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Regular Session, 2014
SENATE BILL NO. 8484
BY SENATORS NEVERS, ADLEY AND BROOME AND REPRESENTATIVES
HONORE, JAMES AND ALFRED WILLIAMS
CONSUMERS. Provides relative to consumer credit transactions.
AN ACT1
To amend and reenact R.S. 9:3560(A), 3578.3, 3578.4(A), 3578.5 and 3578.6, and to enact2
R.S. 9:3537, relative to consumer credit transactions, deferred presentment3
transactions and small loans; to provide relative to holding of checks; to provide4
relative to licensing; to provide relative to partial payments and interest; to provide5
relative to certain limitations on loans, loan fees and interest rates; to provide relative6
to certain prohibited acts and violations of such acts; to provide for certain terms,7
conditions, and procedures; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 9:3560(A), 3578.3, 3578.4(A), 3578.5 and 3578.6 are hereby10
amended and reenacted and R.S. 9:3537 is hereby enacted to read as follows:11
§3537. Holding of checks12
With respect to a consumer credit transaction, an extender of credit shall13
not accept a check, as defined by R.S. 9:3516, from the issuer and agree to hold14
the check for a period of time in exchange for payment to the issuer.15
* * *16
§3560. Licenses not required17 SB NO. 84
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A. Notwithstanding R.S. 9:3557, the following persons shall be exempt from1
the consumer loan licensing requirements under this Part:2
(1)(a) A bank, savings and loan association, or similar financial institution3
organized, certified, and supervised by an agency of either the United States of4
America or the state of Louisiana pursuant to the banking, currency and related laws5
of the United States of America or the state of Louisiana.6
(b) A subsidiary of any state-chartered entity described in Subparagraph (a)7
of this Paragraph in which eighty percent or more of the ownership rests with such8
parent entity.9
(2) A trust administered by a bank or a bank trust department.10
(3) A governmental agency, instrumentality, or public entity organized by11
act of congress or the Legislature of Louisiana.12
(4) An insurance company when entering into a life insurance loan to a13
policyholder.14
(5) A qualified pension plan when entering into an extension of credit to a15
plan participant.16
(6) A bona fide pledgee of a consumer credit transaction to secure a bona17
fide loan thereon.18
(7) A seller or other creditor refinancing a retail installment transaction19
subject to the Motor Vehicle Sales Finance Act.20
(8) A creditor having no office within this state offering credit to Louisiana21
consumers through the mails and other means of interstate commerce.22
(9)(8) Unless otherwise provided by rule or regulation of the commissioner,23
persons whose lending activities pertain to federally related mortgage loans, and who24
are subject to licensing, supervision or auditing by the Federal National Mortgage25
Association, the Federal Home Loan Mortgage Corporation, the Governmental26
National Mortgage Association, the Veterans Administration, or the United States27
Department of Housing and Urban Development. Such lenders may also make loans28
secured by a second or junior lien or mortgage on owner-occupied one-to-four family29 SB NO. 84
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residential immovable property made contemporaneously with federally related1
mortgage loans or as part of a mortgage revenue bond loan program, or sold on the2
secondary market to the Federal National Mortgage Association, the Federal Home3
Loan Mortgage Corporation, or the Governmental National Mortgage Association,4
and the entity sells ten or fewer of such loans over any calendar year.5
* * *6
§3578.3. Definitions7
As used in this Chapter, the following terms have the following meanings8
ascribed to them:9
(1) "Commissioner" means the commissioner of the office of financial10
institutions.11
(2) "Deferred presentment transaction" means a transaction made pursuant12
to a written agreement whereby a licensee:13
(a) Accepts a check from the issuer dated as of the date it was written;.14
(b) Agrees to hold the check for a period of time not to exceed thirty days15
prior to negotiation or presentment; and.16
(c) Pays to the issuer of the check the amount of the check less the fee17
permitted in R.S. 9:3578.4(A). The amount paid to the issuer of the check may not18
exceed three hundred fifty dollars.19
(3) "Licensee" means a person licensed pursuant to this Chapter that offers20
deferred presentment transactions or small loans, or both.21
(4) "Partial payment" means a payment of fifty dollars or more on a deferred22
presentment transaction or small loan.23
(5)(4) "Prepayment" means payment in full of the deferred presentment24
transaction or small loan amount prior to the end of the term of that transaction or25
loan.26
(6)(5) "Small loan" means a consumer loan, as defined in R.S. 9:3516(14),27
of three hundred fifty dollars or less, made for a term of sixty days or less.28
(6) "Interest" means all charges and fees assessed, payable directly or29 SB NO. 84
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indirectly, including fees allowed under R.S. 9:3530 in connection with or as a1
condition of a deferred presentment transaction or small loan.2
§3578.4. Finance charge and fees3
A.(1) In conjunction with a deferred presentment transaction or small loan4
Notwithstanding any other provision of law to the contrary, a licensee may5
charge a fee not to exceed sixteen and seventy-five one hundredths percent of the6
face amount of the check issued or in the case of a small loan, the equivalent rate of7
interest, provided however that such fee or interest does not exceed forty-five dollars,8
regardless of the name or type of charge thirty-six percent interest annually. Any9
transaction or loan made or collected in violation of this Paragraph is void, and10
the licensee shall not have the right to collect, receive, or retain any principal,11
interest, fees or other charges.12
(2) However, if the loan remains unpaid at contractual maturity, the licensee13
may charge one of the following:14
(a) An amount equal to the rate of thirty-six percent per annum for a period15
not to exceed one year and beginning one year after contractual maturity, the rate16
shall not exceed eighteen percent per annum.17
(b) A one-time delinquency charge as authorized in R.S. 9:3527(A)(1).18
* * *19
§3578.5. Rebate upon prepayment20
Upon the prepayment in full of a deferred presentment transaction or small21
loan, during the first five days of the term of such transaction or loan only, the22
licensee shall refund any and all unearned charges by a method no less favorable to23
the consumer than the actuarial method, less twenty dollars of the original fee, which24
shall be considered earned and shall not be subject to refund. Should the consumer25
make prepayment after the first five days of the term of the transaction or loan, the26
licensee shall not be required to make any refund.27
§3578.6. Prohibited acts28
A. A licensee shall not:29 SB NO. 84
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(1) Except for reasonable attorney fees and costs awarded by a court, charge,1
contract for, receive, or collect a loan finance charge or credit service charge, or any2
other fee or charge other than as provided in R.S. 9:3578.4.3
(2) Sell any goods when those goods are financed with the proceeds of the4
loan or sell insurance in connection with a deferred presentment transaction or small5
loan. The sale and financing of services, including but not limited to utility payment6
services, financial or tax services, or the sale of prepaid telephone services and7
telephone-related products which are not financed with the proceeds of the loan,8
shall not be deemed a violation of this Chapter.9
(3) Refuse a partial loan payment of fifty dollars or greater.10
(4) Divide a deferred presentment transaction or small loan into multiple11
agreements for the purpose of obtaining a higher fee or charge.12
(5) Threaten any customer with prosecution or refer for prosecution any13
check accepted as payment of a deferred presentment transaction and returned by the14
lender's depository institution for reason of insufficient funds.15
(6) Structure the repayment of a loan in such a manner as to attempt to16
circumvent the provisions of this Chapter.17
(7) Renew or roll over a deferred presentment transaction or small loan.18
However, a licensee may accept a partial payment of twenty-five percent of the19
amount advanced plus fees charged and enter into a new deferred presentment20
transaction or renew the small loan for the remaining balance owed. Once a deferred21
presentment transaction or small loan has been completed, a consumer may enter22
into a new transaction or loan with the licensee. A deferred presentment transaction23
or small loan shall be considered completed when the amount advanced has been24
paid in full by the consumer.25
(8) Take any direct or indirect interest, possessory or otherwise, whether26
perfected or unperfected, in any property in connection with a small loan, or a27
deferred presentment transaction.28
(9) Through the use of mail, telephone, Internet, electronic or any other29 SB NO. 84
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means, engage in any device or subterfuge intended to evade the requirements1
of this Chapter, including but not limited to:2
(a) Offering, making, assisting a borrower to obtain, or brokering a3
deferred presentment transaction or small loan at a rate of interest prohibited4
by Louisiana law, or acting as an agent for a third party in such a transaction.5
(b) Making deferred presentment transactions or small loans disguised6
as personal property sales, consumer credit sales, and leaseback transactions.7
(c) Disguising deferred presentment transactions or small loan proceeds8
as cash rebates for the pretextual installment sale of goods or services.9
(d) Disguising a deferred presentment transaction or small loan as a10
revolving line of credit, or making or assisting a borrower to obtain a revolving11
line of credit for the purpose of avoiding the requirements of Subsection(A)(1)12
of this Section.13
B. It shall be unlawful for any small loan lender, for any reason and by any14
means, including but not limited to direct deposit and personal tender, to accept as15
payment, offer to accept as payment, or require for use as security any check issued16
pursuant to the federal Social Security Act. In addition, it shall be unlawful for any17
lender making small loans to act as a depository institution for the acceptance of any18
check issued pursuant to the federal Social Security Act, unless such lender is a19
federally insured financial institution.20
C. A violation of this Section shall constitute a violation of Chapter 1321
of Title 51 of the Louisiana Revised Statutes of 1950.22
* * *23
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Julie J. Baxter.
DIGEST
Nevers (SB 84)
Proposed law provides that, with respect to a consumer credit transaction, 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.
Present law provides that a creditor having no office in this state offering credit to Louisiana
consumers through the mails and other means of interstate commerce shall be exempt from SB NO. 84
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the consumer loan licensing requirements under the licensing provisions of the Louisiana
Consumer Credit Law.
Proposed law deletes present law.
Present law in Louisiana's Deferred Presentment and Small Loan Act defines "partial
payment" as a payment of fifty dollars or more on a deferred presentment transaction or
small loan.
Proposed law deletes the definition of "partial payment" in present law.
Proposed law in Louisiana's Deferred Presentment and Small Loan Act defines "interest" to
mean all charges and fees assessed, payable directly or indirectly, including fees allowed
under R.S. 9:5530 in connection with or as a condition of a deferred presentment transaction
or small loan.
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 provides that notwithstanding any other provision of law, a licensee may
charge a fee not to exceed 36% interest annually. Proposed law further provides that any
transaction or loan made or collected in violation of proposed law is void, and the licensee
shall not have the right to collect, receive, or retain any principal, interest, fees or other
charges.
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 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.
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 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.
Proposed law provides that a licensee under Louisiana's Deferred Presentment and Small
Loan Act shall not engage in any device or subterfuge intended to evade the requirements
of the Act through any means, including but not limited to mail, telephone, Internet or any
electronic means, by 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 SB NO. 84
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assisting a borrower to obtain a revolving line of credit for the purpose of avoiding the
requirements of present law.
Proposed law provides that the performance of one of the prohibited acts under Louisiana's
Deferred Presentment and Small Loan Act shall constitute a violation of Louisiana's Unfair
Trade Practices and Consumer Protection Law.
Effective August 1, 2014.
(Amends R.S. 9:3560(A), 3578.3, 3578.4(A), 3578.5 and 3578.6; adds R.S. 9:3537)