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Senate File 418 - IntroducedA Bill ForAn Act 1relating to consumer credit transactions establishing
2and increasing specified charges and penalties.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 537.2301, Code 2017, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 2A. A supervised loan made by a person in
4violation of subsection 2 shall be void and the consumer is
5not obligated to pay either the amount financed or the finance
6charge. If the consumer has paid any part of the amount
7financed or the finance charge, the consumer has a right to
8recover the payment from the person in violation of subsection
92 or from an assignee of that person’s rights who undertakes
10direct collection of payments or enforcement of rights arising
11from the debt. With respect to violations arising from
12loans made pursuant to open-end credit, no action pursuant
13to this subsection may be brought more than two years after
14the violation occurred. With respect to violations arising
15from other loans, no action pursuant to this subsection may
16be brought more than one year after the due date of the last
17scheduled payment of the agreement pursuant to which the charge
18was paid.
19 Sec. 2. Section 537.2501, subsection 1, paragraph f,
20subparagraph (1), Code 2017, is amended to read as follows:
21(1) With respect to open-end credit pursuant to a credit
22card issued by the creditor which entitles the cardholder
23to purchase or lease goods or services from at least one
24hundred persons not related to the card issuer, the parties
25may contract for an over-limit charge up to fifteen thirty
26 dollars if the balance of the account exceeds the credit
27limit established pursuant to the agreement. The over-limit
28charge under this paragraph shall not be assessed again in a
29subsequent billing cycle unless in a subsequent billing cycle
30the account balance has been reduced below the credit limit.
31 Sec. 3. Section 537.2501, subsection 1, paragraph g, Code
322017, is amended to read as follows:
33g. A surcharge of not more than five percent of the amount
34of the face value of the payment instrument or twenty dollars,
35whichever is greater, for each dishonored payment instrument
-1-1provided that the fee is clearly and conspicuously disclosed
2in the cardholder agreement. However, the amount of the
3surcharge shall not exceed twenty dollars unless the check,
4draft, or order was presented twice or the maker does not have
5an account with the drawee. If the check, draft, or order was
6presented twice or the maker does not have an account with the
7drawee, the amount of the surcharge shall not exceed fifty
8dollars as provided for in section 554.3512 for a dishonored
9check, draft, or order that was accepted as payment for a
10consumer credit transaction payment. The surcharge shall not
11be assessed against the maker if the reason for the dishonor of
12the instrument is that the maker has stopped payment pursuant
13to section 554.4403.
14 Sec. 4. Section 537.2501, subsection 1, Code 2017, is
15amended by adding the following new paragraph:
16 NEW PARAGRAPH. k. Credit reporting charges.
17 Sec. 5. Section 537.2502, subsection 1, paragraph a,
18subparagraph (1), Code 2017, is amended to read as follows:
19(1) Five percent of the unpaid amount of the installment, or
20a maximum of twenty thirty dollars.
21 Sec. 6. Section 537.2502, subsection 1, paragraph b, Code
222017, is amended to read as follows:
23b. For an interest-bearing transaction, an amount not
24exceeding five percent of the unpaid amount of the installment,
25or a maximum of fifteen thirty dollars.
26 Sec. 7. Section 537.2502, subsection 4, Code 2017, is
27amended to read as follows:
284. With respect to open-end credit, the parties may contract
29for a delinquency charge on any payment not paid in full when
30due, as originally scheduled or as deferred, in an amount up to
31fifteen thirty dollars.
32 Sec. 8. Section 537.2510, Code 2017, is amended by adding
33the following new subsection:
34 NEW SUBSECTION. 8. This section does not apply to a
35financial institution as defined in section 537.1301.
-2-1 Sec. 9. Section 537.5201, subsection 3, Code 2017, is
2amended to read as follows:
33. If a creditor has contracted for or received a charge
4in excess of that allowed by this chapter, or if a consumer
5is entitled to a refund and a person liable to the consumer
6refuses to make a refund within a reasonable time after demand,
7the consumer may recover from the creditor or the person
8liable, in an action other than a class action, the excess
9charge or refund and a penalty in an amount determined by the
10court not less than one two hundred dollars or more than one
11 two thousand dollars. With respect to excess charges arising
12from sales or loans made pursuant to open-end credit, no action
13pursuant to this subsection may be brought more than two years
14after the time the excess charge was made. With respect to
15excess charges arising from other consumer credit transactions
16no action pursuant to this subsection may be brought more than
17one year after the due date of the last scheduled payment of
18the agreement pursuant to which the charge was made. For
19purposes of this subsection, a reasonable time is presumed to
20be thirty days.
21 Sec. 10. Section 537.5203, subsection 1, paragraph a, Code
222017, is amended to read as follows:
23a. Twice the amount of the finance charge in connection with
24the transaction, but the liability pursuant to this paragraph
25shall be not less than one two hundred dollars or more than one
26 two thousand dollars.
27 Sec. 11. Section 537.6113, subsection 2, Code 2017, is
28amended to read as follows:
292. The administrator may bring a civil action against a
30person to recover a civil penalty of no more than five ten
31 thousand dollars for repeatedly and intentionally violating
32this chapter. No civil penalty pursuant to this subsection
33may be imposed for violations of this chapter occurring more
34than two years before the action is brought or for making
35unconscionable agreements or engaging in a course of fraudulent
-3-1or unconscionable conduct.
2 Sec. 12. Section 537.6203, subsections 1 and 4, Code 2017,
3are amended to read as follows:
41. A person required to file notification shall pay to the
5administrator an annual fee of ten fifty dollars. The fee
6shall be paid with the filing of the first notification and on
7or before January 31 of each succeeding year.
84. In addition to the penalties provided by section
9537.6113, subsection 3, the administrator may collect a charge,
10established by rule, not exceeding twenty-five seventy-five
11 dollars from each person required to pay fees under this
12section who fails to pay the fees in full within thirty days
13after they are due.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
17This bill establishes and increases specified charges and
18penalties relating to consumer credit transactions.
19Current Code section 537.2301 authorizes certain persons to
20make supervised loans. The bill provides that a supervised
21loan made by a person in violation of Code section 537.2301(2)
22is void and the consumer is not obligated to pay the amount
23financed or the finance charge. A consumer who has already
24paid any part of such amount or charge may recover the payment.
25With respect to violations arising from loans made pursuant
26to open-end credit, no action may be brought pursuant to the
27bill more than two years after the violation occurred. With
28respect to violations arising from other loans, no action may
29be brought pursuant to the bill more than one year after the
30due date of the last scheduled payment of the agreement for
31which the charge was paid.
32Current Code section 537.2501 sets forth the charges that
33a creditor may receive in addition to a finance charge. The
34bill increases the over-limit charge the parties to an open-end
35credit pursuant to a credit card transaction may contract
-4-1for from up to $15 to a maximum of $30. The bill modifies
2the surcharge in Code section 537.2501(1)(g) to authorize a
3surcharge for a dishonored check, draft, or order not to exceed
4$30 as provided for in Code section 554.3512. The bill also
5provides that a creditor may receive credit reporting charges.
6Current Code section 537.2502 allows the parties in certain
7consumer credit transactions to contract for delinquency
8charges. For a precomputed consumer credit transaction, the
9maximum delinquency charge is increased from the greater of 5
10percent of the unpaid installment or $20, to the greater of
115 percent of the unpaid installment or $30, or the deferral
12charge amount. For an interest-bearing consumer credit
13transaction, the maximum delinquency charge is increased from 5
14percent of the unpaid installment or $15, to 5 percent of the
15unpaid installment or $30. For an open-credit arrangement, the
16maximum delinquency charge is increased from $15 to $30.
17Current Code section 537.2510 requires creditors to rebate
18certain amounts to consumers upon the prepayment of precomputed
19consumer credit transactions. The bill provides that Code
20section 537.2510 does not apply to financial institutions as
21defined in Code section 537.1301. This would include banks,
22savings and loan associations, or state banks incorporated
23under state or federal law, and credit unions organized under
24state or federal law.
25Current Code section 537.5201 sets forth the remedies
26available to consumers for violations of Code chapter 537. The
27bill increases the penalty a creditor must pay for contracting
28for or receiving a charge in excess of that allowed by Code
29chapter 537 from not less than $100 or more than $1,000, to not
30less than $200 or more than $2,000.
31Current Code section 537.5203 sets forth the civil liability
32of a creditor who fails to disclose information to a person
33entitled to the information under Code chapter 537. The bill
34increases the amount a creditor is liable to such person from
35not less than $100 or more than $1,000 to not less than $200 or
-5-1more than $2,000.
2Current Code section 537.6113 allows the attorney general to
3bring civil actions to recover moneys under Code chapter 537.
4The bill increases the civil penalty the attorney general may
5recover from a person for repeated and intentional violations
6of Code chapter 537 from no more than $5,000 to no more than
7$10,000.
8Current Code section 537.6203 sets forth various fees and
9charges for persons required to file notification pursuant to
10Code chapter 537. The bill increases the annual fee for a
11person required to file notification from $10 to $50. The bill
12also increases the late charge for failure to pay a fee within
1330 days that it is due from no more than $25 per person to no
14more than $75 per person.
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2and increasing specified charges and penalties.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 537.2301, Code 2017, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 2A. A supervised loan made by a person in
4violation of subsection 2 shall be void and the consumer is
5not obligated to pay either the amount financed or the finance
6charge. If the consumer has paid any part of the amount
7financed or the finance charge, the consumer has a right to
8recover the payment from the person in violation of subsection
92 or from an assignee of that person’s rights who undertakes
10direct collection of payments or enforcement of rights arising
11from the debt. With respect to violations arising from
12loans made pursuant to open-end credit, no action pursuant
13to this subsection may be brought more than two years after
14the violation occurred. With respect to violations arising
15from other loans, no action pursuant to this subsection may
16be brought more than one year after the due date of the last
17scheduled payment of the agreement pursuant to which the charge
18was paid.
19 Sec. 2. Section 537.2501, subsection 1, paragraph f,
20subparagraph (1), Code 2017, is amended to read as follows:
21(1) With respect to open-end credit pursuant to a credit
22card issued by the creditor which entitles the cardholder
23to purchase or lease goods or services from at least one
24hundred persons not related to the card issuer, the parties
25may contract for an over-limit charge up to fifteen thirty
26 dollars if the balance of the account exceeds the credit
27limit established pursuant to the agreement. The over-limit
28charge under this paragraph shall not be assessed again in a
29subsequent billing cycle unless in a subsequent billing cycle
30the account balance has been reduced below the credit limit.
31 Sec. 3. Section 537.2501, subsection 1, paragraph g, Code
322017, is amended to read as follows:
33g. A surcharge of not more than five percent of the amount
34of the face value of the payment instrument or twenty dollars,
35whichever is greater, for each dishonored payment instrument
-1-1provided that the fee is clearly and conspicuously disclosed
2in the cardholder agreement. However, the amount of the
3surcharge shall not exceed twenty dollars unless the check,
4draft, or order was presented twice or the maker does not have
5an account with the drawee. If the check, draft, or order was
6presented twice or the maker does not have an account with the
7drawee, the amount of the surcharge shall not exceed fifty
8dollars as provided for in section 554.3512 for a dishonored
9check, draft, or order that was accepted as payment for a
10consumer credit transaction payment. The surcharge shall not
11be assessed against the maker if the reason for the dishonor of
12the instrument is that the maker has stopped payment pursuant
13to section 554.4403.
14 Sec. 4. Section 537.2501, subsection 1, Code 2017, is
15amended by adding the following new paragraph:
16 NEW PARAGRAPH. k. Credit reporting charges.
17 Sec. 5. Section 537.2502, subsection 1, paragraph a,
18subparagraph (1), Code 2017, is amended to read as follows:
19(1) Five percent of the unpaid amount of the installment, or
20a maximum of twenty thirty dollars.
21 Sec. 6. Section 537.2502, subsection 1, paragraph b, Code
222017, is amended to read as follows:
23b. For an interest-bearing transaction, an amount not
24exceeding five percent of the unpaid amount of the installment,
25or a maximum of fifteen thirty dollars.
26 Sec. 7. Section 537.2502, subsection 4, Code 2017, is
27amended to read as follows:
284. With respect to open-end credit, the parties may contract
29for a delinquency charge on any payment not paid in full when
30due, as originally scheduled or as deferred, in an amount up to
31fifteen thirty dollars.
32 Sec. 8. Section 537.2510, Code 2017, is amended by adding
33the following new subsection:
34 NEW SUBSECTION. 8. This section does not apply to a
35financial institution as defined in section 537.1301.
-2-1 Sec. 9. Section 537.5201, subsection 3, Code 2017, is
2amended to read as follows:
33. If a creditor has contracted for or received a charge
4in excess of that allowed by this chapter, or if a consumer
5is entitled to a refund and a person liable to the consumer
6refuses to make a refund within a reasonable time after demand,
7the consumer may recover from the creditor or the person
8liable, in an action other than a class action, the excess
9charge or refund and a penalty in an amount determined by the
10court not less than one two hundred dollars or more than one
11 two thousand dollars. With respect to excess charges arising
12from sales or loans made pursuant to open-end credit, no action
13pursuant to this subsection may be brought more than two years
14after the time the excess charge was made. With respect to
15excess charges arising from other consumer credit transactions
16no action pursuant to this subsection may be brought more than
17one year after the due date of the last scheduled payment of
18the agreement pursuant to which the charge was made. For
19purposes of this subsection, a reasonable time is presumed to
20be thirty days.
21 Sec. 10. Section 537.5203, subsection 1, paragraph a, Code
222017, is amended to read as follows:
23a. Twice the amount of the finance charge in connection with
24the transaction, but the liability pursuant to this paragraph
25shall be not less than one two hundred dollars or more than one
26 two thousand dollars.
27 Sec. 11. Section 537.6113, subsection 2, Code 2017, is
28amended to read as follows:
292. The administrator may bring a civil action against a
30person to recover a civil penalty of no more than five ten
31 thousand dollars for repeatedly and intentionally violating
32this chapter. No civil penalty pursuant to this subsection
33may be imposed for violations of this chapter occurring more
34than two years before the action is brought or for making
35unconscionable agreements or engaging in a course of fraudulent
-3-1or unconscionable conduct.
2 Sec. 12. Section 537.6203, subsections 1 and 4, Code 2017,
3are amended to read as follows:
41. A person required to file notification shall pay to the
5administrator an annual fee of ten fifty dollars. The fee
6shall be paid with the filing of the first notification and on
7or before January 31 of each succeeding year.
84. In addition to the penalties provided by section
9537.6113, subsection 3, the administrator may collect a charge,
10established by rule, not exceeding twenty-five seventy-five
11 dollars from each person required to pay fees under this
12section who fails to pay the fees in full within thirty days
13after they are due.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
17This bill establishes and increases specified charges and
18penalties relating to consumer credit transactions.
19Current Code section 537.2301 authorizes certain persons to
20make supervised loans. The bill provides that a supervised
21loan made by a person in violation of Code section 537.2301(2)
22is void and the consumer is not obligated to pay the amount
23financed or the finance charge. A consumer who has already
24paid any part of such amount or charge may recover the payment.
25With respect to violations arising from loans made pursuant
26to open-end credit, no action may be brought pursuant to the
27bill more than two years after the violation occurred. With
28respect to violations arising from other loans, no action may
29be brought pursuant to the bill more than one year after the
30due date of the last scheduled payment of the agreement for
31which the charge was paid.
32Current Code section 537.2501 sets forth the charges that
33a creditor may receive in addition to a finance charge. The
34bill increases the over-limit charge the parties to an open-end
35credit pursuant to a credit card transaction may contract
-4-1for from up to $15 to a maximum of $30. The bill modifies
2the surcharge in Code section 537.2501(1)(g) to authorize a
3surcharge for a dishonored check, draft, or order not to exceed
4$30 as provided for in Code section 554.3512. The bill also
5provides that a creditor may receive credit reporting charges.
6Current Code section 537.2502 allows the parties in certain
7consumer credit transactions to contract for delinquency
8charges. For a precomputed consumer credit transaction, the
9maximum delinquency charge is increased from the greater of 5
10percent of the unpaid installment or $20, to the greater of
115 percent of the unpaid installment or $30, or the deferral
12charge amount. For an interest-bearing consumer credit
13transaction, the maximum delinquency charge is increased from 5
14percent of the unpaid installment or $15, to 5 percent of the
15unpaid installment or $30. For an open-credit arrangement, the
16maximum delinquency charge is increased from $15 to $30.
17Current Code section 537.2510 requires creditors to rebate
18certain amounts to consumers upon the prepayment of precomputed
19consumer credit transactions. The bill provides that Code
20section 537.2510 does not apply to financial institutions as
21defined in Code section 537.1301. This would include banks,
22savings and loan associations, or state banks incorporated
23under state or federal law, and credit unions organized under
24state or federal law.
25Current Code section 537.5201 sets forth the remedies
26available to consumers for violations of Code chapter 537. The
27bill increases the penalty a creditor must pay for contracting
28for or receiving a charge in excess of that allowed by Code
29chapter 537 from not less than $100 or more than $1,000, to not
30less than $200 or more than $2,000.
31Current Code section 537.5203 sets forth the civil liability
32of a creditor who fails to disclose information to a person
33entitled to the information under Code chapter 537. The bill
34increases the amount a creditor is liable to such person from
35not less than $100 or more than $1,000 to not less than $200 or
-5-1more than $2,000.
2Current Code section 537.6113 allows the attorney general to
3bring civil actions to recover moneys under Code chapter 537.
4The bill increases the civil penalty the attorney general may
5recover from a person for repeated and intentional violations
6of Code chapter 537 from no more than $5,000 to no more than
7$10,000.
8Current Code section 537.6203 sets forth various fees and
9charges for persons required to file notification pursuant to
10Code chapter 537. The bill increases the annual fee for a
11person required to file notification from $10 to $50. The bill
12also increases the late charge for failure to pay a fee within
1330 days that it is due from no more than $25 per person to no
14more than $75 per person.
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