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Minnesota Legislature

Office of the Revisor of Statutes

SF 806

2nd Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:16am

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

Bill Text Versions

Engrossments
Introduction Posted on 02/17/2009
1st Engrossment Posted on 04/03/2009
2nd Engrossment Posted on 04/14/2009

Current Version - 2nd Engrossment

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A bill for an act
relating to financial institutions; regulating payday lending; providing penalties
and remedies; amending Minnesota Statutes 2008, sections 47.60, subdivisions
4, 6; 53.09, subdivision 2; proposing coding for new law in Minnesota Statutes,
chapter 47.

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

Section 1.

Minnesota Statutes 2008, section 47.60, subdivision 4, is amended to read:


Subd. 4.

Books of account; annual report; schedule of charges; disclosures.

(a)
A lender filing under subdivision 3 shall keep and use in the business books, accounts,
and records as will enable the commissioner to determine whether the filer is complying
with this section.

(b) A lender filing under subdivision 3 shall annually on or before March 15 file a
report to the commissioner giving the information the commissioner reasonably requires
concerning the business and operations during the preceding calendar yearnew text begin, including the
information required to be reported under section 47.601, subdivision 5
new text end.

(c) A lender filing under subdivision 3 shall display prominently in each place of
business a full and accurate schedule, to be approved by the commissioner, of the charges
to be made and the method of computing those charges. A lender shall furnish a copy of
the contract of loan to a person obligated on it or who may become obligated on it at any
time upon the request of that person. This is in addition to any disclosures required by the
federal Truth in Lending Act, United States Code, title 15.

(d) A lender filing under subdivision 3 shall, upon repayment of the loan in
full, mark indelibly every obligation signed by the borrower with the word "Paid" or
"Canceled" within 20 days after repayment.

(e) A lender filing under subdivision 3 shall display prominently, in each licensed
place of business, a full and accurate statement of the charges to be made for loans made
under this section. The statement of charges must be displayed in a notice, on plastic or
other durable material measuring at least 12 inches by 18 inches, headed "CONSUMER
NOTICE REQUIRED BY THE STATE OF MINNESOTA." The notice shall include,
immediately above the statement of charges, the following sentence, or a substantially
similar sentence approved by the commissioner: "These loan charges are higher than
otherwise permitted under Minnesota law. Minnesota law permits these higher charges
only because short-term small loans might otherwise not be available to consumers. If
you have another source of a loan, you may be able to benefit from a lower interest rate
and other loan charges." The notice must not contain any other statement or information,
unless the commissioner has determined that the additional statement or information is
necessary to prevent confusion or inaccuracy. The notice must be designed with a type
size that is large enough to be readily noticeable and legible. The form of the notice must
be approved by the commissioner prior to its use.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for reports made for the 2009
calendar year.
new text end

Sec. 2.

Minnesota Statutes 2008, section 47.60, subdivision 6, is amended to read:


Subd. 6.

Penalties for violation.

A person deleted text beginor the person's members, officers,
directors, agents, and employees
deleted text end who deleted text beginviolatedeleted text endnew text begin violatesnew text end or deleted text beginparticipatedeleted text endnew text begin participatesnew text end in the
violation of any of the provisions of this section deleted text beginmay bedeleted text endnew text begin isnew text end liable in the same manner
as in section deleted text begin56.19deleted text endnew text begin 47.601, subdivision 7new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2009, and applies to loans
made on or after that date.
new text end

Sec. 3.

new text begin [47.601] CONSUMER SHORT-TERM LOANS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

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

new text begin (c) "Commissioner" means the commissioner of commerce.
new text end

new text begin (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.
new text end

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

new text begin Subd. 2. new text end

new text begin Consumer short-term loan contract. new text end

new text begin (a) No contract or agreement
between a consumer short-term loan lender and a borrower residing in Minnesota may
contain the following:
new text end

new text begin (1) a provision selecting a law other than Minnesota law under which the contract
is construed or enforced;
new text end

new text begin (2) a provision choosing a forum for dispute resolution other than the state of
Minnesota; or
new text end

new text begin (3) a provision limiting class actions against a consumer short-term lender for
violations of subdivision 3 or for making consumer short-term loans:
new text end

new text begin (i) without a required license issued by the commissioner; or
new text end

new text begin (ii) in which interest rates, fees, charges, or loan amounts exceed those allowable
under section 47.59, subdivision 6, or 47.60, subdivision 2, other than by de minimis
amounts if no pattern or practice exists.
new text end

new text begin (b) Any provision prohibited by paragraph (a) is void and unenforceable.
new text end

new text begin (c) A consumer short-term loan lender must furnish a copy of the written loan
contract to each borrower. The contract and disclosures must be written in the language in
which the loan was negotiated with the borrower and must contain:
new text end

new text begin (1) the name; address, which may not be a post office box; and telephone number of
the lender making the consumer short-term loan;
new text end

new text begin (2) the name and title of the individual employee or representative who signs the
contract on behalf of the lender;
new text end

new text begin (3) an itemization of the fees and interest charges to be paid by the borrower;
new text end

new text begin (4) in bold, 24-point type, the annual percentage rate as computed under United
States Code, chapter 15, section 1606; and
new text end

new text begin (5) a description of the borrower's payment obligations under the loan.
new text end

new text begin (d) The holder or assignee of a check or other instrument evidencing an obligation of
a borrower in connection with a consumer short-term loan takes the instrument subject to
all claims by and defenses of the borrower against the consumer short-term lender.
new text end

new text begin Subd. 3. new text end

new text begin Debt collection. new text end

new text begin 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 end

new text begin Subd. 4. new text end

new text begin Record keeping; annual reports; notifications. new text end

new text begin In addition to any other
information required to be filed under chapters 45 through 56, a consumer short-term
lender must annually file a report with the commissioner that contains the following
information for each calendar year:
new text end

new text begin (1) the total dollar amount, over and above principal, collected on consumer
short-term loans;
new text end

new text begin (2) the average annual percentage rate and range of annual percentage rates for
consumer short-term loans;
new text end

new text begin (3) the number of individual borrowers who obtained one or more consumer
short-term loans;
new text end

new text begin (4) a breakdown of the number of individual borrowers identified in clause (3) by
the number of individual borrowers who obtained:
new text end

new text begin (i) five or more loans;
new text end

new text begin (ii) ten or more loans;
new text end

new text begin (iii) 15 or more loans; and
new text end

new text begin (iv) 20 or more loans; and
new text end

new text begin (5) the total number and dollar amount of loans charged off or written off.
new text end

new text begin Subd. 5. new text end

new text begin Jurisdiction. new text end

new text begin For the purposes of this section, a consumer short-term loan
transaction is deemed to take place in the state of Minnesota if the borrower is a Minnesota
resident and the borrower completes the transaction, either personally or electronically,
while physically located in the state of Minnesota.
new text end

new text begin Subd. 6. new text end

new text begin Penalties for violation; private right of action. new text end

new text begin (a) Except for a "bona
fide error" as set forth under United States Code, chapter 15, section 1640, subsection (c),
an individual or entity who violates subdivision 2 or 3 is liable to the borrower for:
new text end

new text begin (1) all money collected or received in connection with the loan;
new text end

new text begin (2) actual, incidental, and consequential damages;
new text end

new text begin (3) statutory damages of up to $1,000 per violation;
new text end

new text begin (4) costs, disbursements, and reasonable attorney fees; and
new text end

new text begin (5) injunctive relief.
new text end

new text begin (b) In addition to the remedies provided in paragraph (a), a loan is void, and the
borrower is not obligated to pay any amounts owing if the loan is made:
new text end

new text begin (1) by a consumer short-term lender who has not obtained an applicable license
from the commissioner;
new text end

new text begin (2) in violation of any provision of subdivision 2 or 3; or
new text end

new text begin (3) in which interest, fees, charges, or loan amounts exceed the interest, fees, charges,
or loan amounts allowable under sections 47.59, subdivision 6, and 47.60, subdivision 2.
new text end

new text begin Subd. 7. new text end

new text begin Attorney general enforcement. new text end

new text begin The attorney general shall enforce this
section under section 8.31.
new text end

new text begin Subd. 8. new text end

new text begin Remedies cumulative. new text end

new text begin The remedies provided in this section are
cumulative and do not restrict any remedy that is otherwise available. The provisions
of this section are not exclusive and are in addition to any other requirements, rights,
remedies, and penalties provided by law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2009, and applies to loans
made on or after that date.
new text end

Sec. 4.

Minnesota Statutes 2008, section 53.09, subdivision 2, is amended to read:


Subd. 2.

Annual report.

(1) Each industrial loan and thrift company shall annually
on or before the first day of March file a report with the commissioner stating in detail,
under appropriate heads, its assets and liabilities at the close of business on the last day
of the preceding calendar yearnew text begin and, if applicable, information required under section
47.601, subdivision 5
new text end. This report shall be made under oath in the form prescribed by
the commissioner.

(2) Each industrial loan and thrift company which holds authority to accept accounts
pursuant to section 53.04, subdivision 5, shall in place of the requirement in clause (1)
submit the reports required of state banks pursuant to section 48.48.

(3) Within 30 days following a change in controlling ownership of the capital stock
of an industrial loan and thrift company, it shall file a written report with the commissioner
stating in detail the nature of such change in ownership.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for reports made for the 2009
calendar year.
new text end