HB320 Alabama 2013 Session

Summary

Primary Sponsor

Patricia Todd

Democrat

Co-Sponsors

Laura HallJames E. BuskeyLawrence McAdoryMerika ColemanJamie Ison

Session

Regular Session 2013

Title

Deferred presentment services, define principal balance, common database, limits on interest that can be charged, violations, Secs. 5-18A-2, 5-18A-12, 5-18A-13, 5-18A-16 am'd.

Summary

HB320 would tighten Alabama payday loan rules by defining principal balance, capping fees and interest, expanding borrower protections, and creating a shared database to prevent over-lending.

What This Bill Does

It adds a definition for principal balance and makes non-exempt borrowers subject to the Deferred Presentment Services Act. It imposes caps on charges (17.5% per transaction, 36% APR, and a $500 total advance cap across all lenders) and requires a common database to enforce these limits. It restricts lending to borrowers with outstanding balances or high loan counts, extends deferral periods, and prohibits certain aggressive practices; it also strengthens disclosures and requires a detailed extended repayment plan option. It creates enforcement mechanisms, voids contracts made in violation, and imposes penalties for violations.

Who It Affects

• Deferred presentment providers (payday loan lenders) would need licensure, must use a common real-time database, disclose fees clearly, comply with loan caps and borrowing limits, report data to the supervisor, and face penalties for violations.
• Borrowers and customers using deferred presentment services would gain stronger protections, including fee/price disclosures, limits on loan frequency and amounts, extended repayment options, and protections against threats or abusive collection practices.

Key Provisions

• Adds and defines Principal Balance; applies to all non-exempt borrowers under the act; any loan contract in violation is void and unenforceable.
• Imposes caps: maximum fee 17.5% of the amount advanced; APR not to exceed 36%; total advances capped at $500 per borrower; common database used to enforce the cap.
• Borrower restrictions: no new loan if outstanding deferred presentment balance is $500 or more, or if the borrower has six or more deferred presentment transactions in 12 months; extended repayment plans and military status provisions included; deferral period extended and DP starts only after funds are received.
• Database and reporting: licensees must use a designated common database (real-time access) to verify outstanding balances; licensees must report specified information to the supervisor; data submission may involve a small per-transaction fee not charged to borrowers.
• Extended Repayment Plan (ERP): four equal monthly installments over up to 90 days; optional, with upfront disclosures and a signed amendment; failure to pay ERP can accelerate the remaining balance; 15-day notice window for exercising ERP rights.
• Disclosures and protections: upfront disclosure of all fees and costs; Truth-in-Lending-style disclosures; forbidden practices include threats, coercion, or deception; checks/debits must be properly dated and editable only as permitted.
• Enforcement and penalties: contracts violating the act are void; violations can lead to civil penalties up to $1,000 per transaction and potential misdemeanors; improper collection methods and unlicensed operation carry additional penalties.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Deferred Presentment Services