Bank Closed- and Open-End Direct Loans for the Purchase of Goods and Services — DOBS — US-PA

COMMONWEALTH OF PENNSYLVANIA
GOVERNOR'S OFFICE OF GENERAL COUNSEL

March 24, 2015

Redacted

Re: Bank Closed- and Open-End Direct Loans for the Purchase of Goods and Services

Dear Redacted :

This responds to your request for confirmation from the Commonwealth of Pennsylvania Department of Banking and Securities (the “Department”) that Section 303 of the Banking Code of 1965 (the “Banking Code”), 7 P.S. § 303, and Section 506 of the Department of Banking and Securities Code (the “DOBS Code”), 71 P.S. § 733-506, permit Pennsylvania state-chartered banks and savings banks, federally-chartered banks and savings associations, and banks and savings institutions chartered in states other than Pennsylvania to make closed-end and open-end direct loans, including by means of credit cards, for the purchase of goods and services without regard to the provisions of Chapter 63 of the new consolidated consumer credit code (“CCC”) created by Act 98 of 2013, notwithstanding Section 6304(e) of the CCC (“Section 6304(e)”), 12 Pa.C.S. § 6304(e).

Background

Chapter 63 of the CCC repealed and replaced the former Goods and Services Installment Sales Act (“GSISA”) on December 1, 2014. Section 6304(e) provides that “[n]otwithstanding any provision of law to the contrary, [Chapter 63 of the CCC] shall exclusively govern and regulate the terms and conditions of all extensions of credit, except cash advances, for the purchase of goods and services within this Commonwealth.” 12 Pa.C.S. § 6304(e). Section 6304(e) is based on prior Section 1104 of the GSISA, which provided that “[n]otwithstanding any other act [the GSISA] shall exclusively govern and regulate the terms and conditions of all extensions of credit by the means of credit cards and credit card operations for the purchase of goods and services within this Commonwealth but excluding cash advances.”

Section 303 of the Banking Code provides in pertinent part that:

(b) General rule- (i) An institution may, subject to any applicable restriction under other provisions of this act, lend money, extend credit and discount or purchase evidences of indebtedness and agreements for the payment of money at such interest, finance charge, rate or terms under this section or at any interest, finance charge, rate or terms permitted for any other financial institution or any other lender regulated by any State or Federal supervisory authority on the specified class of loan.