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H.B. 111

             1     

DEFERRED DEPOSIT LENDING AMENDMENTS

             2     
2009 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Laura Black

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Check Cashing and Deferred Deposit Lending Registration Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    modifies the time period for which a deferred deposit loan may be rolled over;
             14          .    imposes restrictions on interest or fees; and
             15          .    makes technical and conforming amendments.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          7-23-102, as last amended by Laws of Utah 2008, Chapter 96
             23          7-23-401, as renumbered and amended by Laws of Utah 2008, Chapter 96
             24          15-1-4, as last amended by Laws of Utah 2008, Chapter 96
             25     
             26      Be it enacted by the Legislature of the state of Utah:
             27          Section 1. Section 7-23-102 is amended to read:


             28           7-23-102. Definitions.
             29          As used in this chapter:
             30          (1) "Annual percentage rate" has the same meaning as in the Truth and Lending Act,
             31      Sec. 107, 15 U.S.C. 1606, as implemented by regulations of the Board of Governors of the
             32      Federal Reserve System.
             33          [(1)] (2) "Business of cashing checks" means cashing a check for consideration.
             34          [(2)] (3) "Business of deferred deposit lending" means extending a deferred deposit
             35      loan.
             36          [(3)] (4) "Check" is as defined in Section 70A-3-104 .
             37          [(4)] (5) "Check casher" means a person that engages in the business of cashing checks.
             38          [(5)] (6) "Deferred deposit lender" means a person that engages in the business of
             39      deferred deposit lending.
             40          [(6)] (7) "Deferred deposit loan" means a transaction where:
             41          (a) a person:
             42          (i) presents to a deferred deposit lender a check written on that person's account; or
             43          (ii) provides written or electronic authorization to a deferred deposit lender to effect a
             44      debit from that person's account using an electronic payment; and
             45          (b) the deferred deposit lender:
             46          (i) provides the person described in Subsection [(6)] (7)(a) an amount of money that is
             47      equal to the face value of the check or the amount of the debit less [any fee or] interest or fees
             48      charged for the transaction; and
             49          (ii) agrees not to cash the check or process the debit until a specific date.
             50          [(7)] (8) (a) "Electronic payment" means an electronic method by which a person:
             51          (i) accepts a payment from another person; or
             52          (ii) makes a payment to another person.
             53          (b) "Electronic payment" includes a payment made through:
             54          (i) an automated clearing house transaction;
             55          (ii) an electronic check;
             56          (iii) a stored value card; or
             57          (iv) an Internet transfer.
             58          (9) "Interest or fees" includes the cost elements associated with the extension of credit,


             59      including:
             60          (a) a fee;
             61          (b) a charge, such as:
             62          (i) a service charge; or
             63          (ii) a renewal charge;
             64          (c) a credit insurance premium;
             65          (d) an ancillary product sold with any extension of credit; and
             66          (e) any other charge or premium with respect to the extension of credit.
             67          [(8)] (10) "Rollover" means the extension or renewal of the term of a deferred deposit
             68      loan.
             69          Section 2. Section 7-23-401 is amended to read:
             70           7-23-401. Operational requirements for deferred deposit loans.
             71          (1) If a deferred deposit lender extends a deferred deposit loan, the deferred deposit
             72      lender shall:
             73          (a) post in a conspicuous location on its premises that can be viewed by a person
             74      seeking a deferred deposit loan:
             75          (i) a complete schedule of [any] interest or fees charged for a deferred deposit loan that
             76      states the interest [and] or fees using dollar amounts;
             77          (ii) a number the person can call to make a complaint to the department regarding the
             78      deferred deposit loan; and
             79          (iii) a list of states where the deferred deposit lender is registered or authorized to offer
             80      deferred deposit loans through the Internet or other electronic means;
             81          (b) enter into a written contract for the deferred deposit loan;
             82          (c) conspicuously disclose in the written contract:
             83          (i) that under Subsection (3)(a), a person receiving a deferred deposit loan may make a
             84      partial payment in increments of at least $5 on the principal owed on the deferred deposit loan
             85      without incurring additional [charges] interest or fees above the [charges] interest or fees
             86      provided in the written contract;
             87          (ii) that under Subsection (3)(b), a person receiving a deferred deposit loan may rescind
             88      the deferred deposit loan on or before 5 p.m. of the next business day without incurring any
             89      [charges] interest or fees;


             90          (iii) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
             91      without the person receiving the deferred deposit loan requesting the rollover of the deferred
             92      deposit loan;
             93          (iv) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
             94      rollover requires the person to pay the amount owed by the person under the deferred deposit
             95      loan in whole or in part more than [12] four weeks after the day on which the deferred deposit
             96      loan is executed; and
             97          (v) (A) the name and address of a designated agent required to be provided the
             98      department under Subsection 7-23-201 (2)(d)(vi); and
             99          (B) a statement that service of process may be made to the designated agent;
             100          (d) provide the person seeking the deferred deposit loan a copy of the deferred deposit
             101      contract;
             102          (e) orally review with the person seeking the deferred deposit loan the terms of the
             103      deferred deposit loan including:
             104          (i) the amount of [any] interest [rate] or [fee] fees;
             105          (ii) the date on which the full amount of the deferred deposit loan is due;
             106          (iii) that under Subsection (3)(a), a person receiving a deferred deposit loan may make
             107      a partial payment in increments of at least $5 on the principal owed on the deferred deposit
             108      loan without incurring additional [charges] interest or fees above the [charges] interest or fees
             109      provided in the written contract;
             110          (iv) that under Subsection (3)(b), a person receiving a deferred deposit loan may
             111      rescind the deferred deposit loan on or before 5 p.m. of the next business day without incurring
             112      any [charges] interest or fees;
             113          (v) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
             114      without the person receiving the deferred deposit loan requesting the rollover of the deferred
             115      deposit loan; and
             116          (vi) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
             117      rollover requires the person to pay the amount owed by the person under the deferred deposit
             118      loan in whole or in part more than [12] four weeks after the day on which the deferred deposit
             119      loan is executed; and
             120          (f) comply with the following as in effect on the date the deferred deposit loan is


             121      extended:
             122          (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and its implementing federal
             123      regulations;
             124          (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691, and its implementing federal
             125      regulations;
             126          (iii) Bank Secrecy Act, 12 U.S.C. Sec. 1829b, 12 U.S.C. Sec. 1951 through 1959, and
             127      31 U.S.C. Sec. 5311 through 5332, and its implementing regulations; and
             128          (iv) Title 70C, Utah Consumer Credit Code.
             129          (2) If a deferred deposit lender extends a deferred deposit loan through the Internet or
             130      other electronic means, the deferred deposit lender shall provide the information described in
             131      Subsection (1)(a) to the person receiving the deferred deposit loan:
             132          (a) in a conspicuous manner; and
             133          (b) prior to the person entering into the deferred deposit loan.
             134          (3) A deferred deposit lender that engages in a deferred deposit loan shall permit a
             135      person receiving a deferred deposit loan to:
             136          (a) make partial payments in increments of at least $5 on the principal owed on the
             137      deferred deposit loan at any time prior to maturity without incurring additional [charges]
             138      interest or fees above the [charges] interest or fees provided in the written contract; and
             139          (b) rescind the deferred deposit loan without incurring any [charges] interest or fees by
             140      returning the deferred deposit loan amount to the deferred deposit lender on or before 5 p.m.
             141      the next business day following the deferred deposit loan transaction.
             142          (4) A deferred deposit lender that engages in a deferred deposit loan may not:
             143          (a) collect additional interest or fees on a deferred deposit loan with an outstanding
             144      principal balance [12] four weeks after the day on which the deferred deposit loan is executed;
             145          (b) roll over a deferred deposit loan without the person receiving the deferred deposit
             146      loan requesting the rollover of the deferred deposit loan;
             147          (c) roll over a deferred deposit loan if the rollover requires a person to pay the amount
             148      owed by the person under a deferred deposit loan in whole or in part more than [12] four weeks
             149      from the day on which the deferred deposit loan is first executed;
             150          (d) extend a new deferred deposit loan to a person on the same business day that the
             151      person makes a payment on another deferred deposit loan if the payment:


             152          (i) is made at least [12] four weeks after the day on which that deferred deposit loan is
             153      extended; and
             154          (ii) results in the principal of that deferred deposit loan being paid in full; [or]
             155          (e) threaten to use or use the criminal process in any state to collect on [the] a deferred
             156      deposit loan[.]; or
             157          (f) charge interest or fees on a deferred deposit loan that in the aggregate is greater than
             158      an annual percentage rate of 100%.
             159          (5) Notwithstanding Subsections (4)(a) and (4) (e), a deferred deposit lender that is the
             160      holder of a check used to obtain a deferred deposit loan that is dishonored may use the
             161      remedies and notice procedures provided in Chapter 15, Dishonored Instruments, except that
             162      the issuer, as defined in Section 7-15-1 , of the check may not be:
             163          (a) asked by the holder to pay the amount described in Subsection 7-15-1 (6)(a)(iii) as a
             164      condition of the holder not filing a civil action; or
             165          (b) held liable for the damages described in Subsection 7-15-1 (7)(b)(vi).
             166          Section 3. Section 15-1-4 is amended to read:
             167           15-1-4. Interest on judgments.
             168          (1) As used in this section, "federal postjudgment interest rate" means the interest rate
             169      established for the federal court system under 28 U.S.C. Sec. 1961, as amended.
             170          (2) (a) Except as provided in Subsection (2)(b), a judgment rendered on a lawful
             171      contract shall conform to the contract and shall bear the interest agreed upon by the parties,
             172      which shall be specified in the judgment.
             173          (b) A judgment rendered on a deferred deposit loan subject to Title 7, Chapter 23,
             174      Check Cashing and Deferred Deposit Lending Registration Act, shall bear interest at the rate
             175      imposed under Subsection (3) on an amount not exceeding the sum of:
             176          (i) the total of the principal balance of the deferred deposit loan;
             177          (ii) interest at the rate imposed by the deferred deposit loan agreement for a period not
             178      exceeding [12] four weeks as provided in Subsection 7-23-401 (4);
             179          (iii) costs;
             180          (iv) attorney fees; and
             181          (v) other amounts allowed by law and ordered by the court.
             182          (3) (a) Except as otherwise provided by law, other civil and criminal judgments of the


             183      district court and justice court shall bear interest at the federal postjudgment interest rate as of
             184      January 1 of each year, plus 2%.
             185          (b) The postjudgment interest rate in effect at the time of the judgment shall remain the
             186      interest rate for the duration of the judgment.
             187          (c) The interest on criminal judgments shall be calculated on the total amount of the
             188      judgment.
             189          (d) Interest paid on state revenue shall be deposited in accordance with Section
             190      63A-8-301 .
             191          (e) Interest paid on revenue to a county or municipality shall be paid to the general
             192      fund of the county or municipality.




Legislative Review Note
    as of 1-20-09 11:15 AM


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