SC Department of Consumer Affairs v. Cash Central

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

South Carolina Department of Consumer Affairs,
Appellant,

v.

Cash Central of South Carolina LLC, Respondent.

Appellate Case No. 2017-002639

Appeal from Richland County
Robert E. Hood, Circuit Court Judge

Opinion No. 5855
Heard October 14, 2020 – Filed September 1, 2021

REVERSED

James Cochran Copeland and Kelly Hunter Rainsford,
both of the South Carolina Department of Consumer
Affairs, of Columbia, for Appellant.

James Y. Becker and Mary M. Caskey, both of
Haynsworth Sinkler Boyd, PA, of Columbia; and Sarah
P. Spruill, of Haynsworth Sinkler Boyd, PA, of
Greenville, for Respondent.

LOCKEMY, C.J.: The South Carolina Department of Consumer Affairs (the
Department) appeals the circuit court's order granting final judgment in favor of
Cash Central of South Carolina, LLC (Cash Central) as to the Department's
allegations that it failed to comply with sections 37-3-201 and 37-3-305 of the
South Carolina Consumer Protection Code (the SCCPC).1 The Department argues
the circuit court erred by finding Cash Central was not required to refund excess
charges to consumers because it substantially complied with the posting and filing
requirements of sections 37-3-201 and 37-3-305 and established the bona fide error
and excusable neglect defenses of sections 37-3-201(6) and 37-5-202(7) of the
SCCPC. We reverse.

FACTS/PROCEDURAL HISTORY

Cash Central is an internet-based lender that provides short- and medium-term
consumer loans ranging from $750 to $5,000. It is a wholly owned subsidiary of
Direct Financial Solutions, LLC (Direct Financial), which, in turn, is a wholly
owned subsidiary of Community Choice Financial, Inc. (Community Choice).
Cash Central had no employees but instead used those of Direct Financial and
Community Choice. In February 2013, Community Choice began preparing to do
business in South Carolina, and in September 2013, Cash Central submitted two
applications for supervised lender licenses—one for Cash Central and one for
"www.cashcentral.com"—to the South Carolina Board of Financial Institutions
(the Board). The Board issued two supervised lender licenses to Cash Central on
October 2, 2013. Cash Central's website went live on October 23, 2013. From
October 23, 2013, until April 10, 2015, Cash Central made 15,000 loans to South
Carolina consumers, including 1,642 loans with loan finance charges over
239.99% APR.2

The Board audited Cash Central in March 2015 and informed Cash Central on
April 3, 2015, that it had failed to file and post a maximum rate schedule. On
April 10, 2015, Cash Central filed a maximum rate schedule with the Department,
delineating a maximum rate of 246.9% APR. The Department determined Cash
Central failed to file or post a maximum rate schedule from October 24, 2013, until
April 10, 2015. The Department then brought this action against Cash Central on
behalf of South Carolina consumers pursuant to section 37-6-113(A) of the
SCCPC3 for violation of sections 37-3-201 and 37-3-305 of the SCCPC and sought
a refund of excess charges.

1
S.C. Code Ann. § 37-3-201 (2015); S.C. Code Ann. § 37-3-305 (Supp. 2020); see
generally §§ 37-1-101 to 37-29-100 (2015 & Supp. 2020).
2
An annual percentage rate (APR) is the sum of the interest rate and other finance
charges, calculated on a yearly basis and expressed as a percentage.
3
§ 37-6-113(A) ("[T]he administrator may bring a civil action against . . . a person
subject to this title to recover actual damages sustained and excess charges paid
The circuit court held a trial on the matter. At trial, James Copeland, then-acting
commissioner of the Board, testified that when the Board issued a supervised
lending license, it would send the license to the business's headquarters along with
a letter stating that the lender must file and post its maximum rate schedule.
Carolyn Grube-Lybarker, of the Department, testified supervised lenders must file
a maximum rate schedule with the Department before they can assess finance
charges in excess of 18% APR.

Assistant general counsel for Community Choice, Rebecca Fox, was responsible
for ensuring Community Choice complied with state law when it began business in
a new state. To accomplish this, she created a "compliance outline" specific to
each state. To make the outline, Fox downloaded state statutes, visited websites,
and summarized the information. She confirmed she obtained a copy of a "guide
for business" from the Department's website and acknowledged this document
discussed the maximum rate schedule. Fox stated she saved this and other
documents pertaining to compliance with South Carolina law to her electronic file
during the first week of February 2013. She could not recall if she realized two
regulatory agencies oversaw supervised lenders in South Carolina or that Cash
Central was required to file a maximum rate schedule with a different agency.

Fox testified that after Cash Central made its first loan, she reviewed the loan
documents, compared them to her outline, and discovered Cash Central had failed
to post the maximum rate schedule or the 127-word disclosure on its website.4 Fox
informed Cash Central's head of marketing of these discrepancies. Cash Central
then added the 127-word statutory disclosure and posted the rate schedule showing
eight different APRs based on loans of $1,000; $2,000; and $4,000. The website
included a calculator feature, which allowed the user to adjust the terms and
amount of the loan to view different rates based on those factors. Fox believed the
rate schedule on the website satisfied the posting requirement but agreed the
website did not state the maximum rate was 246.64%.

Todd Jensen, CEO of Direct Financial, admitted that between October 23, 2013,
and April 10, 2015, the maximum APR did not appear on the website, and he

by . . . consumers who have a right to recover explicitly granted by this title.");
§ 37-5-202(2) ("A consumer is not obligated to pay a charge in excess of that
allowed by this title and has a right of refund of any excess charge paid.").
4
See § 37-3-305(3) (providing a 127-word disclosure that must be included with
the posted rate schedule).
agreed the schedules Cash Central provided on its website did not provide the
applicable rates for a $750 loan. He stated a consumer could use the loan
calculator to determine the maximum APR but a consumer would have to enter
forty-two possible variations to determine the highest possible APR. Jensen
acknowledged Cash Central collected $11 million in interest on the loans it made
between October 2013 and April 2015.

Cash Central presented the testimony of an expert in the field of consumer and
firm behavior in household-financial settings, who opined the rate calculator on
Cash Central's website provided consumers with more "salient and timely"
information than the static disclosure that section 37-3-305 required.

The circuit court found subsection 37-5-202(7) excused Cash Central's admitted
failure to file the maximum rate schedule. Next, it found Cash Central
substantially complied with sections 37-3-201 and 37-3-305 because its website's
disclosures "better promote[d] the purposes of [s]ection 37-3-305 than the
[m]aximum [r]ate [s]chedule issued by the Department." In addition, the circuit
court concluded any monetary liability for Cash Central's failure to file was strictly
limited by the provisions of section 37-3-201(6) because its failure to file was a
good faith error and qualified as excusable neglect. It further found section
37-3-201(6) must apply to initial failures to file to avoid the absurd result of
requiring Cash Central to recast its loans to 0% APR. However, the circuit court
ordered Cash Central to pay a civil penalty of $5,000 under section 37-3-201(6) for
each of the three years it failed to file its maximum rate schedule with the
Department. This appeal followed.

ISSUES ON APPEAL

1. Did the circuit court err by finding Cash Central was not required to refund
excess charges to consumers because it substantially complied with the filing and
posting requirements of sections 37-3-201 and 37-3-305?

2. Did the circuit court err by finding Cash Central was not required to refund
excess charges to consumers pursuant to the bona fide error defenses of sections
37-3-201(6) and 37-5-202(7)?

STANDARD OF REVIEW

"Statutory interpretation is a question of law subject to de novo review." Barton v.
S.C. Dep't of Prob. Parole & Pardon Servs., 404 S.C. 395, 414, 745 S.E.2d 110,
120 (2013). This court is free to decide questions of law without any deference to
the circuit court. CFRE, LLC v. Greenville Cnty. Assessor, 395 S.C. 67, 74, 716
S.E.2d 877, 881 (2011).

LAW/ANALYSIS

I. Filing and Posting Requirements of Sections 37-3-201 and 37-3-305

The Department argues Cash Central was not authorized to charge more than 18%
APR pursuant to section 37-3-201 because it never filed its maximum rate
schedule with the Department. The Department contends that when construed in
light of the SCCPC's primary purpose of protecting consumers, sections
37-3-201(2) and 37-6-113(A) do not require a consumer to pay—or allow a
creditor to retain—an excess charge. The Department therefore asserts the charges
in excess of 18% APR that Cash Central collected between October 24, 2013, and
April 10, 2015, were excess charges in violation of 37-3-201(2), and as a matter of
law, it was required to return the excess charges collected to consumers. We agree.

"The cardinal rule of statutory construction is to ascertain and effectuate the intent
of the legislature." Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581
(2000). "Whe[n] the statute's language is plain and unambiguous, and conveys a
clear and definite meaning, the rules of statutory interpretation are not needed and
the court has no right to impose another meaning." Id.

"A court should not consider a particular clause in a statute in isolation, but should
read it in conjunction with the purpose of the entire statute and the policy of the
law." Peake v. S.C. Dep't of Motor Vehicles, 375 S.C. 589, 599, 654 S.E.2d 284,
290 (Ct. App. 2007). "A statute as a whole must receive practical, reasonable, and
fair interpretation consonant with the purpose, design, and policy of lawmakers. In
interpreting a statute, the language of the statute must be read in a sense that
harmonizes with its subject matter and accords with its general purpose." Sparks v.
Palmetto Hardwood, Inc., 406 S.C. 124, 128, 750 S.E.2d 61, 63 (2013) (quoting
Town of Mt. Pleasant v. Roberts, 393 S.C. 332, 342, 713 S.E.2d 278, 283 (2011)).
"General and special statutes should be read together and harmonized if possible.
But to the extent of any conflict between the two, the special statute must prevail."
Criterion Ins. Co. v. Hoffmann, 258 S.C. 282, 293, 188 S.E.2d 459, 464 (1972).

"[T]he purpose of the SCCPC is to clarify the law governing consumer credit and
to protect consumer buyers against unfair practices by suppliers of consumer
credit." Freeman v. J.L.H. Invs., LP, 414 S.C. 362, 373, 778 S.E.2d 902, 907
(2015) (quoting Fanning v. Fritz's Pontiac-Cadillac-Buick, Inc., 322 S.C. 399,
401, 472 S.E.2d 242, 244 (1996)); see also Camp v. Springs Mortg. Corp., 310
S.C. 514, 516, 426 S.E.2d 304, 305 (1993) ("The purpose of SCCPC is to protect
consumers."). The SCCPC must be "liberally construed and applied to promote its
underlying purposes and policies." See § 37-1-102(1)-(2) (setting forth the policies
of the SCCPC, which include "protect[ing] consumer[s] . . . against unfair practices
by some suppliers of consumer credit" as well as "provid[ing] rate ceilings to
assure an adequate supply of credit to consumers," "further[ing] consumer
understanding of the terms of credit transactions," and "foster[ing] competition
among suppliers of consumer credit so that consumers may obtain credit at [a]
reasonable cost").

A supervised lender is an organization authorized to make supervised loans.
§ 37-3-501(2); § 37-1-301(20). A supervised loan is "a consumer loan in which
the rate of the loan finance charge exceeds twelve percent per year as determined
according to the provisions on the loan finance charge for consumer loans (Section
37-3-201)." § 37-3-501(1); § 37-3-109(1) (defining a loan finance charge as the
sum of all charges payable by the debtor and imposed by the lender "as an incident
to the extension of credit, including . . . interest"). A supervised lender may
contract for and receive a loan finance charge "(b) on loans with a cash advance
exceeding six hundred dollars . . . [at] any rate filed and posted pursuant to Section
37-3-305; or (c) on loans of any amount, eighteen percent per year on the unpaid
balances of principal. § 37-3-201(2) (emphases added).

In October 2013, subsections 37-3-305(1)-(3) provided:

(1) Every creditor . . . making supervised or restricted
consumer loans . . . in this State shall . . . on or before
the date the creditor begins to make such loans in this
State, file with the Department . . . and . . . post in one
conspicuous place in every place of business, if any, in
this State in which offers to make consumer loans are
extended, a certified maximum rate schedule meeting the
requirements set forth in subsections (2), (3), and (4). . . .

(2) The rate schedule required to be filed and posted by
subsection (1) must contain a list of the maximum rate of
loan finance charge . . . stated as an annual percentage
rate . . . that the creditor intends to charge for consumer
credit transactions in each of the following categories of
credit:

(a) unsecured personal loans;

....

(3) The rate schedule that is filed by the creditor shall be
reproduced in at least fourteen-point type for posting as
required by subsection (1). The terms "Loan Finance
Charge" and "Annual Percentage Rate" will be printed in
larger size type than the other terms in the posted rate
schedule. . . .

(4) A rate schedule filed and posted as required by this
section shall be effective until changed in accordance
with this subsection. A creditor wishing to change any of
the maximum rates shown on a schedule previously filed
and posted . . . shall file with the Department . . . and
shall post as required by subsection (1) a revised
schedule of maximum rates. The revised schedule shall
be certified and returned to the creditor if properly
filed. . . .

S.C. Code Ann. § 37-3-305(1)-(4) (2015).5 We apply the foregoing language in
our analysis because it was the law in effect during the filing and posting periods at
issue in this matter.

5
In 2016, the legislature made several changes to these subsections; the revisions
now provide that after the supervised lender files a rate schedule with the
Department, the Department will issue a maximum rate schedule containing the
items required by subsections (2), (3), and (4), which the lender must post. In
addition, subsection (3) now provides the Department will reproduce the rate
schedule provided by the creditor "in at least fourteen-point type for posting as
required by subsection (1)." S.C. Code Ann. § 37-3-305(1)-(3) (Supp. 2020).
Subsection (4) provides a creditor seeking to revise a schedule must submit the
revised schedule to the Department, which will issue the revised schedule, which
the creditor must then post in accordance with subsection (1). S.C. Code Ann.
§ 37-3-305(4) (Supp. 2020).
In 2013, the statutory requirement that a supervised lender file a maximum rate
schedule with the Department was already in effect. See § 37-3-305(1) (2002).
Subsection 37-3-305(2), which remains unchanged, required the schedule to
"contain a list of the maximum rate of loan finance charge . . . stated as an annual
percentage rate . . . that the creditor intends to charge for consumer credit
transactions in . . . unsecured personal loans." Subsection 37-3-305(7) provided
that a creditor making supervised loans must file a maximum rate schedule with
the Department by January 31 of each state fiscal year. S.C. Code Ann.
§ 37-3-305(7) (Supp. 2020) (amended by 2016 Act No. 244 to redesignate former
paragraph (8) as paragraph (7)). If the creditor fails to do so by January 31, any
maximum rate schedule previously filed with the Department would be deemed
ineffective, "and the maximum credit service charge that the creditor may impose
on any credit extended after that date may not exceed eighteen percent a year until
such time as the creditor files a revised maximum rate schedule that complies with
this section." Id. (emphasis added).

We find the plain language of sections 37-3-201(2) and 37-3-305 requires that a
supervised lender intending to charge rates above 18% APR file and post its
maximum rate. Unless and until it complies with this requirement, such lender is
not authorized to contract for or receive finance charges in excess of 18% APR.

II. Defenses

Next, we consider whether the circuit court erred in finding Cash Central was not
required to refund excess charges because it (1) substantially complied with these
statutory requirements and (2) established the defense of bona fide error pursuant
to sections 37-3-201(6) and 37-5-202(7).

A. Substantial Compliance

The Department argues the defense of substantial compliance did not apply to
Cash Central's failure to satisfy sections 37-3-201 and 37-3-305. It next asserts
that even if it did apply, section 37-3-305 required lenders to file and post the
maximum rate schedule, and Cash Central was required to show it substantially
complied with both the filing requirement and the posting requirement. We agree.

"Substantial compliance has been defined as 'compliance in respect to the essential
matters necessary to assure every reasonable objective of the statute.'" Brown v.
Baby Girl Harper, 410 S.C. 446, 453 n.6, 766 S.E.2d 375, 379 n.6 (2014) (quoting
Orr v. Heiman, 12 P.3d 387, 389 (Kan. 2000)). However, there is no recognized
doctrine of substantial compliance in this context. In Davis v. NationsCredit
Financial Services Corp., 326 S.C. 83, 86, 484 S.E.2d 471, 472 (1997), our
supreme court found a lender substantially complied with the borrower preference
statute by providing the borrower the statutorily required information
contemporaneously with her credit application, even though it was not contained
on the first page of the application as the statute required. There, the court found
the purpose of the statute was the clear and prominent disclosure of the information
necessary to ascertain the relevant preferences of the borrowers. Id. at 86-87, 484
S.E.2d at 473. This case is distinguishable. Here, the statutory provisions at issue
have a regulatory purpose. They provide filing and licensing requirements that a
supervised lender must meet to operate and impose finance charges higher than
18% APR in this state. The purpose of filing a maximum rate schedule serves not
only to inform consumers, it triggers the Department's oversight of the lender,
which is critical to assuring the SCCPC's objectives of protecting consumers,
providing rate ceilings, and fostering competition among suppliers of consumer
credit.

More than 1,600 of the loans Cash Central made to South Carolina consumers
exceeded 239.9% APR, and the highest rate it charged was 246%. The SCCPC
allows supervised lenders to contract for and receive loan finance charges at any
rate they wish so long as they meet the statutory filing and posting requirements.
If the lender fails to meet such requirements, the statute prohibits it from imposing
finance charges at a rate higher than 18% APR. If we were to allow substantial
compliance in this context, supervised lenders would be able to charge excessive
rates without ever actually meeting the statutory filing and posting requirements.
Because the legislature has given supervised lenders the freedom to charge such
high rates, such lenders must strictly comply with the applicable statutory
provisions. We therefore conclude a defense of substantial compliance is
inapplicable.

We find the circuit court erred by determining Cash Central substantially complied
with sections 37-3-201 and 37-3-305. Section 37-3-305 requires a supervised
lender to file a rate schedule with the Department and post a maximum rate
schedule in a conspicuous place. It is undisputed Cash Central did not file a
maximum rate schedule with the Department prior to April 2015. Because the
statute requires both filing and posting, Cash Central's compliance with only one of
these requirements would have been insufficient to establish the defense.
Moreover, no evidence in the record supports the circuit court's conclusion that
Cash Central complied with the statute's posting requirement. Jensen admitted
Cash Central's website—its only place of business—did not state the maximum
APR. Likewise, he acknowledged the fee schedule Cash Central posted did not
reflect rates for $750 loans even though it offered loans ranging from $750 to
$5,000. The SCCPC evidences an intent to provide consumers with information
about the maximum rate a supervised lender can charge. A posting that does not
provide the maximum rate does not achieve this purpose. We therefore conclude
that even assuming a defense of substantial compliance were applicable, the record
does not support the circuit court's finding that the fee schedule posted on Cash
Central's website substantially complied with the SCCPC's statutory filing and
posting requirements.

B. Section 37-3-201(6)

Section 37-3-201(6) provides:

Notwithstanding subsection (2), if a lender can
demonstrate with competent evidence that (a) any failure
to post rates properly filed under [s]ection 37-3-305 or
failure to properly file these rates under [s]ection
37-3-305 was a result of a bona fide error or excusable
neglect, (b) the rates were properly posted or properly
filed when the error or neglect was discovered or brought
to the lender's attention, and (c) that no other failure to
post or file rates has been brought to the lender's attention
by the Department . . . or by consumers within the
previous forty-eight month period, then the maximum
rate of loan finance charges assessable by the lender is
the rate previously properly filed with the
Department[,] . . . provided, however, the lender that has
failed or neglected to post rates or to file rates is subject
to a civil penalty of up to $5,000.00 payable to the
Department . . . .

(emphasis added).

The Department contends the language of section 37-3-201(6) suggests the
legislature intended this statutory defense to be available only to lenders that
previously properly filed a maximum rate schedule with the Department. It argues
Cash Central did not satisfy the prerequisites of section 37-3-201(6) because it
never filed rates with the Department and it therefore could not avail itself of this
statutory defense. However, the Department contends that even assuming the
defense applied and Cash Central satisfied the three elements, Cash Central must
roll back its contracted rates to 18% APR, in addition to paying the $5,000 penalty.
Further, it asserts the circuit court erred in finding Cash Central would have to
recast its loans to 0% APR as opposed to 18% APR. We agree.

We find the circuit court erred in concluding this provision excused Cash Central
from refunding excess charges to consumers. The provisions of 37-3-305 are
clear: to charge a rate higher than 18%, a supervised lender must file and post its
maximum rate; if it fails to do so, it is not authorized to contract for or receive
finance charges over 18% APR. Although section 37-3-201(6) creates an
exception that allows a lender to assess finance charges at or below the rate it
previously properly filed with the Department if the lender meets the requirements
of subsection 37-3-201(6), Cash Central had never filed a maximum rate with the
Department prior to 2015. Thus, there was no "previously properly filed" rate to
apply, and even assuming Cash Central established its failure to post was the result
of a bona fide error or excusable neglect, it was not permitted to assess charges
higher than 18% APR. See § 37-3-201(2) (stating that a supervised lender may
contract for and receive finance charges "(b) on loans with a cash advance
exceeding six hundred dollars . . . any rate filed and posted pursuant to Section
37-3-305; or (c) on loans of any amount, eighteen percent per year on the unpaid
balances of principal" (emphases added)); § 37-3-305(7) (providing that with
respect to the renewal of maximum rate filings, "[i]f any creditor has not filed a
maximum rate schedule with the Department . . . by the thirty-first day of January
of the year in which it is due, then on this date the filing is no longer effective and
the maximum credit service charge that the creditor may impose on any credit
extended after that date may not exceed eighteen percent a year" (emphasis
added)). For the foregoing reasons, the circuit court erred in concluding subsection
37-3-201(6) excused Cash Central from refunding excess charges.

C. Section 37-5-202(7)

The Department next argues the bona fide error defense of section 37-5-202(7) is
likewise inapplicable here. We agree.

Section 37-5-202(1) provides generally,

If a creditor has violated any provisions of this title
applying to . . . schedule of maximum loan finance
charges to be filed and posted [under section
37-3-305] . . . the consumer has a cause of action to
recover actual damages and also a right in an
action . . . to recover from the person violating this title a
penalty in an amount determined by the court not less
than one hundred dollars nor more than one thousand
dollars. . . .

§ 37-5-202(1). In addition, subsection 37-5-202(2) states, "A consumer is not
obligated to pay a charge in excess of that allowed by this title and has a right of
refund of any excess charge paid." (emphasis added). However, subsection
37-5-202(7) provides,

A creditor may not be held liable in an action brought
under this section for a violation of this title if the
creditor shows by a preponderance of evidence that the
violation was not intentional and resulted from a bona
fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid the error.

The Department asserts that because the defense in section 37-3-201(6) is more
specific than section 37-5-202(7), section 37-3-201(6) is the only applicable
statutory defense for failure to comply with the maximum rate provisions.

We find the circuit court erred in determining section 37-5-202(7) relieved Cash
Central from any obligation to refund excess charges to consumers. Section
37-5-202(7) provides a defense generally available to creditors while section
37-3-201(6) is a specific defense available to supervised lenders for the failure to
file a maximum rate. Further, if the defense contained in 37-5-202 were available
for the failure to file a maximum rate, section 37-3-201(6) would be superfluous.
Thus, we find subsection 37-3-201(6) prevails over section 37-5-202.6 See
Criterion Ins. Co., 258 S.C. at 293, 188 S.E.2d at 464 ("General and special
statutes should be read together and harmonized if possible. But to the extent of
any conflict between the two, the special statute must prevail.").

6
The Department argues the circuit court erred in failing to defer to its 1986
administrative interpretation that the bona fide error defense of subsection
37-5-202(7) did not apply to a lender's failure to file a maximum rate. In light of
our disposition of this issue, we need not address this argument. See Futch v.
McAllister Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598
(1999) (holding an appellate court need not address an appellant's remaining issues
when the disposition of a prior issue is dispositive).
Next, the Department argues the defense in subsection 37-5-202(7) is reserved for
clerical errors rather than errors of law and the record failed to show Cash Central
maintained procedures reasonably adapted to avoid the error. We agree.

Subsection 37-5-202(7) does not define "bona fide error." The Federal Truth in
Lending Act contains a similar provision, which states that "[e]xamples of a bona
fide error include, but are not limited to, clerical, calculation, computer
malfunction and program[m]ing, and printing errors, except that an error of legal
judgment with respect to a person's obligations under this subchapter is not a bona
fide error." 15 U.S.C. § 1640(c) (emphasis added); see also 15 U.S.C. § 1601
(providing the purpose of the subchapter was "to assure a meaningful disclosure of
credit terms so that the consumer will be able to compare more readily the various
credit terms available to him and avoid the uninformed use of credit, and to protect
the consumer against inaccurate and unfair credit billing and credit card
practices"). Black's Law Dictionary defines the term "bona fide" as "1. Made in
good faith; without fraud or deceit. 2. Sincere; genuine." Bona Fide, Black's Law
Dictionary (11th ed. 2019). It defines "bona fide error" as "[a] violation that is
unintentional and occurs despite procedures reasonably adapted to avoid any such
error" and states it "is sometimes a defense to a technical violation of a statute that
otherwise imposes strict liability." Error, Black's Law Dictionary (11th ed. 2019)
(citing 15 U.S.C. § 1640(c)).

Even assuming subsection 37-5-202(7) applies, the circuit court erred in finding
Cash Central's failure to comply with subsection 37-3-305(1) was a bona fide error.
This defense requires that the violation was not intentional and was a bona fide
error. The circuit court found Fox—the person responsible for ensuring legal
compliance—simply "forgot, due to innocent human error" to file the maximum
rate schedule with the Department. Fox testified her failure to file the schedule or
realize this additional filing requirement was an "oversight." Furthermore,
Bridgette Roman, general counsel for Community Choice and Fox's direct
supervisor, corroborated Fox's testimony that her compliance outline was the only
written procedure Community Choice used to ensure compliance when beginning
operations in a new state. Fox acknowledged her compliance outline specifically
referenced the filing and posting requirement of section 37-3-305 but admitted it
did not specifically refer to the Board or the Department. Fox testified her file
included the "Initial Maximum Rate Filing Schedule for Consumer Loans" form
but she did not complete or file the form at that time. Fox stated that eight months
later, when Cash Central applied for and received the license from the Board, she
did not recall whether it was required to file anything else and stated that it was
"pretty easy to forget that [she] h[ad] this other piece of paper to file." Fox was the
only person who contributed to the creation of the outline, Roman acknowledged
she did not review the outline to verify its completeness or accuracy, and Cash
Central had no other procedure in place that required anyone to review the outline
for accuracy. In addition, Fox and Roman testified the outlines were unique to
each state and there was no overarching policy governing what information was to
be included in the outline. Based on the foregoing, no evidence showed Cash
Central's procedure of creating a compliance outline was reasonably adapted to
avoid the errors here. Therefore, we find the circuit court erred in finding Cash
Central's failure to post and file the maximum rate schedule was a bona fide error.

Finally, we find the circuit court erred as a matter of law in concluding this defense
allowed Cash Central to retain charges it obtained in excess of 18% APR. Cash
Central admitted it failed to file the maximum rate schedule with the Department.
As we stated, until it filed the maximum rate schedule, the maximum rate it was
permitted to charge pursuant to the SCCPC was 18% APR. Cash Central did not
file this form until April 10, 2015. Therefore, all finance charges over 18% APR
that it collected from South Carolina consumers from the time it began making
consumer loans in South Carolina until April 10, 2015, were excess charges.
Subsection 37-5-202(2) states consumers are not obligated to pay charges in excess
of those allowed by the SCCPC and have a right to a refund of any excess charges
paid. We conclude this provision is a distinct remedy, independent of a consumer's
right to bring an action for damages or penalties for the violation of a failure to file.
See § 37-5-202(1) (stating "[i]f a creditor has violated any provisions of this title
applying to . . . schedule of maximum loan finance charges to be filed and posted"
under section 37-3-305, a consumer has a cause of action to recover actual
damages and "to recover from the person violating this title a penalty in an amount
determined by the court not less than one hundred dollars nor more than one
thousand dollars"); § 37-5-202(3) ("[I]f a consumer is entitled to a refund and a
person liable to the consumer refuses to make a refund within a reasonable time
after demand, the consumer may recover from the creditor or the person liable in
an action other than a class action a penalty in an amount determined by the court
not less than one hundred nor more than one thousand dollars."). Subsection
37-5-202(2) provides "consumer[s are] not obligated to pay a charge in excess of
that allowed by this title and ha[ve] a right of refund of any excess charge paid."
(emphasis added). The provisions of subsections 37-5-202(2) and 37-5-202(7) are
mutually exclusive, and section 37-5-202(7) does not excuse Cash Central from
refunding excess charges. Nothing in these provisions require Cash Central to
recast its rates to 0%; rather, they require it to refund charges in excess of 18%
APR. Therefore, we find the circuit court erred in concluding Cash Central's
failure to file was a bona fide error and that it was excused from refunding excess
charges.7

CONCLUSION

For the foregoing reasons, we find the circuit court erred by concluding Cash
Central was not required to refund excess charges to affected consumers, and the
circuit court's order finding in favor of Cash Central is

REVERSED.

KONDUROS and MCDONALD, JJ., concur.

7
We note neither party has challenged the imposition of the $15,000 penalty.