2003 Senate Bill 474 ↩

House Roll Call 647: Passed

To require providers of a "deferred deposit loan" (or "payday loan"), in which for a fee the lender accepts a post-dated check, or agrees to hold a check for a period of days prior to deposit, to be licensed and regulated by the state, with license fees and bonding requirements. The bill would cap the total aggregate amount of fees and interest which can be charged for a “payday loan” transaction at 14 percent of the amount paid out to the customer. Licensees would be required to display a warning on the written loan agreements that the loan is not intended to meet long-term needs and should be used only for short-term cash needs, and to post a notice to customers that, if calculated as an annual percentage rate, the annual interest on a payday loan would be 364 percent. (However, the bill prohibits extending the loans more that one month, or "rolling them over.") The bill contains other regulations, and would also require all payday lenders to utilize a database of all loan transactions, which would be maintained by a third-party private entity. The database would be accessible to the Office of Financial and Insurance Services (OFIS) for regulation purposes, and to payday loan providers to check whether a loan applicant has an outstanding payday loan at another lender. The bill limits the amounts and duration of loans to a single person.