2008 Legislation
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HOUSE BILL NO. 435<br /> – Payday loan, procedures revised

HOUSE BILL NO. 435

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Bill Status



H0435...........................................................by BUSINESS
PAYDAY LOANS - Amends existing law relating to payday loans to provide that
payday lenders shall give notice that the borrower should consider
consulting with a licensed credit or debt counselor if the borrower is
having difficulty meeting financial obligations; and to provide that before
disbursing funds pursuant to a payday loan, a licensee shall give the
prospective borrower a written list setting forth the names, addresses and
phone numbers of all credit and debt counselors.

01/30    House intro - 1st rdg - to printing
01/31    Rpt prt - to Bus

Bill Text




                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 435

                                   BY BUSINESS COMMITTEE

  1                                        AN ACT
  2    RELATING TO PAYDAY LOANS; AMENDING SECTION 28-46-412, IDAHO  CODE,  TO  REVISE
  3        PAYDAY  LOAN  PROCEDURES;  AND  AMENDING SECTION 28-46-413, IDAHO CODE, TO
  4        PROVIDE CORRECT CODE REFERENCES.

  5    Be It Enacted by the Legislature of the State of Idaho:

  6        SECTION 1.  That Section 28-46-412, Idaho Code, be, and the same is hereby
  7    amended to read as follows:

  8        28-46-412.  PAYDAY LOAN PROCEDURES. (1) Each payday  loan  must  be  docu-
  9    mented  in a written agreement signed by the borrower. The loan agreement must
 10    include the name of the licensee, the loan date, the principal amount  of  the
 11    loan,  and  a  statement of the total amount of fees charged as a condition of
 12    making the loan, expressed both as a dollar amount and as an annual percentage
 13    rate (APR).
 14        (2)  The maximum principal amount of any payday loan is one thousand  dol-
 15    lars ($1000).
 16        (3)  A  licensee  may charge a fee for each payday loan. Such fee shall be
 17    deemed fully earned as of the date of the transaction and shall not be  deemed
 18    interest  for  any  purpose  of law. No other fee or charges may be charged or
 19    collected for the payday loan except as specifically set forth in this act.
 20        (4)  Each licensee shall conspicuously post in each  licensed  location  a
 21    notice  of  the  fees,  expressed  as  a dollar amount per one hundred dollars
 22    ($100), charged for payday loans.
 23        (5)  Before disbursing funds pursuant to a payday loan, a  licensee  shall
 24    provide written notice to the borrower indicating the following:
 25        (a)  A  payday  loan  is  intended  to  address short-term, not long-term,
 26        financial needs.
 27        (b)  The borrower will be required to pay additional fees  if  the  payday
 28        loan is renewed rather than paid in full when due.
 29        (c)  The borrower has the right to rescind the payday loan, at no cost, no
 30        later than the end of the next business day following the day on which the
 31        payday loan is made.
 32        (d)  The  borrower  should  consider  consulting with a licensed credit or
 33        debt counselor if the borrower  is  having  difficulty  meeting  financial
 34        obligations.
 35        (6)  Before  disbursing  funds pursuant to a payday loan, a licensee shall
 36    give the  prospective  borrower  a  written  list  setting  forth  the  names,
 37    addresses  and  phone  numbers of all the credit and debt counselors permitted
 38    under chapter 22, title 26, Idaho Code, to offer and deliver  credit  or  debt
 39    counseling  services  in  Idaho.  The  written list shall be accessible on the
 40    website of the Idaho department of finance, and at the time of delivery to the
 41    prospective borrower shall be current or dated no more than thirty  (30)  days
 42    prior to the date of disbursement of funds pursuant to a payday loan.
 43        (7)  (a) A  payday  loan may be made pursuant to a transaction whereby the

                                       2

  1        licensee:
  2             (i)   Accepts a check from a borrower who is the maker of the  check;
  3             and
  4             (ii)  Agrees  not  to  negotiate, deposit or present the check for an
  5             agreed upon period of time and pays to the maker the  amount  of  the
  6             check, less the fees permitted by this act.
  7        (b)  In such a transaction, the licensee may accept only one (1) postdated
  8        check  for  each  loan  as  security for the loan. Before the licensee may
  9        negotiate or present a check for payment, the check shall be endorsed with
 10        the actual name under which the licensee is doing business.  The  borrower
 11        shall  have  the  right  to redeem the check from the licensee at any time
 12        prior to the presentment or deposit of the check by making payment  to the
 13        licensee of the full amount of the check in cash or immediately  available
 14        funds.
 15        (78)  The amount advanced to the borrower by the licensee in a payday loan
 16    may  be  paid  to  the  borrower  in the form of cash, the licensee's business
 17    check, a money order, an electronic funds transfer to the borrower's  account,
 18    or  other  reasonable  electronic payment mechanism, provided however, that no
 19    additional fee may be charged to the borrower by a licensee to access the pro-
 20    ceeds of the payday loan.
 21        (89)  A payday loan may be repaid by the borrower in cash, by  negotiation
 22    of  the  borrower's check in a transaction pursuant to subsection (67) of this
 23    section or, with the agreement of the licensee,  a  debit  card,  a  cashier's
 24    check,  an  electronic funds transfer from the borrower's bank account, or any
 25    other reasonable electronic payment mechanism to which the parties may agree.

 26        SECTION 2.  That Section 28-46-413, Idaho Code, be, and the same is hereby
 27    amended to read as follows:

 28        28-46-413.  PAYDAY LOAN BUSINESS PRACTICES.  (1)  No  licensee  or  person
 29    related  to a licensee by common control may have outstanding at any time to a
 30    single borrower a loan or loans with an aggregate principal balance  exceeding
 31    one thousand dollars ($1,000), plus allowable fees.
 32        (2)  No payday loan shall be repaid by the proceeds of another payday loan
 33    made  by  the same licensee or a person related to the licensee by common con-
 34    trol.
 35        (3)  If the borrower's check is returned unpaid to  the  licensee  from  a
 36    payor  financial  institution,  the  licensee  shall have the right to collect
 37    charges authorized by section 28-22-105, Idaho Code, provided such charges are
 38    disclosed in the loan agreement. A licensee may not charge treble damages.  If
 39    the  borrower's  obligation is assigned to any third party for collection, the
 40    provisions of this section shall apply to such third party collector.
 41        (4)  A licensee shall not threaten a borrower with criminal  action  as  a
 42    result of any payment deficit.
 43        (5)  No  licensee  shall  engage in unfair or deceptive acts, practices or
 44    advertising in the conduct of a payday loan business.
 45        (6)  A licensee may renew a payday loan no more than three (3) consecutive
 46    times, after which the payday loan shall be repaid in full by the borrower.  A
 47    borrower  may  enter into a new loan transaction with the licensee at any time
 48    after a prior loan  to  the  borrower  is  completed.  A  loan  secured  by  a
 49    borrower's  check is completed when the check is presented or deposited by the
 50    licensee or redeemed by the borrower pursuant to section 28-46-412(67),  Idaho
 51    Code.
 52        (7)  Other  than  a  borrower's check in a transaction pursuant to section
 53    28-46-412(67), Idaho Code, a licensee shall not accept any property, title  to

                                       3

  1    property, or other evidence of ownership as collateral for a payday loan.
  2        (8)  A  licensee may conduct other business at a location where it engages
  3    in payday lending unless it carries on such other business for the purpose  of
  4    evading or violating the provisions of this act.
  5        (9)  A  borrower  may rescind the payday loan at no cost at any time prior
  6    to the close of business on the next business day following the day  on  which
  7    the  payday  loan  was  made by paying the principal amount of the loan to the
  8    licensee in cash or other immediately available funds.

Statement of Purpose / Fiscal Impact


                                               
                     STATEMENT OF PURPOSE

                          RS 17719

  This bill requires that when a payday loan is made in Idaho,
  notification of the availability of licensed consumer credit
  counseling services be made to the borrower.  It also
  requires that the Department of Finance make available the
  list of Idaho licensed credit counselors on its website.


                        FISCAL IMPACT

  None.  
 
  
  
  
  
  
  
  Contact
  Name: Rep. John Rusche 
  Phone: 332-1154
       
  
  STATEMENT OF PURPOSE/FISCAL NOTE                              H 435