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2004 Enacted Payday Lending Legislation

January 14, 2005

State:	Bill Summary:
Alaska	S.B. 272 Signed by governor 6/29/04, Chapter 116 Protects the consuming public and defines and codifies for the state the practice where a business pays money in exchange for a check or other instrument but agrees to delay depositing or otherwise negotiating the check or instrument; gives the Department of Community and Economic Development additional licensing and regulatory authority over persons who make these deferred deposit advances; gives recipients of these advances the right to rescind the advance without cost before the end of the following business day; prohibits onerous collection practices by both deferred deposit advance licensees and licensees' third-party collectors, including the threat of criminal charges; prohibits the acceptance of collateral other than a check or other instrument in these situations; and defines the additional disclosures that persons who make these advances must make to clearly describe the advances and their uses for the persons receiving the advances.
California	A.B. 971 Chaptered by secretary of state 2/23/04, Chapter 17 Extends the dates on which the Deferred Deposit Transaction Law becomes operative and inoperative to December 31, 2004.  Authorizes the governor to issue an executive order to make these provisions operative and inoperative at a date earlier than December 31, 2004, if the earlier date is not less than 30 days after the issuance of the executive order.
	A.B. 2156 Chaptered by secretary of state 8/25/04, Chapter 312 Current law requires the commissioner of Corporations to report to the governor and the Legislature, on December 1, 2007, on the implementation of the California Deferral Deposit Transaction Law, which regulates the activities of people who conduct deferred deposit transactions, as defined, prohibits advertisements regarding deferred deposit transactions which are false, misleading, or deceptive, and permits the commissioner to establish requirements regarding statements of rates and charges in connection with deferred deposit transactions.  This bill requires the commissioner’s report to the governor and Legislature to include specified information on the advertising practices of the deferred deposit transactions industry and recommendations regarding additional regulation of these practices.
Colorado	H.B. 1069 Signed by governor 4/7/04, Chapter 95 Clarifies that in a deferred deposit loan transaction a lender may accept a dated instrument and no other collateral as sole security for the loan. Clarifies that there shall be no minimum loan term or minimum finance charge. Allows the due date for a loan to be set without regard to any specific income date. Allows a lender to hold a check beyond the loan due date if there is no additional fee or charge to the consumer. Clarifies that the $500 lending limit to a consumer is for one lender. Clarifies that if a consumer's check is dishonored and, prior to the notice of dishonor to the lender, a new loan is made, the lender shall not be in violation of the maximum loan amount provision. Allows a lender to pay loan proceeds in the form of stored value cards, Internet transfers, and authorizations for automated clearinghouse transactions. Prohibits a lender from charging a consumer for negotiating forms of loan proceeds other than cash. Clarifies that if a loan is returned unpaid for any reason, the lender can collect the face value of the instrument.
Georgia	S.B. 157 Signed by governor 4/14/04, Act 440 Relates to penalties for violations of the Georgia Industrial Loan Act, so as to allow class actions to be brought against unlicensed lenders; amends Title 16 of the Official Code of Georgia Annotated, relating to crimes and offenses, so as to include payday lending in the definition of racketeering activity; declares a legislative intent to prohibit activities commonly referred to as payday lending, deferred presentment services, or advance cash services and other similar activities; strengthens and increases the criminal and civil penalties therefor; voids payday lending loans; declares that forum selection clauses in payday lending contracts are unenforceable in Georgia; provides that it shall be unlawful to engage in the business of making certain small loans; provides for exemptions for licensed and regulated activities; defines crimes and declare penalties; provides for civil remedies of borrowers; provides for civil penalties; provides for collection of civil penalties in actions by the state or by private parties; declares a tax on profits from payday loans; declares sites or locations on which payday lending is taking place to be public nuisances; provides disclosure and notice requirements regarding loans made to members of the military.
Kansas	H.B. 2685 Signed by governor 4/8/04, Chapter 29 Concerns the regulation of payday loans.  Establishes a seven-day minimum term for any loan; limits the number of loans to three for any borrower within a 30-day period and requires lenders to keep a journal of all loan transactions which includes the name, address, telephone number of the borrower, and the date each loan is made and the date each is due; requires the lender, upon receipt of a check from the borrower, to immediately stamp the check with an endorsement that states: "Negotiated as part of a loan made under KSA 16a-2-404.  Holder takes subject to claims and defenses of maker.  No criminal prosecution."  Allows a borrower, under the terms specified, to rescind the transaction without cost not later than the end of the business day following the day on which the transaction was made; outlines a list of acts or practices prohibited in connection with a payday loan.
Louisiana	S.B. 372 Signed by governor 5/28/04, Act 70 Expands the use of the proceeds to include personal, family, or household purposes, including debts created by the use of a lender credit card revolving loan account, or similar arrangement, as well as insurance premium financing.  This law shall not apply to a consumer loan made pursuant to the Louisiana Deferred Presentment and Small Loan Act.
Nebraska	L.B. 999 Signed by governor 4/15/04 Amends the Nebraska Installment Loan Act, the Nebraska Installment Sales Act, and the Delayed Deposit Services Licensing Act to shorten the response time for inquiries from the Department from 30 to 21 days.
New Hampshire	H.B. 1320 Signed by governor 5/24/04, Chapter 139 Makes certain changes to the laws relative to retail installment sales of motor vehicles, licensing of nondepository first mortgage bankers and brokers, regulation of mortgage loan services, second mortgage home loans, and regulation of small loans.
Oklahoma	S.B. 1565 Signed by governor 6/10/04, Chapter 557 Relates to Deferred Deposit Lending Act; relates to determination of outstanding loans; expands the number of databases which may be approved by the administrator of consumer credit for specified purpose.
South Dakota	H.B. 1049 Signed by governor 2/26/04 Establishes the definition of a payday loan and establishes limitations on such transactions.
Virginia	H.B. 688 Signed by governor 3/31/04, Chapter 295 Specifies borrowers' checks as records payday lenders must retain. Prohibits application of post-maturity interest to loan fees and limits borrowers' right to make partial payments to the period prior to loan maturity. Requires payday lenders to return paid loan agreements to borrowers marked "paid" or "canceled" and to keep a copy. Codifies the exclusive applicability of Chapter 18 of Title 6.1 to post-judgment interest and other charges and expenses payday lenders may recover from borrowers.

NCSL Contact:  Heather Morton, Denver