SB404 Alabama 2017 Session

Summary

Primary Sponsor

Tom Whatley

Republican

Session

Regular Session 2017

Title

Checks, deferred presentment, regulation by Banking Dept., renewals, repayment plans further authorized, licensees to notify customer of installment loans, Secs. 5-18A-2, 5-18A-3, 5-18A-12, 5-18A-13 am'd.

Description

Under existing law, a person who engages in the business of deferred presentment services must be licensed by the State Banking Department. Under existing law, when a deferred presentment services transaction becomes due, the licensee may renew or extend the transaction for one additional term.

After one renewal or extension, the licensee may not enter into a new transaction with the customer until the next business day after the previous transaction is paid in full. Under existing law, if the customer is unable to pay upon the expiration of the initial term and one renewal or extension, the licensee may offer an extended repayment plan of four equal monthly installments.

This bill would clarify that a person may not engage in the business of deferred presentment services with a consumer in this state by mail, telephone, over the Internet, or in person without a license, and any transaction in violation is void.

This bill would remove the provision authorizing one renewal or extension of a deferred presentment transaction and specify that the licensee could not enter into a new transaction with the customer until at least 48 hours after the previous transaction is paid in full.

This bill would provide for a free extended repayment plan if the customer is unable to pay at the end of the term of the transaction or if the customer's check or debit authorization is returned for any reason. This bill would allow the customer to request a repayment plan once in a 12-month period. This bill would require a customer participating in the repayment plan to also participate in a financial literary and education program or financial counseling program and to produce documentation of completion of such a program before entering into a new deferred presentment transaction. This bill would allow the licensee to access and collect a late charge and would prohibit any licensee from entering into a new transaction with a customer under an extended repayment plan.

This bill would require a licensee who offers other installment loan products to inform a customer of the availability of these products once the customer has successfully used and repaid six transactions in a 12-month period. This bill would also prohibit a licensee from using the proceeds of a loan made under the Small Loan Act or the Alabama Consumer Credit Act to repay a deferred presentment services transaction.

This bill would allow a licensee to enter into a deferred presentment transaction with a customer who has made 12 or more transactions in the previous 12 months only after 14 days have passed since the previous transaction is paid in full.

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Subjects

Banking Department