HB146 Alabama 2014 Session

Summary

Primary Sponsor

Patricia Todd

Democrat

Session

Regular Session 2014

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

HB146 would overhaul Alabama payday-like deferment loans by defining Principal Balance, capping loan costs, restricting certain borrowers, adding a shared database, and expanding consumer disclosures and enforcement.

What This Bill Does

It defines key terms such as Principal Balance and subjects non-exempt borrowers to the Deferred Presentment Services Act. It voids loan contracts entered in violation of the act and imposes caps on charges (a maximum fee of 17.5% of the amount advanced, with an APR cap of 36%), plus a total borrower-aggregate loan cap of $500 across all licensees. It restricts licensees from extending loans to customers with outstanding deferred presentment transactions over $500, who have six or more such transactions in 12 months, who are in an extended repayment plan, or who are military members or their spouses/dependents. It extends the deferral period for checks, prohibits threats or violence, starts the deferment when funds are received, requires a common database to ensure no outstanding balances exceed $500, and mandates reporting and disclosures to protect consumers.

Who It Affects

• Borrowers and customers of deferred presentment services; they face new limits on how much they can borrow, higher disclosure requirements, and potential repayment options.
• Licensees and deferred presentment providers; they must adhere to licensing, reporting, database use, fee disclosures, and consumer protections, with potential penalties for violations.
• Military members and their spouses or dependents; their eligibility for new loans is restricted under certain conditions to protect service members.
• Banks, credit unions, savings institutions, and certain financial entities; these groups are exempt from licensing under this act.

Key Provisions

• Defines Principal Balance and clarifies that any loan contract entered in violation of the act is void.
• Imposes cost caps: maximum fee of 17.5% of the amount advanced and APR capped at 36%; aggregate amount advanced to a borrower across all licensees is capped at $500; requires a common database to enforce the cap.
• Limitations on borrower risk: licensees cannot extend loans to customers with more than $500 outstanding in deferred presentment, six or more transactions in 12 months, those in an extended repayment plan until 14 days after paid, or customers who are military members (or their spouses/dependents).
• Extends deferral periods and sets repayment terms, including an extended repayment option with specific notice and terms, and a requirement that extended repayment can be canceled if the customer misses payments.
• Prohibits threats or use of force, and limits criminal-prosecution threats against customers; the deferment period begins only after the customer receives funds.
• Requires licensees to use a designated common database (or third-party database) to verify outstanding balances and repayment plans, with real-time access and data submission requirements.
• Mandates comprehensive disclosures: upfront itemized fee disclosures, Truth-in-Lending Act-style notices, and a conspicuous schedule of all fees and penalties, including a warning that fees may be higher for deferred presentment transactions.
• Requires written agreements, clear right to redeem, and specific timelines for presenting checks or debits (not less than 10 days and not more than 30 (31 in text) calendar days after the contract).
• Authorizes enforcement and penalties: void contracts, refunds of fees, civil penalties up to $1,000 per violation, and additional penalties for certain deceptive or illegal practices; enforcement includes fines and potential litigation consequences.
• Regulates reporting and oversight: licensees must report annually to the supervisor with required information; the supervisor will publish analyses of deferred presentment use.
• Effective date: the act becomes effective on the first day of the third month after passage and governor approval.

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