This document includes House Floor Amendments incorporated into the bill on Wed, Jan 25, 2017 at 12:19 PM by ryoung.
1     
CHECK CASHING AND DEFERRED DEPOSIT LENDING

2     
AMENDMENTS

3     
2017 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Brad M. Daw

6     
Senate Sponsor: Curtis S. Bramble

7     

8     LONG TITLE
9     Committee Note:
10          The Business and Labor Interim Committee recommended this bill.
11     General Description:
12          This bill modifies provisions related to check cashing and deferred deposit lending.
13     Highlighted Provisions:
14          This bill:
15          ▸     amends the definition provision;
16          ▸     modifies requirements for registration under the Check Cashing and Deferred
17     Deposit Lending Registration Act;
18          ▸     grants rulemaking authority;
19          ▸     addresses restrictions on extensions of deferred deposit loans;
20          ▸     addresses examinations by the Department of Financial Institutions; and
21          ▸     makes technical and conforming amendments.
22     Money Appropriated in this Bill:
23          None
24     Other Special Clauses:
25          None
26     Utah Code Sections Affected:
27     AMENDS:
28          7-23-102, as last amended by Laws of Utah 2013, Chapter 73
29          7-23-201, as last amended by Laws of Utah 2016, Chapter 248
30          7-23-401, as last amended by Laws of Utah 2016, Chapter 248
31          7-23-502, as renumbered and amended by Laws of Utah 2008, Chapter 96
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 7-23-102 is amended to read:
35          7-23-102. Definitions.
36          As used in this chapter:
37          (1) "Annual percentage rate" has the same meaning as in 15 U.S.C. Sec. 1606, as
38     implemented by regulations issued under that section.
39          (2) "Business of cashing checks" means cashing a check for consideration.
40          (3) "Business of deferred deposit lending" means extending a deferred deposit loan.
41          (4) "Check" is as defined in Section 70A-3-104.
42          (5) "Check casher" means a person that engages in the business of cashing checks.
43          (6) "Deferred deposit lender" means a person that engages in the business of deferred
44     deposit lending.
45          (7) "Deferred deposit loan" means a transaction where:
46          (a) a person:
47          (i) presents to a deferred deposit lender a check written on that person's account; or
48          (ii) provides written or electronic authorization to a deferred deposit lender to effect a
49     debit from that person's account using an electronic payment; and
50          (b) the deferred deposit lender:
51          (i) provides the person described in Subsection (7)(a) an amount of money that is equal
52     to the face value of the check or the amount of the debit less any fee or interest charged for the
53     transaction; and
54          (ii) agrees not to cash the check or process the debit until a specific date.
55          (8) (a) "Electronic payment" means an electronic method by which a person:
56          (i) accepts a payment from another person; or
57          (ii) makes a payment to another person.
58          (b) "Electronic payment" includes a payment made through:
59          (i) an automated clearing house transaction;
60          (ii) an electronic check;
61          (iii) a stored value card; or
62          (iv) an Internet transfer.
63          (9) "Nationwide database" means the Nationwide Mortgage Licensing System and
64     Registry, authorized under federal licensing requirements for mortgage loan originators.
65          (10) (a) "Refinance" means a new deferred deposit loan transaction whose proceeds are
66     meant to satisfy the term or amount owed on an existing deferred deposit loan.
67          (b) "Refinance" does not mean:
68          (i) an extended payment plan under Section 7-23-403; or
69          (ii) a rollover.
70          [(10)] (11) "Rollover" means the extension or renewal of the term of a deferred deposit
71     loan.
72          Section 2. Section 7-23-201 is amended to read:
73          7-23-201. Registration -- Rulemaking.
74          (1) (a) It is unlawful for a person to engage in the business of cashing checks or the
75     business of deferred deposit lending in Utah or with a Utah resident unless the person:
76          (i) registers with the department in accordance with this chapter; and
77          (ii) maintains a valid registration.
78          (b) It is unlawful for a person to operate a mobile facility in this state to engage in the
79     business of:
80          (i) cashing checks; or
81          (ii) deferred deposit lending.
82          (2) (a) A registration and a renewal of a registration expires on December 31 of each
83     year unless on or before that date the person renews the registration.
84          (b) To register under this section, a person shall:
85          (i) pay an original registration fee established under Subsection 7-1-401(8);
86          (ii) submit a registration statement containing the information described in Subsection
87     (2)(d);
88          (iii) submit evidence satisfactory to the commissioner that the person is authorized to
89     conduct business in this state as a domestic or foreign entity pursuant to filings with the
90     Division of Corporations and Commercial Code under Title 16, Corporations, or Title 48,
91     Unincorporated Business Entity Act; and
92          (iv) if the person engages in the business of deferred deposit lending, submit evidence
93     satisfactory to the commissioner that the person is registered with the nationwide database.
94          (c) To renew a registration under this section, a person shall:
95          (i) pay the annual fee established under Subsection 7-1-401(5);
96          (ii) submit a renewal statement containing the information described in Subsection
97     (2)(d);
98          (iii) submit evidence satisfactory to the commissioner that the person is authorized to
99     conduct business in this state as a domestic or foreign entity pursuant to filings with the
100     Division of Corporations and Commercial Code under Title 16, Corporations, or Title 48,
101     Unincorporated Business Entity Act;
102          (iv) if the person engages in the business of deferred deposit lending, submit evidence
103     satisfactory to the commissioner that the person is registered with the nationwide database; and
104          (v) if the person engages in the business of deferred deposit lending, submit an
105     operations statement containing the information described in Subsection (2)(e).
106          (d) A registration or renewal statement shall state:
107          (i) the name of the person;
108          (ii) the name in which the business will be transacted if different from that required in
109     Subsection (2)(d)(i);
110          (iii) the address of the person's principal business office, which may be outside this
111     state;
112          (iv) the addresses of all offices in this state at which the person conducts the business
113     of:
114          (A) cashing checks; or
115          (B) deferred deposit lending;
116          (v) if the person conducts the business of cashing checks or the business of deferred
117     deposit lending in this state but does not maintain an office in this state, a brief description of
118     the manner in which the business is conducted;
119          (vi) the name and address in this state of a designated agent upon whom service of
120     process may be made;
121          (vii) [disclosure of an injunction, judgment, administrative order, or] whether there is a
122     conviction of a crime:
123          (A) involving [moral turpitude] an act of fraud, dishonesty, breach of trust, or money
124     laundering; and
125          (B) with respect to that person [or], an officer, director, manager, operator, or principal
126     of that person, or an employee of that person engaged in the business described in this chapter;
127     and
128          (viii) any other information required by the rules of the department.
129          (e) An operations statement required for a deferred deposit lender to renew a
130     registration shall state for the immediately preceding calendar year:
131          (i) the average principal amount of the deferred deposit loans extended by the deferred
132     deposit lender;
133          (ii) for deferred deposit loans paid in full, the average number of days a deferred
134     deposit loan is outstanding for the duration of time that interest is charged;
135          (iii) the minimum and maximum dollar amount of interest and fees charged by the
136     deferred deposit lender for a deferred deposit loan of $100 with a loan term of seven days;
137          (iv) the total number of deferred deposit loans rescinded by the deferred deposit lender
138     at the request of the customer pursuant to Subsection 7-23-401(3)(b);
139          (v) of the persons to whom the deferred deposit lender extended a deferred deposit
140     loan, the percentage that entered into an extended payment plan under Section 7-23-403;
141          (vi) the total dollar amount of deferred deposit loans rescinded by the deferred deposit
142     lender at the request of the customer pursuant to Subsection 7-23-401(3)(b);
143          (vii) the average annual percentage rate charged on deferred deposit loans;
144          (viii) the average dollar amount of extended payment plans entered into under Section
145     7-23-403 by the deferred deposit lender;
146          (ix) the number of deferred deposit loans carried to the maximum 10 weeks;
147          (x) the total dollar amount of deferred deposit loans carried to the maximum 10 weeks;
148          (xi) the number of deferred deposit loans not paid in full at the end of 10 weeks;
149          (xii) the total dollar amount of deferred deposit loans not paid in full at the end of 10
150     weeks;
151          (xiii) the percentage of deferred deposit loans against which the deferred deposit lender
152     initiates civil action to collect on the deferred deposit loan; and
153          (xiv) for the civil actions described in Subsection (2)(e)(xiii), the percentage of those
154     civil actions whose deferred deposit loans have the following payment history:
155          (A) no payments;
156          (B) one payment;
157          (C) two payments;
158          (D) three payments;
159          (E) four payments;
160          (F) five payments;
161          (G) six payments;
162          (H) seven payments;
163          (I) eight payments;
164          (J) nine payments; and
165          (K) 10 or more payments.
166          (f) The commissioner may by rule, made in accordance with Title 63G, Chapter 3,
167     Utah Administrative Rulemaking Act, provide for the transition of persons registering with the
168     nationwide database.
169          (3) Information provided by a deferred deposit lender under Subsection (2)(e) is:
170          (a) confidential in accordance with Section 7-1-802; and
171          (b) not subject to Title 63G, Chapter 2, Government Records Access and Management
172     Act.
173          (4) (a) The commissioner may impose an administrative fine determined under
174     Subsection (4)(b) on a person if:
175          (i) the person is required to be registered under this chapter;
176          (ii) the person fails to register or renew a registration in accordance with this chapter;
177          (iii) the department notifies the person that the person is in violation of this chapter for
178     failure to be registered; and
179          (iv) the person fails to register within 30 days after the day on which the person
180     receives the notice described in Subsection (4)(a)(iii).
181          (b) Subject to Subsection (4)(c), the administrative fine imposed under this section is:
182          (i) $500 if the person:
183          (A) has no office in this state at which the person conducts the business of:
184          (I) cashing checks; or
185          (II) deferred deposit lending; or
186          (B) has one office in this state at which the person conducts the business of:
187          (I) cashing checks; or
188          (II) deferred deposit lending; or
189          (ii) if the person has two or more offices in this state at which the person conducts the
190     business of cashing checks or the business of deferred deposit lending, $500 for each office at
191     which the person conducts the business of:
192          (A) cashing checks; or
193          (B) deferred deposit lending.
194          (c) The commissioner may reduce or waive a fine imposed under this Subsection (4) if
195     the person shows good cause.
196          (5) If the information in a registration, renewal, or operations statement required under
197     Subsection (2) becomes inaccurate after filing, a person is not required to notify the department
198     until:
199          (a) that person is required to renew the registration; or
200          (b) the department specifically requests earlier notification.
201          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
202     department may make rules consistent with this section providing for:
203          (a) the form, content, and filing of a registration and renewal statement described in
204     Subsection (2)(d); and
205          (b) the form and filing of an operations statement described in Subsection (2)(e).
206          (7) A deferred deposit loan that is made by a person who is required to be registered
207     under this chapter but who is not registered is void, and the person may not collect, receive, or
208     retain any principal or other interest or fees in connection with the deferred deposit loan.
209          (8) (a) At the time a person registers under this section, the person shall disclose a
210     conviction of a crime described in Subsection (2)(d)(vii) that is:
211          (i) known to the person; or
212          (ii) included in:
213          (A) a Utah Bureau of Criminal Identification report; or
214          (B) a background check acceptable to the department that provides information similar
215     to a Utah Bureau of Criminal Identification report.
216          (b) To comply with Subsection (8)(a), a person registered under this chapter shall, for
217     each individual described in Subsection (2)(d)(vii):
218          (i) obtain a Utah Bureau of Criminal Identification report; or
219          (ii) conduct a background check acceptable to the Ĥ→ [commission] commissioner ←Ĥ
219a     that provides
220     information similar to a Utah Bureau of Criminal Identification report.
221          (c) A person registered under this section shall keep a record of the information
222     described in Subsection (8)(b) for the time period required by the department by rule made in
223     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
224          Section 3. Section 7-23-401 is amended to read:
225          7-23-401. Operational requirements for deferred deposit loans.
226          (1) If a deferred deposit lender extends a deferred deposit loan, the deferred deposit
227     lender shall:
228          (a) post in a conspicuous location on its premises that can be viewed by a person
229     seeking a deferred deposit loan:
230          (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
231     states the interest and fees using dollar amounts;
232          (ii) a number the person can call to make a complaint to the department regarding the
233     deferred deposit loan; and
234          (iii) a list of states where the deferred deposit lender is registered or authorized to offer
235     deferred deposit loans through the Internet or other electronic means;
236          (b) enter into a written contract for the deferred deposit loan;
237          (c) conspicuously disclose in the written contract:
238          (i) that under Subsection (3)(a), a person receiving a deferred deposit loan may make a
239     partial payment in increments of at least $5 on the principal owed on the deferred deposit loan
240     without incurring additional charges above the charges provided in the written contract;
241          (ii) that under Subsection (3)(b), a person receiving a deferred deposit loan may rescind
242     the deferred deposit loan on or before 5 p.m. of the next business day without incurring any
243     charges;
244          (iii) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
245     without the person receiving the deferred deposit loan requesting the rollover of the deferred
246     deposit loan;
247          (iv) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
248     rollover requires the person to pay the amount owed by the person under the deferred deposit
249     loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
250     executed; and
251          (v) (A) the name and address of a designated agent required to be provided the
252     department under Subsection 7-23-201(2)(d)(vi); and
253          (B) a statement that service of process may be made to the designated agent;
254          (d) provide the person seeking the deferred deposit loan:
255          (i) a copy of the written contract described in Subsection (1)(c); and
256          (ii) written notice that the person seeking the deferred deposit loan is eligible to enter
257     into an extended payment plan described in Section 7-23-403;
258          (e) orally review with the person seeking the deferred deposit loan the terms of the
259     deferred deposit loan including:
260          (i) the amount of any interest rate or fee;
261          (ii) the date on which the full amount of the deferred deposit loan is due;
262          (iii) that under Subsection (3)(a), a person receiving a deferred deposit loan may make
263     a partial payment in increments of at least $5 on the principal owed on the deferred deposit
264     loan without incurring additional charges above the charges provided in the written contract;
265          (iv) that under Subsection (3)(b), a person receiving a deferred deposit loan may
266     rescind the deferred deposit loan on or before 5 p.m. of the next business day without incurring
267     any charges;
268          (v) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
269     without the person receiving the deferred deposit loan requesting the rollover of the deferred
270     deposit loan; and
271          (vi) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
272     rollover requires the person to pay the amount owed by the person under the deferred deposit
273     loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
274     executed;
275          (f) comply with the following as in effect on the date the deferred deposit loan is
276     extended:
277          (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and its implementing federal
278     regulations;
279          (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691, and its implementing federal
280     regulations;
281          (iii) Bank Secrecy Act, 12 U.S.C. Sec. 1829b, 12 U.S.C. Sec. 1951 through 1959, and
282     31 U.S.C. Sec. 5311 through 5332, and its implementing regulations; and
283          (iv) Title 70C, Utah Consumer Credit Code;
284          (g) in accordance with Subsection (6), make an inquiry to determine whether a person
285     attempting to receive a deferred deposit loan has the ability to repay the deferred deposit loan
286     in the ordinary course, which may include rollovers or extended payment plans as allowed
287     under this chapter;
288          (h) in accordance with Subsection (7), receive a signed acknowledgment from a person
289     attempting to receive a deferred deposit loan that the person has the ability to repay the
290     deferred deposit loan, which may include rollovers or extended payment plans as allowed by
291     this chapter; and
292          (i) report the original loan amount, payment in full, or default of a deferred deposit
293     loan to a consumer reporting agency, as defined in 15 U.S.C. Sec. 1681a, in accordance with
294     procedures established by the consumer reporting agency.
295          (2) If a deferred deposit lender extends a deferred deposit loan through the Internet or
296     other electronic means, the deferred deposit lender shall provide the information described in
297     Subsection (1)(a) to the person receiving the deferred deposit loan:
298          (a) in a conspicuous manner; and
299          (b) prior to the person entering into the deferred deposit loan.
300          (3) A deferred deposit lender that engages in a deferred deposit loan shall permit a
301     person receiving a deferred deposit loan to:
302          (a) make partial payments in increments of at least $5 on the principal owed on the
303     deferred deposit loan at any time prior to maturity without incurring additional charges above
304     the charges provided in the written contract; and
305          (b) rescind the deferred deposit loan without incurring any charges by returning the
306     deferred deposit loan amount to the deferred deposit lender on or before 5 p.m. the next
307     business day following the deferred deposit loan transaction.
308          (4) A deferred deposit lender that engages in a deferred deposit loan may not:
309          (a) collect additional interest on a deferred deposit loan with an outstanding principal
310     balance 10 weeks after the day on which the deferred deposit loan is executed;
311          (b) roll over a deferred deposit loan without the person receiving the deferred deposit
312     loan requesting the rollover of the deferred deposit loan;
313          (c) roll over a deferred deposit loan if the rollover requires a person to pay the amount
314     owed by the person under a deferred deposit loan in whole or in part more than 10 weeks from
315     the day on which the deferred deposit loan is first executed;
316          (d) extend a new deferred deposit loan to a person on the same business day that the
317     person makes a payment on another deferred deposit loan if [the payment]:
318          [(i) is made at least 10 weeks after the day on which that deferred deposit loan is
319     extended; and]
320          [(ii)] (i) the payment results in the principal of that deferred deposit loan being paid in
321     full; and
322          (ii) the combined terms of the original deferred deposit loan and the new deferred
323     deposit loan total more than 10 weeks of consecutive interest;
324          (e) avoid the limitations of Subsections (4)(a) and (4)(c) by extending a new deferred
325     deposit loan whose proceeds are used to satisfy or refinance any portion of an existing deferred
326     deposit loan;
327          [(e)] (f) threaten to use or use the criminal process in any state to collect on the
328     deferred deposit loan;
329          [(f)] (g) in connection with the collection of money owed on a deferred deposit loan,
330     communicate with a person who owes money on a deferred deposit loan at the person's place of
331     employment if the person or the person's employer communicates, orally or in writing, to the
332     deferred deposit lender that the person's employer prohibits the person from receiving these
333     communications; or
334          [(g)] (h) modify by contract the venue provisions in Title 78B, Chapter 3, Actions and
335     Venue.
336          (5) Notwithstanding Subsections (4)(a) and [(e)] (f), a deferred deposit lender that is
337     the holder of a check used to obtain a deferred deposit loan that is dishonored may use the
338     remedies and notice procedures provided in Chapter 15, Dishonored Instruments, except that
339     the issuer, as defined in Section 7-15-1, of the check may not be:
340          (a) asked by the holder to pay the amount described in Subsection 7-15-1(6)(a)(iii) as a
341     condition of the holder not filing a civil action; or
342          (b) held liable for the damages described in Subsection 7-15-1(7)(b)(vi).
343          (6) (a) The inquiry required by Subsection (1)(g) applies solely to the initial period of a
344     deferred deposit loan transaction with a person and does not apply to any rollover or extended
345     payment plan of a deferred deposit loan.
346          (b) Subject to Subsection (6)(c), a deferred deposit lender is in compliance with
347     Subsection (1)(g) if the deferred deposit lender, at the time of the initial period of the deferred
348     deposit loan transaction[,]:
349          (i) obtains one of the following regarding the person seeking the deferred deposit loan:
350          [(i)] (A) a consumer report, as defined in 15 U.S.C. Sec. 1681a, from a consumer
351     reporting agency, as defined in 15 U.S.C. Sec. 1681a; or
352          [(ii)] (B) written proof or verification of income from the person seeking the deferred
353     deposit loan; or
354          [(iii)] (ii) relies on the prior repayment history with the deferred deposit [loan] lender
355     from the records of the deferred deposit lender.
356          (c) If a person seeking a deferred deposit loan has not previously received a deferred
357     deposit loan from that deferred deposit lender, to be in compliance with Subsection (1)(g), the
358     deferred deposit lender, at the time of the initial period of the deferred deposit loan transaction,
359     shall obtain a consumer report, as defined in 15 U.S.C. Sec. 1681a, from a consumer reporting
360     agency, as defined in 15 U.S.C. Sec. 1681a.
361          (7) A deferred deposit lender is in compliance with Subsection (1)(h) if the deferred
362     deposit lender obtains from the person seeking the deferred deposit loan a signed
363     acknowledgment that is in 14-point bold font, that the person seeking the deferred deposit loan
364     has:
365          (a) reviewed the payment terms of the deferred deposit loan agreement;
366          (b) received a disclosure that a deferred deposit loan may not be rolled over if the
367     rollover requires the person to pay the amount owed by the person under the deferred deposit
368     loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
369     first executed;
370          (c) received a disclosure explaining the extended payment plan options; and
371          (d) acknowledged the ability to repay the deferred deposit loan in the ordinary course,
372     which may include rollovers, or extended payment plans as allowed under this chapter.
373          (8) (a) Before initiating a civil action against a person who owes money on a deferred
374     deposit loan, a deferred deposit lender shall provide the person at least 10 days notice of
375     default, describing that:
376          (i) the person must remedy the default; and
377          (ii) the deferred deposit lender may initiate a civil action against the person if the
378     person fails to cure the default within the 10-day period or through an extended payment plan
379     meeting the requirements of Section 7-23-403 .
380          (b) A deferred deposit lender may provide the notice required under this Subsection
381     (8):
382          (i) by sending written notice to the address provided by the person to the deferred
383     deposit lender;
384          (ii) by sending an electronic transmission to a person if electronic contact information
385     is provided to the deferred deposit lender; or
386          (iii) pursuant to the Utah Rules of Civil Procedure.
387          (c) A notice under this Subsection (8), in addition to complying with Subsection (8)(a),
388     shall:
389          (i) be in English, if the initial transaction is conducted in English;
390          (ii) state the date by which the person must act to enter into an extended payment plan;
391          (iii) explain the procedures the person must follow to enter into an extended payment
392     plan;
393          (iv) subject to Subsection 7-23-403(7), if the deferred deposit lender requires the
394     person to make an initial payment to enter into an extended payment plan:
395          (A) explain the requirement; and
396          (B) state the amount of the initial payment and the date the initial payment shall be
397     made;
398          (v) state that the person has the opportunity to enter into an extended payment plan for
399     a time period meeting the requirements of Subsection 7-23-403(2)(b); and
400          (vi) include the following amounts:
401          (A) the remaining balance on the original deferred deposit loan;
402          (B) the total payments made on the deferred deposit loan;
403          (C) any charges added to the deferred deposit loan amount allowed pursuant to this
404     chapter; and
405          (D) the total amount due if the person enters into an extended payment plan.
406          Section 4. Section 7-23-502 is amended to read:
407          7-23-502. Examination of books, accounts, and records by the department.
408          (1) At least annually the department shall, for each [premise] person registered under
409     this chapter and engaging in the business of cashing checks or the business of deferred deposit
410     lending:
411          (a) examine the books, accounts, and records; and
412          (b) make investigations to determine compliance with this chapter.
413          (2) In accordance with Section 7-1-401, a person examined under Subsection (1) shall
414     pay a fee for the examination conducted under Subsection (1).




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