| 1 | 1 | | |
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| 2 | 2 | | EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted |
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| 3 | 3 | | and is intended to be omitted in the law. |
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| 4 | 4 | | FIRST REGULAR SESSION |
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| 5 | 5 | | SENATE BILL NO. 368 |
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| 6 | 6 | | 103RD GENERAL ASSEMBLY |
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| 7 | 7 | | INTRODUCED BY SENATOR MCCREERY. |
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| 8 | 8 | | 0344S.01I KRISTINA MARTIN, Secretary |
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| 9 | 9 | | AN ACT |
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| 10 | 10 | | To repeal sections 367.515, 408.500, 408.505, and 408.510, RSMo, and to enact in lieu thereof six |
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| 11 | 11 | | new sections relating to small loans, with penalty provisions and a referendum clause. |
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| 12 | 12 | | |
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| 13 | 13 | | Be it enacted by the General Assembly of the State of Missouri, as follows: |
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| 14 | 14 | | Section A. Sections 367.515, 408.500, 408.505, and 1 |
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| 15 | 15 | | 408.510, RSMo, are repealed and six new sections enacted in 2 |
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| 16 | 16 | | lieu thereof, to be known as sections 367.105, 367.515, 408.101, 3 |
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| 17 | 17 | | 408.500, 408.505, and 408.510, to read as follows:4 |
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| 18 | 18 | | 367.105. Any person making or offering a consumer 1 |
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| 19 | 19 | | credit loan shall contract for and receive interest and fees 2 |
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| 20 | 20 | | in accordance with sections 408.100, 408.101, 408.140, and 3 |
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| 21 | 21 | | 408.170, and such loan shall be subject to all provisions of 4 |
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| 22 | 22 | | sections 408.100, 408.101, 408.140, and 408.170. 5 |
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| 23 | 23 | | 367.515. A title lender shall contract for and receive 1 |
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| 24 | 24 | | simple interest and fees i n accordance with sections 2 |
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| 25 | 25 | | 408.100, 408.101, and 408.140, and such interest and fees 3 |
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| 26 | 26 | | shall be subject to all provisions of sections 408.100, 4 |
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| 27 | 27 | | 408.101, and 408.140 . 5 |
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| 28 | 28 | | 408.101. 1. On any loan subject to this section, any 1 |
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| 29 | 29 | | person, firm, or corporation may charge, contract for, and 2 |
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| 30 | 30 | | receive interest on the unpaid principal balance at rates 3 |
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| 31 | 31 | | agreed to by the parties, provided that the combined 4 |
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| 32 | 32 | | interest, fees, and finance charges shall not exceed an 5 |
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| 33 | 33 | | annual percentage rate of thirty -six percent. 6 SB 368 2 |
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| 34 | 34 | | 2. No person, firm, or corporation shall use any 7 |
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| 35 | 35 | | device or subterfuge to intentionally evade the requirements 8 |
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| 36 | 36 | | of this chapter to: 9 |
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| 37 | 37 | | (1) Offer, make, assist a borrower in obtaining, or 10 |
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| 38 | 38 | | broker a loan at an annual percentage rate prohibited by 11 |
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| 39 | 39 | | this section; 12 |
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| 40 | 40 | | (2) Make a loan disguised as a personal property sale 13 |
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| 41 | 41 | | and leaseback transaction; 14 |
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| 42 | 42 | | (3) Disguise loan proceeds as cash rebates for the 15 |
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| 43 | 43 | | pretextual installment sale of goods or services; 16 |
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| 44 | 44 | | (4) Make, assist a borrower in obtai ning, or broker an 17 |
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| 45 | 45 | | offer of credit, in whole or in part, from a third party or 18 |
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| 46 | 46 | | while acting as an agent for a third party, regardless of 19 |
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| 47 | 47 | | whether the third party is exempt from licensing or if the 20 |
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| 48 | 48 | | approval, acceptance, or ratification by the third party is 21 |
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| 49 | 49 | | necessary to create a legal obligation for the third party; 22 |
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| 50 | 50 | | or 23 |
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| 51 | 51 | | (5) Charge, if authorized under any applicable section 24 |
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| 52 | 52 | | of Missouri law, any application fee for providing credit or 25 |
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| 53 | 53 | | any fee for participation in a credit plan without including 26 |
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| 54 | 54 | | the fee in the calculation of the annual percentage rate 27 |
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| 55 | 55 | | required under this section. 28 |
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| 56 | 56 | | 408.500. 1. Lenders, other than banks, trust 1 |
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| 57 | 57 | | companies, credit unions, savings banks and savings and loan 2 |
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| 58 | 58 | | companies, in the business of making unse cured loans of five 3 |
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| 59 | 59 | | hundred dollars or less shall obtain a license from the 4 |
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| 60 | 60 | | director of the division of finance. An annual license fee 5 |
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| 61 | 61 | | of six hundred dollars per location shall be required. The 6 |
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| 62 | 62 | | license year shall commence on January first each year a nd 7 |
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| 63 | 63 | | the license fee may be prorated for expired months. The 8 |
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| 64 | 64 | | director may establish a biennial licensing arrangement but 9 |
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| 65 | 65 | | in no case shall the fees be payable for more than one year 10 SB 368 3 |
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| 66 | 66 | | at a time. The provisions of this section shall not apply 11 |
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| 67 | 67 | | to pawnbroker loans, consumer credit loans as authorized 12 |
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| 68 | 68 | | under chapter 367, nor to a check accepted and deposited or 13 |
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| 69 | 69 | | cashed by the payee business on the same or the following 14 |
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| 70 | 70 | | business day. The disclosures required by the federal Truth 15 |
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| 71 | 71 | | in Lending Act, 15 U.S.C. Section 1601, et seq., and 16 |
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| 72 | 72 | | regulation Z shall be provided on any loan, renewal or 17 |
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| 73 | 73 | | extension made pursuant to this section and the loan, 18 |
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| 74 | 74 | | renewal or extension documents shall be signed by the 19 |
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| 75 | 75 | | borrower. 20 |
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| 76 | 76 | | 2. Entities making loans pursuant to this sectio n 21 |
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| 77 | 77 | | shall contract for and receive simple interest and fees in 22 |
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| 78 | 78 | | accordance with sections 408.100 , 408.101, and 408.140, and 23 |
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| 79 | 79 | | such loans shall be subject to all provisions of sections 24 |
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| 80 | 80 | | 408.100, 408.101, and 408.140 . Any contract evidencing any 25 |
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| 81 | 81 | | fee or charge of any kind whatsoever, except for bona fide 26 |
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| 82 | 82 | | clerical errors, in violation of this section shall be 27 |
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| 83 | 83 | | void. Any person, firm or corporation who receives or 28 |
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| 84 | 84 | | imposes a fee or charge in violation of this section shall 29 |
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| 85 | 85 | | be guilty of a class A misdemeanor. 30 |
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| 86 | 86 | | 3. Notwithstanding any other law to the contrary, cost 31 |
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| 87 | 87 | | of collection expenses, which include court costs and 32 |
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| 88 | 88 | | reasonable attorneys fees, awarded by the court in suit to 33 |
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| 89 | 89 | | recover on a bad check or breach of contract shall not be 34 |
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| 90 | 90 | | considered as a fee or charge for purposes of this section. 35 |
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| 91 | 91 | | 4. Lenders licensed pursuant to this section shall 36 |
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| 92 | 92 | | conspicuously post in the lobby of the office, in at least 37 |
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| 93 | 93 | | fourteen-point bold type, the maximum annual percentage 38 |
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| 94 | 94 | | rates such licensee is currently charging and the statement: 39 |
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| 95 | 95 | | 40 NOTICE: SB 368 4 |
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| 96 | 96 | | 5. The lender shall provide the borrower with a notice 44 |
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| 97 | 97 | | in substantially the following form set forth in at least 45 |
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| 98 | 98 | | ten-point bold type, and receipt thereof shall be 46 |
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| 99 | 99 | | acknowledged by signature of the borrower: 47 |
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| 100 | 100 | | (1) This lender offers short -term loans. Please read 48 |
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| 101 | 101 | | and understand the terms of the loan agreement before 49 |
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| 102 | 102 | | signing. 50 |
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| 103 | 103 | | (2) You may cancel this loan without costs by 51 |
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| 104 | 104 | | returning the full principal balance to the lender by the 52 |
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| 105 | 105 | | close of the lender's next full business day. 53 |
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| 106 | 106 | | 6. The lender shall renew the loan upon the borrower's 54 |
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| 107 | 107 | | written request and the payment of any interest and fees due 55 |
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| 108 | 108 | | at the time of such renewal; however, upon the first renewal 56 |
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| 109 | 109 | | of the loan agreement, and each subsequent renewal 57 |
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| 110 | 110 | | thereafter, the borrower shall reduce the principal amount 58 |
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| 111 | 111 | | of the loan by not less than five percent of the original 59 |
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| 112 | 112 | | amount of the loan until such loan is paid in full. 60 |
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| 113 | 113 | | However, no loan may be renewed more than six times. 61 |
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| 114 | 114 | | 7. When making or negotiating loans, a licensee shall 62 |
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| 115 | 115 | | consider the financial ability of the borrower to rea sonably 63 |
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| 116 | 116 | | repay the loan in the time and manner specified in the loan 64 |
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| 117 | 117 | | contract. All records shall be retained at least two years. 65 |
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| 118 | 118 | | 8. A licensee who ceases business pursuant to this 66 |
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| 119 | 119 | | section must notify the director to request an examination 67 |
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| 120 | 120 | | of all records within ten business days prior to cessation. 68 |
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| 121 | 121 | | All records must be retained at least two years. 69 |
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| 122 | 122 | | 9. Any lender licensed pursuant to this section who 70 |
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| 123 | 123 | | fails, refuses or neglects to comply with the provisions of 71 |
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| 124 | 124 | | 41 |
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| 125 | 125 | | 42 |
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| 126 | 126 | | 43 |
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| 127 | 127 | | This lender offers short -term loans. Please read |
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| 128 | 128 | | and understand the terms of the loan agreement |
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| 129 | 129 | | before signing. |
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| 130 | 130 | | SB 368 5 |
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| 131 | 131 | | this section, or any laws relati ng to consumer loans or 72 |
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| 132 | 132 | | commits any criminal act may have its license suspended or 73 |
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| 133 | 133 | | revoked by the director of finance after a hearing before 74 |
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| 134 | 134 | | the director on an order of the director to show cause why 75 |
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| 135 | 135 | | such order of suspension or revocation should not be entered 76 |
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| 136 | 136 | | specifying the grounds therefor which shall be served on the 77 |
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| 137 | 137 | | licensee at least ten days prior to the hearing. 78 |
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| 138 | 138 | | 10. Whenever it shall appear to the director that any 79 |
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| 139 | 139 | | lender licensed pursuant to this section is failing, 80 |
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| 140 | 140 | | refusing or neglecti ng to make a good faith effort to comply 81 |
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| 141 | 141 | | with the provisions of this section, or any laws relating to 82 |
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| 142 | 142 | | consumer loans, the director may issue an order to cease and 83 |
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| 143 | 143 | | desist which order may be enforceable by a civil penalty of 84 |
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| 144 | 144 | | not more than one thousand do llars per day for each day that 85 |
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| 145 | 145 | | the neglect, failure or refusal shall continue. The penalty 86 |
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| 146 | 146 | | shall be assessed and collected by the director. In 87 |
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| 147 | 147 | | determining the amount of the penalty, the director shall 88 |
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| 148 | 148 | | take into account the appropriateness of the pen alty with 89 |
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| 149 | 149 | | respect to the gravity of the violation, the history of 90 |
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| 150 | 150 | | previous violations, and such other matters as justice may 91 |
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| 151 | 151 | | require. 92 |
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| 152 | 152 | | 408.505. 1. This section shall apply to: 1 |
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| 153 | 153 | | (1) Unsecured loans made by lenders licensed or w ho 2 |
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| 154 | 154 | | should have been licensed pursuant to section 408.500; 3 |
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| 155 | 155 | | (2) Any person that the Missouri division of finance 4 |
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| 156 | 156 | | determines that has entered into a transaction that, in 5 |
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| 157 | 157 | | substance, is a disguised loan; and 6 |
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| 158 | 158 | | (3) Any person that the Missouri divis ion of finance 7 |
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| 159 | 159 | | determines has engaged in subterfuge for the purpose of 8 |
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| 160 | 160 | | avoiding the provisions of this section. 9 |
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| 161 | 161 | | 2. All loans made pursuant to this section and section 10 |
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| 162 | 162 | | 408.500, shall have a minimum term of fourteen days and a 11 SB 368 6 |
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| 163 | 163 | | maximum term of thirt y-one days, regardless of whether the 12 |
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| 164 | 164 | | loan is an original loan or renewed loan. 13 |
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| 165 | 165 | | 3. A lender may only charge simple interest and fees 14 |
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| 166 | 166 | | in accordance with sections 408.100 , 408.101, and 408.140, 15 |
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| 167 | 167 | | and such interest and fees shall be subject to all 16 |
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| 168 | 168 | | provisions of sections 408.100, 408.101, and 408.140 . No 17 |
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| 169 | 169 | | other charges of any nature shall be permitted except as 18 |
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| 170 | 170 | | provided by this section, including any charges for cashing 19 |
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| 171 | 171 | | the loan proceeds if they are given in check form. 20 |
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| 172 | 172 | | [However, no borrower shall be required to pay a total 21 |
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| 173 | 173 | | amount of accumulated interest and fees in excess of seventy - 22 |
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| 174 | 174 | | five percent of the initial loan amount on any single loan 23 |
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| 175 | 175 | | authorized pursuant to this section for the entire term of 24 |
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| 176 | 176 | | that loan and all renewals authorized by secti on 408.500 and 25 |
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| 177 | 177 | | this section.] 26 |
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| 178 | 178 | | 4. A loan made pursuant to the provisions of section 27 |
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| 179 | 179 | | 408.500 and this section shall be deemed completed and shall 28 |
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| 180 | 180 | | not be considered a renewed loan when the lender presents 29 |
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| 181 | 181 | | the instrument for payment or the payee rede ems the 30 |
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| 182 | 182 | | instrument by paying the full amount of the instrument to 31 |
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| 183 | 183 | | the lender. Once the payee has completed the loan, the 32 |
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| 184 | 184 | | payee may enter into a new loan with a lender. 33 |
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| 185 | 185 | | 5. Except as provided in subsection 3 of this section, 34 |
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| 186 | 186 | | no loan made pursuant to this section shall be repaid by the 35 |
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| 187 | 187 | | proceeds of another loan made by the same lender or any 36 |
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| 188 | 188 | | person or entity affiliated with the lender. A lender, 37 |
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| 189 | 189 | | person or entity affiliated with the lender shall not have 38 |
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| 190 | 190 | | more than five hundred dollars in loans ma de pursuant to 39 |
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| 191 | 191 | | section 408.500 and this section outstanding to the same 40 |
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| 192 | 192 | | borrower at any one time. A lender complies with this 41 |
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| 193 | 193 | | subsection if: 42 SB 368 7 |
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| 194 | 194 | | (1) The consumer certifies in writing that the 43 |
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| 195 | 195 | | consumer does not have any outstanding small loans with t he 44 |
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| 196 | 196 | | lender which in the aggregate exceeds five hundred dollars, 45 |
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| 197 | 197 | | and is not repaying the loan with the proceeds of another 46 |
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| 198 | 198 | | loan made by the same lender; and 47 |
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| 199 | 199 | | (2) The lender does not know, or have reason to 48 |
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| 200 | 200 | | believe, that the consumer's written certif ication is false. 49 |
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| 201 | 201 | | 6. On a consumer loan transaction where cash is 50 |
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| 202 | 202 | | advanced in exchange for a personal check, a return check 51 |
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| 203 | 203 | | charge may be charged in the amounts provided by sections 52 |
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| 204 | 204 | | 408.653 and 408.654, as applicable. 53 |
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| 205 | 205 | | 7. No state or public e mployee or official, including 54 |
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| 206 | 206 | | a judge of any court of this state, shall enforce the 55 |
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| 207 | 207 | | provisions of any contract for payment of money subject to 56 |
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| 208 | 208 | | this section which violates the provisions of section 57 |
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| 209 | 209 | | 408.500 and this section. 58 |
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| 210 | 210 | | 8. A person does not commit the crime of passing a bad 59 |
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| 211 | 211 | | check pursuant to section 570.120 if at the time the payee 60 |
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| 212 | 212 | | accepts a check or similar sight order for the payment of 61 |
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| 213 | 213 | | money, he or she does so with the understanding that the 62 |
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| 214 | 214 | | payee will not present it for payment until l ater and the 63 |
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| 215 | 215 | | payee knows or has reason to believe that there are 64 |
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| 216 | 216 | | insufficient funds on deposit with the drawee at the time of 65 |
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| 217 | 217 | | acceptance. However, this section shall not apply if the 66 |
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| 218 | 218 | | person's account on which the instrument was written was 67 |
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| 219 | 219 | | closed by the consumer before the agreed -upon date of 68 |
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| 220 | 220 | | negotiation or the consumer has stopped payment on the check. 69 |
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| 221 | 221 | | 9. A lender shall not use a device or agreement that 70 |
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| 222 | 222 | | would have the effect of charging or collecting more fees, 71 |
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| 223 | 223 | | charges, or interest than all owed by this section, 72 |
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| 224 | 224 | | including, but not limited to: 73 |
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| 225 | 225 | | (1) Entering into a different type of transaction; 74 SB 368 8 |
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| 226 | 226 | | (2) Entering into a sales lease back arrangement; 75 |
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| 227 | 227 | | (3) Catalog sales; 76 |
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| 228 | 228 | | (4) Entering into any other transaction with the 77 |
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| 229 | 229 | | consumer that is designed to evade the applicability of this 78 |
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| 230 | 230 | | section. 79 |
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| 231 | 231 | | 10. The provisions of this section shall only apply to 80 |
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| 232 | 232 | | entities subject to the provisions of section 408.500 and 81 |
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| 233 | 233 | | this section. 82 |
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| 234 | 234 | | 408.510. [Notwithstanding any other la w to the 1 |
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| 235 | 235 | | contrary,] 1. For purposes of this section, the [phrase] 2 |
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| 236 | 236 | | following terms mean: 3 |
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| 237 | 237 | | (1) "Consumer installment lender", a person licensed 4 |
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| 238 | 238 | | to make consumer installment loans; 5 |
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| 239 | 239 | | (2) "Consumer installment loans" [means], secured or 6 |
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| 240 | 240 | | unsecured loans of any amount and payable in not less than 7 |
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| 241 | 241 | | four substantially equal installments over a period of not 8 |
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| 242 | 242 | | less than one hundred twenty days. [The phrase "consumer 9 |
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| 243 | 243 | | installment lender" means a person licensed to make consumer 10 |
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| 244 | 244 | | installment loans.] 11 |
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| 245 | 245 | | 2. A consumer installment lender shall be licensed in 12 |
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| 246 | 246 | | the same manner and upon the same terms as a lender making 13 |
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| 247 | 247 | | consumer credit loans. [Such] 14 |
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| 248 | 248 | | 3. A consumer installment [lenders] lender shall 15 |
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| 249 | 249 | | contract for and receive interest and fees in acc ordance 16 |
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| 250 | 250 | | with sections 408.100, 408.101, 408.140, and 408.170 [. 17 |
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| 251 | 251 | | Consumer installment lenders ], and such interest and fees 18 |
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| 252 | 252 | | shall be subject to [the] all provisions of sections 19 |
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| 253 | 253 | | 408.100, 408.101, 408.140, and 408.170 and sections 408.551 20 |
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| 254 | 254 | | to 408.562. 21 |
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| 255 | 255 | | Section B. This act is hereby submitted to the 1 |
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| 256 | 256 | | qualified voters of this state for approval or rejection at 2 |
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| 257 | 257 | | an election which is hereby ordered and which shall be held 3 SB 368 9 |
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| 258 | 258 | | and conducted on Tuesday next following the first Monday in 4 |
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| 259 | 259 | | November, 2026, pursuant to the laws and constitutional 5 |
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| 260 | 260 | | provisions of this state for the submission of referendum 6 |
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| 261 | 261 | | measures by the general assembly, and this act shall become 7 |
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| 262 | 262 | | effective when approved by a majority of the votes cast 8 |
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| 263 | 263 | | thereon at such election a nd not otherwise. 9 |
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| 264 | 264 | | |
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