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H0206aa.......................................................by STATE AFFAIRS
PAYDAY LOAN SERVICES - Adds to existing law to require licensure for persons
providing payday loan services; to set forth qualifications for licensure; to
provide for denial, suspension or revocation of a license; to require
reporting and the maintenance of records; to provide for examinations and
investigations by the administrator; to apply the Idaho Administrative
Procedure Act; and to set forth payday loan procedures and business practices.
02/07 House intro - 1st rdg - to printing
02/10 Rpt prt - to Bus
02/24 Rpt out - to Gen Ord
02/26 Rpt out amen - to engros
02/27 Rpt engros - 1st rdg - to 2nd rdg as amen
02/28 2nd rdg - to 3rd rdg as amen
03/03 3rd rdg as amen - PASSED - 66-2-2
AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins,
Crow, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth,
Eskridge, Field(18), Field(23), Garrett, Harwood, Henbest, Jaquet,
Jones, Kellogg, Lake, Langford, Langhorst, Martinez, McGeachin, Meyer,
Miller, Mitchell, Moyle, Naccarato, Nielsen, Raybould, Ridinger, Ring,
Ringo, Roberts, Robison, Rydalch, Sayler, Schaefer, Shepherd, Shirley,
Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Tilman,
Trail, Wills, Wood, Mr. Speaker
NAYS -- Kulczyk, Sali
Absent and excused -- Gagner, McKague
Floor Sponsor - Black
Title apvd - to Senate
03/04 Senate intro - 1st rdg - to Com/HuRes
03/13 Rpt out - rec d/p - to 2nd rdg
03/14 2nd rdg - to 3rd rdg
03/20 3rd rdg - PASSED - 34-0-1
AYES -- Andreason, Bailey, Bunderson, Burkett, Burtenshaw,
Calabretta(Wilson), Cameron, Compton, Darrington, Davis, Gannon, Geddes,
Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley,
McKenzie, McWilliams, Noble, Noh, Pearce, Richardson, Schroeder,
Sorensen, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Brandt
Floor Sponsor - Goedde
Title apvd - to House
03/21 To enrol
03/24 Rpt enrol - Sp signed
03/25 Pres signed
03/26 To Governor
03/31 Governor signed
Session Law Chapter 182
Effective: 07/01/03
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 206
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO PAYDAY LOANS; AMENDING CHAPTER 46, TITLE 28, IDAHO CODE, BY THE
3 ADDITION OF A NEW PART 4, CHAPTER 46, TITLE 28, IDAHO CODE, TO DEFINE
4 TERMS, TO REQUIRE LICENSURE, TO SET FORTH QUALIFICATIONS FOR LICENSURE, TO
5 PROVIDE FOR LICENSE APPLICATIONS, TO PROVIDE FOR DENIAL OF A LICENSE, TO
6 SET FORTH PROVISIONS RELATING TO THE TRANSFERABILITY OF LICENSES AND
7 CHANGE IN CONTROL OF LICENSEES, TO PROVIDE FOR SUSPENSION OR REVOCATION OF
8 A LICENSE, TO REQUIRE REPORTS, TO PROVIDE FOR THE MAINTENANCE OF RECORDS
9 AND TO REQUIRE ANNUAL REPORTS, TO PROVIDE FOR EXAMINATIONS AND INVESTIGA-
10 TIONS BY THE ADMINISTRATOR, TO APPLY THE IDAHO ADMINISTRATIVE PROCEDURE
11 ACT AND TO SET FORTH PAYDAY LOAN PROCEDURES AND BUSINESS PRACTICES.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Chapter 46, Title 28, Idaho Code, be, and the same is
14 hereby amended by the addition thereto of a NEW PART, to be known and desig-
15 nated as Part 4, Chapter 46, Title 28, Idaho Code, and to read as follows:
16 PART 4.
17 PAYDAY LOANS
18 28-46-401. DEFINITIONS. (1) As used in this act, unless the context
19 otherwise requires, "payday loan" means a transaction pursuant to a written
20 agreement between a creditor and the maker of a check whereby the creditor:
21 (a) Accepts a check from the maker;
22 (b) Agrees to hold the check for a period of time prior to negotiation,
23 deposit or presentment; and
24 (c) Pays to the maker of the check the amount of the check, less the fee
25 permitted by this chapter.
26 (2) Payday loans are regulated consumer credit transactions, and all pro-
27 visions of the Idaho credit code relating to regulated loans apply to payday
28 loans and to persons engaged in the business of payday loans except for part
29 3, chapter 46, title 28, Idaho Code.
30 (3) As used in this section, "check" refers to a check or the electronic
31 equivalent of a check.
32 28-46-402. LICENSE REQUIRED. No person shall engage in the business of
33 payday loans, offer or make a payday loan, or arrange a payday loan for a
34 third party lender in a payday loan transaction without having first obtained
35 a license under this chapter. A separate license shall be required for each
36 location from which such business is conducted.
37 28-46-403. QUALIFICATIONS FOR PAYDAY LOAN LICENSE. (1) To qualify for a
38 license, an applicant shall satisfy the following requirements:
39 (a) The applicant shall have and maintain liquid assets of at least
40 twenty-five thousand dollars ($25,000) per licensed location determined in
2
1 accordance with generally accepted accounting principles; and
2 (b) The financial responsibility, financial condition, business experi-
3 ence, character and general fitness of the applicant shall reasonably war-
4 rant the administrator's belief that the applicant's business will be con-
5 ducted lawfully and fairly. In determining whether this qualification has
6 been met, and for the purpose of investigating compliance with this act,
7 the administrator may review and approve:
8 (i) The relevant business records and the capital adequacy of the
9 applicant;
10 (ii) The competence, experience, integrity and financial ability of
11 any applicant, and if the applicant is an entity, of any person who
12 is a member, partner, director, senior officer or twenty-five percent
13 (25%) or more equity owner of the applicant; and
14 (iii) Any record of conviction, on the part of the applicant, or any
15 person referred to in subparagraph (ii) of this paragraph, of any
16 criminal activity; any fraud or other act of personal dishonesty; any
17 act, omission or practice which constitutes a breach of a fiduciary
18 duty; or any suspension, revocation, removal or administrative action
19 by any agency or department of the United States or any state, from
20 participation in the conduct of any business.
21 (2) The requirements set forth in subsection (1) of this section are con-
22 tinuing in nature and may be reviewed periodically by the administrator.
23 28-46-404. APPLICATION FOR PAYDAY LOAN LICENSE. (1) Each application for
24 a license shall be in writing and under oath to the administrator, in a form
25 prescribed by the administrator, and shall include at least the following:
26 (a) The legal name, residence and business address of the applicant and,
27 if the applicant is an entity, of every member, partner, director, senior
28 officer or twenty-five percent (25%) or more equity owner of the appli-
29 cant;
30 (b) The location at which the principal place of business of the appli-
31 cant is located; and
32 (c) Other data and information the administrator may require with respect
33 to the applicant, and if the applicant is an entity, such data and infor-
34 mation of its members, partners, directors, senior officers, or twenty-
35 five percent (25%) or more equity owners of the applicant.
36 (2) Each application for a license shall be accompanied by an application
37 and investigation fee in an amount prescribed by the administrator. Such fee
38 shall not be subject to refund.
39 (3) The fee set forth in subsection (2) of this section shall be required
40 for each location for which an application is submitted.
41 (4) Within sixty (60) days of the filing of an application in a form pre-
42 scribed by the administrator, accompanied by the fee required in subsection
43 (2) of this section, the administrator shall investigate to ascertain whether
44 the qualifications prescribed by subsection (1) of section 28-46-403, Idaho
45 Code, have been satisfied. If the administrator finds that the qualifications
46 have been satisfied and approves the documents, the administrator shall issue
47 to the applicant a license to engage in the payday loan business.
48 (5) A license issued pursuant to this section shall remain in force and
49 effect through the remainder of the calendar year after its date of issuance
50 unless earlier surrendered, suspended or revoked pursuant to this act.
51 28-46-405. DENIAL OF LICENSE. (1) If the administrator determines that an
52 applicant is not qualified to receive a license, the administrator shall
53 notify the applicant in writing that the application has been denied, and
3
1 shall state the basis for denial.
2 (2) If the administrator denies an application, or if the administrator
3 fails to act on an application within sixty (60) days after the filing of a
4 properly completed application, the applicant may make written demand to the
5 administrator for a hearing on the question of whether the license should be
6 granted. Written demand for a hearing may not be made more than fifteen (15)
7 days after the administrator has mailed a writing to the applicant notifying
8 him that the application has been denied and stating the basis for denial. In
9 the event of a hearing, the administrator shall reconsider the application
10 and, after the hearing, issue a written order granting or denying the applica-
11 tion.
12 28-46-406. NONTRANSFERABILITY -- CHANGE IN CONTROL. (1) Other than the
13 transfer of a license to a new location as set forth in subsection (3) of this
14 section, a license issued pursuant to this chapter is not transferable or
15 assignable.
16 (2) The prior written approval of the administrator is required for the
17 continued operation of a payday loan business whenever a change in control of
18 a licensee is proposed. Control in the case of an entity means direct or indi-
19 rect ownership, or the right to vote or otherwise control, twenty-five percent
20 (25%) or more of the governance interests of the entity, or the ability of any
21 person to elect a majority of the directors. The administrator may require
22 information deemed necessary to determine whether a new application is
23 required. Costs incurred by the administrator in investigating a change of
24 control request shall be paid by the licensee requesting such approval.
25 (3) A licensee shall notify the administrator in writing at least fifteen
26 (15) days before any proposed changes in the licensee's business location or
27 name.
28 28-46-407. SUSPENSION OR REVOCATION OF LICENSE. (1) The administrator
29 may, after notice and hearing, suspend or revoke any license if the adminis-
30 trator finds that the licensee:
31 (a) Has knowingly or through the lack of due care failed to pay the
32 annual fee imposed by this act, or any examination fee imposed by the
33 administrator under the authority of this act;
34 (b) Has committed any fraud, engaged in any dishonest activities or made
35 any misrepresentations;
36 (c) Has violated any provision of this act or any rule or order lawfully
37 made pursuant to this act or has violated any other law in the course of
38 the licensee's dealing as a licensee;
39 (d) Has made a materially false statement in the application for the
40 license or failed to give a true reply to a question in the application;
41 or
42 (e) Has demonstrated incompetence or untrustworthiness to act as a licen-
43 see.
44 (2) If the reason for revocation or suspension of a licensee's license at
45 any one (1) location is of general application to all locations operated by a
46 licensee, the administrator may revoke or suspend all licenses issued to a
47 licensee.
48 28-46-408. REPORTS TO ADMINISTRATOR. Within fifteen (15) days of the
49 occurrence of any of the events listed below, a licensee shall file a written
50 report with the administrator describing such events and their expected impact
51 on the activities of the licensee in the state:
52 (1) The filing for bankruptcy or reorganization by the licensee;
4
1 (2) The institution of revocation or suspension proceedings against the
2 licensee by any state or governmental authority;
3 (3) Any felony indictment of the licensee and, if the licensee is an
4 entity, of any of its members, partners, directors, senior officers or twenty-
5 five percent (25%) or more equity owners;
6 (4) Any felony conviction of the licensee and, if the licensee is an
7 entity, of any of its members, partners, directors, senior officers or twenty-
8 five percent (25%) or more equity owners; and
9 (5) Such other events as the administrator may determine and identify by
10 rule.
11 28-46-409. RECORDS -- ANNUAL REPORTS. (1) Every licensee shall maintain
12 records in conformity with generally accepted accounting principles and prac-
13 tices in a manner that will enable the administrator to determine whether the
14 licensee is complying with the provisions of this act. The recordkeeping sys-
15 tem of a licensee shall be sufficient if he makes the required information
16 reasonably available. The records need not be kept in the place of business
17 where payday loans are made if the administrator is given free access to the
18 records wherever located. The records pertaining to any loan need not be pre-
19 served for more than two (2) years after the due date of the loan.
20 (2) On or before May 31 of each year, every licensee shall file with the
21 administrator a composite annual report for the prior calendar year in the
22 form prescribed by the administrator relating to all payday loans made by him.
23 Information contained in annual reports shall be subject to disclosure accord-
24 ing to chapter 3, title 9, Idaho Code, and may be published only in composite
25 form.
26 28-46-410. EXAMINATIONS AND INVESTIGATIONS. (1) The administrator shall
27 examine periodically, at intervals he deems appropriate, the loans and busi-
28 ness records of every payday lender. In addition, for the purpose of discover-
29 ing violations of this act or securing information lawfully required, the
30 administrator may at any time investigate the loans, business and records of
31 any payday lender. For these purposes, the administrator shall have free and
32 reasonable access to the offices, places of business, and records of the
33 lender. The administrator, for purposes of examination of licensees herein,
34 shall be paid the cost of examination by the licensee within thirty (30) days
35 of demand for payment. The administrator shall, on July 1 of each year, fix
36 such per diem examination cost.
37 (2) If the lender's records are located outside this state, the lender,
38 at his option, shall make them available to the administrator at a convenient
39 location within this state or pay the reasonable and necessary expenses for
40 the administrator or his representative to examine them at the place where
41 they are maintained. The administrator may designate representatives, includ-
42 ing comparable officials of the state in which the records are located, to
43 inspect them on his behalf.
44 (3) For the purposes of this section, the administrator may administer
45 oaths or affirmations and, upon his own motion or upon request of any party,
46 may subpoena witnesses, compel the attendance of witnesses, adduce evidence
47 and require the production of any matter which is relevant to the investiga-
48 tion, including the existence, description, nature, custody, condition and
49 location of any books, documents or other tangible items and the identity and
50 location of persons having knowledge of relevant facts, or any other matter
51 reasonably calculated to lead to the discovery of admissible evidence.
52 (4) Upon failure without lawful excuse to obey a subpoena or to give tes-
53 timony, and upon reasonable notice to all persons affected thereby, the admin-
5
1 istrator may apply to the district court for an order compelling compliance.
2 28-46-411. APPLICATION OF ADMINISTRATIVE PROCEDURE ACT. Except as other-
3 wise provided, the Idaho administrative procedure act, as set forth in chapter
4 52, title 67, Idaho Code, applies to and governs all administrative action
5 taken by the administrator pursuant to this act.
6 28-46-412. PAYDAY LOAN PROCEDURES. (1) Each payday loan must be docu-
7 mented in a written agreement signed by the borrower. The loan agreement must
8 include the name of the licensee, the loan date, the principal amount of the
9 loan, and a statement of the total amount of fees charged as a condition of
10 making the loan, expressed both as a dollar amount and as an annual percentage
11 rate (APR).
12 (2) The maximum principal amount of any payday loan is one thousand dol-
13 lars ($1000).
14 (3) A licensee may charge a fee for each payday loan. Such fee shall be
15 deemed fully earned as of the date of the transaction and shall not be deemed
16 interest for any purpose of law. No other fee or charges may be charged or
17 collected for the payday loan except as specifically set forth in this act.
18 (4) Each licensee shall conspicuously post in each licensed location a
19 notice of the fees, expressed as a dollar amount per one hundred dollars
20 ($100), charged for payday loans.
21 (5) Before disbursing funds pursuant to a payday loan, a licensee shall
22 provide written notice to the borrower indicating the following:
23 (a) A payday loan is intended to address short-term, not long-term,
24 financial needs.
25 (b) The borrower will be required to pay additional fees if the payday
26 loan is renewed rather than paid in full when due.
27 (c) The borrower has the right to rescind the payday loan, at no cost, no
28 later than the end of the next business day following the day on which the
29 payday loan is made.
30 (6) (a) A payday loan may be made pursuant to a transaction whereby the
31 licensee:
32 (i) Accepts a check from a borrower who is the maker of the check;
33 and
34 (ii) Agrees not to negotiate, deposit or present the check for an
35 agreed upon period of time and pays to the maker the amount of the
36 check, less the fees permitted by this act.
37 (b) In such a transaction, the licensee may accept only one (1) postdated
38 check for each loan as security for the loan. Before the licensee may
39 negotiate or present a check for payment, the check shall be endorsed with
40 the actual name under which the licensee is doing business. The borrower
41 shall have the right to redeem the check from the licensee at any time
42 prior to the presentment or deposit of the check by making payment to the
43 licensee of the full amount of the check in cash or immediately available
44 funds.
45 (7) The amount advanced to the borrower by the licensee in a payday loan
46 may be paid to the borrower in the form of cash, the licensee's business
47 check, a money order, an electronic funds transfer to the borrower's account,
48 or other reasonable electronic payment mechanism, provided however, that no
49 additional fee may be charged to the borrower by a licensee to access the pro-
50 ceeds of the payday loan.
51 (8) A payday loan may be repaid by the borrower in cash, by negotiation
52 of the borrower's check in a transaction pursuant to subsection (6) of this
53 section or, with the agreement of the licensee, a debit card, a cashier's
6
1 check, an electronic funds transfer from the borrower's bank account, or any
2 other reasonable electronic payment mechanism to which the parties may agree.
3 28-46-413. PAYDAY LOAN BUSINESS PRACTICES. (1) No licensee or person
4 related to a licensee by common control may have outstanding at any time to a
5 single borrower a loan or loans with an aggregate principal balance exceeding
6 one thousand dollars ($1,000), plus allowable fees.
7 (2) No payday loan shall be repaid by the proceeds of another payday loan
8 made by the same licensee or a person related to the licensee by common con-
9 trol.
10 (3) If the borrower's check is returned unpaid to the licensee from a
11 payor financial institution, the licensee shall have the right to collect
12 charges authorized by section 28-22-105, Idaho Code, provided such charges are
13 disclosed in the loan agreement. A licensee may not charge treble damages. If
14 the borrower's obligation is assigned to any third party for collection, the
15 provisions of this section shall apply to such third party collector.
16 (4) A licensee shall not threaten a borrower with criminal action as a
17 result of any payment deficit.
18 (5) No licensee shall engage in unfair or deceptive acts, practices or
19 advertising in the conduct of a payday loan business.
20 (6) A licensee may renew a payday loan no more than three (3) consecutive
21 times, after which the payday loan shall be repaid in full by the borrower. A
22 borrower may enter into a new loan transaction with the licensee at any time
23 after a prior loan to the borrower is completed. A loan secured by a
24 borrower's check is completed when the check is presented or deposited by the
25 licensee or redeemed by the borrower pursuant to section 28-46-412(6), Idaho
26 Code.
27 (7) Other than a borrower's check in a transaction pursuant to section
28 28-46-412(6), Idaho Code, a licensee shall not accept any property, title to
29 property, or other evidence of ownership as collateral for a payday loan.
30 (8) A licensee may conduct other business at a location where it engages
31 in payday lending unless it carries on such other business for the purpose of
32 evading or violating the provisions of this act.
33 (9) A borrower may rescind the payday loan at no cost at any time prior
34 to the close of business on the next business day following the day on which
35 the payday loan was made by paying the principal amount of the loan to the
36 licensee in cash or other immediately available funds.
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
Moved by Douglas
Seconded by Deal
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 206
1 AMENDMENTS TO SECTION 1
2 On page 1 of the printed bill, in line 39, delete "and maintain"; delete
3 line 40 and insert: "thirty thousand dollars ($30,000) determined in"; on page
4 2, in line 1, following "principles" insert: ", provided that applicants seek-
5 ing to engage in the business of payday loans at more than one (1) location in
6 the state shall have liquid assets of at least an additional five thousand
7 dollars ($5,000) for each additional location in the state up to a maximum of
8 seventy-five thousand dollars ($75,000) for all locations in the state".
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 206, As Amended
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO PAYDAY LOANS; AMENDING CHAPTER 46, TITLE 28, IDAHO CODE, BY THE
3 ADDITION OF A NEW PART 4, CHAPTER 46, TITLE 28, IDAHO CODE, TO DEFINE
4 TERMS, TO REQUIRE LICENSURE, TO SET FORTH QUALIFICATIONS FOR LICENSURE, TO
5 PROVIDE FOR LICENSE APPLICATIONS, TO PROVIDE FOR DENIAL OF A LICENSE, TO
6 SET FORTH PROVISIONS RELATING TO THE TRANSFERABILITY OF LICENSES AND
7 CHANGE IN CONTROL OF LICENSEES, TO PROVIDE FOR SUSPENSION OR REVOCATION OF
8 A LICENSE, TO REQUIRE REPORTS, TO PROVIDE FOR THE MAINTENANCE OF RECORDS
9 AND TO REQUIRE ANNUAL REPORTS, TO PROVIDE FOR EXAMINATIONS AND INVESTIGA-
10 TIONS BY THE ADMINISTRATOR, TO APPLY THE IDAHO ADMINISTRATIVE PROCEDURE
11 ACT AND TO SET FORTH PAYDAY LOAN PROCEDURES AND BUSINESS PRACTICES.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Chapter 46, Title 28, Idaho Code, be, and the same is
14 hereby amended by the addition thereto of a NEW PART, to be known and desig-
15 nated as Part 4, Chapter 46, Title 28, Idaho Code, and to read as follows:
16 PART 4.
17 PAYDAY LOANS
18 28-46-401. DEFINITIONS. (1) As used in this act, unless the context
19 otherwise requires, "payday loan" means a transaction pursuant to a written
20 agreement between a creditor and the maker of a check whereby the creditor:
21 (a) Accepts a check from the maker;
22 (b) Agrees to hold the check for a period of time prior to negotiation,
23 deposit or presentment; and
24 (c) Pays to the maker of the check the amount of the check, less the fee
25 permitted by this chapter.
26 (2) Payday loans are regulated consumer credit transactions, and all pro-
27 visions of the Idaho credit code relating to regulated loans apply to payday
28 loans and to persons engaged in the business of payday loans except for part
29 3, chapter 46, title 28, Idaho Code.
30 (3) As used in this section, "check" refers to a check or the electronic
31 equivalent of a check.
32 28-46-402. LICENSE REQUIRED. No person shall engage in the business of
33 payday loans, offer or make a payday loan, or arrange a payday loan for a
34 third party lender in a payday loan transaction without having first obtained
35 a license under this chapter. A separate license shall be required for each
36 location from which such business is conducted.
37 28-46-403. QUALIFICATIONS FOR PAYDAY LOAN LICENSE. (1) To qualify for a
38 license, an applicant shall satisfy the following requirements:
39 (a) The applicant shall have liquid assets of at least thirty thousand
40 dollars ($30,000) determined in accordance with generally accepted
2
1 accounting principles, provided that applicants seeking to engage in the
2 business of payday loans at more than one (1) location in the state shall
3 have liquid assets of at least an additional five thousand dollars
4 ($5,000) for each additional location in the state up to a maximum of sev-
5 enty-five thousand dollars ($75,000) for all locations in the state; and
6 (b) The financial responsibility, financial condition, business experi-
7 ence, character and general fitness of the applicant shall reasonably war-
8 rant the administrator's belief that the applicant's business will be con-
9 ducted lawfully and fairly. In determining whether this qualification has
10 been met, and for the purpose of investigating compliance with this act,
11 the administrator may review and approve:
12 (i) The relevant business records and the capital adequacy of the
13 applicant;
14 (ii) The competence, experience, integrity and financial ability of
15 any applicant, and if the applicant is an entity, of any person who
16 is a member, partner, director, senior officer or twenty-five percent
17 (25%) or more equity owner of the applicant; and
18 (iii) Any record of conviction, on the part of the applicant, or any
19 person referred to in subparagraph (ii) of this paragraph, of any
20 criminal activity; any fraud or other act of personal dishonesty; any
21 act, omission or practice which constitutes a breach of a fiduciary
22 duty; or any suspension, revocation, removal or administrative action
23 by any agency or department of the United States or any state, from
24 participation in the conduct of any business.
25 (2) The requirements set forth in subsection (1) of this section are con-
26 tinuing in nature and may be reviewed periodically by the administrator.
27 28-46-404. APPLICATION FOR PAYDAY LOAN LICENSE. (1) Each application for
28 a license shall be in writing and under oath to the administrator, in a form
29 prescribed by the administrator, and shall include at least the following:
30 (a) The legal name, residence and business address of the applicant and,
31 if the applicant is an entity, of every member, partner, director, senior
32 officer or twenty-five percent (25%) or more equity owner of the appli-
33 cant;
34 (b) The location at which the principal place of business of the appli-
35 cant is located; and
36 (c) Other data and information the administrator may require with respect
37 to the applicant, and if the applicant is an entity, such data and infor-
38 mation of its members, partners, directors, senior officers, or twenty-
39 five percent (25%) or more equity owners of the applicant.
40 (2) Each application for a license shall be accompanied by an application
41 and investigation fee in an amount prescribed by the administrator. Such fee
42 shall not be subject to refund.
43 (3) The fee set forth in subsection (2) of this section shall be required
44 for each location for which an application is submitted.
45 (4) Within sixty (60) days of the filing of an application in a form pre-
46 scribed by the administrator, accompanied by the fee required in subsection
47 (2) of this section, the administrator shall investigate to ascertain whether
48 the qualifications prescribed by subsection (1) of section 28-46-403, Idaho
49 Code, have been satisfied. If the administrator finds that the qualifications
50 have been satisfied and approves the documents, the administrator shall issue
51 to the applicant a license to engage in the payday loan business.
52 (5) A license issued pursuant to this section shall remain in force and
53 effect through the remainder of the calendar year after its date of issuance
54 unless earlier surrendered, suspended or revoked pursuant to this act.
3
1 28-46-405. DENIAL OF LICENSE. (1) If the administrator determines that an
2 applicant is not qualified to receive a license, the administrator shall
3 notify the applicant in writing that the application has been denied, and
4 shall state the basis for denial.
5 (2) If the administrator denies an application, or if the administrator
6 fails to act on an application within sixty (60) days after the filing of a
7 properly completed application, the applicant may make written demand to the
8 administrator for a hearing on the question of whether the license should be
9 granted. Written demand for a hearing may not be made more than fifteen (15)
10 days after the administrator has mailed a writing to the applicant notifying
11 him that the application has been denied and stating the basis for denial. In
12 the event of a hearing, the administrator shall reconsider the application
13 and, after the hearing, issue a written order granting or denying the applica-
14 tion.
15 28-46-406. NONTRANSFERABILITY -- CHANGE IN CONTROL. (1) Other than the
16 transfer of a license to a new location as set forth in subsection (3) of this
17 section, a license issued pursuant to this chapter is not transferable or
18 assignable.
19 (2) The prior written approval of the administrator is required for the
20 continued operation of a payday loan business whenever a change in control of
21 a licensee is proposed. Control in the case of an entity means direct or indi-
22 rect ownership, or the right to vote or otherwise control, twenty-five percent
23 (25%) or more of the governance interests of the entity, or the ability of any
24 person to elect a majority of the directors. The administrator may require
25 information deemed necessary to determine whether a new application is
26 required. Costs incurred by the administrator in investigating a change of
27 control request shall be paid by the licensee requesting such approval.
28 (3) A licensee shall notify the administrator in writing at least fifteen
29 (15) days before any proposed changes in the licensee's business location or
30 name.
31 28-46-407. SUSPENSION OR REVOCATION OF LICENSE. (1) The administrator
32 may, after notice and hearing, suspend or revoke any license if the adminis-
33 trator finds that the licensee:
34 (a) Has knowingly or through the lack of due care failed to pay the
35 annual fee imposed by this act, or any examination fee imposed by the
36 administrator under the authority of this act;
37 (b) Has committed any fraud, engaged in any dishonest activities or made
38 any misrepresentations;
39 (c) Has violated any provision of this act or any rule or order lawfully
40 made pursuant to this act or has violated any other law in the course of
41 the licensee's dealing as a licensee;
42 (d) Has made a materially false statement in the application for the
43 license or failed to give a true reply to a question in the application;
44 or
45 (e) Has demonstrated incompetence or untrustworthiness to act as a licen-
46 see.
47 (2) If the reason for revocation or suspension of a licensee's license at
48 any one (1) location is of general application to all locations operated by a
49 licensee, the administrator may revoke or suspend all licenses issued to a
50 licensee.
51 28-46-408. REPORTS TO ADMINISTRATOR. Within fifteen (15) days of the
52 occurrence of any of the events listed below, a licensee shall file a written
4
1 report with the administrator describing such events and their expected impact
2 on the activities of the licensee in the state:
3 (1) The filing for bankruptcy or reorganization by the licensee;
4 (2) The institution of revocation or suspension proceedings against the
5 licensee by any state or governmental authority;
6 (3) Any felony indictment of the licensee and, if the licensee is an
7 entity, of any of its members, partners, directors, senior officers or twenty-
8 five percent (25%) or more equity owners;
9 (4) Any felony conviction of the licensee and, if the licensee is an
10 entity, of any of its members, partners, directors, senior officers or twenty-
11 five percent (25%) or more equity owners; and
12 (5) Such other events as the administrator may determine and identify by
13 rule.
14 28-46-409. RECORDS -- ANNUAL REPORTS. (1) Every licensee shall maintain
15 records in conformity with generally accepted accounting principles and prac-
16 tices in a manner that will enable the administrator to determine whether the
17 licensee is complying with the provisions of this act. The recordkeeping sys-
18 tem of a licensee shall be sufficient if he makes the required information
19 reasonably available. The records need not be kept in the place of business
20 where payday loans are made if the administrator is given free access to the
21 records wherever located. The records pertaining to any loan need not be pre-
22 served for more than two (2) years after the due date of the loan.
23 (2) On or before May 31 of each year, every licensee shall file with the
24 administrator a composite annual report for the prior calendar year in the
25 form prescribed by the administrator relating to all payday loans made by him.
26 Information contained in annual reports shall be subject to disclosure accord-
27 ing to chapter 3, title 9, Idaho Code, and may be published only in composite
28 form.
29 28-46-410. EXAMINATIONS AND INVESTIGATIONS. (1) The administrator shall
30 examine periodically, at intervals he deems appropriate, the loans and busi-
31 ness records of every payday lender. In addition, for the purpose of discover-
32 ing violations of this act or securing information lawfully required, the
33 administrator may at any time investigate the loans, business and records of
34 any payday lender. For these purposes, the administrator shall have free and
35 reasonable access to the offices, places of business, and records of the
36 lender. The administrator, for purposes of examination of licensees herein,
37 shall be paid the cost of examination by the licensee within thirty (30) days
38 of demand for payment. The administrator shall, on July 1 of each year, fix
39 such per diem examination cost.
40 (2) If the lender's records are located outside this state, the lender,
41 at his option, shall make them available to the administrator at a convenient
42 location within this state or pay the reasonable and necessary expenses for
43 the administrator or his representative to examine them at the place where
44 they are maintained. The administrator may designate representatives, includ-
45 ing comparable officials of the state in which the records are located, to
46 inspect them on his behalf.
47 (3) For the purposes of this section, the administrator may administer
48 oaths or affirmations and, upon his own motion or upon request of any party,
49 may subpoena witnesses, compel the attendance of witnesses, adduce evidence
50 and require the production of any matter which is relevant to the investiga-
51 tion, including the existence, description, nature, custody, condition and
52 location of any books, documents or other tangible items and the identity and
53 location of persons having knowledge of relevant facts, or any other matter
5
1 reasonably calculated to lead to the discovery of admissible evidence.
2 (4) Upon failure without lawful excuse to obey a subpoena or to give tes-
3 timony, and upon reasonable notice to all persons affected thereby, the admin-
4 istrator may apply to the district court for an order compelling compliance.
5 28-46-411. APPLICATION OF ADMINISTRATIVE PROCEDURE ACT. Except as other-
6 wise provided, the Idaho administrative procedure act, as set forth in chapter
7 52, title 67, Idaho Code, applies to and governs all administrative action
8 taken by the administrator pursuant to this act.
9 28-46-412. PAYDAY LOAN PROCEDURES. (1) Each payday loan must be docu-
10 mented in a written agreement signed by the borrower. The loan agreement must
11 include the name of the licensee, the loan date, the principal amount of the
12 loan, and a statement of the total amount of fees charged as a condition of
13 making the loan, expressed both as a dollar amount and as an annual percentage
14 rate (APR).
15 (2) The maximum principal amount of any payday loan is one thousand dol-
16 lars ($1000).
17 (3) A licensee may charge a fee for each payday loan. Such fee shall be
18 deemed fully earned as of the date of the transaction and shall not be deemed
19 interest for any purpose of law. No other fee or charges may be charged or
20 collected for the payday loan except as specifically set forth in this act.
21 (4) Each licensee shall conspicuously post in each licensed location a
22 notice of the fees, expressed as a dollar amount per one hundred dollars
23 ($100), charged for payday loans.
24 (5) Before disbursing funds pursuant to a payday loan, a licensee shall
25 provide written notice to the borrower indicating the following:
26 (a) A payday loan is intended to address short-term, not long-term,
27 financial needs.
28 (b) The borrower will be required to pay additional fees if the payday
29 loan is renewed rather than paid in full when due.
30 (c) The borrower has the right to rescind the payday loan, at no cost, no
31 later than the end of the next business day following the day on which the
32 payday loan is made.
33 (6) (a) A payday loan may be made pursuant to a transaction whereby the
34 licensee:
35 (i) Accepts a check from a borrower who is the maker of the check;
36 and
37 (ii) Agrees not to negotiate, deposit or present the check for an
38 agreed upon period of time and pays to the maker the amount of the
39 check, less the fees permitted by this act.
40 (b) In such a transaction, the licensee may accept only one (1) postdated
41 check for each loan as security for the loan. Before the licensee may
42 negotiate or present a check for payment, the check shall be endorsed with
43 the actual name under which the licensee is doing business. The borrower
44 shall have the right to redeem the check from the licensee at any time
45 prior to the presentment or deposit of the check by making payment to the
46 licensee of the full amount of the check in cash or immediately available
47 funds.
48 (7) The amount advanced to the borrower by the licensee in a payday loan
49 may be paid to the borrower in the form of cash, the licensee's business
50 check, a money order, an electronic funds transfer to the borrower's account,
51 or other reasonable electronic payment mechanism, provided however, that no
52 additional fee may be charged to the borrower by a licensee to access the pro-
53 ceeds of the payday loan.
6
1 (8) A payday loan may be repaid by the borrower in cash, by negotiation
2 of the borrower's check in a transaction pursuant to subsection (6) of this
3 section or, with the agreement of the licensee, a debit card, a cashier's
4 check, an electronic funds transfer from the borrower's bank account, or any
5 other reasonable electronic payment mechanism to which the parties may agree.
6 28-46-413. PAYDAY LOAN BUSINESS PRACTICES. (1) No licensee or person
7 related to a licensee by common control may have outstanding at any time to a
8 single borrower a loan or loans with an aggregate principal balance exceeding
9 one thousand dollars ($1,000), plus allowable fees.
10 (2) No payday loan shall be repaid by the proceeds of another payday loan
11 made by the same licensee or a person related to the licensee by common con-
12 trol.
13 (3) If the borrower's check is returned unpaid to the licensee from a
14 payor financial institution, the licensee shall have the right to collect
15 charges authorized by section 28-22-105, Idaho Code, provided such charges are
16 disclosed in the loan agreement. A licensee may not charge treble damages. If
17 the borrower's obligation is assigned to any third party for collection, the
18 provisions of this section shall apply to such third party collector.
19 (4) A licensee shall not threaten a borrower with criminal action as a
20 result of any payment deficit.
21 (5) No licensee shall engage in unfair or deceptive acts, practices or
22 advertising in the conduct of a payday loan business.
23 (6) A licensee may renew a payday loan no more than three (3) consecutive
24 times, after which the payday loan shall be repaid in full by the borrower. A
25 borrower may enter into a new loan transaction with the licensee at any time
26 after a prior loan to the borrower is completed. A loan secured by a
27 borrower's check is completed when the check is presented or deposited by the
28 licensee or redeemed by the borrower pursuant to section 28-46-412(6), Idaho
29 Code.
30 (7) Other than a borrower's check in a transaction pursuant to section
31 28-46-412(6), Idaho Code, a licensee shall not accept any property, title to
32 property, or other evidence of ownership as collateral for a payday loan.
33 (8) A licensee may conduct other business at a location where it engages
34 in payday lending unless it carries on such other business for the purpose of
35 evading or violating the provisions of this act.
36 (9) A borrower may rescind the payday loan at no cost at any time prior
37 to the close of business on the next business day following the day on which
38 the payday loan was made by paying the principal amount of the loan to the
39 licensee in cash or other immediately available funds.
STATEMENT OF PURPOSE
RS 12931
The purpose of the proposed payday loan legislation is to define
and codify the preferred payday lending business practices in the
State of Idaho. The act gives the Department of Finance
additional licensing and regulatory authority over payday
lenders. It gives borrowers the right to rescind a loan at no
cost prior to the end of the following business day. The act
prohibits onerous collection practices by both the licensee and
its third party collector and prohibits the acceptance of
collateral other than the post-dated check. Finally, the act
defines the additional disclosures that must be made to more
clearly describe the payday loan and its uses for borrowers.
FISCAL IMPACT
None
Contact
Name: Patrick J. Sullivan
Phone: 208/344-9514
STATEMENT OF PURPOSE/FISCAL NOTE H 206