

transaction as open in a timely manner, the transaction remains an open

transaction until it is closed and the database provide r is notified that the

transaction is closed.

(c) 1. Notwithstanding any other law, a licensee may accept, collect, or seek

payment on a deferred deposit transaction that is designated as closed in

the database if the transaction remains unpaid due to a re turned or

dishonored payment instrument.

2. A licensee may exercise all rights and remedies otherwise available

under law to enforce payment of a deferred deposit transaction

referenced in subparagraph 1. of this paragraph if the licensee complies

with applicable state and federal collection laws.

3. This paragraph shall apply whether the returned or dishonored payment

instrument is within or after the time periods prescribed under:

a. The Uniform Commercial Code, KRS Chapter 355; or

b. Federal clearinghouse rules.

4. Any collection activity permitted under this paragraph shall not:

a. Constitute a renewal, rollover, or consolidation of a deferred

deposit transaction; or

b. Trigger any additional reporting obligations within the database.

(8) (a) If a deferred deposit service business licensee stops providing deferred deposit

transactions, the database provider shall designate all open transactions with

that licensee as closed in the database sixty (60) days after the date the

deferred deposit service business licensee stops offering deferred deposit

transactions, unless the deferred deposit service business licensee reports to

the database provider before the expiration of the sixty (60) day period which

of its transactions remain open and the specific reason each transaction

remains open.

(b) The deferr ed deposit service business licensee shall also provide to the

commissioner a reasonably acceptable plan that outlines how the deferred

deposit service business licensee will continue to update the database after it

stops offering deferred deposit transactions.

(c) The commissioner shall promptly approve or disapprove the plan and

immediately notify the deferred deposit service business licensee of the

commissioner's decision.

(d) If the plan is disapproved, the deferred deposit service business licensee ma y

submit a new plan or may submit a modified plan for the deferred deposit

service business licensee to follow.

(e) If at any time the commissioner reasonably determines that a deferred deposit

service business licensee that has stopped offering deferred d eposit

transactions is not updating the database in accordance with its approved plan,

the commissioner shall immediately close or instruct the database provider to

immediately close all remaining open transactions of that deferred deposit

service business licensee.

(9) (a) The response to an inquiry to the database provider by a deferred deposit

service business licensee shall state only that a person is eligible or ineligible

for a new deferred deposit transaction and describe the reason for that

determination.

(b) Only the person seeking the transaction may make a direct inquiry to the

database provider to request a more detailed explanation of a particular

transaction that was the basis for the ineligibility determination.

(c) Any information regarding a ny person's transaction history is confidential; is

not subject to public inspection; is not a public record subject to the disclosure

requirements of the Kentucky Open Records Act, KRS 61.870 to 61.884; is

not subject to discovery, subpoena, or other comp ulsory process, except in an

administrative or legal action arising under this subtitle; and shall not be

disclosed to any person other than the commissioner.

(10) The commissioner may access the database only for purposes of an investigation of,

examination of, or enforcement action concerning an individual database provider,

licensee, customer, or other person.

(11) (a) The commissioner shall investigate violations of and enforce this subtitle.

(b) The commissioner shall not delegate his or her responsibi lities under this

subsection to any third-party provider.

(12) The commissioner may, by administrative regulation or order, do all of the

following:

(a) Require that data be retained in the database only as required to ensure

deferred deposit service business licensee compliance with this subtitle;

(b) Require that customer transaction data in the database are archived within

three hundred sixty -five (365) days after the customer transaction is closed

unless needed for a pending enforcement or legal action;

(c) Require that any identifying customer information is deleted from the

database when data are archived; and

(d) Require that data in the database concerning a customer transaction are

deleted from the database three (3) years after the customer transac tion is

closed or, if any administrative, legal, or law enforcement action is pending,

three (3) years after the administrative, legal, or law enforcement action is

completed, whichever is later.

(13) The commissioner may maintain access to data archived u nder subsection (12) of

this section for examination, investigation, or legislative or policy review.

(14) A deferred deposit service business licensee may rely on the information contained

in the database as accurate and is not subject to any administrati ve penalty or civil

liability as a result of relying on inaccurate information contained in the database,

provided the deferred deposit licensee accurately and promptly submits such data as

required before entering into a deferred deposit transaction with a customer.

(15) The commissioner may use the database to administer and enforce this subtitle.

(16) The commissioner may require a database provider to file a report by March 1 of

each year containing the following information:

(a) The total number and dollar amount of deferred deposit transactions entered

into in the calendar year ending December 31 of the previous year;

(b) The total number and dollar amount of deferred deposit transactions

outstanding as of December 31 of the previous year;

(c) The total dollar amount of fees collected for deferred deposit transactions as

of December 31 of the previous year;

(d) The minimum, maximum, and average dollar amount of deferred deposit

transactions entered into, the total dollar amount of the net charge -offs and

write-offs, and the net recoveries of licensees as of December 31 of the

previous year;

(e) The ave rage deferred deposit transaction amount, the average number of

transactions, and the average aggregate deferred deposit transaction amount

entered into per customer as of December 31 of the previous year;

(f) The average number of days a customer was enga ged in a deferred deposit

transaction for the previous year; and

(g) An estimate of the average total fees paid per customer for deferred deposit

transactions for the previous year.