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This opinion was issued in the second quarter of 2000.
A company offering computer training courses with the intention of providing financing to students at a rate of 12% or less to students allowing them to pay for each course in more than 5 installments. The company inquires as to whether the training courses are "services" within the meaning of "services" set forth in Mass.Gen. Law chapter 255D, and whether installment contracts offered by the company are subject to said statute.
Mass. Gen. Laws 255D, section 1 defines services as "any work, labor, or other services, purchased primarily for personal, family or household purposes, or furnished or agreed to be furnished in the delivery, installation, repair or improvement of goods, including but not limited to alterations, or improvements upon or in connection with real property, but excluding insurance of all types." Computer training courses would be deemed "services" under chapter 255D if they are used primarily for personal, family or household purposes. However, licensure under chapter 255D is dependant upon whether the entity is a sales finance company, as defined in section 1 of chapter 255D.
Under said chapter 255D, section 1, a sales finance company, is defined, in pertinent, part, as "...any person other than an installment seller engaged, in whole or in part, in the business of purchasing retail installment sale agreements or revolving credit agreements of one or more retail sellers. An installment seller is defined as, "a person who sells or agrees to sell goods or services or both, or merchandise certificates, pursuant to retail installment sale agreement, or revolving credit agreement."
Section 2 of said chapter 255D requires, in part, that "...no person, other than a bank...or a national banking association, federal savings bank, federal savings and loan association or federal saving bank, federal savings and loan association or federal credit union, shall engage in the business of a sales finance company without first obtaining from the commissioner a license to carry on said business in each city or town where the business is to be transacted as provided herein."
The company, as an installment seller, will directly finance the training course for the students. An installment seller is excluded from the definition of a sales finance company. Therefore, it is the position of the Division that your client would not be required to obtain a license under Mass. Gen. Laws chapter 255D. However, the company would be classified as a "holder" under Mass. Gen. Law chapter 255D section 1 which states that a holder is a person entitled to enforce a retail installment sales agreement or revolving credit agreement against an installment buyer. Therefore, although the company would not be required to obtain a license under said chapter 255D, his/her status as a holder would subject him/her to the provisions of Mass. Gen. Laws chapter 255D, pursuant to section 25 of said chapter 255D. The company may also be subjected to licensure under Mass. Gen. Laws chapter 140, section 96. Chapter 140, states, in part, that no person shall directly or indirectly engage in the business of making loans six thousand or less, if the amount to be paid on any such loan for interest and expenses exceed in the aggregate an amount equivalent to twelve per cent per annum upon the sum loaned, without first obtaining a license. Since the company plans to provide financing for less that twelve per cent per annum the company would not be subjected to the statute.