H.B. 47
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7 LONG TITLE
8 General Description:
9 This bill modifies the Check Cashing and Deferred Deposit Lending Registration Act to
10 address deferred deposit loans.
11 Highlighted Provisions:
12 This bill:
13 . modifies the definition provision;
14 . requires a deferred deposit lender to query the database before extending a deferred
15 deposit loan;
16 . provides for reporting requirements;
17 . imposes ineligibility conditions;
18 . requires the creation of a deferred deposit database;
19 . addresses query procedures; and
20 . makes technical and conforming amendments.
21 Money Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 None
25 Utah Code Sections Affected:
26 AMENDS:
27 7-23-102 , as last amended by Laws of Utah 2013, Chapter 73
28 7-23-401 , as last amended by Laws of Utah 2010, Chapter 102
29 7-23-503 , as last amended by Laws of Utah 2012, Chapter 323
30 ENACTS:
31 7-23-601 , Utah Code Annotated 1953
32 7-23-602 , Utah Code Annotated 1953
33 7-23-603 , Utah Code Annotated 1953
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35 Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 7-23-102 is amended to read:
37 7-23-102. Definitions.
38 As used in this chapter:
39 (1) "Annual percentage rate" has the same meaning as in 15 U.S.C. Sec. 1606, as
40 implemented by regulations issued under that section.
41 (2) "Business of cashing checks" means cashing a check for consideration.
42 (3) "Business of deferred deposit lending" means extending a deferred deposit loan.
43 (4) "Check" is as defined in Section 70A-3-104 .
44 (5) "Check casher" means a person that engages in the business of cashing checks.
45 (6) "Deferred deposit database" means the deferred deposit database created in
46 accordance with Section 7-23-602 .
47 (7) "Deferred deposit database provider" means:
48 (a) the department; or
49 (b) a third party with which the department contracts as provided in Section 7-23-602 .
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51 deferred deposit lending.
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53 (a) a person:
54 (i) presents to a deferred deposit lender a check written on that person's account; or
55 (ii) provides written or electronic authorization to a deferred deposit lender to effect a
56 debit from that person's account using an electronic payment; and
57 (b) the deferred deposit lender:
58 (i) provides the person described in Subsection [
59 equal to the face value of the check or the amount of the debit less any fee or interest charged
60 for the transaction; and
61 (ii) agrees not to cash the check or process the debit until a specific date.
62 [
63 (i) accepts a payment from another person; or
64 (ii) makes a payment to another person.
65 (b) "Electronic payment" includes a payment made through:
66 (i) an automated clearing house transaction;
67 (ii) an electronic check;
68 (iii) a stored value card; or
69 (iv) an Internet transfer.
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71 and Registry, authorized under federal licensing requirements for mortgage loan originators.
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73 loan.
74 Section 2. Section 7-23-401 is amended to read:
75 7-23-401. Operational requirements for deferred deposit loans.
76 (1) If a deferred deposit lender extends a deferred deposit loan, the deferred deposit
77 lender shall:
78 (a) post in a conspicuous location on its premises that can be viewed by a person
79 seeking a deferred deposit loan:
80 (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
81 states the interest and fees using dollar amounts;
82 (ii) a number the person can call to make a complaint to the department regarding the
83 deferred deposit loan; and
84 (iii) a list of states where the deferred deposit lender is registered or authorized to offer
85 deferred deposit loans through the Internet or other electronic means;
86 (b) enter into a written contract for the deferred deposit loan;
87 (c) conspicuously disclose in the written contract:
88 (i) that under Subsection (3)(a), a person receiving a deferred deposit loan may make a
89 partial payment in increments of at least $5 on the principal owed on the deferred deposit loan
90 without incurring additional charges above the charges provided in the written contract;
91 (ii) that under Subsection (3)(b), a person receiving a deferred deposit loan may rescind
92 the deferred deposit loan on or before 5 p.m. of the next business day without incurring any
93 charges;
94 (iii) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
95 without the person receiving the deferred deposit loan requesting the rollover of the deferred
96 deposit loan;
97 (iv) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
98 rollover requires the person to pay the amount owed by the person under the deferred deposit
99 loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
100 executed; and
101 (v) (A) the name and address of a designated agent required to be provided the
102 department under Subsection 7-23-201 (2)(d)(vi); and
103 (B) a statement that service of process may be made to the designated agent;
104 (d) provide the person seeking the deferred deposit loan:
105 (i) a copy of the written contract described in Subsection (1)(c); and
106 (ii) written notice that if the person seeking the deferred deposit loan is eligible to enter
107 into an extended payment plan, the deferred deposit lender provides an extended payment plan
108 described in Section 7-23-403 ;
109 (e) orally review with the person seeking the deferred deposit loan the terms of the
110 deferred deposit loan including:
111 (i) the amount of any interest rate or fee;
112 (ii) the date on which the full amount of the deferred deposit loan is due;
113 (iii) that under Subsection (3)(a), a person receiving a deferred deposit loan may make
114 a partial payment in increments of at least $5 on the principal owed on the deferred deposit
115 loan without incurring additional charges above the charges provided in the written contract;
116 (iv) that under Subsection (3)(b), a person receiving a deferred deposit loan may
117 rescind the deferred deposit loan on or before 5 p.m. of the next business day without incurring
118 any charges;
119 (v) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
120 without the person receiving the deferred deposit loan requesting the rollover of the deferred
121 deposit loan; and
122 (vi) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
123 rollover requires the person to pay the amount owed by the person under the deferred deposit
124 loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
125 executed; [
126 (f) comply with the following as in effect on the date the deferred deposit loan is
127 extended:
128 (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and its implementing federal
129 regulations;
130 (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691, and its implementing federal
131 regulations;
132 (iii) Bank Secrecy Act, 12 U.S.C. Sec. 1829b, 12 U.S.C. Sec. 1951 through 1959, and
133 31 U.S.C. Sec. 5311 through 5332, and its implementing regulations; and
134 (iv) Title 70C, Utah Consumer Credit Code[
135 (g) on and after October 1, 2014, before extending a deferred deposit loan, query the
136 deferred deposit database in accordance with Section 7-23-603 to determine if the person
137 seeking the deferred deposit loan is ineligible to have a deferred deposit loan as provided in
138 Section 7-23-601 .
139 (2) If a deferred deposit lender extends a deferred deposit loan through the Internet or
140 other electronic means, the deferred deposit lender shall provide the information described in
141 Subsection (1)(a) to the person receiving the deferred deposit loan:
142 (a) in a conspicuous manner; and
143 (b) prior to the person entering into the deferred deposit loan.
144 (3) A deferred deposit lender that engages in a deferred deposit loan shall permit a
145 person receiving a deferred deposit loan to:
146 (a) make partial payments in increments of at least $5 on the principal owed on the
147 deferred deposit loan at any time prior to maturity without incurring additional charges above
148 the charges provided in the written contract; and
149 (b) rescind the deferred deposit loan without incurring any charges by returning the
150 deferred deposit loan amount to the deferred deposit lender on or before 5 p.m. the next
151 business day following the deferred deposit loan transaction.
152 (4) A deferred deposit lender that engages in a deferred deposit loan may not:
153 (a) collect additional interest on a deferred deposit loan with an outstanding principal
154 balance 10 weeks after the day on which the deferred deposit loan is executed;
155 (b) roll over a deferred deposit loan without the person receiving the deferred deposit
156 loan requesting the rollover of the deferred deposit loan;
157 (c) roll over a deferred deposit loan if the rollover requires a person to pay the amount
158 owed by the person under a deferred deposit loan in whole or in part more than 10 weeks from
159 the day on which the deferred deposit loan is first executed;
160 (d) extend a new deferred deposit loan to a person on the same business day that the
161 person makes a payment on another deferred deposit loan if the payment:
162 (i) is made at least 10 weeks after the day on which that deferred deposit loan is
163 extended; and
164 (ii) results in the principal of that deferred deposit loan being paid in full;
165 (e) threaten to use or use the criminal process in any state to collect on the deferred
166 deposit loan; [
167 (f) in connection with the collection of money owed on a deferred deposit loan,
168 communicate with a person who owes money on a deferred deposit loan at the person's place of
169 employment if the person or the person's employer communicates, orally or in writing, to the
170 deferred deposit lender that the person's employer prohibits the person from receiving these
171 communications[
172 (g) extend a deferred deposit loan to a person who is ineligible for the deferred deposit
173 loan under Section 7-23-601 .
174 (5) Notwithstanding Subsections (4)(a) and (e), a deferred deposit lender that is the
175 holder of a check used to obtain a deferred deposit loan that is dishonored may use the
176 remedies and notice procedures provided in Chapter 15, Dishonored Instruments, except that
177 the issuer, as defined in Section 7-15-1 , of the check may not be:
178 (a) asked by the holder to pay the amount described in Subsection 7-15-1 (6)(a)(iii) as a
179 condition of the holder not filing a civil action; or
180 (b) held liable for the damages described in Subsection 7-15-1 (7)(b)(vi).
181 (6) A deferred deposit lender shall keep a record of a query made under Subsection
182 (1)(g) in accordance with rules made by the department pursuant to Title 63G, Chapter 3, Utah
183 Administrative Rulemaking Act.
184 Section 3. Section 7-23-503 is amended to read:
185 7-23-503. Reporting by commissioner.
186 (1) Subject to Subsection (2), as part of the commissioner's annual report to the
187 governor and Legislature under Section 7-1-211 , the commissioner shall report to the governor
188 and Legislature on:
189 (a) the operations on an aggregate basis of deferred deposit lenders operating in the
190 state[
191 (b) the information required to be reported under Section 7-23-602 .
192 (2) In preparing the report required by Subsection (1), the commissioner:
193 (a) shall include in the report for the immediately preceding calendar year aggregate
194 information from the one or more operations statements filed under Subsection 7-23-201 (2)(e)
195 by deferred deposit lenders for that calendar year;
196 (b) shall include in the report:
197 (i) the total number of written complaints concerning issues material to deferred
198 deposit loan transactions received by the department in a calendar year from persons who have
199 entered into a deferred deposit loan with a deferred deposit lender;
200 (ii) for deferred deposit lenders who are registered with the department:
201 (A) the number of the complaints described in Subsection (2)(b)(i) that the department
202 considers resolved; and
203 (B) the number of the complaints described in Subsection (2)(b)(i) that the department
204 considers unresolved; and
205 (iii) for deferred deposit lenders who are not registered with the department:
206 (A) the number of the complaints described in Subsection (2)(b)(i) that the department
207 considers resolved; and
208 (B) the number of the complaints described in Subsection (2)(b)(i) that the department
209 considers unresolved; [
210 (c) shall include the information required under Section 7-23-602 ; and
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212 with the department that could identify a specific deferred deposit lender.
213 Section 4. Section 7-23-601 is enacted to read:
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215 7-23-601. Ineligibility.
216 (1) A person is ineligible to obtain a deferred deposit loan if the person:
217 (a) has two deferred deposit loans outstanding;
218 (b) borrows in aggregate, including the deferred deposit loan being applied for, more
219 than 25% of the person's net monthly income for all outstanding deferred deposit loans at the
220 same time; or
221 (c) has obtained 10 deferred deposit loans in the preceding 12 months.
222 (2) The department shall by rule, made in accordance with Title 63G, Chapter 3, Utah
223 Administrative Rulemaking Act, establish the method to determine 25% of a person's net
224 monthly income.
225 Section 5. Section 7-23-602 is enacted to read:
226 7-23-602. Deferred Deposit Database Program established.
227 (1) (a) There is established the Deferred Deposit Database Program to create a deferred
228 deposit database to verify whether a person seeking a deferred deposit loan is ineligible to have
229 a deferred deposit loan under Section 7-23-601 .
230 (b) The program shall be administered by the department and require the department to
231 implement by October 1, 2014, a common database with real-time access by deferred deposit
232 lenders through an Internet connection or other electronic means.
233 (c) The deferred deposit database shall be accessible to the department and a deferred
234 deposit lender to verify whether a person seeking a deferred deposit loan is ineligible for the
235 deferred deposit loan under Section 7-23-601 .
236 (d) (i) The department may contract in accordance with Title 63G, Chapter 6a, Utah
237 Procurement Code, with a third party to establish and maintain the deferred deposit database
238 for the purpose of determining whether a person seeking a deferred deposit loan is ineligible
239 for the deferred deposit loan under Section 7-23-601 .
240 (ii) If the department contracts with a third party, the commissioner shall:
241 (A) ensure that the third party selected as the deferred deposit database provider
242 operates the deferred deposit database pursuant to this part;
243 (B) consider the third party's cost of service and ability to meet the requirements of this
244 part; and
245 (C) ensure that the third party can provide accurate and secure receipt, transmission,
246 and storage of data.
247 (iii) A contract may not obligate the department to pay a third party deferred deposit
248 database provider more money than is paid in fees collected under Subsection 7-23-603 (2).
249 (iv) A third party deferred deposit database provider shall use the data collected under
250 this part only as prescribed in this part and in the contract with the department and for no other
251 purpose.
252 (e) The department shall investigate violations of and enforce this part. The
253 department may not delegate its responsibilities under this Subsection (1)(e).
254 (2) The department shall establish guidelines to be followed by the deferred deposit
255 database provider so that a deferred deposit lender can efficiently:
256 (a) report information to the deferred deposit database under Subsection (3); and
257 (b) access the deferred deposit database under Section 7-23-603 .
258 (3) The department shall by rule made in accordance with Title 63G, Chapter 3, Utah
259 Administrative Rulemaking Act, provide:
260 (a) for the reporting by a deferred deposit lender to the deferred deposit database the
261 information required to determine whether a person seeking a deferred deposit loan is ineligible
262 for the deferred deposit loan under Section 7-23-601 , including the amount of any outstanding
263 deferred deposit loan and the amount of the deferred deposit loan for which a person is
264 applying;
265 (b) that when the deferred deposit database provider receives notification that a
266 deferred deposit loan is closed, the deferred deposit database provider shall designate the
267 transaction as closed in the deferred deposit database immediately, but in no event after 11:59
268 p.m. on the day the deferred deposit database provider receives the notification;
269 (c) for the archiving and retention of information on the deferred deposit database; and
270 (d) for the deferred deposit database provider to establish and maintain a process for
271 responding to queries that due to technical difficulties the deferred deposit lender cannot access
272 through the Internet or other electronic means.
273 (4) If the department contracts with a third party provider, the department:
274 (a) may maintain access to data in the deferred deposit database, including transactions
275 archived under Subsection (3)(c) for examination, investigation, or legislative or policy review;
276 and
277 (b) may not obtain or access a Social Security number, driver license number, or other
278 state-issued identification number in the deferred deposit database except as provided in this
279 Subsection (4).
280 (5) A deferred deposit lender violates this chapter if the deferred deposit lender
281 knowingly or with reckless disregard:
282 (a) fails to report information required to be reported under Subsection (3); or
283 (b) reports inaccurate information required to be reported under Subsection (3).
284 (6) (a) Information regarding a person's transactional history provided to, maintained
285 in, or accessed from the deferred deposit database is confidential and, except as provided in
286 Subsection (6)(b):
287 (i) is not subject to discovery, subpoena, or similar compulsory process in any civil,
288 judicial, administrative, or legislative proceeding;
289 (ii) a person with lawful access to the information may not be compelled to testify with
290 regard to the information; and
291 (iii) is not subject to Title 63G, Chapter 2, Government Records Access and
292 Management Act.
293 (b) Subsections (6)(a)(i) and (ii) do not apply to a civil, judicial, or administrative
294 action brought to enforce this chapter.
295 (7) A person who knowingly engages in the following is guilty of a third degree felony:
296 (a) places false information on the deferred deposit database; or
297 (b) releases or discloses information from the deferred deposit database for a purpose
298 other than those authorized in this part or to a person who is not entitled to the information.
299 (8) A person injured by a third party deferred deposit database provider's violation of
300 this part may maintain a civil cause of action against the third party deferred deposit database
301 provider and may recover actual damages plus reasonable attorney fees and court costs.
302 (9) The state is not liable to any person for gathering, managing, or using the
303 information in the deferred deposit database.
304 (10) The department shall include in the report required under Section 7-23-503
305 aggregate information regarding the number of times in a calendar year a person is found to be
306 ineligible under Section 7-23-601 to have extended a deferred deposit loan and the grounds for
307 the ineligibility.
308 (11) (a) A deferred deposit lender shall notify the deferred deposit database provider if
309 the deferred deposit lender stops extending deferred deposit loans.
310 (b) If a deferred deposit lender stops extending deferred deposit loans, the deferred
311 deposit database provider shall designate all open transactions with that deferred deposit lender
312 closed in the deferred deposit database 60 days after the date the deferred deposit lender stops
313 extending deferred deposit loans, unless the deferred deposit lender reports to the deferred
314 deposit database provider before the expiration of the 60-day period which of its transactions
315 remain open and the specific reason each transaction remains open.
316 Section 6. Section 7-23-603 is enacted to read:
317 7-23-603. Query of deferred deposit database.
318 (1) On and after October 1, 2014, before extending a deferred deposit loan, a deferred
319 deposit lender shall query the deferred deposit database to determine if the person seeking the
320 deferred deposit loan is ineligible for a deferred deposit loan under Section 7-23-601 .
321 (2) The deferred deposit database provider may collect a fee from a deferred deposit
322 lender that is established by the department and that does not exceed $1 for a query to the
323 deferred deposit database that results in the making of a deferred deposit loan.
324 (3) In response to a query by a deferred deposit lender under Subsection (1), the
325 deferred deposit database shall state:
326 (a) whether the person seeking the deferred deposit loan is ineligible to have a deferred
327 deposit loan under Subsection 7-23-601 (1)(a) or (c); and
328 (b) the amount borrowed in aggregate for all outstanding deferred deposit loans at the
329 time of the query.
330 (4) If a deferred deposit lender accurately and promptly submits data to the deferred
331 deposit database as required under Section 7-23-602 , a deferred deposit lender may rely on the
332 deferred deposit database, and may not be held liable if the information in the deferred deposit
333 database is inaccurate.
334 (5) If, in response to a query by a deferred deposit lender, the deferred deposit database
335 states that the person is ineligible or if by extending a deferred deposit loan the aggregate
336 amount of the deferred deposit loans, including the deferred deposit loan being applied for,
337 would be more than 25% of the person's net monthly income for all outstanding deferred
338 deposit loans at the same time, the deferred deposit lender shall:
339 (a) not extend the deferred deposit loan;
340 (b) inform the person that the person is ineligible; and
341 (c) explain that the person may contact the deferred deposit database provider
342 regarding the specific details of why the person is ineligible.
Legislative Review Note
as of 1-7-14 11:05 AM