LRB-3073/2
ARG:lmk&jld:jf
2007 - 2008 LEGISLATURE
November 13, 2007 - Introduced by Representatives Zepnick, A. Williams,
Berceau, Steinbrink and Schneider. Referred to Committee on Financial
Institutions.
AB574,1,2
1An Act to create 138.09 (8) (f) and 138.14 of the statutes;
relating to: payday
2loans.
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 Department of
Financial Institutions (DFI) to assess a finance charge greater than 18 percent per
year. This type of lender is generally referred to as a "licensed lender." A licensed
lender must have a separate license for each place of business it maintains.
This bill creates certain requirements applicable to payday loan transactions.
Under the bill, a "payday loan provider" is a licensed lender that makes payday loans.
A "payday loan" is a transaction between an individual with an account at a financial
establishment and the payday loan provider in which the provider agrees to either:
1) accept from the individual a check, hold the check for at least three days before
negotiating it, and before negotiating the check pay the individual an agreed
amount; or 2) accept the individual's authorization to initiate an electronic fund
transfer (EFT) from the individual's account, wait for at least three days before
initiating the EFT, and before initiating the EFT pay the individual an agreed
amount. A payday loan provider may not make a payday loan in a principal amount
that exceeds $800 or 50 percent of the applicant's next paycheck, whichever is
greater. The bill also limits a consumer's ability to "rollover" a payday loan. The bill
defines "rollover" as the refinancing, renewal, amendment, or extension of a payday
loan. Under the bill, a payday loan provider may enter into no more than one rollover
of a consumer's payday loan and, before entering into such a rollover, the consumer
must make payment, applied to the existing payday loan, that reduces the
outstanding balance on the existing payday loan by at least 50 percent.
The bill also prohibits DFI, or any other state agency, from establishing or
maintaining a database of individuals who enter into payday loans.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB574, s. 1
1Section
1. 138.09 (8) (f) of the statutes is created to read:
AB574,2,32
138.09
(8) (f) With respect to any payday loan, as defined in s. 138.14 (1) (h),
3made or offered by the licensee, comply with s. 138.14 (2) and (3).
AB574, s. 2
4Section
2. 138.14 of the statutes is created to read:
AB574,2,5
5138.14 Payday loan providers. (1) Definitions. In this section:
AB574,2,66
(a) "Agency" has the meaning given in s. 13.62 (2).
AB574,2,77
(b) "Applicant" means an individual who seeks to obtain a payday loan.
AB574,2,88
(c) "Check" has the meaning given in s. 403.104 (6).
AB574,2,109
(d) "Consumer" means an individual who enters into a payday loan with a
10payday loan provider.
AB574,2,1111
(e) "Department" means the Department of Financial Institutions.
AB574,2,1412
(f) "Financial establishment" means any organization that is authorized to do
13business under state or federal law and that holds a demand deposit, savings deposit,
14or other asset account belonging to an individual.
AB574,2,1515
(g) "Organization" has the meaning given in s. 19.42 (11).
AB574,2,1616
(h) "Payday loan" means any of the following:
AB574,3,217
1. A transaction between an individual with an account at a financial
18establishment and another person, in which the person agrees to accept from the
19individual a check, to hold the check for at least 3 days before negotiating or
20presenting the check for payment, and to pay to the individual, at any time before
1negotiating or presenting the check for payment, an amount that is agreed to by the
2individual.
AB574,3,83
2. A transaction between an individual with an account at a financial
4establishment and another person, in which the person agrees to accept the
5individual's authorization to initiate an electronic fund transfer from the account, to
6wait for at least 3 days before initiating the electronic fund transfer, and to pay to
7the individual, at any time before initiating the electronic fund transfer, an amount
8that is agreed to by the individual.
AB574,3,109
(i) "Payday loan provider" means a person who is required to be licensed under
10s. 138.09 and who makes payday loans.
AB574,3,1211
(j) "Rollover" means the refinancing, renewal, amendment, or extension of a
12payday loan beyond its original term.
AB574,3,15
13(2) Maximum payday loan amount. No payday loan provider may make a
14payday loan that exceeds, in principal amount, $800 or 50 percent of the applicant's
15next paycheck, whichever is greater.
AB574,3,20
16(3) Rollover limitations. (a) Subject to sub. (b), a payday loan provider may
17enter into not more than one rollover of a consumer's payday loan. After a payday
18loan provider enters into a rollover of a consumer's payday loan, the payday loan
19provider may not, until the consumer pays the loan in full, enter into another payday
20loan with the consumer.
AB574,3,2421
(b) A payday loan provider may enter into a rollover of a consumer's payday
22loan only if, at or prior to the time of the rollover, the consumer makes payment,
23applied to the existing payday loan, that reduces the outstanding balance on the
24existing payday loan by at least 50 percent.
AB574,4,3
1(c) No consumer may, and no payday loan provider may allow a consumer to,
2repay a payday loan with the proceeds of another payday loan made by the same
3payday loan provider except as provided under this subsection.
AB574,4,5
4(4) State database of consumers prohibited. Neither the department nor any
5other agency may establish or maintain a database of consumers.
AB574,4,87
(1) This act first applies to payday loans made or offered on the effective date
8of this subsection.
AB574,4,1110
(1)
This act takes effect on the first day of the 4th month beginning after
11publication.
