SLS 14RS-1360 ORIGINAL
Page 1 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Regular Session, 2014
SENATE BILL NO. 679
BY SENATOR NEVERS
LOANS. To provide relative to certain consumer credit transactions. (8/1/14)
AN ACT1
To amend and reenact R.S. 9:3557(B), 3560(A), 3561(A), 3561.1(G), 3578.4(A), 3578.5,2
3578.6, and 3578.8, R.S. 14:511, and R.S. 51:1406(1), and to enact R.S. 9:3518.4,3
3537, 3561.2, 3578.4.1 and 3578.9, relative to consumer credit transactions, deferred4
presentment transactions and small loans; to provide relative to the Louisiana5
Consumer Credit Law and to the Louisiana Deferred Presentment and Small Loans6
Act; to provide for powers of the commissioner of the Office of Financial7
Institutions; to provide for examination of certain records by the legislative auditor;8
to provide relative to the authority of the attorney general relative to deferred9
presentment transactions and small loans; to provide relative to certain lenders; to10
provide relative to licensing and record maintenance in consumer credit transactions;11
to provide relative to the location of offices of makers of consumer loans; to provide12
for the collection and reporting of certain information and data; to provide relative13
to holding of checks in deferred presentment transactions and small loans; to provide14
relative to certain limitations on loans, loan fees, finance charges and interest; to15
provide relative to certain prohibited acts and violations of such acts; to provide16
relative to applicability of loansharking in deferred presentment transactions and17 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 2 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
small loans; to provide certain definitions, terms, conditions, procedures,1
prohibitions, exemptions, penalties and effects; and to provide for related matters.2
Be it enacted by the Legislature of Louisiana:3
Section 1. R.S. 9:3557(B), 3560(A), 3561(A), 3561.1(G), 3578.4(A), 3578.5, 3578.6,4
and 3578.8 are hereby amended and reenacted and R.S. 9:3518.4, 3537, 3561.2, 3578.4.15
and 3578.9 are hereby enacted to read as follows:6
§3518.4. Contract validity; consumer credit transactions; deferred7
presentment transactions8
A.(1) A consumer credit transaction as defined by R.S. 9:3516(13) or a9
deferred presentment transaction as defined by R.S. 9:3578(2) shall be null,10
void, unenforceable, and uncollectible as being contrary to the policy of this11
state if the creditor has not obtained a license, if required by this Chapter or12
R.S. 9:3578.1, et seq., at the time the transaction is made.13
(2) The creditor shall forfeit all loans or transactions proceeds, fees,14
charges and other amounts paid in association with the transaction or loan.15
(3) Upon request of the borrower, the creditor shall return any property16
taken as collateral within thirty days of the request. If the collateral property17
has been disposed of at the time of the request, the creditor shall reimburse the18
borrower an amount equal to the current value of the collateral as determined19
by any recognized market for the type of collateral or, if there is no recognized20
market, the fair market value of any such property as determined by21
commercially reasonable standards.22
B. Any person who attempts to enforce or collect pursuant to the23
agreements nullified by this Section shall be subject to fines, penalties,24
assessments, and applicable administrative and legal actions at the discretion25
of the commissioner within the powers granted to him under this Chapter.26
C. The provisions of this Section shall not apply to creditors exempt27
from the consumer loan licensing requirements pursuant to R.S. 9:3560 or any28
other creditor not required to obtain a license from the Office of Financial29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 3 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Institutions.1
* * *2
§3537. Holding of checks3
With respect to a consumer credit transaction, except for a deferred4
presentment transaction or small loan pursuant to the Louisiana Deferred5
Presentment and Small Loan Act, an extender of credit shall not accept a check,6
as defined by R.S. 9:3516, from the issuer and agree to hold the check for a7
period of time in exchange for payment to the issuer.8
* * *9
§3557. Authority to make consumer loans10
* * *11
B. Provided that the creditor has one or more offices in this state, a A12
creditor may not take assignments of and undertake direct collection of payments13
from or enforce rights against consumers arising from consumer loans, without first14
having obtained a license from the commissioner as provided under this Part. A15
creditor may, however, collect and enforce consumer loan obligations of which he16
has taken assignment for three months without a license if he notifies the17
commissioner in writing of his intention to take assignments of consumer loans,18
including the name and address of the proposed assignee and assignor, the number19
of loans assigned, the dollar amount of the assignment, and other information the20
commissioner requires at least ten days prior to the time the assignment is made, and21
the commissioner has not objected, and such creditor promptly applies for a license22
and his application has not been denied.23
* * *24
§3560. Licenses not required25
A. Notwithstanding R.S. 9:3557, the following persons shall be exempt from26
the consumer loan licensing requirements under this Part:27
(1)(a) A bank, savings and loan association, or similar financial institution28
organized, certified, and supervised by an agency of either the United States of29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 4 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
America or the state of Louisiana pursuant to the banking, currency and related laws1
of the United States of America or the state of Louisiana.2
(b) A subsidiary of any state-chartered entity described in Subparagraph (a)3
of this Paragraph in which eighty percent or more of the ownership rests with such4
parent entity.5
(2) A trust administered by a bank or a bank trust department.6
(3) A governmental agency, instrumentality, or public entity organized by7
act of congress or the Legislature of Louisiana.8
(4) An insurance company when entering into a life insurance loan to a9
policyholder.10
(5) A qualified pension plan when entering into an extension of credit to a11
plan participant.12
(6) A bona fide pledgee of a consumer credit transaction to secure a bona13
fide loan thereon.14
(7) A seller or other creditor refinancing a retail installment transaction15
subject to the Motor Vehicle Sales Finance Act.16
(8) A creditor having no office within this state offering credit to Louisiana17
consumers through the mails and other means of interstate commerce.18
(9) Unless otherwise provided by rule or regulation of the commissioner,19
persons whose lending activities pertain to federally related mortgage loans, and who20
are subject to licensing, supervision or auditing by the Federal National Mortgage21
Association, the Federal Home Loan Mortgage Corporation, the Governmental22
National Mortgage Association, the Veterans Administration, or the United States23
Department of Housing and Urban Development. Such lenders may also make loans24
secured by a second or junior lien or mortgage on owner-occupied one-to-four family25
residential immovable property made contemporaneously with federally related26
mortgage loans or as part of a mortgage revenue bond loan program, or sold on the27
secondary market to the Federal National Mortgage Association, the Federal Home28
Loan Mortgage Corporation, or the Governmental National Mortgage Association,29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 5 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
and the entity sells ten or fewer of such loans over any calendar year.1
* * *2
§3561. Single place of business; additional licenses3
A. Each licensee shall maintain a place of business in the state and, unless4
otherwise provided by rule, making consumer loans to Louisiana residents shall5
maintain records of its consumer loans at that the location stated on its license. Not6
more than one place of business shall be maintained under the same license, but the7
commissioner shall issue additional licenses to the same licensed lender upon his8
compliance with all the provisions of this Part governing issuance of a license.9
* * *10
§3561.1. License; examination; renewal fees; records11
* * *12
G.(1) If the lender's records are located outside this state, the lender, at the13
commissioner's option, shall make them available in a format deemed by the14
commissioner to be acceptable, to include physical reproductions and digital15
electronically imaged records, to the commissioner at a location within this state16
convenient to the commissioner, or via electronic transmittal or delivery of optical17
imaging disc containing electronic copies of the records, pay the reasonable and18
necessary expenses for the commissioner or his representatives to examine them at19
the place where they are maintained. The method of examination and delivery of20
records shall be at the sole discretion of the commissioner. The commissioner21
shall define the method of examination and delivery of these records through22
promulgation of rules under the Administrative Procedures Act by August 1,23
2015. The commissioner may designate representatives, including comparable24
officials of the state in which the records are located, to inspect them on his behalf.25
* * *26
§3561.2. Registration of licensees with the secretary of state27
Any person required to be licensed pursuant to this Chapter shall, prior28
to application for licensure, be duly registered with the secretary of state and29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 6 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
be in possession of a certificate of authority to transact business pursuant to1
R.S. 12:304 or 1345 or R.S. 9:3422, as applicable.2
* * *3
§3578.4. Finance charge and fees4
A.(1) In conjunction with a deferred presentment transaction or small loan,5
a licensee may charge a one-time loan origination fee of fifteen-percent of the6
face amount of the check fee not to exceed sixteen and seventy-five one hundredths7
percent of the face amount of the check issued or in the case of a small loan, the8
equivalent rate of interest, provided however that such fee or interest does not exceed9
forty-five dollars, regardless of the name or type of charge.10
(2) However, if the loan remains unpaid at contractual maturity, the licensee11
may charge one of the following:12
(a) An an amount equal to the rate of thirty-six percent per annum for a13
period not to exceed one year and beginning one year after contractual maturity, the14
rate shall not exceed eighteen percent per annum.15
(b) A one-time delinquency charge as authorized in R.S. 9:3527(A)(1).16
* * *17
§3578.4.1. Repayment plan; terms; conditions18
A.(1) A borrower who is unable to repay either a deferred presentment19
transaction or small loan when due to a licensee may elect once in any twelve-20
month period to repay the licensee the amount due under the deferred21
presentment transaction or small loan by means of a repayment plan as22
provided for in this Section. The licensee shall inform the borrower verbally23
and in writing of the option and terms of this repayment plan option upon24
initial execution of the loan. To be eligible for the repayment plan, the25
borrower shall request to enter into the plan before the due date of the26
outstanding deferred presentment transaction or small loan.27
(2) The terms of a repayment plan under this Section shall include the28
following:29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 7 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(a) The licensee may not impose any additional charge on the borrower1
for using a repayment plan. Performance of the terms of the repayment plan2
extinguishes the consumer's obligation on the loan.3
(b) The borrower shall be allowed to repay the loan in at least four equal4
installments with at least thirteen days between installments, provided that the5
term of the repayment plan does not exceed ninety days. The first payment6
under the repayment plan shall not be due before at least thirteen days after the7
repayment plan is signed by both parties.8
(c) The borrower may prepay the amount due under the repayment plan9
at any time without charge or penalty.10
(d) The length of time between installments may be extended by the11
parties so long as the total period of repayment does not exceed ninety days.12
Any such modification shall be in writing and signed by both parties.13
* * *14
§3578.5. Rebate upon prepayment15
Upon the prepayment in full of a deferred presentment transaction or small16
loan, during the first five days of the term of such transaction or loan only, the17
licensee shall refund any and all unearned charges by a method no less favorable to18
the consumer than the actuarial method, less twenty dollars of the original fee, which19
shall be considered earned and shall not be subject to refund. Should the consumer20
make prepayment after the first five days of the term of the transaction or loan, the21
licensee shall not be required to make any refund.22
§3578.6. Prohibited acts23
A. A licensee shall not:24
(1) Except for reasonable attorney fees and costs awarded by a court, charge,25
contract for, receive, or collect a loan finance charge or credit service charge, or any26
other fee or charge other than as provided in R.S. 9:3578.4.27
(2) Enter into any loan made under this Chapter with a person who has28
made five or more loans under this Chapter with that licensee or with any other29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 8 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
licensed lender within the previous twelve consecutive months. No borrower1
shall be permitted to have more than five loans made under this Chapter within2
any twelve-month consecutive period.3
(3) Enter into any loan made under this Chapter with a person for4
whom the total of all loan payments coming due within the first calendar month5
of the loan, when combined with the payment amount of the borrower's other6
outstanding deferred presentment transactions and small loans coming due7
within that same month, exceeds twenty-five percent of the borrower's gross8
monthly income. The licensee is not in violation of this provision if the9
borrower presents evidence of his gross monthly income to the licensee and10
represents to the licensee in writing that the prospective loan amount together11
with the amount of any other outstanding loan made under this Chapter, does12
not exceed twenty-five percent of the borrower's expected gross monthly income13
when the prospective loan is made.14
(4) Enter into any loan made under this Chapter with a person who has15
completed any deferred presentment transaction or small loan within the past16
thirty days. The licensee shall verify this information as follows:17
(a) The licensee shall consult the real-time access database which the18
commissioner shall have established and implemented pursuant to R.S.19
9:3578.8. The licensee shall verify through this real-time access database20
whether that particular person has made five loans with the licensee or any21
other licensed lender within the previous twelve consecutive months, or whether22
that particular person has completed any loan under this Chapter with the23
licensee or with any other licensed lender within the previous thirty days.24
(b) Until the commissioner has established and implemented a real-time25
access database pursuant to R.S. 9:3578.8, the licensed lender may rely upon the26
signed and written verification of the borrower indicating the following: "I have27
not made more than four deferred presentment transactions or small loans with28
a licensed lender within the past twelve consecutive months. I have not29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 9 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
terminated or completed a deferred presentment transaction or small loan1
agreement with any licensed lender within the past thirty days."2
(2)(5) Sell any goods when those goods are financed with the proceeds of the3
loan or sell insurance in connection with a deferred presentment transaction or small4
loan. The sale and financing of services, including but not limited to utility payment5
services, financial or tax services, or the sale of prepaid telephone services and6
telephone-related products which are not financed with the proceeds of the loan,7
shall not be deemed a violation of this Chapter.8
(3)(6) Refuse a partial loan payment of fifty dollars or greater.9
(4)(7) Divide a deferred presentment transaction or small loan into multiple10
agreements for the purpose of obtaining a higher fee or charge.11
(5)(8) Threaten any customer with prosecution or refer for prosecution any12
check accepted as payment of a deferred presentment transaction and returned by the13
lender's depository institution for reason of insufficient funds.14
(6)(9) Structure the repayment of a loan in such a manner as to attempt to15
circumvent the provisions of this Chapter.16
(7)(10) Renew or roll over a deferred presentment transaction or small loan.17
However, a licensee may accept a partial payment of twenty-five percent of the18
amount advanced plus fees charged and enter into a new deferred presentment19
transaction or renew the small loan for the remaining balance owed. Once a deferred20
presentment transaction or small loan has been completed, a consumer may enter21
into a new transaction or loan with the licensee provided that thirty days have22
passed since completing the loan and provided that the loan will not place the23
consumer in violation of the limits provided for in this Section. A deferred24
presentment transaction or small loan shall be considered completed when the25
amount advanced has been paid in full by the consumer.26
(8)(11) Take any direct or indirect interest, possessory or otherwise, whether27
perfected or unperfected, in any property in connection with a small loan, or a28
deferred presentment transaction.29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 10 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(12) Through the use of mail, telephone, Internet, electronic or any other1
means, engage in any device or subterfuge intended to evade the requirements2
of this Chapter, including but not limited to:3
(a) Offering, making, assisting a borrower to obtain, or brokering a4
deferred presentment transaction or small loan at a rate of interest prohibited5
by Louisiana law, or acting as an agent for a third party in such a transaction.6
(b) Making deferred presentment transactions or small loans disguised7
as personal property sales, consumer credit sales, and leaseback transactions.8
(c) Disguising deferred presentment transactions or small loan proceeds9
as cash rebates for the pretextual installment sale of goods or services.10
(d) Disguising a deferred presentment transaction or small loan as a11
revolving line of credit, or making or assisting a borrower to obtain a revolving12
line of credit for the purpose of avoiding the requirements of Subsection(A)(1)13
of this Section.14
B. It shall be unlawful for any small loan lender, for any reason and by any15
means, including but not limited to direct deposit and personal tender, to accept as16
payment, offer to accept as payment, or require for use as security any check issued17
pursuant to the federal Social Security Act. In addition, it shall be unlawful for any18
lender making small loans to act as a depository institution for the acceptance of any19
check issued pursuant to the federal Social Security Act, unless such lender is a20
federally insured financial institution.21
C. An extension of a deferred presentment transaction or small loan to22
a member of the U.S. military or a dependent of a member of the U.S. military23
must comply with 10 U.S.C. §987 and any regulations adopted under that law,24
to the extent applicable. Notwithstanding any other provision of law, a violation25
of any provision of 10 U.S.C. §987, or any regulation adopted pursuant thereto,26
shall be deemed to be a violation of this Chapter.27
D. A violation of this Section shall constitute a violation of Chapter 1328
of Title 51 of the Revised Statutes.29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 11 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
* * *1
§3578.8. Powers of the commissioner; adoption of rules and regulation2
A. The commissioner may shall apply the provisions of Parts I, VII, VIII,3
IX, and X of Chapter 2 of this Code Title, the Louisiana Consumer Credit Law, for4
purposes of administering and regulating the activities of licensees and the5
provisions of this Chapter.6
B. The commissioner may shall adopt rules and regulations as he deems7
necessary to implement the purposes and provisions of this Chapter on or before8
August 1, 2015.9
C.(1) Beginning January 1, 2013, for a period of one year, the commissioner10
the commissioner annually shall collect and compile information and11
nonaggregate data from licensees concerning the operation, function, and customers12
of deferred presentment transactions and small loan businesses.13
(2) The information and nonaggregate data collected by the commissioner14
from a licensee shall include but not be limited to the following:15
(a) The number of deferred presentment transactions and small loans issued16
quarterly.17
(b) The fees collected quarterly on deferred presentment transactions and18
small loans.19
(c) The location of the licensee's business.20
(d) The number of checks returned unpaid for any reason and the amount of21
the fee charged by the licensee for such checks.22
D. The commissioner shall compile and submit to the legislature, in an23
aggregate format, a report detailing the information and data collected by April 1,24
2014 February 1, 2014, each year.25
E.(1) The commissioner shall implement as provided in this Section the26
use of a single common database with real-time access through an Internet27
connection for licensed lenders who make deferred presentment transactions28
and small loans pursuant to this Chapter, hereinafter referred to in this29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 12 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Subsection as "licensees". The database shall be accessible to the commissioner1
and to the licensees so that the commissioner shall be able to verify the number2
and nature of transactions that are outstanding for a particular consumer. On3
or before August 1, 2015, the commissioner shall provide by rules and4
regulations through the Administrative Procedures Act for the implementation5
of this real-time access common database.6
(2) No licensee shall engage in lending activity with a consumer who has7
made more than five loans under this Chapter within the previous twelve8
consecutive months.9
(3) Licensees shall submit such loan transaction data before entering10
into each transaction in such format as required by the commissioner, including11
but not limited to the borrower's name, social security number or employment12
authorization alien number, address, driver's license number, amount of13
transaction, date of transaction, the date the transaction is closed, data14
reporting requirements of R.S. 9:3554(A)(6) and such additional information15
as required by the commissioner.16
§3578.9. Examination of records17
The legislative auditor as an agent of the commissioner shall have the18
authority to examine all records of deferred presentment transactions or small19
loans from the licensee.20
* * *21
Section 2. R.S. 14:511 is hereby amended and reenacted to read as follows:22
§511. Loansharking; penalty23
A.(1) A person is guilty of loansharking when he knowingly solicits, or24
receives any money or anything of value, including services, as interest or25
compensation for a loan, or as forbearance of any right to money or other property,26
at a rate exceeding forty-five percentum per annum or the equivalent rate for a longer27
or shorter period. This Section shall not apply to any transaction under Title 6, Title28
9, or Sections 1751 through 1770 of Title 37 of the Louisiana Revised Statutes of29 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 13 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
1950 or under R.S. 9:3500.1
(2) However, licensed lenders who make deferred presentment2
transactions and small loans under the Louisiana Deferred Presentment3
Transaction and Small Loans Act, Chapter 2-A of Code Title XII of Title 9,4
shall be subject to this Section when interest, finance charges, fees or any other5
costs charged to the borrower exceed the amount allowed under Louisiana law,6
or if the licensed lender enters into a loan which would cause the licensee and7
the consumer to be in violation of the number of loans allowed per consumer8
per year under R.S. 9:3578.6(A).9
B. Whoever commits the crime of loansharking is guilty of a felony and shall10
be punished by a fine of not more than ten thousand dollars or imprisoned for not11
less than one year nor more than five years with or without hard labor, or both.12
C. For the purposes of this Part, the term "person" shall mean any individual,13
partnership, corporation, or combination of individuals.14
* * *15
Section 3. R.S. 51:1406(1) is hereby amended and reenacted to read as follows:16
§1406. Exemptions17
The provisions of this Chapter shall not apply to:18
(1) Any federally insured financial institution, its subsidiaries, and affiliates19
or any licensee of the Office of Financial Institutions, its subsidiaries, and affiliates,20
except as provided by R.S. 9:3578.6(D), or actions or transactions subject to the21
jurisdiction of the Louisiana Public Service Commission or other public utility22
regulatory body, the commissioner of financial institutions, except as provided by23
R.S. 9:3578.6(D), the insurance commissioner, the financial institutions and24
insurance regulators of other states, or federal banking regulators who possess25
authority to regulate unfair or deceptive trade practices.26
* * *27 SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 14 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Julie J. Baxter.
DIGEST
Nevers (SB 679)
Proposed law provides that a consumer credit transaction as defined by present law,
including a deferred presentment transaction as defined by present law, shall be null, void,
unenforceable, and uncollectible as being contrary to the policy of the state if the creditor
has not obtained a license from the Office of Financial Institutions if required to do so.
Present law prohibits a creditor from taking assignments of and undertaking direct collection
of payments from or enforcing rights against consumers arising from consumer loans
without an office in this state and first having obtained a license from the commissioner of
the Office of Financial Institutions (OFI).
Proposed law retains present law and removes requirement that the creditor have an office
in this state.
Present law provides that a creditor having no office within this state who offers credit to
Louisiana consumers through the mail and other means of interstate commerce is not
required to be licensed by OFI.
Proposed law removes present law.
Present law provides that each licensee shall maintain a place of business in the state and,
unless otherwise provided by rule, shall maintain records of its consumer loans at that
location.
Proposed law provides that each licensee making consumer loans to Louisiana residents,
shall maintain records of its consumer loans at the location stated on its license.
Present law provides that if the lender's records are located outside this state, the lender, at
the commissioner's option, shall make them available to the commissioner at a location
within this state convenient to the commissioner, or pay the reasonable and necessary
expenses for the commissioner or his representatives to examine them at the place where
they are maintained. The commissioner may designate representatives, including
comparable officials of the state in which the records are located, to inspect them on his
behalf.
Proposed law adds that if the lender's records are located outside this state, the lender, at the
commissioner's option, shall make them available in a format deemed by the commissioner
to be acceptable to include physical reproductions and digital electronically imaged records,
or via electronic transmittal or delivery of optical imaging disc containing electronic copies
of the records. The method of examination and delivery of records will be at the sole
discretion of the commissioner.
Proposed law provides that any person required to be licensed pursuant to this Chapter shall,
prior to application for licensure, be duly registered with the secretary of state and be in
possession of a certificate of authority to transact business pursuant to present law, as
applicable.
Proposed law provides that, with respect to a consumer credit transaction, except for a
deferred presentment transaction or small loan pursuant to the Louisiana Deferred
Presentment and Small Loan Act, an extender of credit shall not accept a check, as defined
by 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. SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 15 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Present law provides that a creditor having no office in this state offering credit of Louisiana
consumers through the mail and other means of interstate commerce shall be exempt from
the consumer loan licensing requirements under the licensing provisions of the Louisiana
Consumer Credit Law.
Proposed law deletes present law.
Present law provides that each licensed lender under the Louisiana Consumer Credit Law
shall maintain a place of business in the state and, unless otherwise provided by rule, shall
maintain records of its consumer loans at that location.
Proposed law deletes present law, and provides that each licensee making consumer loans
to Louisiana residents shall maintain records of its consumer loans at the location stated on
its license.
Present law provides that if a licensed lender's records are located outside of Louisiana, the
lender, at the commissioner's option, shall make them available to the commissioner at a
location within this state convenient to the commissioner or pay the reasonable and
necessary expenses for the commissioner or his representatives to examine them at the place
where they are maintained.
Proposed law deletes present law, and provides that if the licensed lender's records are
located outside of this state, the lender, at the commissioner's option, shall make them
available in a format deemed by the commissioner to be acceptable, to include physical
reproductions and digital electronically imaged records, to the commissioner at a location
within this state convenient to the commissioner, or via electronic transmittal or delivery of
optical imaging disc containing electronic copies of the records, pay the reasonable and
necessary expenses for the commissioner or his representatives to examine them at the place
where they are maintained. Proposed law further provides that the method of examination
and delivery of records shall be at the sole discretion of the commissioner. Proposed law
further provides that the commissioner shall define the method of examination and delivery
of these records through promulgation of rules under the Administrative Procedures Act by
August 1, 2015.
Proposed law provides that any person required to be licensed pursuant to the licensing
provisions of the Louisiana Consumer Credit Law shall, prior to application for licensure,
be duly registered with the secretary of state and be in possession of a certificate of authority
to transact business pursuant to R.S. 12:304 or 1345 or R.S. 9:3422, as applicable.
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 however that
such fee or interest does not exceed $45, regardless of the name or type of charge.
Proposed law deletes present law, and provides that in conjunction with a deferred
presentment transaction or small loan, a licensee may charge a one-time loan origination fee
of fifteen-percent of the face amount of the check, provided however that such fee or interest
does not exceed $45, regardless of the name or type of charge.
Present law further provides that if the loan remains unpaid at contractual maturity, the
licensee may charge one of the following: (a) an amount equal to the rate of 36% per annum
for a period not to exceed one year and beginning one year after contractual maturity, the
rate shall not exceed 18% per annum, or (b) A one-time delinquency charge as authorized
in R.S. 9:3527(A)(1).
Proposed law retains present law, except that it deletes the option for one-time delinquency
charge as authorized in R.S. 9:3527(A)(1). SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 16 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Proposed law further provides that under proposed law a borrower who is unable to repay
either a deferred presentment transaction or small loan when due to a licensee may elect
once in any 12-month period to repay the licensee the amount due under the deferred
presentment transaction or small loan by means of a repayment plan as provided for in
proposed law. Provides that the licensee shall inform the borrower verbally and in writing
of the option and terms of this repayment plan option upon initial execution of the loan.
Further provides that to be eligible for the repayment plan, the borrower shall request to
enter into the plan before the due date of the outstanding deferred presentment transaction
or small loan.
Proposed law provides that the terms of a repayment plan under proposed law shall include
the following: (a) The licensee may not impose any additional charge on the borrower for
using a repayment plan. Further provides that performance of the terms of the repayment
plan extinguishes the consumer's obligation on the loan. (b) The borrower shall be allowed
to repay the loan in at least four equal installments with at least 13 days between
installments, provided that the term of the repayment plan does not exceed 90 days. Further
provides that the first payment under the repayment plan shall not be due before at least 13
days after the repayment plan is signed by both parties. (c) The borrower may prepay the
amount due under the repayment plan at any time without charge or penalty. (d) The length
of time between installments may be extended by the parties so long as the total period of
repayment does not exceed 90 days. Further provides that any such modification shall be
in writing and signed by both parties.
Present law provides that upon the prepayment in full of a deferred presentment transaction
or small loan, during the first five days of the term of such transaction or loan only, the
licensee shall refund any and all unearned charges by a method no less favorable to the
consumer than the actuarial method, less $20 of the original fee, which shall be considered
earned and shall not be subject to refund. Present law further provides that, should the
consumer make prepayment after the first five days of the term of the transaction or loan,
the licensee shall not be required to make any refund.
Proposed law deletes present law and provides that upon the prepayment in full of a deferred
presentment transaction or small loan, the licensee shall refund any and all unearned charges
by a method no less favorable to the consumer than the actuarial method.
Proposed law adds that a licensee shall not:
(1)Enter into any loan made under proposed law with a person who has made five or
more loans under proposed law with that licensee or with any other licensed lender
within the previous twelve consecutive months. No borrower shall be permitted to
have more than five loans made under proposed law within any twelve-month
consecutive period.
(2)Enter into any loan made under proposed law with a person for whom the total of all
loan payments coming due within the first calendar month of the loan, when
combined with the payment amount of the borrower's other outstanding deferred
presentment transactions and small loans coming due within that same month,
exceeds 25% of the borrower's gross monthly income. Further provides that the
licensee is not in violation of this provision if the borrower presents evidence of his
gross monthly income to the licensee and represents to the licensee in writing that
the prospective loan amount together with the amount of any other outstanding loan
made under proposed law does not exceed 25% of the borrower's expected gross
monthly income when the prospective loan is made.
(3)Enter into any loan made under proposed law with a person who has completed any
deferred presentment transaction or small loan within the past thirty days. Provides
that the licensee shall verify this information as follows: SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 17 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(a)The licensee shall consult the real-time access database which the commissioner
shall have established and implemented pursuant to proposed law. Provides that the
licensee shall verify through this real-time access database whether that particular
person has made five loans with the licensee or any other licensed lender within the
previous twelve consecutive months, or whether that particular person has completed
any loan under this Chapter with the licensee or with any other licensed lender within
the previous thirty days.
(b)Until the commissioner has established and implemented a real-time access database
pursuant to R.S. 9:3578.8, the licensed lender may rely upon the signed and written
verification of the borrower indicating the following: "I have not made more than
four deferred presentment transactions or small loans with a licensed lender within
the past twelve consecutive months. I have not terminated or completed a deferred
presentment transaction or small loan agreement with any licensed lender within the
past 30 days."
Present law provides that a licensee under Louisiana's Deferred Presentment and Small Loan
Act shall not renew or roll over a deferred presentment transaction or small loan, but
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 provides that a licensee under Louisiana's Deferred Presentment and Small
Loan Act shall not renew or roll over a deferred presentment transaction or small loan.
Present law provides that once a deferred presentment transaction or small loan has been
completed, a consumer may enter into a new transaction or loan with the licensee.
Proposed law provides that once a deferred presentment transaction or small loan has been
completed, a consumer may enter into a new transaction or loan with the licensee, provided
that 30 days have passed since completing the loan and provided that the loan will not place
the consumer in violation of the limits provided for in this Section.
Present law provides that a deferred presentment transaction or small loan shall be
considered completed when the amount advanced has been paid in full by the consumer.
Proposed law retains present law. Proposed law provides that a licensee under Louisiana's
Deferred Presentment and Small Loan Act shall not through the use of mail, telephone,
internet, electronic or any other means, engage in any device or subterfuge intended to evade
the requirements of this Chapter, including but not limited to: offering, making, assisting a
borrower to obtain, or brokering a deferred presentment transaction or small loan at a rate
of interest prohibited by Louisiana law, or acting as an agent for a third party in such a
transaction; making deferred presentment transactions or small loans disguised as personal
property sales, consumer credit sales, and leaseback transactions; disguising preferred
presentment transactions or small loan proceeds as cash rebates for the pretextual installment
sale of goods or services; or disguising a preferred 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 requirements of present law.
Proposed law further provides that an extension of a deferred presentment transaction or
small loan to a member of the U.S. military or a dependent of a member of the U.S. military
must comply with 10 U.S.C. §987 and any regulations adopted under that law, to the extent
applicable. Further provides that, notwithstanding any other provision of law, a violation
of any provisions of 10 U.S.C. §987, or any regulation adopted pursuant thereto, shall be
deemed a violation of present law.
Proposed law provides that the performance of one of the prohibited acts under Louisiana's
Deferred Presentment and Small Loan shall constitute a violation of Louisiana's Unfair SB NO. 679
SLS 14RS-1360 ORIGINAL
Page 18 of 18
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Trade Practices and Consumer Protection Law.
Proposed law provides for certain mandatory duties of the commissioner, for certain rules
and regulations to be promulgated, for certain non-aggregate data to be collected, and for the
commissioner to submit to the legislature certain reports and data by February 1, 2014, each
year.
Proposed law provides that the commissioner shall implement a single common database
with real-time access through an internet connection for licensed lenders who make deferred
presentment transactions and small loans. Further provides that the database shall be
accessible to the commissioner and to the licensees so that the commissioner shall be able
to verify certain information. Further provides that on or before August 1, 2015, the
commissioner shall provide by rules and regulations through the Administrative Procedures
Act for the implementation of this real-time access common database.
Proposed law further provides that no licensee shall engage in lending activity with a
consumer who has made more than five loans under proposed law within the previous twelve
consecutive months.
Proposed law further provides that license shall submit such loan transaction data before
entering into each transaction in such formate as required by the commissioner, and includes
certain information necessary to be submitted.
Proposed law further provides that the legislative auditor as an agent of the commissioner
shall have the authority to examine all records of deferred presentment transactions or small
loans from the licensee.
Present law exempts deferred presentment transactions and small loans from Louisiana's
Unfair Trade Practices and Consumer Protection Act.
Proposed law provides that licensed lenders who make deferred presentment transactions
and small loans under the Louisiana Deferred Presentment Transaction and Small Loans Act,
Chapter 2-A of Code Title XII of Title 9, shall be subject to this Section when interest,
finance charges, fees or any other costs charged to the borrower exceed the amount allowed
under Louisiana law, or if the licensed lender enters into a loan which would cause the
licensee and the consumer to be in violation of the number of loans allowed per consumer
per year under R.S. 9:3578.6(A).
Proposed law further removes certain exemptions from Louisiana's Unfair Trade Practices
and Consumer Protection Law.
Effective August 1, 2014.
(Amends R.S. 9:3557(B), 3560(A), 3561(A), 3561.1(G), 3578.4(A), 3578.5, 3578.6 and
3578.8, R.S. 14:511, and R.S. 51:1406(1); adds R.S. 9:3518.4, 3537, 3561.2, 3578.4.1 and
3578.9)