Summary Payday Lending 2020 Legislation

HB 2312
Passed House 2/10/20

AB 2196
Signed by governor 9/25/20, Chapter 174

This bill prohibits a licensee under the Money Transmission Act or the California Deferred Deposit Transaction Law from arranging a loan, referring, directly or indirectly, a person to a provider of a loan, or distributing or sharing marketing materials or any similar information with a person related to a provider of a loan if that loan contains charges that exceed the limits described above in the California Financing Law.

The California Deferred Deposit Transaction Law provides for the licensure and regulation by the Commissioner of Business Oversight of persons engaged in the business of making or arranging deferred deposit transactions. Existing law, among other things, prohibits a licensee from entering into an agreement for a deferred deposit transaction with a customer during the period of time that an earlier written agreement for a deferred deposit transaction for the same customer is in effect. A knowing and willful violation of the provisions of this law is a crime. This bill requires the commissioner, by July 1, 2021, to develop, operate, and maintain an internet website and common database in which a licensee would be required to, by the time period described below, record each deferred deposit transaction for the purpose of preventing violations of the California Deferred Deposit Transaction Law. The bill requires the database to meet certain requirements, including that it allow real-time access to information entered into the database via an internet connection. The bill, alternatively, authorizes the commissioner to contract with a provider to develop, operate, or maintain the database. The bill requires, on or after July 1, 2021, a licensee to conduct a search on the database before entering into any deferred deposit transaction, and prohibits the licensee from entering into that transaction if the database reveals the customer has any outstanding deferred deposit transactions or has taken out 4 or more deferred deposit transactions in the preceding 365 days. The bill requires the licensee to adhere to generally accepted security safeguards to maintain the confidentiality and security of information transmitted to the database.

Died in committee 3/14/20

Creates Access to Responsible Credit Pilot Program within the Office of Financial Regulation to provide consumer loans; requires persons to obtain program license from office before engaging in certain actions relating to program loans; requires program licensee's program branch offices to be licensed; provides requirements for program licensees, program loans, loan repayments, loan rescissions, interest rates, program loan refinancing, receipts, disclosures & statements provided by program licensees to borrowers, origination fees, insufficient funds fees, and delinquency charges; authorizes program licensees to provide program loans only to residents of specified counties; specifies program loan underwriting requirements for program licensees.

Died in committee 3/14/20

Creates the Access to Responsible Credit Pilot Program within the Office of Financial Regulation; requires a program license from the office to advertise, offer, or make program loans or to impose certain charges or fees; specifies requirements for program licensees, program loans, loan repayments, rescissions, interest rates, program loan refinancing, receipts, disclosures and statements provided by program licensees to borrowers, origination fees, insufficient funds fees, and delinquency charges, etc.

HB 1883
SB 2587
Passed Senate 3/3/20

Transitions from lump sum deferred deposit transactions to installment-based small dollar loan transactions. Specifies various consumer protection requirements for small dollar loans. Beginning Jan. 1, 2022, requires licensure for small dollar lenders that offer small dollar loans to consumers. Specifies licensing requirements for small dollar lenders. Authorizes the division of financial institutions to appoint 2.0 FTE examiner positions, funded via the compliance resolution fund, to carry out the purposes of the small dollar installment loan program. Requires check cashers to be registered with DCCA and to offer a voluntary payment plan to customers under certain circumstances. Establishes the terms of voluntary payment plans. Clarifies that a customer may only have 1 outstanding deferred deposit transaction from any source. Amends notices to customers required of check cashers. Removes the exemption for persons engaged in the bona fide retail sale of goods or services. Requires the Division of Financial Institutions of the Department of Commerce and Consumer Affairs to conduct an analysis of the regulation of payday lenders and deferred deposit agreements in the state.

Request the auditor to conduct a follow-up analysis to Report No. 05-11 on payday loans.

Amends existing law to revise the licensing requirements for regulated lenders and payday lenders and to revise administrative and civil remedies for persons offering consumer credit.

Amends existing law to revise the licensing requirements for regulated lenders and payday lenders and to revise administrative and civil remedies for persons offering consumer credit.

Amends the Illinois Credit Union Act, the Transmitters of Money Act, the Sales Finance Agency Act, the Debt Management Service Act, the Consumer Installment Loan Act, the Debt Settlement Consumer Protection Act, and the Payday Loan Reform Act. Requires applicants for a license or renewal of a license to operate a credit union, operate as a transmitter of money, engage in the business of a sales finance agency, engage in a debt management service, make consumer installment loans, operate as a debt settlement provider, or operate as a lender of payday loans to provide an email address of record to the Department of Financial and Professional Regulation. In provisions concerning service of certain notices and orders, allows service by email to the email address of record. Provides that service to an email address of record is deemed complete when sent. Provides that service by certified mail shall be deemed completed when the notice is deposited in the U.S. mail. Defines the term "email address of record". Makes other changes.

Amends the Currency Exchange Act, the Sales Finance Agency Act, the Debt Management Service Act, the Consumer Installment Loan Act, and the Payday Loan Reform Act. Changes application fees, license fees, initial license fees, and fees to operate under those Acts. Changes the fine for late annual consumer installment loan reports to $500 (instead of $25) for each day beyond March 1 such report is filed. Establishes an initial license fee to operate as a payday lender in the amount of $1,250. Changes the fine for late annual payday lender reports to $500 (instead of $25) for each day beyond March 1 such report is filed. In the Sales Finance Agency Act, the Consumer Installment Loan Act, and the Payday Loan Reform Act, makes changes to the expiration date of licenses under those Acts and adds a fee to reinstate an expired license.

Amends the Payday Loan Reform Act. Provides that the finance charge for a payday loan shall not exceed an annual percentage rate of 39%.

Amends the Payday Loan Reform Act. Provides that lenders must verify the identity of borrowers before making a loan under the Act. Requires inspection and copying of a government-issued identification document. Allows identifications to be made by licensees under the Currency Exchange Act and other licensees approved by the Department of Financial and Professional Regulation on behalf of lenders under the Payday Loan Reform Act.

Amends various Acts to eliminate the changes made by Public Acts 101-30, 101-31, and 101-32. Includes the Payday Loan Reform Act and Consumer Installment Loan Act. Makes other changes.

Amends the Illinois Credit Union Act, the Transmitters of Money Act, the Sales Finance Agency Act, the Debt Management Service Act, the Consumer Installment Loan Act, the Debt Settlement Consumer Protection Act, and the Payday Loan Reform Act. Requires applicants for a license or renewal of a license to operate a credit union, operate as a transmitter of money, engage in the business of a sales finance agency, engage in a debt management service, make consumer installment loans, operate as a debt settlement provider, or operate as a lender of payday loans to provide an email address of record to the Department of Financial and Professional Regulation. In provisions concerning service of certain notices and orders, allows service by email to the email address of record. Provides that service to an email address of record is deemed complete when sent. Provides that service by certified mail shall be deemed completed when the notice is deposited in the U.S. mail. Defines the term "email address of record". Makes other changes.

Amends the Currency Exchange Act, the Sales Finance Agency Act, the Debt Management Service Act, the Consumer Installment Loan Act, and the Payday Loan Reform Act. Changes application fees, license fees, initial license fees, and fees to operate under those Acts. Changes the fine for late annual consumer installment loan reports to $500 (instead of $25) for each day beyond March 1 such report is filed. Establishes an initial license fee to operate as a payday lender in the amount of $1,250. Changes the fine for late annual payday lender reports to $500 (instead of $25) for each day beyond March 1 such report is filed. In the Sales Finance Agency Act, the Consumer Installment Loan Act, and the Payday Loan Reform Act, makes changes to the expiration date of licenses under those Acts and adds a fee to reinstate an expired license.

Changes the current incremental finance charge limits that apply to a small loan to a maximum annual rate. Prohibits making, or taking other actions with respect to, a small loan with a greater rate or amount of interest, or other fees and charges, than allowed under the statute governing small loans. Prohibits a credit services organization from providing certain functions with respect to a small loan and makes a violation a deceptive act.

Amends the Uniform Consumer Credit Code (UCCC) as follows: (1) Specifies that the UCCC applies to any consumer credit transaction entered into by a creditor and a resident of Indiana regardless of whether: (A) the creditor has a physical presence in any state; or (B) the transaction is conducted, in whole or in part, by means of the Internet. (2) Specifies that the licensing requirements under the UCCC apply to any person that regularly engages in making consumer loans in Indiana regardless of whether: (A) the person has a physical presence in any state; or (B) the loan transactions are conducted, in whole or in part, by means of the internet. (3) Provides that after June 30, 2020, a lender may not contract for or receive the authorized minimum finance charge upon a borrower's prepayment of the second or any subsequent refinancing of a consumer loan made to that borrower by the lender. (4) Provides that after June 30, 2020, a lender may not assess the authorized nonrefundable prepaid finance charge on the second or any subsequent refinancing of a consumer loan made to a borrower by the lender. (5) Provides that a creditor: (A) who is licensed with the department of financial institutions (department) under the UCCC or is required to be licensed with the department; and (B) who violates the UCCC; commits a deceptive act that is actionable by the attorney general or a consumer under the deceptive consumer sales act.

Changes the current incremental finance charge limits that apply to a small loan to a maximum annual rate. Prohibits making, or taking other actions with respect to, a small loan with a greater rate or amount of interest, or other fees and charges, than allowed under the statute governing small loans.

Amends and reenacts R.S. 9:3578.3(3) through (6), 3578.4(A)(1), 3578.5, and 3578.6(A)(7) and enacts R.S. 9:3537, 3578.3(7), and 3578.6(A)(9) and (C), relative to consumer credit transactions; provides relative to preliminary check holding; provides for definitions; provides relative to refunds; provides relative to time limitations; provides for fees; provides for prepayment; provides for rebates; provides for deferred presentment transactions; provides for small loans; provides relative to creditor provisions; provides for interest; provides for prohibitions; provides relative to evasion; and provides for penalties.

Clarifies the jurisdiction of the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection to regulate transactions entered into by mail, telephone or electronic mail or using a creditor's website when the consumer is located in Maine.

Passed House 5/27/20

Amends the Deferred Presentment Service Transactions Act to allow the authorized licensed providers of deferred presentment service transactions (commonly called payday lenders) to make certain small loans to their customers. The bill would further allow lenders to offer small loans with a principal amount of $2,500 or less to their customers. Specifically, a small loan made under the bill would have to meet the following requirements: The loan is made to one or more individuals for personal, family, or household use (i.e., is a personal loan). The principal amount of the loan does not exceed $2,500. The maturity date for the loan is not less than 90 days after the date of the transaction. The loan is unsecured and payable in installments.

Relates to financial institutions; regulates interest rates for consumer short-term and small loans.

HF 1507
Passed House 5/7/20

Establishes the COVID-19 Economic Security Act; modifies loans during public health emergency, including consumer small loans and consumer short-term loans; provides for small business loans and grants; provides grants for expanding broadband and telemedicine; provides housing assistance; expanding personal care assistance services; increases personal care assistant rates; provides penalties and appropriates money.

None

This bill modifies the law relating to unsecured loans of $500 or less, commonly referred to as payday loans. The bill requires a lender to provide a borrower with a notice of the borrower's right to contact the Division of Finance regarding the lender. Currently, the maximum number of loan renewals is six. This bill lowers the maximum number of renewals to two. The bill also allows a lender to decline to renew a loan. Borrowers may pay outstanding loans by means of an extended payment plan (EPP) with the following conditions: (1) A borrower is not eligible to enter into more than one EPP in any 12-month period with an individual lender; (2) A borrower must sign a written agreement to repay the amount owed in four or less equal installments based on the dates the borrower receives his or her paycheck; (3) Interest does not accrue on the loan during the EPP and the borrower may prepay an EPP in full at any time without penalty; (4) If the borrower fails to pay the amount due under the EPP, the lender can immediately accelerate the unpaid balance; (5) If a borrower enters into an EPP, the lender cannot make another loan to the borrower until the loan is re-paid in full; (6) The borrower must enter into the EPP by the close of business on the day the loan is due; and (7) The lender must post a notice in the lobby that the borrower can use an EPP. Currently, the total amount of accumulated interest and fees are limited to 75% of the initial loan amount. This bill reduces that amount to 35%. Lenders are required to comply with the Fair Debt Collection Practices Act regarding harassment or abuse, false or misleading misrepresentations, and unfair practices when collecting on a payday loan.

This bill prohibits lenders of consumer credit loans, title loans, consumer installment loans, and unsecured loans of $500 or less (commonly called payday loans) from charging interest, fees, and finance charges in excess of 36% of the unpaid balance of the loan. Lenders are prohibited from intentionally evading statutory requirements through any method, including but not limited to mail, telephone, Internet, or any electronic means. This bill requires voter approval.

This bill enacts into state statute federal payday loan regulations that were recently repealed by the Consumer Financial Protection Bureau. The bill prevents a lender from making a short-term loan without first making a reasonable determination that the consumer will have the ability to repay the loan. The lender must make the determination of ability to repay every 90 days. A short-term loan is defined as a loan where the consumer is required to repay substantially the entire amount of the loan within 45 days. To determine ability to repay, the lender must calculate the consumer's debt-to-income ratio and residual income and estimate the consumer's basic living expenses. The consumer must give a written statement of his or her income and current major financial obligations. The lender is required to obtain verification evidence as reasonably necessary. The lender does not have to make a determination on ability to repay if: (1) The first loan is less than $500; for the second loan, 2/3 of the principal amount of the first loan; or for the third loan, 1/3 of the principal amount of the first loan; (2) The loan amortizes completely during the term of the loan and the payment schedule allocates payments to outstanding principal, interest, and fees as they accrue through a fixed periodic rate of interest; (3) The loan is not open-end credit; (4) The loan does not require vehicle security as a condition of the loan; (5) The consumer has not had an outstanding loan in the past 30 days; (6) The loan will not result in the consumer having a loan sequence of more than 3 short-term loans; and (7) The loan will not result in the consumer having more than 6 short-term loans outstanding in any 12-month period or any outstanding short-term loans for a period of more than 90 days. A lender cannot make subsequent short-term loans while a loan is outstanding or for 30 days after the repayment of the loan. The lender must disclose to the consumer certain information about the loan before giving out a loan. The lender must also disclose to the consumer certain information after a loan ceases to be outstanding. The lender must retain the loan paperwork for 36 months after a loan ceases to be outstanding.

Changes provisions of the Delayed Deposit Services Licensing Act; updates a definition, defines a term, adds a processing fee, and changes licensing provisions; harmonizes provisions; and repeals the original sections.

Includes payday lending as a violation of the consumer fraud act.

AB 6506
Enacting clause stricken 2/11/20

Enacts the "credit creation pilot program act of New York"; directs the superintendent of financial services to create and implement such act; defines terms; provides that a program licensee may not offer or make a program loan or impose any charges or fees without prior approval from the superintendent of financial services to participate in the program; provides for disclosures, statements and receipts, referral partners, permitted services and prohibited activities.

Prohibits foreign banking corporations from issuing payday loans; defines payday loans as any transaction in which a short-term cash advance is made to a consumer in exchange for (i) a consumer's personal check or share draft, in the amount of an advance plus a fee, where presentment or negotiation of such check or share draft is deferred by agreement of the parties until a designated future date; or (ii) a consumer's authorization to debit the consumer's transaction account, in the amount of the advance plus a fee, where such account will be debited on or after a designated future date.

Relates to debtor and creditor; creates the Payday Loan Prohibition Act of 2020; prohibits certain loans; limits interest rate allowable for certain transactions; states applicability to all parties of certain transactions; specifies certain unlawful acts; specifies certain interest rate maximums for transactions; provides for the promulgation of rules; provides certain penalties; provides for codification.

Creates the Payday Lending Act.

Creates to Law of Deferred Deposit Loans with the purpose of authorizing and regulating the industry in Puerto Rico of deferred deposit loans or what in the English language are known as Deferred Deposit Loans or Payday Loans.

This bill caps the annual percentage rate (APR) for payday loans to 28%; requires a maturity date of more than 90 days from closing; prohibits fees and interest payments of more than 60% of the principal amount; and requires that payments be made monthly with each payment being no more than 25% of the loan's original principal.

This bill repeals the provisions of the general laws allowing deferred deposit providers, also known as "payday lenders."

This bill amends Title 7, Chapter 23, Check Cashing and Deferred Deposit Lending Registration Act, and Title 78B, Chapter 6, Part 3, Contempt. This bill: amends registration requirements for deferred deposit lenders; amends reporting requirements for deferred deposit lenders; amends operational requirements for deferred deposit lenders; amends reporting requirements for the commissioner of Financial Institutions regarding deferred deposit lenders; amends provisions relating to bail bonds; amends provisions related to damages to party aggrieved; and makes technical and conforming changes.

HB 789
Signed by governor 4/22/20, Chapter 1215
SB 421
Signed by governor 4/22/20, Chapter 1258

Substituted by HB 789 1/21/20

Caps the rate of interest that may be charged on motor vehicle title loans, payday loans, and open-end credit plans at 36% per year. The bill prohibits a lender from charging a membership fee, participation fee, or transaction fee in connection with any such extension of credit. The bill also caps the maximum rate of interest that a licensed consumer finance company may charge on any loan at 36 percent annually and eliminates the existing provision that permits such licensees to charge any agreed-upon amount of interest on consumer finance loans over $2,500.

HB 1265
Incorporated into HB 789 1/21/20

Requires the State Corporation Commission, as a condition of licensing a consumer finance company, to find that the applicant will not make consumer finance loans at the same location at which the applicant makes payday loans or motor vehicle title loans. The measure also (i) sets the minimum and maximum amounts of a consumer finance loan at $500 and $35,000, respectively; (ii) requires that such loans be installment loans with a term that is not less than six months nor more than 120 months; (iii) sets the maximum annual interest rate on such loans at 36 percent; (iv) authorizes late payment fees of $20, provided that they are set forth in a contract; (v) authorizes loan processing fees of the greater of $75 or five percent of the principal amount of the loan but not to exceed $150; and (vi) increases from $15 to $25 the amount of a bad check fee.

Requires the State Corporation Commission, as a condition of licensing a consumer finance company, to find that the applicant will not make consumer finance loans at the same location at which the applicant makes payday loans or motor vehicle title loans. The measure also (i) sets the minimum and maximum amounts of a consumer finance loan at $500 and $35,000, respectively; (ii) requires that such loans be installment loans with a term that is not less than 6 months nor more than 120 months; (iii) sets the maximum annual interest rate on such loans at 36%; (iv) authorizes late payment fees of $20, provided that they are set forth in a contract; (v) authorizes loan processing fees of the greater of $75 or 5% of the principal amount of the loan but not to exceed $150; and (vi) increases from $15 to $25 the amount of a bad check fee.

Failed to pass pursuant to SJR 1 4/1/20

This bill limits the maximum interest rate that may be charged on a payday loan or a consumer loan by a licensed lender and modifies the criteria under which a person that makes consumer loans must be licensed by the Department of Financial Institutions. This bill limits the interest rate that a payday loan licensee may charge, before the maturity date, on a payday loan to an annual percentage rate of 36%. A payday loan on which a greater rate of interest is charged is not enforceable.

Failed to pass pursuant to SJR 1 4/1/20

This bill limits the maximum interest rate that may be charged on a payday loan or a consumer loan by a licensed lender and modifies the criteria under which a person that makes consumer loans must be licensed by the Department of Financial Institutions. This bill limits the interest rate that a payday loan licensee may charge, before the maturity date, on a payday loan to an annual percentage rate of 36%. A payday loan on which a greater rate of interest is charged is not enforceable.