75th OREGON LEGISLATIVE ASSEMBLY--2010 Special Session
Enrolled
Senate Bill 993
Sponsored by Senator MORSE (at the request of Oregon Financial
Services Association) (Presession filed.)
CHAPTER ................
AN ACT
Relating to consumer lending; creating new provisions; amending
ORS 725.010, 725.045, 725.340 and 725.370; repealing ORS
725.600, 725.602, 725.605, 725.610, 725.615, 725.620, 725.622,
725.624, 725.626 and 725.630; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + As used in sections 1 to 28 of this 2010 Act:
(1)(a) 'Broker or facilitator' means a person that conducts a
business in which, for a fee or consideration, the person:
(A) Processes, receives or accepts for delivery to a lender an
application for a loan, individually or in conjunction or
cooperation with another person;
(B) Accepts and delivers to a lender all or most of the
proceeds of a payment made in connection with a loan; or
(C) Assists in making a loan in a material capacity other than
as a lender.
(b) 'Broker or facilitator' does not include a mortgage broker,
as defined in ORS 86A.100, a mortgage loan originator, as defined
in ORS 86A.200, or an employee of a licensee.
(2) 'Earnings' means salary, wages or other compensation for
service.
(3)(a) 'Lender' means an individual, corporation, association,
firm, partnership, limited liability company or joint stock
company that is engaged in the business of making loans.
(b) 'Lender' does not include a financial institution or a
trust company, as those terms are defined in ORS 706.008.
(4) 'Licensee' means a person licensed under section 5 of this
2010 Act.
(5)(a) 'Payday loan' means a loan of not more than $50,000,
other than a purchase money loan, in which:
(A) The primary purpose is personal, family or household use;
(B) The loan agreement specifies a term of not more than 60
days or specifies that a payday loan lender may demand repayment
within 60 days; and
(C) The evidence of the loan is usually a check or electronic
repayment agreement provided by or on behalf of the borrower.
(b) 'Payday loan' does not include a loan with a term longer
than 60 days in which a lender may accelerate repayment if the
borrower defaults.
(6) 'Payday loan lender' means a lender that is engaged in the
business of making loans, at least 10 percent of which are payday
loans.
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(7) 'Title loan' means:
(a) A loan of not more than $50,000, other than a purchase
money loan, in which:
(A) The title to a motor vehicle, recreational vehicle, boat or
mobile home is security for the loan;
(B) The loan agreement specifies a term of not more than 60
days and requires the borrower to repay the entire amount in a
single payment; and
(C) The lender is a title loan lender;
(b) A loan of a type substantially equivalent to a loan
described in paragraph (a) of this subsection that the Director
of the Department of Consumer and Business Services designates by
rule or order as a title loan; or
(c) A sale-leaseback arrangement between a consumer and a
purchaser for a motor vehicle, recreational vehicle, boat or
mobile home in an amount that does not exceed $50,000 when:
(A) The title and all rights to the motor vehicle, recreational
vehicle, boat or mobile home do not transfer from the consumer to
the purchaser in a bona fide sale of the motor vehicle,
recreational vehicle, boat or mobile home or the consumer retains
equity in the motor vehicle, recreational vehicle, boat or mobile
home after the consumer's sale to the purchaser;
(B) The purchaser and the consumer agree within 60 days of the
date on which the consumer sells the motor vehicle, recreational
vehicle, boat or mobile home to the purchaser that the consumer
has an option to or will repurchase the motor vehicle,
recreational vehicle, boat or mobile home from the purchaser for
a nominal price or a price other than the market value,
determined at the time the lease expires, of the motor vehicle,
recreational vehicle, boat or mobile home;
(C) During the term in which the consumer leases the motor
vehicle, recreational vehicle, boat or mobile home, the purchaser
or an agent of the purchaser holds a check, electronic repayment
agreement or other evidence of the consumer's agreement to
repurchase the motor vehicle, recreational vehicle, boat or
mobile home that was provided by or on behalf of the consumer; or
(D) The director by rule or order designates the sale-leaseback
arrangement as a title loan.
(8) 'Title loan lender' means a lender that is engaged in the
business of making loans, at least 10 percent of which are title
loans. + }
SECTION 2. { + (1) Sections 1 to 28 of this 2010 Act do not
limit a person's rights, powers or privileges under a law of this
state or of the United States that regulates the person's lending
money or extending credit, provided that the person complies with
the provisions of the law.
(2) Except as otherwise provided in subsection (3) of this
section, sections 1 to 28 of this 2010 Act do not affect a loan
made or payable in another jurisdiction and lawful where made or
payable.
(3)(a) A person is subject to sections 1 to 28 of this 2010 Act
if in the person's capacity as a lender the person makes a payday
loan or title loan to a consumer who resides in or maintains a
domicile in this state and the consumer:
(A) Negotiates or agrees to the terms of the payday loan or
title loan in person, by mail, by telephone or via the Internet
while the consumer is physically present in this state;
(B) Enters into or executes a contract with the person for a
payday loan or title loan in person, by mail, by telephone or via
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the Internet while the consumer is physically present in this
state; or
(C) Makes a payment on the payday loan or title loan in this
state.
(b) For purposes of this subsection, a consumer makes a payment
on a payday loan or title loan in this state if:
(A) A person, for purposes of receiving or processing a payment
on the payday loan or title loan, debits an account that the
consumer holds in a branch of a financial institution that is
located in this state; or
(B) The consumer makes a payment on the payday loan or title
loan with a negotiable instrument that is drawn on a financial
institution that is, or a branch of which is, located in this
state. + }
SECTION 3. { + (1)(a) Except as provided in ORS 82.010, 82.020
and 82.025, a person may not conduct business as a payday loan
lender or a title loan lender unless the person obtains a license
under section 5 of this 2010 Act.
(b) A person may not act as an agent, broker or facilitator for
making a payday loan or title loan unless the person obtains a
license under section 5 of this 2010 Act, regardless of whether
the principal that makes the payday loan or title loan must
obtain a license under paragraph (a) of this subsection.
(2)(a) Except as provided in paragraph (b) of this subsection,
a person subject to the provisions of subsection (1) of this
section may not deposit a consumer's check, withdraw funds
electronically from a consumer's account or otherwise collect the
principal of, interest on, or a fee or charge for a loan subject
to sections 1 to 28 of this 2010 Act if at the time the person
makes the loan the person is not in compliance with subsection
(1) of this section.
(b) A person subject to subsection (1) of this section may
process a payment for or collect a loan if:
(A) The terms and conditions of the loan substantially comply
with the provisions of sections 1 to 28 of this 2010 Act;
(B) The person proves to the Director of the Department of
Consumer and Business Services by clear and convincing evidence
that the person did not know that the person was required to
comply with the provisions of subsection (1) of this section; and
(C) The person obtains a license under section 5 of this 2010
Act within 90 days after becoming aware of or receiving actual
notice of the requirement for a license.
(3) Subsection (1) of this section does not apply to a person
that does not collect a fee or consideration in connection with a
payday loan or title loan or an application for a payday loan or
title loan and:
(a) Does not interact directly with a borrower or consumer;
(b) Acts solely as an intermediary between the borrower or
consumer and a lender or a person that conducts business as a
broker or facilitator for a payday loan or title loan;
(c) Transmits information, electronically or otherwise,
concerning the borrower or consumer to a lender or a person that
conducts business as a broker or facilitator for a payday loan or
title loan; or
(d) Prepares, issues or delivers a negotiable instrument to a
lender or a person that conducts business as a broker or
facilitator for a payday loan or title loan, for subsequent
delivery to a borrower or consumer. + }
SECTION 4. { + (1) An applicant for a license as a payday loan
lender or a title loan lender shall apply to the Director of the
Enrolled Senate Bill 993 (SB 993-INTRO) Page 3
Department of Consumer and Business Services in writing on a form
and in a manner that the director prescribes by rule. An
application for a license as a payday loan lender or a title loan
lender must:
(a) List the applicant's name, residence address and business
address;
(b) Name and list the residence address and business address
for the applicant's officers and directors, if the applicant is a
corporation, or for the applicant's members, if the applicant is
a partnership, limited liability company or other association;
(c) Identify the county and city in which, and the street
address, if any, at which the applicant will conduct business;
and
(d) Provide other information the director requires.
(2)(a) At the time the applicant submits an application under
this section, the applicant shall pay to the director a license
fee in an amount the director sets under section 7 of this 2010
Act. Except as provided in paragraph (b) of this subsection, the
license fee is not refundable.
(b) If the director for cause does not issue a license or if
the applicant withdraws the application after the director has
investigated the applicant, the director shall refund the license
fee, less an amount the director retains to pay the
administrative and investigative costs the director incurred in
connection with the application. + }
SECTION 5. { + (1) Within 90 days after receiving an
application under section 4 of this 2010 Act, the Director of the
Department of Consumer and Business Services shall issue and
deliver to the applicant a license to conduct business in
accordance with sections 1 to 28 of this 2010 Act at the location
identified in the application if the director finds that:
(a) The applicant and the applicant's members, if the applicant
is a partnership, limited liability company or other association,
or the applicant's officers and directors, if the applicant is a
corporation, have the financial responsibility, experience,
character and general fitness necessary to command the confidence
of the community and to warrant the belief that the applicant
will operate the business honestly, fairly and efficiently and in
compliance with the provisions of sections 1 to 28 of this 2010
Act.
(b) The applicant has paid the fee required under section 4 of
this 2010 Act.
(c) Grounds do not exist under section 6 of this 2010 Act to
disapprove the application.
(d) Other reasons or conditions that would warrant the
director's refusal to issue a license do not exist.
(2) An applicant may not become a licensee under this section
unless the applicant is legally qualified to conduct business in
this state.
(3)(a) The director shall disapprove an application and deny
the applicant a license if the director finds that the applicant
does not meet the standard set forth in subsection (1)(a) of this
section or has not paid the required application fee or that
grounds, reasons or conditions described in subsection (1)(b),
(c) or (d) of this section exist and warrant the director's
disapproval and denial.
(b) If the director disapproves an application or denies the
applicant a license under paragraph (a) of this subsection, the
director shall notify the applicant immediately and shall state
the director's reasons for the disapproval or denial.
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(4)(a) The director by rule shall prescribe the form of the
license the director issues under this section. At a minimum, the
director shall require the license to display the licensee's full
name and the address at which the licensee conducts business.
(b) A license the director issues under this section:
(A) Is not transferable or assignable; and
(B) Remains in full force and effect until:
(i) The director revokes or suspends the license in accordance
with section 10 of this 2010 Act; or
(ii) The licensee surrenders the license in accordance with
section 12 of this 2010 Act.
(5) The director may issue more than one license to the same
licensee if the director finds that for each additional license
the licensee meets the qualifications set forth in this section.
Each license the director issues must be for a separate and
distinct place in which the licensee conducts business in
accordance with sections 1 to 28 of this 2010 Act. + }
SECTION 6. { + (1) The Director of the Department of Consumer
and Business Services may disapprove an application submitted
under section 4 of this 2010 Act and deny a license to the
applicant if a person named in the application:
(a) Cannot meet financial obligations as the obligations
mature, has liabilities that exceed assets or is in a financial
condition that prevents the person from conducting business with
safety to consumers;
(b) Engaged in dishonest, fraudulent or illegal practices or
conduct in a business or profession;
(c) Failed to comply with or knowingly or repeatedly violated a
provision of or a rule adopted under the Bank Act, ORS chapter
723, 725 or 726 or sections 1 to 28 of this 2010 Act;
(d) Was convicted of a crime, an essential element of which is
fraud;
(e) Is permanently or temporarily enjoined by a court of
competent jurisdiction from engaging in or continuing a practice
or conduct in connection with making payday loans, title loans or
consumer loans; or
(f) Is subject to an order in which:
(A) The director imposed a fine or other civil penalty on the
person under the Bank Act, ORS chapter 723, 725 or 726 or
sections 1 to 28 of this 2010 Act;
(B) The director removed the person from an office in an entity
regulated under the Bank Act, ORS chapter 723 or 725 or sections
1 to 28 of this 2010 Act; or
(C) A state or federal agency with authority over banking
institutions, savings associations, credit unions or consumer
finance companies, within a five-year period before the applicant
submitted an application under section 4 of this 2010 Act:
(i) Imposed a fine or other civil penalty on the person; or
(ii) Removed the person from an office in a state banking
institution, a national bank, a state or federal savings
association, a state or federal credit union or a consumer
finance company.
(2) If the director denies a license to an applicant under this
section, the director shall provide the applicant with a
reasonable opportunity for a hearing under ORS chapter 183. + }
SECTION 7. { + (1) A licensee each year shall pay to the
Director of the Department of Consumer and Business Services a
license fee in an amount the director specifies by rule. The
licensee shall pay the fee not later than the date the director
sets in the rule.
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(2) The director shall specify the amount of the fee described
in subsection (1) of this section after considering:
(a) The amount of other moneys available for the director to
use in performing the director's duties;
(b) The costs the director will incur in performing the
director's duties in the year in which the director will collect
the fee; and
(c) The amount the director needs to establish and maintain a
reasonable emergency fund.
(3) In addition to any license fee the director collects under
subsection (1) of this section, whenever the director devotes
extra attention to a licensee's affairs, either when the licensee
requests the attention or the director determines that the extra
attention is necessary, the director shall charge as a fee for
the extra attention the actual cost the director incurs. + }
SECTION 8. { + (1) On or before February 15 of each year, or
on a date the Director of the Department of Consumer and Business
Services establishes by rule, a licensee shall file a report with
the director in a form and with the content the director
prescribes by rule. The report must contain information the
director requires concerning the licensee's business and the
operations at each place of business in which the licensee
conducts business in this state during the preceding calendar
year under the terms of a license issued under section 5 of this
2010 Act.
(2) The director may assess against a licensee a penalty of $10
for each day after February 15, or after the date the director
specifies in subsection (1) of this section, during which the
licensee fails to file a report required under this section. + }
SECTION 9. { + (1) A licensee may not conduct a business that
is subject to sections 1 to 28 of this 2010 Act except under the
name and at the place of business named in the license. The
licensee at all times shall display the license conspicuously in
the licensee's place of business.
(2) A licensee that changes the location at which the licensee
conducts business as a payday loan lender or title loan lender
shall notify the Director of the Department of Consumer and
Business Services in writing and return the licensee's license.
The director shall amend the license to reflect the new location
and return the amended license to the licensee.
(3) The director may allow the licensee to change the location
in which the licensee conducts business as a payday loan lender
or title loan lender to a location outside the city named in the
original license only if the director determines that the new
location will serve substantially the same community that the
location named in the original license served.
(4) If the director disapproves the proposed new location, the
director shall immediately notify the licensee of the disapproval
and return the license unchanged to the licensee. + }
SECTION 10. { + (1) The Director of the Department of Consumer
and Business Services may revoke a license issued under section 5
of this 2010 Act if the director:
(a) Gives the licensee 10 days' written notice in which the
director specifies the action the director will take and the
general grounds for the action;
(b) Provides the licensee with reasonable opportunity for a
hearing under ORS chapter 183 in connection with the action; and
(c) Finds that:
(A) The licensee failed to pay the annual license fee;
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(B) The licensee failed to comply with a demand, ruling or
requirement the director made under sections 1 to 28 of this 2010
Act;
(C) The licensee, if the licensee is a corporation, failed to
keep the corporation in good standing under applicable provisions
of law;
(D) The licensee violated a provision of sections 1 to 28 of
this 2010 Act or a rule the director adopted under sections 1 to
28 of this 2010 Act; or
(E) A fact or condition exists that clearly would have
warranted the director's refusing to issue the license had the
fact or condition existed at the time the licensee submitted an
application under section 4 of this 2010 Act.
(2) The director, without notice or hearing, may suspend a
license for a period not exceeding 30 days, pending
investigation. The director shall provide the licensee with a
reasonable opportunity for a hearing under ORS chapter 183 if the
director proposes to suspend a license for a period longer than
30 days.
(3) The director may revoke or suspend only the particular
license with respect to which grounds for revocation or
suspension exist. If the director finds that grounds for revoking
or suspending a license exist with respect to more than one of
the locations in which a licensee operates, the director may
revoke or suspend the license issued to the licensee for each
location with respect to which grounds for revocation or
suspension exist. + }
SECTION 11. { + The Director of the Department of Consumer and
Business Services may reinstate a license the director revoked if
the licensee:
(1) Complies with applicable provisions of law;
(2) Complies with a demand, ruling or requirement the director
issues or imposes; and
(3) Pays a fee of $25. + }
SECTION 12. { + (1) A licensee may deliver a written notice to
the Director of the Department of Consumer and Business Services
to surrender a license the director issued to the licensee under
section 5 of this 2010 Act.
(2)(a) A licensee shall surrender a license under which no
material loan activity has occurred for a period of 12
consecutive months.
(b) For purposes of this subsection, 'material loan activity'
includes a new loan, a loan that refinances an existing loan or a
formal extension of existing loan repayment provisions for more
than 30 days.
(3) A licensee's surrendering a license under subsection (1) or
(2) of this section does not affect the licensee's civil or
criminal liability for acts the licensee committed before
surrendering the license. + }
SECTION 13. { + Revocation, suspension or surrender of a
license issued under section 5 of this 2010 Act does not impair
or affect the rights or obligations specified in a lawful
contract between the licensee and a borrower that existed before
the revocation, suspension or surrender. + }
SECTION 14. { + (1) The Director of the Department of Consumer
and Business Services, to secure information the director
requires and to ensure compliance with sections 1 to 28 of this
2010 Act and rules the director adopts under sections 1 to 28 of
this 2010 Act:
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(a) May at any time investigate a licensee or a person required
under section 3 of this 2010 Act to obtain a license.
(b) Shall examine a licensee not less than once every two years
and may inspect and examine the licensee at other times that the
director determines are necessary.
(2) For purposes of subsection (1) of this section:
(a) A licensee or a person required to obtain a license as a
payday loan lender or title loan lender is subject to inspection
and shall give the director free access to the licensee's or
person's place of business, books, accounts, records, files,
safes and vaults.
(b) The director may:
(A) Conduct an investigation or examination without prior
notice to the person the director investigates or examines.
(B) Compel the attendance of a witness or other person from
whom the director requires testimony necessary to conduct an
investigation or examination and examine the witness or person
under oath.
(C) Require a licensee or a person required to obtain a license
as a payday loan lender or title loan lender to produce books,
accounts, records, files or other documents.
(c) A person may not knowingly give or cause to be given to the
director a document or an oral or written statement or report
that is false in any material respect.
(3) If the director investigates or examines under this section
a licensee or a person required to obtain a license as a payday
loan lender or title loan lender, the licensee or person shall
pay the director for the actual cost of the investigation or
examination. The director may maintain an action to recover the
cost in a court of competent jurisdiction. + }
SECTION 15. { + The Director of the Department of Consumer and
Business Services may specify the form and content of the books
and records the licensee must keep in accordance with the
provisions of sections 1 to 28 of this 2010 Act. The licensee
shall preserve and make available the books and records for a
period of at least two years after the licensee makes the final
entry in connection with a loan or account recorded in the book
or record. + }
SECTION 16. { + (1) A director or officer of a licensee who
has reason to believe that a defalcation has occurred at an
office of the licensee shall report the defalcation to the local,
state or federal law enforcement officer with jurisdiction.
(2) A licensee, within five days after the discovery of a
defalcation that occurs at an office of the licensee, shall
notify the Director of the Department of Consumer and Business
Services. If the director instructs the licensee to do so, the
licensee shall cause an audit to be made of the business of the
licensed office where the defalcation occurred, in accordance
with the director's instructions.
(3) The Director of the Department of Consumer and Business
Services may report a defalcation to a federal, state or local
law enforcement agency with jurisdiction if the licensee has not
reported the defalcation in accordance with subsection (1) of
this section. + }
SECTION 17. { + A licensee shall:
(1) Deliver to the borrower at the time the licensee makes a
loan a statement in the English language that shows in clear and
distinct terms:
(a) The borrower's and the licensee's names and addresses.
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(b) The amount of the loan, the date on which the licensee made
the loan and the maturity of or payment terms for the loan.
(c) The interest rate to which the licensee and borrower agreed
and the consideration the licensee will charge for the loan.
(d) The nature of the security for the loan, if the licensee
has taken a lien on personal property by chattel mortgage, bill
of sale, collateral agreement or otherwise.
(2) Make available to the borrower upon request a plain and
complete receipt for all payments the borrower made on a loan at
the time the licensee receives the payments. The receipt must:
(a) Specify the amount, if any, that the licensee applied
toward interest;
(b) Identify the date to which the interest is paid;
(c) Specify the amount, if any, the licensee applied toward
principal; and
(d) State the unpaid principal balance for the loan, if a
principal balance remains.
(3) Permit a borrower at any time to pay any amount in advance
on any loan.
(4) Mark the word 'Paid' or 'Renewed' indelibly on the note, or
on other evidence of the debt or obligation that bears the
borrower's signature, whenever the borrower pays the loan in full
or renews the loan. If the borrower repays the loan in full, the
licensee shall also:
(a) Release a mortgage or security agreement that no longer
secures the loan and restore any security or collateral, to the
extent and in the manner required by law.
(b) Release a Uniform Commercial Code filing that no longer
secures the loan, to the extent and in the manner required under
ORS 79.0513.
(c) Return any assignment the borrower gave.
(d) Return to the borrower the canceled note or other evidence
of the loan or, alternatively, acknowledge to the borrower in
writing that the borrower has repaid the loan. + }
SECTION 18. { + A licensee or other person may not advertise,
print, display, publish, distribute or broadcast or cause or
permit to be advertised, printed, displayed, published,
distributed or broadcast in any manner whatsoever a statement or
representation that is false, misleading or deceptive with
respect to a rate, term or condition for a payday loan or title
loan. + }
SECTION 19. { + (1) A licensee or a person required under
section 3 of this 2010 Act to obtain a license may not:
(a) Take from a consumer:
(A) A power of attorney, except a power of attorney to transfer
ownership of a motor vehicle at the time the licensee or the
person makes a loan secured by a motor vehicle.
(B) A note or promise to pay that does not accurately disclose
the actual amount or the term of the loan, the rate of interest
charged and the schedule of payments for the loan.
(C) An instrument in which blank spaces remain to be filled in
after execution.
(D) An assignment of earnings as payment or as security for a
loan. An assignment that violates this subparagraph is
unenforceable by the assignee and revocable by the assignor. For
purposes of this subparagraph, if the licensee or the person pays
money to or on behalf of a consumer in return for a right or
claim to all or a portion of the consumer's unpaid earnings, the
licensee or the person has made a loan to the consumer that is
secured by an assignment of earnings. This subparagraph does not
Enrolled Senate Bill 993 (SB 993-INTRO) Page 9
preclude an employee from authorizing deductions from the
employee's earnings if the authorization is revocable.
(b) Conduct business where liquor or lottery tickets are sold
or where gambling devices are located.
(c) Charge a consumer:
(A) More than the actual amount that the vendor or service
provider charges the licensee or the person for access to or use
of the system described in section 26 of this 2010 Act; or
(B) More than one fee per loan transaction for dishonored
checks or insufficient funds, regardless of how many checks or
debit agreements the licensee or the person obtains from the
consumer for the transaction. The fee may not exceed $20.
(d) Collect a fee for a dishonored check under ORS 30.701 or
seek or recover statutory damages or attorney fees from a
consumer for a dishonored check under ORS 30.701. The licensee or
the person may recover from the consumer a fee that an
unaffiliated financial institution charges to the licensee or the
person for each dishonored check. For a dishonored check or
insufficient funds, the fees described in this subsection are the
only remedy the licensee or the person may pursue and the only
fees the licensee or the person may charge.
(2) The provisions of sections 1 to 28 of this 2010 Act do not
prevent a licensee or a person required under section 3 of this
2010 Act to obtain a license from recovering amounts associated
with collecting a defaulted loan that are authorized by statute
or awarded by a court of law. + }
SECTION 20. { + A title loan lender may not:
(1) Make or renew a title loan at a rate of interest that
exceeds 36 percent per annum, excluding a one-time origination
fee for a new loan.
(2) Charge during the term of a new title loan, including all
renewals of the loan, more than one origination fee of $10 per
$100 of the loan amount or $30, whichever is less.
(3) Make or renew a title loan for a term of less than 31 days.
(4) Make or renew a title loan to a consumer without forming a
good faith belief that the consumer has the ability to repay the
title loan. In forming a good faith belief, the title loan lender
shall consider factors that the Director of the Department of
Consumer and Business Services specifies by rule. A title loan
lender complies with this subsection if the title loan lender
meets the conditions the director specifies.
(5) Charge a consumer a fee or interest other than a fee or
interest described in subsection (1) or (2) of this section or in
section 19 (1)(c) or (d) of this 2010 Act.
(6) Include in a title 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) A provision in which the consumer agrees not to assert
against the lender or a holder in due course a claim or defense
arising out of the contract;
(d) An executory waiver or a limitation of exemption from
attachment, execution or other process on real or personal
property the consumer holds, owns or is due, unless the waiver or
limitation applies only to property that is subject to a security
interest executed in connection with the loan; or
(e) A clause that permits interest to continue after the
consumer's motor vehicle, recreational vehicle, boat or mobile
home has been repossessed.
Enrolled Senate Bill 993 (SB 993-INTRO) Page 10
(7) Require or accept from a consumer a set of keys to the
motor vehicle, recreational vehicle, boat or mobile home the
title to which secures the title loan.
(8) Make more than one outstanding title loan that is secured
by one title.
(9) Renew an existing title loan that is secured by one title
more than two times after the loan is first made.
(10) Make a new title loan to a consumer within seven days of
the date on which a previous title loan expires. + }
SECTION 21. { + A payday loan lender may not:
(1) 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.
(2) Charge during the term of a new payday loan, including all
renewals of the loan, more than one origination fee of $10 per
$100 of the loan amount or $30, whichever is less.
(3) Make or renew a payday loan for a term of less than 31
days.
(4) Charge a consumer a fee or interest other than a fee or
interest described in subsection (1) or (2) of this section or in
section 19 (1)(c) or (d) of this 2010 Act.
(5) 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) A provision in which the consumer agrees not to assert
against the lender or a holder in due course a claim or defense
arising out of the contract; or
(d) An executory waiver or a limitation of exemption from
attachment, execution or other process on real or personal
property the consumer holds, owns or is due, unless the waiver or
limitation applies only to property that is subject to a security
interest executed in connection with the loan.
(6) Renew an existing payday loan more than two times.
(7) Make a new payday loan to a consumer within seven days of
the date on which a previous payday loan expires. + }
SECTION 22. { + (1) A person who claims to be aggrieved by a
practice that violates a provision of section 3, 19, 20 or 21 of
this 2010 Act or a rule adopted under section 27 of this 2010 Act
that regulates a licensee or a person required under section 3 of
this 2010 Act to obtain a license may, not later than one year
after the date of the alleged violation, file with the Director
of the Department of Consumer and Business Services a verified
written complaint. The complaint must state the name and address
of the licensee or the person alleged to have committed the
unlawful practice and the particulars of the alleged unlawful
practice. The director may require the complaint to set forth
other information that the director considers pertinent.
(2) A title loan lender shall state in every contract for a
title loan, in a type size equal to at least 12-point type, that
the consumer or the consumer's attorney may file a complaint with
the director as provided in this section.
(3) After receiving a complaint under this section, the
director may, under section 14 of this 2010 Act, investigate the
unlawful practice and the licensee or the person alleged in the
complaint to have committed the unlawful practice. + }
SECTION 23. { + (1) If the Director of the Department of
Consumer and Business Services has reasonable cause to believe
that a person violated, is violating or is about to violate a
provision of sections 1 to 28 of this 2010 Act or a rule the
Enrolled Senate Bill 993 (SB 993-INTRO) Page 11
director adopted or an order the director issued under sections 1
to 28 of this 2010 Act, the director may order the person to
cease and desist from the violation.
(2) The director, in an order the director issues under
subsection (1) of this section, shall:
(a) State the facts constituting the violation;
(b) Require the person named in the order to cease and desist
from the violation or to meet specific conditions;
(c) State the effective date of the order; and
(d) Advise the person named in the order that the person has a
right to a contested case hearing under ORS chapter 183.
(3) An order under this section is effective 30 days after the
date of the order, unless the person named in the order requests
a hearing on the order, and remains in effect until the director
or a court withdraws the order.
(4) If an individual named in an order under this section fails
to comply with the order, in addition to imposing a penalty under
section 28 of this 2010 Act, the director may issue an order to
remove or suspend the individual from the individual's office or
position. + }
SECTION 24. { + (1) If the Director of the Department of
Consumer and Business Services finds that an officer or director
of a licensee is dishonest, reckless or incompetent or refuses to
comply with the law, with a rule the Department of Consumer and
Business Services adopted or with a written requirement or
instruction the department imposed or issued, the Director of the
Department of Consumer and Business Services may order the
licensee to suspend the licensee's officer or director from the
officer or director's office or position.
(2) The Director of the Department of Consumer and Business
Services, for any of the reasons set forth in section 6 of this
2010 Act, may order a licensee to remove an officer or director
of the licensee from office. + }
SECTION 25. { + A person is not personally liable for an act
the person does or fails to do in good faith and in compliance
with a rule or order the Director of the Department of Consumer
and Business Services adopted or issued under sections 1 to 28 of
this 2010 Act, even if the director amends or rescinds the rule
or order or a judicial or other authority determines that the
rule or order is invalid. + }
SECTION 26. { + (1) The Director of the Department of Consumer
and Business Services, by contract with a vendor or service
provider or otherwise, may develop and implement a system by
means of which a licensee 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 a loan contract subject to sections 1 to 28 of this 2010
Act and other information necessary to comply with the provisions
of sections 1 to 28 of this 2010 Act. The director by rule may
specify the form and content 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 licensees 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
Enrolled Senate Bill 993 (SB 993-INTRO) Page 12
process except in an action brought under sections 1 to 28 of
this 2010 Act.
(3) A vendor or service provider that operates or administers
the system described in subsection (1) of this section may charge
a licensee a fee or fees for access to or use of the system in
amounts that the director approves by rule.
(4)(a) If the system described in subsection (1) of this
section is developed and implemented, licensees subject to
sections 1 to 28 of this 2010 Act, within one business day after
conducting a loan transaction that generates information that the
system described in subsection (1) of this section requires,
shall enter or update the information.
(b) A licensee, after the date on which the licensee ceases to
make loans subject to sections 1 to 28 of this 2010 Act, shall
continue to enter and update information for loans that are
outstanding or that have not yet expired.
(c) Within 10 business days after ceasing to make loans subject
to sections 1 to 28 of this 2010 Act, a licensee 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 licensee to submit a new
or modified plan that ensures compliance with this subsection.
(5) The director by rule shall establish requirements for
retaining, archiving and deleting information entered into or
stored by the system described in subsection (1) of this
section. + }
SECTION 27. { + (1) The Director of the Department of Consumer
and Business Services, in accordance with ORS chapter 183, may
adopt rules for the purposes of protecting borrowers and
consumers, providing clarity to licensees and otherwise carrying
out and enforcing the provisions of sections 1 to 28 of this 2010
Act. The rules may include, but are not limited to, provisions
that establish loan forms, terms, charges and fees.
(2) Before the director adopts a rule under subsection (1) of
this section, the director shall submit a copy of the rule to
each licensee.
(3) The director may institute an action or proceeding and make
a specific ruling, demand or finding that the director considers
necessary to carry out or enforce a provision of sections 1 to 28
of this 2010 Act or a rule the director adopted, an order the
director issued or an action the director took to carry out or
enforce the provisions of sections 1 to 28 of this 2010 Act. + }
SECTION 28. { + (1) The Director of the Department of Consumer
and Business Services may assess a civil penalty of not more than
$2,500 against a person who violates a provision of sections 1 to
28 of this 2010 Act or a rule the director adopted or final order
the director issued under sections 1 to 28 of this 2010 Act. The
director, in addition to imposing a penalty under this subsection
for the violation, may revoke the licensee's license.
(2) A civil penalty under this section must be imposed as
provided in ORS 183.745.
(3) Except as provided in subsection (4) of this section,
moneys collected under this section must be paid to the State
Treasurer and credited as provided in ORS 705.145.
(4) In addition to any other penalty provided by law, the
director may assess against a person who makes a payday loan or
title loan in violation of section 3 of this 2010 Act a civil
penalty in an amount equal to the interest the person receives
that exceeds nine percent per annum. The director shall pay all
Enrolled Senate Bill 993 (SB 993-INTRO) Page 13
moneys collected under this subsection to the Department of State
Lands for the benefit of the Common School Fund. + }
SECTION 29. ORS 725.010, as operative until July 30, 2010, is
amended to read:
725.010. As used in this chapter:
(1)(a) 'Broker or facilitator' means a person that conducts a
business in which, for a fee or consideration, the person:
(A) Processes, receives or accepts for delivery to a lender an
application for a { + consumer finance + } loan, individually or
in conjunction or cooperation with another person;
(B) Accepts and delivers to a lender all or most of the
proceeds of a payment made in connection with a { + consumer
finance + } loan; or
(C) Assists in making a { + consumer finance + } loan in a
material capacity other than as a lender.
(b) 'Broker or facilitator' does not include a mortgage broker
or loan originator, as those terms are defined in ORS 86A.100, or
an employee of a licensee.
(2) 'Consumer finance loan' means a loan or line of credit that
is unsecured or secured by personal or real property and that has
periodic payments and terms longer than 60 days.
(3) 'Licensee' means a person licensed under this chapter.
SECTION 30. ORS 725.010, as amended by section 33, chapter 863,
Oregon Laws 2009, is amended to read:
725.010. As used in this chapter:
(1)(a) 'Broker or facilitator' means a person that conducts a
business in which, for a fee or consideration, the person:
(A) Processes, receives or accepts for delivery to a lender an
application for a { + consumer finance + } loan, individually or
in conjunction or cooperation with another person;
(B) Accepts and delivers to a lender all or most of the
proceeds of a payment made in connection with a { + consumer
finance + } loan; or
(C) Assists in making a { + consumer finance + } loan in a
material capacity other than as a lender.
(b) 'Broker or facilitator' does not include a mortgage broker,
as that term is defined in ORS 86A.100, a mortgage loan
originator, as that term is defined in ORS 86A.200, or an
employee of a licensee.
(2) 'Consumer finance loan' means a loan or line of credit that
is unsecured or secured by personal or real property and that has
periodic payments and terms longer than 60 days.
(3) 'Licensee' means a person licensed under this chapter.
SECTION 31. ORS 725.045 is amended to read:
725.045. (1) { - Without first obtaining a license under this
chapter, - } { + Except as provided in ORS 82.010, 82.020 and
82.025, + } a person may not conduct a business in which the
person makes a
{ - loan described in subsection (2) of this section - } { +
consumer finance loan of $50,000 or less + } or acts as an agent,
broker or facilitator for a person that makes a { - loan
described in subsection (2) of this section, except as provided
under ORS 82.010, 82.020 and 82.025. - } { + consumer finance
loan of $50,000 or less unless the person first obtains a license
under this chapter. + }
{ - (2) This section applies to loans of $50,000 or less that
are: - }
{ - (a) Payday loans, as defined in ORS 725.600; - }
{ - (b) Title loans, as defined in ORS 725.600; or - }
{ - (c) Consumer finance loans. - }
Enrolled Senate Bill 993 (SB 993-INTRO) Page 14
{ - (3) - } { + (2) + } This section does not apply to a
person that does not collect a fee or consideration in connection
with a { + consumer finance + } loan { - described in
subsection (2) of this section - } or an application for a { +
consumer finance + } loan { - described in subsection (2) of
this section - } and that:
(a) Does not interact directly with a borrower or consumer;
(b) Acts solely as an intermediary between the borrower or
consumer and a lender or a person that conducts business as a
broker or facilitator for a { + consumer finance + } loan
{ - described in subsection (2) of this section - } ;
(c) Transmits information, electronically or otherwise,
concerning the borrower or consumer to a lender or a person that
conducts business as a broker or facilitator for a { + consumer
finance + } loan { - described in subsection (2) of this
section - } ; or
(d) Prepares, issues or delivers a negotiable instrument to a
lender or a person that conducts business as a broker or
facilitator for a { + consumer finance + } loan { - described
in subsection (2) of this section - } for subsequent delivery to
a borrower or consumer.
SECTION 32. ORS 725.340 is amended to read:
725.340. (1) { - Except as provided in ORS 725.615 and
725.622, - } A licensee may:
(a) Charge, contract for and receive in connection with a
consumer finance loan made in accordance with this chapter a
finance charge that, when expressed as an annual percentage rate,
does not exceed the greater of:
(A) 36 percent; or
(B) 30 percentage points in excess of the discount window
primary credit rate. The Director of the Department of Consumer
and Business Services on the second Friday of December shall
determine by order from published sources available on that date
the discount rate upon which the annual percentage rate set forth
in this subparagraph will be based as of January 1 of the
following calendar year. The annual percentage rate set forth in
this subparagraph shall apply to each new loan made during the
succeeding calendar year for the entire term of the loan,
including all renewals of the loan.
(b) Contract for and receive in connection with a consumer
finance loan made in accordance with this chapter, and in
addition to the finance charge described in paragraph (a) of this
subsection, other reasonable and bona fide fees, expenses or
damages, subject to oversight and regulation by the Department of
Consumer and Business Services. For purposes of this paragraph, '
fees, expenses or damages' includes, but is not limited to:
(A) Items exempted from the computation of the finance charge
in accordance with the Truth in Lending Act, 15 U.S.C. 1605(d)
and (e), as that Act existed on July 2, 2007, and similar
pass-through fees or charges;
(B) Prepayment fees and late fees;
(C) Fees and damages in accordance with ORS 30.701;
(D) Actual expenses the licensee reasonably incurs in
collecting a consumer finance loan that the borrower or consumer
has failed to repay according to the terms of the consumer
finance loan contract; and
(E) Amounts associated with the collection of a defaulted loan
that are authorized by statute or awarded by a court of law.
Enrolled Senate Bill 993 (SB 993-INTRO) Page 15
(c) For purposes of this subsection, 'finance charge' and '
annual percentage rate' have the meanings given those terms in
the federal Truth in Lending Act, 15 U.S.C. 1601 et seq.
(2) When a precomputed loan contract is originally scheduled to
be repaid in 62 months or less and requires repayment in
substantially equal or consecutive monthly installments of
principal and interest combined, the interest or consideration
may be precomputed, contracted for and earned on scheduled unpaid
principal balances on the assumption that all scheduled payments
will be made when due. In such cases, every payment may be
applied to the combined total of principal and precomputed
interest until the contract is fully paid, and the acceptance or
payment of interest or consideration on any loan made under the
provisions of this subsection does not constitute payment,
deduction or receipt of the interest or consideration in advance.
The precomputed interest or consideration is subject to the
following adjustments:
(a) When a default of more than 10 days in the payment of any
scheduled installment occurs, the licensee may charge and collect
a default charge not exceeding five percent of the unpaid amount
of the installment or $5, whichever is less. A default charge may
be collected only once on an installment, but may be collected at
the time the default charge accrues or at any time thereafter. A
default charge may not be assessed with respect to an installment
that is paid in full on or within 10 days after a scheduled
installment due date when an earlier maturing installment or a
default or deferral charge on an earlier maturing installment may
not have been paid in full even though all or part of such
installment payment is applied to an earlier maturing
installment, or a default or deferral charge.
(b) If the payment of all unpaid installments is deferred one
or more full months, and if the contract so provides, the
licensee may charge and collect a deferral charge not exceeding
the annual percentage rate specified in subsection (1)(a) of this
section and previously disclosed to the borrower pursuant to the
federal Truth in Lending Act applied to the sum of the
installments deferred for the length of the deferral period. The
deferral period is that period in which no scheduled installment
is required to be paid by reason of the deferral. The charge may
be collected at the time of deferral or at any time thereafter. A
deferral charge may not be made for the deferral of any
installment with respect to which a default charge has been
collected, unless the default charge is deducted from the
deferral charge. If prepayment of the loan in full occurs during
the deferral period, in addition to any other rebate which may be
required, the borrower shall receive a rebate of the portion of
the deferral applicable to the unexpired months in the deferral
period, for which purpose a fraction of an unexpired month
exceeding 15 days is considered to be a month.
(c) Upon prepayment in full of the unpaid balance of a
precomputed loan, a rebate of unearned interest or consideration
shall be made as provided in this paragraph. The amount of the
rebate shall be not less than the total interest contracted for
to maturity, less the greater of:
(A) Ten percent of the amount financed or $75, whichever is
less; or
(B) The interest or consideration earned to the installment due
date nearest the date of prepayment, computed by applying the
simple interest rate of the loan to the actual principal balances
outstanding, for the periods of time the balances were actually
Enrolled Senate Bill 993 (SB 993-INTRO) Page 16
outstanding. For purposes of rebate computations under this
subparagraph, the installment due date preceding the date of
prepayment is nearest if prepayment occurs 15 days or less after
that installment date. If prepayment occurs more than 15 days
after the preceding installment due date, the next succeeding
installment due date is nearest to the date of prepayment. In
determining the simple interest rate, the licensee may apply to
the scheduled payments the actuarial method by which each
scheduled payment is applied first to accrued and unpaid interest
or consideration and any amount remaining is applied to reduction
of the principal balance.
(3) If the borrower agrees to perform certain duties to insure
or preserve the collateral and fails to perform those duties, the
licensee may pay for the performance of the duties and add the
amounts paid to the unpaid principal balance. A charge may be
made for sums advanced, at the rate provided for in the loan
agreement.
(4) The loan contract may provide that after default and
referral the borrower shall pay the licensee for reasonable
attorney fees actually paid by the licensee to an attorney who is
not a salaried employee of the licensee.
SECTION 33. ORS 725.370 is amended to read:
725.370. { - Except as otherwise provided in ORS 725.602, - }
{ + This chapter does not affect + } loans made or payable in
other jurisdictions and lawful where made or payable { - , are
not affected by this chapter - } .
SECTION 34. { + ORS 725.600, 725.602, 725.605, 725.610,
725.615, 725.620, 725.622, 725.624, 725.626 and 725.630 are
repealed. + }
SECTION 35. { + (1) Sections 1 to 28 of this 2010 Act, the
amendments to ORS 725.010, 725.045, 725.340 and 725.370 by
sections 29, 31, 32 and 33 of this 2010 Act and the repeal of ORS
725.600, 725.602, 725.605, 725.610, 725.615, 725.620, 725.622,
725.624, 725.626 and 725.630 by section 34 of this 2010 Act
become operative 90 days after the effective date of this 2010
Act.
(2) The Director of the Department of Consumer and Business
Services may take any action before the operative date set forth
in subsection (1) of this section that is necessary to enable the
director to exercise, on and after the operative date, all the
duties, functions and powers conferred on the director by
sections 1 to 28 of this 2010 Act, the amendments to ORS 725.010,
725.045, 725.340 and 725.370 by sections 29 to 33 of this 2010
Act and the repeal of ORS 725.600, 725.602, 725.605, 725.610,
725.615, 725.620, 725.622, 725.624, 725.626 and 725.630 by
section 34 of this 2010 Act. + }
SECTION 36. { + This 2010 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2010 Act takes effect on
its passage. + }
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Enrolled Senate Bill 993 (SB 993-INTRO) Page 17
Passed by Senate February 5, 2010
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House February 22, 2010
...........................................................
Speaker of House
Enrolled Senate Bill 993 (SB 993-INTRO) Page 18
Received by Governor:
......M.,............., 2010
Approved:
......M.,............., 2010
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2010
...........................................................
Secretary of State
Enrolled Senate Bill 993 (SB 993-INTRO) Page 19