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2008 SESSION

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SB 588 Payday Loan Act; requires SCC to contract with one or more parties to develop, etc. database.

Introduced by: Phillip P. Puckett | 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.  HB 12 is identical.

SUMMARY AS PASSED SENATE:

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 of not more than $1. 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 loans 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 10 percent of the loan proceeds, and a $10 verification fee.  The Commission is prohibited from licensing a new payday lending office within 1.5 miles of an existing payday loan office.  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 two extended payment plans 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, or to a borrower within 90 days after the person has paid a payday loan by means other than an extended payment plan if that person was in default on such loan for 60 or more days.  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; (iv) state that the provisions of the Payday Loan Act apply to Internet lenders. 

SUMMARY AS INTRODUCED:

Payday Loan Act.  Requires the State Corporation Commission, by July 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. Fifty cents may be charged to defray the costs of using the database. A payday lender is prohibited from making a payday loan to a person who has terminated a payday loan on the loan application date, or if the loan would cause the borrower to have more than three payday loans outstanding at the same time. Payday lenders are prohibited from knowingly making loans to a member of the military service or to the spouse or dependent of such person. If a borrower obtains three or more consecutive payday loans, the borrower may enter into an extended payment plan, which allows the borrower to repay the loan in at least two equal installments over 60 days. A payday loan may not be made to a borrower in an extended payment plan. 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; (iv) state that the provisions of the Payday Loan Act apply to Internet lenders; and (v) allow licensees to secure payday loans with the borrower's electronic debit authorization.