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Regular Session, 2014
SENATE BILL NO. 84
BY SENATORS NEVERS, ADL EY, BROOME AND BROWN AND
REPRESENTATIVES HONORE, JAMES AND ALFRED WILLIAMS
CONSUMERS. Provides relative to consumer credit transactions. (8/1/14)
AN ACT1
To amend and reenact R.S. 9:3560(A), 3578.3, 3578.5 and 3578.6, and R.S. 51:1406(1), and2
to enact R.S. 9:3537 and R.S. 9:3578.8(E), relative to consumer credit transactions,3
deferred presentment transactions and small loans; to provide relative to holding of4
checks; to provide relative to licensing; to provide certain definitions, limitations,5
and requirements; to provide for the adoption of regulations and the implementation6
of a database; to provide relative to certain prohibited acts and violations of such7
acts; to provide for certain terms, conditions, and procedures; and to provide for8
related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 9:3560(A), 3578.3, 3578.5 and 3578.6, are hereby amended and11
reenacted and R.S. 9:3537 and R.S. 9:3578.8(E) are hereby enacted to read as follows:12
§3537. Holding of checks13
With respect to a consumer credit transaction, an extender of credit shall14
not accept a check, as defined by R.S. 9:3516, from the issuer and agree to hold15
the check for a period of time in exchange for payment to the issuer.16
* * *17 SB NO. 84
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§3560. Licenses not required1
A. Notwithstanding R.S. 9:3557, the following persons shall be exempt from2
the consumer loan licensing requirements under this Part:3
(1)(a) A bank, savings and loan association, or similar financial institution4
organized, certified, and supervised by an agency of either the United States of5
America or the state of Louisiana pursuant to the banking, currency and related laws6
of the United States of America or the state of Louisiana.7
(b) A subsidiary of any state-chartered entity described in Subparagraph (a)8
of this Paragraph in which eighty percent or more of the ownership rests with such9
parent entity.10
(2) A trust administered by a bank or a bank trust department.11
(3) A governmental agency, instrumentality, or public entity organized by12
act of congress or the Legislature of Louisiana.13
(4) An insurance company when entering into a life insurance loan to a14
policyholder.15
(5) A qualified pension plan when entering into an extension of credit to a16
plan participant.17
(6) A bona fide pledgee of a consumer credit transaction to secure a bona18
fide loan thereon.19
(7) A seller or other creditor refinancing a retail installment transaction20
subject to the Motor Vehicle Sales Finance Act.21
(8) A creditor having no office within this state offering credit to Louisiana22
consumers through the mails and other means of interstate commerce.23
(9)(8) Unless otherwise provided by rule or regulation of the commissioner,24
persons whose lending activities pertain to federally related mortgage loans, and who25
are subject to licensing, supervision or auditing by the Federal National Mortgage26
Association, the Federal Home Loan Mortgage Corporation, the Governmental27
National Mortgage Association, the Veterans Administration, or the United States28
Department of Housing and Urban Development. Such lenders may also make loans29 SB NO. 84
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secured by a second or junior lien or mortgage on owner-occupied one-to-four family1
residential immovable property made contemporaneously with federally related2
mortgage loans or as part of a mortgage revenue bond loan program, or sold on the3
secondary market to the Federal National Mortgage Association, the Federal Home4
Loan Mortgage Corporation, or the Governmental National Mortgage Association,5
and the entity sells ten or fewer of such loans over any calendar year.6
* * *7
§3578.3. Definitions8
As used in this Chapter, the following terms have the following meanings9
ascribed to them:10
(1) "Commissioner" means the commissioner of the office of financial11
institutions.12
(2) "Deferred presentment transaction" means a transaction made pursuant13
to a written agreement whereby a licensee:14
(a) Accepts a check from the issuer dated as of the date it was written;.15
(b) Agrees to hold the check for a period of time not to exceed thirty days16
prior to negotiation or presentment; and.17
(c) Pays to the issuer of the check the amount of the check less the fee18
permitted in R.S. 9:3578.4(A). The amount paid to the issuer of the check may not19
exceed three hundred fifty dollars.20
(d) No consumer shall enter into more than ten deferred presentment21
transactions within twelve consecutive months.22
(3) "Licensee" means a person licensed pursuant to this Chapter that offers23
deferred presentment transactions or small loans, or both.24
(4) "Partial payment" means a payment of fifty dollars or more on a deferred25
presentment transaction or small loan.26
(5)(4) "Prepayment" means payment in full of the deferred presentment27
transaction or small loan amount prior to the end of the term of that transaction or28
loan.29 SB NO. 84
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(6)(5) "Small loan" means a consumer loan, as defined in R.S. 9:3516(14),1
of three hundred fifty dollars or less, made for a term of sixty days or less. No2
consumer shall enter into more than ten small loans within twelve consecutive3
months.4
* * *5
§3578.5. Rebate upon prepayment6
Upon the prepayment in full of a deferred presentment transaction or small7
loan, during the first five days of the term of such transaction or loan only, the8
licensee shall refund any and all unearned charges by a method no less favorable to9
the consumer than the actuarial method, less twenty dollars of the original fee, which10
shall be considered earned and shall not be subject to refund. Should the consumer11
make prepayment after the first five days of the term of the transaction or loan, the12
licensee shall not be required to make any refund.13
§3578.6. Prohibited acts14
A. A licensee shall not:15
(1) Except for reasonable attorney fees and costs awarded by a court, charge,16
contract for, receive, or collect a loan finance charge or credit service charge, or any17
other fee or charge other than as provided in R.S. 9:3578.4.18
(2) Sell any goods when those goods are financed with the proceeds of the19
loan or sell insurance in connection with a deferred presentment transaction or small20
loan. The sale and financing of services, including but not limited to utility payment21
services, financial or tax services, or the sale of prepaid telephone services and22
telephone-related products which are not financed with the proceeds of the loan,23
shall not be deemed a violation of this Chapter.24
(3) Refuse a partial loan payment of fifty dollars or greater.25
(4) Divide a deferred presentment transaction or small loan into multiple26
agreements for the purpose of obtaining a higher fee or charge.27
(5) Threaten any customer with prosecution or refer for prosecution any28
check accepted as payment of a deferred presentment transaction and returned by the29 SB NO. 84
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lender's depository institution for reason of insufficient funds.1
(6) Structure the repayment of a loan in such a manner as to attempt to2
circumvent the provisions of this Chapter.3
(7) Renew or roll over a deferred presentment transaction or small loan.4
However, a licensee may accept a partial payment of twenty-five percent of the5
amount advanced plus fees charged and enter into a new deferred presentment6
transaction or renew the small loan for the remaining balance owed. Once a deferred7
presentment transaction or small loan has been completed, a consumer may enter8
into a new transaction or loan with the licensee. A deferred presentment transaction9
or small loan shall be considered completed when the amount advanced has been10
paid in full by the consumer.11
(8) Take any direct or indirect interest, possessory or otherwise, whether12
perfected or unperfected, in any property in connection with a small loan, or a13
deferred presentment transaction.14
(9) Through the use of mail, telephone, Internet, electronic or any other15
means, engage in any device or subterfuge intended to evade the requirements16
of this Chapter, including but not limited to:17
(a) Offering, making, assisting a borrower to obtain, or brokering a18
deferred presentment transaction or small loan at a rate of interest prohibited19
by Louisiana law, or acting as an agent for a third party in such a transaction.20
(b) Making deferred presentment transactions or small loans disguised21
as personal property sales, consumer credit sales, and leaseback transactions.22
(c) Disguising deferred presentment transactions or small loan proceeds23
as cash rebates for the pretextual installment sale of goods or services.24
(d) Disguising a deferred presentment transaction or small loan as a25
revolving line of credit, or making or assisting a borrower to obtain a revolving26
line of credit for the purpose of avoiding the requirements of Subsection(A)(1)27
of this Section.28
B. It shall be unlawful for any small loan lender, for any reason and by any29 SB NO. 84
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means, including but not limited to direct deposit and personal tender, to accept as1
payment, offer to accept as payment, or require for use as security any check issued2
pursuant to the federal Social Security Act. In addition, it shall be unlawful for any3
lender making small loans to act as a depository institution for the acceptance of any4
check issued pursuant to the federal Social Security Act, unless such lender is a5
federally insured financial institution.6
C. A violation of this Section shall constitute a violation of Chapter 137
of Title 51 of the Louisiana Revised Statutes of 1950.8
* * *9
§3578.8. Powers of the commissioner; adoption of rules and regulation10
11
* * *12
13
E. (1)The commissioner shall implement as provided in this Section the14
use of a single common database with real-time access through an Internet15
connection for licensed lenders who make deferred presentment transactions16
and small loans pursuant to this Chapter, hereinafter referred to in this17
Subsection as "licensees." The database shall be accessible to the commissioner18
and to the licensees so that the commissioner shall be able to verify the number19
and nature of transactions that are outstanding for a particular consumer. On20
or before August 1, 2015, the commissioner shall provide by rules and21
regulations through the Administrative Procedures Act for the implementation22
of this real-time access common database.23
(2) No licensee shall engage in lending activity with a consumer who has24
taken out more than ten loans under this Chapter in the previous twelve25
consecutive months.26
(3) Licensees shall submit such loan transaction data before entering27
into each transaction in such format as required by the commissioner, including28
but not limited to the borrower's name, social security number or employment29
authorization alien number, address, driver's license number, amount of30
transaction, date of transaction, the date the transaction is closed, data31
reporting requirements of R.S. 9:3554(A)(6) and such additional information32 SB NO. 84
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as required by the commissioner.1
* * *2
Section 2. R.S. 51:1406(1) is hereby amended and reenacted to read as follows:3
§1406. Exemptions 4
The provisions of this Chapter shall not apply to: 5
(1) Any federally insured financial institution, its subsidiaries, and affiliates6
or any licensee of the Office of Financial Institutions, its subsidiaries, and affiliates,7
except as provided by R.S. 9:3578.6(C), or actions or transactions subject to the8
jurisdiction of the Louisiana Public Service Commission or other public utility9
regulatory body, the commissioner of financial institutions, except as provided by10
R.S. 9:3578.6(C), the insurance commissioner, the financial institutions and11
insurance regulators of other states, or federal banking regulators who possess12
authority to regulate unfair or deceptive trade practices.13
* * *14
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
the consumer loan licensing requirements under the licensing provisions of the Louisiana
Consumer Credit Law.
Proposed law deletes present law.
Proposed law adds to the definition of "deferred presentment transaction" that no consumer
shall enter into more than ten deferred presentment transactions within twelve consecutive
months.
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 adds to the definition of "small loans" that no consumer shall enter into more
than ten small loan transactions within twelve consecutive months. SB NO. 84
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words in boldface type and underscored are additions.
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
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.
Proposed law provides that the commissioner of the Office of Financial Institutions shall
implement as provided in proposed law a single common database with real-time access
through an Internet connection for licensed lenders who make deferred presentment
transactions and small loans pursuant to present law. Provides that the database shall be
accessible to the commissioner and to the licensees so that the commissioner shall be able
to verify the number and nature of transactions that are outstanding for a particular
consumer. 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 provides that no licensee shall engage in lending activity with a consumer who
has taken out more than ten loans under present law in the previous twelve consecutive
month.
Proposed law provides that licensees shall submit such loan transaction data before entering
into each transaction in such format as required by the commissioner, including but not
limited to the borrower's name, social security number of employment authorization alien
number, address, driver's license number, amount of transaction, date of transaction, the date
the transaction is closed, data reporting requirements of R.S. 9:3554(A(6) and such
additional information as required by the commissioner. SB NO. 84
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Proposed law removes the exemption in present law for the applicability of the Louisiana
Unfair Trade Practices and Consumer Protection Act to deferred presentment transactions
and small loans.
Effective August 1, 2014.
(Amends R.S. 9:3560(A), 3578.3, 3578.5 and 3578.6, and R.S. 51:1406(1); adds R.S. 9:3537
and 3578.8(E))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Judiciary A to the
engrossed bill
1. Provides that no consumer shall enter into more than ten deferred
presentment transactions within twelve consecutive months.
2. Provides that no consumer shall enter into more than ten small loans within
twelve consecutive months.
3. Deletes proposed definition of "interest."
4. Deletes proposed changes to current finance charges allowed in deferred
presentment transactions and small loans.
5. Adds law providing that the commissioner of the Office of Financial
Institutions 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.
6. Adds that no licensed lender shall engage in lending activity with a consumer
who has taken out more than ten loans under the Louisiana Deferred
Presentment and Small Loans Act in the previous twelve consecutive
months.
7. Removes the current exemption in the Louisiana Unfair Trade Practices and
Consumer Protection Act for deferred presentment transactions and small
loans.