SB138 Alabama 2018 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

Regular Session 2018

Title

Deferred presentment transactions, term set at 30 days, Sec. 5-18A-13 amd.

Summary

SB 138 would fix the term of deferred presentment transactions at 30 calendar days and add various borrower protections and disclosure requirements.

What This Bill Does

Sets the maximum term for all deferred presentment transactions to 30 calendar days (minimum remains 10 days). Adds protections for borrowers, including a limit that a licensee cannot enter into a new transaction if the borrower has more than $500 outstanding across all deferred presentment loans, and requires written agreements with proper endorsement and clear fee disclosures that follow federal rules. Requires licensees to provide copies of written agreements, disclose all fees upfront, display a prominent fee schedule with a warning that fees may be significantly higher than other loans, and use a third-party database to verify outstanding balances. Orders licensees to report certain issues to the district attorney if a check is altered or fraudulently handled, prohibits altering or undated checks, requires cash proceeds to be paid to the customer, and prohibits deceptive practices.

Who It Affects

• Customers who use deferred presentment services, who would be subject to a 30-day term, clearer disclosures, and limits on new transactions if they have existing outstanding amounts.
• Deferred presentment licensees/providers, who must comply with the new term limit, enhanced disclosures, record-keeping, reporting requirements, and use of the third-party database.

Key Provisions

• Amends Section 5-18A-13 to set the term of all deferred presentment transactions to 30 calendar days (not more than 30 days, not less than 10).
• Cannot enter into a new deferred presentment transaction if the customer has more than $500 outstanding across any lender for the term of the loan.
• Before presenting for payment, require endorsement of the actual business name; require written agreement signed by the customer; allow redemption before deposit by paying the contract amount.
• Require full fee disclosures prior to consummation, with fees treated as finance charges under applicable law; disclosures may be supplemented by supervisor rules.
• Provide a copy of the written agreement to the customer, including fee details and any extended repayment options.
• If a check is returned for insufficient funds or similar reasons, licensee may pursue remedies with limits (including attorney’s fees not to exceed 15% of the face amount; certain protections for the signer).
• Prohibit altering or undating checks; prohibit unfair or deceptive practices; prohibit requiring security or guaranties.
• Proceeds from deferred presentment transactions must be paid in cash to the customer; display a conspicuous schedule of all fees and a warning that fees may be higher than other loans.
• Licensee may not redeem or extend a transaction using proceeds from another deferred presentment transaction except as allowed by law.
• Require use of a third-party private-sector database to verify that customers do not have more than $500 outstanding.

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 Transactions