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Third Substitute H.B. 189

Senator Ed P. Mayne proposes the following substitute bill:




Sponsor: Wayne A. Harper

             5      This act modifies the Check Cashing Registration Act to enact provisions governing the
             6      extension of a deferred deposit loan through electronic means, and to require immediate
             7      payment to a person receiving a deferred deposit loan through electronic means. The act
             8      modifies the Financial Institutions Code to enact the Title Lending Registration Act,
             9      imposing registration requirements, operational and disclosure requirements, and
             10      enforcement provisions for title loans. The act makes technical changes.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      AMENDS:
             13          7-1-401, as last amended by Chapter 97, Laws of Utah 2001
             14          7-23-102, as enacted by Chapter 144, Laws of Utah 1999
             15      ENACTS:
             16          7-23-105.1, Utah Code Annotated 1953
             17          7-24-101, Utah Code Annotated 1953
             18          7-24-102, Utah Code Annotated 1953
             19          7-24-201, Utah Code Annotated 1953
             20          7-24-202, Utah Code Annotated 1953
             21          7-24-203, Utah Code Annotated 1953
             22          7-24-204, Utah Code Annotated 1953
             23          7-24-301, Utah Code Annotated 1953
             24          7-24-302, Utah Code Annotated 1953
             25          7-24-303, Utah Code Annotated 1953

             26          7-24-304, Utah Code Annotated 1953
             27          7-24-305, Utah Code Annotated 1953
             28      Be it enacted by the Legislature of the state of Utah:
             29          Section 1. Section 7-1-401 is amended to read:
             30           7-1-401. Fees payable to commissioner.
             31          (1) Except for an out-of-state depository institution with a branch in Utah, a depository
             32      institution under the jurisdiction of the department shall pay an annual fee:
             33          (a) computed by averaging the total assets of the depository institution shown on each
             34      quarterly report of condition for the depository institution for the calendar year immediately
             35      proceeding the date the annual fee is due under Section 7-1-402 ; and
             36          (b) at the following rates:
             37          (i) on the first $5,000,000 of these assets, the greater of:
             38          (A) 65 cents per $1,000; or
             39          (B) $500;
             40          (ii) on the next $10,000,000 of these assets, 35 cents per $1,000;
             41          (iii) on the next $35,000,000 of these assets, 15 cents per $1,000;
             42          (iv) on the next $50,000,000 of these assets, 12 cents per $1,000;
             43          (v) on the next $200,000,000 of these assets, 10 cents per $1,000;
             44          (vi) on the next $300,000,000 of these assets, 6 cents per $1,000; and
             45          (vii) on all amounts over $600,000,000 of these assets, 2 cents per $1,000.
             46          (2) A financial institution with a trust department shall pay a fee determined in
             47      accordance with Subsection (7) for each examination of the trust department by state
             48      examiners.
             49          (3) Notwithstanding Subsection (1), a credit union in its first year of operation shall pay
             50      a basic fee of $25 instead of the fee required under Subsection (1).
             51          (4) A trust company that is not a depository institution or a subsidiary of a depository
             52      institution holding company shall pay:
             53          (a) an annual fee of $500; and
             54          (b) an additional fee determined in accordance with Subsection (7) for each
             55      examination by state examiners.
             56          (5) Any person or institution under the jurisdiction of the department that does not pay a

             57      fee under Subsections (1) through (4) shall pay:
             58          (a) an annual fee of $100; and
             59          (b) an additional fee determined in accordance with Subsection (7) for each
             60      examination by state examiners.
             61          (6) A person filing an application or request under Section 7-1-503 , 7-1-702 , 7-1-703 ,
             62      7-1-704 , 7-1-713 , 7-5-3 , or 7-18a-202 shall pay:
             63          (a) a filing fee of $500; and
             64          (b) all reasonable expenses incurred in processing the application.
             65          (7) (a) Per diem assessments for an examination shall be calculated at the rate of $40
             66      per hour:
             67          (i) for each examiner; and
             68          (ii) per hour worked.
             69          (b) For an examination of a branch or office of a financial institution located outside of
             70      this state, in addition to the per diem assessment under this Subsection (7), the institution shall
             71      pay all reasonable travel, lodging, and other expenses incurred by each examiner while
             72      conducting the examination.
             73          (8) In addition to a fee under Subsection (5), a person registering under Section
             74      7-23-103 or 7-24-201 shall pay an original registration fee of $300.
             75          Section 2. Section 7-23-102 is amended to read:
             76           7-23-102. Definitions.
             77          As used in this chapter:
             78          (1) "Business of a check casher" means:
             79          (a) cashing a check for consideration; or
             80          (b) extending a deferred deposit loan.
             81          (2) "Check" is as defined in Section 70A-3-104 .
             82          (3) "Check casher" means a person that engages in the business of a check casher.
             83          (4) "Deferred deposit loan" means a transaction where:
             84          (a) [the] a person:
             85          (i) presents to a check casher a check written on that person's account; [and] or
             86          (ii) provides written or electronic authorization to a check casher to effect a debit from
             87      that person's account using an electronic payment; and

             88          (b) the check casher:
             89          (i) provides the maker an amount of money that is equal to the face value of the check
             90      or the amount of the debit less any fee or interest charged for the transaction; and
             91          (ii) agrees not to cash the check or process the debit until a specific date.
             92          (5) (a) "Electronic payment" means any electronic method by which a check casher:
             93          (i) accepts a payment from a person; or
             94          (ii) makes a payment to a person.
             95          (b) "Electronic payment" includes a payment made through:
             96          (i) an automated clearing house transaction;
             97          (ii) an electronic check;
             98          (iii) a stored value card; or
             99          (iv) an Internet transfer.
             100          [(5)] (6) "Rollover" means the extension or renewal of the term of a deferred deposit
             101      loan.
             102          Section 3. Section 7-23-105.1 is enacted to read:
             103          7-23-105.1. Electronic disbursement and collections.
             104          If a check casher collects payment on a deferred deposit loan through an electronic
             105      payment, the check casher shall, on the day the loan is executed:
             106          (1) credit the amount of the deferred deposit loan through an electronic payment to the
             107      person receiving the deferred deposit loan; or
             108          (2) make the amount of the deferred deposit loan immediately available to the person
             109      receiving the deferred deposit loan.
             110          Section 4. Section 7-24-101 is enacted to read:

Part 1. General Provisions

             113          7-24-101. Title.
             114          This chapter is known as the "Title Lending Registration Act."
             115          Section 5. Section 7-24-102 is enacted to read:
             116          7-24-102. Definitions.
             117          As used in this chapter:
             118          (1) "Rollover" means the extension or renewal of the term of a title loan.

             119          (2) (a) "Title lender" means a person that extends a title loan.
             120          (b) "Title lender" includes a person that:
             121          (i) arranges a title loan on behalf of a title lender;
             122          (ii) acts as an agent for a title lender; or
             123          (iii) assists a title lender in the extension of a title loan.
             124          (3) (a) "Title loan" means a loan secured by the title to a:
             125          (i) motor vehicle, as defined in Section 41-6-1 ;
             126          (ii) mobile home, as defined in Section 41-6-1 ; or
             127          (iii) motorboat, as defined in Section 73-18-2 .
             128          (b) "Title loan" includes a title loan extended at the same premise on which any of the
             129      following are sold:
             130          (i) a motor vehicle, as defined in Section 41-6-1 ;
             131          (ii) a mobile home, as defined in Section 41-6-1 ; or
             132          (iii) a motorboat, as defined in Section 73-18-2 .
             133          (c) "Title loan" does not include:
             134          (i) a purchase money loan;
             135          (ii) a loan made in connection with the sale of a:
             136          (A) motor vehicle, as defined in Section 41-6-1 ;
             137          (B) mobile home, as defined in Section 41-6-1 ; or
             138          (C) motorboat, as defined in Section 73-18-2 ; or
             139          (iii) a loan extended by an institution listed in Section 7-24-305 .
             140          Section 6. Section 7-24-201 is enacted to read:
Part 2. Requirements

             142          7-24-201. Registration -- Rulemaking.
             143          (1) (a) It is unlawful for a person to extend a title loan in Utah or with a Utah resident
             144      unless the person:
             145          (i) registers with the department in accordance with this chapter; and
             146          (ii) maintains a valid registration.
             147          (b) It is unlawful for a person to operate a mobile facility in this state to extend a title
             148      loan.
             149          (c) Notwithstanding Subsection (1)(a), a person that is a title lender in this state on

             150      May 5, 2003, is not required to be registered under this section until July 1, 2003.
             151          (2) (a) A registration and a renewal of a registration expires on April 30 of each year
             152      unless on or before that date the person renews the registration.
             153          (b) To register under this section, a person shall:
             154          (i) pay an original registration fee established under Subsection 7-1-401 (8); and
             155          (ii) submit a registration statement containing the information described in Subsection
             156      (2)(d).
             157          (c) To renew a registration under this section, a person shall:
             158          (i) pay the annual fee established under Subsection 7-1-401 (5); and
             159          (ii) submit a renewal statement containing the information described in Subsection
             160      (2)(d).
             161          (d) A registration or renewal statement shall state:
             162          (i) the name of the person;
             163          (ii) the name in which the business will be transacted if different from that required in
             164      Subsection (2)(d)(i);
             165          (iii) the address of the person's principal business office, which may be outside this
             166      state;
             167          (iv) the addresses of all offices in this state at which the person extends title loans;
             168          (v) if the person extends title loans in this state but does not maintain an office in this
             169      state, a brief description of the manner in which the business is conducted;
             170          (vi) the name and address in this state of a designated agent upon whom service of
             171      process may be made;
             172          (vii) disclosure of any injunction, judgment, administrative order, or conviction of any
             173      crime involving moral turpitude with respect to that person or any officer, director, manager,
             174      operator, or principal of that person; and
             175          (viii) any other information required by the rules of the department.
             176          (3) If the information in a registration or renewal statement required under Subsection
             177      (2) becomes inaccurate after filing, a person is not required to notify the department until:
             178          (a) that person is required to renew the registration; or
             179          (b) the department specifically requests earlier notification.
             180          (4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the

             181      department may make rules consistent with this section providing for the form, content, and
             182      filing of a registration and renewal statement.
             183          Section 7. Section 7-24-202 is enacted to read:
             184          7-24-202. Operational requirements for title loans.
             185          (1) A title lender shall:
             186          (a) post in a conspicuous location on its premises that can be viewed by a person
             187      seeking a title loan:
             188          (i) a complete schedule of any interest or fees charged for a title loan that states the
             189      interest and fees:
             190          (A) as dollar amounts; and
             191          (B) as annual percentage rates; and
             192          (ii) a telephone number a person may call to make a complaint to the department
             193      regarding a title loan;
             194          (b) enter into a written contract for the title loan containing:
             195          (i) the name of the person receiving the title loan;
             196          (ii) the transaction date;
             197          (iii) the amount of the title loan; and
             198          (iv) a statement of the total amount of any interest or fees that may be charged for the
             199      title loan, expressed as:
             200          (A) a dollar amount; and
             201          (B) an annual percentage rate;
             202          (c) provide the person seeking the title loan a copy of the written contract described in
             203      Subsection (1)(b);
             204          (d) prior to the execution of the title loan:
             205          (i) orally review with the person seeking the title loan the terms of the title loan
             206      including:
             207          (A) the amount of any interest rate or fee, expressed as:
             208          (I) a dollar amount; and
             209          (II) an annual percentage rate; and
             210          (B) the date on which the full amount of the title loan is due; and
             211          (ii) provide the person seeking the title loan a copy of the disclosure form adopted by

             212      the department under Section 7-24-203 ; and
             213          (e) comply with:
             214          (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et. seq.;
             215          (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691; and
             216          (iii) Title 70C, Utah Consumer Credit Code.
             217          (2) If a title lender extends a title loan through the Internet or other electronic means,
             218      the title lender shall:
             219          (a) provide the information described in Subsection (1)(a) to the person receiving the
             220      title loan in a conspicuous manner prior to the completion of the title loan; and
             221          (b) in connection with the disclosure required under Subsection (2)(a), provide a list of
             222      states where the title lender is registered or authorized to offer title loans through the Internet or
             223      other electronic means.
             224          (3) A title lender may not:
             225          (a) rollover a title loan unless the person receiving the title loan requests a rollover of
             226      the title loan;
             227          (b) extend more than one title loan on any vehicle at one time;
             228          (c) extend a title loan that exceeds the fair market value of the vehicle securing the title
             229      loan; or
             230          (d) extend a title loan without regard to the ability of the person seeking the title loan to
             231      repay the title loan, including the person's:
             232          (i) current and expected income;
             233          (ii) current obligations; and
             234          (iii) employment.
             235          (4) A title lender has met the requirements of Subsection (3)(d) of the person seeking a
             236      title loan provides the title lender with a signed acknowledgment that:
             237          (a) the person has provided the title lender with true and correct information
             238      concerning the person's income, obligations, and employment; and
             239          (b) the person has the ability to repay the title loan.
             240          Section 8. Section 7-24-203 is enacted to read:
             241          7-24-203. Disclosure form for title loans.
             242          (1) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the

             243      department shall adopt a disclosure form for title loans that complies with this section.
             244          (2) The department shall specify by rule:
             245          (a) the information to be provided in the disclosure form including:
             246          (i) the costs of obtaining a title loan;
             247          (ii) the consequences of defaulting on a title loan;
             248          (iii) generally available alternatives to a title loan; and
             249          (iv) methods of obtaining credit counseling or other financial advice;
             250          (b) the type size of the disclosure form; and
             251          (c) the manner in which a title lender shall conspicuously provide the disclosure form
             252      to a person seeking a title loan.
             253          Section 9. Section 7-24-204 is enacted to read:
             254          7-24-204. Remedy for default.
             255          Except in the event of fraud by a borrower, if a borrower defaults on a title loan:
             256          (1) the title lender's sole remedy is to seek repossession and sale of the property
             257      securing the title loan;
             258          (2) the title lender may not pursue the borrower personally for:
             259          (a) repayment of the loan; or
             260          (b) any deficiency after repossession and sale of the property securing the loan; and
             261          (3) after repossession and sale of the property securing the title loan, the title lender
             262      shall return to the borrower any proceeds from the sale in excess of the amount owed on the
             263      title loan.
             264          Section 10. Section 7-24-301 is enacted to read:
Part 3. Enforcement

             266          7-24-301. Enforcement by department -- Rulemaking.
             267          Subject to the requirements of Title 63, Chapter 46b, Administrative Procedures Act,
             268      the department may:
             269          (1) (a) receive and act on complaints;
             270          (b) take action designed to obtain voluntary compliance with this chapter; or
             271          (c) commence administrative or judicial proceedings on its own initiative to enforce
             272      compliance with this chapter;
             273          (2) counsel persons and groups on their rights and duties under this chapter;

             274          (3) make rules to:
             275          (a) restrict or prohibit lending or servicing practices that are misleading, unfair, or
             276      abusive;
             277          (b) promote or assure fair and full disclosure of the terms and conditions of agreements
             278      and communications between title lenders and customers; or
             279          (c) promote or assure uniform application of or to resolve ambiguities in applicable
             280      state or federal laws or federal regulations; and
             281          (4) employ hearing examiners, clerks, and other employees and agents as necessary to
             282      perform the department's duties under this chapter.
             283          Section 11. Section 7-24-302 is enacted to read:
             284          7-24-302. Examination of books, accounts, and records by the department.
             285          (1) The department may examine the books, accounts, and records of a title lender and
             286      may make investigations to determine compliance with this chapter.
             287          (2) In accordance with Section 7-1-401 , a title lender shall pay a fee for an examination
             288      conducted under Subsection (1).
             289          Section 12. Section 7-24-303 is enacted to read:
             290          7-24-303. Penalties.
             291          (1) A person who violates this chapter or who files materially false information with a
             292      registration or renewal under Section 7-24-201 is:
             293          (a) guilty of a class B misdemeanor; and
             294          (b) subject to revocation of a person's registration under this chapter.
             295          (2) Subject to Title 63, Chapter 46b, Administrative Procedures Act, if the department
             296      determines that a person is extending title loans in violation of this chapter, the department
             297      may:
             298          (a) revoke that person's registration under this chapter;
             299          (b) issue a cease and desist order from committing any further violations; or
             300          (c) prohibit the person from continuing to extend title loans.
             301          (3) A person is not subject to the penalties under this section for a violation of this
             302      chapter that was not willful or intentional, including a violation resulting from a clerical error.
             303          Section 13. Section 7-24-304 is enacted to read:
             304          7-24-304. Civil liability.

             305          Nothing in this chapter is intended to limit any civil liability that may exist against a
             306      title lender for:
             307          (1) breach of contract;
             308          (2) violation of federal law; or
             309          (3) other unlawful act.
             310          Section 14. Section 7-24-305 is enacted to read:
             311          7-24-305. Exemptions.
             312          The following are not subject to the requirements of this chapter:
             313          (1) a depository institution;
             314          (2) a depository institution holding company; or
             315          (3) an institution directly or indirectly owned or controlled by one or more:
             316          (a) depository institutions; or
             317          (b) depository institution holding companies.

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