74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 873
A-Engrossed
House Bill 2203
Ordered by the House February 5
Including House Amendments dated February 5
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Applies provisions of Oregon Consumer Finance Act to lenders
that make loans to consumers in this state. Requires Director of
Department of Consumer and Business Services to develop and
implement system to permit lenders to comply with lenders'
obligations under law. Establishes minimum requirements for
system. Prohibits lenders from charging consumers fees greater
than fees that vendor or service provider charges to lenders for
access to or use of system. Permits lenders to { - charge
consumers actual collection costs for loans consumers fail to
repay - } { + recover expenses associated with collection of
defaulted loan + }. Prohibits lenders from collecting loan
principal, interest or fees unless lenders have or obtain
license.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to short-term consumer loans; creating new provisions;
amending ORS 725.370, 725.615 and 725.622; and declaring an
emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 725.370 is amended to read:
725.370. { + Except as otherwise provided in section 4 of this
2007 Act, + } loans made or payable in other jurisdictions and
lawful where made or payable, are not affected by this chapter.
SECTION 2. ORS 725.615 is amended to read:
725.615. { + (1) + } A lender in the business of making title
loans may not:
{ - (1) - } { + (a) + } Include any of the following
provisions in a title loan contract:
{ - (a) - } { + (A) + } A hold-harmless clause;
{ - (b) - } { + (B) + } A confession of judgment or other
waiver of the right to notice and the opportunity to be heard in
an action;
{ - (c) - } { + (C) + } An agreement by the consumer not to
assert any claim or defense arising out of the contract against
the lender or any holder in due course;
{ - (d) - } { + (D) + } An executory waiver or a limitation
of exemption from attachment, execution or other process on real
or personal property held by, owned by or due to the consumer,
unless the waiver or limitation applies only to property subject
to a security interest executed in connection with the loan; or
{ - (e) - } { + (E) + } A clause permitting the
continuation of interest after repossession of the consumer's
motor vehicle, recreational vehicle, boat or mobile home;
{ - (2) - } { + (b) + } Conduct a title loan business where
liquor or lottery tickets are sold or where gambling devices are
located;
{ - (3) - } { + (c) + } Charge the consumer more than one
fee under ORS 30.701 for dishonored checks when the consumer
issues more than one check to the lender. However, the lender may
recover from the consumer any fee charged to the lender by an
unaffiliated financial institution for each dishonored check;
{ + (d) Charge the consumer more than the actual amount that
the vendor or service provider charges the lender for access to
or use of the system described in section 5 of this 2007 Act; + }
{ - (4) - } { + (e) + }Require or accept from a consumer a
set of keys to the motor vehicle, recreational vehicle, boat or
mobile home whose title secures the title loan;
{ - (5) - } { + (f) + } Make more than one outstanding loan
that is secured by one title;
{ - (6) - } { + (g) + } Renew a loan that is secured by one
title more than six times after the loan is first made; or
{ - (7) - } { + (h) + } Make a new loan, secured by a
title, to a consumer on the same day that a previous loan,
secured by the same title, expires if the lender has renewed the
previous loan six times. The lender shall wait at least until the
next day after the expiration date of the previous loan before
making the new loan to the consumer.
{ + (2) The provisions of ORS 725.600 to 725.625 do not
affect any right a lender may have to recover expenses associated
with the collection of a defaulted loan in amounts authorized by
law. + }
SECTION 3. ORS 725.622, as amended by section 1, chapter 3,
Oregon Laws 2006, is amended to read:
725.622. (1) A lender in the business of making payday loans
may not:
(a) Make or renew a payday loan at a rate of interest that
exceeds 36 percent per annum, excluding a one-time origination
fee for a new loan;
(b) Charge an origination fee for a new payday loan of more
than $10 for each $100 of the amount of the loan;
{ + (c) Charge a consumer more than the actual amount that
the vendor or service provider charges the lender for access to
or use of the system described in section 5 of this 2007 Act; + }
{ - (c) - } { + (d) + } Make or renew a payday loan for a
term of less than 31 days;
{ - (d) - } { + (e) + } Charge a consumer any fee or
interest other than a fee or interest described in paragraph
(a) { + , + } { - or - } (b) { + or (c) + } of this
subsection or in subsection (2) of this section;
{ - (e) - } { + (f) + } Include in a payday loan contract:
(A) A hold-harmless clause;
(B) A confession of judgment or other waiver of the right to
notice and the opportunity to be heard in an action;
(C) An agreement by the consumer not to assert any claim or
defense arising out of the contract against the lender or any
holder in due course; or
(D) An executory waiver or a limitation of exemption from
attachment, execution or other process on real or personal
property held by, owned by or due to the consumer, unless the
waiver or limitation applies only to property subject to a
security interest executed in connection with the loan;
{ - (f) - } { + (g) + } Conduct a payday loan business
where liquor or lottery tickets are sold or where gambling
devices are located;
{ - (g) - } { + (h) + } Renew an existing payday loan more
than two times; or
{ - (h) - } { + (i) + } Make a new payday loan to a
consumer within seven days of the day that a previous payday loan
expires.
(2) A lender in the business of making payday loans may not
charge the consumer more than one fee per loan transaction for
dishonored checks or insufficient funds, regardless of how many
checks or debit agreements the lender obtains from the consumer
for the transaction. The fee may not exceed $20. A lender in the
business of making payday loans may not collect a fee for a
dishonored check under ORS 30.701 or seek or recover statutory
damages and attorney fees from a consumer for a dishonored check
under ORS 30.701. The lender may recover from the consumer any
fee charged to the lender by an unaffiliated financial
institution for each dishonored check. For a dishonored check or
insufficient funds, the fees described in this subsection are the
only remedy a lender may pursue and the only fees a lender may
charge.
{ + (3) The provisions of ORS 725.600 to 725.625 do not
affect any right a lender may have to recover expenses associated
with the collection of a defaulted loan in amounts authorized by
law. + }
SECTION 4. { + (1) Notwithstanding ORS 725.370, a person that
makes a payday loan or title loan is subject to ORS chapter 725
if in the person's capacity as a lender the person makes a loan
to a consumer who resides in or maintains a domicile in this
state and if the consumer:
(a) Negotiates or agrees to the terms of the loan in person, by
mail, by telephone or via the Internet while physically present
in this state;
(b) Enters into or executes a loan contract with the lender in
person, by mail, by telephone or via the Internet while
physically present in this state; or
(c) Makes a payment on the loan in this state.
(2) For purposes of this section, a consumer makes a payment on
a loan in this state if a lender debits an account the consumer
holds in a branch of a financial institution located in this
state or if the consumer makes a payment with a negotiable
instrument drawn on a branch of a financial institution located
in this state. + }
SECTION 5. { + (1) The Director of the Department of Consumer
and Business Services shall, by contract with a vendor or service
provider or otherwise, develop and implement a system by means of
which a lender may determine whether a consumer has an
outstanding loan, the number of loans the consumer has
outstanding, the dates on which the consumer entered into or
renewed any loan contract subject to ORS 725.600 to 725.625 and
any other information necessary to comply with the provisions of
ORS 725.600 to 725.625. The director by rule shall specify the
form and contents of the system but shall ensure at a minimum
that the information entered into or stored by the system is:
(a) Accessible to and usable by lenders and the director from
any location in this state; and
(b) Secured against public disclosure, tampering, theft or
unauthorized acquisition or use.
(2) The information in the system described in subsection (1)
of this section is not subject to public inspection or disclosure
and is not subject to discovery, subpoena or other compulsory
process except in an action brought under this chapter.
(3) A vendor or service provider that operates or administers
the system described in subsection (1) of this section may charge
lenders a fee or fees for access to or use of the system in
amounts that the director must approve by rule.
(4) Lenders subject to ORS 725.600 to 725.625 shall enter or
update information required by the system described in subsection
(1) of this section within one business day after conducting any
loan transaction that generates any of the information required
by the system. The lender shall continue to enter and update the
required information for any loans subject to ORS 725.600 to
725.625 that are outstanding or have not yet expired after the
date on which the lender ceases making such loans. Within 10
business days after ceasing to make loans subject to ORS 725.600
to 725.625 the lender shall submit to the director for approval a
plan for continuing compliance with this subsection. The director
shall promptly approve or disapprove the plan and may require the
lender to submit a new or modified plan that ensures compliance
with this subsection.
(5) The director by rule shall establish requirements for the
retention, archiving and deletion of information entered into or
stored by the system described in subsection (1) of this
section. + }
SECTION 6. { + (1) Except as provided in subsection (2) of
this section, a lender may not deposit a consumer's check,
withdraw funds electronically from a consumer's account, or
otherwise collect the principal of, interest on, or any fees or
charges for a loan subject to ORS 725.600 to 725.625 if at the
time the lender makes the loan the lender does not have a current
and valid license to make loans in this state.
(2) A lender subject to ORS 725.600 to 725.625 may process a
payment for or collect a loan if:
(a) The terms and conditions of the loan substantially comply
with the provisions of ORS 725.600 to 725.625;
(b) The lender proves to the Director of the Department of
Consumer and Business Services by clear and convincing evidence
that the lender did not know that the lender was required to be
licensed to make the loan; and
(c) The lender obtains a license under ORS 725.600 to 725.625
within 90 days after becoming aware of or receiving actual notice
of the requirement for a license. + }
SECTION 7. { + Sections 4, 5 and 6 of this 2007 Act are added
to and made a part of ORS 725.600 to 725.625. + }
SECTION 8. { + (1) Sections 4 and 6 of this 2007 Act and the
amendments to ORS 725.370 by section 1 of this 2007 Act apply to
loans made or renewed on or after the operative date specified in
section 10 of this 2007 Act.
(2) Section 5 of this 2007 Act and the amendments to ORS
725.615 and 725.622 by sections 2 and 3 of this 2007 Act apply to
loans made or renewed on or after the operative date specified in
section 11 of this 2007 Act. + }
SECTION 9. { + (1) The Director of the Department of Consumer
and Business Services may take any action before the operative
date specified in section 10 of this 2007 Act that is necessary
to enable the director to exercise, on and after the operative
date specified in section 10 of this 2007 Act, all the duties,
functions and powers conferred on the director by section 4 of
this 2007 Act.
(2) The Director of the Department of Consumer and Business
Services may take any action before the operative date specified
in section 11 of this 2007 Act that is necessary to enable the
director to exercise, on and after the operative date specified
in section 11 of this 2007 Act, all the duties, functions and
powers conferred on the director by sections 5 and 6 of this 2007
Act. + }
SECTION 10. { + Sections 4 and 6 of this 2007 Act and the
amendments to ORS 725.370 by section 1 of this 2007 Act become
operative July 1, 2007. + }
SECTION 11. { + Section 5 of this 2007 Act and the amendments
to ORS 725.615 and 725.622 by sections 2 and 3 of this 2007 Act
become operative January 1, 2008. + }
SECTION 12. { + This 2007 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2007 Act takes effect on
its passage. + }
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