HLS 19RS-355 ORIGINAL
2019 Regular Session
HOUSE BILL NO. 528
BY REPRESENTATIVE JORDAN
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
CONSUMERS: Provides relative to consumer credit loans and transactions
1 AN ACT
2To amend and reenact R.S. 9:3578.3(3) through (6), 3578.4(A)(1), 3578.5, and 3578.6(A)(7)
3 and to enact R.S. 9:3537, 3578.3(7), and 3578.6(A)(9) and (C), relative to consumer
4 credit transactions; to prohibit preliminary check holding; to provide for definitions;
5 to modify relative to refunds and deferred presentment transactions or small loans;
6 to provide modifications relative to creditor provisions and chargeable interest; to
7 provide for creditor and transactional prohibitions; and to provide for related matters.
8Be it enacted by the Legislature of Louisiana:
9 Section 1. R.S. 9:3578.3(3) through (6), 3578.4(A)(1), 3578.5, and 3578.6(A)(7) are
10hereby amended and reenacted and R.S. 9:3537, 3578.3(7), and 3578.6(A)(9) and (C) are
11hereby enacted to read as follows:
12 §3537. Prohibition; check holding
13 With respect to a consumer credit transaction, an extender of credit shall not
14 accept a check, as defined in R.S. 9:3516, from the issuer and agree to hold the check
15 for a period of time in exchange for payment to the issuer.
16 * * *
17 §3578.3. Definitions
18 As used in this Chapter, the following terms have the following meanings
19 ascribed to them:
20 * * *
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1 (3) "Interest" means all charges and fees assessed, payable directly or
2 indirectly, including fees pursuant to R.S. 9:3530(C) in connection with or as a
3 condition of a deferred presentment transaction or small loan.
4 (3)(4) "Licensee" means a person licensed pursuant to this Chapter that
5 offers deferred presentment transactions or small loans, or both.
6 (4)(5) "Partial payment" means a payment of fifty dollars or more on a
7 deferred presentment transaction or small loan.
8 (5)(6) "Prepayment" means payment in full of the deferred presentment
9 transaction or small loan amount prior to the end of the term of that transaction or
10 loan.
11 (6)(7) "Small loan" means a consumer loan, as defined in R.S. 9:3516, of
12 three hundred fifty dollars or less, made for a term of sixty days or less.
13 §3578.4. Finance charge and fees
14 A.(1) In conjunction with a deferred presentment transaction or small loan
15 Notwithstanding any other provision of law, a licensee may charge a fee not to
16 exceed sixteen and seventy-five one hundredths percent of the face amount of the
17 check issued or in the case of a small loan, the equivalent rate of interest, provided
18 however that such fee or interest does not exceed forty-five dollars, regardless of the
19 name or type of charge thirty-six percent interest annually. Any transaction or loan
20 made or collected in violation of this Paragraph is void and the licensee shall not
21 have the right to collect, receive, or retain any principal, interest, fees, or other
22 charges.
23 * * *
24 §3578.5. Rebate upon prepayment
25 Upon the prepayment in full of a deferred presentment transaction or small
26 loan, during the first five days of the term of such transaction or loan only, the
27 licensee shall refund any and all unearned charges by a method no less favorable to
28 the consumer than the actuarial method, less twenty dollars of the original fee, which
29 shall be considered earned and shall not be subject to refund. Should the consumer
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HB NO. 528
1 make prepayment after the first five days of the term of the transaction or loan, the
2 licensee shall not be required to make any refund.
3 §3578.6. Prohibited acts
4 A. A licensee shall not:
5 * * *
6 (7) Renew or roll over a deferred presentment transaction or small loan.
7 However, a licensee may accept a partial payment of twenty-five percent of the
8 amount advanced plus fees charged and enter into a new deferred presentment
9 transaction or renew the small loan for the remaining balance owed. Once a deferred
10 presentment transaction or small loan has been completed, a consumer may enter
11 into a new transaction or loan with the licensee. A deferred presentment transaction
12 or small loan shall be considered completed when the amount advanced has been
13 paid in full by the consumer.
14 * * *
15 (9) Engage in any device or subterfuge intended to evade the requirements
16 of this Chapter through any method, including but not limited to mail, telephone,
17 internet, or any electronic means, or by doing any of the following:
18 (a) Offering, making, assisting a borrower to obtain, or brokering a deferred
19 presentment transaction or small loan at a rate of interest prohibited by Louisiana
20 law, or acting as an agent for a third party in such a transaction.
21 (b) Making deferred presentment transactions or small loans disguised as
22 personal property sales, consumer credit sales, and leaseback transactions.
23 (c) Disguising deferred presentment transaction or small loan proceeds as
24 cash rebates for the pretextual installment sale of goods or services.
25 (d) Disguising a deferred presentment transaction or small loan as a
26 revolving line of credit, or making or assisting a borrower to obtain a revolving line
27 of credit for the purpose of avoiding the provisions of Subsection A of this Section.
28 * * *
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HB NO. 528
1 C. A violation of this Section is a violation of the Unfair Trade Practices and
2 Consumer Protection Law, Chapter 13 of Title 51 of the Louisiana Revised Statutes
3 of 1950.
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)]
HB 528 Original 2019 Regular Session Jordan
Abstract: Modifies various provisions relative to consumer credit loans and creditors.
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 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.
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 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 the fee or
interest does not exceed $45, regardless of the name or type of charge. Proposed law deletes
present law and provides that a licensee may charge a fee not to exceed 36% interest
annually.
Proposed law 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.
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 extends present law by
removing the five day limit to require a refund at any point in time of the loan period.
Proposed law provides that a licensee shall 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 present law.
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HB NO. 528
Proposed law adds that a licensee 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 proposed law (R.S. 9:3578.6(A)(1)).
Proposed law provides that a violation of a provision of proposed law (R.S. 9:3578.6) is a
violation of the Unfair Trade Practices and Consumer Protection Law (R.S. 51:1401 et seq.).
(Amends R.S. 9:3578.3(3)-(6), 3578.4(A)(1), 3578.5, and 3578.6(A)(7); Adds R.S. 9:3537,
3578.3(7), and 3578.6(A)(9) and (C))
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