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H.B. 15 Enrolled

             1     

DEFERRED DEPOSIT LENDING AMENDMENTS

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: James A. Dunnigan

             5     
Senate Sponsor: Karen Mayne

             6      Cosponsor:Laura Black              7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Check Cashing and Deferred Deposit Lending Registration Act
             11      to address operational requirements related to deferred deposit lending.
             12      Highlighted Provisions:
             13          This bill:
             14          .    addresses required information in annual operation statements;
             15          .    changes the permissible length of rollovers to 10 weeks;
             16          .    imposes restrictions related to communications at a place of employment;
             17          .    provides for an extended payment plan option; and
             18          .    makes technical and conforming amendments.
             19      Monies Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          7-23-201, as last amended by Laws of Utah 2008, Chapter 382 and renumbered and
             26      amended by Laws of Utah 2008, Chapter 96
             27          7-23-401, as renumbered and amended by Laws of Utah 2008, Chapter 96
             28          15-1-4, as last amended by Laws of Utah 2008, Chapter 96
             29      ENACTS:


             30          7-23-403, Utah Code Annotated 1953
             31     
             32      Be it enacted by the Legislature of the state of Utah:
             33          Section 1. Section 7-23-201 is amended to read:
             34           7-23-201. Registration -- Rulemaking.
             35          (1) (a) It is unlawful for a person to engage in the business of cashing checks or the
             36      business of deferred deposit lending in Utah or with a Utah resident unless the person:
             37          (i) registers with the department in accordance with this chapter; and
             38          (ii) maintains a valid registration.
             39          (b) It is unlawful for a person to operate a mobile facility in this state to engage in the
             40      business of:
             41          (i) cashing checks; or
             42          (ii) deferred deposit lending.
             43          (2) (a) A registration and a renewal of a registration expires on April 30 of each year
             44      unless on or before that date the person renews the registration.
             45          (b) To register under this section, a person shall:
             46          (i) pay an original registration fee established under Subsection 7-1-401 (8); and
             47          (ii) submit a registration statement containing the information described in Subsection
             48      (2)(d).
             49          (c) To renew a registration under this section, a person shall:
             50          (i) pay the annual fee established under Subsection 7-1-401 (5);
             51          (ii) submit a renewal statement containing the information described in Subsection
             52      (2)(d); and
             53          (iii) if the person engages in the business of deferred deposit lending, submit an
             54      operations statement containing the information described in Subsection (2)(e).
             55          (d) A registration or renewal statement shall state:
             56          (i) the name of the person;
             57          (ii) the name in which the business will be transacted if different from that required in


             58      Subsection (2)(d)(i);
             59          (iii) the address of the person's principal business office, which may be outside this
             60      state;
             61          (iv) the addresses of all offices in this state at which the person conducts the business
             62      of:
             63          (A) cashing checks; or
             64          (B) deferred deposit lending;
             65          (v) if the person conducts the business of cashing checks or the business of deferred
             66      deposit lending in this state but does not maintain an office in this state, a brief description of
             67      the manner in which the business is conducted;
             68          (vi) the name and address in this state of a designated agent upon whom service of
             69      process may be made;
             70          (vii) disclosure of any injunction, judgment, administrative order, or conviction of any
             71      crime involving moral turpitude with respect to that person or any officer, director, manager,
             72      operator, or principal of that person; and
             73          (viii) any other information required by the rules of the department.
             74          (e) An operations statement required for a deferred deposit lender to renew a
             75      registration shall state for the immediately preceding calendar year:
             76          (i) the average deferred deposit loan amount that the deferred deposit lender extended;
             77          (ii) the average number of days a deferred deposit loan is extended by the deferred
             78      deposit lender before the deferred deposit loan is paid in full;
             79          (iii) of the deferred deposit loans that are paid in full 10 weeks or sooner after the day
             80      on which the deferred deposit loan is executed, the average number of days a deferred deposit
             81      loan is extended by the deferred deposit lender before the deferred deposit loan is paid in full;
             82          [(iii)] (iv) the minimum and maximum amount of interest or fees charged by the
             83      deferred deposit lender for a deferred deposit loan:
             84          (A) of $100; and
             85          (B) extended for one week; [and]


             86          [(iv)] (v) the total number of deferred deposit loans rescinded by the deferred deposit
             87      lender at the request of the customer pursuant to Subsection 7-23-401 (3)(b)[.];
             88          (vi) the percentage of deferred deposit loans extended by the deferred deposit lender
             89      that are not paid in full by 10 weeks after the day on which the deferred deposit loan is
             90      executed; and
             91          (vii) of the persons to whom the deferred deposit lender extended a deferred deposit
             92      loan, the percentage that entered into an extended payment plan under Section 7-23-403 .
             93          (3) Information provided by a deferred deposit lender under Subsection (2)(e) is:
             94          (a) confidential in accordance with Section 7-1-802 ; and
             95          (b) not subject to Title 63G, Chapter 2, Government Records Access and Management
             96      Act.
             97          (4) (a) The commissioner may impose an administrative fine determined under
             98      Subsection (4)(b) on a person if:
             99          (i) the person is required to be registered under this chapter;
             100          (ii) the person fails to register or renew a registration in accordance with this chapter;
             101          (iii) the department notifies the person that the person is in violation of this chapter for
             102      failure to be registered; and
             103          (iv) the person fails to register within 30 days after the day on which the person
             104      receives the notice described in Subsection (4)(a)(iii).
             105          (b) Subject to Subsection (4)(c), the administrative fine imposed under this section is:
             106          (i) $500 if the person:
             107          (A) has no office in this state at which the person conducts the business of:
             108          (I) cashing checks; or
             109          (II) deferred deposit lending; or
             110          (B) has one office in this state at which the person conducts the business of:
             111          (I) cashing checks; or
             112          (II) deferred deposit lending; or
             113          (ii) if the person has two or more offices in this state at which the person conducts the


             114      business of cashing checks or the business of deferred deposit lending, $500 for each office at
             115      which the person conducts the business of:
             116          (A) cashing checks; or
             117          (B) deferred deposit lending.
             118          (c) The commissioner may reduce or waive a fine imposed under this Subsection (4) if
             119      the person shows good cause.
             120          (5) If the information in a registration, renewal, or operations statement required under
             121      Subsection (2) becomes inaccurate after filing, a person is not required to notify the
             122      department until:
             123          (a) that person is required to renew the registration; or
             124          (b) the department specifically requests earlier notification.
             125          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             126      the department may make rules consistent with this section providing for:
             127          (a) the form, content, and filing of a registration and renewal statement described in
             128      Subsection (2)(d); and
             129          (b) the form and filing of an operations statement described in Subsection (2)(e).
             130          Section 2. Section 7-23-401 is amended to read:
             131           7-23-401. Operational requirements for deferred deposit loans.
             132          (1) If a deferred deposit lender extends a deferred deposit loan, the deferred deposit
             133      lender shall:
             134          (a) post in a conspicuous location on its premises that can be viewed by a person
             135      seeking a deferred deposit loan:
             136          (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
             137      states the interest and fees using dollar amounts;
             138          (ii) a number the person can call to make a complaint to the department regarding the
             139      deferred deposit loan; and
             140          (iii) a list of states where the deferred deposit lender is registered or authorized to offer
             141      deferred deposit loans through the Internet or other electronic means;


             142          (b) enter into a written contract for the deferred deposit loan;
             143          (c) conspicuously disclose in the written contract:
             144          (i) that under Subsection (3)(a), a person receiving a deferred deposit loan may make a
             145      partial payment in increments of at least $5 on the principal owed on the deferred deposit loan
             146      without incurring additional charges above the charges provided in the written contract;
             147          (ii) that under Subsection (3)(b), a person receiving a deferred deposit loan may
             148      rescind the deferred deposit loan on or before 5 p.m. of the next business day without
             149      incurring any charges;
             150          (iii) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
             151      without the person receiving the deferred deposit loan requesting the rollover of the deferred
             152      deposit loan;
             153          (iv) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if
             154      the rollover requires the person to pay the amount owed by the person under the deferred
             155      deposit loan in whole or in part more than [12] 10 weeks after the day on which the deferred
             156      deposit loan is executed; and
             157          (v) (A) the name and address of a designated agent required to be provided the
             158      department under Subsection 7-23-201 (2)(d)(vi); and
             159          (B) a statement that service of process may be made to the designated agent;
             160          (d) provide the person seeking the deferred deposit loan:
             161          (i) a copy of the [deferred deposit contract;] written contract described in Subsection
             162      (1)(c); and
             163          (ii) written notice that if the person seeking the deferred deposit loan is eligible to
             164      enter into an extended payment plan, the deferred deposit lender provides an extended
             165      payment plan described in Section 7-23-403 ;
             166          (e) orally review with the person seeking the deferred deposit loan the terms of the
             167      deferred deposit loan including:
             168          (i) the amount of any interest rate or fee;
             169          (ii) the date on which the full amount of the deferred deposit loan is due;


             170          (iii) that under Subsection (3)(a), a person receiving a deferred deposit loan may make
             171      a partial payment in increments of at least $5 on the principal owed on the deferred deposit
             172      loan without incurring additional charges above the charges provided in the written contract;
             173          (iv) that under Subsection (3)(b), a person receiving a deferred deposit loan may
             174      rescind the deferred deposit loan on or before 5 p.m. of the next business day without
             175      incurring any charges;
             176          (v) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
             177      without the person receiving the deferred deposit loan requesting the rollover of the deferred
             178      deposit loan; and
             179          (vi) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if
             180      the rollover requires the person to pay the amount owed by the person under the deferred
             181      deposit loan in whole or in part more than [12] 10 weeks after the day on which the deferred
             182      deposit loan is executed; and
             183          (f) comply with the following as in effect on the date the deferred deposit loan is
             184      extended:
             185          (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and its implementing federal
             186      regulations;
             187          (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691, and its implementing federal
             188      regulations;
             189          (iii) Bank Secrecy Act, 12 U.S.C. Sec. 1829b, 12 U.S.C. Sec. 1951 through 1959, and
             190      31 U.S.C. Sec. 5311 through 5332, and its implementing regulations; and
             191          (iv) Title 70C, Utah Consumer Credit Code.
             192          (2) If a deferred deposit lender extends a deferred deposit loan through the Internet or
             193      other electronic means, the deferred deposit lender shall provide the information described in
             194      Subsection (1)(a) to the person receiving the deferred deposit loan:
             195          (a) in a conspicuous manner; and
             196          (b) prior to the person entering into the deferred deposit loan.
             197          (3) A deferred deposit lender that engages in a deferred deposit loan shall permit a


             198      person receiving a deferred deposit loan to:
             199          (a) make partial payments in increments of at least $5 on the principal owed on the
             200      deferred deposit loan at any time prior to maturity without incurring additional charges above
             201      the charges provided in the written contract; and
             202          (b) rescind the deferred deposit loan without incurring any charges by returning the
             203      deferred deposit loan amount to the deferred deposit lender on or before 5 p.m. the next
             204      business day following the deferred deposit loan transaction.
             205          (4) A deferred deposit lender that engages in a deferred deposit loan may not:
             206          (a) collect additional interest on a deferred deposit loan with an outstanding principal
             207      balance [12] 10 weeks after the day on which the deferred deposit loan is executed;
             208          (b) roll over a deferred deposit loan without the person receiving the deferred deposit
             209      loan requesting the rollover of the deferred deposit loan;
             210          (c) roll over a deferred deposit loan if the rollover requires a person to pay the amount
             211      owed by the person under a deferred deposit loan in whole or in part more than [12] 10 weeks
             212      from the day on which the deferred deposit loan is first executed;
             213          (d) extend a new deferred deposit loan to a person on the same business day that the
             214      person makes a payment on another deferred deposit loan if the payment:
             215          (i) is made at least [12] 10 weeks after the day on which that deferred deposit loan is
             216      extended; and
             217          (ii) results in the principal of that deferred deposit loan being paid in full; [or]
             218          (e) threaten to use or use the criminal process in any state to collect on the deferred
             219      deposit loan[.]; or
             220          (f) in connection with the collection of money owed on a deferred deposit loan,
             221      communicate with a person who owes money on a deferred deposit loan at the person's place
             222      of employment if the person or the person's employer communicates, orally or in writing, to
             223      the deferred deposit lender that the person's employer prohibits the person from receiving these
             224      communications.
             225          (5) Notwithstanding Subsections (4)(a) and [(4)] (e), a deferred deposit lender that is


             226      the holder of a check used to obtain a deferred deposit loan that is dishonored may use the
             227      remedies and notice procedures provided in Chapter 15, Dishonored Instruments, except that
             228      the issuer, as defined in Section 7-15-1 , of the check may not be:
             229          (a) asked by the holder to pay the amount described in Subsection 7-15-1 (6)(a)(iii) as
             230      a condition of the holder not filing a civil action; or
             231          (b) held liable for the damages described in Subsection 7-15-1 (7)(b)(vi).
             232          Section 3. Section 7-23-403 is enacted to read:
             233          7-23-403. Extended payment plan.
             234          (1) (a) If a person who owes money on a deferred deposit loan requests to enter into an
             235      extended payment plan, the deferred deposit lender who extended the deferred deposit loan
             236      shall allow the person to enter into an extended payment plan that meets the requirements of
             237      this section at least once during a 12-month period to pay the money owed.
             238          (b) A deferred deposit lender is not required to enter into an extended payment plan
             239      with a person who owes money on a deferred deposit loan more than one time during a
             240      12-month period.
             241          (2) An extended payment plan shall include the following:
             242          (a) A deferred deposit lender shall require a person who receives a deferred deposit
             243      loan and wants to enter an extended payment plan to enter into a written agreement:
             244          (i) with the deferred deposit lender;
             245          (ii) that is executed:
             246          (A) no sooner than the day before the last day of the initial term of the deferred deposit
             247      loan; and
             248          (B) no later than the end of the deferred deposit lender's business day before the day
             249      on which the deferred deposit loan is due; and
             250          (iii) that states:
             251          (A) a payment schedule; and
             252          (B) the money owed under the extended payment plan.
             253          (b) A payment schedule for an extended payment plan shall provide that the money


             254      owed may be paid:
             255          (i) in at least four equal payments; and
             256          (ii) over a time period that is at least 60 days.
             257          (c) The money owed under an extended payment plan shall equal the money owed
             258      under the deferred deposit loan, including interest and fees, that would be due if the deferred
             259      deposit loan is paid in full on the last day of the most current term of the deferred deposit loan.
             260          (3) A deferred deposit lender may not charge interest or fees as part of an extended
             261      payment plan, except that if the person who receives the deferred deposit loan defaults under
             262      the extended payment plan, the deferred deposit lender may:
             263          (a) accelerate the requirement to pay the money owed under the extended payment
             264      plan;
             265          (b) charge a fee not to exceed $20;
             266          (c) terminate the extended payment plan; and
             267          (d) subject to the other requirements of this chapter, reinstate the original deferred
             268      deposit loan terms.
             269          (4) A deferred deposit loan may not penalize a person who enters into an extended
             270      payment plan for paying to the deferred deposit lender money owed under the extended
             271      payment plan before the money is due.
             272          (5) A deferred deposit lender may not initiate collection activities for a deferred
             273      deposit loan that is subject to an extended payment plan during the period that the person
             274      owing money under the extended payment plan is in compliance with the extended payment
             275      plan.
             276          Section 4. Section 15-1-4 is amended to read:
             277           15-1-4. Interest on judgments.
             278          (1) As used in this section, "federal postjudgment interest rate" means the interest rate
             279      established for the federal court system under 28 U.S.C. Sec. 1961, as amended.
             280          (2) (a) Except as provided in Subsection (2)(b), a judgment rendered on a lawful
             281      contract shall conform to the contract and shall bear the interest agreed upon by the parties,


             282      which shall be specified in the judgment.
             283          (b) A judgment rendered on a deferred deposit loan subject to Title 7, Chapter 23,
             284      Check Cashing and Deferred Deposit Lending Registration Act, shall bear interest at the rate
             285      imposed under Subsection (3) on an amount not exceeding the sum of:
             286          (i) the total of the principal balance of the deferred deposit loan;
             287          (ii) interest at the rate imposed by the deferred deposit loan agreement for a period not
             288      exceeding [12] 10 weeks as provided in Subsection 7-23-401 (4);
             289          (iii) costs;
             290          (iv) attorney fees; and
             291          (v) other amounts allowed by law and ordered by the court.
             292          (3) (a) Except as otherwise provided by law, other civil and criminal judgments of the
             293      district court and justice court shall bear interest at the federal postjudgment interest rate as of
             294      January 1 of each year, plus 2%.
             295          (b) The postjudgment interest rate in effect at the time of the judgment shall remain
             296      the interest rate for the duration of the judgment.
             297          (c) The interest on criminal judgments shall be calculated on the total amount of the
             298      judgment.
             299          (d) Interest paid on state revenue shall be deposited in accordance with Section
             300      63A-8-301 .
             301          (e) Interest paid on revenue to a county or municipality shall be paid to the general
             302      fund of the county or municipality.


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