DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of
the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of
the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Hunter HB No. 1187
Abstract: Modifies various provisions relative to consumer credit loans and creditors in certain
municipalities.
Present law (R.S. 9:3516) defines "check" as any check, draft, item, orders or requests for
payment of money, negotiable orders, withdrawal, or any other instrument used to pay a debt or
transfer money from one to another.
Proposed law provides that, with respect to a consumer transaction in a municipality with a
population in excess of 48,700 and less than 50,000, an extender of credit shall not accept an
issuer's check as defined in present law (R.S. 9:3516) from the issuer and agree to hold the check
for a period of time in exchange for payment to the issuer.
Present law provides that a creditor having no office in the state of La. offering credit to La.
consumers through mail and other means of interstate commerce is exempt from consumer loan
licensing requirements. Proposed law retains present law but provides that the exception to
licensure does not apply to creditors participating in transactions in a municipality with a
population in excess of 48,700 and less than 50,000.
Present law provides that in conjunction with a deferred presentment transaction or small loan, a
licensee may charge a fee not to exceed 16.75% of the face amount of the check issued or, in the
case of a small loan, the equivalent rate of interest, provided that such fee or interest does not
exceed $45, regardless of the name or type of charge.
Proposed law retains present law but prohibits a licensee in a municipality with a population in
excess of 48,700 and less than 50,000 from charging a fee in excess of 36% interest annually.
Proposed law further voids any transaction or loan made or collected in violation of proposed law
and further provides that a licensee in violation has no right to collect, receive, or retain any
principal, interest, fees, or other charges.
Proposed law defines "interest" as all charges and fees assessed, payable directly or indirectly,
including a documentation fee not to exceed $10 under present law (R.S. 9:3530(C)) in
connection with or as a condition of a deferred presentment transaction or small loan.
Present law provides that upon the consumer's prepayment in full of a deferred presentment
transaction or small loan during the first five days of the term of the transaction or loan, a
licensee shall refund any and all unearned charges by a method no less favorable to the consumer than the actuarial method, minus $20 of the original fee, which shall be considered earned by the
licensee and not subject to refund.
Proposed law retains present law but removes the time limit for transactions in a municipality
with a population in excess of 48,700 and less than 50,000 and requires the licensee to refund any
and all unearned charges by a method no less favorable than the actuarial method upon the
consumer's prepayment in full of a deferred presentment transaction or small loan.
Present law prohibits a licensee from renewing or rolling over a deferred presentment transaction
or small loan; however, present law provides that a licensee may accept a partial payment of 25%
of the amount advanced plus fees charged and enter into a new deferred presentment transaction
or renew the small loan for the remaining balance owed.
Proposed law deletes the authorization in present law to accept a partial payment before entering
into a new deferred presentment transaction for transactions in a municipality with a population
in excess of 48,700 and less than 50,000.
Proposed law adds that a licensee in a municipality with a population in excess of 48,700 and
less than 50,000 shall not engage in any device or subterfuge intended to evade the requirements
of law through any method, including but not limited to mail, telephone, Internet, or any
electronic means, or by doing any of the following:
(1)Offering, making, assisting a borrower to obtain, or brokering a deferred presentment
transaction or small loan at a rate of interest prohibited by La. law, or acting as an agent
for a third party in such a transaction.
(2)Making deferred presentment transactions or small loans disguised as personal property
sales, consumer credit sales, and leaseback transactions.
(3)Disguising deferred presentment transactions or small loan proceeds as cash rebates for
the pretextual installment sale of goods or services.
(4)Disguising a deferred presentment transaction or small loan as a revolving line of credit,
or making or assisting a borrower to obtain a revolving line of credit for the purpose of
avoiding the licensee's provision under present law (R.S. 9:3578.6(A)(1)) pursuant to
proposed law (R.S. 9:3578.4(A)(1)).
Proposed law further provides that a violation of the provisions relative to prohibited acts, in
conjunction with a transaction in a municipality with a population in excess of 48,700 and less
than 50,000, is a violation of the Unfair Trade Practices and Consumer Protection Law (R.S.
51:1401 et seq.).
(Amends R.S. 9:3560(A)(8), 3578.4(A)(1), 3578.5, and 3578.6(A)(7); Adds R.S. 9:3537,
3578.4(A)(3), and 3578.6(A)(9) and (C))