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16a-1-201. (UCCC) Territorial application. (1) Except as otherwise provided in this section, K.S.A. 16a-1-101 et seq., and amendments thereto, apply to consumer credit transactions made in Kansas. For purposes of such sections of this act, a consumer credit transaction is made in Kansas if:

(a) A written agreement executed by electronic or physical signature evidencing the obligation or offer of the consumer is received by the creditor from a consumer in Kansas; or

(b) the creditor induces the consumer who is a resident of Kansas to enter into the transaction by solicitation in Kansas by any means, including, but not limited to: Mail, telephone, radio, television, electronic mail, internet or any other electronic means.

(2) Except as provided in subsection (5), a consumer credit transaction made in a state outside of Kansas to a person who was not a resident of Kansas when the sale, lease, loan or modification was made is valid and enforceable in Kansas according to its terms to the extent that it is valid and enforceable under the laws of the state applicable to the transaction.

(3) Notwithstanding other provisions of this section, except as provided in subsection (5), K.S.A. 16a-1-101 et seq., and amendments thereto, do not apply if the consumer is not a resident of Kansas at the time of a consumer credit transaction and the parties have agreed that the law of the consumer's residence applies.

(4) With respect to consumer credit transactions entered into pursuant to open-end credit, this act shall apply if the consumer's communication or indication of intention to establish the agreement is received by the creditor conducting business in Kansas. If no communication or indication of intention is given by the consumer before the first transaction, this act applies if the creditor's communication notifying the consumer of the privilege of using open-end credit is provided to the consumer in Kansas.

(5) The part addressing limitations on creditors' remedies of the article on remedies and penalties applies to actions or other proceedings brought in this state to enforce rights arising from consumer credit transactions or extortionate extensions of credit, wherever made.

(6) For the purposes of K.S.A. 16a-1-101 et seq., and amendments thereto, the residence of a consumer is the address provided by the consumer as the consumer's residence in any written agreement signed by the consumer in connection with a consumer credit transaction. Until the consumer notifies the creditor of a new or different address, the address provided by the consumer shall be presumed to be unchanged.

(7) Except as provided in subsection (3), the following agreements by a buyer, lessee or debtor are invalid with respect to a consumer credit transaction to which K.S.A. 16a-1-101 et seq., and amendments thereto, apply:

(a) That the law of another state shall apply;

(b) that the consumer consents to the jurisdiction of another state; and

(c) that fixes venue.

History: L. 1973, ch. 85, § 9; L. 1977, ch. 70, § 1; L. 1981, ch. 93, § 4; L. 1993, ch. 200, § 3; L. 1999, ch. 107, § 7; L. 2024, ch. 6, § 35; January 1, 2025.

KANSAS COMMENT, 2010

1. This section enables Kansas to apply the U3C for the protection of its own consumer residents in multi-state transactions.

2. Under the original version of subsections (1) and (2) of this section, the issue of whether a transaction was deemed to have been made in Kansas (thus triggering application of the entire U3C) was dependent on the place at which the executed contract was received by the creditor and whether any face-to-face solicitations occurred in Kansas.

Subsection (1)(b) was amended, however, in the 1999 legislative session to remove the "face-to-face" qualifier from the solicitation test. This amendment was driven primarily by a concern over the growing use of the internet as a means of soliciting Kansas consumers to enter into credit transactions with out-of-state creditors.

Under amended subsection (1)(b), the applicability of the U3C to a multi-state transaction turns on whether there is "solicitation in this state." The Court of Appeals for the 10 th Circuit affirmed the constitutionality of subsection (1)(b) in the case Quik Payday v. Stork, et al., 549 F.3d 1302, (2008), cert. denied 129 S.Ct. 2062. In that case, the court held that the administrator did not act unconstitutionally when the administrator applied the U3C to an internet payday lender located in Utah. In Quik Payday, an out-of-state payday lender made supervised loans to Kansas consumers via the internet. The lender had no agents or offices in Kansas. However, subsection (1)(b) brought these internet payday loan transactions under the U3C. Additional guidance regarding when a solicitation is deemed to have been made in Kansas may be found in Watkins v. Roach Cadillac, Inc., 7 Kan. App. 2d 8, 637 P.2d 458 (1981), the court held that out-of-state radio and newspaper advertisements which reached a Kansas consumer were "solicitations" sufficiently "within this state" to bring the transaction within the scope of the KCPA. Another example of a case construing a similar phrase is Norton v. Local Loan, 251 N.W.2d 520 (Iowa 1977), the court held that a long distance phone call from the creditor's out-of-state agent to the consumer was "conduct in this state" within the meaning of that phrase in the Iowa U3C.

It seems quite unlikely that a Kansas resident will locate an out-of-state creditor, travel to the creditor's state and consummate a consumer credit transaction with that creditor unless the creditor has "solicited" the consumer by the use of targeted telephone, mail or other direct marketing or general radio, television, or other non-individualized advertisements received or seen by the consumer in Kansas. Thus, as a practical matter, nearly all consumer credit extended by out-of-state creditors to Kansas residents would be deemed to have been made in Kansas. The entire U3C (including its licensing requirements, its disclosure requirements and its substantive limitations) would apply to those transactions.

3. Under subsections (7) and (8), choice of law agreements have been invalidated except where the law chosen is that of the state of the consumer's residence. This eliminates the danger that creditors could induce consumers to agree that the applicable law would be that of a creditor's haven that had no effective credit protection.

4. As noted in Kansas comment 2 to this section, virtually all supervised loans extended to Kansas residents would be deemed to have been made in Kansas and, as a result, out-of-state creditors extending those loans would need a Kansas supervised lender's license. Note, however, that (a) an out-of-state supervised financial organization does not need a supervised lender's license to make supervised loans in Kansas and (b) federally-insured financial institutions may "export" to Kansas the interest rates and related charges permitted by the law of their home states as a matter of federal law. See Smiley v. Citibank (South Dakota), N.A., 116 S.Ct. 1730 (1996).

Law Review and Bar Journal References:

"Summary Repossession, Replevin, and Foreclosure of Security Interests," Thomas V. Murray, 46 J.B.A.K. 93, 95 (1977).

Warranty violations in tripartite finance lease agreements, Winton A. Winter, Jr., 25 K.L.R. 573, 582 (1977).

"Insurer's Bad Faith: A New Tort for Kansas?" Janet Amerine and Jan E. Montgomery, 19 W.L.J. 467, 485 (1980).

"Creditor Beware: From Default Through Deficiency Judgment," Wanda M. Temm, 60 J.K.B.A. No. 8, 17, 18 (1991).

"To Be (Transformed) or Not to Be: The Transformation Versus Dual-Status Rules for Purchase-Money Security Interest Under Kansas' Former and Revised Article 9," Christopher Harry, 50 K.L.R. 1095 (2002).

"History & Overview of the Uniform Consumer Credit Code," Ryan E. Hodge, J.K.T.L.A. Vol. XXVI, No. 3, 8 (2003).

Attorney General's Opinions:

Finance charge for consumer loans; supervised lenders. 79-286.

Scope and jurisdiction of UCCC; territorial application. 90-38.

CASE ANNOTATIONS

1. Cited in holding parties to business loans may agree to subject themselves to UCCC (K.S.A. 16a-1-109). Farmers State Bank v. Haflich, 10 Kan. App. 2d 333, 336, 699 P.2d 533 (1985).

2. Issue concerning whether KUCCC (K.S.A. 16a-5-101 et seq.) applied to mortgage transaction between out of state financier and residents precluded summary judgment. Pilcher v. Direct Equity Lending, 189 F. Supp. 2d 1198, 1208 (2002).

3. Plaintiff offering payday loans over internet alleges commerce clause and due process violations; summary judgment for defendant. Quick Payday, Inc. v. Stork, 509 F. Supp. 2d 974, 977, 984, 985 (2007).

4. Cited; Kansas regulation of payday loans over internet held not to violate dormant commerce clause. Quik Payday, Inc. v. Stork, 549 F.3d 1302, 1305 (2008).


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