Minnesota Session Laws - 2009, Regular Session

CHAPTER 68--S.F.No. 806

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 year new 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 begin or the person's members, officers, directors, agents, and employees deleted text end who deleted text begin violate deleted text end new text begin violates new text end or deleted text begin participate deleted text end new text begin participates new text end in the violation of any of the provisions of this section deleted text begin may be deleted text end new text begin is new text end liable in the same manner as in section deleted text begin 56.19 deleted text end new text begin 47.601, subdivision 7 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. 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 year new 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

Presented to the governor May 8, 2009

Signed by the governor May 12, 2009, 4:46 p.m.