1     
CHECK CASHING AND DEFERRED DEPOSIT LENDING

2     
AMENDMENTS

3     
2015 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Brad M. Daw

6     
Senate Sponsor: ____________

7     

8     LONG TITLE
9     General Description:
10          This bill modifies the Check Cashing and Deferred Deposit Lending Registration Act to
11     address deferred deposit loans.
12     Highlighted Provisions:
13          This bill:
14          ▸     modifies definition provisions;
15          ▸     addresses reporting requirements for deferred deposit lenders;
16          ▸     imposes requirements related to querying the database to determine ineligibility to
17     receive a deferred deposit loan;
18          ▸     imposes requirements related to the commissioner's annual report;
19          ▸     establishes what constitutes ineligibility to obtain a deferred deposit loan;
20          ▸     creates the Deferred Deposit Lending Database Program, which includes the
21     creation of the Deferred Deposit Lending Database;
22          ▸     permits the department to contract with a third party to establish and maintain the
23     database;
24          ▸     addresses various requirements related to the operation of the database;
25          ▸     grants rulemaking authority;
26          ▸     provides for the process to make a query to the database, including the payment of a
27     fee; and
28          ▸     makes technical and conforming amendments.
29     Money Appropriated in this Bill:
30          None
31     Other Special Clauses:
32          None
33     Utah Code Sections Affected:
34     AMENDS:
35          7-23-102, as last amended by Laws of Utah 2013, Chapter 73
36          7-23-201, as last amended by Laws of Utah 2014, Chapter 131
37          7-23-401, as last amended by Laws of Utah 2014, Chapter 131
38          7-23-503, as last amended by Laws of Utah 2012, Chapter 323
39     ENACTS:
40          7-23-601, Utah Code Annotated 1953
41          7-23-602, Utah Code Annotated 1953
42          7-23-603, Utah Code Annotated 1953
43     

44     Be it enacted by the Legislature of the state of Utah:
45          Section 1. Section 7-23-102 is amended to read:
46          7-23-102. Definitions.
47          As used in this chapter:
48          (1) "Annual percentage rate" [has the same meaning as] means the same as that term is
49     defined in 15 U.S.C. Sec. 1606, as implemented by regulations issued under that section.
50          (2) "Business of cashing checks" means cashing a check for consideration.
51          (3) "Business of deferred deposit lending" means extending a deferred deposit loan.
52          (4) "Check" [is as] means the same as that term is defined in Section 70A-3-104.
53          (5) "Check casher" means a person that engages in the business of cashing checks.
54          (6) "Database" means the Deferred Deposit Lending Database created in Section
55     7-23-602.
56          (7) "Database provider" means:
57          (a) the department; or
58          (b) a third party with which the department contracts as provided in Section 7-23-602.
59          [(6)] (8) "Deferred deposit lender" means a person that engages in the business of
60     deferred deposit lending.
61          [(7)] (9) (a) "Deferred deposit loan" means a transaction where:
62          [(a)] (i) a person:
63          [(i)] (A) presents to a deferred deposit lender a check written on that person's account;
64     or
65          [(ii)] (B) provides written or electronic authorization to a deferred deposit lender to
66     effect a debit from that person's account using an electronic payment; and
67          [(b)] (ii) the deferred deposit lender:
68          [(i)] (A) provides the person described in Subsection [(7)(a)] (9)(a)(i) an amount of
69     money that is equal to the face value of the check or the amount of the debit less any fee or
70     interest charged for the transaction; and
71          [(ii)] (B) agrees not to cash the check or process the debit until a specific date.
72          (b) "Deferred deposit loan" includes:
73          (i) an agreement that through the automated clearing house the deferred deposit lender
74     may debit the account of the person seeking a loan;
75          (ii) a person presenting a physical check written on the person's account that the
76     deferred deposit lender agrees to cash at a later date; or
77          (iii) an agreement to garnish the wages of the person seeking a loan.
78          [(8)] (10) (a) "Electronic payment" means an electronic method by which a person:
79          (i) accepts a payment from another person; or
80          (ii) makes a payment to another person.
81          (b) "Electronic payment" includes a payment made through:
82          (i) an automated clearing house transaction;
83          (ii) an electronic check;
84          (iii) a stored value card; or
85          (iv) an Internet transfer.
86          (11) "Ineligible" means that a person is not eligible to obtain a deferred deposit loan
87     under Section 7-23-601.
88          [(9)] (12) "Nationwide database" means the Nationwide Mortgage Licensing System
89     and Registry, authorized under federal licensing requirements for mortgage loan originators.
90          [(10)] (13) "Rollover" means the extension or renewal of the term of a deferred deposit
91     loan.
92          Section 2. Section 7-23-201 is amended to read:
93          7-23-201. Registration -- Rulemaking.
94          (1) (a) It is unlawful for a person to engage in the business of cashing checks or the
95     business of deferred deposit lending in Utah or with a Utah resident unless the person:
96          (i) registers with the department in accordance with this chapter; and
97          (ii) maintains a valid registration.
98          (b) It is unlawful for a person to operate a mobile facility in this state to engage in the
99     business of:
100          (i) cashing checks; or
101          (ii) deferred deposit lending.
102          (c) If a person is registered under this chapter, an individual who is an officer or
103     employee of a person required to be registered under Subsection (1)(a) is not required to be
104     registered.
105          (2) (a) A registration and a renewal of a registration expires on December 31 of each
106     year unless on or before that date the person renews the registration.
107          (b) To register under this section, a person shall:
108          (i) pay an original registration fee established under Subsection 7-1-401(8);
109          (ii) submit a registration statement containing the information described in Subsection
110     (2)(d);
111          (iii) submit evidence satisfactory to the commissioner that the person is authorized to
112     conduct business in this state as a domestic or foreign entity pursuant to filings with the
113     Division of Corporations and Commercial Code under Title 16, Corporations, or Title 48,
114     Partnership - Unincorporated Business Entities; and
115          (iv) if the person engages in the business of deferred deposit lending, submit evidence
116     satisfactory to the commissioner that the person is registered with the nationwide database.
117          (c) To renew a registration under this section, a person shall:
118          (i) pay the annual fee established under Subsection 7-1-401(5);
119          (ii) submit a renewal statement containing the information described in Subsection
120     (2)(d);
121          (iii) submit evidence satisfactory to the commissioner that the person is authorized to
122     conduct business in this state as a domestic or foreign entity pursuant to filings with the
123     Division of Corporations and Commercial Code under Title 16, Corporations, or Title 48,
124     Partnership - Unincorporated Business Entities;
125          (iv) if the person engages in the business of deferred deposit lending, submit evidence
126     satisfactory to the commissioner that the person is registered with the nationwide database; and
127          (v) if the person engages in the business of deferred deposit lending, submit an
128     operations statement containing the information described in Subsection (2)(e).
129          (d) A registration or renewal statement shall state:
130          (i) the name of the person;
131          (ii) the name in which the business will be transacted if different from that required in
132     Subsection (2)(d)(i);
133          (iii) the address of the person's principal business office, which may be outside this
134     state;
135          (iv) the addresses of all offices in this state at which the person conducts the business
136     of:
137          (A) cashing checks; or
138          (B) deferred deposit lending;
139          (v) if the person conducts the business of cashing checks or the business of deferred
140     deposit lending in this state but does not maintain an office in this state, a brief description of
141     the manner in which the business is conducted;
142          (vi) the name and address in this state of a designated agent upon whom service of
143     process may be made;
144          (vii) disclosure of an injunction, judgment, administrative order, or conviction of a
145     crime involving moral turpitude with respect to that person or an officer, director, manager,
146     operator, or principal of that person; and
147          (viii) any other information required by the rules of the department.
148          (e) An operations statement required for a deferred deposit lender to renew a
149     registration shall state for the immediately preceding calendar year:
150          (i) the average principal amount of the deferred deposit loans extended by the deferred
151     deposit lender;
152          (ii) for deferred deposit loans paid in full, the average number of days a deferred
153     deposit loan is outstanding for the duration of time that interest is charged;
154          [(iii) the minimum and maximum dollar amount of interest and fees charged by the
155     deferred deposit lender for a deferred deposit loan of $100 with a loan term of seven days;]
156          [(iv)] (iii) the total number of deferred deposit loans rescinded by the deferred deposit
157     lender at the request of the customer pursuant to Subsection 7-23-401(3)(b);
158          [(v)] (iv) of the persons to whom the deferred deposit lender extended a deferred
159     deposit loan, the percentage that entered into an extended payment plan under Section
160     7-23-403;
161          [(vi)] (v) the total dollar amount of deferred deposit loans rescinded by the deferred
162     deposit lender at the request of the customer pursuant to Subsection 7-23-401(3)(b);
163          [(vii)] (vi) the average annual percentage rate charged on deferred deposit loans;
164          (vii) the range of annual percentage rates charged on deferred deposit loans extended
165     by the deferred deposit lender;
166          (viii) the average dollar amount of extended payment plans entered into under Section
167     7-23-403 by the deferred deposit lender;
168          (ix) the number of deferred deposit loans carried to the maximum 10 weeks;
169          (x) the total dollar amount of deferred deposit loans carried to the maximum 10 weeks;
170          (xi) the number of deferred deposit loans not paid in full at the end of 10 weeks; [and]
171          (xii) the total dollar amount of deferred deposit loans not paid in full at the end of 10
172     weeks[.] after the day on which the deferred deposit loans are extended;
173          (xiii) the total number of deferred deposit loans the deferred deposit lender extended;
174          (xiv) the total dollar amount of deferred deposit loans extended by the deferred deposit
175     lender; and
176          (xv) the total number of individuals to whom the deferred deposit lender extended a
177     deferred deposit loan.
178          (f) The commissioner may by rule, made in accordance with Title 63G, Chapter 3,
179     Utah Administrative Rulemaking Act, provide for the transition of persons registering with the
180     nationwide database.
181          (3) Information provided by a deferred deposit lender under Subsection (2)(e) is:
182          (a) confidential in accordance with Section 7-1-802; and
183          (b) not subject to Title 63G, Chapter 2, Government Records Access and Management
184     Act.
185          (4) (a) The commissioner may impose an administrative fine determined under
186     Subsection (4)(b) on a person if:
187          (i) the person is required to be registered under this chapter;
188          (ii) the person fails to register or renew a registration in accordance with this chapter;
189          (iii) the department notifies the person that the person is in violation of this chapter for
190     failure to be registered; and
191          (iv) the person fails to register within 30 days after the day on which the person
192     receives the notice described in Subsection (4)(a)(iii).
193          (b) Subject to Subsection (4)(c), the administrative fine imposed under this section is:
194          (i) $500 if the person:
195          (A) has no office in this state at which the person conducts the business of:
196          (I) cashing checks; or
197          (II) deferred deposit lending; or
198          (B) has one office in this state at which the person conducts the business of:
199          (I) cashing checks; or
200          (II) deferred deposit lending; or
201          (ii) if the person has two or more offices in this state at which the person conducts the
202     business of cashing checks or the business of deferred deposit lending, $500 for each office at
203     which the person conducts the business of:
204          (A) cashing checks; or
205          (B) deferred deposit lending.
206          (c) The commissioner may reduce or waive a fine imposed under this Subsection (4) if
207     the person shows good cause.
208          (5) If the information in a registration, renewal, or operations statement required under
209     Subsection (2) becomes inaccurate after filing, a person is not required to notify the department
210     until:
211          (a) that person is required to renew the registration; or
212          (b) the department specifically requests earlier notification.
213          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
214     department may make rules consistent with this section providing for:
215          (a) the form, content, and filing of a registration and renewal statement described in
216     Subsection (2)(d); and
217          (b) the form and filing of an operations statement described in Subsection (2)(e).
218          (7) A deferred deposit loan that is made by a person who is required to be registered
219     under this chapter but who is not registered is void, and the person may not collect, receive, or
220     retain any principal or other interest or fees in connection with the deferred deposit loan.
221          Section 3. Section 7-23-401 is amended to read:
222          7-23-401. Operational requirements for deferred deposit loans.
223          (1) If a deferred deposit lender extends a deferred deposit loan, the deferred deposit
224     lender shall:
225          (a) post in a conspicuous location on its premises that can be viewed by a person
226     seeking a deferred deposit loan:
227          (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
228     states the interest and fees using dollar amounts;
229          (ii) a number the person can call to make a complaint to the department regarding the
230     deferred deposit loan; and
231          (iii) a list of states where the deferred deposit lender is registered or authorized to offer
232     deferred deposit loans through the Internet or other electronic means;
233          (b) enter into a written contract for the deferred deposit loan;
234          (c) conspicuously disclose in the written contract:
235          (i) that under Subsection (3)(a), a person receiving a deferred deposit loan may make a
236     partial payment in increments of at least $5 on the principal owed on the deferred deposit loan
237     without incurring additional charges above the charges provided in the written contract;
238          (ii) that under Subsection (3)(b), a person receiving a deferred deposit loan may rescind
239     the deferred deposit loan on or before 5 p.m. of the next business day without incurring any
240     charges;
241          (iii) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
242     without the person receiving the deferred deposit loan requesting the rollover of the deferred
243     deposit loan;
244          (iv) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
245     rollover requires the person to pay the amount owed by the person under the deferred deposit
246     loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
247     executed; and
248          (v) (A) the name and address of a designated agent required to be provided the
249     department under Subsection 7-23-201(2)(d)(vi); and
250          (B) a statement that service of process may be made to the designated agent;
251          (d) provide the person seeking the deferred deposit loan:
252          (i) a copy of the written contract described in Subsection (1)(c); and
253          (ii) written notice that the person seeking the deferred deposit loan is eligible to enter
254     into an extended payment plan described in Section 7-23-403;
255          (e) orally review with the person seeking the deferred deposit loan the terms of the
256     deferred deposit loan including:
257          (i) the amount of any interest rate or fee;
258          (ii) the date on which the full amount of the deferred deposit loan is due;
259          (iii) that under Subsection (3)(a), a person receiving a deferred deposit loan may make
260     a partial payment in increments of at least $5 on the principal owed on the deferred deposit
261     loan without incurring additional charges above the charges provided in the written contract;
262          (iv) that under Subsection (3)(b), a person receiving a deferred deposit loan may
263     rescind the deferred deposit loan on or before 5 p.m. of the next business day without incurring
264     any charges;
265          (v) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
266     without the person receiving the deferred deposit loan requesting the rollover of the deferred
267     deposit loan; and
268          (vi) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
269     rollover requires the person to pay the amount owed by the person under the deferred deposit
270     loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
271     executed;
272          (f) comply with the following as in effect on the date the deferred deposit loan is
273     extended:
274          (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and its implementing federal
275     regulations;
276          (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691, and its implementing federal
277     regulations;
278          (iii) Bank Secrecy Act, 12 U.S.C. Sec. 1829b, 12 U.S.C. Sec. 1951 through 1959, and
279     31 U.S.C. Sec. 5311 through 5332, and its implementing regulations; and
280          (iv) Title 70C, Utah Consumer Credit Code;
281          (g) in accordance with Subsection (6), make an inquiry to determine whether a person
282     attempting to receive a deferred deposit loan has the ability to repay the deferred deposit loan
283     in the ordinary course, which may include rollovers or extended payment plans as allowed
284     under this chapter; [and]
285          (h) in accordance with Subsection (7), receive a signed acknowledgment from a person
286     attempting to receive a deferred deposit loan that the person has the ability to repay the
287     deferred deposit loan, which may include rollovers or extended payment plans as allowed by
288     this chapter[.]; and
289          (i) on and after October 1, 2015, before extending a deferred deposit loan, query the
290     database to determine if the person seeking the deferred deposit loan is ineligible.
291          (2) If a deferred deposit lender extends a deferred deposit loan through the Internet or
292     other electronic means, the deferred deposit lender shall provide the information described in
293     Subsection (1)(a) to the person receiving the deferred deposit loan:
294          (a) in a conspicuous manner; and
295          (b) prior to the person entering into the deferred deposit loan.
296          (3) A deferred deposit lender that engages in a deferred deposit loan shall permit a
297     person receiving a deferred deposit loan to:
298          (a) make partial payments in increments of at least $5 on the principal owed on the
299     deferred deposit loan at any time prior to maturity without incurring additional charges above
300     the charges provided in the written contract; and
301          (b) rescind the deferred deposit loan without incurring any charges by returning the
302     deferred deposit loan amount to the deferred deposit lender on or before 5 p.m. the next
303     business day following the deferred deposit loan transaction.
304          (4) A deferred deposit lender that engages in a deferred deposit loan may not:
305          (a) collect additional interest on a deferred deposit loan with an outstanding principal
306     balance 10 weeks after the day on which the deferred deposit loan is executed;
307          (b) roll over a deferred deposit loan without the person receiving the deferred deposit
308     loan requesting the rollover of the deferred deposit loan;
309          (c) roll over a deferred deposit loan if the rollover requires a person to pay the amount
310     owed by the person under a deferred deposit loan in whole or in part more than 10 weeks from
311     the day on which the deferred deposit loan is first executed;
312          (d) extend a new deferred deposit loan to a person on the same business day that the
313     person makes a payment on another deferred deposit loan if the payment:
314          (i) is made at least 10 weeks after the day on which that deferred deposit loan is
315     extended; and
316          (ii) results in the principal of that deferred deposit loan being paid in full;
317          (e) threaten to use or use the criminal process in any state to collect on the deferred
318     deposit loan;
319          (f) in connection with the collection of money owed on a deferred deposit loan,
320     communicate with a person who owes money on a deferred deposit loan at the person's place of
321     employment if the person or the person's employer communicates, orally or in writing, to the
322     deferred deposit lender that the person's employer prohibits the person from receiving these
323     communications; or
324          (g) modify by contract the venue provisions in Title 78B, Chapter 3, Actions and
325     Venue.
326          (5) Notwithstanding Subsections (4)(a) and (e), a deferred deposit lender that is the
327     holder of a check used to obtain a deferred deposit loan that is dishonored may use the
328     remedies and notice procedures provided in Chapter 15, Dishonored Instruments, except that
329     the issuer, as defined in Section 7-15-1, of the check may not be:
330          (a) asked by the holder to pay the amount described in Subsection 7-15-1(6)(a)(iii) as a
331     condition of the holder not filing a civil action; or
332          (b) held liable for the damages described in Subsection 7-15-1(7)(b)(vi).
333          (6) (a) The inquiry required by Subsection (1)(g) applies solely to the initial period of a
334     deferred deposit loan transaction with a person and does not apply to any rollover or extended
335     payment plan of a deferred deposit loan.
336          (b) A deferred deposit lender is in compliance with Subsection (1)(g) if the deferred
337     deposit lender, at the time of the initial period of the deferred deposit loan transaction, obtains
338     one of the following regarding the person seeking the deferred deposit loan:
339          (i) a consumer report, as defined in 15 U.S.C. Sec. 1681a, from a consumer reporting
340     agency, as defined in 15 U.S.C. Sec. 1681a;
341          (ii) written proof or verification of income from the person seeking the deferred deposit
342     loan; or
343          (iii) prior repayment history with the deferred deposit loan from the records of the
344     deferred deposit lender.
345          (7) A deferred deposit lender is in compliance with Subsection (1)(h) if the deferred
346     deposit lender obtains from the person seeking the deferred deposit loan a signed
347     acknowledgment that is in 14-point bold font, that the person seeking the deferred deposit loan
348     has:
349          (a) reviewed the payment terms of the deferred deposit loan agreement;
350          (b) received a disclosure that a deferred deposit loan may not be rolled over if the
351     rollover requires the person to pay the amount owed by the person under the deferred deposit
352     loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
353     first executed;
354          (c) received a disclosure explaining the extended payment plan options; and
355          (d) acknowledged the ability to repay the deferred deposit loan in the ordinary course,
356     which may include rollovers, or extended payment plans as allowed under this chapter.
357          (8) (a) Before initiating a civil action against a person who owes money on a deferred
358     deposit loan, a deferred deposit lender shall provide the person at least 10 days notice of
359     default, describing that the person must remedy the default and that the deferred deposit lender
360     intends to initiate a civil action against the person if the person fails to cure the default within
361     the 10-day period.
362          (b) A deferred deposit lender may provide the notice required under this Subsection
363     (8):
364          (i) by sending written notice to the address provided by the person to the deferred
365     deposit lender;
366          (ii) by sending an electronic transmission to a person if electronic contact information
367     is provided to the deferred deposit lender; or
368          (iii) pursuant to the Utah Rules of Civil Procedure.
369          (9) (a) On and after October 1, 2015, a deferred deposit lender may not extend a
370     deferred deposit loan to a person who, on the basis of a query to the database required under
371     Subsection (1)(i), is ineligible.
372          (b) A deferred deposit lender shall keep a record of a query made under Subsection
373     (1)(i) in accordance with rules made by the department pursuant to Title 63G, Chapter 3, Utah
374     Administrative Rulemaking Act.
375          Section 4. Section 7-23-503 is amended to read:
376          7-23-503. Reporting by commissioner.
377          (1) Subject to Subsection (2), as part of the commissioner's annual report to the
378     governor and Legislature under Section 7-1-211, the commissioner shall report to the governor
379     and Legislature on:
380          (a) the operations on an aggregate basis of deferred deposit lenders operating in the
381     state[.]; and
382          (b) the information required to be reported under Section 7-23-602.
383          (2) In preparing the report required by Subsection (1), the commissioner:
384          (a) shall include in the report for the immediately preceding calendar year aggregate
385     information from the one or more operations statements filed under Subsection 7-23-201(2)(e)
386     by deferred deposit lenders for that calendar year;
387          (b) shall include in the report:
388          (i) the total number of written complaints concerning issues material to deferred
389     deposit loan transactions received by the department in a calendar year from persons who have
390     entered into a deferred deposit loan with a deferred deposit lender;
391          (ii) for deferred deposit lenders who are registered with the department:
392          (A) the number of the complaints described in Subsection (2)(b)(i) that the department
393     considers resolved; and
394          (B) the number of the complaints described in Subsection (2)(b)(i) that the department
395     considers unresolved; and
396          (iii) for deferred deposit lenders who are not registered with the department:
397          (A) the number of the complaints described in Subsection (2)(b)(i) that the department
398     considers resolved; and
399          (B) the number of the complaints described in Subsection (2)(b)(i) that the department
400     considers unresolved; [and]
401          (c) for the information reported under Subsection (2)(a), shall determine the
402     information to be reported in accordance with Subsection (3);
403          (d) shall include the information required under Section 7-23-602; and
404          [(c)] (e) may not include in the report information from an operations statement filed
405     with the department or the database that could identify a specific deferred deposit lender.
406          (3) (a) By rule made in accordance with Title 63G, Chapter 3, Utah Administrative
407     Rulemaking Act, the department shall develop a method by which the department reports the
408     information collected under Subsection 7-23-201(2)(e) in a manner that the department
409     determines most accurately reports the information on a statewide basis after taking into
410     consideration the different volume of deferred deposit loans extended by the different deferred
411     deposit lenders provided the information collected under Subsection 7-23-201(2)(e).
412          (b) To comply with Subsection (3)(a), the department may create two or more
413     categories of deferred deposit lenders providing the information collected under Subsection
414     7-23-201(2)(e) by:
415          (i) volume of deferred deposit loans extended by the different deferred deposit lenders;
416          (ii) dollar amount of deferred deposit loans extended; or
417          (iii) other category.
418          Section 5. Section 7-23-601 is enacted to read:
419     
Part 6. Deferred Deposit Lending Database Program

420          7-23-601. Ineligibility to obtain a deferred deposit loan.
421          (1) On and after October 1, 2015, a person is ineligible to obtain a deferred deposit
422     loan if the person:
423          (a) owes $500 or more in the aggregate in principal for one or more deferred deposit
424     loans subject to this chapter that are not closed at the time the person applies for a new deferred
425     deposit loan; or
426          (b) has two deferred deposit loans subject to this chapter that are not closed at the time
427     the person applies for a new deferred deposit loan.
428          (2) If the person seeking a deferred deposit loan is not ineligible under Subsection (1),
429     a deferred deposit lender may extend a deferred deposit loan to that person in any amount to
430     which both parties agree.
431          Section 6. Section 7-23-602 is enacted to read:
432          7-23-602. Deferred Deposit Lending Database Program.
433          (1) (a) There is created the Deferred Deposit Lending Database Program to establish a
434     Deferred Deposit Lending Database to verify whether under Section 7-23-601 a person is
435     ineligible to obtain a deferred deposit loan.
436          (b) The program shall be administered by the department to implement by October 1,
437     2015, a common database with real-time access by deferred deposit lenders through an Internet
438     connection or other electronic means.
439          (c) The database shall be accessible to the department and a deferred deposit lender to
440     verify:
441          (i) the aggregate amount owed on deferred deposit loans outstanding for a particular
442     person; and
443          (ii) the number of deferred deposit loans outstanding for a particular person.
444          (d) (i) The department may contract in accordance with Title 63G, Chapter 6a, Utah
445     Procurement Code, with a third party to establish and maintain the database for the purpose of
446     determining whether under Section 7-23-601 a person is ineligible to obtain a deferred deposit
447     loan.
448          (ii) If the department contracts with a third party, the department shall:
449          (A) ensure that the third party provider selected as the database provider operates the
450     database pursuant to this part;
451          (B) consider cost of service and ability to meet the requirements of this part; and
452          (C) ensure that the third party provider can provide accurate and secure receipt,
453     transmission, and storage of data.
454          (iii) The contract may not obligate the department to pay a third party database
455     provider more money than is paid in fees collected under Subsection 7-23-603(2).
456          (iv) A third party database provider under contract under this section is the
457     department's designated agent, and shall develop and maintain the database from the
458     information provided by deferred deposit lenders.
459          (e) A designated agent shall use the data collected under this part only as prescribed in
460     this part and the contract with the department and for no other purpose.
461          (f) The department shall investigate violations of and enforce this part. The
462     department may not delegate its responsibilities under this Subsection (1)(f).
463          (2) The department shall establish guidelines to be followed by the designated agent so
464     that:
465          (a) a deferred deposit lender can efficiently:
466          (i) report information to the database under Subsection (3); and
467          (ii) access the database under Section 7-23-603; and
468          (b) the designated agent complies with any applicable federal and state laws to prevent
469     identity theft.
470          (3) The department shall by rule made in accordance with Title 63G, Chapter 3, Utah
471     Administrative Rulemaking Act, provide:
472          (a) for the reporting by a deferred deposit lender to the database the information
473     required to determine ineligibility under Section 7-23-601;
474          (b) an outline of the information provided by the database to the deferred deposit
475     lender who makes a query of the database;
476          (c) that when the database provider receives notification that a deferred deposit loan is
477     closed, the database provider shall designate the transaction as closed in the database
478     immediately, but in no event after 11:59 p.m. on the day the database provider receives the
479     notification;
480          (d) that data on a deferred deposit loan in the database be archived one year after the
481     deferred deposit loan is closed unless needed for a pending enforcement or legal action;
482          (e) that any identifying information for a person who had a deferred deposit loan be
483     deleted from the database when data is archived;
484          (f) that data about a deferred deposit loan in the database be deleted from the archive of
485     the database the later of:
486          (i) three years after the deferred deposit loan is closed; or
487          (ii) if an administrative, legal, or law enforcement action is pending, three years after
488     the administrative, legal, or law enforcement action is completed; and
489          (g) for the database provider to establish and maintain a process for responding to
490     queries that due to technical difficulties the deferred deposit lender cannot access through the
491     Internet or other electronic means.
492          (4) If the department contracts with a third party provider, the department:
493          (a) may maintain access to data in the database, including transactions archived under
494     Subsection (3) for examination, investigation, or legislative or policy review; and
495          (b) may not obtain or access a Social Security number, driver license number, or other
496     state-issued identification number in the database except as provided in this Subsection (4).
497          (5) A deferred deposit lender violates this chapter if the deferred deposit lender
498     knowingly or with reckless disregard:
499          (a) fails to report information required to be reported under Subsection (3); or
500          (b) reports inaccurate information required to be reported under Subsection (3).
501          (6) (a) Except as provided in Subsection (6)(b), information regarding a person's
502     transactional history provided to, maintained in, or accessed from the database is not subject to
503     Title 63G, Chapter 2, Government Records Access and Management Act, and may not be used
504     in a judicial or administrative action.
505          (b) The restrictions of Subsection (6)(a) do not apply to a judicial or administrative
506     action brought to enforce this chapter.
507          (7) A person who knowingly engages in the following is guilty of a third degree felony:
508          (a) places false information in the database; or
509          (b) releases or discloses information from the database for a purpose other than those
510     authorized in this part or to a person who is not entitled to the information.
511          (8) A person injured by a designated agent's violation of this part may maintain a civil
512     cause of action against the designated agent and may recover actual damages plus reasonable
513     attorney fees and court costs.
514          (9) The state is not liable to any person for gathering, managing, or using the
515     information in the database.
516          (10) The department shall include in the report required under Section 7-23-503
517     aggregate information regarding the number of times in a calendar year a person is found
518     ineligible after a query by a deferred deposit lender.
519          (11) (a) A deferred deposit lender shall notify the database provider if the deferred
520     deposit lender stops extending deferred deposit loans.
521          (b) If a deferred deposit lender stops providing deferred deposit loans, the database
522     provider shall designate all open transactions with that deferred deposit lender closed in the
523     database 60 days after the date the deferred deposit lender stops offering deferred deposit loans,
524     unless the deferred deposit lender reports to the database provider before the expiration of the
525     60-day period which of its transactions remain open and the specific reason each transaction
526     remains open.
527          (c) A deferred deposit lender that no longer extends deferred deposit loans shall
528     provide to the commissioner a reasonably acceptable plan that outlines how the deferred
529     deposit lender will continue to update the database after it stops offering deferred deposit loans.
530     The commissioner shall promptly approve or disapprove the plan and immediately notify the
531     deferred deposit lender of the decision. If the plan is disapproved, the deferred deposit lender
532     may submit a new plan or may submit a modified plan for the deferred deposit lender to follow.
533          (d) If at any time the commissioner reasonably determines that a deferred deposit
534     lender that has stopped offering deferred deposit loans is not updating the database in
535     accordance with its approved plan, the commissioner shall instruct the database provider to
536     immediately close all remaining open transactions of that deferred deposit lender.
537          (e) A transaction closed under this Subsection (11) is closed only for purposes of the
538     database and the closure does not impair the deferred deposit lender from continuing to collect
539     on the deferred deposit loan.
540          Section 7. Section 7-23-603 is enacted to read:
541          7-23-603. Query to database.
542          (1) On and after October 1, 2015, before extending a deferred deposit loan, a deferred
543     deposit lender shall query the database to determine if the person seeking the deferred deposit
544     loan is ineligible.
545          (2) The database provider may collect a fee from a deferred deposit lender that is
546     established by the department and that does not exceed $1 for a query to the database that
547     results in the making of a deferred deposit loan.
548          (3) In response to a query by a deferred deposit lender under Subsection (1), the
549     database shall state whether a person is ineligible.
550          (4) (a) If in response to a query by a deferred deposit lender the database states that a
551     person is ineligible, the deferred deposit lender shall:
552          (i) inform the person that the person is ineligible; and
553          (ii) explain that the person may ask the database provider or department, at the
554     department's discretion, regarding the specific details of why the person is ineligible.
555          (b) Only a person found ineligible to obtain a deferred deposit loan may make a direct
556     inquiry to request a more detailed explanation of a particular transaction that was the basis for
557     the ineligibility determination.
558          (5) If a deferred deposit lender accurately and promptly submits data to the database as
559     required under Section 7-23-602, a deferred deposit lender may rely on the database, and may
560     not be held liable if the information in the database is inaccurate.




Legislative Review Note
     as of 1-19-15 2:49 PM

Office of Legislative Research and General Counsel