ORDINANCE NO.
__________________
AN ORDINANCE OF
THE CITY OF __________ SETTING FORTH REGISTRATION REQUIRMENTS AND CREDIT
EXTENSION GUIDELINES FOR CREDIT ACCESS BUSINESSES AND PROVIDING A PENALTY.
ORDENANZA DE LA
CIUDAD DE __________ ESTABLECIENDO REQUISITOS PARA EL REGISTRO Y NORMAS PARA
EMPRESAS OFRECIENDO PRESTAMOS Y
IMPONIENDO MULTA
WHEREAS, certain credit access businesses engage in abusive and
predatory lending practices, offering easy money to those members of our
community who are in a tight spot with onerous terms and fees; and
Considerando que ciertos negocios de acceso a crédito
se involucran en las prácticas de préstamos abusivos y depredadores, ofreciendo
dinero fácil de los miembros de nuestra comunidad que están en una situación
difícil con los términos y las tarifas onerosas; y
WHEREAS, the practices of certain access businesses cause members
of our community to become trapped in a cycle of short term, high interest
loans resulting in large debt and huge payments; and
POR
CUANTO, las prácticas de algunos negocios de acceso a causar que los miembros
de nuestra comunidad que quedan atrapados en un ciclo de corto plazo, los
préstamos de alto interés que impliquen endeudamiento grandes y enormes pagos;
y
WHEREAS, the Pew Charitable Trusts, in their publication entitled Payday Lending in America: Who Borrows,
Where they Borrow, and Why, (July 2012), wrote that “payday loans are sold
as two-week credit products that provide fast cash, but borrowers are actually
indebted for an average of five months per year.” The report further noted that
“on average, a borrower takes out eight loans of $375 each per year and spends
$520 on interest;” and
POR CUANTO, el Pew Charitable Trusts, en su publicación titulada
Préstamos de día de pago en América: que pide prestado, donde se pide prestado,
y por qué, (julio de 2012), escribió que "los préstamos de día de pago se
venden como productos de crédito de dos semanas que proporcionan dinero rápido,
pero prestatarios son en realidad en deuda por un promedio de cinco meses por
año "El informe señaló además que" en promedio, un prestatario lleva
a cabo ocho préstamos de $ 375 cada uno por año y gasta $ 520 en intereses;.
"y
WHEREAS, the Pew Charitable Trusts, in their publication entitled Payday Lending in America: Who Borrows,
Where they Borrow, and Why, (July 2012), also noted: “How much borrowers
spend on loans depends heavily on the fees permitted by their state. The same
$500 storefront loan would generally cost about $55 in Florida, $75 in
Nebraska, $87.50 in Alabama, and $100 in Texas, even if it were provided by the
same national company in all those states. Previous research has found that
lenders tend to charge the maximum permitted in a state;” and
POR
CUANTO, el Pew Charitable Trusts, en su publicación titulada Préstamos de día
de pago en América: que pide prestado, donde se pide prestado, y por qué,
(julio de 2012), también señaló: "¿Cuánto prestatarios pasan de los
préstamos depende en gran medida de las cuotas permitidas por su estado . El
mismo préstamo escaparate de $ 500 sería lo general cuesta alrededor de $ 55 en
la Florida, $ 75 en Nebraska, $ 87.50 en Alabama, y $ 100 en Texas, incluso
si fueron proporcionados por la misma empresa nacional en todos esos estados.
Investigaciones anteriores han encontrado que los prestamistas tienden a cobrar
el máximo permitido en un estado "; y
WHEREAS, the Pew Charitable Trusts, in their publication entitled Payday Lending in America: Who Borrows,
Where they Borrow, and Why, (July 2012), also stated that “the vast
majority of borrowers use the loans on a long-term basis, not temporary one.
Thus it seems that the payday loan industry is selling a product few people use
as designed and that imposes debt that is consistently more costly and longer
lasting than advertised;” and
POR
CUANTO, el Pew Charitable Trusts, en su publicación titulada Préstamos de día
de pago en América: que pide prestado, donde se pide prestado, y por qué,
(julio de 2012), también declaró que "la gran mayoría de los prestatarios
utilizar los préstamos a largo plazo, uno no temporal. Así, parece que la
industria de préstamo de día de pago es la venta de un producto pocas personas
utilizan como fue diseñado y que impone la deuda que es consistentemente más
costoso y más duradera de lo anunciado; "y
WHEREAS, the Community Financial Services Association of America
(CFSA), the national trade association for companies that offer small dollar,
short-term loans or payday advances includes the following in the “Member Best
Practices” as listed on its internet site (http://cfsaa.com/cfsa-member-best-practices.aspx):
“Members shall not allow customers to rollover a payday advance (the extension
of an outstanding advance by payment of only a fee) unless expressly authorized
by state law, but in such cases where authorized will limit rollovers to four
or the state limit, whichever is less.” The need for consumer understanding was
also outlined on this website: “A contract between a member and the customer
must fully outline the terms of the payday advance transaction. Members agree
to disclose the cost of the service fee both as a dollar amount and as an
annual percentage rate (“APR”);” and
POR
CUANTO, la Asociación Comunitaria de Servicios Financieros de América (CFSA),
la asociación nacional de empresas que ofrecen dólar de los pequeños, los
préstamos a corto plazo o adelantos de su sueldo incluye lo siguiente en los
"Miembros Mejores Prácticas" que se enumeran en su sitio de Internet
(http: //cfsaa.com/cfsa-member-best-practices.aspx): "los miembros no
permitirán a los clientes Pasar por encima de día de pago anticipado (la
extensión de un anticipo pendiente mediante el pago de una cuota única) a menos
que expresamente autorizado por la ley estatal, pero en tales casos, cuando lo
autoricen limitará vuelcos de cuatro o el límite del estado, el que sea menor
"la necesidad de comprensión de los consumidores también se esbozó en este
sitio web:". un contrato entre un miembro y el cliente debe describir
completamente los términos del día de pago anticipado transacción. Los miembros
están de acuerdo en dar a conocer el costo de la cuota de servicio tanto como
una cantidad de dinero y, como una tasa porcentual anual ( "apr");
"y
WHEREAS, the Center for Responsible Lending, a non-profit,
non-partisan organization, states on its internet site (http://www.responsiblelending.org/other-consumer-loans
/tools-resources/fast-facts.html) that: “car title loans are based on the
value of a borrower’s car - the ability to repay the loans is not factor in the
lending decision…”; “loan rates for a car title are typically 20-30 times that
of rates charged by credit card issuers…”; “the average car title customer
renews their loan 8 times…”; and, “on a $500 title loan, this average customer
will pay back $650 in interest over eight months; the principal borrowed will
be in addition;” and
POR
CUANTO, el Centro para Préstamos Responsables, una organización sin ánimo de
lucro, organización no partidista, afirma en su sitio de internet
(http://www.responsiblelending.org/other-consumer-loans
/tools-resources/fast-facts.html) que: "préstamos de título de automóvil
se basan en el valor del coche de un prestatario - la capacidad para reembolsar
los préstamos no es factor en la decisión de préstamo ..."; "Las
tasas de préstamo para un título de automóvil son típicamente 20-30 veces mayor
que la de las tasas cobradas por los emisores de tarjetas de crédito ...";
"El cliente medio título del coche renueva sus préstamos 8 veces
..."; y, "en un préstamo del título de $ 500, este cliente promedio
pagará $ 650 en intereses durante ocho meses; el capital prestado será
adicional; "y
WHEREAS, lenders hold onto the motor vehicle title and when
borrowers cannot continue to pay the fees, they can lose their vehicles, which
can drastically affect the borrower’s means of transportation for work and
other essential household functions.
POR
CUANTO, los prestamistas se aferran a la garantía de vehículo automotor y
cuando los prestatarios no pueden seguir pagando las cuotas, que pueden perder
sus vehículos, que pueden afectar drásticamente medios del prestatario de
transporte para el trabajo y otras funciones esenciales para el hogar.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ___________:
Section 1. Chapter ____ - CREDIT ACCESS BUSINESSES
____.010- Short Title and
Purpose.
(a) This article may be known and cited as “Credit Access
Businesses Regulation.”
(b) The purpose of this article
is to protect the welfare of the citizens of the City of _________ by
monitoring credit access businesses in an effort to reduce abusive and
predatory lending practices. To this end, this article establishes a
registration program for credit access businesses, imposes restrictions on
extensions of consumer credit made by credit access businesses, and imposes
recordkeeping requirements on credit access businesses.
____.020- Definitions.
As used in this chapter:
(1) CERTIFICATE OF REGISTRATION means a certificate of registration
issued by the director under this article to the owner or operator of a credit
access business.
(2) CONSUMER means an individual who is solicited to purchase or who
purchases the services of a credit access business.
(3) CONSUMER’S LANGUAGE OF PREFERENCE is the language the consumer
understands best.
(4) CREDIT ACCESS BUSINESS has the meaning given that term in Section
393.601 of the Texas Finance Code.
(5) DEFERRED PRESENTMENT TRANSACTION has the meaning given that term
in Section 393.601 of the Texas Finance Code.
(6) DIRECTOR means the director of the department designated by the City
Council, City Manager, or City Councilor City Manager’s Designee, to enforce
and administer this chapter.
(7) EXTENSION OF CONSUMER CREDIT has the meaning given that term in
Section 393.001 of the Texas Finance Code.
(8) MOTOR VEHICLE TITLE LOAN has the meaning given that term in
Section 393.601 of the Texas Finance Code.
(9) PERSON means any individual, corporation, organization,
partnership, association, financial institution, or any other legal entity.
(10) REGISTRANT means a person issued a certificate of registration for
a credit access business under this chapter and includes all owners and
operators of the credit access business identified in the registration
application filed under this chapter.
(11) STATE LICENSE means a
license to operate a credit access business issued by the Texas Consumer Credit
Commissioner under Chapter 393, Subchapter G of the Texas Finance Code.
____.030- Violations; Penalty
(a) A person who violates a provision of this chapter, or who
fails to perform an act required of the person by this chapter, commits an
offense. A person commits a separate offense for each and every violation
relating to an extension of consumer credit, and for each day during which a
violation is committed, permitted, or continued.
(b) An offense under this chapter is punishable by a fine of not
more than $500.
(c) A culpable mental state is not required for the commission of
an offense under this article and need not be proved.
(d) The penalties provided for in Subsection (b) are in addition
to any other remedies that the city may have under city ordinances and state
law.
____.040- Defenses
It is a defense to prosecution under this article that at the time
of the alleged offense the person was not required to be licensed by the state
as a credit access business under Chapter 393, Subchapter G, of the Texas
Finance Code.
____.050-
Registration Required
A person commits an offense if the person acts,
operates, or conducts businesses as a credit access business without a valid
certificate of registration. A certificate of registration is required for each
physically separate credit access business.
____.060-
Registration Application
(a) To
obtain a certificate of registration for a credit access business, a person
must submit an application on a form provided for that purpose to the director.
The application must contain the following:
(1) The name,
street address, mailing address, facsimile number, and telephone number of the
applicant.
(2) The business
or trade name, street address, mailing address, facsimile number, and telephone
number of the credit access business.
(3) The names,
street addresses, mailing addresses, and telephone numbers of all owners of the
credit access business, and the nature and extent of each person’s interest in
the credit access business.
(4) A copy of a
current, valid state license held by the credit access business pursuant to
Chapter 393, Subchapter G of the Texas Finance Code.
(5) A copy of a
current, valid certificate of occupancy showing that the credit access business
is in compliance with the City of _______ Code.
(6) A non-refundable
application fee for the amount established.
(b) An applicant or registrant shall notify the
director within 45 days after any material change in the information contained
in the application for a certificate of registration, including, but not
limited to, any change of address and any change in the status of the state
license held by the applicant or registrant.
____.070- Issuance
and Display of Certificate of Registration; Presentment upon Request.
(a) The director shall issue to the applicant a
certificate of registration upon receiving a completed application under Section
___.060
(b) A certificate of registration issued under
this section must be conspicuously displayed to the public in the credit access
business. The certificate of
registration must be presented upon request to the director or any peace
officer for examination.
____.080- Expiration
and Renewal of Certificate of Registration.
(a) A certificate of registration
expires on the earliest of:
(1) One year after the date of issuance;
or
(2) The date
of revocation, suspension, surrender, expiration without renewal, or other
termination of the registrant’s state license.
(b) A certificate of registration
may be renewed by making application in accordance with Section ___.060. A
registrant shall apply for renewal at least 30 days before the expiration of
the registration.
____.090-
Non-transferability.
A certificate of registration for a credit access business
is not transferable.
____.100- Maintenance
of Records.
(a) A credit access business shall maintain a
complete set of records of all extensions of consumer credit arranged or
obtained by the credit access business, which must include the following
information:
(1) The
name and address of the consumer.
(2) The
principal amount of cash actually advanced.
(3) The
length of the extension of consumer credit, including the number of
installments
and
renewals.
(4) The
fees charged by the credit access business to arrange or obtain an extension
of
consumer credit; and
(5) The
documentation used to establish a consumer’s income under Section _____.110 of
this ordinance.
(b) A credit access business shall maintain a
copy of each written agreement between the credit access business and a
consumer evidencing an extension of a consumer credit (including, but not
limited to, any refinancing or renewal granted to the consumer).
(c) A credit access business shall maintain
copies of all quarterly reports filed with the Texas Consumer Credit
Commissioner under Section 393.627 of the Texas Finance Code.
(d) The records required to be maintained by a
credit access business under this section must be retained for at least three
years and made available for inspection by the city upon request during the
usual and customary business hours of the credit access business.
____.110-
Restriction on Extension of Consumer Credit.
(a) The cash advanced under an extension of
consumer credit that a credit access business obtains for a consumer or assists
a consumer in obtaining in the form of a deferred presentment transaction may
not exceed 20 percent of the consumer’s gross monthly income.
(b) The cash advanced under an extension of
consumer credit that a credit access business obtains for a consumer or assists
a consumer in obtaining in the form of a motor vehicle title loan may not
exceed the lesser of:
(1)
Three percent of the consumer’s gross annual income; or
(2) 70
percent of the retail value of the motor vehicle.
(c) A credit access business shall use a paycheck
or other documentation establishing income to determine a consumer’s income.
(d) An extension of consumer credit that a credit
access business obtains for a consumer or assists a consumer in obtaining and
that provides for repayment in installments may not be payable in more than
four installments. Proceeds from each installment must be used to repay at
least 25 percent of the principal amount of the extension of consumer credit.
An extension of consumer credit that provides for repayment in installments
many not be refinanced or renewed.
(e) An extension of consumer credit that a credit
access business obtains for a consumer or assists a consumer in obtaining and
that provides for a single lump sum repayment may not be refinanced or renewed
more than three times. Proceeds from each refinancing or renewal must be used
to repay at least 25 percent of the principal amount of the original extension
of consumer credit.
(f) For purposes of this section, an extension of
consumer credit that is made to a consumer within seven days after a previous
extension of consumer credit has been paid by the consumer will constitute a
refinancing or renewal.
____.120-
Requirement of Consumer Understanding of Agreement.
(a) Every agreement between the credit access
business and a consumer evidencing an extension of consumer credit (including,
but not limited to, any refinancing or renewal granted to the consumer), must
be written in the consumer’s language of preference. Every credit access
business location must maintain on its premises, to be available for use by
consumers, agreements in the English and Spanish languages.
(b) For every consumer who cannot read, every
agreement between the credit access business and a consumer evidencing an
extension of consumer credit (including, but not limited to, any refinancing or
renewal granted to the consumer) must be read to the consumer in its entirety
in the consumer’s language of preference, prior to the consumer’s signature.
(c) For every consumer who cannot read, every
disclosure and notice required by law must be read to the consumers in its
entirety in the consumer’s language of preference, prior to the consumer’s
signature.
____.130-
Referral to Consumer Credit Counseling.
A credit access business shall provide a form, to
be prescribed by the Director, to each consumer seeking assistance in obtaining
an extension of consumer credit which references non-profit agencies that
provide financial education and training programs and agencies with cash
assistance programs. The form will also
contain information regarding extensions of consumer credit, and must include
the information required by ____.100(a)(1)-(5) of this ordinance specific to
the loan agreement with the consumer. If the Director has prescribed a form in
the consumer’s language of preference, the form must be provided in the
consumer’s language of preference.
Section
2. Should any article, section,
part, paragraph, sentence, phrase, clause, or word of this ordinance, for any
reason be held illegal, inoperative, or invalid, or if any exception to or
limitation upon any general provision herein contained be held to be
unconstitutional or invalid or ineffective, the remainder shall, nevertheless,
stand effective and valid as if it had been enacted and ordained without the
portion held to be illegal, inoperative, unconstitutional, invalid, or
ineffective.
Section
3. This ordinance shall take
effect ___________, 2013
ADOPTED THIS _____ day of
_________________________ 2013.
CITY OF __________________________
ATTEST: __________________________________
Mayor
______________________________
City Clerk
APPROVED AS TO FORM:
City Attorney
