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SF 2368

1st Engrossment - 88th Legislature (2013 - 2014) Posted on 09/04/2014 10:27am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

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A bill for an act
relating to commerce; regulating payday lending; amending Minnesota Statutes
2012, section 47.601, subdivisions 1, 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 47.601, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For the purposes of this section, the terms defined in
this subdivision have the meanings given.

(b) "Borrower" means an individual who obtains a consumer short-term loan
primarily for personal, family, or household purposes.

(c) "Commissioner" means the commissioner of commerce.

(d) "Consumer short-term loan" means a loan to a borrower which has a principal
amount, or an advance on a credit limit, of $1,000 or less and requires a minimum
payment within 60 days of loan origination or credit advance of more than 25 percent of
the principal balance or credit advance. For the purposes of this section, each new advance
of money to a borrower under a consumer short-term loan agreement constitutes a new
consumer short-term loan. A "consumer short-term loan" does not include any transaction
made under chapter 325J or a loan made by a consumer short-term lender where, in the
event of default on the loan, the sole recourse for recovery of the amount owed, other than
a lawsuit for damages for the debt, is to proceed against physical goods pledged by the
borrower as collateral for the loan.

(e) "Consumer short-term lender" means an individual or entity engaged in the
business of makingnew text begin , offering,new text end or arranging consumer short-term loans, other than a state or
federally chartered bank, savings bank, or credit union.

Sec. 2.

Minnesota Statutes 2012, section 47.601, subdivision 3, is amended to read:


Subd. 3.

deleted text begin Debt collectiondeleted text end new text begin Requirements; prohibitionsnew text end .

new text begin (a) new text end A consumer short-term
lender collecting or attempting to collect on an indebtedness in connection with a
consumer short-term loan must not engage in the prohibited debt collection practices
referenced in section 332.37.

new text begin (b) No consumer short-term lender shall make a consumer short-term loan without
first determining and documenting that the borrower has the ability to repay the loan. In
determining whether the borrower has the ability to repay the loan, the consumer short-term
lender must, at a minimum, verify the borrower's current and anticipated income.
new text end

new text begin (c) A consumer short-term lender may not make a consumer short-term loan to a
borrower that will cause a borrower to have had, as of the date of the loan and within the
immediately preceding 365 days more than eight consumer short-term loans.
new text end

new text begin (d) A consumer short-term lender may not make a consumer short-term loan to
a borrower if there has been less than 45 days since the borrower has paid in full any
previous consumer short-term loan.
new text end

new text begin (e) A consumer short-term lender must verify the total number of consumer
short-term loans taken by the borrower within the immediately preceding 365 days.
Verification must include utilization of a consumer reporting service.
new text end

new text begin For purposes of this subdivision, a "consumer reporting service" means an operated,
real-time, electronically accessible service that the commissioner determines to be
capable of providing a consumer short-term lender with adequate verification information
necessary to ensure compliance with this paragraph.
new text end

new text begin (f) A consumer short-term lender shall have a duty to promptly report each consumer
short-term loan transaction to the consumer reporting service.
new text end

new text begin (g) A consumer short-term lender shall have a duty to inquire whether the borrower
is a covered borrower, as defined in Code of Federal Regulations, title 32, section
232.3(c). No consumer short-term lender may make a consumer short-term loan to a
covered borrower:
new text end

new text begin (1) without first providing the disclosures required under Code of Federal
Regulations, title 32, section 232.5; or
new text end

new text begin (2) which violates any of the terms and conditions set forth in Code of Federal
Regulations, title 32, section 232.4, for the issuance of consumer credit, as defined in
Code of Federal Regulations, title 32, section 232.3(b), except that for purposes of this
subdivision, "consumer credit" includes open-end credit.
new text end

Sec. 3. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective January 1, 2015, and apply to consumer short-term
loans made on or after that date.
new text end