AB447: Bill Text

AB447,3,3 138.09 (8) (f) When making a payday loan, as defined in s. 138.14 (1) (g), comply with s. 138.14 (2), (3), (5), and (6) and rules promulgated under s. 138.14 (8).

AB447, s. 2 Section 2. 138.14 of the statutes is created to read:

AB447,3,5 138.14 Payday loan providers. (1) Definitions. In this section:

AB447,3,6 (a) "Applicant" means an individual who seeks to obtain a payday loan.

AB447,3,7 (b) "Check" has the meaning given in s. 403.104 (6).

AB447,3,9 (c) "Customer" means an individual who enters into a payday loan with a payday loan provider.

AB447,3,11 (d) "Division" means the division of banking in the department of financial institutions.

AB447,3,14 (e) "Financial establishment" means any organization that is authorized to do business under state or federal law and that holds a demand deposit, savings deposit, or other asset account belonging to an individual.

AB447,3,15 (f) "Organization" has the meaning given in s. 19.42 (11).

AB447,3,16 (g) "Payday loan" means any of the following:

AB447,4,3 1. A transaction between an individual with an account at a financial establishment and another person, in which the person agrees to accept from the individual a check, to hold the check for at least 3 days before negotiating or presenting the check for payment, and to pay to the individual, at any time before negotiating or presenting the check for payment, an amount that is agreed to by the individual.

AB447,4,9 2. A transaction between an individual with an account at a financial establishment and another person, in which the person agrees to accept the individual's authorization to initiate an electronic fund transfer from the account, to wait for at least 3 days before initiating the electronic fund transfer, and to pay to the individual, at any time before initiating the electronic fund transfer, an amount that is agreed to by the individual.

AB447,4,11 (h) "Payday loan provider" means a person who is required to be licensed under s. 138.09 and who makes payday loans.

AB447,4,16 (i) "Rollover" or "rolled over" means the refinancing, renewal, amendment, or extension of a payday loan beyond its original date of maturity. "Rollover" or "rolled over" includes the consolidation of payday loans and any transaction in which a payday loan is repaid with the proceeds of another payday loan made by the same payday loan provider.

AB447,4,19 (2) Disclosure requirements. (a) Not less than 15 minutes before any payday loan provider enters into a payday loan with an applicant, the payday loan provider shall do all of the following:

AB447,4,22 1. Disclose to the applicant the total amount of all fees and costs, in dollars, to be paid by the applicant for the loan assuming that the loan is paid in full at the end of the loan term.

AB447,4,24 2. Disclose to the applicant the annual percentage rate to be paid by the applicant on the loan assuming that the loan is paid in full at the end of the loan term.

AB447,5,2 3. Provide to the applicant a copy of the written informational materials specified in sub. (4).

AB447,5,4 4. Disclose to the applicant that he or she has the right to rescind the loan transaction as provided in sub. (6).

AB447,5,6 (b) A payday loan provider shall retain, for at least 3 years after the origination date of any payday loan, a record of compliance with par. (a) with respect to the loan.

AB447,5,9 (3) Loan restrictions. (a) No payday loan provider may require the payment of any interest on a payday loan that accrues after the maturity date of the payday loan.

AB447,5,12 (b) Except as provided in pars. (e) and (f), no payday loan provider may impose any penalty on a customer arising from the customer's default or late payment on a payday loan.

AB447,5,16 (c) No payday loan provider may accept from a customer a check or authorization to initiate an electronic fund transfer if the amount of the check or authorization exceeds the principal amount of the payday loan plus the finance charge on the payday loan.

AB447,5,20 (d) A payday loan provider may not rollover a payday loan unless the customer enters into a new payday loan transaction with the payday loan provider, including issuing a new check or executing a new authorization to initiate an electronic fund transfer.

AB447,6,2 (e) A payday loan provider may present a customer's check for payment no more than 2 times. The payday loan provider may make a second presentment of the check only if at least 3 business days have elapsed since the first presentment and the payday loan provider has made a good faith effort to contact the customer since the first presentment. The only charge the payday loan provider may impose for dishonor of the customer's check is that specified in s. 422.202 (1) (d).

AB447,6,11 (f) For each customer authorization to initiate an electronic fund transfer from the customer's account, a payday loan provider may initiate an electronic fund transfer no more than 2 times. The payday loan provider may initiate an electronic fund transfer a second time only if at least 3 business days have elapsed since the payday loan provider initiated an electronic fund transfer the first time and the payday loan provider has made a good faith effort to contact the customer since the payday loan provider initiated an electronic fund transfer the first time. The only charge the payday loan provider may impose if its instruction to execute an electronic fund transfer is denied is a charge equivalent to that specified in s. 422.202 (1) (d).

AB447,6,16 (4) Informational materials. (a) The division shall develop written informational materials on payday loans and the payday loan industry. These informational materials shall be designed to educate individuals regarding the operation and potential costs of payday loans and of other options for borrowing funds that may be available.

AB447,6,18 (b) The informational materials under par. (a) shall include a clear and conspicuous notice containing all of the following:

AB447,6,19 1. A payday loan is not intended to meet long-term financial needs.

AB447,6,21 2. A payday loan applicant should use a payday loan only to provide funds in a financial emergency.

AB447,6,23 3. A payday loan applicant will be required to pay additional interest if a payday loan is refinanced rather than paid in full when due.

AB447,6,25 4. Refinancing a payday loan or entering into consecutive payday loans to pay an existing payday loan may cause financial hardship for the applicant.

AB447,7,4 5. An example of the cost to the applicant if the applicant pays the payday loan in full at the end of the loan term in comparison to the cost to the applicant if the applicant pays the payday loan in full after financing the amount of the payday loan at the end of the loan term 3 consecutive times.

AB447,7,7 (c) The informational materials under par. (a) shall include all of the following information, based upon aggregated information from reports submitted under sub. (5) for the most recent reporting period:

AB447,7,9 1. The average annual percentage rate for payday loans, not including any rollover of the loans.

AB447,7,11 2. The average annual percentage rate for payday loans, including loan rollovers.

AB447,7,13 3. The percentage of customers originating payday loans who defaulted on the original loan or a rollover loan.

AB447,7,15 4. The percentage of customers originating payday loans whose payment method was dishonored or denied for insufficient funds.

AB447,7,20 (d) The informational materials under par. (a) shall include a summary of all actions that the payday loan provider may take against a payday loan customer, including all fees and costs that may be assessed, if the customer defaults on the payday loan or if the customer's check or electronic fund transfer is dishonored or denied for insufficient funds.

AB447,7,22 (e) The division shall annually update the informational materials under par. (a), based upon the division's analysis of reports received under sub. (5).

AB447,8,3 (f) The division shall make copies of the informational materials under par. (a) available, upon request, to payday loan providers and to the public, including making these informational materials available on the Internet Web site of the department of financial institutions. The division may charge payday loan providers a reasonable fee for printed copies of informational materials supplied under this paragraph.

AB447,8,16 (5) Reporting and record keeping. (a) On or before March 15 of each year, every payday loan provider shall make an annual report to the division and shall pay any reasonable filing fee imposed by the division. The report shall cover business relating to payday loans made by the payday loan provider during the preceding calendar year and shall include any relevant information required by the division. The report shall be made upon forms prescribed by the division and shall be signed and verified by the oath or affirmation of the payday loan provider if an individual, one of the partners if a partnership, a member or manager if a limited liability company, or an officer of the corporation or association if a corporation or association. A payday loan provider may include the information required to be reported under this subsection in the payday loan provider's report under s. 138.09 (3) (f), if the information required under this subsection is stated separately in the report from information relating to the payday loan provider's other business.

AB447,8,18 (b) The division shall require that the report under par. (a) include, for the applicable reporting period, all of the following aggregated information:

AB447,8,19 1. The number of payday loans originated by the payday loan provider.

AB447,8,22 2. The average of the total amount of all fees and costs, in dollars, and the average loan term, for all payday loans of the payday loan provider, not including any rollover of the loans.

AB447,8,25 3. Based upon the information specified in subd. 2., the average annual percentage rate for all payday loans of the payday loan provider, not including any rollover of the loans.

AB447,9,3 4. The number of payday loans originated by the payday loan provider that were rolled over and, of those payday loans rolled over, the average number of times these payday loans were rolled over.

AB447,9,6 5. The average of the total amount of all fees and costs, in dollars, and the average loan term, for all payday loans of the payday loan provider, including any rollover of the loans.

AB447,9,9 6. Based upon the information specified in subd. 5., the average annual percentage rate for all payday loans of the payday loan provider, including any rollover of the loans.

AB447,9,11 7. The number of payday loans originated by the payday loan provider that resulted in default on the loan by the customer.

AB447,9,17 8. The number of payday loans originated by the payday loan provider on which the customer's payment method was dishonored or denied because the customer's check was drawn on, or the customer's authorization to initiate an electronic fund transfer was from, an account at a financial establishment containing insufficient funds when the check was presented for payment or the electronic fund transfer was initiated.

AB447,9,22 (6) Rescission. A customer may rescind a payday loan, before the close of business on the next day of business after the loan is made, by returning to the payday loan provider the proceeds of the payday loan. The payday loan provider may not charge the customer any fee for rescinding the payday loan as provided in this subsection.

AB447,9,24 (7) Penalty. Notwithstanding s. 138.09 (8) (f) and (10), any person who violates sub. (2), (3), (5), or (6) may be required to forfeit not more than $200.

AB447,10,3 (8) Rules. The division shall promulgate rules necessary to implement, administer, and enforce this section, including prescribing the form and content of any report required under sub. (5) and the method of, and fee for, filing such a report.

AB447, s. 3 Section 3 . Nonstatutory provisions.

AB447,10,6 (1) In this Section, "division" means the division of banking in the department of financial institutions.

AB447,10,10 (2) The division shall submit in proposed form the rules required under section 138.14 (8) of the statutes, as created by this act, to the legislative council staff under section 227.15 (1) of the statutes no later than the first day of the 6th month beginning after the effective date of this subsection.

AB447,10,23 (3) Using the emergency rules procedure under section 227.24 of the statutes, the division shall promulgate the rules required under section 138.14 (8) of the statutes, as created by this act, for purposes of implementing this act, for the period before the effective date of the rules submitted under subsection (2). The division shall promulgate these emergency rules no later than the first day of the 6th month beginning after the effective date of this subsection. Notwithstanding section 227.24 (1) (c) and (2) of the statutes, these emergency rules may remain in effect until July 1, 2011, or the date on which permanent rules take effect, whichever is sooner. Notwithstanding section 227.24 (1) (a) and (3) of the statutes, the division is not required to provide evidence that promulgating a rule under this subsection as an emergency rule is necessary for the preservation of the public peace, health, safety, or welfare and is not required to provide a finding of emergency for a rule promulgated under this subsection.

AB447, s. 4 Section 4. Initial applicability.

AB447,11,2 (1) This act first applies to payday loans made or offered on the effective date of this subsection.

AB447, s. 5 Section 5. Effective dates. This act takes effect on the first day of the 6th month beginning after publication, except as follows:

AB447,11,5 (1) Section 3 of this act takes effect on the day after publication.

AB447,11,6 (End)