SB532 Alabama 2012 Session

Summary

Primary Sponsor

Bryan Taylor

Republican

Session

Regular Session 2012

Title

Deferred presentment services, bad check fee, common database, roll-over of deferred presentment transactions, violations, Secs. 5-18A-2, 5-18A-12, 5-18A-13, 5-18A-16 am'd.

Summary

This bill would tighten and standardize Alabama's Deferred Presentment Services Act by capping fees, clarifying rollover rules, creating a real-time shared database, and strengthening penalties for violations.

What This Bill Does

It sets a maximum fee of 17.5% of the amount advanced (up to $500 per loan) and limits to two consecutive deferred presentment transactions per borrower; after two transactions, repayment must be made or the borrower offered a four-month extended payment plan, with a 15-day notice before collection. It requires clear written disclosures of all fees, treats them as finance charges, and requires conspicuous fee schedules. It also creates a real-time common database to check outstanding deferred presentment debts and strengthens enforcement, including possible refunds and civil penalties for violations.

Who It Affects

• Borrowers/consumers who use deferred presentment services would face new limits on fees and rollovers, required disclosures, and extended repayment options.
• Licensees/deferred presentment providers and the State Banking Department, who must implement the common database, follow new disclosure and rollover rules, and face enhanced enforcement.

Key Provisions

• Maximum fee of 17.5% of the amount advanced, with a cap of $500 advanced per transaction.
• Limit to two continuous deferred presentment transactions per borrower with the same licensee; new transactions must wait until the next business day after full repayment.
• After initial period and one rollover, the full outstanding balance becomes due; borrower may choose a four-month extended repayment plan, with 15-day notice before collection.
• If funds are insufficient, only one NSF/insufficient funds fee may be charged; no other extra charges beyond those authorized by law.
• Outstanding deferred presentment debts cannot exceed $500 for a borrower with any lender at any time.
• Written disclosures of all fees before entering the agreement; fees disclosed as finance charges consistent with Truth-in-Lending; conspicuous fee schedule with warning about higher costs.
• Licensees must provide a copy of the written agreement and describe the extended repayment option.
• Licensees may not alter the date on checks, may not accept undated checks, and must avoid deceptive practices; all transactions must be conducted fairly.
• A common real-time database will be created and used by providers and the supervisor to verify outstanding transactions; data fields required; up to $1 per transaction data-fee.
• Enforcement powers include cease-and-desist orders, refunds of fees, civil penalties up to $1,000 per transaction, and making violative transactions unenforceable.
• Effective date: the act takes effect on the first day of the third month after passage.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Deferred Presentment Services