S.F. _____ Section 1. NEW SECTION . 536B.1 Title. 1 This chapter shall be known and may be cited as the “Iowa 2 Unsecured Consumer Loan Act” . 3 Sec. 2. NEW SECTION . 536B.2 Definitions. 4 As used in this chapter, unless the context otherwise 5 requires: 6 1. “Annual percentage rate” means the measure of the cost 7 of credit, expressed as a yearly rate, that relates the amount 8 extended to a consumer on an unsecured consumer loan to the 9 amount and timing of payments made, as computed under the 10 federal Truth in Lending Act. 11 2. “Consumer” means an individual who obtains an unsecured 12 consumer loan. 13 3. “Federal Truth in Lending Act” means as defined in 14 section 537.1302. 15 4. “Finance charge” means the amount payable by a consumer 16 incident to or as a condition of the extension of an unsecured 17 consumer loan but excluding other fees allowed under section 18 536B.19. 19 5. “Licensee” means a person licensed pursuant to this 20 chapter. 21 6. “Regularly engaged in the business” means any of the 22 following: 23 a. Advertising to or making any other solicitation to a 24 resident of this state to offer an unsecured consumer loan 25 within this state. 26 b. Making three or more unsecured consumer loans within a 27 calendar year to residents of this state. 28 7. “Superintendent” means the superintendent of banking 29 within the banking division of the department of commerce. 30 8. “Unsecured consumer loan” is a loan in which all of the 31 following are applicable: 32 a. The debt is incurred for a personal, family, or household 33 purpose. 34 b. The debt is not less than five hundred dollars and not 35 -1- LSB 6171XC (5) 87 gh/rn 1/ 16

S.F. _____ more than one thousand five hundred dollars. 1 c. The debt is unsecured. 2 d. The lender holds the consumer’s check or checks 3 for a specified period, or obtains the consumer’s written 4 authorization to debit the consumer’s account, other than as 5 a result of default, under an agreement, either express or 6 implied, for a specified period, before the lender does any of 7 the following: 8 (1) Offers the check or checks for deposit or presentment. 9 (2) Exercises the consumer’s written authorization to debit 10 the consumer’s account. 11 e. The debt is payable in biweekly, semimonthly, or monthly 12 payment installments, in accordance with the dates that the 13 consumer is scheduled to receive income payments. 14 f. The debt is subject to prepayment in whole or in part at 15 any time without penalty. 16 g. The term length of the loan is for a maximum of twelve 17 months. 18 9. “Unsecured consumer loan lender” means a person who 19 advertises to make, solicit, or hold the person out to make an 20 unsecured consumer loan to a consumer in this state. 21 Sec. 3. NEW SECTION . 536B.3 Exemptions. 22 This chapter shall not apply to any of the following: 23 1. A person who does business under the authority of a 24 law of this state, or any other state while regulated by a 25 state agency of that other state, or of the United States, 26 relating to banks, savings banks, trust companies, savings and 27 loan associations, profit sharing and pension trusts, credit 28 unions, insurance companies, or receiverships if the person 29 is regulated by the other law or under the jurisdiction of a 30 court. 31 2. A person who is not regularly engaged in the business of 32 making an unsecured consumer loan. 33 3. A person who is licensed pursuant to another law of this 34 state to the extent that the person’s activities are governed 35 -2- LSB 6171XC (5) 87 gh/rn 2/ 16

S.F. _____ by that law. 1 4. A consumer loan to the extent provided under chapter 2 533D, 535C, 536, 536A, 536C, or 537. 3 Sec. 4. NEW SECTION . 536B.4 License —— application —— fees. 4 1. Unless exempt under section 536B.3, a person shall not 5 engage in the business of making an unsecured consumer loan 6 to a resident of this state without first having obtained 7 a license as an unsecured consumer loan lender from the 8 superintendent. 9 2. An applicant for a license shall submit an application 10 in writing, under oath, and in the form as prescribed by the 11 superintendent. The application shall require any information 12 that the superintendent determines is necessary. 13 3. At the time of making the application, the applicant 14 shall pay to the superintendent a fee of one hundred dollars. 15 Sec. 5. NEW SECTION . 536B.5 Grounds for denial of license. 16 The superintendent may deny a license for any of the 17 following: 18 1. The person is insolvent. 19 2. The person has failed to demonstrate the financial 20 responsibility, experience, character, and general fitness to 21 command the confidence of the community and to warrant the 22 belief that the business of the proposed unsecured consumer 23 loan lender will be honestly and efficiently conducted. 24 3. The person has failed to pay the fee required under 25 section 536B.4, subsection 3. 26 4. The person has failed to demonstrate that the person 27 maintains at least twenty-five thousand dollars in unencumbered 28 assets readily available for use in the conduct of the 29 unsecured consumer loan business. 30 5. The person has, either knowingly or without the exercise 31 of due care to prevent a violation, violated any provision of 32 this Title XIII of the Code or any rule or order adopted or made 33 pursuant to this Title XIII. 34 Sec. 6. NEW SECTION . 536B.6 Issuance of license —— form —— 35 -3- LSB 6171XC (5) 87 gh/rn 3/ 16

S.F. _____ posting. 1 1. The superintendent shall issue a license to an applicant 2 within ninety days after receiving a complete application 3 unless the superintendent finds grounds for denying the 4 license. 5 2. A license issued under this chapter shall be valid for a 6 term of one year, beginning on January 1 and ending on December 7 31. 8 3. A license issued under this chapter shall remain in full 9 force until surrendered, revoked, or suspended. 10 4. A license issued under this chapter shall not be 11 transferable or assignable. 12 5. A license issued under this chapter shall remain the 13 property of this state. Upon the voluntary surrender of the 14 license by the licensee or the revocation of the license by 15 the superintendent, the licensee shall immediately deliver the 16 license to the superintendent. Surrender or revocation of the 17 license shall not affect any other liability of the licensee. 18 6. A license issued under this chapter shall be kept 19 conspicuously posted at the office of the licensee and 20 any licensed branch office where unsecured consumer loan 21 transactions are conducted. 22 Sec. 7. NEW SECTION . 536B.7 License location. 23 1. A licensee shall designate the principal place of 24 business where the licensee shall conduct unsecured consumer 25 loan transactions pursuant to this chapter, which shall be 26 indicated on the license as the licensed office location. 27 2. a. A licensee may obtain a branch office license from 28 the superintendent for each branch office if the licensee wants 29 to maintain more than one license location. 30 b. A licensee may obtain a branch office license by 31 submitting an application in the form as prescribed by the 32 superintendent and paying a fee of two hundred fifty dollars 33 for each branch office license. 34 c. The superintendent shall issue a branch office 35 -4- LSB 6171XC (5) 87 gh/rn 4/ 16

S.F. _____ license indicating the address of the branch office if the 1 superintendent determines that the applicant is qualified for 2 the license and has paid the applicable fee. 3 3. A licensee shall not conduct unsecured consumer loan 4 transactions under any name or at any place of business other 5 than the name and location indicated on the license. However, 6 a licensee may do any of the following: 7 a. Provide an unsecured consumer loan by mail or electronic 8 means. 9 b. Make an accommodation to a consumer at any location upon 10 a request by the consumer. 11 c. Conduct an administrative, loan servicing, or 12 recordkeeping activity at any other location not open to the 13 public provided that the superintendent is notified in advance 14 of that activity. 15 4. A licensee may change the licensed office location or 16 licensed branch office location by providing the superintendent 17 with written notice, and the superintendent shall amend the 18 license accordingly. 19 5. a. A licensee may conduct unsecured consumer loan 20 transactions from within any licensed office location or 21 licensed branch office location in which any other business not 22 licensed pursuant to this Title XIII of the Code is solicited 23 or engaged in, or in conjunction with any other business not 24 licensed pursuant to this Title XIII. 25 b. If the superintendent determines that the other business 26 is of such a nature or is being conducted in such a manner 27 as to conceal an evasion or violation of this Title XIII of 28 the Code or any rules adopted pursuant to this Title XIII, 29 or is otherwise being conducted in an unlawful manner, the 30 superintendent may restrict the licensee from conducting its 31 business as an unsecured consumer loan lender in conjunction 32 with that other business. 33 Sec. 8. NEW SECTION . 536B.8 Renewal of license. 34 1. A license issued pursuant to this chapter shall be 35 -5- LSB 6171XC (5) 87 gh/rn 5/ 16

S.F. _____ renewed annually. A licensee may renew a license by submitting 1 an application in the form as prescribed by the superintendent 2 no later than December 1 and paying a renewal fee of two 3 hundred fifty dollars. 4 2. The superintendent may assess a late fee of ten dollars 5 per day for applications submitted and accepted for processing 6 after December 1. 7 3. The license of a licensee who has not filed a renewal 8 application or paid the renewal fee by December 31 shall expire 9 and the licensee shall not act as an unsecured consumer loan 10 lender until the license is renewed or a new license is issued 11 pursuant to this chapter. 12 Sec. 9. NEW SECTION . 536B.9 Grounds for denial of license 13 renewal —— suspension —— revocation. 14 1. The superintendent may deny the renewal of a license or 15 suspend or revoke a license if the superintendent determines 16 any of the following: 17 a. The licensee is insolvent. 18 b. The licensee is not a person of honesty, truthfulness, 19 and good character, as determined by rule. 20 c. The licensee has failed to pay the annual renewal fees. 21 d. The licensee has failed to file an annual report as 22 required by this chapter when the report was due or within 23 any extension of time provided by the superintendent for good 24 cause. 25 e. The licensee has failed to demonstrate that the licensee 26 maintains at least twenty-five thousand dollars in unencumbered 27 assets readily available for use in the conduct of the 28 unsecured consumer loan business. 29 2. The superintendent may also deny the renewal of a license 30 or suspend or revoke a license if the superintendent determines 31 a fact or condition exists which would have warranted the 32 superintendent to refuse to originally issue the license. 33 Sec. 10. NEW SECTION . 536B.10 Records —— examination by 34 superintendent —— fees. 35 -6- LSB 6171XC (5) 87 gh/rn 6/ 16

S.F. _____ 1. A licensee shall keep such books, accounts, and records 1 as the superintendent may require in order to determine whether 2 the licensee is complying with the provisions of this chapter 3 and with the rules adopted by the superintendent under this 4 chapter. 5 2. A licensee shall preserve for at least two years after 6 making the last entry on any unsecured consumer loan all books, 7 accounts, and records pertaining to the loan. A licensee who 8 uses an electronic recordkeeping system shall not be required 9 to keep a written copy of the books, accounts, and records 10 if the licensee is able to generate all of the information 11 required under this section in a timely manner for examination 12 or other purposes. 13 3. A licensee shall make any books, accounts, and records 14 kept outside of this state available to the superintendent 15 within three business days upon request by the superintendent. 16 The superintendent may examine such books, accounts, and 17 records at the office of the licensee located outside of this 18 state. 19 4. A licensee shall provide to the superintendent or the 20 superintendent’s duly authorized representative access, during 21 normal business hours, to the licensee’s offices, files, safes, 22 and vaults regarding the unsecured consumer loan business or 23 regarding the subject matter of any examination, investigation, 24 or hearing regarding the licensee. 25 5. a. A licensee required to provide the superintendent 26 with access to its records pursuant to this section shall 27 pay the cost of the examination or investigation. The 28 superintendent shall determine the cost of the examination or 29 investigation based upon the actual cost of the operation of 30 the finance bureau of the banking division of the department of 31 commerce, including the proportionate share of administrative 32 expenses in the operation of the banking division attributable 33 to the finance bureau as determined by the superintendent, 34 incurred in the discharge of duties imposed upon the 35 -7- LSB 6171XC (5) 87 gh/rn 7/ 16

S.F. _____ superintendent by this chapter. 1 b. Failure to pay the examination or investigation fee 2 within thirty days of receipt of demand from the superintendent 3 shall subject the licensee to a late fee of up to five percent 4 of the amount of the examination or investigation fee for each 5 day the payment is delinquent. 6 Sec. 11. NEW SECTION . 536B.11 Annual report by licensee. 7 1. A licensee shall annually on or before April 1 file a 8 report with the superintendent giving such relevant information 9 as the superintendent reasonably may require concerning 10 the business and operations during the twelve-month period 11 ending the preceding December 31. Upon good cause shown by a 12 licensee, the superintendent may extend the time for filing the 13 report for a period not to exceed sixty days. 14 2. The annual report shall include a licensee’s average 15 annual percentage rate and average loan amount during the 16 twelve-month period ending the preceding December 31. 17 3. a. If a licensee fails to file an annual report under 18 this section on or before April 1 or within any extension 19 of time provided by the superintendent for good cause, the 20 superintendent or any person designated by the superintendent 21 may examine the books, accounts, and records of the licensee, 22 prepare the annual report, and charge the licensee an 23 examination fee as established by rule. The fee shall be based 24 on the actual cost of the examination or investigation. 25 b. If a licensee fails to file an annual report within the 26 specified time and has not received an extension, the licensee 27 shall be subject to a civil penalty not to exceed five dollars 28 per day until the licensee has filed the annual report. The 29 licensee shall pay the penalty to the superintendent within 30 thirty days after the penalty is levied. 31 Sec. 12. NEW SECTION . 536B.12 Surrender of license. 32 A licensee may surrender an unsecured consumer loan license 33 by delivering to the superintendent written notice that the 34 license is surrendered. The surrender does not affect the 35 -8- LSB 6171XC (5) 87 gh/rn 8/ 16

S.F. _____ licensee’s civil or criminal liability for acts committed 1 prior to such surrender or entitle such licensee to a return 2 of any part of the annual license fee. The superintendent 3 may establish procedures for the disposition of the books, 4 accounts, and records of the licensee and may require such 5 action as deemed necessary for the protection of consumers that 6 have unsecured consumer loans that are outstanding at the time 7 of surrender of the license. 8 Sec. 13. NEW SECTION . 536B.13 Impairment of preexisting 9 loan. 10 1. The revocation, suspension, surrender, expiration, or 11 alteration of a license provided under this chapter shall not 12 impair or affect any of the following: 13 a. The obligation of a preexisting unsecured consumer loan 14 between an unsecured consumer loan lender and a consumer. 15 b. The ability or right of an unsecured consumer loan lender 16 to service a preexisting unsecured consumer loan from outside 17 this state. 18 2. If this chapter or any part of this chapter is modified, 19 amended, or repealed, resulting in a cancellation or alteration 20 of any unsecured consumer loan lender license or right of a 21 licensee under this chapter, that cancellation or alteration 22 shall not impair or affect the obligation of any preexisting 23 contract between an unsecured consumer loan lender and any 24 consumer. 25 Sec. 14. NEW SECTION . 536B.14 Restrictions. 26 1. A licensee shall not knowingly advertise, display, 27 distribute, broadcast, or televise, or cause or allow to be 28 advertised, displayed, distributed, broadcast, or televised, in 29 any manner, any false, misleading, or deceptive statement or 30 representation with regard to the rates, terms, or conditions 31 of an unsecured consumer loan. To the extent applicable, all 32 advertising shall comply with the advertising requirements 33 specified in the federal Truth in Lending Act. 34 2. a. A licensee shall not provide an unsecured consumer 35 -9- LSB 6171XC (5) 87 gh/rn 9/ 16

S.F. _____ loan with an annual percentage rate greater than that provided 1 in 10 U.S.C. §987(b), to any of the following: 2 (1) A member of the United States armed forces who is on 3 active duty under a call or order that does not specify a 4 period of thirty days or less. 5 (2) A person on active national guard duty or armed forces 6 military reserve active duty. 7 (3) A dependent as defined in 10 U.S.C. §987(i). 8 b. A licensee shall not provide an unsecured consumer loan 9 to a consumer unless the consumer has signed a statement, to 10 be included as part of the loan, attesting to whether or not 11 the consumer is a military member or a dependent as defined 12 in 10 U.S.C. §987(i). The statement shall be in the form as 13 prescribed by the superintendent by rule. 14 c. An unsecured consumer loan made in violation of 10 U.S.C. 15 §987 is void and its terms and conditions unenforceable. 16 Sec. 15. NEW SECTION . 536B.15 Rules. 17 The superintendent may adopt rules to administer this 18 chapter. 19 Sec. 16. NEW SECTION . 536B.16 Noncompliance. 20 1. An unsecured consumer loan that is provided by a 21 person who is required to be licensed under this chapter but 22 who is not licensed is void and its terms and conditions 23 unenforceable. 24 2. Except as provided in subsection 1 and section 536B.14, 25 subsection 2, failure to comply with this chapter shall not 26 affect the validity or enforceability of an unsecured consumer 27 loan. 28 Sec. 17. NEW SECTION . 536B.17 Disclosures. 29 1. To the extent applicable, a licensee shall comply with 30 the disclosure requirements as set forth in the federal Truth 31 in Lending Act. 32 2. A licensee shall conspicuously display a sign printed 33 in at least twelve-point bold font type at each desk in the 34 licensed office and licensed branch office where unsecured 35 -10- LSB 6171XC (5) 87 gh/rn 10/ 16

S.F. _____ consumer loan transactions are conducted with the following 1 disclosure: 2 Notice: Before signing any loan documents or otherwise 3 committing to a loan, you may take copies of those documents 4 away from the unsecured consumer loan lender’s place of 5 business for review. 6 3. A licensee providing electronic unsecured consumer loans 7 shall conspicuously display the following disclosure on the 8 licensee’s internet site: 9 Notice: Before signing any loan documents or otherwise 10 committing to a loan, please read our terms and conditions 11 carefully. 12 4. A licensee who fails to provide disclosures as required 13 under this section shall be subject to a civil penalty not to 14 exceed three hundred dollars for each violation. 15 Sec. 18. NEW SECTION . 536B.18 Finance charge. 16 1. A licensee may charge a finance charge on an unsecured 17 consumer loan at a rate not to exceed twenty percent of the 18 first five hundred dollars loaned, plus seven and one-half 19 percent of any amount in excess of five hundred dollars loaned. 20 The finance charge shall be deemed fully earned as of the date 21 of the unsecured consumer loan transaction and shall not be 22 refundable or prorated in the event of prepayment. 23 2. This section does not authorize the compounding of a 24 finance charge. 25 Sec. 19. NEW SECTION . 536B.19 Other fees and charges. 26 1. In addition to a finance charge authorized under section 27 536B.18, a licensee may collect any of the following fees or 28 charges: 29 a. A monthly maintenance fee on each unsecured consumer loan 30 at a rate not to exceed eleven dollars and twenty-five cents 31 per one hundred dollars loaned. Such fee shall be refundable 32 to the consumer on a pro rata basis upon prepayment in full 33 prior to the maturity date of the loan. 34 b. A delinquency charge if an installment is not paid in 35 -11- LSB 6171XC (5) 87 gh/rn 11/ 16

S.F. _____ full within seven days, equal to five percent of the amount of 1 the installment. 2 c. Court costs and reasonable attorney fees if the unsecured 3 consumer loan is referred for collection to an attorney other 4 than an employee of the licensee. 5 d. A dishonored check service fee if a licensee receives 6 a check, draft, negotiable order of withdrawal, or similar 7 instrument that is not paid or is not honored by a depository 8 institution, equal to the actual charges assessed by the 9 depository institution. 10 2. A licensee shall not directly or indirectly charge, 11 contract for, or receive any other amount in connection with an 12 unsecured consumer loan except as provided in this chapter. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill creates new Code chapter 536B to require licensure 17 of persons who wish to provide unsecured consumer loans to 18 residents of the state. 19 The bill defines “unsecured consumer loan” to mean a loan 20 that is incurred for a personal, family, or household purpose, 21 is not less than $500 and not more than $1,500, is unsecured, 22 the lender holding the consumer’s check for a specified 23 period prior to deposit or presentment or obtains written 24 authorization to debit the consumer’s account for a specified 25 period prior to debiting the consumer’s account, is payable in 26 specified payment installments, is subject to prepayment in 27 whole or in part at any time without penalty, and is for a term 28 length of a maximum of 12 months. 29 The bill exempts the following persons from the requirements 30 of the bill: a person who does business under any law relating 31 to banks, savings banks, trusts, savings and loan associations, 32 profit sharing and pension trusts, credit unions, insurance 33 companies, or receiverships, a person who is not regularly 34 engaged in the business of making unsecured consumer loans, 35 -12- LSB 6171XC (5) 87 gh/rn 12/ 16

S.F. _____ as defined in the bill, a person who is licensed pursuant to 1 another Code chapter to the extent that the person’s activities 2 are governed by that Code chapter, or a consumer loan provided 3 under Code chapter 533D, 535C, 536, 536A, 536C, or 537. 4 The bill prohibits a person from engaging in the business 5 of making unsecured consumer loans to a resident in this state 6 without first obtaining a license from the superintendent 7 of the banking division in the department of commerce. An 8 applicant for a license must submit an application in the form 9 prescribed by the superintendent and pay a fee of $100. 10 The bill allows the superintendent to deny a license if 11 the applicant is insolvent, has failed to demonstrate the 12 financial responsibility, experience, character, and general 13 fitness required, as determined by rule, has failed to pay the 14 $100 fee, or has failed to demonstrate the availability of at 15 least $25,000 in assets for use in the conduct of the unsecured 16 consumer loan business. 17 The bill requires the superintendent to issue a license 18 within 90 days of receiving an application unless grounds exist 19 for denying it. A license is valid for one year, from January 20 1 to December 31, remains in full force until surrendered, 21 revoked, or suspended, and is not transferable. A license 22 remains the property of the state and must be immediately 23 returned to the superintendent if a licensee voluntarily 24 surrenders it. A license must be posted conspicuously in the 25 office of the licensee and any licensed branch offices. 26 The bill requires a licensee to designate the principal 27 place of business to be indicated on the license. A licensee 28 wishing to maintain more than one place of business may 29 obtain a branch office license by submitting an application 30 as prescribed by the superintendent and paying a $250 fee. 31 A licensee is prohibited from conducting unsecured consumer 32 loan transactions under any name or location different than 33 what is indicated on the license, provided, however, that 34 a licensee may provide loans by mail or electronic means, 35 -13- LSB 6171XC (5) 87 gh/rn 13/ 16

S.F. _____ make an accommodation to a consumer at any location upon 1 the consumer’s request, or conduct an administrative, loan 2 servicing, or recordkeeping activity at any other location if 3 the superintendent is notified. A licensee can change the 4 license location by giving the superintendent written notice to 5 amend the license. 6 The bill authorizes a licensee to conduct unsecured consumer 7 loan transactions from any licensed office location where 8 other business activities unrelated to unsecured consumer loan 9 lending occur. However, the superintendent may prohibit a 10 licensee from conducting business as an unsecured consumer 11 loan lender in conjunction with, or at the location of, such 12 other business if the other business is being conducted in an 13 unlawful manner. 14 The bill allows a licensee to obtain a renewal license by 15 submitting an application as prescribed by the superintendent 16 no later than December 1 and paying a $250 fee. A renewal 17 application submitted after December 1 is subject to a $10 late 18 fee for each day it is late. A license of a licensee who has 19 not filed a renewal or paid the fee by December 31 expires. 20 The bill allows the superintendent to deny a renewal license 21 or suspend or revoke a license if the licensee is insolvent, 22 is not a person of honesty, truthfulness, and good character, 23 as determined by rule, has failed to pay the renewal fee, has 24 failed to file an annual report, or has failed to demonstrate 25 the availability of at least $25,000 in assets for use in 26 the conduct of the business. The superintendent may deny a 27 renewal license or suspend or revoke a license if a fact or 28 condition exists to have warranted the superintendent to refuse 29 to originally issue the license. 30 The bill requires a licensee to keep records for the 31 superintendent to determine whether the licensee is complying 32 with the bill for at least two years. A licensee must make 33 all records kept outside of the state available to the 34 superintendent within three business days upon request. A 35 -14- LSB 6171XC (5) 87 gh/rn 14/ 16

S.F. _____ licensee must provide the superintendent with access to 1 the licensee’s records during normal business hours. A 2 licensee subjected to an examination of its records by the 3 superintendent must pay a fee determined by the actual cost of 4 the examination. A licensee who fails to pay the fee within 30 5 days must pay a late fee of up to 5 percent of the amount of the 6 fee for each day the payment is delinquent. 7 The bill requires a licensee to provide the superintendent 8 with an annual report on or before April 1, which may be 9 extended for no more than 60 days upon showing good cause. The 10 report must include the licensee’s average annual percentage 11 rate, as defined in the bill, and average loan amount during 12 the 12-month period ending the preceding December 31. The 13 superintendent may examine the records of a licensee who has 14 failed to file an annual report, prepare the annual report, and 15 charge a fee based on the cost of the examination. A licensee 16 who has failed to file an annual report without an extension is 17 also subject to a civil penalty not to exceed $5 for each day 18 until the report is filed, which must be paid within 30 days of 19 being charged. 20 The bill provides that the revocation, suspension, 21 surrender, cancellation, or alteration of a license will not 22 impair or affect the validity of a preexisting unsecured 23 consumer loan or the ability of a lender to service a 24 preexisting loan outside of this state. 25 The bill restricts a licensee from advertising in any false 26 or misleading manner with regards to the rates or terms of an 27 unsecured consumer loan and requires a licensee to comply with 28 the advertising requirements in the federal Truth in Lending 29 Act. A licensee cannot provide an unsecured consumer loan to a 30 military member or dependent, as defined in 10 U.S.C. §987(i), 31 with an annual percentage rate greater than that provided in 32 10 U.S.C. §987(b). Before a licensee may provide a loan, 33 the consumer must sign a statement attesting to whether or 34 not the consumer is a military member or dependent. A loan 35 -15- LSB 6171XC (5) 87 gh/rn 15/ 16

S.F. _____ made in violation of 10 U.S.C. §987 is void and its terms and 1 conditions unenforceable. 2 The bill provides that an unsecured consumer loan provided 3 by a person who is required to be licensed under new Code 4 chapter 536B but who is not licensed is void and its terms and 5 conditions unenforceable. However, any other noncompliance 6 with new Code chapter 536B, except pertaining to military 7 members and their dependents, will not affect the validity of 8 a loan. 9 The bill requires a licensee to comply with the disclosure 10 requirements in the federal Truth in Lending Act. A licensee 11 must display a disclosure sign, as described in the bill, at 12 each desk in the licensed office and each licensed branch 13 office and on the licensee’s internet site if the licensee 14 provides electronic unsecured consumer loans. A licensee who 15 fails to do so is subject to a civil penalty not to exceed $300 16 for each violation. 17 The bill allows a licensee to charge a finance charge, as 18 defined in the bill, on an unsecured consumer loan at a rate 19 not to exceed 20 percent of the first $500 loaned, plus 7.5 20 percent of any amount in excess of $500 loaned. However, a 21 licensee is not permitted to compound a finance charge. In 22 addition to this, a licensee may collect a monthly maintenance 23 fee, a delinquency charge, court costs and reasonable attorney 24 fees, and a dishonored check service fee, as described in 25 the bill. A licensee is prohibited from collecting any 26 other charges or fees in connection with conducting unsecured 27 consumer loan transactions. 28 -16- LSB 6171XC (5) 87 gh/rn 16/ 16