H.F. _____ Section 1. NEW SECTION . 536B.1 Title. 1 This chapter shall be known and may be cited as the “Iowa 2 Flexible 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 a flexible credit loan to the amount 9 and timing of payments made, as computed under the federal 10 Truth in Lending Act. 11 2. “Consumer” means an individual who obtains a flexible 12 credit 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 a flexible 17 credit loan but excluding other fees allowed under section 18 536B.18. 19 5. “Flexible credit lender” means a person who advertises to 20 make, solicit, or hold the person out to make a flexible credit 21 loan to a consumer in this state. 22 6. “Flexible credit loan” is a loan in which all of the 23 following are applicable: 24 a. The debt is incurred for a personal, family, or household 25 purpose. 26 b. The debt is not less than five hundred dollars and not 27 more than five thousand dollars. 28 c. The debt is unsecured. 29 d. The debt is payable in substantially equal installment 30 payments of principal and interest for the term of the loan. 31 e. The debt is subject to prepayment in whole or in part at 32 any time without penalty. 33 f. The term length of the loan is for a minimum of six 34 months and a maximum of twenty-four months. 35 -1- LSB 5673YC (4) 86 gh/sc 1/ 16

H.F. _____ 7. “Licensee” means a person licensed pursuant to this 1 chapter. 2 8. “Regularly engaged in the business” means any of the 3 following: 4 a. Advertising to or making any other solicitation to a 5 resident of this state to offer a flexible credit loan within 6 this state. 7 b. Making three or more flexible credit loans within a 8 calendar year to residents of this state. 9 9. “Superintendent” means the superintendent of banking 10 within the banking division of the department of commerce. 11 Sec. 3. NEW SECTION . 536B.3 Exemptions. 12 This chapter shall not apply to any of the following: 13 1. A person who does business under the authority of a 14 law of this state, or any other state while regulated by a 15 state agency of that other state, or of the United States, 16 relating to banks, savings banks, trust companies, savings and 17 loan associations, profit sharing and pension trusts, credit 18 unions, insurance companies, or receiverships if the person 19 is regulated by the other law or under the jurisdiction of a 20 court. 21 2. A person who is not regularly engaged in the business of 22 making a flexible credit loan. 23 3. A person who is licensed pursuant to another law of this 24 state to the extent that the person’s activities are governed 25 by that law. 26 4. A consumer loan to the extent provided under chapters 27 533D, 536, 536A, 536C, or 537. 28 Sec. 4. NEW SECTION . 536B.4 License —— application —— fees. 29 1. Unless exempt under section 536B.3, a person shall not 30 engage in the business of making a flexible credit loan to a 31 resident of this state without first having obtained a license 32 as a flexible credit lender from the superintendent. 33 2. An applicant for a license shall submit an application 34 in writing, under oath, and in the form as prescribed by the 35 -2- LSB 5673YC (4) 86 gh/sc 2/ 16

H.F. _____ superintendent. The application shall require any information 1 that the superintendent determines is necessary. 2 3. At the time of making the application, the applicant 3 shall pay to the superintendent a fee of one hundred dollars. 4 Sec. 5. NEW SECTION . 536B.5 Grounds for denial of license. 5 The superintendent may deny a license for any of the 6 following: 7 1. The person is insolvent. 8 2. The person has failed to demonstrate the financial 9 responsibility, experience, character, and general fitness to 10 command the confidence of the community and to warrant the 11 belief that the business of the proposed flexible credit lender 12 will be honestly and efficiently conducted. 13 3. The person has failed to pay the fee required under 14 section 536B.4. 15 4. The person has failed to demonstrate that the person 16 maintains at least twenty-five thousand dollars in assets 17 readily available for use in the conduct of the business for 18 the licensed office and each licensed branch office. 19 5. The person has, either knowingly or without the exercise 20 of due care to prevent a violation, violated any provision of 21 this Title XIII of the Code or any rule or order adopted or made 22 pursuant to this Title XIII. 23 Sec. 6. NEW SECTION . 536B.6 Issuance of license —— form —— 24 posting. 25 1. The superintendent shall issue a license to an applicant 26 within one hundred twenty days after receiving a complete 27 application unless the superintendent finds grounds for denying 28 the license. 29 2. A license issued under this chapter shall be valid for a 30 term of one year, beginning on January 1 and ending on December 31 31. 32 3. A license issued under this chapter shall remain in full 33 force until surrendered, revoked, or suspended. 34 4. A license issued under this chapter shall not be 35 -3- LSB 5673YC (4) 86 gh/sc 3/ 16

H.F. _____ transferable or assignable. 1 5. A license issued under this chapter shall remain the 2 property of this state. Upon the voluntary surrender of the 3 license by the licensee or the revocation of the license by 4 the superintendent, the licensee shall immediately deliver the 5 license to the superintendent. Surrender or revocation of the 6 license shall not affect any other liability of the licensee. 7 6. A license issued pursuant to this chapter shall be kept 8 conspicuously posted at the office of the licensee and any 9 licensed branch office where flexible credit loan transactions 10 are conducted. 11 Sec. 7. NEW SECTION . 536B.7 License location. 12 1. A licensee shall designate the principal place of 13 business where the licensee shall conduct flexible credit loan 14 transactions pursuant to this chapter, which shall be indicated 15 on the license as the licensed office location. 16 2. a. A licensee may obtain a branch office license from 17 the superintendent for each branch office if the licensee wants 18 to maintain more than one license location. 19 b. A licensee may obtain a branch office license by 20 submitting an application in the form as prescribed by the 21 superintendent and paying a fee of two hundred fifty dollars 22 for each branch office license. 23 c. The superintendent shall issue a branch office 24 license indicating the address of the branch office if the 25 superintendent determines that the applicant is qualified for 26 the license. 27 3. A licensee shall not conduct flexible credit loan 28 transactions under any name or at any place of business other 29 than the name and location indicated on the license. However, 30 a licensee may do any of the following: 31 a. Provide a flexible credit loan by mail or electronic 32 means. 33 b. Make an accommodation to a consumer at any location upon 34 a request by the consumer. 35 -4- LSB 5673YC (4) 86 gh/sc 4/ 16

H.F. _____ c. Conduct an administrative, loan servicing, or 1 recordkeeping activity at any other location not open to the 2 public provided that the superintendent is notified in advance 3 of that activity. 4 4. A licensee may change the licensed office location or 5 licensed branch office location by providing the superintendent 6 with written notice, and the superintendent shall amend the 7 license accordingly. 8 5. a. A licensee shall not conduct flexible credit loan 9 transactions from within any licensed office location or 10 licensed branch office location in which any other business not 11 licensed pursuant to this Title XIII of the Code is solicited 12 or engaged in, or in conjunction with any other business not 13 licensed pursuant to this Title XIII, without providing notice 14 to the superintendent. 15 b. If the superintendent determines that the other business 16 is of such a nature or is being conducted in such a manner 17 as to conceal an evasion or violation of this Title XIII of 18 the Code or any rules adopted pursuant to this Title XIII, 19 or is otherwise being conducted in an unlawful manner, the 20 superintendent may restrict the licensee from conducting its 21 business as a flexible credit lender in conjunction with that 22 other business. 23 Sec. 8. NEW SECTION . 536B.8 Renewal of license. 24 1. A license issued pursuant to this chapter shall be 25 renewed annually. A licensee may renew a license by submitting 26 an application in the form as prescribed by the superintendent 27 no later than December 1 and paying a renewal fee of two 28 hundred fifty dollars. 29 2. The superintendent may assess a late fee of ten dollars 30 per day for applications submitted and accepted for processing 31 after December 1. 32 3. The license of a licensee who has not filed a renewal 33 application or paid the renewal fee by December 31 shall 34 expire and the licensee shall not act as a flexible credit 35 -5- LSB 5673YC (4) 86 gh/sc 5/ 16

H.F. _____ lender until the license is renewed or a new license is issued 1 pursuant to this chapter. 2 Sec. 9. NEW SECTION . 536B.9 Grounds for denial of license 3 renewal —— suspension —— revocation. 4 1. The superintendent may deny the renewal of a license or 5 suspend or revoke a license if the superintendent determines 6 any of the following: 7 a. The licensee is insolvent. 8 b. The licensee is not a person of honesty, truthfulness, 9 and good character, as determined by rule. 10 c. The licensee has failed to pay the annual renewal fees. 11 d. The licensee has failed to file an annual report as 12 required by this chapter when the report was due or within 13 any extension of time provided by the superintendent for good 14 cause. 15 e. The licensee has failed to demonstrate that the licensee 16 maintains at least twenty-five thousand dollars in assets 17 readily available for use in the conduct of the business for 18 the licensed office and each licensed branch office. 19 f. The licensee has violated a provision of this Title XIII 20 of the Code or any rule made pursuant to this Title XIII either 21 knowingly or without the exercise of due care to prevent the 22 violation. 23 2. The superintendent may also deny the renewal of a license 24 or suspend or revoke a license if the superintendent determines 25 a fact or condition exists which would have warranted the 26 superintendent to refuse to originally issue the license. 27 Sec. 10. NEW SECTION . 536B.10 Records. 28 1. A licensee shall keep such books, accounts, and records 29 as the superintendent may require in order to determine whether 30 the licensee is complying with the provisions of this chapter 31 and with the rules adopted by the superintendent under this 32 chapter. 33 2. A licensee shall preserve for at least two years after 34 making the last entry on any flexible credit loan all books, 35 -6- LSB 5673YC (4) 86 gh/sc 6/ 16

H.F. _____ accounts, and records pertaining to the loan. A licensee who 1 uses an electronic recordkeeping system shall not be required 2 to keep a written copy of the books, accounts, and records 3 provided that the licensee is able to generate all of the 4 information required under this section in a timely manner for 5 examination or other purposes. 6 3. A licensee shall make any books, accounts, and records 7 kept outside of this state available to the superintendent 8 within three business days upon request by the superintendent. 9 The superintendent may examine such books, accounts, and 10 records at the office of the licensee located outside of this 11 state. 12 4. A licensee shall provide to the superintendent or the 13 superintendent’s duly authorized representative access, during 14 normal business hours, to the licensee’s offices, files, safes, 15 and vaults regarding the flexible credit lending business or 16 regarding the subject matter of any examination, investigation, 17 or hearing regarding the licensee. 18 Sec. 11. NEW SECTION . 536B.11 Annual report by licensee. 19 1. A licensee shall annually on or before April 1 file a 20 report with the superintendent giving such relevant information 21 as the superintendent reasonably may require concerning 22 the business and operations during the twelve-month period 23 ending the preceding December 31. Upon good cause shown by a 24 licensee, the superintendent may extend the time for filing the 25 report for a period not to exceed sixty days. 26 2. a. The annual report shall include a licensee’s average 27 annual percentage rate and average loan amount during the 28 twelve-month period ending the preceding December 1. 29 b. On at least an annual basis the superintendent shall 30 compile a report of the average annual percentage rate and 31 average loan amount of each licensee as submitted pursuant 32 to paragraph “a” . The superintendent shall disseminate the 33 report in a manner deemed appropriate and shall make the report 34 available to the public for inspection and copying. 35 -7- LSB 5673YC (4) 86 gh/sc 7/ 16

H.F. _____ 3. The annual report shall include the total number of 1 flexible credit loan transactions that the licensee completed 2 in the prior two years. 3 4. a. If a licensee fails to file an annual report under 4 this section, the superintendent or any person designated 5 by the superintendent may examine the books, accounts, and 6 records of the licensee, prepare the annual report, and charge 7 the licensee an examination fee as established by rule. The 8 fee shall be based on the actual cost of the examination or 9 investigation. 10 b. If a licensee fails to file an annual report within the 11 specified time and has not received an extension, the licensee 12 shall be subject to a civil penalty not to exceed five dollars 13 per day until the licensee has filed the annual report. The 14 licensee shall pay the penalty to the superintendent within 15 thirty days after the penalty is levied. 16 Sec. 12. NEW SECTION . 536B.12 Surrender of license. 17 A licensee may surrender a flexible credit loan license 18 by delivering to the superintendent written notice that the 19 license is surrendered. The surrender does not affect the 20 licensee’s civil or criminal liability for acts committed 21 prior to such surrender or entitle such licensee to a return 22 of any part of the annual license fee. The superintendent 23 may establish procedures for the disposition of the books, 24 accounts, and records of the licensee and may require such 25 action as deemed necessary for the protection of consumers that 26 have flexible credit loans that are outstanding at the time of 27 surrender of the license. 28 Sec. 13. NEW SECTION . 536B.13 Impairment of preexisting 29 loan. 30 1. The revocation, suspension, surrender, expiration, or 31 alteration of a license provided under this chapter shall not 32 impair or affect any of the following: 33 a. The obligation of a preexisting flexible credit loan 34 between a flexible credit lender and a consumer. 35 -8- LSB 5673YC (4) 86 gh/sc 8/ 16

H.F. _____ b. The ability or right of a flexible credit lender to 1 service a preexisting flexible credit loan from outside this 2 state. 3 2. If this chapter or any part of this chapter is modified, 4 amended, or repealed, resulting in a cancellation or alteration 5 of any flexible credit lender license or right of a licensee 6 under this chapter, that cancellation or alteration shall not 7 impair or affect the obligation of any preexisting contract 8 between a flexible credit lender and any consumer. 9 Sec. 14. NEW SECTION . 536B.14 Restrictions. 10 1. A licensee shall not knowingly advertise, display, 11 distribute, broadcast, or televise, or cause or allow to be 12 advertised, displayed, distributed, broadcast, or televised, in 13 any manner, any false, misleading, or deceptive statement or 14 representation with regard to the rates, terms, or conditions 15 of a flexible credit loan. To the extent applicable, all 16 advertising shall comply with the advertising requirements 17 specified in the federal Truth in Lending Act. 18 2. A licensee shall not provide a flexible credit loan 19 to a consumer with more than one outstanding flexible credit 20 loan provided under this chapter at any one time. A licensee 21 shall inquire of any consumer seeking a flexible credit loan 22 regarding whether the consumer has any outstanding flexible 23 credit loans. A licensee may only offer a consumer a flexible 24 credit loan if the consumer represents in writing that the 25 consumer has no outstanding flexible credit loans. 26 3. a. A licensee shall not provide a flexible credit loan 27 with an annual percentage rate greater than that provided in 10 28 U.S.C. §987(b), to any of the following: 29 (1) A member of the United States armed forces who is on 30 active duty under a call or order that does not specify a 31 period of thirty days or less. 32 (2) A person on active national guard and reserve duty. 33 (3) A dependent as defined in 10 U.S.C. §987(i). 34 b. A licensee shall not provide a flexible credit loan 35 -9- LSB 5673YC (4) 86 gh/sc 9/ 16

H.F. _____ to a consumer unless the consumer has signed a statement, to 1 be included as part of the loan, attesting to whether or not 2 the consumer is a military member or a dependent as defined 3 in 10 U.S.C. §987(i). The statement shall be in the form as 4 prescribed by the superintendent by rule. 5 c. A flexible credit loan made in violation of 10 U.S.C. 6 §987 is void and its terms and conditions unenforceable. 7 4. A licensee shall not condition a flexible credit loan 8 upon a consumer’s agreement to repay the loan by recurring 9 automatic electronic fund transfers from the consumer’s bank 10 account. However, this shall not preclude the consumer from 11 providing written authorization to repay a loan by recurring 12 automatic electronic fund transfers from the consumer’s bank 13 account if the licensee offers a repayment option. 14 Sec. 15. NEW SECTION . 536B.15 Rules. 15 The superintendent may adopt rules to administer this 16 chapter. 17 Sec. 16. NEW SECTION . 536B.16 Noncompliance. 18 1. A flexible credit loan that is provided by a person who 19 is required to be licensed under this chapter but who is not 20 licensed is void and its terms and conditions unenforceable. 21 2. Except as provided in subsection 1 and section 536B.14, 22 subsection 3, failure to comply with this chapter shall not 23 affect the validity or enforceability of a flexible credit 24 loan. 25 Sec. 17. NEW SECTION . 536B.17 Disclosures. 26 1. To the extent applicable, a licensee shall comply with 27 the disclosure requirements as set forth in the federal Truth 28 in Lending Act. 29 2. A licensee shall conspicuously display a sign printed 30 in at least twelve-point bold font type at each desk in the 31 licensed office and licensed branch office where flexible 32 credit loan transactions are conducted with the following 33 disclosure: 34 Notice: Before signing any loan documents or otherwise 35 -10- LSB 5673YC (4) 86 gh/sc 10/ 16

H.F. _____ committing to a loan, you may take copies of those documents 1 away from the flexible credit lender’s place of business for 2 review. 3 3. A licensee providing electronic flexible credit loans 4 shall conspicuously display the following disclosure on the 5 licensee’s internet site: 6 Notice: Before signing any loan documents or otherwise 7 committing to a loan, please read our terms and conditions 8 carefully. 9 4. A licensee who fails to provide disclosures as required 10 under this section shall be subject to a civil penalty not to 11 exceed three hundred dollars for each violation. 12 Sec. 18. NEW SECTION . 536B.18 Finance charge. 13 1. A licensee may charge a finance charge on a flexible 14 credit loan at a rate not to exceed twenty-four percent per 15 month. 16 2. This section does not authorize the compounding of a 17 finance charge. 18 Sec. 19. NEW SECTION . 536B.19 Other fees and charges. 19 1. In addition to a finance charge authorized under section 20 536B.18, a licensee may collect any of the following fees or 21 charges: 22 a. A delinquency charge if an installment is not paid in 23 full within seven days, equal to five percent of the amount of 24 the installment. 25 b. Court costs and reasonable attorney fees if the flexible 26 credit loan is referred for collection to an attorney other 27 than an employee of the licensee. 28 c. A dishonored check service fee if a licensee receives 29 a check, draft, negotiable order of withdrawal, or similar 30 instrument that is not paid or is not honored by a depository 31 institution, equal to the actual charges assessed by the 32 depository institution. 33 2. A licensee shall not directly or indirectly charge, 34 contract for, or receive any other amount in connection with a 35 -11- LSB 5673YC (4) 86 gh/sc 11/ 16

H.F. _____ flexible credit loan except as provided in this chapter. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill creates new Code chapter 536B to require licensure 5 of persons who wish to provide flexible credit loans to 6 residents of the state. 7 The bill defines “flexible credit loan” to mean a loan that 8 is incurred for a personal, family, or household purpose, is 9 not less than $500 and not more than $5,000, is unsecured, 10 is payable in substantially equal installment payments of 11 principal and interest for the term of the loan, is subject to 12 prepayment in whole or in part at any time without penalty, and 13 is for a term length of a minimum of 6 months and a maximum of 14 24 months. 15 The bill exempts the following persons from the requirements 16 of the bill: a person who does business under any law relating 17 to banks, savings banks, trusts, savings and loan associations, 18 profit sharing and pension trusts, credit unions, insurance 19 companies, or receiverships, a person who is not regularly 20 engaged in the business of making flexible credit loans, as 21 defined in the bill, a person who is licensed pursuant to 22 another Iowa Code chapter to the extent that the person’s 23 activities are governed by that Code chapter, or a consumer 24 loan provided under Code chapters 533D, 536, 536A, 536C, or 25 537. 26 The bill prohibits a person from engaging in the business 27 of making flexible credit loans to a resident in this state 28 without first obtaining a license from the superintendent 29 of the banking division in the department of commerce. An 30 applicant for a license must submit an application in the form 31 prescribed by the superintendent and pay a fee of $100. 32 The bill allows the superintendent to deny a license if the 33 applicant is insolvent, has failed to demonstrate the financial 34 responsibility, experience, character, and general fitness 35 -12- LSB 5673YC (4) 86 gh/sc 12/ 16

H.F. _____ required, as determined by rule, has failed to pay the $100 1 fee, or has failed to demonstrate the availability of at least 2 $25,000 in assets for use in the conduct of the business for 3 the licensed office and each licensed branch office. 4 The bill requires the superintendent to issue a license 5 within 120 days of receiving an application unless grounds 6 exist for denying it. A license is valid for one year, 7 from January 1 to December 31, remains in full force until 8 surrendered, revoked, or suspended, and is not transferable. 9 A license remains the property of the state and must be 10 immediately returned to the superintendent if a licensee 11 voluntarily surrenders it. A license must be posted 12 conspicuously in the office of the licensee and any licensed 13 branch offices. 14 The bill requires a licensee to designate the principal 15 place of business to be indicated on the license. A licensee 16 wishing to maintain more than one place of business may 17 obtain a branch office license by submitting an application 18 as prescribed by the superintendent and paying a $250 fee. 19 A licensee is prohibited from conducting flexible credit 20 loan transactions under any name or location different than 21 what is indicated on the license, provided, however, that 22 a licensee may provide loans by mail or electronic means, 23 make an accommodation to a consumer at any location upon 24 the consumer’s request, or conduct an administrative, loan 25 servicing, or recordkeeping activity at any other location if 26 the superintendent is notified. A licensee can change the 27 license location by giving the superintendent written notice to 28 amend the license. 29 The bill prohibits a licensee from conducting flexible 30 credit loan transactions from any licensed office location 31 where other business activities unrelated to flexible credit 32 lending occur without giving notice to the superintendent. The 33 superintendent may prohibit a licensee from conducting business 34 as a flexible credit lender in conjunction with, or at the 35 -13- LSB 5673YC (4) 86 gh/sc 13/ 16

H.F. _____ location of, such other business. 1 The bill allows a licensee to obtain a renewal license by 2 submitting an application as prescribed by the superintendent 3 no later than December 1 and paying a $250 fee. A renewal 4 application submitted after December 1 is subject to a $10 late 5 fee for each day it is late. A license of a licensee who has 6 not filed a renewal or paid the fee by December 31 expires. 7 The bill allows the superintendent to deny a renewal license 8 or suspend or revoke a license if the licensee is insolvent, 9 is not a person of honesty, truthfulness, and good character, 10 as determined by rule, has failed to pay the renewal fee, has 11 failed to file an annual report, has failed to demonstrate 12 the availability of at least $25,000 in assets for use in the 13 conduct of the business for each office, or has violated a 14 provision of the bill either knowingly or negligently. The 15 superintendent may deny a renewal license or suspend or revoke 16 a license if a fact or condition exists to have warranted the 17 superintendent to refuse to originally issue the license. 18 The bill requires a licensee to keep records for the 19 superintendent to determine whether the licensee is complying 20 with the bill for at least two years. A licensee must make 21 all records kept outside of the state available to the 22 superintendent within three business days upon request. A 23 licensee must provide the superintendent with access to their 24 records during normal business hours. 25 The bill requires a licensee to provide the superintendent 26 with an annual report on or before April 1, which may be 27 extended for no more than 60 days upon showing good cause. The 28 report must include the licensee’s average annual percentage 29 rate, as defined in the bill, average loan amount during the 30 12-month period ending the preceding December 1, and the 31 total number of flexible credit loan transactions completed 32 in the prior two years. The superintendent must compile a 33 report of such information on at least an annual basis and 34 make the report available to the public. The superintendent 35 -14- LSB 5673YC (4) 86 gh/sc 14/ 16

H.F. _____ may prepare the annual report of a licensee who has failed to 1 file their annual report and charge a fee based on the cost of 2 preparation. A licensee who has failed to file their annual 3 report without an extension is also subject to a civil penalty 4 not to exceed $5 for each day until their report is filed, 5 which must be paid within 30 days of being charged. 6 The bill provides that the revocation, suspension, 7 surrender, cancellation, or alteration of a license will not 8 impair or affect the validity of a preexisting flexible credit 9 loan or the ability of a lender to service a preexisting loan 10 outside of this state. 11 The bill restricts a licensee from advertising in any false 12 or misleading manner with regards to the rates or terms of a 13 flexible credit loan and requires a licensee to comply with the 14 advertising requirements in the federal Truth in Lending Act. 15 A licensee cannot provide a flexible credit loan to a consumer 16 with more than one outstanding flexible credit loan, and the 17 consumer must represent in writing that the consumer has no 18 outstanding loans. A licensee cannot provide a flexible credit 19 loan to a military member or dependent, as defined in 10 U.S.C. 20 §987(i), with an annual percentage rate greater than that 21 provided in 10 U.S.C. §987(b). Before a licensee may provide 22 a flexible credit loan, the consumer must sign a statement 23 attesting to whether or not the consumer is a military member 24 or dependent. A loan made in violation of 10 U.S.C. §987 is 25 void and its terms and conditions unenforceable. A licensee is 26 prohibited from conditioning a loan on a consumer’s agreement 27 to repay by recurring automatic electronic fund transfers. 28 The bill provides that a flexible credit loan provided 29 by a person who is required to be licensed under new Code 30 chapter 536B but who is not licensed is void and its terms and 31 conditions unenforceable. However, any other noncompliance 32 with new Code chapter 536B, except pertaining to military 33 members and their dependents, will not affect the validity of 34 a flexible credit loan. 35 -15- LSB 5673YC (4) 86 gh/sc 15/ 16

H.F. _____ The bill requires a licensee to comply with the disclosure 1 requirements in the federal Truth in Lending Act. A licensee 2 must display a disclosure sign, as described in the bill, at 3 each desk in the licensed office and each licensed branch 4 office and on the licensee’s internet site if the licensee 5 provides electronic flexible credit loans. A licensee who 6 fails to do so is subject to a civil penalty not to exceed $300 7 for each violation. 8 The bill allows a licensee to charge a finance charge, 9 as defined in the bill, on a flexible credit loan at a rate 10 not to exceed 24 percent per month. However, a licensee is 11 not permitted to compound a finance charge. In addition to 12 this, a licensee may collect a delinquency charge, court costs 13 and reasonable attorney fees, and a dishonored check service 14 fee, as described in the bill. A licensee is prohibited 15 from collecting any other charges or fees in connection with 16 conducting flexible credit loan transactions. 17 -16- LSB 5673YC (4) 86 gh/sc 16/ 16