North Dakota Administrative Code Title 18.5 - Credit Review Board
North Dakota Administrative Code Title 18.5 — Credit Review Board
1. Overview
Title 18.5 of the ND Administrative Code establishes the rules and procedures governing the Credit Review Board (CRB) in North Dakota. The CRB is a state-level administrative body tasked with overseeing credit-related issues within the state, particularly as they relate to financial institutions regulated by North Dakota law.
The CRB's primary role is to review and oversee credit practices, standards, and disputes involving lenders and borrowers, with an emphasis on consumer protection, financial stability, and adherence to state laws and regulations.
2. Statutory and Regulatory Authority
The authority of the Credit Review Board derives from the North Dakota Century Code (NDCC) Chapter 6-09, which addresses credit regulation, interest rates, lending practices, and related financial laws.
The Board operates under administrative rules codified in NDAC Title 18.5, which specify its procedural framework, powers, and duties.
3. Composition and Powers of the Credit Review Board
The CRB is typically composed of appointed members with expertise in banking, finance, law, and consumer affairs.
It has the authority to:
Review lending practices of financial institutions within the state.
Investigate complaints regarding credit transactions.
Evaluate compliance with interest rate caps, disclosure requirements, and other statutory protections.
Hear appeals related to credit disputes or administrative decisions made by regulatory agencies.
Issue orders, including cease and desist, corrective measures, or penalties.
4. Key Functions and Procedures
A. Review of Credit Transactions
The CRB reviews credit agreements, especially those that may involve usury violations, unfair lending practices, or violations of disclosure laws.
It assesses whether credit providers comply with state statutes limiting interest rates and fees.
B. Complaint and Appeal Process
Consumers or financial institutions may file complaints or appeals with the CRB.
The Board conducts hearings or reviews submissions to resolve disputes.
Decisions can include remedial orders or referrals to other agencies.
C. Enforcement Actions
The CRB can impose sanctions on lenders who violate credit laws.
It may require corrective actions to protect consumers.
Enforcement may involve collaboration with the North Dakota Attorney General or other financial regulators.
5. Legal Principles and Case Law
While specific North Dakota case law directly referencing the Credit Review Board and Title 18.5 is limited, several key legal principles guide the Board’s authority and decisions, with relevant case law addressing similar credit regulation and administrative oversight:
A. Authority to Regulate Interest Rates and Lending Practices
The North Dakota Supreme Court has upheld state authority to impose interest rate caps and lending restrictions under the state’s police powers.
In cases involving alleged usury or unlawful credit practices, courts defer to regulatory bodies like the CRB to enforce these statutes.
Example Legal Principle:
The Court recognizes that state regulation of lending practices is essential to protect consumers from exploitative credit terms, even if it restricts lender freedom.
B. Due Process in Administrative Proceedings
Parties subject to CRB investigations or enforcement actions have rights to due process, including notice of charges, the opportunity for hearing, and appeal.
Courts require that the Board’s findings be supported by substantial evidence and that procedural fairness be maintained.
Illustrative Case Concept:
Where a lender challenged an enforcement order by the CRB, the court ruled that as long as the Board followed statutory procedures and made findings based on evidence, its decision would be upheld.
C. Consumer Protection and Unfair Practices
North Dakota courts have interpreted credit laws broadly to encompass protections against deceptive or unconscionable lending.
The CRB’s role includes ensuring lenders comply with truth-in-lending disclosures and avoid unfair terms.
D. Judicial Review of CRB Decisions
Decisions by the CRB can be appealed in court.
Judicial review generally assesses whether the Board acted within its statutory authority and did not violate constitutional or procedural rights.
Courts show deference to the expertise of the CRB unless decisions are arbitrary or capricious.
6. Illustrative Case Scenarios
While no landmark published cases may directly interpret Title 18.5 or the CRB, the following hypotheticals demonstrate how courts treat CRB-related matters:
Hypothetical Case 1: Usury Violation
A lender charged interest exceeding state limits.
The CRB investigated and ordered repayment and fines.
The lender contested, arguing the limits violated contract rights.
The court upheld the CRB, affirming state authority to regulate interest rates for consumer protection.
Hypothetical Case 2: Due Process Challenge
A creditor was fined for failure to disclose fees.
The creditor claimed lack of notice before the CRB hearing.
The court found the creditor received adequate notice and opportunity to be heard, affirming the Board’s action.
Hypothetical Case 3: Consumer Complaint Review
A consumer alleged deceptive lending terms.
The CRB reviewed documents, held a hearing, and ordered corrective disclosures.
The lender appealed, but the court deferred to the Board’s expertise and factual findings.
7. Practical Implications
For Lenders: Compliance with North Dakota lending laws and CRB regulations is critical. Violations can lead to administrative sanctions, reputational harm, and legal penalties.
For Consumers: The CRB offers a forum to challenge unfair credit practices and seek remedies.
For Legal Practitioners: Understanding administrative procedures and evidence standards before the CRB is essential in advising clients.
8. Summary
NDAC Title 18.5 empowers the Credit Review Board to oversee and regulate credit practices in North Dakota, ensuring compliance with statutory protections and consumer safeguards. Though direct case law on the Board’s actions is limited, established legal principles emphasize:
The state's authority to regulate credit for public welfare.
The necessity of due process in administrative actions.
The judiciary’s deference to the Board’s expertise unless decisions are arbitrary or unlawful.
The CRB thus plays a vital role in balancing the interests of lenders and consumers within North Dakota’s financial regulatory framework.
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