LRB-2494/1
RJM:jld:km
2001 - 2002 LEGISLATURE
March 13, 2001 - Introduced by Senators Robson, Burke, Decker and Hansen,
cosponsored by Representatives
Grothman, Miller, Berceau, Black, Bock,
Boyle, Cullen, J. Lehman, Morris-Tatum, Musser, Pocan, Reynolds,
Schneider, Sinicki, Turner, Wasserman and Wood. Referred to Committee on
Privacy, Electronic Commerce and Financial Institutions.
SB84,1,3
1An Act to amend 422.201 (3);
to repeal and recreate 138.09 (title); and
to
2create 138.14 of the statutes;
relating to: payday loan providers and providing
3a penalty.
Analysis by the Legislative Reference Bureau
Under current law, a lender other than a bank, savings bank, savings and loan
association, or credit union generally must obtain a license from the division of
banking in the department of financial institutions (DFI) in order to assess a finance
charge greater than 18%. This type of lender is generally referred to as a "licensed
lender." With certain limited exceptions, current law provides no maximum finance
charge for a loan entered into by a licensed lender.
Currently, a lender who makes payday loans is typically required to be a
licensed lender. In a standard payday loan transaction, the lender accepts a personal
check from the borrower, pays the borrower the amount of the check less any
applicable finance charge, and agrees to wait a short time, such as two weeks, before
depositing the check. Current law does not specifically regulate payday loan
transactions.
This bill creates requirements and prohibitions that apply specifically to
payday loan transactions. Under this bill, a lender, other than a bank, saving bank,
savings and loan association, or credit union, who makes payday loans in the regular
course of business (payday loan provider), may not assess fees or interest in a payday
loan transaction in an aggregate amount that exceeds 5% of the amount of the
payday loan. In addition, a payday loan provider may not make a payday loan with
a term of less than 30 days. The bill also requires a payday loan provider to give each
borrower copies of educational brochures prepared by DFI regarding the operation
and potential costs of payday loans, to make annual reports to the division of banking
in DFI, and to annually pay any reasonable filing fee imposed by the division of
banking in DFI.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB84, s. 1
1Section
1. 138.09 (title) of the statutes is repealed and recreated to read:
SB84,2,2
2138.09 (title)
Licensed lenders.
SB84, s. 2
3Section
2. 138.14 of the statutes is created to read:
SB84,2,4
4138.14 Payday loan providers. (1) Definitions. In this section:
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(a) "Check" has the meaning given in s. 403.104 (6).
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(b) "Department" means the department of financial institutions.
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(c) "Division" means the division of banking.
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(d) "Payday loan" means any of the following:
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1. A transaction between a person and the issuer of a check in which the person
10agrees to accept a check from the issuer, hold the check for a period of time before
11negotiating or presenting the check for payment, and pay to the issuer, upon
12accepting the check, the amount of the check less any applicable fee.
SB84,2,1313
2. A refinancing or consolidation of a transaction described in subd. 1.
SB84,2,1614
(e) "Payday loan provider" means a person, other than a bank, savings bank,
15savings and loan association, or credit union, who makes payday loans in the
16ordinary course of business.
SB84,3,2
17(2) Maximum fees and interest for payday loans. Notwithstanding ss. 138.09
18and 422.201 (9), no payday loan provider may charge, contract for, or receive fees and
1interest for a payday loan in an aggregate amount that exceeds 5% of the amount of
2the payday loan.
SB84,3,4
3(3) Minimum term for payday loans. No payday loan provider may make a
4payday loan with a term of less than 30 days.
SB84,3,8
5(4) Disclosure requirements. (a) Except as provided in par. (b), before
6disbursing funds pursuant to a payday loan, a payday loan provider shall provide the
7person obtaining the payday loan with a copy of each brochure provided by the
8department under sub. (6).
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(b) Paragraph (a) does not apply if the person obtaining the payday loan has
10previously received a copy of each brochure from the payday loan provider.
SB84,3,23
11(5) Reporting and recordkeeping. (a) On or before March 15, every payday
12loan provider shall make an annual report to the division and shall pay any
13reasonable filing fee imposed by the division. The report shall cover business
14relating to payday loans made by the payday loan provider during the preceding
15calendar year and shall include any relevant information required by the division.
16The report shall be made upon forms provided by the division and shall be signed and
17verified by the oath or affirmation of the payday loan provider if an individual, one
18of the partners if a partnership, a member or manager if a limited liability company,
19or an officer of the corporation or association if a corporation or association. A payday
20loan provider that is licensed under s. 138.09 may include the information required
21to be reported under this paragraph in the payday loan provider's report under s.
22138.09 (3) (f), if the information required under this paragraph is stated separately
23in the report from information relating to the payday loan provider's other business.
SB84,4,3
1(b) Every payday loan provider shall keep the records relating to payday loans
2made by the payday loan provider separate from the records of any other business
3of the payday loan provider.
SB84,4,9
4(6) Educational brochures. The department shall provide brochures to
5educate individuals regarding the operation and potential costs of payday loans and
6regarding the laws of this state relating to consumer credit. Upon the request of a
7payday loan provider, the department shall supply the payday loan provider with
8copies of the brochures provided under this subsection. The department shall charge
9a payday loan provider a reasonable fee for brochures supplied under this subsection.
SB84,4,11
10(7) Penalty. Any person who violates sub. (2), (3), (4), or (5) may be fined not
11more than $500 or imprisoned not more than 6 months or both.
SB84, s. 3
12Section
3. 422.201 (3) of the statutes is amended to read:
SB84,4,1713
422.201
(3) For Notwithstanding sub. (2), for licensees under s. 138.09 and
14under ss. 218.0101 to 218.0163
and for payday loan providers under s. 138.14, the
15finance charge
, calculated according to those sections, may not exceed the
applicable 16maximums permitted in
and calculated under ss. 138.09
, 138.14, and 218.0101 to
17218.0163
, respectively.
SB84,4,2019
(1)
This act first applies to payday loans made on the effective date of this
20subsection.
SB84,4,2322
(1)
This act takes effect on the first day of the 6th month beginning after
23publication.
