Payday loans in the United States

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Ohio House sends payday lending reforms to governor

From Wikipedia, the free encyclopedia. N Make, publish, or otherwise disseminate, directly or indirectly, any misleading or false advertisement, or engage in any other deceptive trade practice. A Every person licensed or registered under this chapter shall pay to the superintendent of financial institutions, prior to the last day of June, an annual license or certificate of registration fee. A borrower who is unable to repay a loan is automatically offered a day payment plan, with no fees or interest. C A borrower injured by a violation of this section may bring an action for recovery of damages. No other or further license fee or assessment shall be required from any such licensee by the state or any political subdivision in the state. How the Other Half Banks:

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Ohio's payday lending law is one of the best in the nation when it comes to protecting consumers. Unfortunately, Ohio's payday lenders have found a loophole in the law, and as a result Ohio residents pay some of the highest payday loan rates in the country. Gov. John Kasich signed into law on Monday a controversial bill that promises to reform the payday lending industry in Ohio. The new law is expected to lower costs for the roughly 1 million Ohioans who take out the high-cost loans each year. But major players in the industry warned that the law will force them out of business. If you have questions regarding the application of a state law to a specific payday loan, please contact the Office of the Attorney General in your state. This page summarizes state statutes regarding payday lending or deferred presentment, which features single-payment, short-term loans based on personal checks held for future deposit or on electronic access to personal checking accounts.


A Interest not exceeding a rate of twenty-eight per cent per annum;. B 1 Except as otherwise provided in division B 2 of this section, a monthly maintenance fee that does not exceed the lesser of ten per cent of the originally contracted loan amount or thirty dollars, provided the fee is not added to the loan balance on which interest is charged;.

C If the originally contracted loan amount is five hundred dollars or more, a loan origination charge in the amount of two per cent of the originally contracted loan amount, provided the loan origination charge is not added to the loan balance on which interest is charged;. D One check collection charge per loan 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 C of section E If a licensee provides the proceeds of a loan in the form of a check, a fee to cash that check in an amount not exceeding ten dollars;.

F Damages, costs, and disbursements to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default, except that the total amount of damages and costs shall not exceed the originally contracted loan amount. A licensee may refinance a short-term loan provided that all of the following apply to the refinanced loan:. A The loan is a short-term loan. B Interest on the loan does not exceed a rate of twenty- eight per cent per annum. C The licensee does not charge, collect, or receive the monthly maintenance fee described in division B of section If a short-term loan is prepaid in full or refinanced prior to the loan's maturity date, the licensee shall refund to the borrower a prorated portion of the interest, monthly maintenance fees, and all other charges based on a ratio of the number of days the loan was outstanding and the number of days for which the loan was originally contracted.

For purposes of this section, the monthly maintenance fee is not considered to be fully earned at the beginning of a month. Notwithstanding any provision of sections For purposes of this section, all charges made in connection with the loan shall be included when calculating the total loan charges except for all of the following:. A The check collection charge authorized under section B The check cashing fee authorized under section C The interest charges on a loan that is refinanced in accordance with section No person licensed pursuant to sections A Violate section B Make a loan that does not comply with section C Charge, collect, or receive, directly or indirectly, any additional fees, interest, or charges in connection with a loan, other than fees and charges permitted by section D Collect treble damages pursuant to division A 1 b ii of section E Make a short-term loan to a borrower if there exists an outstanding loan between the licensee and that borrower, if a loan between any licensee and that borrower was terminated on the same business day, if the borrower has more than one outstanding loan, if the loan would obligate the borrower to repay a total amount of more than five hundred dollars to licensees, or indebt the borrower, to licensees, for an amount that is more than twenty-five per cent of the borrowers gross monthly salary not including bonus, overtime, or other such compensation, based on a payroll verification statement presented by the borrower;.

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;.

G Make a short-term loan to a borrower for purposes of retiring an existing short-term loan between any licensee and that borrower;. H Require the borrower to waive the borrower's right to legal recourse under any otherwise applicable provision of state or federal law;. I Accept the title of a vehicle, real property, physical assets, or other collateral as security for the obligation;.

J Engage in any device or subterfuge to evade the requirements of sections K Assess or charge a borrower a fee for prepaying the loan in full prior to the maturity date;.

L Fail to comply with section M Recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested;.

N Make a loan to a borrower that has received two loans within the previous ninety days from licensees, unless the borrower has completed during that period a financial literacy program approved by the superintendent;.

O Draft funds electronically from any depository financial institution in this state, or bill any credit card issued by such an institution. Nothing in this division shall prohibit the conversion of a negotiable instrument into an electronic form for processing through the automated clearing house system. P Make, publish, or otherwise disseminate, directly or indirectly, any misleading or false advertisement, or engage in any other deceptive trade practice;.

Q Offer any incentive to a borrower in exchange for the borrower taking out multiple loans over any period of time, or provide a short-term loan at no charge or at a discounted charge as compensation for any previous or future business. R Make a loan to a borrower if the borrower has received a total of four or more loans, from licensees, in the calendar year. S Present a check, negotiable order of withdrawal, share draft, or other negotiable instrument, that has been previously presented by the licensee and subsequently returned or dishonored for any reason, without prior written approval from the borrower.

T Change the check number, or in any other way alter a check, negotiable order of withdrawal, or share draft, prior to submitting such check, negotiable order of withdrawal, or share draft for processing through the automated clearing house system, or submit false information about any check, negotiable order of withdrawal, or share draft to the automated clearing house system. C Charge, collect, or receive, directly or indirectly, credit insurance premiums, charges for any ancillary product sold, or any additional fees, interest, or charges in connection with a loan, other than fees and charges permitted by section E Except as otherwise provided in section G Require the borrower to waive the borrower's right to legal recourse under any otherwise applicable provision of state or federal law;.

H Accept the title or registration of a vehicle, real property, physical assets, or other collateral as security for the obligation;. I Engage in any device or subterfuge to evade the requirements of sections J Assess or charge a borrower a fee for prepaying the loan in full prior to the maturity date;.

K Fail to comply with section L Recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested;. M Draft funds electronically from any depository financial institution in this state without written approval of the borrower. N Make, publish, or otherwise disseminate, directly or indirectly, any misleading or false advertisement, or engage in any other deceptive trade practice;.

O Offer any incentive to a borrower in exchange for the borrower taking out multiple loans over any period of time, or provide a short-term loan at no charge or at a discounted charge as compensation for any previous or future business;. P Present a check, negotiable order of withdrawal, share draft, or other negotiable instrument, that has been previously presented by the licensee and subsequently returned or dishonored for any reason, without prior written approval from the borrower;.

Q Change the check number, or in any other way alter a check, negotiable order of withdrawal, or share draft, prior to submitting such check, negotiable order of withdrawal, or share draft for processing through the automated clearing house system, or submit false information about any check, negotiable order of withdrawal, or share draft to the automated clearing house system;.

R Make a short-term loan to a borrower if the loan will result in a total outstanding principal of more than two thousand five hundred dollars in short-term loans made by licensees to that borrower at any one time. Prior to making a short-term loan, a licensee shall require each borrower to sign a written declaration that, pursuant to this division, the borrower is eligible to receive the loan, and shall make a concerted effort to verify the borrower's eligibility.

S Fail to accept cash or a certified check from a third party when submitted on behalf of the borrower for repayment of a short-term loan in full or in part;. T Contact a borrower for any reason other than for the borrower's benefit regarding upcoming payments, options for obtaining loans, payment options, payment due dates, the effect of default, or, after default, receiving payments or other actions permitted by the licensee; to advise the borrower of missed payments or dishonored checks; or to assist the transmittal of payments via a third-party mechanism;.

U In the event that a short-term loan or its servicing is sold or assigned, fail to provide notice and the information needed to make future payments;.

V Make a loan to a borrower that includes a demand feature that permits the licensee, in the event the borrower fails to meet the repayment terms for any outstanding balance, to terminate the loan in advance of the original maturity date and to demand repayment of the entire outstanding balance, unless both of the following requirements are met: For purposes of division V 2 of this section, the outstanding balance and prorated interest and fees shall be calculated as if the borrower had voluntarily prepaid the loan in full on the date of termination.

A licensee shall not attempt to collect from a borrower's account after two consecutive attempts have failed, unless the licensee obtains new written authorization from the borrower to electronically transfer or withdraw funds from the borrower's account. A The superintendent of financial institutions shall, in accordance with Chapter B The superintendent may make any investigation and conduct any hearing the superintendent considers necessary to determine whether any person has violated sections The superintendent may impose a monetary fine of not more than one thousand dollars for each such violation.

C In making any investigation or conducting any hearing pursuant to this section, the superintendent, or any person designated by the superintendent, at any time may compel by subpoena witnesses, may take depositions of witnesses residing without the state in the manner provided for in civil actions, pay any witnesses the fees and mileage for their attendance provided under section The superintendent also may compel by order or subpoena duces tecum the production of, and examine, all relevant books, records, accounts, and other documents.

If a person does not comply with a subpoena or subpoena duces tecum, the superintendent may apply to the court of common pleas of Franklin county for an order compelling the person to comply with the subpoena or subpoena duces tecum or, for failure to do so, an order to be held in contempt of court. D In connection with any investigation under this section, the superintendent may file an action in the court of common pleas of Franklin county or the court of common pleas of the county in which the person who is the subject of the investigation resides, or is engaging in or proposing to engage in actions in violation of sections As often as the superintendent considers it necessary, the superintendent may examine the records of a licensee, but in any case, the superintendent shall examine the records of a licensee at least annually.

A Every licensee shall keep and use in the licensee's business such books, accounts, records, and loan documents as will enable the division of financial institutions to determine whether the licensee is complying with sections Such books, accounts, records, and loan documents shall be segregated from those pertaining to transactions that are not subject to sections Every licensee shall preserve the books, accounts, records, and loan documents pertaining to loans made under sections B 1 As required by the superintendent of financial institutions, each licensee shall file with the division each year a report under oath or affirmation, on forms supplied by the division, concerning the business and operation for the preceding calendar year.

If a licensee has more than one place of business in this state, the licensee shall furnish a report for each location. The published analysis shall include all of the following: The superintendent of financial institutions, in accordance with Chapter The superintendent shall issue a rule defining "senior officer" for the purpose of section The superintendent may adopt, amend, and repeal substantive rules defining with reasonable specificity acts or practices that violate section A A violation of section A borrower injured by a violation of section B The superintendent of financial institutions or a borrower may bring directly an action to enjoin a violation of sections The prosecuting attorney of the county in which the action may be brought may bring an action to enjoin a violation of sections C The superintendent may initiate criminal proceedings under sections If the prosecuting attorney does not prosecute the violations, or at the request of the prosecuting attorney, the superintendent shall present any evidence of criminal violations to the attorney general, who may proceed in the prosecution with all the rights, privileges, and powers conferred by law on prosecuting attorneys, including the power to appear before grand juries and to interrogate witnesses before such grand juries.

These powers of the attorney general are in addition to any other applicable powers of the attorney general. D The prosecuting attorney of the county in which an alleged offense may be prosecuted may initiate criminal proceedings under sections E In order to initiate criminal proceedings under sections If, within a reasonable period of time, the prosecuting attorney has not agreed to prosecute the violations, the attorney general may proceed in the prosecution with all the rights, privileges, and powers described in division B of this section.

F When a judgment under this section becomes final, the clerk of court shall mail a copy of the judgment, including supporting opinions, to the superintendent.

A 1 "Debt collector" means a licensee, officer, employee, or agent of a licensee, or any person acting as a debt collector for a licensee, or any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt resulting from a short-term loan made by a licensee.

For the purpose of this section, the term "borrower" includes the borrower's spouse, parent, if the borrower is a minor, guardian, executor, or administrator. B When communicating with any person other than the borrower for the purpose of acquiring location information about the borrower, the debt collector shall identify self, state that the purpose for the communication is to confirm or correct location information concerning a person, and, only if expressly requested, identify the debt collector's employer.

The debt collector shall not do any of the following: C A debt collector, without the prior consent of the borrower given directly to the debt collector or without the express permission of a court of competent jurisdiction, may not communicate with a borrower in connection with the collection of any debt: In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a borrower is after eight a.

D A debt collector, when communicating with a third party without the prior consent of the borrower given directly to the debt collector, or without the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, may not communicate, in connection with the collection of any debt, with any person other than the borrower, the borrower's attorney, a consumer reporting agency if otherwise permitted by law, or the attorney of the debt collector.

E If a borrower provides written notification, to a person licensed under section If such notice from the borrower is made by mail, notification shall be complete upon receipt. F A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, including, but not limited to, any of the following: G A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, including, but not limited to, any of the following: H A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt, including, but not limited to, any of the following: The charges include, but are not limited to, collect telephone calls and telegram fees;.

I In addition to the requirements of this section, a debt collector shall follow the practices set forth in the federal "Fair Debt Collection Practices Act," 91 Stat. In the event of a conflict between described practices in the federal act and described practices in this section, this section shall prevail. A If more than four hundred persons are licensed under sections Licensees shall use the database to determine if a borrower is eligible for a loan. Licensees shall submit the required data in a format as the superintendent prescribes by rule, and verify eligibility before entering into each loan transaction.

B If a statewide common database is developed pursuant to division A of this section, the superintendent shall adopt rules to administer and enforce this section and to ensure that the database is used by licensees in accordance with this section, including: C The database operator, whether the superintendent or a third party selected by the superintendent pursuant to Chapter D A licensee may rely on the information contained in the database as accurate and is not subject to any administrative penalty or civil liability as a result of relying on inaccurate information contained in the database.

E With respect to the database prescribed in division A of this section, any information submitted for incorporation into the database, information in the database itself, or archived information as maintained by the superintendent pursuant to this section is not a public record under section F If approved by the superintendent, the database operator may impose a per transaction fee for the actual costs of entering, accessing, and maintaining data in the database.

The fee shall be payable to the database operator in a manner prescribed by the superintendent. A licensee may not charge a customer all or part of the fee. Repealed by nd General Assembly File No. A Before initiating a short-term loan transaction with a borrower, a licensee shall make a reasonable attempt to verify the borrower's income for purposes of division B 2 of section At a minimum, the licensee shall obtain from the borrower one or more recent pay stubs or other written evidence of recurring income, such as a bank statement.

The written evidence shall include at least one document that, when presented to the licensee, is dated not earlier than forty-five days prior to the borrower's initiation of the short-term loan transaction.

If the borrower intends to provide a bank statement, the licensee shall permit the borrower to delete from the statement the information regarding to whom the debits listed on the statement are payable. B The superintendent of financial institutions may adopt rules under section A If a statewide common database is not developed under section In the absence of an electronic database tracking service, each licensee shall require a borrower to sign a written declaration confirming that, pursuant to section B The records of a licensee and any electronic database tracking service shall be subject to review and examination by the division of financial institutions to determine whether the licensee is complying with this section and other applicable provisions of sections A A person licensed, and any person required to be licensed under sections B The duties and standards of care created in this section may not be waived or modified.

C A borrower injured by a violation of this section may bring an action for recovery of damages. Damages awarded shall not be less than all compensation paid directly or indirectly to a licensee from any source, plus reasonable attorney's fees and court costs. The borrower may be awarded punitive damages.

A The superintendent of financial institutions shall report semiannually to the governor and the general assembly on the operations of the division of financial institutions with respect to the following: B The information required under divisions A 1 and 2 of this section does not include information that, pursuant to division C of this section, is confidential.

C The following information is confidential: D The information described in division A 1 of this section shall remain confidential for all purposes except when it is necessary for the superintendent to take official action regarding the affairs of a licensee, or in connection with criminal or civil proceedings to be initiated by a prosecuting attorney or the attorney general.

This information also may be introduced into evidence or disclosed when, and in the manner, authorized by section E All application information, except social security numbers, employer identification numbers, financial account numbers, the identity of the institution where financial accounts are maintained, personal financial information, fingerprint cards and the information contained on such cards, and criminal background information, is a public record as defined in section F This section does not prevent the division from releasing information relating to licensees to the attorney general for purposes of that office's administration of Chapter Information the division releases to the attorney general pursuant to this section remains privileged and confidential, and the attorney general may not disclose the information except by introduction into evidence in connection with the attorney general's administration of Chapter A "Person" means an individual, partnership, association, trust, corporation, or any other legal entity.

B "Certificate" means a certificate of registration issued under sections C "Registrant" means a person to whom one or more certificates of registration have been issued under sections D "Principal amount" means the amount of cash paid to, or paid or payable for the account of, the borrower, and includes any charge, fee, or expense that is financed by the borrower at origination of the loan or during the term of the loan.

E "Interest" means all charges payable directly or indirectly by a borrower to a registrant as a condition to a loan or an application for a loan, however denominated, but does not include default charges, deferment charges, insurance charges or premiums, court costs, loan origination charges, check collection charges, credit line charges, points, prepayment penalties, or other fees and charges specifically authorized by law. F "Interest-bearing loan" means a loan in which the debt is expressed as the principal amount and interest is computed, charged, and collected on unpaid principal balances outstanding from time to time.

G "Precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of interest computed in advance on the assumption that all scheduled payments will be made when due. H "Actuarial method" means the method of allocating payments made on a loan between the principal amount and interest whereby a payment is applied first to the accumulated interest and the remainder to the unpaid principal amount.

I "Applicable charge" means the amount of interest attributable to each monthly installment period of the loan contract.

In all other cases, the applicable charge for any installment period is that which would have been made for such period had the loan been made on an interest-bearing basis, based upon the assumption that all payments were made according to schedule. J "Annual percentage rate" means the ratio of the interest on a loan to the unpaid principal balances on the loan for any period of time, expressed on an annual basis.

K "Point" means a charge equal to one per cent of either of the following: L "Prepayment penalty" means a charge for prepayment of a loan at any time prior to five years from the date the loan contract is executed.

M "Refinancing" means a loan the proceeds of which are used in whole or in part to pay the unpaid balance of a prior loan made by the same registrant to the same borrower under sections N "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section O "State" in the context of referring to states in addition to Ohio means any state of the United States, the district of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific islands, the virgin islands, and the northern Mariana islands.

A 1 , A registrant may make loans, other than a residential mortgage loan as defined in section B 1 All loans made to persons who at the time are residents of this state are considered as made within this state and subject to the laws of this state, regardless of any statement in the contract or note to the contrary, except. C A registrant may make unsecured loans and loans secured by other than residential real estate or a dwelling as those terms are defined in section A 1 An application for a certificate of registration under sections The application shall be in writing, under oath, and in the form prescribed by the division of financial institutions, and shall contain any information that the division may require.

Applicants that are foreign corporations shall obtain and maintain a license pursuant to Chapter If the application involves investigation outside this state, the applicant may be required by the division to advance sufficient funds to pay any of the actual expenses of such investigation, when it appears that these expenses will exceed two hundred dollars.

An itemized statement of any of these expenses which the applicant is required to pay shall be furnished to the applicant by the division. No certificate shall be issued unless all the required fees have been submitted to the division.

Where the applicant is a business entity the superintendent shall have the authority to require a civil and criminal background check of those persons that in the determination of the superintendent have the authority to direct and control the operations of the applicant. To fulfill this requirement, the superintendent shall request the superintendent of the bureau of criminal identification and investigation, or a vendor approved by the bureau, to conduct a criminal records check based on the applicant's fingerprints or, if the fingerprints are unreadable, based on the applicant's social security number, in accordance with section The superintendent shall not use a credit score as the sole basis for a registration denial.

No other fee or assessment shall be required of a registrant by the state or any political subdivision of this state. Each registrant shall pay the assessed amount to the superintendent prior to the last day of June. In no case shall the assessment exceed ten cents per each one hundred dollars of interest excluding charge-off recoveries , points, loan origination charges, and credit line charges collected by that registrant during the previous calendar year.

If such an assessment is imposed, it shall not be less than two hundred fifty dollars per registrant and shall not exceed thirty thousand dollars less the total renewal fees paid pursuant to division A 6 a i of this section by each registrant.

If a renewal application does not contain all of the information required under this section, and if that information is not submitted to the division within ninety days after the superintendent requests the information in writing, including by electronic transmission or facsimile, the superintendent may consider the application withdrawn.

If such a fact or condition is found, the division may, in accordance with Chapter B Each registrant that engages in lending under sections C Not more than one place of business shall be maintained under the same certificate, but the division may issue additional certificates to the same registrant upon compliance with sections No change in the place of business of a registrant to a location outside the original municipal corporation shall be permitted under the same certificate without the approval of a new application, the payment of the registration fee and, if required by the superintendent, the payment of an investigation fee of two hundred dollars.

When a registrant wishes to change its place of business within the same municipal corporation, it shall give written notice of the change in advance to the division, which shall provide a certificate for the new address without cost.

If a registrant changes its name, prior to making loans under the new name it shall give written notice of the change to the division, which shall provide a certificate in the new name without cost.

Each certificate shall be kept conspicuously posted in the place of business of the registrant and is not transferable or assignable. E No person engaged in the business of selling tangible goods or services related to tangible goods may receive or retain a certificate under sections A The division of financial institutions may adopt, in accordance with Chapter B 1 The division may, upon written notice to the registrant stating the contemplated action, the grounds for the action, and the registrant's reasonable opportunity to be heard on the action in accordance with Chapter Nothing in division B 3 of this section shall limit a court's ability to impose a cease and desist order preventing any further business or servicing activity.

C 1 The superintendent of financial institutions may impose a fine for a violation of sections All fines collected pursuant to this section shall be paid to the treasurer of state to the credit of the consumer finance fund created in section In determining the amount of a fine to be imposed pursuant to this section, the superintendent may consider all of the following to the extent it is known to the division of financial institutions: D The superintendent may investigate alleged violations of sections The superintendent may make application to the court of common pleas for an order enjoining any violation and, upon a showing by the superintendent that a person has committed, or is about to commit, a violation, the court shall grant an injunction, restraining order, or other appropriate relief.

The superintendent, in making application to the court of common pleas for an order enjoining a person from acting as a registrant , may also seek and obtain civil penalties for that unregistered conduct in an amount not to exceed five thousand dollars per violation.

E In conducting an investigation pursuant to this section, the superintendent may compel, by subpoena, witnesses to testify in relation to any matter over which the superintendent has jurisdiction, and may require the production or photocopying of any book, record, or other document pertaining to such matter.

If a person fails to file any statement or report, obey any subpoena, give testimony, produce any book, record, or other document as required by such a subpoena, or permit photocopying of any book, record, or other document subpoenaed, the court of common pleas of any county in this state, upon application made to it by the superintendent, shall compel obedience by attachment proceedings for contempt, as in the case of disobedience of the requirements of a subpoena issued from the court, or a refusal to testify therein.

F If the superintendent determines that a person is engaged in, or is believed to be engaged in, activities that may constitute a violation of sections The superintendent, in taking administrative action to enjoin a person from acting as a registrant , may also seek and impose fines for those violations in an amount not to exceed five thousand dollars per violation.

Such an order shall be enforceable in the court of common pleas. G 1 To protect the public interest, the superintendent may, without a prior hearing, suspend the certificate of registration of a person who is convicted of or pleads guilty or nolo contendere to a criminal violation of sections A The attorney general may directly bring an action to enjoin a violation of sections B 1 The prosecuting attorney of the county in which an alleged offense may be prosecuted may initiate criminal proceedings under sections If, within a reasonable period of time, the prosecuting attorney has not agreed to prosecute the violations, the attorney general may proceed in the prosecution with all the rights, privileges, and powers conferred by law on prosecuting attorneys, including the power to appear before grand juries and to interrogate witnesses before such grand juries.

C These powers of the attorney general shall be in addition to any other applicable powers of the attorney general. A Every registrant shall keep records pertaining to loans made under sections Such records shall be segregated from records pertaining to transactions that are not subject to these sections of the Revised Code. Every registrant shall preserve records pertaining to loans made under sections At least once each eighteen-month cycle, the division of financial institutions shall make or cause to be made an examination of records pertaining to loans made under sections B 1 As required by the superintendent of financial institutions, each registrant shall file with the division each year an annual report under oath or affirmation, on forms supplied by the division, concerning the business and operations for the preceding calendar year.

Whenever a registrant operates two or more registered offices or whenever two or more affiliated registrants operate registered offices, then a composite report of the group of registered offices may be filed in lieu of individual reports. C 1 The following information is confidential: This information may also be introduced into evidence or disclosed when and in the manner authorized by section D All application information, except social security numbers, employer identification numbers, financial account numbers, the identity of the institution where financial accounts are maintained, personal financial information, fingerprint cards and the information contained on such cards, and criminal background information, is a public record as defined in section E This section does not prevent the division of financial institutions from releasing to or exchanging with other financial institution regulatory authorities information relating to registrants.

For this purpose, a "financial institution regulatory authority" includes a regulator of a business activity in which a registrant is engaged, or has applied to engage in, to the extent that the regulator has jurisdiction over a registrant engaged in that business activity.

A registrant is engaged in a business activity, and a regulator of that business activity has jurisdiction over the registrant , whether the registrant conducts the activity directly or a subsidiary or affiliate of the registrant conducts the activity.

The superintendent, in order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, may enter into sharing arrangements with other governmental agencies.

No person, in connection with any examination or investigation conducted by the superintendent under sections Amended by th General Assembly File No.

No registrant shall conduct the business of making loans under sections Any person who willfully violates section The maximum rate of interest applicable to any loan transaction that does not comply with section A Notwithstanding any other provisions of the Revised Code, a registrant may contract for and receive interest, calculated according to the actuarial method, at a rate or rates not exceeding twenty-one per cent per year on the unpaid principal balances of the loan.

Alternatively, a registrant may consider a day as one three hundred sixtieth of a year and each month as having thirty days. However, both of the following apply: A registrant may charge interest after the original or deferred maturity of a precomputed loan at the rate specified in division A of this section on all unpaid principal balances for the time outstanding.

If the prepayment is made other than on a scheduled installment due date, the nearest scheduled installment due date shall be used in such computation. If the prepayment occurs prior to the first installment due date, the registrant may retain one-thirtieth of the applicable charge for a first installment period of one month for each day from date of loan to date of prepayment, and shall refund, or credit the borrower with, the balance of the total interest contracted for.

If the maturity of the loan is accelerated for any reason and judgment is entered, the registrant shall credit the borrower with the same refund as if prepayment in full had been made on the date the judgment is entered.

A deferment charge is earned pro rata during the deferment period and is fully earned on the last day of the deferment period. If a loan is prepaid in full during a deferment period, the registrant shall make, or credit to the borrower, a refund of the unearned deferment charge in addition to any other refund or credit made for prepayment of the loan in full. E A registrant, at the request of the borrower, may obtain, on one or more borrowers, credit life insurance, credit accident and health insurance, and unemployment insurance.

The premium or identifiable charge for the insurance may be included in the principal amount of the loan and may not exceed the premium rate filed by the insurer with the superintendent of insurance and not disapproved by the superintendent. If a registrant obtains the insurance at the request of the borrower, the borrower shall have the right to cancel the insurance for a period of twenty-five days after the loan is made. If the borrower chooses to cancel the insurance, the borrower shall give the registrant written notice of this choice and shall return all of the policies or certificates of insurance or notices of proposed insurance to the registrant during such period, and the full premium or identifiable charge for the insurance shall be refunded to the borrower by the registrant.

If the borrower requests, in the notice to cancel the insurance, that this refund be applied to reduce the balance of a precomputed loan, the registrant shall credit the amount of the refund plus the amount of interest applicable to the refund to the loan balance.

If the registrant obtains the insurance at the request of the borrower, the registrant shall not charge or collect interest on any insured amount that remains unpaid after the insured borrower's date of death. F A registrant may require the borrower to provide insurance or a loss payable endorsement covering reasonable risks of loss, damage, and destruction of property used as security for the loan and with the consent of the borrower such insurance may cover property other than that which is security for the loan.

The purchase of this insurance through the registrant or an agent or broker designated by the registrant shall not be a condition precedent to the granting of the loan. If the borrower purchases the insurance from or through the registrant or from another source, the premium may be included in the principal amount of the loan. H If the loan contract or security instrument contains covenants by the borrower to perform certain duties pertaining to insuring or preserving security and the registrant pursuant to the loan contract or security instrument pays for performance of the duties on behalf of the borrower, the registrant may add the amounts paid to the unpaid principal balance of the loan or collect them separately.

Within a reasonable time after advancing a sum, the registrant shall notify the borrower in writing of the amount advanced, any interest charged with respect to the amount advanced, any revised payment schedule, and shall include a brief description of the reason for the advance.

I 1 A registrant may charge and receive the following: J A registrant may charge and receive check collection charges not greater than twenty dollars plus any amount passed on from other depository institutions for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason.

K If the loan contract so provides, a registrant may collect a default charge on any installment not paid in full within ten days after its due date. The amount of the default charge shall not exceed the greater of five per cent of the scheduled installment or fifteen dollars. A A registrant may make open-end loans pursuant to an agreement between the registrant and the borrower whereby: B Notwithstanding any other provisions of the Revised Code, a registrant may contract for and receive interest for open-end loans at a rate or rates not exceeding twenty-one per cent per year and may compute interest in each billing cycle by either of the following methods: The monthly rate is determined by dividing the annual rate by twelve.

C In addition to the interest permitted in division B of this section, a registrant may charge and receive or add to the unpaid balance any or all of the following: The amount of the default charge shall not exceed the greater of five per cent of the required minimum payment or fifteen dollars.

D The borrower at any time may pay all or any part of the unpaid balance on the account or, if the account is not in default, the borrower may pay the unpaid balance in installments subject to minimum payment requirements as determined by the registrant and set forth in the open-end loan agreement.

E If credit life insurance or credit accident and health insurance is obtained by the registrant and if the insured dies or becomes disabled when there is an outstanding open-end loan indebtedness, the insurance shall be sufficient to pay the unpaid balance on the loan due on the date of the borrower's death in the case of credit life insurance or all minimum payments that become due on the loan during the covered period of disability in the case of credit accident and health insurance.

No credit life insurance, credit accident and health insurance, or unemployment insurance written in connection with an open-end loan shall be canceled by the registrant because of delinquency of the borrower in making the required minimum payments on the loan unless one or more such payments is past due for a period of thirty days or more.

The registrant shall advance to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited to the borrower's account. F Whenever there is no unpaid balance in an open-end loan account, the account may be terminated by written notice, by the borrower or the registrant, to the other party. If a registrant has taken a security interest in personal property to secure the open-end loan, the registrant shall release the security interest and terminate any financing statement in accordance with section A No registrant under sections B No registrant shall induce or permit any person to become obligated to the registrant under sections C No registrant shall refuse to provide information regarding the amount required to pay in full a loan under sections No registrant or licensee shall fail to follow the practices set forth in the federal "Fair Debt Collection Practices Act," 91 Stat.

Added by th General AssemblyFile No. A A registrant shall not make a loan under sections B A registrant shall not engage in any act or practice to evade the requirement of division A of this section, including by contracting with a borrower to make a loan on terms that would be prohibited by that division.

C No registrant shall fail to comply with this section. A Advertising for loans subject to sections B In making any advertisement, a registrant shall comply with 12 C.

A "Actuarial method" means the method of allocating payments made on a loan between the principal amount and interest whereby a payment is applied first to the accumulated interest and the remainder to the unpaid principal amount. B "Advertisement" and "advertising" mean all material printed, published, displayed, distributed, or broadcast, and all material displayed or distributed over the internet, telephone, facsimile, or other electronic transmission, for the purposes of obtaining applications for loans.

C "Affiliation" and "affiliated with" mean controlled by or under common control with another person or enterprise either directly or indirectly through one or more intermediaries. D "Annual percentage rate" means the ratio of the interest on a loan to the unpaid principal balances on the loan for any period of time, expressed on an annual basis.

E "Applicable charge" means the amount of interest attributable to each monthly installment period of the loan contract, computed as if each installment period were one month and any charge for extending the first installment period beyond one month is ignored. In the case of loans originally scheduled to be repaid in sixty-one months or less, "applicable charge" for any installment period means that proportion of the total interest contracted for, as the balance scheduled to be outstanding during that period bears to the sum of all of the periodic balances, all determined according to the payment schedule originally contracted for.

In all other cases, "applicable charge" for any installment period is that which would have been made for such period had the loan been made on an interest-bearing basis, based upon the assumption that all payments were made according to schedule. F "Assets" means properties of value that are owned by the applicant or licensee, including cash on hand and in depository institutions, readily marketable securities, accounts receivable less allowances for uncollectible accounts, and real estate less liens and depreciation.

G "Closed-end loan" means any extension of credit other than an open-end loan. H "Collecting" and "collected" means the servicing of a loan or receipt of payments from a borrower for a loan made pursuant to sections I "Consumer report" and "consumer reporting agency" have the same meanings as in the "Fair Credit Reporting Act.

J "Control person" means a person that, in the determination of the superintendent of financial institutions, has the authority to direct and control the operations of the applicant. K "Depository institution" has the same meaning as in section 3 of the "Federal Deposit Insurance Act. Re-borrowing rates slightly declined by 2. Rolling over debt is a process in which the borrower extends the length of their debt into the next period, generally with a fee while still accruing interest.

The study also found that higher income individuals are more likely to use payday lenders in areas that permit rollovers. The article argues that payday loan rollovers lead low income individuals into a debt-cycle where they will need to borrow additional funds to pay the fees associated with the debt rollover.

Price regulation in the United States has caused unintended consequences. Before a regulation policy took effect in Colorado, prices of payday finance charges were loosely distributed around a market equilibrium. The imposition of a price ceiling above this equilibrium served as a target where competitors could agree to raise their prices. This weakened competition and caused the development of cartel behavior. Because payday loans near minority neighborhoods and military bases are likely to have inelastic demand , this artificially higher price doesn't come with a lower quantity demanded for loans, allowing lenders to charge higher prices without losing many customers.

In , Congress passed a law capping the annualized rate at 36 percent that lenders could charge members of the military. Even with these regulations and efforts to even outright ban the industry, lenders are still finding loopholes.

The number of states in which payday lenders operate has fallen, from its peak in of 44 states to 36 in Payday lenders get competition from credit unions , banks, and major financial institutions, which fund the Center for Responsible Lending , a non-profit that fights against payday loans.

The website NerdWallet helps redirect potential payday borrowers to non-profit organizations with lower interest rates or to government organizations that provide short-term assistance.

Its revenue comes from commissions on credit cards and other financial services that are also offered on the site. The social institution of lending to trusted friends and relatives can involve embarrassment for the borrower. The impersonal nature of a payday loan is a way to avoid this embarrassment. Tim Lohrentz, the program manager of the Insight Center for Community Economic Development, suggested that it might be best to save a lot of money instead of trying to avoid embarrassment.

While designed to provide consumers with emergency liquidity , payday loans divert money away from consumer spending and towards paying interest rates. Some major banks offer payday loans with interest rates of to percent, while storefront and online payday lenders charge rates of to percent. Additionally, 14, jobs were lost. By , twelve million people were taking out a payday loan each year. Each borrower takes out an average of eight of these loans in a year. In , over a third of bank customers took out more than 20 payday loans.

Besides putting people into debt, payday loans can also help borrowers reduce their debts. Borrowers can use payday loans to pay off more expensive late fees on their bills and overdraft fees on their checking accounts. Although borrowers typically have payday loan debt for much longer than the loan's advertised two-week period, averaging about days of debt, most borrowers have an accurate idea of when they will have paid off their loans.

The effect is in the opposite direction for military personnel. Job performance and military readiness declines with increasing access to payday loans.

Payday loans are marketed towards low-income households, because they can not provide collateral in order to obtain low interest loans, so they obtain high interest rate loans. The study found payday lenders to target the young and the poor, especially those populations and low-income communities near military bases.

The Consumer Financial Protection Bureau states that renters, and not homeowners, are more likely to use these loans. It also states that people who are married, disabled, separated or divorced are likely consumers. This property will be exhausted in low-income groups. Many people do not know that the borrowers' higher interest rates are likely to send them into a "debt spiral" where the borrower must constantly renew. A study by Pew Charitable research found that the majority of payday loans were taken out to bridge the gap of everyday expenses rather than for unexpected emergencies.

The Center for Responsible Lending found that almost half of payday loan borrowers will default on their loan within the first two years. The possibility of increased economic difficulties leads to homelessness and delays in medical and dental care and the ability to purchase drugs. For military men, using payday loans lowers overall performance and shortens service periods.

Based on this, Dobbie and Skiba claim that the payday loan market is high risk. The interest could be much larger than expected if the loan is not returned on time.

A debt trap is defined as "A situation in which a debt is difficult or impossible to repay, typically because high interest payments prevent repayment of the principal. The center states that the devotion of percent of the borrowers' paychecks leaves most borrowers with inadequate funds, compelling them to take new payday loans immediately.

The borrowers will continue to pay high percentages to float the loan across longer time periods, effectively placing them in a debt-trap. Debtors' prisons were federally banned in , but over a third of states in allowed late borrowers to be jailed. In Texas, some payday loan companies file criminal complaints against late borrowers. Texas courts and prosecutors become de facto collections agencies that warn borrowers that they could face arrest, criminal charges, jail time, and fines.

On top of the debts owed, district attorneys charge additional fees. Threatening to pursue criminal charges against borrowers is illegal when a post-dated check is involved, but using checks dated for the day the loan is given allows lenders to claim theft.

Most borrowers who failed to pay had lost their jobs or had their hours reduced at work. From Wikipedia, the free encyclopedia. Retrieved October 23, Retrieved August 27, Consumer Financial Protection Bureau. Retrieved January 22, Tribal Immunity and Internet Payday Lending". Archived from the original on July 26, Retrieved November 7, An Effective Consumer Protection Measure".

Retrieved June 14, Archived from the original PDF on March 21, Retrieved March 22, Archived from the original PDF on July 16, Retrieved October 3, Archived from the original on September 20, Credit Markets for the Poor. How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy. United States of America: Welcome to the birthplace of payday lending".

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