SB 295 - This act amends the law relating to unsecured loans of $500 or less. Under current law, lenders may renew such loans upon the borrower's request. This act prohibits lenders from renewing such loans. Lenders shall not make loans to consumers who have one outstanding or within 1 week of a borrower paying a previous loan.
Under current law, the director of the Division of Finance may issue a cease and desist order when lenders fail to make a good faith effort to comply with laws relating to consumer loans. This act allows the attorney general to do the same. The Attorney General may also file an action in any circuit court to enjoin the practice; impose a civil penalty; or to obtain an order of rescission, restitution, or disgorgement.
Lenders shall make certain disclosures to consumers at loan signing, including the duration of the loan, amount and date of payments due, and amount of interest and fees to be charged through the duration of the loan.
Under current law, loans have a minimum term of 14 days and a maximum term of 31 days. Under the act, lenders shall give the borrower a minimum of 90 days for repayment and a payment shall be required every 2 weeks.
The lender's exclusive remedy against consumers who deliver checks that are not honored in relation to the loan shall be a breach of contract claim and lenders shall be barred from bringing a civil action for passing bad checks.
This act establishes a pilot program whereby the Division of Finance is charged to develop a real-time statewide compliance system for licensed payday lenders to record each payday loan transaction. The division shall deliver reports to the legislature documenting the usefulness of the system and the general compliance of licensees. The program shall be fully implemented by September 1, 2011 and sunset on August 31, 2012.
This act is similar to HB 1171 (2006), SB 975 (2006), SB 96 (2007),SB 744 (2008),HB 81 (2009), HB 150 (2009), SB 20 (2009), HB 1508 (2010), HB 2116 (2010), SB 593 (2010), SB 699 (2010), and SB 811 (2010).
CHRIS HOGERTY