Bill Text: IA SF418 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to consumer credit transactions establishing and increasing specified charges and penalties. (Formerly SSB 1118; See SF 502.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2017-04-04 - Subcommittee recommends amendment and passage. [SF418 Detail]

Download: Iowa-2017-SF418-Introduced.html

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Senate File 418 - Introduced




                                 SENATE FILE       
                                 BY  COMMITTEE ON COMMERCE

                                 (SUCCESSOR TO SSB
                                     1118)

                                 (COMPANION TO LSB
                                     2322HV)

                                      A BILL FOR

  1 An Act relating to consumer credit transactions establishing
  2    and increasing specified charges and penalties.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 537.2301, Code 2017, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  2A.  A supervised loan made by a person in
  1  4 violation of subsection 2 shall be void and the consumer is
  1  5 not obligated to pay either the amount financed or the finance
  1  6 charge. If the consumer has paid any part of the amount
  1  7 financed or the finance charge, the consumer has a right to
  1  8 recover the payment from the person in violation of subsection
  1  9 2 or from an assignee of that person's rights who undertakes
  1 10 direct collection of payments or enforcement of rights arising
  1 11 from the debt. With respect to violations arising from
  1 12 loans made pursuant to open=end credit, no action pursuant
  1 13 to this subsection may be brought more than two years after
  1 14 the violation occurred. With respect to violations arising
  1 15 from other loans, no action pursuant to this subsection may
  1 16 be brought more than one year after the due date of the last
  1 17 scheduled payment of the agreement pursuant to which the charge
  1 18 was paid.
  1 19    Sec. 2.  Section 537.2501, subsection 1, paragraph f,
  1 20 subparagraph (1), Code 2017, is amended to read as follows:
  1 21    (1)  With respect to open=end credit pursuant to a credit
  1 22 card issued by the creditor which entitles the cardholder
  1 23 to purchase or lease goods or services from at least one
  1 24 hundred persons not related to the card issuer, the parties
  1 25 may contract for an over=limit charge up to fifteen thirty
  1 26  dollars if the balance of the account exceeds the credit
  1 27 limit established pursuant to the agreement. The over=limit
  1 28 charge under this paragraph shall not be assessed again in a
  1 29 subsequent billing cycle unless in a subsequent billing cycle
  1 30 the account balance has been reduced below the credit limit.
  1 31    Sec. 3.  Section 537.2501, subsection 1, paragraph g, Code
  1 32 2017, is amended to read as follows:
  1 33    g.  A surcharge of not more than five percent of the amount
  1 34 of the face value of the payment instrument or twenty dollars,
  1 35 whichever is greater, for each dishonored payment instrument
  2  1 provided that the fee is clearly and conspicuously disclosed
  2  2 in the cardholder agreement. However, the amount of the
  2  3 surcharge shall not exceed twenty dollars unless the check,
  2  4 draft, or order was presented twice or the maker does not have
  2  5 an account with the drawee. If the check, draft, or order was
  2  6 presented twice or the maker does not have an account with the
  2  7 drawee, the amount of the surcharge shall not exceed fifty
  2  8 dollars as provided for in section 554.3512 for a dishonored
  2  9 check, draft, or order that was accepted as payment for a
  2 10 consumer credit transaction payment. The surcharge shall not
  2 11 be assessed against the maker if the reason for the dishonor of
  2 12 the instrument is that the maker has stopped payment pursuant
  2 13 to section 554.4403.
  2 14    Sec. 4.  Section 537.2501, subsection 1, Code 2017, is
  2 15 amended by adding the following new paragraph:
  2 16    NEW PARAGRAPH.  k.  Credit reporting charges.
  2 17    Sec. 5.  Section 537.2502, subsection 1, paragraph a,
  2 18 subparagraph (1), Code 2017, is amended to read as follows:
  2 19    (1)  Five percent of the unpaid amount of the installment, or
  2 20 a maximum of twenty thirty dollars.
  2 21    Sec. 6.  Section 537.2502, subsection 1, paragraph b, Code
  2 22 2017, is amended to read as follows:
  2 23    b.  For an interest=bearing transaction, an amount not
  2 24 exceeding five percent of the unpaid amount of the installment,
  2 25 or a maximum of fifteen thirty dollars.
  2 26    Sec. 7.  Section 537.2502, subsection 4, Code 2017, is
  2 27 amended to read as follows:
  2 28    4.  With respect to open=end credit, the parties may contract
  2 29 for a delinquency charge on any payment not paid in full when
  2 30 due, as originally scheduled or as deferred, in an amount up to
  2 31 fifteen thirty dollars.
  2 32    Sec. 8.  Section 537.2510, Code 2017, is amended by adding
  2 33 the following new subsection:
  2 34    NEW SUBSECTION.  8.  This section does not apply to a
  2 35 financial institution as defined in section 537.1301.
  3  1    Sec. 9.  Section 537.5201, subsection 3, Code 2017, is
  3  2 amended to read as follows:
  3  3    3.  If a creditor has contracted for or received a charge
  3  4 in excess of that allowed by this chapter, or if a consumer
  3  5 is entitled to a refund and a person liable to the consumer
  3  6 refuses to make a refund within a reasonable time after demand,
  3  7 the consumer may recover from the creditor or the person
  3  8 liable, in an action other than a class action, the excess
  3  9 charge or refund and a penalty in an amount determined by the
  3 10 court not less than one two hundred dollars or more than one
  3 11  two thousand dollars. With respect to excess charges arising
  3 12 from sales or loans made pursuant to open=end credit, no action
  3 13 pursuant to this subsection may be brought more than two years
  3 14 after the time the excess charge was made. With respect to
  3 15 excess charges arising from other consumer credit transactions
  3 16 no action pursuant to this subsection may be brought more than
  3 17 one year after the due date of the last scheduled payment of
  3 18 the agreement pursuant to which the charge was made. For
  3 19 purposes of this subsection, a reasonable time is presumed to
  3 20 be thirty days.
  3 21    Sec. 10.  Section 537.5203, subsection 1, paragraph a, Code
  3 22 2017, is amended to read as follows:
  3 23    a.  Twice the amount of the finance charge in connection with
  3 24 the transaction, but the liability pursuant to this paragraph
  3 25 shall be not less than one two hundred dollars or more than one
  3 26  two thousand dollars.
  3 27    Sec. 11.  Section 537.6113, subsection 2, Code 2017, is
  3 28 amended to read as follows:
  3 29    2.  The administrator may bring a civil action against a
  3 30 person to recover a civil penalty of no more than five ten
  3 31  thousand dollars for repeatedly and intentionally violating
  3 32 this chapter. No civil penalty pursuant to this subsection
  3 33 may be imposed for violations of this chapter occurring more
  3 34 than two years before the action is brought or for making
  3 35 unconscionable agreements or engaging in a course of fraudulent
  4  1 or unconscionable conduct.
  4  2    Sec. 12.  Section 537.6203, subsections 1 and 4, Code 2017,
  4  3 are amended to read as follows:
  4  4    1.  A person required to file notification shall pay to the
  4  5 administrator an annual fee of ten fifty dollars. The fee
  4  6 shall be paid with the filing of the first notification and on
  4  7 or before January 31 of each succeeding year.
  4  8    4.  In addition to the penalties provided by section
  4  9 537.6113, subsection 3, the administrator may collect a charge,
  4 10 established by rule, not exceeding twenty=five seventy=five
  4 11  dollars from each person required to pay fees under this
  4 12 section who fails to pay the fees in full within thirty days
  4 13 after they are due.
  4 14                           EXPLANATION
  4 15 The inclusion of this explanation does not constitute agreement with
  4 16 the explanation's substance by the members of the general assembly.
  4 17    This bill establishes and increases specified charges and
  4 18 penalties relating to consumer credit transactions.
  4 19    Current Code section 537.2301 authorizes certain persons to
  4 20 make supervised loans. The bill provides that a supervised
  4 21 loan made by a person in violation of Code section 537.2301(2)
  4 22 is void and the consumer is not obligated to pay the amount
  4 23 financed or the finance charge. A consumer who has already
  4 24 paid any part of such amount or charge may recover the payment.
  4 25 With respect to violations arising from loans made pursuant
  4 26 to open=end credit, no action may be brought pursuant to the
  4 27 bill more than two years after the violation occurred. With
  4 28 respect to violations arising from other loans, no action may
  4 29 be brought pursuant to the bill more than one year after the
  4 30 due date of the last scheduled payment of the agreement for
  4 31 which the charge was paid.
  4 32    Current Code section 537.2501 sets forth the charges that
  4 33 a creditor may receive in addition to a finance charge. The
  4 34 bill increases the over=limit charge the parties to an open=end
  4 35 credit pursuant to a credit card transaction may contract
  5  1 for from up to $15 to a maximum of $30. The bill modifies
  5  2 the surcharge in Code section 537.2501(1)(g) to authorize a
  5  3 surcharge for a dishonored check, draft, or order not to exceed
  5  4 $30 as provided for in Code section 554.3512. The bill also
  5  5 provides that a creditor may receive credit reporting charges.
  5  6    Current Code section 537.2502 allows the parties in certain
  5  7 consumer credit transactions to contract for delinquency
  5  8 charges. For a precomputed consumer credit transaction, the
  5  9 maximum delinquency charge is increased from the greater of 5
  5 10 percent of the unpaid installment or $20, to the greater of
  5 11 5 percent of the unpaid installment or $30, or the deferral
  5 12 charge amount. For an interest=bearing consumer credit
  5 13 transaction, the maximum delinquency charge is increased from 5
  5 14 percent of the unpaid installment or $15, to 5 percent of the
  5 15 unpaid installment or $30. For an open=credit arrangement, the
  5 16 maximum delinquency charge is increased from $15 to $30.
  5 17    Current Code section 537.2510 requires creditors to rebate
  5 18 certain amounts to consumers upon the prepayment of precomputed
  5 19 consumer credit transactions. The bill provides that Code
  5 20 section 537.2510 does not apply to financial institutions as
  5 21 defined in Code section 537.1301. This would include banks,
  5 22 savings and loan associations, or state banks incorporated
  5 23 under state or federal law, and credit unions organized under
  5 24 state or federal law.
  5 25    Current Code section 537.5201 sets forth the remedies
  5 26 available to consumers for violations of Code chapter 537. The
  5 27 bill increases the penalty a creditor must pay for contracting
  5 28 for or receiving a charge in excess of that allowed by Code
  5 29 chapter 537 from not less than $100 or more than $1,000, to not
  5 30 less than $200 or more than $2,000.
  5 31    Current Code section 537.5203 sets forth the civil liability
  5 32 of a creditor who fails to disclose information to a person
  5 33 entitled to the information under Code chapter 537. The bill
  5 34 increases the amount a creditor is liable to such person from
  5 35 not less than $100 or more than $1,000 to not less than $200 or
  6  1 more than $2,000.
  6  2    Current Code section 537.6113 allows the attorney general to
  6  3 bring civil actions to recover moneys under Code chapter 537.
  6  4 The bill increases the civil penalty the attorney general may
  6  5 recover from a person for repeated and intentional violations
  6  6 of Code chapter 537 from no more than $5,000 to no more than
  6  7 $10,000.
  6  8    Current Code section 537.6203 sets forth various fees and
  6  9 charges for persons required to file notification pursuant to
  6 10 Code chapter 537. The bill increases the annual fee for a
  6 11 person required to file notification from $10 to $50. The bill
  6 12 also increases the late charge for failure to pay a fee within
  6 13 30 days that it is due from no more than $25 per person to no
  6 14 more than $75 per person.
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