09RS House Bill 516

House Bill 516

Actions

Last Action	to Banking & Insurance (H)
Title	AN ACT relating to short-term loans.
Bill Documents	Bill
Bill Request Number	1006
Sponsors	J. Jenkins, J. Wayne, J. Glenn, M. Marzian, R. Meeks, D. Owens, R. Palumbo, J. Richards, R. Webb
Summary of Original Version	Amend KRS 286.9-010 to define "annual percentage rate," "borrower," "interest," and"short-term loan" and to delete the definition of "deferred deposit transaction"; amend KRS 286.9-020 to delete deferred deposit transactions and to require any person engaged in the business of making short-term loans in Kentucky to obtain a license from the executive director of the Department of Financial Institutions; amend KRS 286.9-050 to specify the requirements for the application form for engaging in the business of making short-term loans; amend KRS 286.9-070 to delete deferred deposit transactions and insert short-term loans; amend KRS 286.9-075 to delete deferred deposit transactions and insert short-term loans; amend KRS 286.9-100 to prohibit licensees from making a loan to a borrower who is not physically present in the licensee's business location; prohibit a person from making a short-term loan from an office not in Kentucky to a borrower who is physically present in Kentucky and provide that an out-of-state lender may make a loan to a borrower from Kentucky who physically visits the out-of-state office of the lender; prohibit making a short-term loan by telephone, mail, or internet; require written disclosure of all interest and fees to be charged to the borrower prior to making the short-term loan; limit the annual percentage rate to 36% for a short-term loan; delete the maximum $15 dollar service fee per $100 for deferred deposit transactions; provide that the making of a short-term loan that violates the provisions of Subtitle 9 of KRS Chapter 286 also violates KRS 367.170 and authorize the Attorney General or the executive director of the Department of Financial Institutions to enforce the provisions of Subtitle 9 of KRS Chapter 286 and authorize a borrower to bring an action pursuant to KRS 367.220 and if the violation involves interest rate limits the borrower may bring an action under KRS 360.020; limit a borrower to one outstanding short-term loan at one time with a face value not to exceed $500 and require a licensee to inquire whether a person seeking a short-term loan has obtained a short-term loan within the previous 90 days and delete deferred deposit transactions; limit the duration of a short-term loan to 30 days; prohibit renewal, roll over, refinancing or otherwise consolidating a short-term loan for a fee; prohibit a licensee from making a loan to a borrower who has had a short-term loan within the previous 90 days; prohibit a licensee from engaging in activity that would evade the requirements of Subtitle 9 of KRS Chapter 286 including disguising a short-term loan as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates of an installment sale of good or services; prohibit licensees from drafting funds electronically or billing any credit card in connection with a short-term loan; provide that a short-term loan in violation of Subtitle 9 of KRS Chapter 286 is void from inception of the loan; prohibit licensees from entering into a short-term loan with a member of the United States Armed Forces or a member's dependent that does not comply with 10 U.SC. 987 and any violation of this federal law is a violation of Subtitle 9 of KRS Chapter 286; amend KRS 286.9-102 to deleted deferred deposit transactions and to provide that a short-term loan licensee shall give the borrower a signed statement of the applicable annual percentage rate and a clear description of the payment obligations of the terms of the agreement before the agreement is signed; and, require that each short-term loan licensee comply with the federal Fair Debt Collection Practies Act when collecting on a short-term loan.
Index Headings of Original Version	Banks and Financial Institutions - Short-term loans, replace deferred deposit transactions Loans and Credit - Short-term loans, definitions Loans and Credit - Short-term loans, business requirements Loans and Credit - Department of Financial Institutions, regulation of short-term loan business Loans and Credit - Short-term loan, violations and penalties

02/23/09	introduced in House
02/24/09	to Banking & Insurance (H)