Credit Provisions (Misc.) - Financial Regulation
Last reviewed/updated: 12/29/2022
- Retail Credit Accounts
- Retail Installment Sales
- Maryland Equal Credit Opportunity Act
- Denial of Credit (Adverse Action)
- Repossessions and Sales of Goods (Interest & Usury & Credit Grantors)
- Law, Rules, and Regulations
Retail Credit Accounts
A Retail Credit Account is an agreement or transaction for the retail sale of goods or services that is negotiated or entered into and pursuant to which a time sale price is established. A Retail Credit Account includes credit card financing by a financial institution. Each Retail Credit Account is subject to credit provisions such as required disclosures and rate and fee caps established under Md. Code Ann., Com. Law § 12-501 et seq. Please review this subtitle for specific credit requirements.
NOTE: A Retail Credit Account that also meets the definition of a Retail Installment Sale Agreement (discussed below) is covered by the provisions of Md. Code Ann., Com. Law § 12-601 et seq.
Retail Installment Sales
A Retail Installment Sale Agreement is a contract for the retail sale of consumer goods, negotiated or entered into in Maryland, under which part or all of the price is payable in one or more payments after the making of the contract and the seller takes collateral security or keeps a security interest in the goods sold. A Retail Installment Sale Agreement includes a prospective installment sale agreement, a purchase money security agreement, and a contract for the bailment or leasing of consumer goods under which the bailee or lessee contracts to pay as compensation a sum that is substantially equal to or is more than the value of the goods. This type of agreement does not include a bona fide C.O.D. transaction, a layaway agreement as defined in Md. Code Ann., Com. Law § 14-1101(g), or a lease for industrial, commercial, or agricultural purposes. Each Retail Installment Sale Agreement is subject to credit provisions such as required disclosures and rate and fee caps established in Md. Code Ann., Com. Law § 12-601 et seq. Please review that subtitle for specific credit requirements.
NOTE: Any person providing goods or services may potentially fall under the requirements established in either § 12-501 et seq. or § 12-601 et seq. depending on the person’s business practices as well as factors such as the manner of payment, any deferment of payment, or the extension of any form of credit, whether direct or indirect. Before engaging in such activity, a person should seek legal guidance to ensure compliance with Maryland law.
Maryland Equal Credit Opportunity Act
The Maryland Equal Credit Opportunity Act subjects any creditor who regularly extends, renews, or continues credit for personal, family or household purposes, or arranges for the extension, renewal, or continuation of such credit to its requirements. The Maryland Equal Credit Opportunity Act provides, among other things, that with respect to any aspect of a credit transaction a creditor may not discriminate against any applicant on the basis of sex, marital status, race, color, religion, national origin, or age. The Maryland Equal Credit Opportunity Act also prohibits the following discriminatory practices:
- Refusal to consider both applicants' income when both parties of a marriage party apply for a joint account;
- Refusal to consider alimony or child support awarded by a court and received by the applicant as a valid source of income, where that source can be verified as to its amount, length of time received, and regularity of receipt;
- Refusal to extend credit to any person solely because of marital status or change in marital status;
- Refusal to issue separate accounts to married persons where each would be credit worthy if unmarried;
- Request for or consideration of the credit rating of an applicant's spouse where the applicant is otherwise credit worthy and is not applying for a joint account unless the applicant lists credit references in the name of spouse or former spouse or has no individual prior credit history or the creditor permits the applicant to designate the applicant's spouse as an authorized purchaser on the account;
- Refusal to recognize the legal name of any married person; and
- Requests for or consideration of information about birth control practices in evaluating any credit application.
NOTE: A creditor that complies with the applicable provisions of the federal Equal Credit Opportunity Act, or regulations adopted thereunder, is in compliance with the requirements of the Maryland Equal Credit Opportunity Act. Similarly, any violation of the federal Equal Credit Opportunity Act, or any regulation adopted thereunder, is a violation of the Maryland Equal Credit Opportunity Act. Refer to Md. Code Ann., Com. Law § 12-704.
Denial of Credit (Adverse Action)
Md. Code Ann., Com. Law § 14-1701 et seq. governs denials of credit and applies to any lender or credit grantor regulated under Title 12 of the Commercial Law Article. This subtitle defines Adverse Action to mean a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. In addition to other obligations under State and federal law, within 30 days after receipt of a completed application for credit, any lender or credit grantor shall notify the applicant of its action on the application, and if the lender or credit grantor has taken an Adverse Action on the application, that lender must furnish the consumer with a written statement. The written statement must disclose to the applicant, in part, the right to seek a statement from the lender or credit grantor specifying the reasons for any Adverse Action taken. If requested, the statement of reasons must include the specific reasons for the Adverse Action. Please review this subtitle for specific requirements relating to denials of credit, including any Adverse Action.
NOTE: A lender or creditor grantor that complies with the provisions of the federal Equal Credit Opportunity Act (Subchapter IV of the federal Consumer Credit Protection Act) and regulations promulgated thereunder, shall be deemed in compliance with the Adverse Action reporting requirements described above. Refer to Md. Code Ann., Com. Law § 14-1705.
Repossessions and Sales of Goods (Interest & Usury & Credit Grantors)
Md. Code Ann., Com. Law Titles 9 and12 generally permit the Repossession and Sale of Goods securing an extension of credit if the borrower is in default and the creditor adheres to the relevant requirements of Titles 9 and 12. These requirements may differ based on the type of collateral and the subtitle of Title 12 governing the extension of credit. Please review Title 9 and the applicable subtitle of Title 12 for specific requirements. In addition to the Commissioner’s general regulatory and supervisory authority, the Commissioner may enter an order denying a deficiency judgment arising from a repossession and private sale of goods if the Commissioner determines that the private sale was not accomplished in a commercially reasonable manner. Refer to Md. Code Ann., Com. Law §§ 12-115, 12-921, & 12-1021.
Laws, Rules, and Regulations
Persons engaging in making or procuring loans are expected to be knowledgeable about and in compliance with all applicable credit provisions under Maryland law, and any other applicable State or Federal statutes, rules, and regulations.
Maryland laws, rules, and regulations can be found by accessing the Annotated Code of Maryland and Rules and Code of Maryland Regulations (COMAR). Certain relevant Maryland laws, rules, and/or regulations include, but are not necessarily limited to:
- Maryland Code, Commercial Law Article, Title 9 (Secured Transactions)
- Maryland Code, Commercial Law Article, Title 12, Subtitle 1 (Interest and Usury)
- Maryland Code, Commercial Law Article, Title 12, Subtitle 5 (Retail Credit Accounts)
- Maryland Code, Commercial Law Article, Title 12, Subtitle 6 (Retail Installment Sales)
- Maryland Code, Commercial Law Article, Title 12, Subtitle 7 (Equal Credit Opportunity Act)
- Maryland Code, Commercial Law Article, Title 12, Subtitle 9 (Credit Grantor Revolving Credit Provisions)
- Maryland Code, Commercial Law Article, Title 12, Subtitle 10 (Credit Grantor Closed End Credit Provisions)
- Maryland Code, Commercial Law Article, Title 14, Subtitle 17 (Denial of Credit – Disclosure)
- US Cods, Title 15, Chapter 41, Subchapter IV (Equal Credit Opportunity)
- Code of Federal Regulations, Title 12, Chapter X, Part 1002 (Equal Credit Opportunity Act – Regulation B)