Assembly Bill No. 433–Assemblymen Brown, Buckley, Marvel and Sherer

 

March 17, 2003

____________

 

Referred to Committee on Commerce and Labor

 

SUMMARY—Makes various changes to provisions regulating persons providing check-cashing and deferred deposit services. (BDR 52‑935)

 

FISCAL NOTE:  Effect on Local Government: No.

                           Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to financial services; providing that a person may rescind a deferred deposit transaction under certain circumstances; providing that a person may redeem a check presented pursuant to a deferred deposit transaction under certain circumstances; defining the term “check” to include certain electronic transfers; limiting the number of fees a person may be charged pursuant to a deferred deposit transaction under certain circumstances; revising the disclosures that must be provided in an agreement for a deferred deposit; prohibiting registrants and collection agencies from engaging in certain business practices; limiting the applicability of certain remedies for unpaid checks; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1  Section 1. Chapter 604 of NRS is hereby amended by adding

1-2  thereto the provisions set forth as sections 2 and 3 of this act.

1-3  Sec. 2.  1.  A person may rescind a deferred deposit

1-4  transaction entered into with a registrant if, not later than 1

1-5  business day after the person enters into the deferred deposit

2-1  transaction, the person delivers to the registrant at the location

2-2  where the person entered into the transaction:

2-3  (a) A sum of money equal to the face value of the check the

2-4  person provided to the registrant, less any fee charged to the

2-5  person for the provision of the deferred deposit; or

2-6  (b) The original check, if any, provided to the person by the

2-7  registrant pursuant to the deferred deposit transaction.

2-8  2.  If a person rescinds a deferred deposit transaction

2-9  pursuant to this section, the registrant:

2-10      (a) Shall not charge the person any fee for cancelling the

2-11  contract; and

2-12      (b) Upon receipt of the sum of money or check required

2-13  pursuant to subsection 1, shall return to the person the check that

2-14  was provided by the person to the registrant at the time the person

2-15  and the registrant entered into the deferred deposit transaction.

2-16      Sec. 3.  1.  A person may redeem a check that was provided

2-17  to a registrant pursuant to a deferred deposit transaction at any

2-18  time prior to the deposit of the check by the registrant.

2-19      2.  To redeem a check pursuant to the provisions of this

2-20  section, the person shall present to the registrant a sum of money

2-21  equal to the face value of the check.

2-22      3.  If a person redeems a check pursuant to this section, the

2-23  registrant shall, upon receipt of the sum of money required

2-24  pursuant to subsection 2, return to the person the check that was

2-25  provided by the person to the registrant at the time the person and

2-26  the registrant entered into the deferred deposit transaction.

2-27      Sec. 4.  NRS 604.030 is hereby amended to read as follows:

2-28      604.030  1.  “Check” means a check, draft , [or] money order

2-29  [,] or written authorization to transfer money from a deposit

2-30  account via an electronic transfer of money or funds-transfer

2-31  system, but does not include a traveler’s check or an instrument of

2-32  payment drawn on a foreign account in foreign money.

2-33      2.  As used in this section:

2-34      (a) “Electronic transfer of money” has the meaning ascribed

2-35  to it in subsection 2 of NRS 660.045; and

2-36      (b) “Funds-transfer system” has the meaning ascribed to it in

2-37  paragraph (e) of subsection 1 of NRS 104A.4105.

2-38      Sec. 5.  NRS 604.162 is hereby amended to read as follows:

2-39      604.162  1.  If a check is not paid upon presentment because

2-40  of insufficient funds, the registrant may collect a fee of not more

2-41  than $25. [Only]

2-42      2.  Except as otherwise provided in subsection 3, the registrant

2-43  may collect only two such fees [may be charged] of $25 regardless

2-44  of the number of times the check is presented for payment.

3-1  3.  If the check is provided to the registrant pursuant to a

3-2  deferred deposit transaction, and the check is not paid upon

3-3  presentment because of insufficient funds, the registrant may

3-4  collect only one such fee of $25 regardless of the number of times

3-5  the check is presented for payment.

3-6  Sec. 6.  NRS 604.164 is hereby amended to read as follows:

3-7  604.164  A registrant, before deferring a deposit, shall provide

3-8  each borrower with a written agreement, approved by the

3-9  Commissioner, which the borrower may keep and which contains

3-10  the following information, in English:

3-11      1.  The identity of the registrant deferring the deposit and the

3-12  name of the registrant and the name and title of the employee who

3-13  signs the agreement;

3-14      2.  An itemization of the fees and interest to be paid by the

3-15  borrower;

3-16      3.  Disclosures required for a similar transaction by the federal

3-17  Truth in Lending Act;

3-18      4.  Disclosures required under any applicable state statute or

3-19  regulation; [and]

3-20      5.  A clear description of the borrower’s obligations under the

3-21  deferred deposit[.] ;

3-22      6.  A disclosure of the right of the borrower to rescind a

3-23  deferred deposit transaction pursuant to the provisions of section 2

3-24  of this act; and

3-25      7.  A disclosure of the right of the borrower to redeem a check

3-26  pursuant to the provisions of section 3 of this act.

3-27      Sec. 7.  NRS 604.180 is hereby amended to read as follows:

3-28      604.180  It is unlawful for a registrant to:

3-29      1.  Use or threaten to use the criminal process in this or any

3-30  other state, or any civil process not available to creditors generally,

3-31  to collect on a deferred deposit.

3-32      2.  Threaten the criminal process provided under the

3-33  provisions of NRS 205.130, 205.132 and 205.134, unless the

3-34  district attorney whose jurisdiction includes this matter determines

3-35  that the person who issued the check intended to defraud the

3-36  registrant by issuing a check drawn on a deposit account that the

3-37  person knew was closed or did not exist.

3-38      3.  Make a loan made in the form of a deferred deposit that

3-39  exceeds one-third of the borrower’s expected monthly net income

3-40  during the term of the deferred deposit unless justified by particular

3-41  circumstances. A registrant is not in violation of the provisions of

3-42  this subsection if the borrower presents evidence of monthly net

3-43  income to the registrant and represents to the registrant in writing

3-44  that the deferred deposit does not exceed one-third of the borrower’s

4-1  expected monthly net income during the term of the deferred

4-2  deposit.

4-3  [3.] 4.  Charge to cash a check representing the proceeds of a

4-4  deferred deposit.

4-5  [4.] 5.  Make more than one loan in the form of a deferred

4-6  deposit to the same borrower at one time unless the borrower is

4-7  seeking multiple loans in the form of a deferred deposit that do not

4-8  exceed the limit set forth in subsection [2.] 3.

4-9  [5.] 6.  Accept more than one check for deferred deposit per

4-10  deferred deposit transaction.

4-11      7.  Establish or extend the period for the repayment, renewal,

4-12  refinancing or consolidation of an outstanding loan made in the

4-13  form of a deferred deposit to the same borrower beyond 10 weeks

4-14  after the expiration of the initial loan period.

4-15      [6.] 8.  Accept any collateral for a loan made in the form of a

4-16  deferred deposit.

4-17      [7.] 9.  Include in the written agreement required by NRS

4-18  604.164 for a loan made in the form of a deferred deposit:

4-19      (a) A promise by the borrower to hold the lender harmless;

4-20      (b) A confession of judgment by the borrower;

4-21      (c) An assignment or order for payment of wages or other

4-22  compensation due the borrower; or

4-23      (d) A waiver of any claim or defense arising out of the

4-24  agreement or a waiver of any provision of this chapter.

4-25      10.  Engage in a deceptive trade practice, including, without

4-26  limitation, making a false representation in connection with a

4-27  deferred deposit transaction.

4-28      11.  Engage in deceptive advertising, including, without

4-29  limitation, making any false, misleading or deceptive statement or

4-30  representation with regard to providing services related to deferred

4-31  deposits.

4-32      Sec. 8.  NRS 41.620 is hereby amended to read as follows:

4-33      41.620  1.  Any person who:

4-34      (a) Makes, utters, draws or delivers a check or draft for the

4-35  payment of money drawn upon any financial institution or other

4-36  person, when he has no account with the drawee of the instrument or

4-37  has insufficient money, property or credit with the drawee to pay; or

4-38      (b) Uses a credit card or debit card to obtain money, goods,

4-39  property, services or anything of value, when he knows or should

4-40  have known the credit card or debit card is no longer valid,

4-41  and who fails to pay the amount in cash to the payee, issuer or other

4-42  creditor within 30 days after a demand therefor in writing is mailed

4-43  to him by certified mail, is liable to the payee, issuer or other

4-44  creditor for the amount of the check, draft or extension of credit, and

5-1  damages equal to three times the amount of the check, draft or

5-2  extension of credit, but not less than $100 nor more than $500.

5-3  2.  The provisions of paragraph (a) of subsection 1 do not

5-4  apply to any check or draft provided to a registrant pursuant to an

5-5  agreement for a deferred deposit.

5-6  3.  As used in this section, unless the context otherwise

5-7  requires:

5-8  (a) “Credit card” has the meaning ascribed to it in NRS 205.630;

5-9  (b) “Debit card” has the meaning ascribed to it in NRS 205.635;

5-10  [and]

5-11      (c) “Deferred deposit” has the meaning ascribed to it in

5-12  NRS 604.060;

5-13      (d) “Issuer” has the meaning ascribed to it in NRS 205.650[.] ;

5-14  and

5-15      (e) “Registrant” has the meaning ascribed to it in

5-16  NRS 604.080.

5-17      Sec. 9.  Chapter 649 of NRS is hereby amended by adding

5-18  thereto a new section to read as follows:

5-19      1.  A collection agency engaged by a customer who is a

5-20  registrant to solicit or obtain the payment of a claim arising out of

5-21  an agreement for a deferred deposit shall comply with the

5-22  provisions of subsection 2 of NRS 41.620, NRS 604.166 and

5-23  604.180 as if the collection agency was the registrant.

5-24      2.  As used in this section:

5-25      (a) “Deferred deposit” has the meaning ascribed to it in

5-26  NRS 604.060.

5-27      (b) “Registrant” has the meaning ascribed to it in

5-28  NRS 604.080.

 

5-29  H