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H. B. No. 337 As IntroducedAs Introduced
127th General Assembly | Regular Session | 2007-2008 |
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Representatives McGregor, R., Lundy
Cosponsors:
Representatives Patton, Williams, S., Ujvagi, Yuko, Bolon, Harwood, Dodd, Fende, Seitz, Luckie, Collier, Distel, Barrett, Goyal, Evans, Hite, Daniels, McGregor, J., Bacon, Stewart, J., Wagoner, Blessing, Coley, Sayre, Carmichael, Book, DeGeeter, Szollosi, Chandler, Letson, Dyer
A BILL
To amend sections 1181.06, 1315.36, 1315.39, 1315.40,
and 1315.41 and
to enact section 121.085 of the
Revised Code to
modify terms and permissible
charges under the
Check-Cashing Lender Law, to
establish the
Financial Literacy Education Fund,
to
authorize the Director of Commerce to
administer the
fund and establish adult financial
literacy
education programs, and to create the
Small Emergency Loan Task Force.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1181.06, 1315.36, 1315.39, 1315.40,
and 1315.41 be
amended and section 121.085 of the Revised Code be
enacted to read
as follows:
Sec. 121.085. The financial literacy education fund is hereby
created in the state treasury. The fund shall consist of funds
transferred to it from the financial institutions fund pursuant to
division (B) of section 1181.06 of the Revised Code. The fund
shall be used to support various adult financial literacy
education programs developed or implemented by the director of
commerce. The fund shall be administered by the director of
commerce,
who shall adopt rules for the distribution of fund
moneys. The director of commerce shall adopt a rule to require
that at least one-half of the financial literacy education
programs developed or implemented pursuant to this section, and
offered to the public, be presented or available at public
community colleges throughout the state. The
director of commerce
shall deliver to the president
of the senate,
the speaker of the
house of representatives, the
minority leader
of the senate, the
minority leader of the house
of
representatives, and the
governor an annual report that
includes
an outline of each adult
financial
literacy education program developed or
implemented,
the number of
individuals who were educated by each
program, and
an accounting
for all funds distributed.
Sec. 1181.06. There is hereby created in the state
treasury
the financial institutions fund. The fund shall
receive
assessments on the banks fund established under section
1121.30 of
the Revised
Code, the savings institutions fund
established under
section 1181.18 of the Revised
Code, the credit unions fund
established under section 1733.321 of the
Revised Code, and the
consumer finance
fund established under section 1321.21 of the
Revised Code in accordance with
procedures prescribed by the
superintendent of financial
institutions and approved by the
director of budget and
management. Such assessments shall be in
addition to any
assessments on these funds required under division
(G) of section 121.08 of the
Revised Code. All operating expenses
of the division of financial institutions shall be paid from the
financial institutions fund.
Periodically, in accordance with a schedule the director
establishes by rule, the director of budget and management shall
transfer five per cent of all assessments received
into the
financial institutions fund to the financial literacy
education
fund created under section 121.085 of the Revised Code.
Sec. 1315.36. (A) No check-cashing business shall engage
in
the business of making loans under sections 1315.35 to 1315.44
of
the Revised Code without first having obtained
a license from the
superintendent of financial
institutions under sections 1315.35 to
1315.44 of the Revised Code.
(B) No person shall lend funds to a borrower in Ohio as part
of an internet check-cashing loan business, or through the mail
from an office of any check-cashing loan business not located in
Ohio, pursuant to an agreement for deferred deposit of any check,
negotiable order of withdrawal, share draft, or negotiable
instrument, including any deferred electronic draft from any
borrower account at a depository financial institution, without
first having obtained a license from the superintendent under
sections 1315.35 to 1315.44 of the Revised Code. Nothing in this
section prohibits a business not located or licensed in Ohio from
lending funds to Ohio borrowers who physically visit the
out-of-state office of the business and obtain the disbursement of
loan funds at that location.
(C) No person, other than a check-cashing business licensed
under sections 1315.35 to 1315.44 of the Revised Code shall
draft
funds electronically from any depository financial
institution in
this state, or bill any credit card issued by such
institution,
where the loan or extension of credit is made
pursuant to an
agreement for deferred deposit of any check,
negotiable order of
withdrawal, share draft, or negotiable
instrument, including any
deferred electronic draft from any
borrower account at a
depository financial institution.
Sec. 1315.39. (A) A check-cashing business
licensed under
sections 1315.35 to 1315.44 of the Revised
Code may engage in the
business of making loans provided
that each loan meets all of the
following conditions:
(1) The total amount of the loan does not exceed eight
hundred dollars.
(2) The duration of the loan does not exceed six
months.
(3) The interest on the loan is calculated in compliance
with, and
does not exceed the amount permitted by, division (B) of
this section.
(4) The loan is made pursuant to a written loan contract
that
sets forth the terms and conditions of the loan,
and discloses in
a clear and concise manner all of the following:
(a) The total amount of fees and charges the
borrower will be
required to pay in connection with the loan
pursuant to the loan
contract;
(b) The rate of interest contracted for under the
loan
contract, calculated both as an annual percentage rate
based
solely on the principal of the loan and as an annual
percentage
rate based on the sum of the principal of the loan
and the loan
origination fee, check collection charge, and all
other fees or
charges contracted for under the loan contract;
(c) The total amount of each payment, when each
payment is
due, and the total number of payments that the
borrower will be
required to make under the loan contract;
(d) A statement, printed in boldface type of the
minimum size
of ten points, as follows: "WARNING: The rate of
interest charged
on this loan is higher than the average rate of interest
charged
by financial institutions on substantially similar
loans."
(5) The loan is not being made to a borrower for purposes
of
retiring an existing loan between the check-cashing business and
that
borrower, which existing loan was made pursuant to sections
1315.35 to 1315.44
of the Revised Code.
(6) The loan contract includes a provision that offers the
borrower an optional extended payment plan that may be
invoked by
the borrower on the last business day before the maturity date of
the loan. To invoke the extended payment plan, the borrower must
return to the office where the loan was made and sign an amendment
to the original loan agreement reflecting the extended terms of
the loan and the new payment schedule. A licensee shall offer to
each borrower at least one extended payment plan per calendar
year. The extended payment plan shall allow the borrower to repay
the balance in four equal payments with the first payment being
due on the date the borrower enters into the extended payment plan
and the remaining payments being due on the borrower's next three
scheduled periodic pay dates. No additional interest, fees, or
charges may be applied to the loan upon the borrower entering the
extended payment plan as long as the borrower is in compliance
with the terms of the extended payment plan. The contract
provision regarding the extended payment plan shall stipulate that
the plan may be revoked and the entire balance become immediately
due and payable if the borrower fails to abide by the terms of the
extended payment plan. The person originating the loan for the
licensee shall identify verbally to the borrower the contract
provision, regarding the extended payment plan, and the borrower
shall verify that the provision has been identified by initialing
the contract adjacent to the provision.
(B) A Except as prohibited in division (A)(6) of this
section, a check-cashing business may contract for
and receive
interest at a rate of five per cent per month or
fraction of a
month on the unpaid principal of a loan made under
sections
1315.35 to 1315.44 of the Revised
Code. Any unearned interest
shall not be deducted from the proceeds
of the loan or paid in
advance, and interest shall be computed on the unpaid
balance and
shall not be compounded. If, after the first
month of the loan
contract, the loan is paid in full before the
final date on which
payment is due on the loan pursuant to the
loan contract, the
licensee shall refund or credit the borrower
with the amount of
the unearned interest for the unexpired
period of the loan
contract that follows the date of the
borrower's payment in full.
(C) A check-cashing business licensed under sections 1315.35
to 1315.44 of the Revised Code that makes a loan in accordance
with this section shall comply with the requirements of the
federal "Fair Debt Collection Practices Act," 91 Stat. 874 (1977),
15 U.S.C. 1692 et seq., when collecting the money owed under a
loan contract entered into pursuant to this section.
(D) A check-cashing business licensed under sections 1315.35
to 1315.44 of the Revised Code shall post a sign that informs
potential borrowers of the extended payment plan option required
by this section. The business shall post the sign at a location
clearly visible to every potential borrower. The sign shall be at
least eleven inches by seventeen inches in size and shall contain
the following statement in boldface type not smaller than
twenty-eight points: "State law requires that a loan contract for
a check-cashing loan include an extended payment plan option that
may be invoked by the borrower on the last business day before the
maturity date of the loan. A borrower who invokes the extended
payment plan option may repay the balance owed in four equal
periodic payments and no additional interest, fees, or charges may
be applied to the loan."
(E) Semi-annually, on or near January 31 and July 31, a
check-cashing business licensed under sections 1315.35 to 1315.44
of the Revised Code shall report to the superintendent of
financial institutions, the number of extended payment plans
pursuant to division (A) of this section that were provided in the
preceding six months. The superintendent annually shall report
such information to the speaker of the house of representatives,
the president of the senate, the minority leader of the house of
representatives and the minority leader of the senate. The speaker
of the house of representatives shall send a copy of the report to
the chairperson of the standing committee in the house of
representatives that customarily considers legislation regarding
financial institutions. The president of the senate shall send a
copy of the report to the chairperson of the standing committee in
the senate that customarily considers legislation regarding
financial institutions.
Sec. 1315.40. (A) In addition to the interest authorized to
be
contracted for
and received pursuant to
section 1315.39 of the
Revised Code, a
check-cashing business licensed pursuant to
sections 1315.35 to 1315.44 of the
Revised Code may charge,
collect,
and receive the following fees and charges in connection
with a
loan made under sections 1315.35 to 1315.44 of the
Revised
Code:
(A)(1) Loan origination fees not exceeding an amount equal to
five
dollars per fifty dollars up to five hundred dollars of the
amount of the loan and three dollars and seventy-five cents per
fifty dollars of the amount of the loan between five hundred one
and eight hundred dollars;
(B)(2) Check collection charges not
exceeding an amount
equal to
twenty dollars, plus any amount
passed
on from other
financial institutions for each check,
negotiable
order of
withdrawal, share draft, or other negotiable
instrument
returned
or dishonored for any reason, provided that
the terms
and
conditions upon which check collection charges will
be
charged to
the borrower are set forth in the written loan
contract described
in division
(A)(4) of section 1315.39 of the
Revised Code charges
comply with division (B) of this section;
(C)(3) Damages, costs, and disbursements to which the
check-cashing
business may become entitled to by law in connection
with any civil action to
collect a loan after default.
(B)(1) The terms and conditions upon which check collection
charges will be charged to the borrower shall be set forth in the
written loan contract described in division (A)(4) of section
1315.39 of the Revised Code.
(2) No check-cashing business shall solicit, collect, or
receive, any check collection charge permitted herein more than
once on the same check, negotiable order of withdrawal, share
draft, negotiable instrument, or loan transaction other than to
recover amounts passed on from the check-cashing business's
financial institution for the return or dishonor of the check,
negotiable order of withdrawal, share draft, or negotiable
instrument.
Sec. 1315.41. No check-cashing business licensed pursuant to
sections 1315.35
to 1315.44 of the Revised Code shall do any of
the following:
(A) Violate section 1315.36 of the Revised Code;
(B) Make a loan that does not comply with division (A) of
section 1315.39 of
the Revised Code;
(C) Charge, collect, or receive, directly or indirectly, any
additional fees
or charges in connection with a loan, other than
fees and charges permitted by
sections 1315.39 and 1315.40 of the
Revised Code and costs or
disbursements to which the check-cashing
business may become
entitled to by law in connection with any
civil action to
collect a loan
after default;
(D) Collect treble damages pursuant to division
(A)(1)(b)(ii)
of section 2307.61 of the Revised Code in
connection with any
civil action to collect a loan after a default due to a
check,
negotiable order of withdrawal, share draft, or other negotiable
instrument that was returned or dishonored for insufficient funds;
(E) Make a loan to a borrower if there exists an outstanding
loan
between the check-cashing business and that borrower and if
the outstanding loan
was made pursuant to sections 1315.35 to
1315.43 of the
Revised
Code.
(F) Bring or threaten to bring an action or complaint against
the borrower for the borrower's failure to comply with the terms
of the loan contract solely due to the check, negotiable order of
withdrawal, share draft, or negotiable instrument being returned
or dishonored for insufficient funds. Nothing herein prohibits
such conduct, action, or complaint if the borrower has
intentionally engaged in fraud by, including but not limited to,
closing or using any closed or false account to evade payment.
Section 2. That existing sections 1181.06, 1315.36, 1315.39,
1315.40,
and 1315.41 of the Revised Code are hereby repealed.
Section 3. (A) There is hereby created the Small Emergency
Loan Task Force to study and make recommendations on how small
emergency loans can be made available by banks and credit unions
to persons with limited resources and poor credit.
(B) The Task Force shall consist of the following ten
members, each with the authority to vote on matters before the
Task Force: One member appointed by the Speaker of the House of
Representatives; one member appointed by the Minority Leader of
the House of Representatives; one member appointed by the
President of the Senate; one member appointed by the Minority
Leader of the Senate; two members each appointed by the Governor,
the Treasurer of State, and the Director of Commerce; one member
designated by the Ohio Bankers League; and one member designated
by the Ohio Credit Union League.
(C) Members shall be appointed not later than thirty days
after the effective date of this section, and within sixty days
thereafter the Task Force shall convene as summoned by the
Director of Commerce. Members of the Task Force shall, at the
first meeting, elect a chair. The Task Force shall meet not less
than once per month, shall report to the Speaker of the House of
Representatives and the President of the Senate within one year
after the date of the first meeting of the Task Force, and shall
thereafter permanently dissolve.
(D) A vacancy shall be filled in the same manner as the
original appointment.
(E) Members of the Task Force shall receive no compensation,
except to the extent that serving as a member is part of the
individual's regular duties of employment and except for the
reimbursement of expenses at cost.
(F) The Department of Commerce shall provide meeting space
and secretarial services.
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