Can a Virginia car-title lender disburse loan proceeds by crediting the borrower's bank account through a debit card or electronic funds transfer?

Plain-English summary

A state senator asked two questions about how Virginia motor vehicle title lenders can deliver loan proceeds. Section 6.2-2215(7) says a licensed lender shall disburse proceeds "(i) in cash, (ii) by the licensee's business check, or (iii) by debit card provided that the borrower will not be directly charged a fee by the licensee in connection with the withdrawal of the funds."

The senator's first question was whether "by debit card" allowed crediting the borrower's existing bank account through a debit card transaction. His second was whether "in cash" allowed electronic funds transfer to the borrower's deposit account.

The AG said no to both.

On the debit card question, the AG focused on the no-fee condition. If "debit card" meant the borrower's existing debit card (drawing from the borrower's own bank account), the lender would never be in a position to charge a fee for the borrower's later use of those funds, so the no-fee condition would be meaningless. The principle that every part of a statute is presumed to have effect drove the AG to a different reading: "debit card" means a prepaid physical card issued by the lender, loaded with the loan proceeds, that the borrower then uses to withdraw the money. With that reading, the no-fee condition has work to do: it prevents the lender from imposing a fee on the borrower for using the prepaid card.

The State Corporation Commission's regulations backed this reading. The mandatory consumer pamphlet that lenders must give borrowers shows the Commission construes the disbursement-by-debit-card option to mean giving the borrower a physical card with a prepaid value equal to the loan proceeds, with the lender prohibited from charging a fee when the card is used or the proceeds withdrawn. That structure only fits a prepaid card issued by the lender.

On the cash question, "cash" was undefined in § 6.2-2200. Dictionary definitions split: a narrow definition restricts cash to currency and coins, while a broader definition includes checks and bank account balances. The AG read the statute to use the narrow definition. The reason: the General Assembly's separate listing of "the licensee's business check" as an alternative payment method shows that it didn't consider checks (or, by extension, EFT to bank accounts) to be "cash." If cash included those, the business check option would be redundant. Reading "cash" narrowly gives full meaning to all three options.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Can a title lender just hand over cash from a register?
Yes. That's "in cash" under the narrow definition the AG adopted. Physical currency and coins are clearly within the allowed disbursement methods.

Can a title lender hand over a personal check from the lender's owner?
No. The statute requires "the licensee's business check," not the owner's personal check or any other instrument.

Why this much detail about disbursement methods?
Because Virginia's title lending statute is a consumer protection scheme. Limiting disbursement methods reduces opportunities for fee-stacking, transaction confusion, and creative pricing tactics that could extract extra value from borrowers.

Could the lender preload the prepaid card with the loan amount minus a fee?
The statute forbids the lender from charging a fee "in connection with the withdrawal of the funds." That language reaches transaction-level fees on the prepaid card. Whether other origination or document fees are allowed turns on other provisions, not § 6.2-2215(7).

Does this affect online title lenders?
The opinion didn't distinguish online from brick-and-mortar lenders. The statute applies to all motor vehicle title lenders licensed in Virginia. Online lenders that disburse by ACH or wire to a borrower's bank account would fall outside the permitted methods under this opinion.

Background and statutory framework

Virginia's motor vehicle title loan law governs licensed title lenders, with § 6.2-2200 the definition section applicable to § 6.2-2215. Section 6.2-2215(7) limits disbursement to three methods: cash, the licensee's business check, or debit card (with no fee charged to the borrower for the withdrawal of funds).

The State Corporation Commission's regulations require lenders to give borrowers an informational pamphlet, the text of which shows the Commission construes the "by debit card" option to mean giving the borrower a physical, prepaid card equal to the loan proceeds.

The statutory construction rules the AG applied: an undefined term takes its ordinary meaning considered in the context in which it is used, and every part of a statute is presumed to have some effect with no part treated as meaningless unless absolutely necessary.

Citations

• Va. Code § 2.2-505 (Attorney General opinions)
• Va. Code § 6.2-2200 (definitions in title lending)
• Va. Code § 6.2-2215 (disbursement methods)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2013/12-072_Watkins.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

January 11, 2013

The Honorable John C. Watkins
Member, Senate of Virginia
Post Office Box 158
Midlothian, Virginia 23113

Dear Senator Watkins:
I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented
You ask two questions related to the permissible methods a motor vehicle title lender may use to disburse loan proceeds from a motor vehicle title loan under § 6.2-2215(7) of the Code of Virginia. You first ask whether the statute, by stating that a lender may disburse the proceeds "by debit card," allows a licensee to disburse loan proceeds to a borrower through a debit card transaction in which the borrower's bank account is credited with the amount of the loan. Secondly, you ask whether the statute, which allows a licensee to disburse loan proceeds "in cash," permits a licensee to disburse loan proceeds by electronic funds transfer to the borrower's deposit account.

Response
It is my opinion that a motor vehicle title lender may not disburse loan proceeds through a debit card transaction in which the borrower's bank account is credited with the amount of the loan. It is further my opinion that a motor vehicle title lender may not disburse loan proceeds through an electronic funds transfer to the borrower's deposit account.

Applicable Law and Discussion
Section 6.2-2215(7) of the Code of Virginia provides, in relevant part, that a motor vehicle title lender shall disburse loan proceeds "(i) in cash, (ii) by the licensee's business check, or (iii) by debit card provided that the borrower will not be directly charged a fee by the licensee in connection with the withdrawal of the funds." The term "debit card" is not defined in § 6.2-2200, the definition section applicable to § 6.2-2215. "An undefined term must be given its ordinary meaning, considered in the context in which the term is used." "Debit card" is commonly defined as "[a] card used to pay for purchases by electronic transfer from the purchaser's bank account." Nevertheless, the context in which the term "debit card" is used in the statute compels me to conclude that the General Assembly intended the term to have a different meaning.

"'Every part of a statute is presumed to have some effect and no part will be treated as meaningless unless absolutely necessary.'" Section 6.2-2215(7) authorizes the loan proceeds to be disbursed by debit card "provided that the borrower will not be directly charged a fee by the licensee in connection with the withdrawal of the funds." Obviously, upon disbursement of the loan proceeds, a motor vehicle title lender has no ability to charge a fee to a borrower for the withdrawal of specific funds from the borrower's own bank account by using a debit card issued by the borrower's deposit bank. Thus, interpreting the statute to permit the disbursement of the proceeds to a borrower's account through a debit card transaction would render meaningless the limitation on the charging of a fee for the withdrawal of funds. I therefore conclude that the General Assembly did not intend to allow a motor vehicle title lender to disburse loan proceeds through a debit card transaction in which the borrower's bank account is credited with the amount of the loan.

This conclusion is supported by the manner in which the State Corporation Commission implements the statute's provisions. In the regulations it issued that apply to motor vehicle title lenders, the State Corporation Commission requires such lenders to give the borrower an informational pamphlet. The text of this mandated pamphlet makes clear that the State Corporation Commission construes the authorization to disburse proceeds "by debit card" to mean giving the borrower a physical card with a prepaid value equal to the amount of the loan proceeds. This construction, which allows a lender to disburse the proceeds by giving the borrower a physical, prepaid card, also gives full meaning to the limitation on lenders charging a fee for the withdrawal of funds, as the limitation will prevent the lender from imposing a fee when the card is used or the proceeds withdrawn. Because this construction gives meaning to the full statute, it is preferred. Thus, if a motor vehicle title lender wishes to disburse the loan proceeds by debit card, it must provide the borrower with a card prepaid with the amount of the loan proceeds, which later can be withdrawn when the card is used. As concluded above, the lender may not disburse the proceeds through a debit card transaction in which the borrower's bank account is credited.

You also ask whether a lender may disburse the proceeds through an electronic funds transfer to the borrower's bank account because the statute also allows a lender to disburse the loan proceeds "in cash." As the term "cash" is also undefined by the statute, it must be given its ordinary meaning considered in the context in which it is used. "Cash" is defined as "money or its equivalent" and as "currency or coins, negotiable checks, and balances in bank accounts." The first definition of "cash," which is essentially restricted to paper currency and coins, is much more restrictive than the second, which includes checks and balances in bank accounts. It is necessary to determine whether the General Assembly intended the term "cash" to have the more restrictive or more expansive meaning. The context of the statute shows that it clearly intended the more restrictive definition to apply. Specifically, the General Assembly's inclusion of the option to disburse the proceeds "by the licensee's business check," a method that would be included within the more expansive definition of "cash," demonstrates that it intended the term to be restricted to currency and coins.

Conclusion
Accordingly, it is my opinion that a motor vehicle title lender may not disburse loan proceeds to a borrower through a debit card transaction in which the borrower's bank account is credited with the proceeds. It is further my opinion that a motor vehicle title lender also may not disburse loan proceeds through an electronic funds transfer to a borrower's account.

With kindest regards, I am

Kenneth T. Cuccinelli, II
Attorney General