Florida Senate - 2023 SB 580 By Senator Gruters 22-00502B-23 2023580__ 1 A bill to be entitled 2 An act relating to consumer finance loans; reordering 3 and amending s. 516.01, F.S.; defining the term 4 branch; amending s. 516.02, F.S.; prohibiting a 5 person from operating a branch of a business making 6 consumer finance loans before obtaining a license from 7 the Office of Financial Regulation; amending s. 8 516.03, F.S.; specifying application fees for branch 9 licenses; revising the applicability of investigation 10 fees; making a technical change; amending s. 516.031, 11 F.S.; revising the maximum interest rate and the 12 calculation of interest rates on consumer finance 13 loans; revising the minimum amount of time before 14 which a delinquency charge for each payment in default 15 may be imposed; amending s. 516.15, F.S.; requiring 16 licensees offering an assistance program to borrowers 17 after a federally declared major disaster to send a 18 specified notice to the office within a certain 19 timeframe; creating s. 516.38, F.S.; requiring 20 licensees to file annual reports with the office; 21 providing for rulemaking by the Financial Services 22 Commission; specifying requirements for the reports; 23 providing requirements for a licensee claiming that 24 submitted information contains a trade secret; 25 authorizing the office to publish a report in a 26 certain manner; creating s. 516.39, F.S.; requiring 27 certain licensees to suspend specified actions for a 28 certain timeframe after a federally declared disaster; 29 reenacting s. 516.19, F.S., relating to penalties, to 30 incorporate the amendments made to ss. 516.02 and 31 516.031, F.S., in references thereto; providing an 32 effective date. 33 34 Be It Enacted by the Legislature of the State of Florida: 35 36 Section 1.Section 516.01, Florida Statutes, is reordered 37 and amended to read: 38 516.01Definitions.As used in this chapter, the term: 39 (1)Branch means any location, other than a licensees 40 principal place of business, at which a licensee operates or 41 conducts business under this chapter or which the licensee owns 42 or controls for the purpose of conducting business under this 43 chapter. 44 (3)(1)Consumer finance borrower or borrower means a 45 person who has incurred either direct or contingent liability to 46 repay a consumer finance loan. 47 (4)(2)Consumer finance loan means a loan of money, 48 credit, goods, or choses in action, including, except as 49 otherwise specifically indicated, provision of a line of credit, 50 in an amount or to a value of $25,000 or less for which the 51 lender charges, contracts for, collects, or receives interest at 52 a rate greater than 18 percent per annum. 53 (2)(3)Commission means the Financial Services 54 Commission. 55 (9)(4)Office means the Office of Financial Regulation of 56 the commission. 57 (6)(5)Interest means the cost of obtaining a consumer 58 finance loan and includes any profit or advantage of any kind 59 whatsoever that a lender may charge, contract for, collect, 60 receive, or in anywise obtain, including by means of any 61 collateral sale, purchase, or agreement, as a condition for a 62 consumer finance loan. Charges specifically permitted by this 63 chapter, including commissions received for insurance written as 64 permitted by this chapter, shall not be deemed interest. 65 (7)(6)License means a permit issued under this chapter 66 to make and collect loans in accordance with this chapter at a 67 single place of business. 68 (8)(7)Licensee means a person to whom a license is 69 issued. 70 (5)(8)Control person means an individual, partnership, 71 corporation, trust, or other organization that possesses the 72 power, directly or indirectly, to direct the management or 73 policies of a company, whether through ownership of securities, 74 by contract, or otherwise. A person is presumed to control a 75 company if, with respect to a particular company, that person: 76 (a)Is a director, general partner, or officer exercising 77 executive responsibility or having similar status or functions; 78 (b)Directly or indirectly may vote 10 percent or more of a 79 class of a voting security or sell or direct the sale of 10 80 percent or more of a class of voting securities; or 81 (c)In the case of a partnership, may receive upon 82 dissolution or has contributed 10 percent or more of the 83 capital. 84 Section 2.Subsection (1) of section 516.02, Florida 85 Statutes, is amended to read: 86 516.02Loans; lines of credit; rate of interest; license. 87 (1)A person must not engage in the business of making 88 consumer finance loans or operate a branch of such business 89 unless she or he is authorized to do so under this chapter or 90 other statutes and unless the person first obtains a license 91 from the office. 92 Section 3.Subsection (1) of section 516.03, Florida 93 Statutes, is amended to read: 94 516.03Application for license; fees; etc. 95 (1)APPLICATION.Application for a license to make loans 96 under this chapter shall be in the form prescribed by rule of 97 the commission. The commission may require each applicant to 98 provide any information reasonably necessary to determine the 99 applicants eligibility for licensure. The applicant shall also 100 provide information that the office requires concerning any 101 officer, director, control person, member, partner, or joint 102 venturer of the applicant or any person having the same or 103 substantially similar status or performing substantially similar 104 functions or concerning any individual who is the ultimate 105 equitable owner of a 10-percent or greater interest in the 106 applicant. The office may require information concerning any 107 such applicant or person, including, but not limited to, his or 108 her full name and any other names by which he or she may have 109 been known, age, social security number, residential history, 110 qualifications, educational and business history, and 111 disciplinary and criminal history. The applicant must provide 112 evidence of liquid assets of at least $25,000 or documents 113 satisfying the requirements of s. 516.05(10). At the time of 114 making such application, the applicant shall pay to the office a 115 nonrefundable biennial license fee of $625 for the principal 116 place of business and for each branch application filed. 117 Applications for a license for the principal place of business, 118 except for applications to renew or reactivate a license, must 119 also be accompanied by a nonrefundable investigation fee of 120 $200. An application is considered received for purposes of s. 121 120.60 upon receipt of a completed application form as 122 prescribed by commission rule, a nonrefundable application fee 123 of $625, and any other fee prescribed by law. The commission may 124 adopt rules requiring electronic submission of any form, 125 document, or fee required by this chapter act if such rules 126 reasonably accommodate technological or financial hardship. The 127 commission may prescribe by rule requirements and procedures for 128 obtaining an exemption due to a technological or financial 129 hardship. 130 Section 4.Subsection (1) and paragraph (a) of subsection 131 (3) of section 516.031, Florida Statutes, are amended to read: 132 516.031Finance charge; maximum rates. 133 (1)INTEREST RATES.A licensee may lend any sum of money up 134 to $25,000. A licensee may not take a security interest secured 135 by land on any loan less than $1,000. The licensee may charge, 136 contract for, and receive thereon interest charges as provided 137 and authorized by this section. The maximum interest rate shall 138 be 36 30 percent per annum, computed on the first $3,000 of the 139 principal amount; 24 percent per annum on that part of the 140 principal amount exceeding $3,000 and up to $4,000; and 18 141 percent per annum on that part of the principal amount exceeding 142 $4,000 and up to $25,000. The original principal amount as used 143 in this section is the same as the amount financed as defined by 144 the federal Truth in Lending Act and Regulation Z of the Board 145 of Governors of the Federal Reserve System. In determining 146 compliance with the statutory maximum interest and finance 147 charges set forth herein, the computations used shall be simple 148 interest and not add-on interest or any other computations. If 149 two or more interest rates are applied to the principal amount 150 of a loan, the licensee may charge, contract for, and receive 151 interest at that single annual percentage rate which, if applied 152 according to the actuarial method to each of the scheduled 153 periodic balances of principal, would produce at maturity the 154 same total amount of interest as would result from the 155 application of the two or more rates otherwise permitted, based 156 upon the assumption that all payments are made as agreed. 157 (3)OTHER CHARGES. 158 (a)In addition to the interest, delinquency, and insurance 159 charges provided in this section, further or other charges or 160 amount for any examination, service, commission, or other thing 161 or otherwise may not be directly or indirectly charged, 162 contracted for, or received as a condition to the grant of a 163 loan, except: 164 1.An amount of up to $25 to reimburse a portion of the 165 costs for investigating the character and credit of the person 166 applying for the loan; 167 2.An annual fee of $25 on the anniversary date of each 168 line-of-credit account; 169 3.Charges paid for the brokerage fee on a loan or line of 170 credit of more than $10,000, title insurance, and the appraisal 171 of real property offered as security if paid to a third party 172 and supported by an actual expenditure; 173 4.Intangible personal property tax on the loan note or 174 obligation if secured by a lien on real property; 175 5.The documentary excise tax and lawful fees, if any, 176 actually and necessarily paid out by the licensee to any public 177 officer for filing, recording, or releasing in any public office 178 any instrument securing the loan, which may be collected when 179 the loan is made or at any time thereafter; 180 6.The premium payable for any insurance in lieu of 181 perfecting any security interest otherwise required by the 182 licensee in connection with the loan if the premium does not 183 exceed the fees which would otherwise be payable, which may be 184 collected when the loan is made or at any time thereafter; 185 7.Actual and reasonable attorney fees and court costs as 186 determined by the court in which suit is filed; 187 8.Actual and commercially reasonable expenses for 188 repossession, storing, repairing and placing in condition for 189 sale, and selling of any property pledged as security; or 190 9.A delinquency charge for each payment in default for at 191 least 12 10 days if the charge is agreed upon, in writing, 192 between the parties before imposing the charge. Delinquency 193 charges may be imposed as follows: 194 a.For payments due monthly, the delinquency charge for a 195 payment in default may not exceed $15. 196 b.For payments due semimonthly, the delinquency charge for 197 a payment in default may not exceed $7.50. 198 c.For payments due every 2 weeks, the delinquency charge 199 for a payment in default may not exceed $7.50 if two payments 200 are due within the same calendar month, and may not exceed $5 if 201 three payments are due within the same calendar month. 202 203 Any charges, including interest, in excess of the combined total 204 of all charges authorized and permitted by this chapter 205 constitute a violation of chapter 687 governing interest and 206 usury, and the penalties of that chapter apply. In the event of 207 a bona fide error, the licensee shall refund or credit the 208 borrower with the amount of the overcharge immediately but 209 within 20 days after the discovery of such error. 210 Section 5.Subsection (5) is added to section 516.15, 211 Florida Statutes, to read: 212 516.15Duties of licensee.Every licensee shall: 213 (5)If the Federal Emergency Management Agency issues a 214 major disaster declaration for this state and if a licensee 215 offers an assistance program to borrowers impacted by the 216 disaster, within 10 days after the licensees establishment of 217 the program, send written notice to the office in either 218 physical or electronic format and include the following 219 information, subject to change as any additional declarations 220 are issued or declarations are revoked: 221 (a)The licensed locations affected by the disaster 222 declaration, including physical addresses, if applicable; 223 (b)The telephone number, e-mail address, or other contact 224 information for the licensee; 225 (c)A brief description of the assistance program available 226 to borrowers in the affected areas; and 227 (d)The start date, and end date if known, of the 228 assistance program. 229 Section 6.Section 516.38, Florida Statutes, is created to 230 read: 231 516.38Annual reports by licensees. 232 (1)By March 15, 2024, and each year thereafter, a licensee 233 shall file a report with the office in a form and manner 234 prescribed by commission rule. The report must include each of 235 the items specified in subsection (2) for the preceding calendar 236 year using aggregated and anonymized data and without reference 237 to any borrowers nonpublic personal information. 238 (2)The report must include the following information for 239 the preceding calendar year: 240 (a)The number of licenses held by the licensee under this 241 chapter as of December 31 of the preceding calendar year. 242 (b)The number of loan originations by the licensee from 243 all licenses held under this chapter during the preceding 244 calendar year. 245 (c)The total dollar amount of loans and the number of 246 loans outstanding by the licensee from all licenses held under 247 this chapter as of December 31 of the preceding calendar year. 248 (d)The total number of loans in which the licensee holds a 249 security interest in collateral as of December 31 of the 250 preceding calendar year. 251 (e)The total number of unsecured loans as of December 31 252 of the preceding calendar year. 253 (f)The total number of loans, separated by principal 254 amount, in the following ranges as of December 31 of the 255 preceding calendar year: 256 1.Up to and including $5,000. 257 2.Five thousand and one dollars to $10,000. 258 3.Ten thousand and one dollars to $15,000. 259 4.Fifteen thousand and one dollars to $20,000. 260 5.Twenty thousand and one dollars to $25,000. 261 (g)The total number and amount of loans charged off as of 262 December 31 of the preceding calendar year. 263 (3)A licensee claiming that any information submitted in 264 the report contains a trade secret must submit to the office an 265 accompanying affidavit in accordance with s. 655.0591 and 266 designate the information claimed to be a trade secret pursuant 267 to s. 655.0591. 268 (4)The office may publish a report of information 269 submitted pursuant to this section, provided that all data 270 published in the report is anonymized and aggregated from all 271 licensees. 272 Section 7.Section 516.39, Florida Statutes, is created to 273 read: 274 516.39Suspension of penalties and remedial measures after 275 federal disaster declaration.If the Federal Emergency 276 Management Agency issues a major disaster declaration for this 277 state, a licensee operating in a county designated in the 278 declaration must suspend for a period of 90 days after the date 279 of the initial declaration the following: 280 (1)The application of delinquency charges under s. 281 516.031(3)(a)9. 282 (2)Repossessions of collateral pledged to loans made under 283 this chapter. 284 (3)The filing of civil actions for the collection of 285 amounts owed for loans made under this chapter. 286 Section 8.For the purpose of incorporating the amendments 287 made by this act to sections 516.02 and 516.031, Florida 288 Statutes, in references thereto, section 516.19, Florida 289 Statutes, is reenacted to read: 290 516.19Penalties.Any person who violates any of the 291 provisions of s. 516.02, s. 516.031, s. 516.05(3), s. 516.05(6), 292 or s. 516.07(1)(e) commits a misdemeanor of the first degree, 293 punishable as provided in s. 775.082 or s. 775.083. 294 Section 9.This act shall take effect July 1, 2023.