HB 516 (BR 1006) - J. Jenkins, J. Wayne, J. Glenn, M. Marzian, R. Meeks, D. Owens, R. Palumbo, J. Richards, R. Webb
AN ACT relating to short-term loans.
Amend KRS 286.9-010 to define "annual percentage rate," "borrower," "interest," and"short-term loan" and to delete the definition of "deferred deposit transaction"; amend KRS 286.9-020 to delete deferred deposit transactions and to require any person engaged in the business of making short-term loans in Kentucky to obtain a license from the executive director of the Department of Financial Institutions; amend KRS 286.9-050 to specify the requirements for the application form for engaging in the business of making short-term loans; amend KRS 286.9-070 to delete deferred deposit transactions and insert short-term loans; amend KRS 286.9-075 to delete deferred deposit transactions and insert short-term loans; amend KRS 286.9-100 to prohibit licensees from making a loan to a borrower who is not physically present in the licensee's business location; prohibit a person from making a short-term loan from an office not in Kentucky to a borrower who is physically present in Kentucky and provide that an out-of-state lender may make a loan to a borrower from Kentucky who physically visits the out-of-state office of the lender; prohibit making a short-term loan by telephone, mail, or internet; require written disclosure of all interest and fees to be charged to the borrower prior to making the short-term loan; limit the annual percentage rate to 36% for a short-term loan; delete the maximum $15 dollar service fee per $100 for deferred deposit transactions; provide that the making of a short-term loan that violates the provisions of Subtitle 9 of KRS Chapter 286 also violates KRS 367.170 and authorize the Attorney General or the executive director of the Department of Financial Institutions to enforce the provisions of Subtitle 9 of KRS Chapter 286 and authorize a borrower to bring an action pursuant to KRS 367.220 and if the violation involves interest rate limits the borrower may bring an action under KRS 360.020; limit a borrower to one outstanding short-term loan at one time with a face value not to exceed $500 and require a licensee to inquire whether a person seeking a short-term loan has obtained a short-term loan within the previous 90 days and delete deferred deposit transactions; limit the duration of a short-term loan to 30 days; prohibit renewal, roll over, refinancing or otherwise consolidating a short-term loan for a fee; prohibit a licensee from making a loan to a borrower who has had a short-term loan within the previous 90 days; prohibit a licensee from engaging in activity that would evade the requirements of Subtitle 9 of KRS Chapter 286 including disguising a short-term loan as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates of an installment sale of good or services; prohibit licensees from drafting funds electronically or billing any credit card in connection with a short-term loan; provide that a short-term loan in violation of Subtitle 9 of KRS Chapter 286 is void from inception of the loan; prohibit licensees from entering into a short-term loan with a member of the United States Armed Forces or a member's dependent that does not comply with 10 U.SC. 987 and any violation of this federal law is a violation of Subtitle 9 of KRS Chapter 286; amend KRS 286.9-102 to deleted deferred deposit transactions and to provide that a short-term loan licensee shall give the borrower a signed statement of the applicable annual percentage rate and a clear description of the payment obligations of the terms of the agreement before the agreement is signed; and, require that each short-term loan licensee comply with the federal Fair Debt Collection Practies Act when collecting on a short-term loan.
Feb 23-introduced in House
Feb 24-to Banking & Insurance (H)