SB282 Alabama 2013 Session

Summary

Primary Sponsor

George M. “Marc” Keahey

Democrat

Co-Sponsors

Gerald H. AllenScott BeasonJerry L. FieldingBryan TaylorLinda Coleman-MadisonTammy IronsVivian Davis FiguresDel MarshPaul BussmanRodger SmithermanTom WhatleyPriscilla Dunn

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

SB282 would tighten Alabama's payday loan laws by defining principal balance, capping charges, restricting lending to certain high-risk borrowers, and creating a shared database and reporting system for deferred presentment transactions.

What This Bill Does

SB282 defines 'Principal Balance' and subjects non-exempt borrowers to the Deferred Presentment Services Act. It makes any loan entered in violation void and sets limits on fees and interest, including a $500 cap on the total amount advanced and a 36% APR limit. It restricts lenders from extending new loans to borrowers with an outstanding balance over $500, six or more deferred presentment transactions in 12 months, an extended repayment plan, or military status, and it extends the deferral period while banning threats or violence. It requires the use of a common database and regular reporting to the supervisor to track loans and enforce the rules, and it strengthens enforcement with penalties and potential voiding of noncompliant transactions.

Who It Affects

• Borrowers who use deferred presentment services (payday loans) would face tighter limits on how many loans they can take, the total amount borrowed, the time to repay, and protections against threats and aggressive collection.
• Licensed deferred presentment providers and the State Banking Department would implement the new rules, use the database, report data, and face enforcement if they violate the act.

Key Provisions

• Defines Principal Balance as the balance due exclusive of any interest, service charges, or other loan-related charges.
• Non-exempt persons are subject to the act; any loan contract entered into in violation is void and violators may face penalties (misdemeanor, fines, or both).
• Sets financial limits: maximum fee on a deferred presentment transaction not to exceed 17.5% of the amount advanced; APR limited to 36%; maximum aggregate amount advanced to a borrower capped at $500; use of a common database to ensure the cap is not exceeded.
• Borrower limits: no new loan if outstanding balance is $500+ or if the borrower has six or more deferred presentment transactions in 12 months; extended repayment plans may be used with specific terms; military members and their families have protections.
• Extended Repayment Plan (ERP) allows four equal installments over about 90 days, with required notices, optional checks for ERP installments, and conditions for termination and acceleration if not paid.
• Deferral period rules: the deferral begins when funds are received by the borrower and is not less than 10 days or more than 30 days (as specified), with required disclosures prior to entering the agreement.
• Disclosures and notices: clear, written disclosures of all fees and total costs; copies of the written agreement provided to the borrower; notices must highlight ERP rights and terms.
• Prohibitions on coercive practices: bans the use of force, threats of violence, or threats of criminal prosecution against borrowers.
• Database and reporting: licensees must use a designated database (common database) to check outstanding balances; licensees must report specified data to the supervisor, with potential per-transaction data submission fees (not increasing borrower costs); the supervisor maintains real-time access to the database.
• Enforcement: the act provides cease-and-desist orders, required refunds, civil penalties, and treats violations as uncollectable/unenforceable in some cases.
• Exemptions: banks, credit unions, savings institutions, and certain federal or state-chartered entities remain exempt from licensing under this chapter.
• Effective date: the act becomes law on the first day of the third month after passage/approval.

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