S.B. 38

1

GARNISHMENT BY DEFERRED DEPOSIT
2 LENDERS
3 2005 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Ron Allen
6
7 LONG TITLE
8 General Description:
9 This bill amends the Financial Institutions Act to address automatic garnishment by
10 deferred deposit lenders.
11 Highlighted Provisions:
12 This bill:
13 . clarifies language regarding disclosure over the Internet;
14 . prohibits including an automatic garnishment clause in a contract for deferred
15 deposit lending;
16 . requires the Department of Financial Institutions to make a filing with the Federal
17 Trade Commission if necessary to implement this bill; and
18 . makes technical changes.
19 Monies Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 7-23-105, as last amended by Chapter 69, Laws of Utah 2003
26 Uncodified Material Affected:
27 ENACTS UNCODIFIED MATERIAL

28
29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 7-23-105 is amended to read:
31 7-23-105. Operational requirements for deferred deposit loans.
32 (1) If a check casher extends a deferred deposit loan, the check casher shall:
33 (a) post in a conspicuous location on its premises that can be viewed by a person
34 seeking a deferred deposit loan:
35 (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
36 states the interest and fees using dollar amounts;
37 (ii) a number the person can call to make a complaint to the department regarding the
38 deferred deposit loan; and
39 (iii) a list of states where the check casher is registered or authorized to offer deferred
40 deposit loans through the Internet or other electronic means;
41 (b) enter into a written contract for the deferred deposit loan;
42 (c) conspicuously disclose in the written contract that, under Subsection (4)(b), the
43 deferred deposit loan may not be rolled over beyond 12 weeks after the day on which the
44 deferred deposit loan is executed;
45 (d) provide the person seeking the deferred deposit loan a copy of the deferred deposit
46 contract;
47 (e) orally review with the person seeking the deferred deposit loan the terms of the
48 deferred deposit loan including:
49 (i) the amount of any interest rate or fee;
50 (ii) the date on which the full amount of the deferred deposit loan is due; and
51 (iii) the fact that the deferred deposit loan may not be rolled over beyond 12 weeks
52 after the day on which the deferred deposit loan is executed; and
53 (f) comply with:
54 (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq.;
55 (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691; and
56 (iii) Title 70C, Utah Consumer Credit Code.
57 (2) If a check casher extends a deferred deposit loan through the Internet or other
58 electronic means, the check casher shall provide the information described in Subsection (1)(a)

59 to the person receiving the deferred deposit loan in a conspicuous manner prior to the
60 [completion] execution of the deferred deposit loan.
61 (3) A check casher that engages in a deferred deposit loan shall permit a person
62 receiving a deferred deposit loan to:
63 (a) make partial payments in increments of at least $5 on the principal owed on the
64 deferred deposit loan at any time prior to maturity without incurring additional charges above
65 the charges provided in the written contract; and
66 (b) rescind the deferred deposit loan without incurring any charges by returning the
67 deferred deposit loan amount to the check casher on or before 5 p.m. the next business day
68 following the loan transaction.
69 (4) A check casher that engages in a deferred deposit loan may not:
70 (a) collect additional interest on a deferred deposit loan with an outstanding principal
71 balance 12 weeks after the day on which the deferred deposit loan is executed;
72 (b) rollover a deferred deposit loan if the rollover requires a person to pay the amount
73 owed by the person under a deferred deposit loan in whole or in part more than 12 weeks from
74 the day on which the deferred deposit loan is first executed; [or]
75 (c) threaten to use or use the criminal process in any state to collect on the deferred
76 deposit loan[.]; or
77 (d) include in the written contract required by Subsection (1)(b) any assignment of or
78 order for payment of wages or other compensation for labor or services that is due the person
79 receiving the deferred deposit loan.
80 (5) Notwithstanding Subsections (4)(a) and (4)(c), a check casher that is the holder of a
81 check, draft, order, or other instrument that has been dishonored may use the remedies and
82 notice procedures provided in [Title 7,] Chapter 15, Dishonored Instruments.
83 Section 2. Required filing.
84 (1) The Department of Financial Institutions shall determine whether in order to
85 implement this bill it is necessary for the state to file an application with the Federal Trade
86 Commission under 16 C.F.R. 444.5.
87 (2) If in order to implement this bill an application must be filed with the Federal Trade
88 Commission under 16 C.F.R. 444.5, the Department of Financial Institutions shall file the
89 application on behalf of the state.

Legislative Review Note
as of 1-6-05 9:43 AM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel