SEARCH SITE

VIRGINIA LAW PORTAL

SEARCHABLE DATABASES

ACROSS SESSIONS

Developed and maintained by the Division of Legislative Automated Systems.

2008 SESSION

  • | print version

HB 12 Payday Loan Act; requires SCC to contract with one or more parties to develop, etc. database.

Introduced by: G. Glenn Oder | all patrons    ...    notes | add to my profiles | history

SUMMARY AS PASSED:

Payday Loan Act.  Requires the State Corporation Commission, by January 1, 2009, to certify and contract with one or more third parties to develop, implement, and maintain an Internet-accessible database, and requires payday lenders to query the database prior to making any loan to determine whether the loan is permissible. Licensees are required to pay a database inquiry fee to the database provider. A payday lender is prohibited from making a payday loan to a person if the loan would cause the borrower to have more than one payday loan outstanding at the same time and from making a payday loan on the same day that the person has paid a previous payday loan. Payday lenders are permitted to charge, on any payday loan, interest at an annual rate of 36 percent, a loan fee of not more than 20 percent of the loan proceeds, and a $5 verification fee.  Payday lenders are prohibited from knowingly making loans to a member of the military service or to the spouse or dependent of such person.  A borrower may enter into an extended payment plan, which allows the borrower to repay the loan in at least four equal installments over a period of not less than 60 days.  A borrower may not enter into more than one extended payment plan in any 12-month period.  A payday loan may not be made to a borrower in an extended payment plan or within 90 days after payment of an extended payment plan.  The measure provides that the fifth payday loan made to a borrower within 180 days shall either be followed by a 45-day lockout period or be made as an extended term loan, under which the loan will be repaid in four equal installments over a 60-day period and be followed by a 90-day lockout period.  Other provisions (i) prohibit a lender from engaging in any unfair, misleading, deceptive, or fraudulent acts or practices in the making or collecting of a payday loan; (ii) require a lender, when collecting or attempting to collect a payday loan when the check given as security for such loan is dishonored, to comply with certain restrictions and prohibitions contained in the Fair Debt Collection Practices Act; (iii) provide that any provision of a written loan agreement that violates the Payday Loan Act is unenforceable against the borrower; and (iv) state that the provisions of the Payday Loan Act apply to Internet lenders.  The measure, except the authorization to establish the database, will become effective January 1, 2009.  SB 588 is identical.  This bill also incorporates HB 1404, HB 730, HB 249, and HB 176.

SUMMARY AS PASSED HOUSE:

Payday Loans. Provides that payday lenders may charge a fee of not more than 10% of the amount of the loan proceeds, plus a $5 verification fee and interest at an annual rate not to exceed 36%. The measure requires the State Corporation Commission, by January 1, 2009, to certify and contract with one or more third parties to develop, implement, and maintain an Internet-accessible database, and requires payday lenders to query the database prior to making any loan to determine whether an applicant is eligible for the loan. A payday lender is prohibited from making a payday loan if the loan would cause the borrower to have more than one payday loan outstanding at the same time, or more than five loans in a year. The minimum term of a payday loan is revised from seven days to a period two times the borrower's pay cycle. A borrower may enter into a voluntary payment plan to repay any payday loan, under which the borrower may repay the loan without interest in at least two equal installments over 60 days. Other provisions (i) prohibit a lender from making a payday loan to a borrower within 24 hours from when the borrower pays or otherwise satisfies a previous payday loan; (ii) require a lender, when collecting or attempting to collect a payday loan, to comply with certain restrictions and prohibitions contained in the Fair Debt Collection Practices Act; (iii) make the Payday Loan Act apply to Internet lending, and (iv) prohibit a lender from filing or initiating a legal proceeding against a borrower until 60 days after the date of default on a payday loan.

SUMMARY AS INTRODUCED:

Payday lending charges.  Establishes a maximum annual interest rate for payday loans of 36 percent.  References in the Payday Loan Act to the fee that may be charged on such loans are revised to refer to the interest that may be charged.