ARIZONA STATE SENATE
Phoenix, Arizona
deferred
presentment companies
(NOW: deferred
presentment; fund; information)
Requires the Department of Banking to develop and produce an informational brochure about the costs and terms associated with deferred presentment loans for customers and the general public.
Deferred presentment companies are commonly known as payday lenders and they 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; usually for a period of two weeks or until the customer’s next payday. 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. At the end of the loan period, customers may rollover or extend their loan terms. Also, they may be required to pay a portion of the loan amount or to pay off the fees due prior to extending the loan.
This measure requires the Department of Banking to develop and produce a customer-oriented brochure that provides new information about payday lending. It expands the consumer disclosure requirements to include bilingual disclosures, to ensure that the brochures are given out to the customers with each transaction, and to educate customers about costs that are associated with deferred presentment loans.
There is no anticipated fiscal impact to the state general fund associated with this bill.
1. Specifies that notice provided to consumers regarding deferred presentment transactions must be written in English and Spanish.
2. Requires the Superintendent to develop the customer education brochure and distribute the material free of charge to each licensee and to the general public on request.
3. Requires licensees to distribute the brochure to all customers at the time of a transaction, or to other parties upon request.
4. Stipulates that the brochures include:
a) A chart illustrating the actual costs and the annual percentage rate applied at the time of the loan; the costs associated with extending the loan;
b) Information relating to credit counseling, financial services; and,
c) Information relating to a consumer’s ability to file a complaint with the Banking Department.
5. Provides for a general effective date.
FII 2/13/02 DPA/SE 9-0-1-0
Third Read 3/26/02 47-11-2-0
Prepared by Senate Staff
April 2, 2002