Senate
Study
Bill
3176
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
FEENSTRA)
A
BILL
FOR
An
Act
requiring
the
licensure
of
unsecured
consumer
loan
1
lenders,
and
making
civil
penalties
applicable.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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_____
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
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_____
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
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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
——
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_____
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
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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
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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.
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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
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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
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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
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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
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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
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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,
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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
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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
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_____
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
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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
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