S.F. 132 Section 1. Section 533D.9, subsection 2, paragraph b, Code 1 2013, is amended to read as follows: 2 b. The annual percentage rate as computed pursuant to the 3 federal Truth in Lending Act. The annual percentage rate 4 shall not exceed thirty-six percent, as computed pursuant to 5 the federal Truth in Lending Act, unless a licensee makes 6 an election and submits to the indebtedness limitations and 7 electronic database reporting requirements specified in section 8 533D.10A. 9 Sec. 2. Section 533D.9, subsection 2, Code 2013, is amended 10 by adding the following new paragraph: 11 NEW PARAGRAPH . e. That the licensee cannot initiate debt 12 collection procedures, civil court proceedings, or arbitration 13 to collect an unpaid check unless the licensee has provided 14 the maker of the check the opportunity to repay the obligation 15 without any additional charges, other than the penalty provided 16 in paragraph “d” of this subsection, in biweekly payments of 17 not more than ten percent of the face of the check until the 18 debt is paid in full. Additionally, that during this repayment 19 period the licensee may not transfer or sell the debt owing on 20 the unpaid check, and the loan shall not be considered to be 21 in default. Further, that the maker of the check’s failure 22 to make a biweekly payment under this paragraph shall place 23 the loan in default and the licensee may, after proper notice, 24 exercise rights against the maker under the law. 25 Sec. 3. Section 533D.10, subsection 1, Code 2013, is amended 26 to read as follows: 27 1. A licensee shall not do any of the following: 28 a. Hold from any one maker more than two checks at any one 29 time. 30 b. Hold from any one maker a check or checks in an aggregate 31 face amount of more than five hundred dollars at any one time. 32 c. Hold or agree to hold a check for more less than 33 thirty-one fourteen days. 34 d. Require the maker to receive payment by a method which 35 -1- LSB 1615XS (3) 85 rn/sc 1/ 7

S.F. 132 causes the maker to pay additional or further fees and charges 1 to the licensee or another person. 2 e. Repay, refinance, or otherwise consolidate a postdated 3 check transaction with the proceeds of another postdated check 4 transaction made by the same licensee. A licensee may not 5 enter into another transaction with the maker of a check if the 6 licensee presently has a transaction outstanding with the maker 7 or if the maker had a previous transaction with the licensee 8 within two days of the new transaction, unless the licensee has 9 provided the following notice both verbally and in writing, 10 and the maker has acknowledged receipt of the notice with a 11 signature and date: 12 Notice to Borrower 13 (1) The licensee may not repay, refinance, or otherwise 14 consolidate a postdated check transaction with the proceeds of 15 another postdated check transaction made by the same licensee. 16 (2) While a licensee may charge a penalty if a check is 17 not negotiable on the date agreed upon, the penalty shall not 18 exceed fifteen dollars. This penalty shall only be collected 19 by the licensee once on a check no matter how long that check 20 remains unpaid. This penalty is the only additional charge 21 a lender may charge you (the borrower) when a check is not 22 negotiable on the date agreed upon. 23 (3) If your check is not negotiable on the date agreed upon, 24 the licensee must provide you (the borrower) the opportunity 25 to repay the obligation without any additional charges, other 26 than the penalty described above, in biweekly payments of not 27 more than ten percent of the face of the check until the debt is 28 paid in full. 29 By signing and dating this notice, you acknowledge the 30 statements above, but yet still desire to obtain another loan 31 with the licensee. 32 Borrower(s) signature: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Date: _ _ _ _ _ _ _ _ 33 Borrower(s) signature: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Date: _ _ _ _ _ _ _ _ 34 f. Receive any other charges or fees in addition to the fees 35 -2- LSB 1615XS (3) 85 rn/sc 2/ 7

S.F. 132 listed in section 533D.9, subsections 1 and 2 . 1 g. Initiate debt collection procedures, civil court 2 proceedings, or civil or private arbitration proceedings to 3 collect an unpaid check unless the licensee has provided the 4 maker the opportunity to repay the obligation without any 5 additional charges, other than the penalty provided in section 6 533D.9, subsection 2, paragraph “d” , in biweekly payments of not 7 more than ten percent of the face of the check until the debt 8 is paid in full. During this repayment period the licensee 9 may not transfer or sell the debt owing on the unpaid check, 10 and the loan shall not be considered to be in default. The 11 failure of the maker of the check to make a biweekly payment as 12 required shall place the loan in default and the licensee may, 13 after proper notice, exercise rights against the maker under 14 the law. 15 Sec. 4. NEW SECTION . 533D.10A Alternative annual percentage 16 rate —— indebtedness limitation —— electronic database. 17 1. A licensee may elect to impose an annual percentage rate, 18 as computed pursuant to the federal Truth in Lending Act, that 19 exceeds thirty-six percent by filing with the superintendent 20 a written notice of intent. An election pursuant to this 21 section shall apply to all transactions entered into by the 22 licensee. A licensee having made an election pursuant to this 23 section who desires to discontinue imposition of an alternative 24 interest rate and consents to imposition of the thirty-six 25 percent annual percentage rate otherwise applicable under this 26 chapter, or a licensee previously imposing an annual percentage 27 rate not exceeding thirty-six percent who desires to make an 28 election pursuant to this subsection, may submit a request to 29 the superintendent, not more than once a year. 30 2. A licensee electing to impose an alternative annual 31 percentage rate pursuant to this section shall be prohibited 32 from entering into a delayed deposit services transaction which 33 will cause the maker of the check, when all other delayed 34 deposit services transactions entered into with any licensee 35 -3- LSB 1615XS (3) 85 rn/sc 3/ 7

S.F. 132 involving the maker of the check are accounted for, and when 1 the term of the transaction is aggregated with the other 2 transactions, to be indebted for a period exceeding ninety 3 days during the preceding twelve-month period. For purposes 4 of this subsection, if the maker of the check has entered 5 into more than one delayed deposit services transaction with 6 the same or another licensee, and the periods during which 7 the transactions are outstanding overlap, each day of each 8 respective transaction shall be counted in satisfying the 9 ninety-day restriction. For purposes of this subsection, if a 10 maker of a check is making biweekly payments during a repayment 11 period as provided in section 533D.9, subsection 2, paragraph 12 “e” , the repayment period shall not be counted in satisfying the 13 ninety-day restriction. 14 3. a. Each licensee making an election pursuant to this 15 section shall, by October 1, 2013, subscribe to, report to, and 16 utilize an electronic database tracking service to be developed 17 or selected pursuant to rules adopted by the banking division 18 of the department of commerce, that permits the licensee to 19 determine whether a maker of a check has an outstanding unpaid 20 check or debit authorization that is, or reasonably appears to 21 be, connected to a delayed deposit services transaction. Each 22 licensee shall require a maker of a check to sign a written 23 declaration confirming that, pursuant to section 533D.10A, 24 subsection 2, the maker of the check is eligible to enter into 25 a delayed deposit services transaction. 26 b. Records of a licensee and the electronic database 27 tracking service shall be subject to review and examination by 28 the division to determine whether the licensee is in compliance 29 with this section and other applicable provisions of this 30 chapter. 31 c. Information, records, and documents obtained in the 32 performance of the review and examination, including the amount 33 of any outstanding unpaid check or debit authorization and 34 the identity of the maker of the check, are confidential and 35 -4- LSB 1615XS (3) 85 rn/sc 4/ 7

S.F. 132 shall not be disclosed by the division and are not subject 1 to subpoena. Such information, records, and documents 2 do not constitute a public record under chapter 22. The 3 superintendent may disclose such information to representatives 4 of other state or federal regulatory authorities and 5 may release summary complaint information so long as the 6 information does not specifically identify the complainant. 7 The superintendent may also provide this information to the 8 attorney general for purposes of enforcing this chapter. 9 Sec. 5. EFFECTIVE DATE. The following provision or 10 provisions of this Act take effect October 1, 2013: 11 1. The section of this Act enacting section 533D.10A, 12 subsection 2. 13 EXPLANATION 14 This bill relates to specified aspects of the regulation of 15 delayed deposit services businesses. 16 The bill provides that the annual percentage rate applicable 17 to delayed deposit services transactions shall not exceed 36 18 percent, as computed pursuant to the federal Truth in Lending 19 Act, unless a licensee elects to impose an alternative higher 20 rate. This is the same percentage rate limitation imposed as 21 a restriction or safeguard for military personnel pursuant to 22 10 U.S.C. 49 § 987. Such an election shall make requirements 23 regarding indebtedness limitations and electronic database 24 reporting requirements specified in a subsequent section of the 25 bill applicable. 26 The bill provides that a licensee must disclose to the maker 27 of a check that the licensee cannot initiate debt collection 28 procedures, civil court proceedings, or arbitration to collect 29 an unpaid check unless the licensee has provided the maker 30 of a check the opportunity to repay the obligation without 31 any charges, other than the current $15 penalty, in biweekly 32 payments of not more than 10 percent of the face of the check 33 until the debt is paid in full. The bill adds that during this 34 repayment period the licensee cannot sell or transfer the debt 35 -5- LSB 1615XS (3) 85 rn/sc 5/ 7

S.F. 132 owing on the unpaid check and the loan shall not be considered 1 to be in default. However, if the maker of the check fails 2 to honor the repayment obligation, the bill provides that the 3 loan shall be placed in default. The bill makes the failure to 4 conform with these provisions a prohibited act on the part of 5 the licensee, which could subject the licensee to disciplinary 6 action as specified in Code section 533D.12. 7 Additionally, the bill changes a current provision that 8 prohibits a licensee from holding or agreeing to hold a 9 check for more than 31 days to a modified provision that the 10 licensee cannot hold or agree to hold a check for less than 14 11 days. The bill also prohibits a licensee from entering into 12 another transaction with the maker of a check who already has 13 a transaction outstanding with the licensee or from entering 14 into a new transaction within two days of the conclusion 15 of the previous transaction, unless the maker acknowledges 16 in writing specified restrictions relating to successive 17 transactions, applicable penalties, and the opportunity to 18 repay the obligation in installments in the event the check is 19 not negotiable. 20 As previously indicated, the bill authorizes a licensee to 21 impose an annual percentage rate which exceeds 36 percent by 22 filing with the superintendent of banking a written notice 23 of intent. If this election is made, it shall apply to all 24 transactions entered into by the licensee. The bill provides 25 that a licensee may discontinue imposition of an alternative 26 interest rate and consent to imposition of the 36 percent rate 27 otherwise applicable, and a licensee previously imposing the 28 36 percent rate may elect to impose the alternative rate, by 29 submitting a request to the superintendent no more often than 30 annually. 31 The bill provides that a licensee electing to impose 32 an alternative annual percentage rate shall be prohibited 33 from entering into a delayed deposit services transaction 34 that results in the maker of the check being indebted to 35 -6- LSB 1615XS (3) 85 rn/sc 6/ 7

S.F. 132 the licensee, or when aggregated with other delayed deposit 1 services business licensees, for longer than a 90-day period 2 during the preceding 12 months. This provision of the bill 3 takes effect October 1, 2013. Further, the bill requires a 4 licensee making the election, by October 1, 2013, to subscribe 5 to, report to, and utilize an electronic database tracking 6 service developed or selected by the banking division of the 7 department of commerce to monitor the number of transactions 8 entered into by a maker of a check for purposes of complying 9 with this provision. The bill states that licensee records and 10 the database shall be subject to review and examination by the 11 division, and provides that information, records, and documents 12 obtained by the division in the performance of such a review or 13 examination shall be considered confidential. 14 A violation of the bill’s provisions will subject a licensee 15 to existing penalty provisions in Code chapter 533D, including 16 possible license suspension or revocation, a civil penalty in 17 an amount not to exceed $5,000, an administrative fine in an 18 amount not to exceed $5,000, and the criminal penalty of a 19 serious misdemeanor punishable by confinement for no more than 20 one year and a fine of at least $315 but not more than $1,875. 21 -7- LSB 1615XS (3) 85 rn/sc 7/ 7