HB342 Alabama 2016 Session

Summary

Primary Sponsor

Patricia Todd

Democrat

Session

Regular Session 2016

Title

Payday loans, deferred presentment services, expand licensure requirements, further regulate deferred presentment services, penalties for evading licensure requirements, Secs. 5-18A-3, 5-18A-6, 5-18A-12, 5-18A-13 am'd.

Summary

HB342 would expand and tighten Alabama's deferred presentment (payday loan) rules by expanding licensure, raising fees, capping charges and terms, and strengthening consumer protections.

What This Bill Does

It would require licensure for deferred presentment services offered via mail, phone, Internet, mobile apps, or in person and increase license fees ($500 per location, with $500 to the General Fund and a $100 investigation fee; the funding split is described as half to the State Banking Department and half to the General Fund). It imposes criminal penalties for evading licensure and tightens rules on fees, interest, number of loans, loan term, finance charges, and repayment. It sets maximums on loan amounts and charges (up to $500 per loan; up to 45% annual finance charge; structured origination and maintenance fees) and requires clear disclosures and notices to borrowers. It limits renewals and extensions, mandates a minimum six-month loan term, provides an extended repayment option, and clarifies prepayment refunds and borrower protections. It also discusses local-government funding implications under Amendment 621, noting the bill is exempt from those requirements because it creates or amends a crime.

Who It Affects

• Licensees and their agents who offer deferred presentment services must obtain and maintain licenses for all channels and follow the new rules and fees.
• Consumers who use deferred presentment services would receive clearer disclosures, caps on fees, new repayment options, and protections against deceptive practices.

Key Provisions

• Expand licensure to cover services offered by mail, telephone, Internet, mobile device applications, or in person (Sections 5-18A-3, 5-18A-6, 5-18A-12, 5-18A-13).
• Increase the license fee to $500 per location, with $500 directed to the General Fund and $500 payable to the department; add a $100 license application investigation fee; supervisor may regulate amounts.
• Create criminal penalties for evading licensure (misdemeanor; fines up to $500 and/or up to 6 months in jail).
• Set loan-structure limits: maximum $500 advanced per transaction; maximum finance charge up to 45% per year; origination fee up to 20% of the first $300 plus 7.5% of amounts over $300; monthly maintenance fees up to $7.50 per $100, not exceeding $30 per month.
• Disclosures and reporting: require clear written disclosure of all fees and total costs; require conspicuous fee schedule; ensure funds are paid to the borrower; require endorsement of checks; specify deposit timing and related notices.
• Renewals and extensions: allow up to two consecutive transactions with a customer, with a one-day waiting period after full repayment before a new agreement; no origination or monthly maintenance fees on renewal; refinance up to $500 if owed more than $500; prorated refunds of finance charges upon renewal.
• Extended repayment options and protections: provide for four equal monthly installments for remaining balance; require notices before enforcement actions; extend protections against unfair practices and unlawful collection.
• Local funding note: references Amendment 621’s local-expenditure rules but states the bill is exempt from those requirements because it creates or amends a crime.

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

Subjects

Banks and Banking