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 and charges allowed under 18 section 536B.19. 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 6048YC (3) 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 1. This chapter shall not apply to any of the following: 13 a. 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 b. A person who is not regularly engaged in the business of 22 making a flexible credit loan. 23 c. 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 d. A consumer loan provided under chapter 533D, 535C, 536, 27 536A, 536C, or 537. 28 2. The provisions of this chapter shall supersede a 29 conflicting provision of chapter 537, the Iowa consumer credit 30 code. 31 Sec. 4. NEW SECTION . 536B.4 License —— application —— fees. 32 1. Unless exempt under section 536B.3, a person shall not 33 engage in the business of making a flexible credit loan to a 34 resident of this state without first having obtained a license 35 -2- LSB 6048YC (3) 86 gh/sc 2/ 16

H.F. _____ as a flexible credit lender from the superintendent. 1 2. An applicant for a license shall submit an application 2 in writing, under oath, and in the form as prescribed by the 3 superintendent. The application shall require any information 4 that the superintendent determines is necessary. 5 3. At the time of making the application, the applicant 6 shall pay to the superintendent a fee of one hundred dollars. 7 Sec. 5. NEW SECTION . 536B.5 Grounds for denial of license. 8 The superintendent may deny a license for any of the 9 following: 10 1. The person is insolvent. 11 2. The person has failed to demonstrate the financial 12 responsibility, experience, character, and general fitness to 13 command the confidence of the community and to warrant the 14 belief that the business of the proposed flexible credit lender 15 will be honestly and efficiently conducted. 16 3. The person has failed to pay the fee required under 17 section 536B.4. 18 4. The person has failed to demonstrate that the person 19 maintains at least twenty-five thousand dollars in assets 20 readily available for use in the conduct of the business for 21 the licensed office and each licensed branch office. 22 5. The person has, either knowingly or without the exercise 23 of due care to prevent a violation, violated any provision of 24 this Title XIII of the Code or any rule or order adopted or made 25 pursuant to this Title XIII. 26 Sec. 6. NEW SECTION . 536B.6 Issuance of license —— form —— 27 posting. 28 1. The superintendent shall issue a license to an applicant 29 within one hundred twenty days after receiving a complete 30 application unless the superintendent finds grounds for denying 31 the license. 32 2. A license issued under this chapter shall be valid for a 33 term of one year, beginning on January 1 and ending on December 34 31. 35 -3- LSB 6048YC (3) 86 gh/sc 3/ 16

H.F. _____ 3. A license issued under this chapter shall remain in full 1 force until surrendered, revoked, or suspended. 2 4. A license issued under this chapter shall not be 3 transferable or assignable. 4 5. A license issued under this chapter shall remain the 5 property of this state. Upon the voluntary surrender of the 6 license by the licensee or the revocation of the license by 7 the superintendent, the licensee shall immediately deliver the 8 license to the superintendent. Surrender or revocation of the 9 license shall not affect any other liability of the licensee. 10 6. A license issued pursuant to this chapter shall be kept 11 conspicuously posted at the office of the licensee and any 12 licensed branch office where flexible credit loan transactions 13 are conducted. 14 Sec. 7. NEW SECTION . 536B.7 License locations. 15 1. A licensee shall designate the principal place of 16 business where the licensee shall conduct flexible credit loan 17 transactions pursuant to this chapter, which shall be indicated 18 on the license as the licensed office location. 19 2. a. A licensee may obtain a branch office license from 20 the superintendent for each branch office if the licensee wants 21 to maintain more than one license location. 22 b. A licensee may obtain a branch office license by 23 submitting an application in the form as prescribed by the 24 superintendent and paying a fee of two hundred fifty dollars 25 for each branch office license. 26 c. The superintendent shall issue a branch office 27 license indicating the address of the branch office if the 28 superintendent determines that the applicant is qualified for 29 the license and the applicant has paid the required fee. 30 3. A licensee shall not conduct flexible credit loan 31 transactions under any name or at any place of business other 32 than the name and location indicated on the license. However, 33 a licensee may do any of the following: 34 a. Provide a flexible credit loan by mail or electronic 35 -4- LSB 6048YC (3) 86 gh/sc 4/ 16

H.F. _____ means. 1 b. Make an accommodation to a consumer at any location upon 2 a request by the consumer. 3 c. Conduct an administrative, loan servicing, or 4 recordkeeping activity at any other location not open to the 5 public provided that the superintendent is notified in advance 6 of that activity. 7 4. A licensee may change the licensed office location or 8 licensed branch office location by providing the superintendent 9 with written notice, and the superintendent shall amend the 10 license accordingly. 11 5. a. A licensee shall not conduct flexible credit loan 12 transactions from within any licensed office location or 13 licensed branch office location in which any other business not 14 licensed pursuant to this Title XIII of the Code is solicited 15 or engaged in, or in conjunction with any other business not 16 licensed pursuant to this Title XIII, without providing notice 17 to the superintendent. 18 b. If the superintendent determines that the other business 19 is of such a nature or is being conducted in such a manner 20 as to conceal an evasion or violation of this Title XIII of 21 the Code or any rules adopted pursuant to this Title XIII, 22 or is otherwise being conducted in an unlawful manner, the 23 superintendent may restrict the licensee from conducting its 24 business as a flexible credit lender in conjunction with that 25 other business. 26 Sec. 8. NEW SECTION . 536B.8 Renewal of license. 27 1. A license issued pursuant to this chapter shall be 28 renewed annually. A licensee may renew a license by submitting 29 an application in the form as prescribed by the superintendent 30 no later than December 1 and paying a renewal fee of two 31 hundred fifty dollars. 32 2. The superintendent may assess a late fee of ten dollars 33 per day for applications submitted and accepted for processing 34 after December 1. 35 -5- LSB 6048YC (3) 86 gh/sc 5/ 16

H.F. _____ 3. The license of a licensee who has not filed a renewal 1 application or paid the renewal fee by December 31 shall 2 expire and the licensee shall not act as a flexible credit 3 lender until the license is renewed or a new license is issued 4 pursuant to this chapter. 5 Sec. 9. NEW SECTION . 536B.9 Grounds for denial of license 6 renewal —— suspension —— revocation. 7 1. The superintendent may deny the renewal of a license or 8 suspend or revoke a license if the superintendent determines 9 any of the following: 10 a. The licensee is insolvent. 11 b. The licensee is not a person of honesty, truthfulness, 12 and good character, as determined by rule. 13 c. The licensee has failed to pay the annual renewal fees. 14 d. The licensee has failed to file an annual report as 15 required by this chapter when the report was due or within 16 any extension of time provided by the superintendent for good 17 cause. 18 e. The licensee has failed to demonstrate that the licensee 19 maintains at least twenty-five thousand dollars in assets 20 readily available for use in the conduct of the business for 21 the licensed office and each licensed branch office. 22 f. The licensee has violated a provision of this Title XIII 23 of the Code or any rule made pursuant to this Title XIII either 24 knowingly or without the exercise of due care to prevent the 25 violation. 26 2. The superintendent may also deny the renewal of a license 27 or suspend or revoke a license if the superintendent determines 28 a fact or condition exists which would have warranted the 29 superintendent to refuse to originally issue the license. 30 Sec. 10. NEW SECTION . 536B.10 Records. 31 1. A licensee shall keep such books, accounts, and records 32 as the superintendent may require in order to determine whether 33 the licensee is complying with the provisions of this chapter 34 and with the rules adopted by the superintendent under this 35 -6- LSB 6048YC (3) 86 gh/sc 6/ 16

H.F. _____ chapter. 1 2. A licensee shall preserve for at least two years after 2 making the last entry on any flexible credit loan all books, 3 accounts, and records pertaining to the loan. A licensee who 4 uses an electronic recordkeeping system shall not be required 5 to keep a written copy of the books, accounts, and records 6 provided that the licensee is able to generate all of the 7 information required under this section in a timely manner for 8 examination or other purposes. 9 3. A licensee shall make any books, accounts, and records 10 kept outside of this state available to the superintendent 11 within three business days upon request by the superintendent. 12 The superintendent may examine such books, accounts, and 13 records at the office of the licensee located outside of this 14 state. 15 4. A licensee shall provide to the superintendent or the 16 superintendent’s duly authorized representative access, during 17 normal business hours, to the licensee’s offices, files, safes, 18 and vaults regarding the flexible credit lending business or 19 regarding the subject matter of any examination, investigation, 20 or hearing regarding the licensee. 21 Sec. 11. NEW SECTION . 536B.11 Annual report by licensee. 22 1. A licensee shall annually on or before April 1 file a 23 report with the superintendent giving such relevant information 24 as the superintendent reasonably may require concerning 25 the business and operations during the twelve-month period 26 ending the preceding December 31. Upon good cause shown by a 27 licensee, the superintendent may extend the time for filing the 28 report for a period not to exceed sixty days. 29 2. a. The annual report shall include a licensee’s average 30 annual percentage rate and average loan amount during the 31 twelve-month period ending the preceding December 1. 32 b. On at least an annual basis the superintendent shall 33 compile a report of the average annual percentage rate and 34 average loan amount of each licensee as submitted pursuant 35 -7- LSB 6048YC (3) 86 gh/sc 7/ 16

H.F. _____ to paragraph “a” . The superintendent shall disseminate the 1 report in a manner deemed appropriate and shall make the report 2 available to the public for inspection and copying. 3 3. The annual report shall include the total number of 4 flexible credit loan transactions that the licensee completed 5 in the prior two years. 6 4. a. If a licensee fails to file an annual report under 7 this section, the superintendent or any person designated 8 by the superintendent may examine the books, accounts, and 9 records of the licensee, prepare the annual report, and charge 10 the licensee an examination fee as established by rule. The 11 fee shall be based on the actual cost of the examination or 12 investigation. 13 b. If a licensee fails to file an annual report within the 14 specified time and has not received an extension, the licensee 15 shall be subject to a civil penalty not to exceed five dollars 16 per day until the licensee has filed the annual report. The 17 licensee shall pay the penalty to the superintendent within 18 thirty days after the penalty is levied. 19 Sec. 12. NEW SECTION . 536B.12 Surrender of license. 20 A licensee may surrender a flexible credit loan license 21 by delivering to the superintendent written notice that the 22 license is surrendered. The surrender does not affect the 23 licensee’s civil or criminal liability for acts committed 24 prior to such surrender or entitle such licensee to a return 25 of any part of the annual license fee. The superintendent 26 may establish procedures for the disposition of the books, 27 accounts, and records of the licensee and may require such 28 action as deemed necessary for the protection of consumers who 29 have flexible credit loans that are outstanding at the time of 30 surrender of the license. 31 Sec. 13. NEW SECTION . 536B.13 Impairment of preexisting 32 loan. 33 1. The revocation, suspension, surrender, expiration, or 34 alteration of a license provided under this chapter shall not 35 -8- LSB 6048YC (3) 86 gh/sc 8/ 16

H.F. _____ impair or affect any of the following: 1 a. The obligation of a preexisting flexible credit loan 2 between a flexible credit lender and a consumer. 3 b. The ability or right of a flexible credit lender to 4 service a preexisting flexible credit loan from outside this 5 state. 6 2. If this chapter or any part of this chapter is modified, 7 amended, or repealed, resulting in a cancellation or alteration 8 of any flexible credit lender license or right of a licensee 9 under this chapter, that cancellation or alteration shall not 10 impair or affect the obligation of any preexisting contract 11 between a flexible credit lender and any consumer. 12 Sec. 14. NEW SECTION . 536B.14 Restrictions. 13 1. A licensee shall not knowingly advertise, display, 14 distribute, broadcast, or televise, or cause or allow to be 15 advertised, displayed, distributed, broadcast, or televised, in 16 any manner, any false, misleading, or deceptive statement or 17 representation with regard to the rates, terms, or conditions 18 of a flexible credit loan. To the extent applicable, all 19 advertising shall comply with the advertising requirements 20 specified in the federal Truth in Lending Act. 21 2. A licensee shall not provide a flexible credit loan 22 to a consumer with more than one outstanding flexible credit 23 loan provided under this chapter at any one time. A licensee 24 shall inquire of any consumer seeking a flexible credit loan 25 regarding whether the consumer has any outstanding flexible 26 credit loans. A licensee may only offer a consumer a flexible 27 credit loan if the consumer represents in writing that the 28 consumer has no outstanding flexible credit loans. 29 3. a. A licensee shall not provide a flexible credit loan 30 with an annual percentage rate greater than that provided in 10 31 U.S.C. §987(b), to any of the following: 32 (1) A member of the United States armed forces who is on 33 active duty under a call or order that does not specify a 34 period of thirty days or less. 35 -9- LSB 6048YC (3) 86 gh/sc 9/ 16

H.F. _____ (2) A person on active national guard and reserve duty. 1 (3) A dependent as defined in 10 U.S.C. §987(i). 2 b. A licensee shall not provide a flexible credit loan 3 to a consumer unless the consumer has signed a statement, to 4 be included as part of the loan, attesting to whether or not 5 the consumer is a military member or a dependent as defined 6 in 10 U.S.C. §987(i). The statement shall be in the form as 7 prescribed by the superintendent by rule. 8 c. A flexible credit loan made in violation of 10 U.S.C. 9 §987 is void and its terms and conditions unenforceable. 10 4. A licensee shall not condition a flexible credit loan 11 upon a consumer’s agreement to repay the loan by recurring 12 automatic electronic fund transfers from the consumer’s bank 13 account. However, this shall not preclude the consumer from 14 providing written authorization to repay a loan by recurring 15 automatic electronic fund transfers from the consumer’s bank 16 account if the licensee offers such a repayment option. 17 Sec. 15. NEW SECTION . 536B.15 Rules. 18 The superintendent may adopt rules to administer this 19 chapter. 20 Sec. 16. NEW SECTION . 536B.16 Noncompliance. 21 1. A flexible credit loan that is provided by a person who 22 is required to be licensed under this chapter but who is not 23 licensed is void and its terms and conditions unenforceable. 24 2. Except as provided in subsection 1 and section 536B.14, 25 subsection 3, failure to comply with this chapter shall not 26 affect the validity or enforceability of a flexible credit 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 flexible 35 -10- LSB 6048YC (3) 86 gh/sc 10/ 16

H.F. _____ credit 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 flexible credit lender’s place of business for 5 review. 6 3. A licensee providing electronic flexible credit 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 a flexible 17 credit loan at a rate not to exceed twenty-four percent per 18 month. 19 2. This section does not authorize the compounding of a 20 finance charge. 21 Sec. 19. NEW SECTION . 536B.19 Other fees and charges. 22 1. In addition to the finance charge authorized under 23 section 536B.18, a licensee may collect any of the following 24 fees or charges: 25 a. A delinquency charge if an installment is not paid in 26 full within seven days, equal to five percent of the amount of 27 the installment. 28 b. Court costs and reasonable attorney fees if the flexible 29 credit loan is referred for collection to an attorney other 30 than an employee of the licensee. 31 c. A dishonored check service fee if a licensee receives 32 a check, draft, negotiable order of withdrawal, or similar 33 instrument that is not paid or is not honored by a depository 34 institution, equal to the actual charges assessed by the 35 -11- LSB 6048YC (3) 86 gh/sc 11/ 16

H.F. _____ depository institution. 1 2. A licensee shall not directly or indirectly charge, 2 contract for, or receive any other amount in connection with a 3 flexible credit loan except as provided in this chapter. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanation’s substance by the members of the general assembly. 7 This bill creates new Code chapter 536B to require licensure 8 of persons who wish to provide flexible credit loans to 9 residents of the state. 10 The bill defines “flexible credit loan” to mean a loan that 11 is incurred for a personal, family, or household purpose, is 12 not less than $500 and not more than $5,000, is unsecured, 13 is payable in substantially equal installment payments of 14 principal and interest for the term of the loan, is subject to 15 prepayment in whole or in part at any time without penalty, and 16 is for a term length of a minimum of 6 months and a maximum of 17 24 months. 18 The bill exempts the following persons from the requirements 19 of the bill: a person who does business under any law relating 20 to banks, savings banks, trusts, savings and loan associations, 21 profit sharing and pension trusts, credit unions, insurance 22 companies, or receiverships, a person who is not regularly 23 engaged in the business of making flexible credit loans, as 24 defined in the bill, a person who is licensed pursuant to 25 another Iowa Code chapter to the extent that the person’s 26 activities are governed by that Code chapter, or a consumer 27 loan provided under Code chapter 533D, 535C, 536, 536A, 536C, 28 or 537. The bill provides that the provisions of new Code 29 chapter 536B supersede any conflicting provisions in Code 30 chapter 537, the Iowa consumer credit code. 31 The bill prohibits a person from engaging in the business 32 of making flexible credit loans to a resident in this state 33 without first obtaining a license from the superintendent 34 of the banking division in the department of commerce. An 35 -12- LSB 6048YC (3) 86 gh/sc 12/ 16

H.F. _____ applicant for a license must submit an application in the form 1 prescribed by the superintendent and pay a fee of $100. 2 The bill allows the superintendent to deny a license if the 3 applicant is insolvent, has failed to demonstrate the financial 4 responsibility, experience, character, and general fitness 5 required, as determined by rule, has failed to pay the $100 6 fee, or has failed to demonstrate the availability of at least 7 $25,000 in assets for use in the conduct of the business for 8 the licensed office and each licensed branch office. 9 The bill requires the superintendent to issue a license 10 within 120 days of receiving an application unless grounds 11 exist for denying it. A license is valid for one year, 12 from January 1 to December 31, remains in full force until 13 surrendered, revoked, or suspended, and is not assignable or 14 transferable. A license remains the property of the state 15 and must be immediately returned to the superintendent if a 16 licensee voluntarily surrenders it. A license must be posted 17 conspicuously in the office of the licensee and any licensed 18 branch offices. 19 The bill requires a licensee to designate the principal 20 place of business to be indicated on the license. A licensee 21 wishing to maintain more than one place of business may 22 obtain a branch office license by submitting an application 23 as prescribed by the superintendent and paying a $250 fee. 24 A licensee is prohibited from conducting flexible credit 25 loan transactions under any name or location different than 26 what is indicated on the license, provided, however, that 27 a licensee may provide loans by mail or electronic means, 28 make an accommodation to a consumer at any location upon 29 the consumer’s request, or conduct an administrative, loan 30 servicing, or recordkeeping activity at any other location if 31 the superintendent is notified. A licensee can change the 32 license location by giving the superintendent written notice to 33 amend the license. 34 The bill prohibits a licensee from conducting flexible 35 -13- LSB 6048YC (3) 86 gh/sc 13/ 16

H.F. _____ credit loan transactions from any licensed office location 1 where other business activities unrelated to flexible credit 2 lending occur without giving notice to the superintendent. The 3 superintendent may prohibit a licensee from conducting business 4 as a flexible credit lender in conjunction with, or at the 5 location of, such other business. 6 The bill allows a licensee to obtain a renewal license by 7 submitting an application as prescribed by the superintendent 8 no later than December 1 and paying a $250 fee. A renewal 9 application submitted after December 1 is subject to a $10 late 10 fee for each day it is late. The license of a licensee who has 11 not filed a renewal or paid the fee by December 31 expires. 12 The bill allows the superintendent to deny a renewal license 13 or suspend or revoke a license if the licensee is insolvent, 14 is not a person of honesty, truthfulness, and good character, 15 as determined by rule, has failed to pay the renewal fee, has 16 failed to file an annual report, has failed to demonstrate 17 the availability of at least $25,000 in assets for use in the 18 conduct of the business for each office, or has violated a 19 provision of the bill either knowingly or negligently. The 20 superintendent may deny a renewal license or suspend or revoke 21 a license if a fact or condition exists to have warranted the 22 superintendent to refuse to originally issue the license. 23 The bill requires a licensee to keep records for the 24 superintendent to determine whether the licensee is complying 25 with the bill for at least two years. A licensee must make 26 all records kept outside of the state available to the 27 superintendent within three business days upon request. A 28 licensee must provide the superintendent with access to the 29 licensee’s records during normal business hours. 30 The bill requires a licensee to provide the superintendent 31 with an annual report on or before April 1, which may be 32 extended for no more than 60 days upon showing good cause. The 33 report must include the licensee’s average annual percentage 34 rate, as defined in the bill, average loan amount during the 35 -14- LSB 6048YC (3) 86 gh/sc 14/ 16

H.F. _____ 12-month period ending the preceding December 1, and the 1 total number of flexible credit loan transactions completed 2 in the prior two years. The superintendent must compile a 3 report of such information on at least an annual basis and 4 make the report available to the public. The superintendent 5 may prepare the annual report of a licensee who has failed 6 to file an annual report and charge a fee based on the cost 7 of preparation. A licensee who has failed to file an annual 8 report without an extension is also subject to a civil penalty 9 not to exceed $5 for each day until the report is filed, which 10 must be paid within 30 days of being charged. 11 The bill provides that the revocation, suspension, 12 surrender, cancellation, or alteration of a license will not 13 impair or affect the validity of a preexisting flexible credit 14 loan or the ability of a lender to service a preexisting loan 15 outside of this state. 16 The bill restricts a licensee from advertising in any false 17 or misleading manner with regards to the rates or terms of a 18 flexible credit loan and requires a licensee to comply with 19 the advertising requirements in the federal Truth in Lending 20 Act. A licensee cannot provide a flexible credit loan to a 21 consumer with more than one outstanding flexible credit loan, 22 and the consumer must represent in writing that the consumer 23 has no such outstanding loans. A licensee is prohibited from 24 conditioning a loan on a consumer’s agreement to repay by 25 recurring automatic electronic fund transfers. 26 A licensee cannot provide a flexible credit loan to a 27 military member or dependent with an annual percentage rate 28 greater than that allowed by federal law. Before a licensee 29 may provide a flexible credit loan, the consumer must sign 30 a statement attesting to whether or not the consumer is a 31 military member or dependent. A loan made in violation of 10 32 U.S.C. §987 is void and its terms and conditions unenforceable. 33 The bill provides that a flexible credit loan provided 34 by a person who is required to be licensed under new Code 35 -15- LSB 6048YC (3) 86 gh/sc 15/ 16

H.F. _____ chapter 536B but who is not licensed is void and its terms and 1 conditions unenforceable. However, any other noncompliance 2 with new Code chapter 536B, except pertaining to military 3 members and their dependents, will not affect the validity of 4 a flexible credit loan. 5 The bill requires a licensee to comply with the disclosure 6 requirements in the federal Truth in Lending Act. A licensee 7 must display a disclosure sign, as described in the bill, at 8 each desk in the licensed office and each licensed branch 9 office and on the licensee’s internet site if the licensee 10 provides electronic flexible credit loans. A licensee who 11 fails to do so is subject to a civil penalty not to exceed $300 12 for each violation. 13 The bill allows a licensee to charge a finance charge, 14 as defined in the bill, on a flexible credit loan at a rate 15 not to exceed 24 percent per month. However, a licensee is 16 not permitted to compound a finance charge. In addition to 17 this, a licensee may collect a delinquency charge, court costs 18 and reasonable attorney fees, and a dishonored check service 19 fee, as described in the bill. A licensee is prohibited 20 from collecting any other charges or fees in connection with 21 conducting flexible credit loan transactions. 22 -16- LSB 6048YC (3) 86 gh/sc 16/ 16