State of Arizona
House of Representatives
Forty-sixth Legislature
First Regular Session
2003
HOUSE BILL 2363
AN ACT
AMENDING SECTION 6-1260, ARIZONA REVISED STATUTES; RELATING TO DEFERRED
PRESENTMENT COMPANIES.
(TEXT OF BILL BEGINS ON NEXT PAGE)
1
H.B. 2363
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Be it enacted by the Legislature of the State of Arizona: 1
Section 1. Section 6-1260, Arizona Revised Statutes, is amended to 2
read: 3
6-1260. Deferred presentment; amount; fees; cost chart 4
A. The licensee may accept for deferred presentment or deposit a check 5
with a face amount of at least fifty dollars but not more than five hundred 6
dollars, excluding the fees permitted in subsection F of this section. 7
B. For each check the licensee accepts for deferred presentment or 8
deposit, the licensee and the customer shall sign a written agreement that 9
contains the name or trade name of the licensee, the transaction date, the 10
amount of the check, the amount to be paid by the maker, a statement of the 11
total amount of the fees charged, expressed both as a dollar amount and as an 12
effective annual percentage rate, a disclosure statement that complies with 13
state and federal truth in lending laws and a notice to the customer as 14
prescribed in subsection C of this section. The written agreement shall 15
expressly require the licensee to defer presentment or deposit of the check 16
until a specified date. THE WRITTEN AGREEMENT SHALL STATE THAT A PERSON WITH 17
A COMPLAINT MAY CONTACT THE DEPARTMENT. THE WRITTEN AGREEMENT SHALL BE IN 18
ENGLISH AND SPANISH. 19
C. A licensee shall provide a notice in a prominent place on each 20
written agreement that specifies that no customer may have outstanding more 21
than one deferred presentment service agreement at one time and the face 22
amount, exclusive of any fees, cannot be more than five hundred dollars. THE 23
NOTICE SHALL BE IN ENGLISH AND SPANISH. A licensee shall ask every customer 24
who seeks deferred presentment services whether that customer has any 25
outstanding checks payable to other licensees. 26
D. A licensee may rely on the customer's representation of whether the 27
customer has any outstanding checks for deferred presentment held by other 28
licensees. 29
E. The maker of a check has the right to redeem the check from the 30
licensee before the agreed on date of presentment or deposit if the maker 31
pays the licensee the amount of the check. 32
F. A licensee shall not directly or indirectly charge any fee or other 33
consideration for accepting a check for deferred presentment or deposit that 34
is more than fifteen per cent of the face amount of the check for any initial 35
transaction or any extension. 36
G. A licensee may impose the fee prescribed in subsection F of this 37
section only once for each written agreement. The fee is earned on execution 38
of the written agreement and is not subject to any reimbursement even if the 39
maker redeems the check pursuant to subsection E of this section. 40
H. The fee charged by the licensee is not interest for purposes of any 41
other law or rule of this state. 42
I. A person may extend the presentment or deposit of a check not more 43
than three TWO consecutive times. BEFORE THE SECOND EXTENSION THE LICENSEE 44
SHALL PROVIDE TO THE CUSTOMER WRITTEN INFORMATION IN ENGLISH AND SPANISH 45
H.B. 2363
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RELATING TO CREDIT COUNSELING AND FINANCIAL EDUCATION SERVICES AVAILABLE IN 1
THE COMMUNITY. For each extension the customer and the licensee shall 2
terminate the previous agreement and sign a separate agreement. During an 3
incomplete transaction the customer may not receive any additional monies 4
from the licensee. The licensee may charge a fee as prescribed in subsection 5
F of this section for each extension. If a customer has completed a deferred 6
presentment transaction with the licensee, the customer may enter into a new 7
agreement for deferred presentment services with the licensee. A transaction 8
is completed when the customer's check is presented for payment, deposited or 9
redeemed by the customer for cash. 10
J. If a check is returned to the licensee from a payer financial 11
institution due to insufficient funds, a closed account or a stop payment 12
order, the licensee may use all available civil remedies to collect on the 13
check including the imposition of the dishonored check SERVICE fee prescribed 14
in section 44-6852. An individual who issues a personal check to a licensee 15
under a deferred presentment agreement is not subject to criminal prosecution 16
pursuant to title 13, chapter 18. 17
K. EACH BRANCH OFFICE SHALL DISPLAY IN A PROMINENT PLACE A CHART 18
SHOWING THE ACTUAL COST AND THE ANNUAL PERCENTAGE RATE OF THE INITIAL LOAN. 19
THE CHART SHALL SHOW THE COSTS FOR EXTENDING THE PRESENTMENT OR DEPOSIT OF 20
BOTH A CHECK WORTH ONE HUNDRED DOLLARS AND A CHECK WORTH FIVE HUNDRED 21
DOLLARS. 22
HOUSE OF REPRESENTATIVES
HB 2363
deferred presentment; agreements; extension
Sponsors: Representatives Clark, Nelson, Downing, et al.

dp Committee on Financial Institutions and Insurance
DP Committee on Commerce and Military Affairs
DP Caucus and COW
X Third Read
As Passed the House

HB 2363 modifies the requirements for deferred presentment companies to specify that written agreements be in English and Spanish to direct the customer to credit counseling and financial services. This bill also reduces the rollover limit from three to two.

Current Status
HB 2363 passed the Committee on Financial Institutions and Insurance unamended.
HB 2363 passed the Commerce and Military Affairs Committee unamended.
HB 2363 failed to pass the House of Representatives.

History
Laws 2000, Chapter 141, contained numerous provisions relating to the regulation and licensing of deferred presentment companies. Deferred presentment companies are commonly known as payday lenders and they offer short-term loans to individuals who can verify an active checking account and current employment or a steady source of income. The loans are usually less than $500 for a period of less than 30 days or until the customer's next payday. The customer signs a disclosure agreement then writes a post-dated personal check for the loan amount, plus the applicable fee. At the end of the loan period, the lender presents the check for payment, as previously agreed. Customers may rollover or extend their loan terms. The customer may pay a portion of the loan amount or pay off the fees due prior to extending the loan. HB 2363 modifies the consumer disclosure requirements to better educate customers about the actual costs associated with deferred presentment loans and reduces the rollover limit from three to two.

Provisions
" Specifies that the written agreement must be in English and Spanish and shall state that a person with a complaint may contact the department.
" States that the notice shall be in English and Spanish specifying that a customer may not have more than one deferred presentment service agreement at one time.
" Changes the extension of the presentment or deposit of a check from not more than three to not more than two consecutive extensions.
" Specifies that before the second extension the licensee shall provide the customer with written information in English and Spanish relating to credit counseling and financial education services available in the community.
" States that each branch must display a chart illustrating the cost and annual percentage rate of the initial loan and the presentment or deposit of both a check worth $100 and $500.

HB 2363 passed the Committee on Financial Institutions and Insurance unamended.
HB 2363 passed the Commerce and Military Affairs Committee unamended.
HB 2363 failed to pass the House of Representatives.



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46th Legislature
First Regular Session 2 March 10, 2003