Senate Bill No. 378

Public Act No. 00-164

An Act Concerning Fees For Dishonored Checks Imposed By Small Loan Companies.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (h) of section 36a-563 of the general statutes is repealed and the following is substituted in lieu thereof:

(h) In addition to the charges provided for by sections 36a-555 to 36a-573, inclusive, and service charges that are imposed for a check that is dishonored as provided in subsection (i) of section 52-565a, no further or other charge or amount for any examination, service, brokerage, commission or other thing, or otherwise, shall be directly or indirectly charged, contracted for or received. If interest or any other charges in excess of those permitted by said sections are charged, contracted for or received, except as the result of a bona fide error, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges. No person shall owe any licensee, as such, at any time more than fifteen thousand dollars for principal as a borrower, comaker or guarantor for loans made under said sections. No licensee shall induce or permit any borrower or borrowers to split or divide any loan or loans made under said sections, or permit any borrower to become obligated, directly or indirectly, under more than one contract of loan under said sections at the same time primarily for the purpose of obtaining a higher rate of charge than would otherwise be permitted by said sections. No contract made under said sections, except as deferred in accordance with subsection (e) of this section, shall provide for a greater rate of interest than twelve per cent per annum on the balance remaining unpaid twenty-four months and fifteen days after the date of making such contract if the original cash advance was one thousand dollars or less or thirty-six months and fifteen days if the original cash advance was in excess of one thousand dollars but not in excess of one thousand eight hundred dollars. No contract made under said sections with an original cash advance in excess of one thousand eight hundred dollars, except as deferred in accordance with subsection (e) of this section, shall provide for a greater rate of interest than twelve per cent per annum on the balance remaining unpaid on the scheduled maturity date of said contract. No part of the principal balance remaining unpaid by a borrower twenty-four months and fifteen days after making such contract where the original cash advance was one thousand dollars or less or thirty-six months and fifteen days where the original cash advance was in excess of one thousand dollars but not in excess of one thousand eight hundred dollars, shall directly or indirectly be renewed or refinanced by the lender who made such loan. If the maturity date of a loan made under said sections has been extended by deferred payments, the maximum renewal period that such loan may be extended shall be the number of months such loan is deferred. When a contract is renewed or refinanced prior to twenty-four months and fifteen days where the original cash advance was one thousand dollars or less or thirty-six months and fifteen days where the original cash advance exceeded one thousand dollars but did not exceed one thousand eight hundred dollars, from the date of making such contract, such renewal or refinancing shall, for the purposes of this section, be deemed a separate loan transaction.

Sec. 2. Subsection (c) of section 36a-565 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) A licensee may make open-end loans and may charge, contract for and receive thereon interest at an annual percentage rate not to exceed nineteen and eight-tenths per cent for any open-end loan agreement entered into on and after July 1, 1991. A licensee may also receive, pursuant to any such agreement entered into on and after July 1, 1991, one or more of the following charges if the agreement so provides: (1) An annual fee not to exceed fifty dollars for the privileges made available to the borrower under the open-end loan agreement; (2) a default charge subject to the conditions and restrictions set forth in subsection (d) of section 36a-563; (3) [a bad check charge not exceeding ten dollars for any payment made by check or draft that is returned unpaid to the licensee due to insufficient funds or because the account on which the check or draft was drawn does not exist] service charges that are imposed for a check that is dishonored as provided in subsection (i) of section 52-565a; and (4) reasonable attorneys' fees subject to the conditions and restrictions set forth in section 42-150aa. In addition to the charges provided for by this section, no further or other charge or amount for any examination, service, brokerage, commission or other thing, or otherwise, shall be directly or indirectly charged, contracted for or received. If interest or any charges in excess of those permitted by this section are charged, contracted for or received, except as the result of a bona fide error, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges. No person shall owe any licensee, as such, at any time more than fifteen thousand dollars for principal as a borrower, comaker or guarantor for loans made under this section. As used in this section, the term "bona fide error" includes, but shall not be limited to, clerical, calculation, computer malfunction and programming and printing errors, but does not include an error of legal judgment with respect to a person's obligations under sections 36a-555 to 36a-573, inclusive.

Approved May 26, 2000