Legal Status: Legal (Applies to check cashers only)
Citation:
Kentucky Rev. Stat. Ann. § 286.9.010 et seq.
Loan Terms:
Maximum Loan Amount: $500
Loan Term: 14-60 days
Maximum Finance Rate and Fees: $15 per $100
Finance Charge for 14-day $100 loan: $17.65
APR for 14-day $100 loan: 459%
Debt Limits:
Maximum Number of Outstanding Loans at One Time: Two ($500 aggregate loans outstanding to all licensees)
Rollovers Permitted: None (cannot renew, rollover, or consolidate)
Cooling-off Period: None
Repayment Plan:
Collection Limits:
Collection Fees: One NSF fee (if disclosed)
Criminal Action: Prohibited
Where to Complain, Get Information:
Regulator: Kentucky Office of Financial Institutions
Address: 1025 Capital Center Drive, Suite 200 Frankfort KY 40601
Phone: (800) 223-2579
Fax: (502) 573-8787
Applicability: To check cashers and payday lenders, i.e., accepting a check and holding the check for a period of time prior to deposit in accordance with an express or implied agreement. Otherwise, consumer loan law applies. Ky. Rev. Stat. Ann. § 288.530 (36% per year on $0-$1000; 24% per year on $1,001-$3000; precomputed).
Exemptions: Any bank, savings and loan association, trust company, credit union, or industrial loan corporation authorized to do business in the state; anyone who cashes checks for free, and any retail sellers which cash checks or issue money orders as a service that is incidental to or independent of a retail sale.
Licensing: Department of Financial Institutions enforces. Must apply and deposit an irrevocable letter of credit in an amount ranging from $50,000 to $200,000, depending on the number of locations; show financial responsibility; disclose criminal activity, fraud, any act constituting a breach of fiduciary duty; intend to comply with all worker’s comp. and unemployment laws of the state; pay fee of $500. License to be renewed annually.
Permitted charges: Not to exceed $15 per $100 on the face amount of the check for a period of 14 days. Can prorate any fee, based upon the maximum fee of $15. Fee constitutes a service charge, not interest. Cannot engage in unfair or deceptive acts, practices or advertising in the conduct of its business; cannot require any security or guarantor; cannot have more than one transaction from any one customer at any one time, with a face value greater than $500; cannot use any device or agreement with the intent to obtain greater charges than are authorized by this section; cannot hold a deferred deposit transaction for more than 60 days; cannot for a deposit transaction for a customer; cannot prosecute or threaten to prosecute. Must inquire whether a customer has any outstanding deferred deposit transaction outstanding with any licensee and can only enter into another with that customer if he/she represents in writing that there is no more than one other loan and the total cannot exceed $500. Must file annual reports but information is confidential.
Required disclosures: Must post license in conspicuous place at place of business. Must have a written agreement, dated and signed by the customer and licensee. Copy to customer. Must conspicuously display a sign that states: “No person who enters into a post-dated check or deferred deposit check transaction with this business establishment will be prosecuted or convicted of writing cold checks or of theft by deception.” Must give Truth In Lending disclosures. Must conspicuously display the schedule of all fees and charges for services.
Loan terms: Must make TILA disclosures. Must contract for check collection charges for a returned or dishonored check in order to collect any.
Enforcement: Commissioner may suspend or revoke a license for specific reasons. Customer may make a written complaint to the commissioner who may investigate.
