Senate File 206 - Introduced SENATE FILE 206 BY BOLKCOM , BOULTON , RAGAN , GIDDENS , WAHLS , TRONE GARRIOTT , JOCHUM , and DOTZLER A BILL FOR An Act relating to delayed deposit services by limiting the 1 annual percentage rate for fees, requiring a delayed deposit 2 repayment option in certain circumstances, and making 3 penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1091XS (3) 89 ja/rn

S.F. 206 Section 1. Section 533D.9, subsection 2, paragraph b, Code 1 2021, is amended to read as follows: 2 b. The annual percentage rate as computed pursuant to the 3 federal Truth in Lending Act. The annual percentage rate shall 4 not exceed thirty-six percent. 5 Sec. 2. Section 533D.9, subsection 2, Code 2021, is amended 6 by adding the following new paragraph: 7 NEW PARAGRAPH . e. That a maker obtaining more than four 8 delayed deposit service loans from one licensee in a two-month 9 period shall have the option to enter into an extended 10 repayment plan agreement with the licensee pursuant to section 11 533D.9A upon the maker’s request and prior to the date the last 12 check accepted by the licensee is to be negotiable. 13 Sec. 3. NEW SECTION . 533D.9A Extended repayment plan. 14 1. Any maker obtaining more than four delayed deposit 15 service loans from one licensee in a two-month period shall 16 enter into an extended repayment plan agreement with the 17 licensee if the maker requests to enter into such agreement 18 prior to the date upon which the last check accepted by the 19 licensee is to be negotiable. Except as provided in this 20 section, the licensee shall not initiate debt collection, 21 as defined by section 537.7102, civil court proceedings, or 22 arbitration to collect on any unpaid checks during the term of 23 the extended repayment plan agreement. 24 2. A licensee is required to enter into only one extended 25 repayment plan agreement with a maker in a twelve-month period, 26 measured from the commencement date of the first extended 27 repayment plan agreement until the commencement date of the 28 second extended repayment plan agreement. 29 3. A licensee shall not assess any other fee, interest 30 charge, or other fee or charge on the maker as a result of 31 entering into an extended repayment plan agreement concerning 32 any unpaid check obligations. 33 4. a. The maker shall be allowed to pay the total unpaid 34 check obligations to be charged in at least four substantially 35 -1- LSB 1091XS (3) 89 ja/rn 1/ 4

S.F. 206 equal installments due on dates or soon after dates when the 1 maker will receive regular income, or on dates as mutually 2 agreed upon by the maker and the licensee. The extended 3 repayment plan agreement shall contain a schedule for the 4 payment of the total unpaid check obligations. 5 b. The extended repayment plan agreement shall be in writing 6 and signed by both the maker and the licensee. 7 5. Upon entering into an extended repayment plan agreement, 8 the licensee shall return any postdated checks that the maker 9 has given to the licensee for the original delayed deposit 10 services transactions and shall do one of the following: 11 a. The licensee shall require the maker at the time of 12 entering into an extended repayment plan agreement to make 13 a new check for the balance on any unpaid checks and upon 14 each payment by the maker under the extended repayment plan 15 agreement, the licensee shall require a new check for the 16 remaining balance and return any previous check to the maker. 17 b. The licensee shall require the maker at the time of 18 entering into the extended repayment plan agreement to provide 19 multiple checks, one for each of the scheduled payments under 20 the extended repayment plan agreement. 21 6. During the duration of the extended repayment plan 22 agreement, the obligations the maker owes on any unpaid checks 23 are not delinquent and the licensee shall not charge a penalty 24 pursuant to section 533D.9, subsection 2. 25 7. Upon the maker’s failure to make a scheduled payment 26 pursuant to the extended repayment plan agreement, the licensee 27 may charge a penalty pursuant to section 533D.9, subsection 28 2, and may initiate debt collection as defined in section 29 537.7102, civil court proceedings, or arbitration to collect on 30 any unpaid checks. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill modifies provisions applicable to delayed deposit 35 -2- LSB 1091XS (3) 89 ja/rn 2/ 4

S.F. 206 services. 1 The bill limits the annual percentage rate applicable to a 2 delayed deposit services transaction to 36 percent, as computed 3 pursuant to the federal Truth in Lending Act. 4 The bill requires a licensee holding multiple checks from 5 one maker at any one time to enter into an extended repayment 6 plan agreement if the maker of the multiple checks requests 7 to enter into such agreement prior to the date upon which the 8 checks are to be negotiable. The licensee may not initiate 9 debt collection, civil court proceedings, or arbitration to 10 collect on the unpaid checks during the term of the extended 11 repayment plan agreement. A licensee need only enter into one 12 extended repayment plan agreement with a maker of multiple 13 checks in a 12-month period. A licensee cannot charge a fee, 14 interest charge, or other charge as a result of entering into 15 an extended repayment plan agreement. During the duration 16 of the agreement, the obligations that the maker owes on the 17 unpaid checks are not delinquent and the licensee cannot charge 18 penalties for a delinquent obligation. 19 The bill allows a maker obtaining more than four delayed 20 deposit service loans from one licensee in a two-month period 21 to enter into an extended repayment plan agreement with the 22 licensee if the maker requests to enter into such an agreement 23 prior to the date upon which the last check accepted by the 24 licensee is to be negotiable. The licensee may not initiate 25 debt collection, civil court proceedings, or arbitration to 26 collect on any unpaid checks during the term of the extended 27 repayment plan agreement. A licensee need only enter into one 28 extended repayment plan agreement with a maker in a 12-month 29 period. A licensee cannot charge a fee, interest charge, or 30 other charge as a result of entering into an extended repayment 31 plan agreement. During the duration of the agreement, the 32 obligations that the maker owes on any unpaid checks are not 33 delinquent and the licensee cannot charge penalties for a 34 delinquent obligation. 35 -3- LSB 1091XS (3) 89 ja/rn 3/ 4

S.F. 206 The bill requires the extended repayment plan agreement 1 to be in writing, signed by the maker and the licensee, and 2 contain the schedule for payment of the total unpaid check 3 obligations. The schedule must allow the maker to pay the 4 checks in at least four substantially equal installments. 5 The bill requires the licensee to return any postdated 6 checks that the maker has given to the licensee for the 7 original transactions. The licensee may then either require 8 the maker to provide a new check for the balance on the unpaid 9 checks or provide multiple checks for each scheduled payment 10 under the agreement. 11 The bill states that upon the maker’s failure to make a 12 scheduled payment, the licensee may charge a penalty pursuant 13 to Code section 533D.9(2), and may initiate debt collection, 14 civil court proceedings, or arbitration to collect on the 15 unpaid checks. 16 A violation of the bill may result in an administrative fine 17 of not more than $5,000 for each violation and the cost of 18 investigation. 19 -4- LSB 1091XS (3) 89 ja/rn 4/ 4