HB452INTRODUCED
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54TK66-1
By Representatives Ensler, Garrett
RFD: Financial Services
First Read: 09-May-23
2023 Regular Session
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6 54TK66-1 04/26/2023 PMG (L)tgw 2023-1773
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SYNOPSIS:
Under existing law, the term of a deferred
presentment transaction is between 10 and 31 calendar
days.
This bill would require the term of a deferred
presentment transaction to be a minimum of 30 calendar
days.
A BILL
TO BE ENTITLED
AN ACT
Relating to deferred presentment transactions; to amend
Section 5-18A-13, Code of Alabama 1975, to require the term of
a deferred presentment transaction to be a minimum of 30
calendar days.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 5-18A-13, Code of Alabama 1975, is
amended to read as follows:
"§5-18A-13
(a) A licensee may not knowingly enter into a deferred
presentment transaction with a customer that has outstanding
deferred presentment transactions from any lender at any
location that exceeds five hundred dollars ($500) for the term
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of the loan.
(b) Before a licensee shall present for payment or
deposit a check or debit authorization accepted by the
licensee, the check shall be endorsed with the actual name
under which the licensee is doing business.
(c) Any agreement for a deferred presentment
transaction shall be in writing and signed by the checking
account holder. The customer in a deferred presentment
contract shall have the right to redeem the check or debit
authorization from the licensee before the agreed date of
deposit upon payment to the licensee of the amount of the
contract. A licensee shall not defer presentment of any
personal check or debit authorization for less than 10 days
nor more than 31 a minimum of 30 calendar days after the date
of the contract.
(d) The licensee shall notify the district attorney for
the circuit in which the check was received within five
business days after being advised by the payer financial
institution that a check or draft has been altered, forged,
stolen, obtained through fraudulent or illegal means,
negotiated without proper legal authority, or represents the
proceeds of illegal activity. If a check or draft is returned
to the licensee by the payer financial institution for any of
these reasons, the licensee shall not release the check,
draft, or money order without the consent of the district
attorney or other investigating law enforcement authority.
(e) A licensee shall comply with all provisions of
state and federal law regarding cash transactions and cash
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transaction reporting.
(f) A licensee shall provide each prospective customer,
before consummation of the deferred presentment agreement,
with a written explanation in clear, understandable language
of the fees to be charged by the licensee and the date on
which the check or debit authorization may be deposited or
presented by the licensee. All fees associated with deferred
presentment transactions shall be disclosed as finance charges
as required by the Federal Truth-in-Lending Act, 15 U.S.C. §
1605, its regulations, 12 C.F.R. Part 226, and Official Staff
Commentary as adopted by the Federal Reserve Board. The
supervisor may promulgate adopt rules establishing additional
requirements in order to assure complete and accurate
disclosures. The customer, prior to entering into a deferred
presentment transaction, shall receive and acknowledge an
accurate and complete notification and disclosure of the
itemized and total amounts of all fees and other costs that
will or potentially could be imposed as a result of such the
agreement. This subsection shall not create any inference that
a particular method of disclosure was required prior to June
20, 2003. All customers will be notified in clear and
conspicuous language that the deferred presentment check or
debit authorization after one rollover , will be subject to
terms and conditions described in subsection (c) of Section
5-18A-12. The terms and conditions of the transaction shall be
provided in the notification.
(g) A licensee shall issue a copy of the written
agreement to each person for whom a licensee defers deposit of
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a check or debit authorization. The written agreement shall
include the information described in subsection (f) and the
extended repayment program described in subsection (c) of
Section 5-18A-12.
(h) If a check is returned to the licensee from a payer
financial institution due to insufficient funds or a closed
account, the licensee shall have the right to all civil
remedies allowed by law, except as provided for in Section
5-18A-12, to collect the check and may recover court costs and
a reasonable attorney's fee. The attorney's fee may not exceed
15 percent of the face amount of the check or debit
authorization. No individual who issues a personal check or
authorizes a debit for his or her checking account to a
licensee for the purpose of a deferred presentment transaction
under this chapter shall be convicted pursuant to Section
13A-9-13.1, if the check or debit authorization is returned
due to insufficient funds. Checks or debit authorizations
returned to the licensee due to a closed account may be
collected pursuant to Section 13A-9-13.1.
(i) No licensee may alter or delete the date on any
check accepted by the licensee. No licensee may accept an
undated check or debit authorization or a check or debit
authorization dated on a date other than the date on which the
licensee accepts the check or debit authorization.
(j) No licensee shall engage in unfair or deceptive
acts, practices, or advertising in the conduct of the licensed
business.
(k) No licensee shall require a customer to provide
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security for the transaction or require the customer to
provide a guaranty from another person.
(l) Each licensee shall pay all proceeds for any
deferred presentment transaction in cash and directly to the
customer.
(m) Every licensee shall conspicuously and continuously
display a schedule of all fees, charges, and penalties for all
services provided by the licensee. The schedule of fees shall
contain the following statement in all capital letters and in
l2-point type or larger immediately above the space for the
borrower's signature: NOTICE: FEES FOR DEFERRED PRESENTMENT
TRANSACTIONS MAY BE SIGNIFICANTLY HIGHER THAN FOR OTHER TYPES
OF LOANS.
(n) A deferred presentment provider shall not redeem,
extend, or otherwise consolidate a deferred deposit agreement
with the proceeds of another deferred presentment transaction
made by the same or affiliated deferred presentment provider
except as expressly provided in Section 5-18A-12.
(o) The licensee shall use a third party private sector
database, where available, to ensure that the customer does
not have outstanding deferred presentment transactions that
exceed five hundred dollars ($500)."
Section 2. This act shall become effective on the first
day of the third month following its passage and approval by
the Governor, or its otherwise becoming law.
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