130th Ohio General Assembly
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H. B. No. 337  As Introduced
As Introduced

127th General Assembly
Regular Session
2007-2008
H. B. No. 337


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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