HB 444 (BR 1675) - J. Bell, D. Owens, T. Burch, L. Clark, T. Firkins, D. Graham, J. Greer, J. Jenkins, M. Marzian, R. Meeks, R. Palumbo, J. Richards, T. Riner, A. Smith, G. Stumbo, T. Thompson, J. Tilley, R. Webb
AN ACT relating to deferred deposit transactions.
Amend KRS 286.9-010 to define terms relating to deferred deposit service transactions and creation of a database; amend KRS 286.9-070 to amend licensing requirements for applications for a license to engage in the business of cashing checks or deferred deposit transactions; amend KRS 286.9-080 to amend license renewal requirements for a license to engage in the business of cashing checks or deferred deposit transactions; amend KRS 286.9-100 to require disclosure in writing of any fee charged for entering into a deferred deposit transaction to be deemed a service fee and not interest, but provide the fee imposed in Section 8 of this Act for database access shall not be deemed a service fee; substitute the term "payment instrument" for "check, draft, or money order" and substitute the prosecutor or county law enforcement authority for the Commonwealth's attorney for enforcement purposes; provide that a licensee shall not have more than two (2), rather than one(1), deferred deposit transactions with a customer at any one time and the face amount of the transactions shall not exceed $500; clarify that a licensee shall not enter into a deferred deposit transaction with a customer whose total transaction proceeds equal or exceed $500 and require verification; prohibit licensees from entering into a deferred deposit transaction with a customer who has two (2) open transactions and require verification via the licensees own database or the state's database established by this Act if operational; amend KRS 286.9-110 to increase the actions the executive director of financial institutions may take against a license and increase the grounds for such actions against a license; provide that license denial shall prevent licensing for one (1) year and provide that license revocation shall result in licensing ineligibility for three (3) years unless revoked twice which shall be deemed permanent revocation of the license; provide that surrender or expiration of a license does not affect civil or criminal liability nor impair obligation under preexisting contracts; authorize the executive director of financial institutions to notify the Department of Revenue to institute an action for the recovery of any penalty, fine, cost or fee assessed under Subtitle 9 of KRS Chapter 286; authorize the executive director of financial institutions to seek a temporary restraining order or injunction against any person who has violated or is about to violate Subtitle 9 of KRS chapter 286 and provide that the court shall have jurisdiction over the proceeding and may assess a penalty as set forth in this Act; amend KRS 286.9-040 to increase the amount of the required irrevocable letter of credit for applicants with twenty-one (21) or more business locations and allow deposit of a corporate surety bond and that the instruments shall be made payable to the executive director and shall be subject to suit thereon within three (3) years of the act upon which recovery is sought; create a new section of Subtitle 9 of KRS chapter 286 to provide that a deferred deposit transaction made by a person who is not licensed is void and provide that the executive director may void a transaction in violation of Subtitle 9 of KRS chapter 286; create a new section of Subtitle 9 of KRS Chapter 286 to require the executive director of financial institutions to establish a database for deferred deposit service business licensees, establish a $1 fee per transaction for data and specify who may operate the database and the requirements for the database; require a licensee who ceases the business of deferred deposit transactions to report to the database provider and submit a plan for updating the database on outstanding transactions, subject to review by the executive director; require licensees to utilize the database within thirty (30) days of implementation; authorize the executive director to determine by rule or order data to be maintained, archived, and deleted; and authorize the executive director to utilize the database to administer and enforce Subtitle 9 of KRS Chapter 286; create a new section of Subtitle 9 of KRS Chapter 286 to authorize the executive director to levy civil penalties for violation of Subtitle 9 of KRS Chapter 286 in amount of $1,000 to $5,000 per violation, plus costs and expenses; create a new section of Subtitle 9 of KRS Chapter 286 to authorize the executive director to enter a consent order to resolve any matter arising under Subtitle 9 of KRS Chapter 286; create a new section of Subtitle 9 of KRS Chapter 286 to authorize the executive director, upon request of the affected person or licensee, to stay, suspend or postpone an order; create a new section of Subtitle 9 of KRS Chapter 286 to require every licensee to comply with all applicable federal and state laws, in addition to Subtitle 9 of KRS Chapter 286; create a new section of Subtitle 9 of KRS Chapter 286 to require every licensee required to register with the United States Treasury Financial Crimes Enforcement Network to report to the executive director as required under the federal Bank Secrecy Act; create a new section of Subtitle 9 of KRS Chapter 286 to require each licensee to maintain an agent for service of process; create a new section of Subtitle 9 of KRS Chapter 286 to establish licensee recordkeeping requirements; create a new section of KRS Chapter 286 to authorize the executive director to enter emergency orders affecting licensees if the licensee has engaged in unsafe, unsound, or illegal practices that pose an imminent threat to the public interest and to specify the grounds for an emergency order; amend KRS 286.9-104 to require licensees to file report by March 1st, rather than September 1st of each year and to include specified information; amend KRS 286.9-120 to authorize the executive director to file an administrative complaint against any person if sufficient grounds exist that a potential or actual violation of this subtitle may be violated, subject to administrative hearing in compliance with KRS Chapter 13 B; amend KRS 286.9-090 to authorize the executive director to adopt reasonable administrative regulations relating to the records and documents of every check cashing and deferred deposit service business license and provide that the maintained records are subject to examination by the executive director without notice; provide that such records are not subject to the Kentucky Open Records Act unless ordered by a court of competent jurisdiction; authorize the executive director to share information with other state, federal, and international regulatory agencies and with other local, state, federal and international regulatory agencies law enforcement authorities; amend KRS 286.9-075, KRS 286.9-030 and KRS 286.9-102 to conform; and amend KRS 286.9-990 to provide that intentionally engaging in the check cashing or deferred deposit service business without a license shall be a Class D felony and each transaction constitutes a separate violation; provide that any person who intentionally violates relevant sections of Subtitle 9 of KRS chapter 286 or regulations promulgated pursuant thereto shall be guilty of a Class A misdemeanor; and provide that Sections 1 through 7 and Sections 9 through 23 of this Act take effect January 1, 2010.
HB 444 - AMENDMENTS
HCS - Retain original provisions; make technical corrections; clarify that the database fee may be passed on to the customer; increase the time for entering information into the database from 30 days to 90 days after implementation of the database; authorize that part of the annual licensee annual reports be derived directly from the database provider; and strengthen the confidentiality requirement.
HFA (1, J. Glenn) - Define "annual percentage rate" and limit the interest rate on a deferred deposit check to 36%.
HFA (2, R. Nelson) - Define "annual percentage rate" and "interest"; limit the annual interest rate to 36%; require oral and written statements to the customer clearly describing the payment obligations and terms of the agreement.
HFA (3, R. Nelson) - Limit a customer to one outstanding transaction at any one time with total proceeds not to exceed $500; delete language requiring the customer to state in writing that the customer has no outstanding transaction; prohibit a licensee from entering into a transaction with a customer if the customer had a transaction with any licensee within the previous 90 days.
HFA (4, R. Nelson) - Clarify the amount a licensee may charge a customer based on the amount of the proceeds received by the customer; prevent the licensee from passing along the service fee, imposed by the executive director, to the customer.
SCS - Retain original provisions and amend to permit the transfer or assignment of a license from one licensee to another licensee under certain conditions; amend to require the executive director to give written notice to licensees when the database is fully operational and require licensees to enter transaction information into the database upon receipt of the written notice from the executive director; establish that licensees have 90 days from the date of the operational notice determined by the executive director to have all transactions entered in the database; create a new section of Subtitle 9 of KRS Chapter 286 to prohibit the executive director from issuing new licenses After July 1, 2009 for a period of 10 years.
SFA (1, K. Stein) - Define "annual percentage rate" and limit the annual percentage rate for making a deferred deposit transaction to 36% and prohibit any fees in addition to the annual percentage rate.
Feb 12-introduced in House
Feb 23-to Banking & Insurance (H); posting waived
Feb 25-reported favorably, 1st reading, to Calendar with Committee Substitute
Feb 26-2nd reading, to Rules; floor amendment (1) filed to Committee Substitute
Feb 27-posted for passage in the Regular Orders of the Day for Monday, March 2, 2009; floor amendments (2) (3) and (4) filed to Committee Substitute
Mar 2-3rd reading, passed 93-2 with Committee Substitute
Mar 3-received in Senate
Mar 5-to State & Local Government (S)
Mar 6-reported favorably, 1st reading, to Calendar with Committee Substitute
Mar 9-2nd reading, to Rules
Mar 10-floor amendment (1) filed to Committee Substitute ; posted for passage in the Regular Orders of the Day for Tuesday, March 10, 2009; 3rd reading, passed 32-6 with Committee Substitute ; received in House
Mar 11-posted for passage for concurrence in Senate Committee Substitute
Mar 12-House concurred in Senate Committee Substitute ; passed 83-11; enrolled, signed by Speaker of the House
Mar 13-enrolled, signed by President of the Senate; delivered to Governor
Mar 25-signed by Governor (Act ch. 98)