2011 -- S 0288 SUBSTITUTE A

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LC01345/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2011

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A N A C T

RELATING TO FINANCIAL INSTITUTIONS - SMALL LOAN LENDERS

     Introduced By: Senator Harold M. Metts

     Date Introduced: February 16, 2011

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 19-14.4-4 and 19-14.4-5.1 of the General Laws in Chapter 19-14.4

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entitled "Check Cashing" are hereby amended to read as follows:

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     19-14.4-4. Fees for services. -- No licensee shall:

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      (1) Charge check-cashing fees in excess of three percent (3%) of the face amount of the

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check, or five dollars ($5.00), whichever is greater, if the check is the payment of any kind of

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state public assistance or federal social security benefit;

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      (2) Charge check-cashing fees for personal checks in excess of ten percent (10%) of the

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face amount of the personal check or five dollars ($5.00), whichever is greater; or

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      (3) Charge check-cashing fees in excess of five percent (5%) of the face amount of the

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check or five dollars ($5.00), whichever is greater, for all other checks.

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      (4) Charge deferred deposit transaction fees in excess of ten percent (10%) of the amount

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of funds advanced eight percent (8%) on any deferred deposit transaction totaling less than two

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hundred and fifty dollars ($250): ten percent (10%) on any deferred deposit transaction totaling

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greater than two hundred and fifty dollars ($250) but less than five hundred dollars ($500); and

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twelve percent (12%) on any deferred deposit transaction totaling greater than five hundred

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dollars ($500) but less than seven hundred and fifty dollars ($750). Provided that any deferred

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deposit transactions entered into with the same licensee within a forty-eight (48) hour period shall

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be considered the same transaction for the purpose of charging fees under the terms of this

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subsection.

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     19-14.4-5.1. Customer checks -- Deferred deposits. -- (a) A check casher may defer the

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deposit of a personal check written by a customer for a term of no less than thirteen (13) days,

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pursuant to the provisions of this section. The face amount of the check shall not exceed five

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hundred dollars ($500) seven hundred fifty dollars ($750).

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      (b) Each deferred deposit shall be made pursuant to a written agreement that has been

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signed by the customer and by the check casher or an authorized representative of the check

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casher. The written agreement shall contain a statement of the total amount of any fees charged

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for the deferred deposit, expressed both in United States currency and as an annual percentage

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rate (APR), as required by federal regulations. The written agreement shall authorize the check

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casher to defer deposit of the personal check until a specific date no less than thirteen (13) days

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from the date the written agreement was signed and executed. The written agreement shall not

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permit the check casher to accept collateral.

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      (c) A roll-over is an extension or deferral of the payment due date of a deferred deposit

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transaction for the payment of only an additional fee.

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      (d) The maximum amount of a single customer's check is five hundred dollars ($500)

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seven hundred and fifty dollars ($750).

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      (e) The maximum aggregate amount of concurrently outstanding checks held by the

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licensee or its affiliate from the same customer is five hundred dollars ($500) seven hundred and

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fifty dollars ($750).

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      (f) The maximum number of concurrently outstanding checks held by the licensee or its

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affiliates from the same customer is three (3).

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     (g) Any check casher offering deferred deposit transactions must offer such transactions

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in all sums up to the maximum amount of seven hundred and fifty dollars ($750).

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      (g) (h) The maximum number of rollovers permitted is one.

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      (h) (i) The check casher shall give a duplicate original of the agreement to the customer

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at the time of the transaction.

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     (j) A check casher shall allow a customer the right to rescind, at no cost, a deferred

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deposit transaction on or before the close of the following business day, provided that the

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customer returns to the check casher the full original amount of funds advanced.

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     (k)(1) Subject to terms and conditions of this section, a customer who is unable to repay a

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deferred presentment transaction when due may elect once every one hundred and eighty (180)

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days to repay the deferred presentment transaction to the check casher by means of an extended

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payment plan. The one hundred eighty (180) day period is measured from the date the customer

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pays in full one extended payment plan with the check casher until the date that the customer

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enters into another extended payment plan with the check casher.

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     (2) To request an extended payment plan, the customer, before the close of business on

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the last business day before the due date of the outstanding deferred presentment transaction,

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must request the plan and sign an amendment to the deferred presentment agreement that

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memorializes the plan’s terms.

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     (3) The extended payment plan’s terms must allow the customer, at no additional cost, to

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repay the outstanding deferred presentment transaction including any fee due in at least four (4)

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substantially equal installments. Each plan installment must be due on or after a date on which the

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customer receives regular income. The customer may prepay an extended payment plan in full at

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any time without penalty. The check casher shall not charge the customer any interest or

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additional fees during the term of the extended payment plan. The check casher may, with each

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payment under the plan by a customer, provide for the return of the customer’s prior held check

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and require a new check for the remaining balance under the plan.

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     (4) If the customer fails to pay any extended payment plan installment when due, the

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customer shall be in default of the payment plan and the check casher immediately may

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accelerate payment on the remaining balance. Upon default, the check casher may take action to

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collect all amounts due.

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     (l) A check casher shall collect any amount due from a deferred presentment transaction

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in a professional, fair and lawful manner in accordance with the prohibitions against harassment

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and abuse, false and misleading representations, and unfair practices set forth in the Rhode Island

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Fair Debt Collection Practices Act, Chapter 19-14.9.

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     SECTION 2. This act shall take effect on September 1, 2011.

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LC01345/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO FINANCIAL INSTITUTIONS - SMALL LOAN LENDERS

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     This act amends the statutes relating to deferred deposit providers (payday lenders)

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including the fee schedule, the maximum amount of a transaction and provides for extended

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payment plans.

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     This act would take effect on September 1, 2011.

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LC01345/SUB A

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