First Substitute H.B. 462

Representative David L. Hogue proposes the following substitute bill:

1 AMENDMENTS RELATED TO LENDING
2 2006 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: David L. Hogue
5 Senate Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Check Cashing Registration Act and the Title Lending
10 Registration Act.
11 Highlighted Provisions:
12 This bill:
13 . requires a check casher or title lender extending a loan to post a current certificate
14 of examination;
15 . imposes limitations on interest that may be charged on a title loan;
16 . limits what a check casher or title lender may recover if a check, draft, order, or
17 other instrument used in a deferred deposit or title loan is dishonored;
18 . modifies examination requirements including requiring the Department of Financial
19 Institutions to provide certificates of examination; and
20 . makes technical changes.
21 Monies Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 None
25 Utah Code Sections Affected:

26 AMENDS:
27 7-23-105, as last amended by Chapter 69, Laws of Utah 2003
28 7-23-107, as last amended by Chapter 69, Laws of Utah 2003
29 7-24-202, as enacted by Chapter 236, Laws of Utah 2003
30 7-24-204, as enacted by Chapter 236, Laws of Utah 2003
31 7-24-302, as enacted by Chapter 236, Laws of Utah 2003
32
33 Be it enacted by the Legislature of the state of Utah:
34 Section 1. Section 7-23-105 is amended to read:
35 7-23-105. Operational requirements for deferred deposit loans.
36 (1) If a check casher extends a deferred deposit loan, the check casher shall:
37 (a) post in a conspicuous location on its premises that can be viewed by a person
38 seeking a deferred deposit loan:
39 (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
40 states the interest and fees using dollar amounts;
41 (ii) a number the person can call to make a complaint to the department regarding the
42 deferred deposit loan; [and]
43 (iii) a list of states where the check casher is registered or authorized to offer deferred
44 deposit loans through the Internet or other electronic means; and
45 (iv) beginning with an examination completed on or after May 1, 2006, a current
46 certificate of examination obtained in accordance with Section 7-23-107 ;
47 (b) enter into a written contract for the deferred deposit loan;
48 (c) conspicuously disclose in the written contract that, under Subsection (4)(b), the
49 deferred deposit loan may not be rolled over beyond 12 weeks after the day on which the
50 deferred deposit loan is executed;
51 (d) provide the person seeking the deferred deposit loan a copy of the deferred deposit
52 contract;
53 (e) orally review with the person seeking the deferred deposit loan the terms of the
54 deferred deposit loan including:
55 (i) the amount of any interest rate or fee;
56 (ii) the date on which the full amount of the deferred deposit loan is due; and

57 (iii) the fact that the deferred deposit loan may not be rolled over beyond 12 weeks
58 after the day on which the deferred deposit loan is executed; and
59 (f) comply with:
60 (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq.;
61 (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691; and
62 (iii) Title 70C, Utah Consumer Credit Code.
63 (2) If a check casher extends a deferred deposit loan through the Internet or other
64 electronic means, the check casher shall provide the information described in Subsection (1)(a)
65 to the person receiving the deferred deposit loan in a conspicuous manner prior to the
66 completion of the deferred deposit loan.
67 (3) A check casher that engages in a deferred deposit loan shall permit a person
68 receiving a deferred deposit loan to:
69 (a) make partial payments in increments of at least $5 on the principal owed on the
70 deferred deposit loan at any time prior to maturity without incurring additional charges above
71 the charges provided in the written contract; and
72 (b) rescind the deferred deposit loan without incurring any charges by returning the
73 deferred deposit loan amount to the check casher on or before 5 p.m. the next business day
74 following the loan transaction.
75 (4) A check casher that engages in a deferred deposit loan may not:
76 (a) collect additional interest on a deferred deposit loan with an outstanding principal
77 balance 12 weeks after the day on which the deferred deposit loan is executed;
78 (b) [rollover] roll over a deferred deposit loan if the rollover requires a person to pay
79 the amount owed by the person under a deferred deposit loan in whole or in part more than 12
80 weeks from the day on which the deferred deposit loan is first executed; or
81 (c) threaten to use or use the criminal process in any state to collect on the deferred
82 deposit loan.
83 (5) [Notwithstanding] (a) Subject to Subsection (5)(b) and notwithstanding
84 Subsections (4)(a) and (4)(c), a check casher that is the holder of a check, draft, order, or other
85 instrument that has been dishonored as part of a deferred deposit loan may use the remedies
86 and notice procedures provided in [Title 7,] Chapter 15, Dishonored Instruments, against a
87 person who obtains a deferred deposit loan and is the issuer of the check, draft, order, or other

88 instrument that has been dishonored.
89 (b) Notwithstanding Chapter 15, Dishonored Instruments, the person described in
90 Subsection (5)(a) that is the issuer of the check, draft, order, or other instrument that has been
91 dishonored is liable to the check casher for the dishonor in the amount equal to the lesser of:
92 (i) the amount owed under Chapter 15, Dishonored Instruments; or
93 (ii) (A) the amount owed under Subsection 7-15-1 (2)(b);
94 (B) the collection costs under Subsection 7-15-1 (4);
95 (C) interest;
96 (D) court costs; and
97 (E) reasonable attorneys' fees.
98 Section 2. Section 7-23-107 is amended to read:
99 7-23-107. Examination of books, accounts, and records by the department.
100 (1) At least [once every calendar year] annually the department shall, for each premise
101 engaging in the business of a check casher:
102 (a) examine the books, accounts, and records; and
103 (b) make investigations to determine compliance with this chapter.
104 (2) In accordance with Section 7-1-401 , the check casher shall pay a fee for an
105 examination conducted under Subsection (1).
106 (3) Once the examination required by this section is completed to the satisfaction of the
107 department, the department shall provide the check casher a certificate of examination that
108 states the day on which the examination is considered completed by the department.
109 Section 3. Section 7-24-202 is amended to read:
110 7-24-202. Operational requirements for title loans.
111 (1) A title lender shall:
112 (a) post in a conspicuous location on its premises that can be viewed by a person
113 seeking a title loan:
114 (i) subject to Subsection (5), a complete schedule of any interest or fees charged for a
115 title loan that states the interest and fees:
116 (A) as dollar amounts; and
117 (B) as annual percentage rates; [and]
118 (ii) a telephone number a person may call to make a complaint to the department

119 regarding a title loan; and
120 (iii) beginning with an examination completed on or after May 1, 2006, a current
121 certificate of examination obtained in accordance with Section 7-24-302 ;
122 (b) enter into a written contract for the title loan containing:
123 (i) the name of the person receiving the title loan;
124 (ii) the transaction date;
125 (iii) the amount of the title loan; and
126 (iv) subject to Subsection (5), a statement of the total amount of any interest or fees
127 that may be charged for the title loan, expressed as:
128 (A) a dollar amount; and
129 (B) an annual percentage rate;
130 (c) provide the person seeking the title loan a copy of the written contract described in
131 Subsection (1)(b);
132 (d) prior to the execution of the title loan:
133 (i) orally review with the person seeking the title loan the terms of the title loan
134 including:
135 (A) subject to Subsection (5), the amount of any interest rate or fee, expressed as:
136 (I) a dollar amount; and
137 (II) an annual percentage rate; and
138 (B) the date on which the full amount of the title loan is due; and
139 (ii) provide the person seeking the title loan a copy of the disclosure form adopted by
140 the department under Section 7-24-203 ; and
141 (e) comply with:
142 (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq.;
143 (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691; and
144 (iii) Title 70C, Utah Consumer Credit Code.
145 (2) If a title lender extends a title loan through the Internet or other electronic means,
146 the title lender shall:
147 (a) provide the information described in Subsection (1)(a) to the person receiving the
148 title loan in a conspicuous manner prior to the completion of the title loan; and
149 (b) in connection with the disclosure required under Subsection (2)(a), provide a list of

150 states where the title lender is registered or authorized to offer title loans through the Internet or
151 other electronic means.
152 (3) A title lender may not:
153 (a) [rollover] roll over a title loan unless the person receiving the title loan requests a
154 rollover of the title loan;
155 (b) extend more than one title loan on any vehicle at one time;
156 (c) extend a title loan that exceeds the fair market value of the vehicle securing the title
157 loan; [or]
158 (d) extend a title loan without regard to the ability of the person seeking the title loan to
159 repay the title loan, including the person's:
160 (i) current and expected income;
161 (ii) current obligations; and
162 (iii) employment[.]; or
163 (e) charge interest or fees in excess of the interest or fees allowed under Subsection (5).
164 (4) A title lender has met the requirements of Subsection (3)(d) if the person seeking a
165 title loan provides the title lender with a signed acknowledgment that:
166 (a) the person has provided the title lender with true and correct information
167 concerning the person's income, obligations, and employment; and
168 (b) the person has the ability to repay the title loan.
169 (5) If a title loan is rolled over, beginning the day after the day on which the original
170 term of the loan ends, the total of interest and fees charged under the title loan during the term
171 of a rollover may not exceed 8% annual percentage rate.
172 Section 4. Section 7-24-204 is amended to read:
173 7-24-204. Remedy for default.
174 (1) Except in the event of fraud by a borrower, if a borrower defaults on a title loan:
175 [(1)] (a) the title lender's sole remedy is to seek repossession and sale of the property
176 securing the title loan;
177 [(2)] (b) the title lender may not pursue the borrower personally for:
178 [(a)] (i) repayment of the loan; or
179 [(b)] (ii) any deficiency after repossession and sale of the property securing the loan;
180 and

181 [(3)] (c) after repossession and sale of the property securing the title loan, the title
182 lender shall return to the borrower any proceeds from the sale in excess of the amount owed on
183 the title loan.
184 (2) (a) Subject to Subsection (2)(b), a title lender that is the holder of a check, draft,
185 order, or other instrument that has been dishonored as part of a title loan transaction may use
186 the remedies and notice procedures provided in Chapter 15, Dishonored Instruments, against a
187 person who obtains the title loan and is the issuer of the check, draft, order, or other instrument
188 that has been dishonored.
189 (b) Notwithstanding Chapter 15, Dishonored Instruments, the person described in
190 Subsection (2)(a) who is the issuer of the check, draft, order, or other instrument that has been
191 dishonored is liable to the title lender for the dishonor of the check, draft, order, or other
192 instrument in an amount equal to the lesser of:
193 (i) the amount owed under Chapter 15, Dishonored Instruments; or
194 (ii) (A) the amount owed under Subsection 7-15-1 (2)(b);
195 (B) the collection costs under Subsection 7-15-1 (4);
196 (C) interest;
197 (D) court costs; and
198 (E) reasonable attorneys' fees.
199 Section 5. Section 7-24-302 is amended to read:
200 7-24-302. Examination of books, accounts, and records by the department.
201 (1) [The] At least annually the department [may] shall examine the books, accounts,
202 and records of a title lender and may make investigations to determine compliance with this
203 chapter.
204 (2) In accordance with Section 7-1-401 , a title lender shall pay a fee for an examination
205 conducted under Subsection (1).
206 (3) Once the examination required by this section is completed to the satisfaction of the
207 department, the department shall provide a title lender a certificate of examination that states
208 the day on which the examination is considered completed by the department.