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Measure Details

Payday Loan Reform Act

Arizona Ballot Measure - Proposition 200

Election: General Nov. 4, 2008 (General)
Outcome: Failed

Categories:
Business and Consumers
Finance and Banking

Summary

ANALYSIS BY LEGISLATIVE COUNCIL

Currently, state law regulates companies that provide deferred presentment services. Deferred presentment is a service where a company makes a loan to a customer, accepts the customer's check in return and agrees to hold the check for at least five days before presenting the check for payment or deposit. These services are more commonly known as "payday loans".

The deferred presentment licensing program in the current law is set to terminate on July 1, 2010. Proposition 200 would continue to allow deferred presentment services indefinitely because it would repeal the program's termination date.

A company or individual providing deferred presentment services is licensed by this state to provide those services and is referred to as a "licensee". Proposition 200 would expand the scope of deferred presentment services to include electronic debit agreements and would further make the following changes to the regulation of companies that provide deferred presentment services:

1. A licensee would be:

a. Prohibited from offering deferred presentment services for longer than 35 days.

b. Prohibited from entering into a new deferred presentment transaction with a customer until the next business day following the completion of any prior transaction.

c. Required to provide the deferred presentment agreement in English or Spanish, as requested by the customer. The agreement must contain contact information for the state agency that regulates licensees.

d. Prohibited from charging a fee to extend the presentment or deposit of a check, but would not be limited on the number of times the presentment or deposit could be extended.

e. Prohibited from charging a dishonored check fee more than:

i. Twice for a check returned due to insufficient funds.

ii. Once for a check returned due to a closed account or a stop payment order.

f. Required to enter into a repayment plan with the customer if the customer requests it before the deferred presentment transaction is due. The repayment plan would divide the customer's remaining balance into four substantially equal payments. A licensee would not be able to assess additional fees or interest on the outstanding balance or seek to collect any amount due except pursuant to the terms of the repayment plan so long as the customer fulfills his repayment plan obligation; otherwise, the customer could be taken to collections. A customer's obligation under the deferred presentment services agreement would be fulfilled if the repayment plan is completed. A customer would only be allowed to enter into a repayment plan once every 365 days. A customer's participation in and completion of a repayment plan would be reported to a consumer credit reporting service (an entity that assembles or evaluates consumer credit information for the purpose of providing consumer credit reports to third parties).

g. Prohibited from entering into a deferred presentment arrangement with a customer who has an outstanding, incomplete repayment plan. Before October 15, 2009, Proposition 200 would allow a licensee to rely on a customer's written representation that the customer does not have an outstanding, incomplete repayment plan. The superintendent of the state agency that regulates licensees would be required, by October 15, 2009, to identify consumer credit reporting services that meet certain criteria and can be used by companies to verify whether a consumer has an outstanding, incomplete repayment plan and is eligible or ineligible for deferred presentment services.

2. A licensee would not be prohibited from making certain other loans of money or extension of credit such as consumer revolving loans and home equity revolving loans.

3. An applicant for a license would be required to maintain a minimum net worth in cash or cash equivalents of at least $50,000 per licensed location, up to a maximum required net worth of $1,000,000.

4. A licensee would be civilly liable under state law for violating a federal law that provides consumer credit protections for active members of the military and their families ("covered borrowers").
FISCAL IMPACT STATEMENT

State law requires the Joint Legislative Budget Committee (JLBC) Staff to prepare a summary of the fiscal impact of certain ballot measures. By continuing to regulate payday lenders, Proposition 200 would allow the state to continue to collect $360,000 in fees from payday lenders that are deposited into the General Fund. These monies would otherwise stop being collected on July 1, 2010. The proposition would also require the state to continue to expend funding to oversee payday lenders, which would otherwise end in 2010. Currently, the Department of Financial Institutions spends $60,000 annually to regulate the industry. The proposition may cause the Department of Financial Institutions' workload to oversee payday lenders to increase.

Measure Text

BE IT ENACTED BY THE PEOPLE OF THE STATE OF ARIZONA:

Section 1. Title

This measure shall be known as the Payday Loan Reform Act.

Section 2. Purpose and Intent

The people of Arizona declare that the intent and purpose of this Act is to:

1. Reduce the cost of small dollar, short-term consumer loans;

2. Promote responsible consumer lending practices;

3. Provide consumers with borrowing options on fair terms that allow a reasonable time to repay a loan;

4. Regulate the covered products in a comprehensive and efficient manner;

5. Make clear that internet lenders are subject to the laws of this State; and,

6. Reduce the number of store-front locations in our neighborhoods.

Section 3. 6-1251, Arizona Revised Statutes is amended to read:

6-1251. Definitions

In this chapter, unless the context otherwise requires:

1. "Branch office" means any office operated by a licensee to provide deferred presentment services.

2. "Check" means a draft signed by the maker and made payable to a person that is licensed pursuant to this chapter with the name of the maker preprinted on the face of the check OR AN ELECTRONIC DEBIT AGREEMENT THAT COMPLIES WITH TITLE 44, CHAPTER 26.

3. "Deferred presentment services" means a transaction pursuant to a written agreement in which the licensee accepts a check and agrees to hold the check for at least five days before presentment for payment or deposit.

4. "Engaged in the business" means either:

(a) Advertising to or any other solicitation of a resident of this state that offers deferred presentment services and that occurs within this state.

(b) Providing three or more deferred presentment services within a calendar year to residents of this state.

5. "License" means a license issued pursuant to this chapter.

6. "Licensee" means a corporation, company, firm, partnership, association or natural person that is licensed by the superintendent to engage in the business of providing deferred presentment services pursuant to this chapter.

7. "Location" means the entire space in which a licensee provides deferred presentment services.

8. "Partner" means a person who either:

(a) Is authorized by law or a partnership agreement to participate in the management of the business of the partnership.

(b) Owns more than twenty-five per cent of the applicant or licensee partnership.

Section 4. 6-1254, Arizona Revised Statutes, is amended to read:

6-1254. Qualifications of applicants

A. An applicant for a license:

1. Shall be a citizen of the United States.

2. Shall be a person of honesty, truthfulness and good moral character.

3. Shall not have been convicted of a crime that involves moral turpitude.

4. Shall not have defaulted on payment of money collected or received for another person.

5. Shall not have been a former licensee pursuant to this chapter whose license was suspended or revoked and not subsequently reinstated.

B. If the applicant is a person other than a natural person, the qualifications required by subsection A are also required of any executive officer, director or partner of the firm, partnership or association.

C. To qualify for a license an applicant shall have AND MAINTAIN:

1. A minimum net worth in cash or cash equivalents, determined in accordance with generally accepted accounting principles, of at least fifty thousand dollars, PER LICENSED LOCATION, UP TO A MAXIMUM REQUIRED NET WORTH OF ONE MILLION DOLLARS.

2. The financial responsibility, character and experience to warrant a belief that the business is operated lawfully, honestly, fairly and efficiently.

Section 5. 6-1259, Arizona Revised Statutes is amended to read:

6-1259. Prohibited acts

A. A person shall not engage in the business of providing deferred presentment services, including internet deferred presentment services, without first obtaining a license pursuant to this chapter. A separate license is required for each location from which the business is conducted. The licensee shall post its license to engage in the business of deferred presentment services at each location that is licensed pursuant to this chapter.

B. A licensee shall not:

1. Advance monies on the security of a check without first obtaining reasonable evidence that indicates that the account on which the presented check is drawn is an open and active account.

2. Assess any fee that is more than the amount prescribed in this chapter.

3. At the licensed location engage in the business of:

(a) Making loans of money or extensions of credit other than those allowed under this chapter TITLE or title 44, chapter 11, article 3.

(b) Discounting notes, bills of exchange, items or other evidences of debt.

(c) Accepting deposits or bailments of money or items, except as expressly provided in section 6-1260.

4. Use or cause to be published or disseminated any advertisement that contains false, misleading or deceptive statements or representations.

5. Engage in the business of deferred presentment services at locations other than licensed locations.

6. Engage in unfair, deceptive or fraudulent practices.

7. Alter or delete the date on a check accepted by the licensee.

8. Take possession of an undated check or a check dated on a date other than the date on which the licensee takes possession of the check or the date of presentment.

9. Require a customer to provide security for the transaction, other than the presented check, or require the customer to provide a guaranty from another person.

10. Fail to take reasonable measures to ensure that no customer has more than one deferred presentment loan outstanding at any time with any licensee in this state.

11. Engage in the sale of the following goods or services at any licensed location:

(a) Gaming activities, including the sale of lottery tickets.

(b) Alcoholic beverages.

12. Tie or otherwise condition the offering of deferred presentment services to the sale of any good or service.

13. Permit others to engage in any activity prohibited in this section at a location licensed pursuant to this chapter.

14. Offer deferred presentment services for less than five days OR LONGER THAN THIRTY FIVE DAYS.

15. Be required to request or accept any written representation by a customer as to whether the customer has any outstanding checks for deferred presentment held by other licensees.

15. Charge a prepayment penalty.

16. ENTER INTO A NEW DEFERRED PRESENTMENT TRANSACTION WITH A CUSTOMER UNTIL THE NEXT BUSINESS DAY FOLLOWING THE COMPLETION OF A PRIOR TRANSACTION, INCLUDING A REPAYMENT PLAN TRANSACTION.

Sec. 6. Section 6-1260, Arizona Revised Statutes, is amended to read:

6-1260. Deferred presentment; amount; fees; loans to members of military service; repayment plans

A. The licensee may accept for deferred presentment or deposit a check with a face amount of at least fifty dollars but not more than five hundred dollars, excluding the fees permitted in subsection F G of this section.

B. For each check the licensee accepts for deferred presentment or deposit, the licensee and the customer shall sign a written agreement IN ENGLISH OR IN SPANISH AT THE CUSTOMER'S REQUEST that contains the name or trade name of the licensee, the transaction date, the amount of the check, the amount to be paid by the maker, a statement of the total amount of the fees charged, expressed both as a dollar amount and as an effective annual percentage rate, a disclosure statement that complies with state and federal truth in lending laws and a notice to the customer as prescribed in subsection C of this section. The written agreement shall expressly require the licensee to defer presentment or deposit of the check until a specified date. THE WRITTEN AGREEMENT SHALL CONTAIN THE FOLLOWING INFORMATION ADJACENT TO THE CUSTOMER SIGNATURE LINE:

1. THE TELEPHONE NUMBER AND ADDRESS OF THE DEPARTMENT.

2. THE LICENSEE IS REGULATED BY THE DEPARTMENT.

3. ANY COMPLAINTS CONCERNING THE AGREEMENT MAY BE ADDRESSED TO THE DEPARTMENT AT THE DEPARTMENT'S ADDRESS AND TELEPHONE NUMBER.

C. A licensee shall provide a notice in a prominent place on each written agreement that specifies that no customer may have outstanding more than one deferred presentment service agreement at one time and the face amount, exclusive of any fees, cannot be more than five hundred dollars. A licensee shall ask every customer who seeks deferred presentment services whether that customer has any outstanding checks payable to other licensees.

D. A licensee may rely on the customer's representation of whether the customer has any outstanding checks for deferred presentment held by other licensees.

E. UNTIL A DATABASE IS CERTIFIED BY THE DEPARTMENT PURSUANT TO SECTION 6-1264, A LICENSEE MAY RELY UPON THE CUSTOMER'S WRITTEN REPRESENTATION THAT THE CUSTOMER DOES NOT HAVE AN OUTSTANDING, INCOMPLETE REPAYMENT PLAN AS DESCRIBED IN SUBSECTION O OF THIS SECTION.

E. F. The maker of a check has the right to redeem the check from the licensee before the agreed on date of presentment or deposit if the maker pays the licensee the amount of the check.

F. G. A licensee shall not directly or indirectly charge any fee or other consideration for accepting a check for deferred presentment or deposit that is more than fifteen per cent of the face amount of the check for any initial transaction or any extension PRINCIPAL AMOUNT BORROWED BY THE CUSTOMER.

G. H. A licensee may impose the fee prescribed in subsection F G of this section only once for each written agreement. The fee is earned on execution of the written agreement and is not subject to any reimbursement even if the maker redeems the check pursuant to subsection E F of this section.

H. I. The fee charged by the licensee is not interest for purposes of any other law or rule of this state.

I. J. Except as otherwise provided in this subsection, A person may NOT, FOR A FEE, extend the presentment or deposit of a check. not more than three consecutive times. For each extension the customer and the licensee shall terminate the previous agreement and sign a separate agreement. During an incomplete transaction the customer may not receive any additional monies from the licensee. The licensee may charge a fee as prescribed in subsection F of this section for each extension. A person who is a member of the military service of the United States or the member's spouse may not extend the presentment or deposit of a check. If a customer has completed a deferred presentment transaction with the licensee, the customer may enter into a new agreement for deferred presentment services with the licensee ON THE NEXT BUSINESS DAY FOLLOWING THE COMPLETION OF AN EXISTING TRANSACTION, INCLUDING THE COMPLETION OF A REPAYMENT AGREEMENT AS PROVIDED FOR IN SECTION 6-1260.O. A transaction is completed when the customer's check is presented for payment, deposited or redeemed by the customer for cash.

J. K. If a check is returned to the licensee from a payer financial institution due to insufficient funds, a closed account or a stop payment order, the licensee may use all available civil remedies to collect on the check including the imposition of the dishonored check service fee prescribed in section 44-6852. THE LICENSEE SHALL NOT CHARGE A DISHONORED CHECK SERVICE FEE MORE THAN TWICE FOR A CHECK RETURNED DUE TO INSUFFICIENT FUNDS. THE LICENSEE SHALL NOT CHARGE A DISHONORED CHECK SERVICE FEE MORE THAN ONCE FOR A CHECK RETURNED DUE TO A CLOSED ACCOUNT OR A STOP PAYMENT ORDER. A LICENSEE MAY NOT CHARGE ANY ADDITIONAL FEES FOR THE DEFERRED PRESENTMENT TRANSACTION IF A CHECK IS RETURNED TO THE LICENSEE FROM A PAYER FINANCIAL INSTITUTION DUE TO INSUFFICIENT FUNDS, A CLOSED ACCOUNT OR A STOP PAYMENT ORDER, EXCEPT AS PROVIDED IN THIS SUBSECTION. An individual who issues a personal check to a licensee under a deferred presentment agreement is not subject to criminal prosecution pursuant to title 13, chapter 18.

K L. Before engaging in a deferred presentment transaction, a licensee shall provide to a customer who is a member of the military service of the United States or the member's spouse a written statement that clearly and conspicuously states the prohibited practices and requirements prescribed in subsection L M of this section.

L. M. If lending to a member of the military service of the United States or the spouse of a member of the military service of the United States, a licensee:

1. Shall not garnish any military wages or salary.

2. Shall not conduct any collection activity against a customer who is a member of the military service of the United States or the spouse of the member during the member's deployment to a combat or combat support posting or during active duty service by a member of the national guard or any military reserve unit of any branch of the armed forces of the United States.

3. Shall contact the employer of a member of the military service of the United States about a deferred presentment debt of the member or the member's spouse. The contact allowed by this paragraph shall only be a notice for informational purposes and shall not be an attempt to collect on a loan made to the member or the member's spouse. A licensee shall not attempt to collect on a loan made to a member of the military service of the United States or the member's spouse through the member's chain of command.

4. Shall not conduct a deferred presentment transaction with a member of the military service of the United States or the member's spouse in any location that the member's commanding officer prohibits the member or the member's spouse from transacting deferred presentment business.

5. Is bound by the terms of any repayment agreement that the licensee negotiates with respect to the customer through military counselors or third party credit counselors.

N. A LICENSEE WHO ENTERS INTO A DEFERRED PRESENTMENT TRANSACTION WITH A "COVERED BORROWER" AS THAT TERM IS DEFINED IN SECTION 670 OF THE JOHN WARNER NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2007 (P.L. 109-364; 120 STAT. 2083; 10 UNITED STATES CODE SECTION 987), AND REGULATIONS PROMULGATED THEREUNDER, AND WHO VIOLATES ANY PROVISION OF SUCH ACT OR REGULATION IN EFFECT ON THE EFFECTIVE DATE OF THIS AMENDMENT TO THIS SECTION IS IN VIOLATION OF THIS TITLE.

O. IF A CUSTOMER REQUESTS A REPAYMENT PLAN AND SIGNS AN AMENDMENT TO THE PARTIES' WRITTEN AGREEMENT BEFORE THE CLOSE OF BUSINESS ON THE DATE ON WHICH A DEFERRED PRESENTMENT TRANSACTION IS DUE, THE LICENSEE SHALL ENTER INTO A REPAYMENT PLAN WITH THE CUSTOMER AS FOLLOWS:

1. THE REPAYMENT PLAN SHALL DIVIDE THE CUSTOMER'S OUTSTANDING BALANCE INTO FOUR SUBSTANTIALLY EQUAL PAYMENTS THAT COINCIDE WITH THE CUSTOMER'S EXPECTED PAY DAYS OR IF THE CUSTOMER IS UNEMPLOYED AT THE TIME, FOUR MONTHLY PAYMENTS. NO ADDITIONAL FEES OR INTEREST MAY BE ASSESSED ON THE OUTSTANDING BALANCE PAID PURSUANT TO THE REPAYMENT PLAN IF THE CUSTOMER FULFILLS THE TERMS OF THE REPAYMENT PLAN. A REPAYMENT PLAN IS NOT AN AGREEMENT FOR DEFERRED PRESENTMENT SERVICES AND IS NOT A LOAN. EXCEPT FOR THE REVISED PAYMENT SCHEDULE THE TERMS OF THE DEFERRED PRESENTMENT AGREEMENT REMAIN IN FULL FORCE AND EFFECT. PROVIDED THAT THE CUSTOMER HAS COMPLIED WITH THE TERMS OF THE REPAYMENT PLAN, THEN DURING THE TERM OF THE REPAYMENT PLAN THE LICENSEE MAY NOT SEEK TO COLLECT ANY AMOUNT DUE EXCEPT PURSUANT TO THE TERMS OF THE REPAYMENT PLAN. IF THE CUSTOMER MAKES EACH OF THE PAYMENTS REQUIRED UNDER THE REPAYMENT PLAN, THE OUTSTANDING DEFERRED PRESENTMENT SERVICES AGREEMENT SHALL BE COMPLETED. IF THE CUSTOMER FAILS TO ADHERE TO THE ORIGINAL REPAYMENT PLAN, THE LICENSEE MAY ENGAGE IN ANY LAWFUL COLLECTION ACTIVITY, BUT SHALL USE REASONABLE EFFORTS TO NEGOTIATE A MUTUALLY AGREEABLE ALTERNATIVE REPAYMENT PLAN BEFORE INITIATING ANY LEGAL ACTION.

2. NO LICENSEE MAY ALLOW A CUSTOMER TO ENTER INTO THE AGREEMENT PROVIDED FOR IN THIS SUBSECTION MORE THAN ONCE PER THREE HUNDRED AND SIXTY-FIVE DAY PERIOD COMMENCING ON THE FIRST DAY OF THE AGREEMENT.

3. THE LICENSEE SHALL SUBMIT TO A CONSUMER CREDIT REPORTING SERVICE THE DATA REQUIRED BY SECTION 6-1264 AT THE TIME IT ENTERS INTO A REPAYMENT PLAN.

4. AT THE SUCCESSFUL COMPLETION OF THE REPAYMENT PLAN, THE LICENSEE SHALL REPORT TO THE CONSUMER CREDIT REPORTING SERVICE THAT THE CUSTOMER'S REPAYMENT PLAN IS TERMINATED.

Sec. 7. Section 6-1262, Arizona Revised Statutes, is amended to read:

6-1262. Violation; classification; individual liability

A. A person that provides deferred presentment services without a license is guilty of a class 1 misdemeanor.

B. A licensee that violates this chapter or the rules adopted pursuant to this chapter is subject to revocation of the licensee's license and is guilty of a class 1 misdemeanor.

C. An officer or agent of a corporation or association who participates in a violation of this chapter is subject to the penalties prescribed in this section.

D. Except as the result of an accidental or bona fide error, if the licensee charges, contracts for or receives any amount in excess of the fees expressly permitted by this chapter, the deferred presentment is voidable and the licensee has no right to collect or receive any fees in connection with the deferred presentment transaction. Any deferred presentment transaction, that is made by a person who is required to be licensed pursuant to this chapter but who is not licensed is void, and the person has no right to MAINTAIN A COURT ACTION OR OTHERWISE collect, receive or retain any principal or other fees in connection with that deferred presentment transaction. ANY AMOUNT RECEIVED BY A CUSTOMER FROM A PERSON WHO IS REQUIRED TO BE LICENSED BUT WHO IS NOT, SHALL BE DEEMED A GIFT TO THE CUSTOMER.

Sec. 8. Repeal

6-1263. Program termination

Section 6-1263., Arizona Revised Statutes is hereby repealed.

Sec. 9. Title 6, chapter 12.1, article 1, Arizona Revised Statutes, is amended by adding a new section 6-1264, to read:

6-1264.Commercially reasonable methods for verification; one incomplete repayment plan; definition

A. BEFORE ENTERING INTO A DEFERRED PRESENTMENT AGREEMENT WITH A CONSUMER, A LICENSEE MUST USE A COMMERCIALLY REASONABLE METHOD OF VERIFICATION TO VERIFY THAT THE CUSTOMER HAS NO OUTSTANDING INCOMPLETE REPAYMENT PLANS AS PROVIDED FOR IN SECTION 6-1260.O WITH THE LICENSEE OR ANY OTHER LICENSEE.

B. NO LATER THAN OCTOBER 15, 2009, THE SUPERINTENDENT SHALL CERTIFY THAT ONE OR MORE CONSUMER REPORTING SERVICE DATABASES ARE COMMERCIALLY REASONABLE METHODS OF VERIFICATION. THE LIST OF PROVIDERS THAT THE DIRECTOR HAS CERTIFIED AS PROVIDING COMMERCIALLY REASONABLE METHODS OF VERIFICATION SHALL BE POSTED ON THE DEPARTMENT'S WEBSITE AND SHALL BE MAILED TO EACH LICENSEE BY FIRST CLASS MAIL AT THE ADDRESS OF RECORD AS SHOWN ON THE DEPARTMENT'S LICENSING FILES.

C. EACH LICENSEE WHO PROVIDES DEFERRED PRESENTMENT SERVICES SHALL COMPLY WITH SUBSECTION A OF THIS SECTION NO LATER THAN DECEMBER 31, 2009.

D. A CONSUMER SEEKING DEFERRED PRESENTMENT SERVICES MAY MAKE A DIRECT INQUIRY TO THE CONSUMER REPORTING SERVICE TO REQUEST A MORE DETAILED EXPLANATION OF THE BASIS FOR A CONSUMER REPORTING SERVICE'S DETERMINATION THAT THE CONSUMER IS INELIGIBLE FOR A DEFERRED PRESENTMENT, AND THE CONSUMER REPORTING SERVICE SHALL PROVIDE A REASONABLE RESPONSE TO THE CONSUMER.

E. IN CERTIFYING A COMMERCIALLY REASONABLE METHOD OF VERIFICATION, THE SUPERINTENDENT SHALL ENSURE THE CERTIFIED DATABASE:

1. PROVIDES REAL TIME ACCESS THROUGH AN INTERNET CONNECTION OR, IF REAL TIME ACCESS THROUGH AN INTERNET CONNECTION BECOMES UNAVAILABLE DUE TO TECHNICAL PROBLEMS INCURRED BY THE CONSUMER REPORTING SERVICE, THROUGH ALTERNATIVE REAL TIME VERIFICATION MECHANISMS, INCLUDING REAL TIME VERIFICATION BY TELEPHONE;

2. CONTAINS A REAL TIME REGULATOR INTERFACE THAT ALLOWS THE DEPRTMENT TO ACCESS A CONSUMER REPORTING SERVICE DATABASE FOR REQUIRED MONITORING AND REPORTING FUNCTION; THIS INCLUDES THE ABILITY TO DETERMINE CONSUMER ELIGIBILITY AND REPORTS FOR LICENSEE EXAMINATIONS, REGULATORY REPORTING AND PROGRAM MONITORING;

3. PROVIDES LICENSEES WITH A STATEMENT THAT A CONSUMER IS ELIGIBLE OR INELIGIBLE FOR DEFERRED PRESENTMENT SERVICES AND A DESCRIPTION OF THE REASON FOR THE DETERMINATION.

4. PROVIDES ADEQUATE SAFEGUARDS TO ENSURE THAT CONSUMER INFORMATION CONTAINED IN THE CONSUMER REPORTING DATABASE IS KEPT CONFIDENTIAL;

5. DOES NOT ALLOW THE LICENSEE TO ENTER INTO A DEFERRED PRESENTMENT AGREEMENT THAT WOULD BE IN VIOLATION OF THIS CHAPTER;

6. ENSURES THAT INFORMATION SUBMITTED TO THE CERTIFIED DATABASE IS CONFIDENTIAL AND SHALL NOT BE RELEASED, OR OTHERWISE MADE AVAILABLE, TO THE PUBLIC;

7. DEMONSTRATES A WORKING SYSTEM TO THE DEPARTMENT PRIOR TO THE CERTIFICATION; AND

8. REQUIRES THAT A PROVIDER BE A REGISTERED CONSUMER REPORTING AGENCY AND BE SUBJECT TO THE APPLICABLE RULES AND REGULATIONS APPLIED BY THE FEDERAL TRADE COMMISSION UNDER THE FAIR CREDIT REPORTING ACT.

F. A LICENSEE SHALL UPDATE THE CERTIFIED DATABASE WHEN:

1. A CONSUMER ELECTS TO ENTER INTO A REPAYMENT PLAN;

2. A CONSUMER'S REPAYMENT PLAN IS PAID IN FULL; OR

4. A LICENSEE DETERMINES A REPAYMENT PLAN IS IN DEFAULT.

G. A LICENSEE MAY RELY ON THE INFORMATION CONTAINED IN THE CERTIFIED DATABASE AS ACCURATE AND IS NOT SUBJECT TO ANY PENALTY OR LIABILITY AS A RESULT OF RELYING ON INACCURATE INFORMATION CONTAINED IN THE DATABASE.

H. IN DETERMINING WHETHER A CREDIT REPORTING SERVICE SHOULD BE CERTIFIED AS A COMMERCIALLY REASONABLE METHOD OF VERIFICATION, THE SUPERINTENDENT WILL CONSIDER WHETHER SUCH CREDIT REPORTING SERVICE IS ADEQUATELY CAPITALIZED, DEMONSTRATES THE RESOURCES AND ABILITY TO PERFORM THE SERVICES REQUIRED PURSUANT TO THIS SECTION, AND HAS APPROPRIATE SURETY TO ENSURE PERFORMANCE OF ITS OBLIGATIONS PURSUANT TO THIS SECTION AND TO REASONABLY PROTECT CLAIMANTS IN THE EVENT THAT ACTIONS OR INACTIONS ON THE PART OF THE CREDIT REPORTING SERVICE RESULTS IN DAMAGES TO LICENSEES OR CONSUMERS.

Sec. 10. Section 12-671, Arizona Revised Statutes, is amended to read:

12-671. Drawing check or draft on no account or insufficient account with intent to defraud; civil action; definition of credit; prima facie evidence

A. A person who, for himself or for another, with intent to defraud, makes, draws, utters or delivers to another person or persons a check or draft on a bank or depositary for payment of money, knowing at the time of such making, drawing, uttering or delivery, that he or his principal does not have an account or does not have sufficient funds in, or credit with, such bank or depositary to meet the check or draft in full upon presentation, shall be liable to the holder of such check or draft for twice the amount of such check or draft or fifty dollars, whichever is greater, together with costs and reasonable attorney's ATTORNEY fees as allowed by the court on the basis of time and effort expended by such attorney on behalf of plaintiff, EXCEPT THAT LIABILITY FOR A CHECK OR DRAFT PRESENTED ACCORDING TO TITLE 6, CHAPTER 12.1 IS LIMITED TO ONLY THE FACE VALUE OF THE CHECK OR DRAFT TOGETHER WITH COSTS AND REASONABLE ATTORNEY FEES AND ANY APPLICABLE DISHONORED CHECK SERVICE FEE PRESCRIBED IN SECTION 44-6852.

B. The word "credit" as used in this section shall be construed to be an express agreement with the bank or depositary for payment of the check or draft.

C. Proof that, at the time of presentment, the maker, issuer or drawer did not have sufficient funds with the bank or depositary, and that he failed within twelve days after receiving notice of nonpayment or dishonor to pay the check or draft is prima facie evidence of intent to defraud.

D. Where a check, draft or order is protested, on the ground of insufficiency of funds or credit, the notice of formal protest thereof shall be admissible as proof of presentation, nonpayment and protest and shall be prima facie evidence of the insufficiency of funds or credit with the bank or depositary, or person, or firm or corporation.

E. "Notice", as used in this section, means notice given to the person entitled thereto, either in person, or in writing. Such notice in writing shall be given by certified mail, return receipt requested, to the person at his address as it appears on such check or draft.

F. Nothing in this section shall be applicable to any criminal case or affect eligibility or terms of probation.

Sec. 11. Section 44-6852, Arizona Revised Statutes, is amended to read:

44-6852. Dishonored checks; service fee

Notwithstanding any other law EXCEPT AS PROVIDED IN SECTION 6-1260, the holder, payee or assignee of the holder or payee of a dishonored check, draft, order or note may charge and collect from the maker or drawer a service fee of not more than twenty-five dollars plus any actual charges assessed by the financial institution of the holder, payee or assignee of the holder or payee as a result of the dishonored instrument.

Sec. 12. Conflicting Initiatives

This initiative constitutes a comprehensive regulatory program for deferred presentment lending. The people intend that if this measure receives more votes than any other initiative concerning deferred presentments then this measure shall prevail and take effect in its entirety and that no provision of any other measure concerning deferred presentments shall take effect in any respect.

Sec. 13. Severability

If any provision of this initiative measure is declared invalid, such invalidity shall not affect other provisions of this initiative measure which can be given effect without the invalid provision. To this end, the provisions of this initiative measure are declared to be severable.

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