House of Representatives

HB 2248

deferred presentment companies

Sponsors: Representative May, Kraft

 

DPA

S/E

Committee on Financial Institutions & Insurance

DPA

Caucus and COW

DP

Third Read

 

X

As Passed the House

 

HB 2248 contains disclosure provisions to better educate customers about the actual costs associated with deferred presentment loans.

 

Current Status

HB 2248 passed the House amended to eliminate the consumer loan education fund and assessment of deferred presentment companies, thereby removing the Proposition 108 clause.

 

History

Laws 2000, Chapter 141, contained numerous provisions relating to the regulation and licensing of deferred presentment companies.   Deferred presentment companies, often known as payday lenders, offer short-term loans to individuals who can verify an active checking account and current employment or steady source of income. The loans are usually less than $500 for a period of less than 30 days.  The customer signs a disclosure agreement then writes a post-dated personal check for the loan amount, plus the applicable fee.  At the end of the loan period, the lender presents the check for payment, as previously agreed.  A customer may rollover or extend the loan period at that time. The customer may pay a portion of the loan amount, and some lenders require the consumer to pay off the fees due prior to extending the loan.  The proposed legislation expands the consumer disclosure requirements to better educate customers about the actual costs associated with deferred presentment loans.

 

Provisions

·          Specifies that notice provided to consumers regarding deferred presentment transactions shall be written in English and Spanish.

·          Requires the Superintendent to develop the customer education brochure and distribute the material free of charge.  The Banking Department shall supply the brochure to all licensees for duplication and distribution at each deferred presentment location.

·          Stipulates that the brochures include a chart illustrating the actual costs and the annual percentage rate applied at the time of the loan.  Costs associated with extending the loan must also be provided. Information relating to credit counseling, financial services and filing complaints with the Banking Department shall be provided.

·          Requires licensees to distribute the brochure to all customers at the time of a transaction, or to other parties upon request.

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·          45th Legislature                 

·          Second Regular Session      2          March 27, 2002

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