2007-2008 Bill 76: Pay Day Lending Services - South Carolina Legislature Online

1 South Carolina General Assembly 2 117th Session, 2007-2008 3 4 S. 76 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Senator Short 10 Document Path: l:\council\bills\agm\18649mm07.doc 11 12 Introduced in the Senate on January 9, 2007 13 Currently residing in the Senate Committee on Banking and Insurance 14 15 Summary: Pay day lending services 16 17 18 HISTORY OF LEGISLATIVE ACTIONS 19 20 Date Body Action Description with journal page number 21 11/29/2006 Senate Prefiled 22 11/29/2006 Senate Referred to Committee on Banking and Insurance 23 1/9/2007 Senate Introduced and read first time SJ-58 24 1/9/2007 Senate Referred to Committee on Banking and Insurance SJ-58 25 26 27 VERSIONS OF THIS BILL 28 29 11/29/2006 30 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING SECTION 34-39-175 SO AS TO PROVIDE 13 FOR A COMMON DATABASE OF DEFERRED 14 PRESENTMENT TRANSACTIONS, IMPLEMENTED BY THE 15 CONSUMER FINANCE DIVISION OF THE BOARD OF 16 FINANCIAL INSTITUTIONS AND ACCESSIBLE TO 17 DEFERRED PRESENTMENT PROVIDERS TO VERIFY IF AN 18 APPLICANT HAS AN EXISTING OR RECENTLY 19 TERMINATED DEFERRED PRESENTMENT TRANSACTION, 20 TO PROVIDE FOR THE INFORMATION REQUIRED, AND 21 TO ALLOW A FEE UP TO ONE DOLLAR FOR SUBMITTED 22 DATA; TO AMEND SECTION 34-39-130, RELATING TO 23 ENGAGING IN THE BUSINESS OF DEFERRED 24 PRESENTMENT SERVICES, SO AS TO REQUIRE 25 COMPLIANCE BY BOTH RESIDENT AND NONRESIDENT 26 PROVIDERS OF DEFERRED PRESENTMENT SERVICES; 27 AND TO AMEND SECTION 34-39-180, RELATING TO 28 REQUIREMENTS OF A LICENSED PROVIDER OF 29 DEFERRED PRESENTMENT SERVICES, SO AS TO 30 INCLUDE THE REQUIREMENTS THAT THE LICENSEE 31 VERIFY EXISTING OR RECENTLY TERMINATED 32 TRANSACTIONS BY WAY OF THE ESTABLISHED 33 DATABASE AND THAT THE PROVIDER GIVE A GRACE 34 PERIOD TO A CONSUMER WHO CANNOT REPAY IN A 35 TIMELY MANNER, INCLUDING WRITTEN NOTICE OF THE 36 GRACE PERIOD, INFORMATION ABOUT CONSUMER 37 CREDIT COUNSELING, AND CONSPICUOUS NOTICE THAT 38 THE CONSUMER CANNOT BE ARRESTED FOR FAILURE 39 TO REPAY THE LOAN, AND TO PROVIDE THAT THE 40 LICENSEE PAY ONE-HALF THE COST OF THE 41 CONSUMER’S COUNSELING. 42

1 [76] 1 1 Be it enacted by the General Assembly of the State of South 2 Carolina: 3 4 SECTION 1. Chapter 39 of Title 34 is amended by adding: 5 6 “Section 34-39-175. (A) The Consumer Finance Division of 7 the Board of Financial Institutions shall implement a common 8 database with real-time access through an Internet connection for 9 deferred presentment providers, as provided in this subsection. The 10 database must be accessible to the board and the deferred 11 presentment providers to verify if deferred presentment 12 transactions are outstanding for a particular person. Deferred 13 presentment providers shall submit that data before entering into a 14 deferred presentment transaction in a format the board requires by 15 rule including the drawer’s name, social security number or 16 employment authorization alien number, address, driver’s license 17 number, amount of the transaction, date of transaction, the date 18 that the transaction is closed, and additional information required 19 by the board. The board may impose a fee not to exceed one dollar 20 for each transaction for data required to be submitted by a licensee. 21 A licensee may rely on the information contained in the database 22 as accurate and is not subject to any administrative penalty or civil 23 liability as a result of relying on inaccurate information contained 24 in the database. The board may adopt rules to administer and 25 enforce the provisions of this section and to assure that the 26 database is used by licensees in accordance with this section.” 27 28 SECTION 2. Section 34-39-130 of the 1976 Code, as added by 29 Act 433 of 1998, is amended by adding at the end: 30 31 “(C) A person may not engage in the business of deferred 32 presentment services to a consumer residing in the State, whether 33 or not the person has a location in South Carolina, except in 34 compliance with the provisions of this chapter and without having 35 first obtained a license pursuant to this chapter. 36 (D) A person may not engage in the business of arranging or 37 brokering deferred presentment services for a consumer residing in 38 the State, whether or not the person has a location in South 39 Carolina.” 40 41 SECTION 3. Section 34-39-180(G) of the 1976 Code, as added 42 by Act 433 of 1998, is amended to read: 43

1 [76] 2 1 “(G) A licensee may not enter into a deferred presentment 2 transaction with a person who has an outstanding deferred 3 presentment transaction with that licensee or with another licensee, 4 or with a person whose previous deferred presentment transaction 5 with that provider or with another provider has been terminated for 6 less than twenty - four hours. The deferred presentment provider 7 must verify that information as follows: 8 (1) The licensee shall maintain a common database pursuant 9 to Section 34 - 39 - 175 and shall verify whether that deferred 10 presentment licensee or an affiliate has an outstanding deferred 11 presentment transaction with a particular person or has terminated 12 a transaction with that person within the previous twenty - four 13 hours. 14 (2) The licensee shall access the board’s database 15 established pursuant to Section 34 - 39 - 175 and shall verify whether 16 another licensee has an outstanding deferred presentment 17 transaction with a particular person or has terminated a transaction 18 with that person within the previous twenty - four hours. Before the 19 board has implemented the database, the licensee may rely upon 20 the written verification of the drawer . 21 (H)(1) If, by the end of the deferment period, the drawer 22 informs the deferred presentment provider in person that the 23 drawer is unable to redeem or pay in full in cash the amount due 24 and owing the deferred presentment provider, the deferred 25 presentment provider shall provide a grace period extending the 26 term of the agreement for an additional sixty days after the original 27 termination date, without additional charge. The provider shall 28 require as a condition of providing this grace period that, within 29 the first seven days of the grace period, the drawer make an 30 appointment with a consumer credit counseling agency within 31 seven days after the end of the deferment period and complete the 32 counseling by the end of the grace period. The drawer may agree 33 to, comply with, and adhere to a repayment plan approved by the 34 counseling agency. If the drawer agrees to comply with and adhere 35 to a repayment plan approved by the counseling agency, the 36 provider is required also to comply with and adhere to that 37 repayment plan. The deferred presentment provider may not 38 deposit or present the drawer’s check for payment before the end 39 of the sixty - day grace period unless the drawer fails to comply 40 with the conditions or the drawer fails to notify the provider of the 41 compliance. Before each deferred presentment transaction, the 42 provider verbally may advise the drawer of the availability of the 43 grace period consistent with the provisions of the written notice in

1 [76] 3 1 subitem (c), and may not discourage the drawer from using the 2 grace period. 3 (2) At the commencement of the grace period, the licensee 4 shall provide the drawer: 5 (a) verbal notice of the availability of the grace period 6 consistent with the written notice in subitem (c); 7 (b) a list of approved consumer credit counseling agencies 8 prepared by the South Carolina Department of Consumer Affairs. 9 This list must include nonprofit consumer credit counseling 10 agencies affiliated with the National Foundation for Credit 11 Counseling which provide credit counseling services to South 12 Carolina residents in person, by telephone, or through the Internet. 13 The office list must include phone numbers for the agencies, the 14 counties served by the agencies, and indicate the agencies that 15 provide telephone counseling and those that provide Internet 16 counseling. The South Carolina Department of Consumer Affairs 17 shall update the list at least once each year; 18 (c) the following notice in at least 14 - point type in 19 substantially the following form: 20 We will give you a grace period of sixty days to pay your loan 21 with us. You have until [date], to go through consumer credit 22 counseling given to you by an agency that is on the list we have 23 provided. You may also agree to follow a repayment plan 24 developed by the agency. The counseling may be in person or by 25 telephone. You must tell us within seven days, by [date], that you 26 have made an appointment with a consumer credit counseling 27 agency. You must also tell us within sixty days, by [date], that you 28 have completed the consumer credit counseling. We may check 29 with the agency to make sure you have done this. If you do not 30 give us either the seven - day or sixty - day notice, or if you have not 31 made the appointment or finished the counseling within the time 32 required, we may deposit or present your check for payment. We 33 also may pursue all legally available civil means to enforce the 34 debt. We cannot have you arrested for a payday loan. 35 (3) If a drawer completes an approved payment plan, the deferred 36 presentment provider shall pay one - half of the drawer’s fee for the 37 deferred presentment agreement to the consumer credit counseling 38 agency. 39 (I) If a check is returned to the licensee from a payer financial 40 institution due to insufficient funds, closed account, or stop 41 payment order, the licensee may pursue all legally available civil 42 means to collect the check including, but not limited to, the 43 imposition of a returned check charge as provided in Section

1 [76] 4 1 34-11-70(a), except that the service charge imposed by the licensee 2 shall not exceed the lesser of ten dollars or the fee imposed by the 3 financial institution on the licensee for the returned check. An 4 individual who issues a personal check to a licensee under a 5 deferred presentment agreement is not subject to criminal penalty.” 6 7 SECTION 4. This act takes effect upon approval by the 8 Governor. 9 ----XX---- 10

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