Legal Status: Legal

Citation:
Ala. Code § 5-18A-1 et seq.

Loan Terms:
Maximum Loan Amount: $500
Loan Term: 10-31 days
Maximum Finance Rate and Fees: 17.50%; 3%/month after default
Finance Charge for 14-day $100 loan: $17.50
APR for 14-day $100 loan: 456.25%

Debt Limits:
Maximum Number of Outstanding Loans at One Time: None (max $ amount of loans at one time: $500)
Rollovers Permitted: One (rollover)
Cooling-off Period: Next business day after 2 continuous loans repaid
Repayment Plan: Yes

Collection Limits:
Collection Fees: One $30 NSF fee; Court Costs; Reasonable Attorney’s Fees up to 15% of face amount of check
Criminal Action: Prohibited (Unless check returned due to closed account)

Where to Complain, Get Information:
Regulator: Alabama Banking Department
Address: P.O. Box 4600 Montgomery AL 36103
Phone: (334) 242-3452
Fax: (334) 353-5961

Applicability: The statute applies to all persons offering deferred presentment services. Otherwise small loan act applies. Ala. Code § 5-18-15 (interest is limited to 3% per month for amounts up to $200 and 2% per month on amounts of $201-$999 plus $3 per month account maintenance fee if monthly payments exceed $30).

Exemptions: Trust companies, life insurance companies, and federally constituted agencies, banks, credit unions, savings associations, savings banks, and thrift institutions organized pursuant to the laws of this state or any other state or the laws of the United States and any parent of any of the foregoing entities.

Licensing Requirements: $20,000 in unencumbered cash assets for each location of the business; no record on the part of the applicant, any director, officer, or shareholder owning more than 25% of the applicant, of any court findings of fraud or any official suspension or removal by any agency or department of the U.S. or any state from participation in the conduct of any lending, deferred presentment, or related business; no record of a conviction of a felony or an offense involving breach of trust, fraud, or dishonesty in any jurisdiction or a history of acting as a beneficial owner for an individual who has been convicted of a felony or an offense involving breach of trust, fraud, or dishonesty in any jurisdiction. Applications must be written and under oath to the supervisor. A nonrefundable license fee of $500 for each location.

Disclosures: A written explanation in clear, understandable language of the fees to be charged by the licensee and the date on which the check or debit authorization may be deposited or presented by the licensee. All fees shall be disclosed as finance charges as required by the Federal Truth-in-Lending Act. The customer, prior to entering into a deferred presentment transaction, shall receive and acknowledge an accurate and complete notification and disclosure of the itemized and total amounts of all fees and other costs that will or potentially could be imposed as a result of such agreement. A licensee shall issue a copy of the written agreement to each person for whom a licensee defers deposit of a check or debit authorization. Any agreement for a deferred presentment transaction shall be in writing and signed by the checking account holder. Every licensee shall conspicuously and continuously display a schedule of all fees, charges, and penalties for all services provided by the licensee in all capital letters and in 12-point type or larger immediately above the space for the borrower’s signature: NOTICE: FEES FOR DEFERRED PRESENTMENT TRANSACTIONS MAY BE SIGNIFICANTLY HIGHER THAN FOR OTHER TYPES OF LOANS. Every licensee shall conspicuously post a sign, as designed by the department, notifying the public of the pertinent provisions of this chapter and any consequences related to entering into a deferred presentment transaction pursuant to this chapter.

Permitted charges: If there are insufficient funds to pay a check on the date of presentment, the licensee may charge a fee; however, only one such fee may be collected with respect to any particular transaction. If a check is returned to the licensee from a payer financial institution due to insufficient funds or a closed account, the licensee shall have the right to all civil remedies allowed by law to collect the check and may recover court costs and a reasonable attorney’s fee. The attorney’s fee may not exceed 15 percent of the face amount of the check or debit authorization. No individual who issues a personal check or authorizes a debit for his or her checking account to a licensee for the purpose of a deferred presentment transaction under this chapter shall be convicted, if the check or debit authorization is returned due to insufficient funds.

Loan Terms: Presentment cannot be deferred for less than 10 days nor more than 31 calendar days after the date of the contract. There is a $500 aggregate loan limit. The maximum amount that a lender can advance is $500. The maximum fee on any deferred presentment transaction cannot 17.5% of the amount advanced. A licensee may renew or extend a deferred presentment transaction with the same customer no more than one additional time at this fee for a maximum of two continuous transactions and cannot thereafter enter into a new deferred presentment transaction with that same customer until the next business day after the transaction amount is repaid in full. After the initial loan period and one rollover with the same customer, the full outstanding amount of the loan shall become due. If the customer is unable to repay the outstanding balance in full, the licensee may offer the customer an extended repayment option of four equal monthly installments of the remaining balance. The licensee shall not commence any civil action to collect on a transaction in default until written notice has been sent notifying the customer of his or her rights. If the customer fails to exercise his or her rights within 15 days of the notice, the licensee may commence action to collect on a transaction in default.

Prohibited Acts: No licensee: may alter or delete the date on any check accepted by the licensee; may accept an undated check or debit authorization or a check or debit authorization dated on a date other than the date on which the licensee accepts the check or debit authorization; shall engage in unfair or deceptive acts, practices, or advertising in the conduct of the licensed business; shall require a customer to provide security for the transaction or require the customer to provide a guaranty from another person. A deferred presentment provider shall not redeem, extend, or otherwise consolidate a deferred deposit agreement with the proceeds of another deferred presentment transaction made by the same or affiliated deferred presentment provider except as expressly permitted. The licensee shall use a third party private sector database, where available, to ensure that the customer does not have outstanding deferred presentment transactions that exceed $500.

Enforcement and Penalties: The supervisor may: suspend or revoke any license; issue cease and desist orders; enter into consent orders at any time with any person to resolve any matter arising under this chapter; require the refund of any fees collected by such person in violation of this chapter; order the person to pay to the supervisor a civil penalty of not more than one thousand dollars ($1,000) for each transaction in violation of this chapter; seek civil or criminal penalties or compromise civil penalties concerning matters encompassed by the consent order. Any person aggrieved by the conduct of a licensee under this chapter in connection with the regulated activities of the licensee may file a written complaint with the supervisor who may investigate the complaint. Any person who willfully makes charges in excess of those permitted or who willfully engages in the business of cashing deferred presentment checks, or both, is guilty of a Class B misdemeanor for the first offense and a Class B felony for the subsequent offense.