SB58 Alabama 2020 Session

Summary

Primary Sponsor

Arthur OrrSenator

Republican

Session

Regular Session 2020

Title

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

Summary

SB 58 would set a 30-day minimum term for deferred presentment transactions and add consumer protections and disclosure requirements.

What This Bill Does

It changes the term for deferred presentment transactions to require at least 30 calendar days (and no more than 31 days). It also imposes safeguards such as a $500 cap on outstanding balances across all such loans, mandatory written and signed agreements, clear disclosure of all fees, and posted fee schedules. It requires notification to the district attorney in certain cases involving altered or fraudulent checks and requires use of a third-party database to verify that a borrower does not have more than $500 in outstanding deferred presentments. It also provides borrower rights to redeem early, limits certain practices, and mandates cash payment of proceeds to customers.

Who It Affects

• Licensees/deferred presentment providers must follow tighter rules (longer minimum term, disclosures, fee posting, balance checks, and reporting).
• Customers using deferred presentment services will experience longer minimum repayment timelines, clearer fee disclosures, and limits on how much they can owe at any time.

Key Provisions

• Minimum term of 30 calendar days for each deferred presentment transaction (no shorter than 30 days, and effectively up to 31 days).
• Restricts outstanding deferred presentment balances to $500 across all lenders at any time.
• All agreements must be in writing and signed; customers may redeem before deposit by paying the contract amount.
• Before presenting for payment, checks must be endorsed with the licensee's actual business name; no undated checks accepted.
• Fees must be disclosed as finance charges with itemized disclosure before consummation; fee schedule must be posted conspicuously.
• Licensee must notify the district attorney within five business days if a check is altered, forged, stolen, or obtained illegally; releases of such checks require consent.
• Licensees must comply with state and federal cash transaction laws and report requirements; proceeds must be paid in cash to the customer.
• If a check is returned for insufficient funds or closed account, the licensee may recover costs and attorney's fees (up to 15% of the face amount).
• Unfair or deceptive acts or advertising are prohibited; no required security or guaranty from customers.
• Licensees must use a third-party private sector database to ensure the customer has no outstanding deferred presentment balances exceeding $500.
• Customers must receive a written agreement and a copy of the terms, including extended repayment options.
• Effective immediately upon passage and approval by the Governor.

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Deferred Presentment Transactions