Bill Text: MN SF2368 | 2013-2014 | 88th Legislature | Engrossed
Bill Title: Payday lending regulations and consumer short-term lender requirements clarifications
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced - Dead) 2014-04-28 - HF substituted on General Orders HF2293 [SF2368 Detail]
Download: Minnesota-2013-SF2368-Engrossed.html
1.2relating to commerce; regulating payday lending; amending Minnesota Statutes
1.32012, section 47.601, subdivisions 1, 3.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. Minnesota Statutes 2012, section 47.601, subdivision 1, is amended to read:
1.6 Subdivision 1. Definitions. (a) For the purposes of this section, the terms defined in
1.7this subdivision have the meanings given.
1.8(b) "Borrower" means an individual who obtains a consumer short-term loan
1.9primarily for personal, family, or household purposes.
1.10(c) "Commissioner" means the commissioner of commerce.
1.11(d) "Consumer short-term loan" means a loan to a borrower which has a principal
1.12amount, or an advance on a credit limit, of $1,000 or less and requires a minimum
1.13payment within 60 days of loan origination or credit advance of more than 25 percent of
1.14the principal balance or credit advance. For the purposes of this section, each new advance
1.15of money to a borrower under a consumer short-term loan agreement constitutes a new
1.16consumer short-term loan. A "consumer short-term loan" does not include any transaction
1.17made under chapter 325J or a loan made by a consumer short-term lender where, in the
1.18event of default on the loan, the sole recourse for recovery of the amount owed, other than
1.19a lawsuit for damages for the debt, is to proceed against physical goods pledged by the
1.20borrower as collateral for the loan.
1.21(e) "Consumer short-term lender" means an individual or entity engaged in the
1.22business of making, offering, or arranging consumer short-term loans, other than a state or
1.23federally chartered bank, savings bank, or credit union.
2.1 Sec. 2. Minnesota Statutes 2012, section 47.601, subdivision 3, is amended to read:
2.2 Subd. 3.Debt collection Requirements; prohibitions. (a) A consumer short-term
2.3lender collecting or attempting to collect on an indebtedness in connection with a
2.4consumer short-term loan must not engage in the prohibited debt collection practices
2.5referenced in section332.37 .
2.6(b) No consumer short-term lender shall make a consumer short-term loan without
2.7first determining and documenting that the borrower has the ability to repay the loan. In
2.8determining whether the borrower has the ability to repay the loan, the consumer short-term
2.9lender must, at a minimum, verify the borrower's current and anticipated income.
2.10(c) A consumer short-term lender may not make a consumer short-term loan to a
2.11borrower that will cause a borrower to have had, as of the date of the loan and within the
2.12immediately preceding 365 days more than eight consumer short-term loans.
2.13(d) A consumer short-term lender may not make a consumer short-term loan to
2.14a borrower if there has been less than 45 days since the borrower has paid in full any
2.15previous consumer short-term loan.
2.16(e) A consumer short-term lender must verify the total number of consumer
2.17short-term loans taken by the borrower within the immediately preceding 365 days.
2.18Verification must include utilization of a consumer reporting service.
2.19For purposes of this subdivision, a "consumer reporting service" means an operated,
2.20real-time, electronically accessible service that the commissioner determines to be
2.21capable of providing a consumer short-term lender with adequate verification information
2.22necessary to ensure compliance with this paragraph.
2.23(f) A consumer short-term lender shall have a duty to promptly report each consumer
2.24short-term loan transaction to the consumer reporting service.
2.25(g) A consumer short-term lender shall have a duty to inquire whether the borrower
2.26is a covered borrower, as defined in Code of Federal Regulations, title 32, section
2.27232.3(c). No consumer short-term lender may make a consumer short-term loan to a
2.28covered borrower:
2.29(1) without first providing the disclosures required under Code of Federal
2.30Regulations, title 32, section 232.5; or
2.31(2) which violates any of the terms and conditions set forth in Code of Federal
2.32Regulations, title 32, section 232.4, for the issuance of consumer credit, as defined in
2.33Code of Federal Regulations, title 32, section 232.3(b), except that for purposes of this
2.34subdivision, "consumer credit" includes open-end credit.
2.35 Sec. 3. EFFECTIVE DATE.
3.1Sections 1 and 2 are effective January 1, 2015, and apply to consumer short-term
3.2loans made on or after that date.
1.32012, section 47.601, subdivisions 1, 3.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. Minnesota Statutes 2012, section 47.601, subdivision 1, is amended to read:
1.6 Subdivision 1. Definitions. (a) For the purposes of this section, the terms defined in
1.7this subdivision have the meanings given.
1.8(b) "Borrower" means an individual who obtains a consumer short-term loan
1.9primarily for personal, family, or household purposes.
1.10(c) "Commissioner" means the commissioner of commerce.
1.11(d) "Consumer short-term loan" means a loan to a borrower which has a principal
1.12amount, or an advance on a credit limit, of $1,000 or less and requires a minimum
1.13payment within 60 days of loan origination or credit advance of more than 25 percent of
1.14the principal balance or credit advance. For the purposes of this section, each new advance
1.15of money to a borrower under a consumer short-term loan agreement constitutes a new
1.16consumer short-term loan. A "consumer short-term loan" does not include any transaction
1.17made under chapter 325J or a loan made by a consumer short-term lender where, in the
1.18event of default on the loan, the sole recourse for recovery of the amount owed, other than
1.19a lawsuit for damages for the debt, is to proceed against physical goods pledged by the
1.20borrower as collateral for the loan.
1.21(e) "Consumer short-term lender" means an individual or entity engaged in the
1.22business of making, offering, or arranging consumer short-term loans, other than a state or
1.23federally chartered bank, savings bank, or credit union.
2.1 Sec. 2. Minnesota Statutes 2012, section 47.601, subdivision 3, is amended to read:
2.2 Subd. 3.
2.3lender collecting or attempting to collect on an indebtedness in connection with a
2.4consumer short-term loan must not engage in the prohibited debt collection practices
2.5referenced in section
2.6(b) No consumer short-term lender shall make a consumer short-term loan without
2.7first determining and documenting that the borrower has the ability to repay the loan. In
2.8determining whether the borrower has the ability to repay the loan, the consumer short-term
2.9lender must, at a minimum, verify the borrower's current and anticipated income.
2.10(c) A consumer short-term lender may not make a consumer short-term loan to a
2.11borrower that will cause a borrower to have had, as of the date of the loan and within the
2.12immediately preceding 365 days more than eight consumer short-term loans.
2.13(d) A consumer short-term lender may not make a consumer short-term loan to
2.14a borrower if there has been less than 45 days since the borrower has paid in full any
2.15previous consumer short-term loan.
2.16(e) A consumer short-term lender must verify the total number of consumer
2.17short-term loans taken by the borrower within the immediately preceding 365 days.
2.18Verification must include utilization of a consumer reporting service.
2.19For purposes of this subdivision, a "consumer reporting service" means an operated,
2.20real-time, electronically accessible service that the commissioner determines to be
2.21capable of providing a consumer short-term lender with adequate verification information
2.22necessary to ensure compliance with this paragraph.
2.23(f) A consumer short-term lender shall have a duty to promptly report each consumer
2.24short-term loan transaction to the consumer reporting service.
2.25(g) A consumer short-term lender shall have a duty to inquire whether the borrower
2.26is a covered borrower, as defined in Code of Federal Regulations, title 32, section
2.27232.3(c). No consumer short-term lender may make a consumer short-term loan to a
2.28covered borrower:
2.29(1) without first providing the disclosures required under Code of Federal
2.30Regulations, title 32, section 232.5; or
2.31(2) which violates any of the terms and conditions set forth in Code of Federal
2.32Regulations, title 32, section 232.4, for the issuance of consumer credit, as defined in
2.33Code of Federal Regulations, title 32, section 232.3(b), except that for purposes of this
2.34subdivision, "consumer credit" includes open-end credit.
2.35 Sec. 3. EFFECTIVE DATE.
3.1Sections 1 and 2 are effective January 1, 2015, and apply to consumer short-term
3.2loans made on or after that date.
