| (a) Any amount due a retail buyer because of a correction
of an error or a violation may be credited to an amount due under
the motor vehicle retail installment sales contract or to the next
payment or payments on the existing account of the retail buyer. If
the credit is applied to payments not yet due, the licensee must notify
the retail buyer in writing of the date and amount of the next payment
due after this credit has been given.
(b) In lieu of crediting an existing account, a refund
may be made directly to the retail buyer by cash, check, money order,
or other negotiable instrument. The licensee must maintain sufficient
records that the refund was made.
(1) Cash refunds. If the refund is made directly to
the retail buyer in cash, the licensee must obtain a signed or authenticated
acknowledgment from the retail buyer. The signed or authenticated
acknowledgment must contain the following information:
(A) the retail buyer's full name;
(B) the retail buyer's account number (the account
number upon which the refund was made);
(C) the amount of the refund; and
(D) a statement that the retail buyer received the
refund in cash and that the licensee has not instructed or required
the retail buyer to repay the cash refund.
(2) Refunds made by check, money order, or other negotiable
instrument. If the refund is made directly to the retail buyer by
check, money order, or other negotiable instrument, the licensee must,
at a minimum, mail the refund to the last known address of the retail
buyer by first-class mail. The licensee must maintain a complete paper
or electronic copy of the check, money order, or other negotiable
instrument. The licensee must also maintain sufficient information
that could be used to determine whether the check, money order, or
other negotiable instrument was successfully negotiated. If the check
or money order is drawn from an account that is not under the licensee's
control, sufficient information will include the name of the bank
or company upon which the refund check or money order is drawn, the
account number upon which the refund check or money order is drawn,
the amount of the check or money order, check or money order number,
and routing or tracking number of the check or money order.
(c) If the error correction or adjustment to an account
is related to an improper charge or proceeds improperly held by the
licensee on which time price differential has been precomputed (regular
transaction using sum of the periodic balances method or scheduled
installment earnings method), the licensee may alternatively credit
the final maturing installment or installments of the contract. In
addition to the error correction or adjustment, a licensee must also
deduct from the precomputed balance the proportionate amount of time
price differential originally charged on the amount being credited.
(d) If the licensee applies the refund to an existing
account of the retail buyer with the licensee, the licensee may be
required to refund the amount due a retail buyer plus the amount of
accrued time price differential on the correction or adjustment amount
or a proportionate amount of time price differential originally charged
on the amount being credited. If more than half of the precomputed
time balance (regular transaction using the sum of the periodic balances
method or scheduled installment earnings method) has been paid before
applying the credit to the account, the licensee may be required to
refund the proportionate amount of time price differential originally
charged on the amount being credited.
(e) If the error correction or adjustment is made to
an account where the time price differential charge is earned using
the true daily earnings method, the licensee must refund or credit
to the account the amount due to the retail buyer for the error correction
or adjustment in addition to the amount of accrued time price differential
on the correction or adjustment amount.
(f) The commissioner may make adjustments or exceptions
to the requirements under this section for unusual situations or when
necessary to achieve an appropriate, practical, and workable result.
(g) If the licensee corrects a violation of law in
compliance with any instructions on any examination report, that correction
will satisfy the requirements of this section with respect to the
violation being corrected. Documentation must be maintained regarding
all corrections made under this section.
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