Print Friendly HOUSE BILL NO. 435
– Payday loan, procedures revised
HOUSE BILL NO. 435
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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.
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]]]] 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
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 (i) Accepts a check from a borrower who is the maker of the check;
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
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-
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
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
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
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.
Name: Rep. John Rusche
STATEMENT OF PURPOSE/FISCAL NOTE H 435