State law citations regarding payday loans

The New Jersey Code of Criminal Justice 2C:21-19 Wrongful credit practices and related offenses, and Title 17 Corporations and Institutions For Finance and Insurance 17:9A-428. Requirement that commissioner be appointed as attorney to receive service of process; service:

2C:21-19 Wrongful credit practices and related offenses.

a. Criminal usury. A person is guilty of criminal usury when not being authorized or permitted by law to do so, he:

(1) Loans or agrees to loan, directly or indirectly, any money or other property at a rate exceeding the maximum rate permitted by law; or

(2) Takes, agrees to take, or receives any money or other property as interest on the loan or on the forbearance of any money or other interest in excess of the maximum rate permitted by law.

For the purposes of this section and notwithstanding any law of this State which permits as a maximum interest rate a rate or rates agreed to by the parties of the transaction, any loan or forbearance with an interest rate which exceeds 30% per annum shall not be a rate authorized or permitted by law, except if the loan or forbearance is made to a corporation, limited liability company or limited liability partnership any rate not in excess of 50% per annum shall be a rate authorized or permitted by law.

Criminal usury is a crime of the second degree if the rate of interest on any loan made to any person exceeds 50% per annum or the equivalent rate for a longer or shorter period. It is a crime of the third degree if the interest rate on any loan made to any person except a corporation, limited liability company or limited liability partnership does not exceed 50% per annum but the amount of the loan or forbearance exceeds $1,000.00. Otherwise, making a loan to any person in violation of subsections a.(1) and a.(2) of this section is a disorderly persons offense.

b. Business of criminal usury. Any person who knowingly engages in the business of making loans or forbearances in violation of subsection a. of this section is guilty of a crime of the second degree and, notwithstanding the provisions of N.J.S. 2C:43-3, shall be subject to a fine of not more than $250,000.00 and any other appropriate disposition authorized by N.J.S. 2C:43-2b.

c. Possession of usurious loan records. A person is guilty of a crime of the third degree when, with knowledge of the nature thereof, he possesses any writing, paper instrument or article used to record criminally usurious transactions prohibited by subsection a. of this section.

d. Unlawful collection practices. A person is guilty of a disorderly persons offense when, with purpose to enforce a claim or judgment for money or property, he sends, mails or delivers to another person a notice, document or other instrument which has no judicial or official sanction and which in its format or appearance simulates a summons, complaint, court order or process or an insignia, seal or printed form of a federal, State or local government or an instrumentality thereof, or is otherwise calculated to induce a belief that such notice, document or instrument has a judicial or official sanction.

e. Making a false statement of credit terms. A person is guilty of a disorderly persons offense when he understates or fails to state the interest rate, or makes a false or inaccurate or incomplete statement of any other credit terms.

f. Debt adjusters. Any person who shall act or offer to act as a debt adjuster shall be guilty of a crime of the fourth degree.

"Debt adjuster" means a person who either (1) acts or offers to act for a consideration as an intermediary between a debtor and his creditors for the purpose of settling, compounding, or otherwise altering the terms of payment of any debts of the debtor, or (2) who, to that end, receives money or other property from the debtor, or on behalf of the debtor, for payment to, or distribution among, the creditors of the debtor. "Debtor" means an individual or two or more individuals who are jointly and severally, or jointly or severally indebted.

The following persons shall not be deemed debt adjusters for the purposes of this section: an attorney at law of this State who is not principally engaged as a debt adjuster; a nonprofit social service or consumer credit counseling agency licensed pursuant to P.L.1979, c.16 (C.17:16G-1 et seq.); a person who is a regular, full-time employee of a debtor, and who acts as an adjuster of his employer's debts; a person acting pursuant to any order or judgment of court, or pursuant to authority conferred by any law of this State or of the United States; a person who is a creditor of the debtor, or an agent of one or more creditors of the debtor, and whose services in adjusting the debtor's debts are rendered without cost to the debtor; or a person who, at the request of the debtor, arranges for or makes a loan to the debtor, and who, at the authorization of the debtor, acts as an adjuster of the debtor's debts in the disbursement of the proceeds of the loan, without compensation for the services rendered in adjusting such debts.

Amended 1979, c.178, s.42; 1981, c.104, s.1; 1981, c.290, s.25; 1986, c.184, s.6; 1997, c.426, s.2.

17:1-27 Prohibited actions.

3. No bank, savings bank, State association, or any officer, director, employee, or major shareholder thereof, shall:

a. Fail to comply with an order or other written instruction of the commissioner or any other financial regulatory agency;

b. Violate a State or federal law;

c. Take any action, or fail to take an action, with the result that a material interest of the covered institution is adversely affected;

d. Be convicted of a crime that would permit adverse action by a governmental agency pursuant to P.L.1968, c.282 (C. 2A:168A-1 et seq.);

e. Provide incorrect, misleading, incomplete or untrue material information about the covered institution to the commissioner or any federal financial regulatory agency;

f. Withhold material information from the commissioner or any federal financial regulatory authority about the covered institution; or

g. Take an action, or fail to take an action, the result of which poses a substantial risk to the safety and soundness of the covered institution or may cause substantial damage to its reputation.

L.2005,c.195,s.3.

17:1-28 Enforcement of, penalties for violations under C.17:1-27.

4. a. In addition to any other penalty provided by law, if the commissioner determines that a bank, savings bank, State association, or any officer, director, employee or major shareholder thereof, has violated a provision of section 3 of this act, the commissioner may impose any one or more of the following penalties and sanctions as he deems appropriate. The commissioner may:

(1) Impose a civil penalty of up to $10,000 for each violation, or up to $50,000 for each willful violation;

(2) Suspend, revoke or refuse to renew a license issued by the department;

(3) Temporarily remove a person responsible for a violation of this act from working in that person's present capacity or in any capacity related to activities regulated by the department;

(4) Prohibit or bar a person responsible for a violation of this act from working in that person's present capacity or in any capacity related to activities regulated by the department;

(5) Order a person to cease and desist any violation of this act;

(6) Order a person to make restitution for actual damages;

(7) Enter an appropriate temporary order, to be effective immediately and until entry of a final order, pending completion of an investigation or any formal proceeding instituted pursuant to this act, if the commissioner finds that the interests of the public require immediate action to prevent undue harm to the covered institution, depositors or the public. Orders issued pursuant to this paragraph shall be subject to an application to vacate upon two days' notice, and a preliminary hearing on the temporary order shall be held, in any event, within five days after it is issued, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.); and

(8) Impose other sanctions or conditions as the commissioner deems appropriate.

b. Penalties and other sanctions shall be reasonable, based on the nature, extent and frequency of the violation, and the risk to the covered institution, depositors and the public. In addition to these factors, the commissioner shall consider, when determining the amount of a monetary penalty against an institution pursuant to paragraph (1) of subsection a. of this section, the amount of other monetary penalties, if any, imposed, or to be imposed, by another regulatory agency or through other legal process, and the impact of the total penalties on the institution.

c. A decision of the commissioner shall be a final order of the department and shall be enforceable in a court of competent jurisdiction.

d. The department shall publish the final adjudication issued in accordance with this section, subject to redaction or modification to preserve confidentiality.

e. Orders may be appealed as a final administrative action pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

L.2005,c.195,s.4.

17:9A-419. Definitions relative to foreign banks
38. As used in sections 37 through 86 of P.L.1996, c.17 (C.17:9A-418 through C.17:9A-467):

"Agency" means any place of business of a foreign bank at which credit balances are maintained, checks are paid, money is lent, or, to the extent not prohibited by federal law, deposits are accepted from a person or entity that is not a citizen or resident of the United States. Obligations shall not be considered credit balances unless they are:

(1) Incidental to, or arise out of the exercise of, other lawful banking powers;

(2) To serve a specific purpose;

(3) Not solicited from the general public;

(4) Not used to pay routine operating expenses such as salaries, rent, or taxes in the United States;

(5) Withdrawn within a reasonable period of time after the specific purpose for which they were placed has been accomplished; and

(6) Drawn upon in a manner reasonable in relation to the size and nature of the account.

"Banking Act" means "The Banking Act of 1948," P.L.1948, c.67 (C.17:9A-1 et seq.).

"Banking subsidiary," with respect to a specified foreign bank, means a bank that is a subsidiary as the terms "bank" and "subsidiary" are defined in section 2 of the federal "Bank Holding Company Act of 1956," 12 U.S.C. 1841.

"Branch" means any place of business of a foreign bank at which deposits are received and that is not an agency, as that term is defined in this section.

"Business in this State," when used with respect to a foreign bank which is licensed to establish one or more agencies or branch offices, includes, without limitation, the aggregate business of all those offices and agencies.

"Change the status of an office" means convert a representative office into a branch or agency, or an agency into a branch, or the reverse of the foregoing, but does not include renewal of the license of an existing office.

"Commercial lending company" means any organization, other than a bank or an organization operating under section 25 of the Federal Reserve Act, 12 U.S.C. 601-604a, organized under the laws of any state of the United States or a foreign country, that maintains credit balances permissible for an agency and engages in the business of making commercial loans. "Commercial lending company" includes any company chartered under Article XII of the banking law of the State of New York.

"Commissioner" means the Commissioner of Banking of New Jersey.

"Controlling person," when used with respect to a foreign bank, means any person who, directly or indirectly, controls that bank.

"Department" means the Department of Banking of New Jersey.

"To establish" or "establish" means to:

(1) Open and conduct business through an office;

(2) Acquire directly, through merger, consolidation, or similar transaction with another foreign bank, the operations of an office that is open and conducting business;

(3) Acquire an office through the acquisition of a foreign bank subsidiary that will cease to operate in the same corporate form following the acquisition;

(4) Change the status of an office; or

(5) Relocate an office from one physical location to another, unless the new office is in the same building as the existing office.

"Executive officer," when used with respect to a foreign bank or a controlling person of a foreign bank, means the chief executive officer, the chief operating officer, the chief financial officer, and any other person who participates or has authority to participate in major policy-making functions of such bank or controlling person. "Executive officer," when used with respect to a foreign bank, includes the head of the international division, or, if there is no such division, the closest equivalent division or unit of that bank.

"Federal agency" has the meaning set forth in section 1(b) of the "International Banking Act of 1978," 12 U.S.C. 3101.

"Federal branch" has the meaning set forth in section 1(b) of the "International Banking Act of 1978," 12 U.S.C. 3101.

"FDIC" means the Federal Deposit Insurance Corporation established pursuant to "Federal Deposit Insurance Act," 12 U.S.C. 1811 et seq.

"Federal Reserve" means the Board of Governors of the Federal Reserve System.

"Foreign country" means any nation other than the United States, including, without limitation, any subdivision, territory, trust territory, dependency, or possession of any such nation. With respect to banks which do not have deposit insurance with the FDIC, "foreign country" also includes Puerto Rico, Guam, American Samoa, the Virgin Islands, and any territory, trust territory, dependency, or insular possession of the United States.

"Foreign bank" means an organization that is organized under the laws of a foreign country and that engages directly in the business of banking outside of the United States. The term "foreign bank" does not include a central bank of a foreign country that does not engage in a commercial banking business in the United States through an office.

"Foreign banking organization" means a foreign bank that operates a branch, agency or commercial lending company subsidiary in the United States or that controls a bank in the United States and any company of which such foreign bank is a subsidiary.

"License" means a license issued under sections 37 through 86 of P.L.1996, c.17 (C.17:9A-418 through C.17:9A-467), authorizing a foreign bank or a commercial lending company to establish and to maintain an office; to be "licensed" means to be issued or to hold a license; and to be "licensed to transact business in this State," when used with respect to a foreign bank or a commercial lending company, means that the bank is licensed to establish an agency or branch office or commercial lending company.

"Loans and extensions of credit" means all direct and indirect advances of funds to a person made on the basis of any obligation of that person to repay funds.

"Office" or "office of a foreign bank" means any branch, agency, representative office, or commercial lending company subsidiary of a foreign bank in the United States.

"Organization" means a corporation, government, partnership, association, or any other entity.

"Person" means an individual or an organization.

"Primary office," when used with respect to a foreign bank which is licensed to establish a single office, means that office and, when used with respect to a foreign bank which is licensed to establish two or more offices, means one of those offices which that bank has designated as its primary office in accordance with section 51 of P.L.1996, c.17 (C.17:9A-432).

"Representative office" means any place of business of a foreign bank that is not a branch, agency, or subsidiary of the foreign bank.

"State of the United States" means any state of the United States or the District of Columbia.

"Subsidiary" means an organization, 25 percent or more of whose voting shares is directly or indirectly owned, controlled, or held with the power to vote by a company, including a foreign bank or foreign banking organization, or any organization that is otherwise controlled or capable of being controlled by a foreign bank or foreign banking organization.

L.1996,c.17,s.38.

17:9A-420. Foreign bank offices; division into classes, ranking
39. a. For purposes of sections 37 through 86 of P.L.1996, c.17 (C.17:9A-418 through C.17:9A-467), offices of foreign banks are divided into classes and ranked in ascending order, as follows:

(1) Representative office.

(2) Commercial lending company.

(3) Agency.

(4) Branch.

b. For purposes of sections 37 through 86 of P.L.1996, c.17 (C.17:9A-418 through C.17:9A-467):

(1) Changing a lower class office into a higher class office shall be treated as establishing the higher class office, but not as closing the lower class office.

(2) Changing a higher class office into a lower class office shall be treated as closing the higher class office, but not as establishing the lower class office.

c. In the case of changing a higher class office into a lower class office, when the application for approval to close the higher class office has been approved and all conditions precedent to the closing have been fulfilled, the foreign bank may change the higher class office into the lower class office, and the commissioner shall issue a license authorizing the bank to establish the lower class office.

L.1996,c.17,s.39.

17:9A-421. Fees relative to foreign banks
40.Fees shall be paid to, and collected by, the commissioner as follows:

a. The fee for filing with the commissioner an application by a foreign bank which is not licensed to transact business in this State for approval to establish a branch office shall be $3,000.

b. The fee for filing with the commissioner an application by a foreign bank or commercial lending company which is not licensed to transact business in this State for approval to establish an agency or an office of a commercial lending company shall be $2,500.

c. The fee for filing with the commissioner an application by a foreign bank which is licensed to transact business in this State for approval to establish a branch office shall be $2,000.

d. The fee for filing with the commissioner an application by a foreign bank or commercial lending company which is licensed to transact business in this State for approval to establish an agency or an office of a commercial lending company shall be $1,500.

e. The fee for filing with the commissioner an application by a foreign bank for approval to establish a representative office shall be $1,500.

f. The fee for filing with the commissioner an application by a foreign bank or commercial lending company which is licensed to establish an agency, branch or commercial lending company office for approval to relocate or to close that office shall be $1,000.

g. The fee for filing with the commissioner an application by a foreign bank which is licensed to establish a representative office for approval to relocate or to close that representative office shall be $500.

h. The fee for issuing a license shall be $300.

i. The commissioner, by regulation, shall have the power to increase the fees set forth above and to set and to charge additional fees, including but not limited to, annual assessment fees.

L.1996,c.17,s.40.

17:9A-428. Requirement that commissioner be appointed as attorney to receive service of process; service
47. a. (1) No foreign bank, other than a foreign bank which is licensed to establish an agency or branch office, shall be issued a license to establish a representative office or commercial lending company unless it shall have first filed with the commissioner, in the form as the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner to be the bank's or commercial lending company's attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors which arises out of the activities in this State of the representative office or commercial lending company after the appointment has been filed, with the same force and validity as if served personally on the bank or its successor, as the case may be.

(2) Any foreign bank, other than a foreign bank which is licensed to establish an agency or branch office or which establishes a federal agency or federal branch in this State, which establishes a representative office or commercial lending company and which has not filed with the commissioner an appointment pursuant to paragraph (1) of this subsection a., shall be deemed by the establishment of that office to have appointed the commissioner as its attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors which arises out of the activities in this State of the representative office or commercial lending company with the same force and validity as if served personally on the bank or its successor, as the case may be.

b. (1) No foreign bank shall be issued a license to establish an agency or branch office unless it shall have first filed with the commissioner, in a form as the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner to be the bank's attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors which arises after the appointment has been filed, with the same force and validity as if served personally on the bank or its successor, as the case may be.

(2) Any foreign bank which establishes an agency or branch office, other than a federal agency or federal branch, and which has not filed with the commissioner an appointment pursuant to paragraph (1) of this subsection b. shall be deemed by the establishment of that office to have appointed the commissioner as its attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the bank or any of its successors with the same force and validity as if served personally on the bank or its successor, as the case may be.

c. Service may be made on a foreign bank which has appointed or is deemed to have appointed the commissioner as its attorney for service of process by leaving a copy of the process at any office of the commissioner. However, this service is not effective unless (1) the party making the service, who may be the commissioner, forthwith sends notice of the service and a copy of the process by registered or certified mail to the foreign bank at its last address on file with the commissioner at any of its offices in this State or at its primary office wherever located, and (2) an affidavit of compliance with this subsection c. by the party making service is filed in the case on or before the return date, if any, or within such further time as the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allow.

L.1996,c.17,s.47.

17:9A-429. License not transferable, assignable
48. No license shall be transferable or assignable.

L.1996,c.17,s.48.

17:9A-430. Posting of license
49. Each foreign bank and commercial lending company which is licensed to establish an office shall post its license in a conspicuous place at that office.

L.1996,c.17,s.49.

Missouri Revised Statutes
Chapter 408
Legal Tender and Interest
Section 408.500

August 28, 2005




Unsecured loans under five hundred dollars, licensure of lenders, interest rates and fees allowed--penalties for violations--cost of collection expenses--notice required, form.
408.500. 1. Lenders, other than banks, trust companies, credit unions, savings banks and savings and loan companies, in the business of making unsecured loans of five hundred dollars or less shall obtain a license from the director of the division of finance. An annual license fee of three hundred dollars per location shall be required. The license year shall commence on January first each year and the license fee may be prorated for expired months. The director may establish a biennial licensing arrangement but in no case shall the fees be payable for more than one year at a time. The provisions of this section shall not apply to pawnbroker loans, consumer credit loans as authorized under chapter 367, RSMo, nor to a check accepted and deposited or cashed by the payee business on the same or the following business day. The disclosures required by the federal Truth in Lending Act and regulation Z shall be provided on any loan, renewal or extension made pursuant to this section and the loan, renewal or extension documents shall be signed by the borrower.

2. Entities making loans pursuant to this section shall contract for and receive simple interest and fees in accordance with sections 408.100 and 408.140. Any contract evidencing any fee or charge of any kind whatsoever, except for bona fide clerical errors, in violation of this section shall be void. Any person, firm or corporation who receives or imposes a fee or charge in violation of this section shall be guilty of a class A misdemeanor.

3. Notwithstanding any other law to the contrary, cost of collection expenses, which include court costs and reasonable attorneys fees, awarded by the court in suit to recover on a bad check or breach of contract shall not be considered as a fee or charge for purposes of this section.

4. Lenders licensed pursuant to this section shall conspicuously post in the lobby of the office, in at least fourteen-point bold type, the maximum annual percentage rates such licensee is currently charging and the statement: NOTICE:

This lender offers short-term loans. Please read and understand the terms of the loan agreement before signing.

5. The lender shall provide the borrower with a notice in substantially the following form set forth in at least ten-point bold type, and receipt thereof shall be acknowledged by signature of the borrower:

(1) This lender offers short-term loans. Please read and understand the terms of the loan agreement before signing.

(2) You may cancel this loan without costs by returning the full principal balance to the lender by the close of the lender's next full business day.

6. The lender shall renew the loan upon the borrower's written request and the payment of any interest and fees due at the time of such renewal; however, upon the first renewal of the loan agreement, and each subsequent renewal thereafter, the borrower shall reduce the principal amount of the loan by not less than five percent of the original amount of the loan until such loan is paid in full. However, no loan may be renewed more than six times.

7. When making or negotiating loans, a licensee shall consider the financial ability of the borrower to reasonably repay the loan in the time and manner specified in the loan contract. All records shall be retained at least two years.

8. A licensee who ceases business pursuant to this section must notify the director to request an examination of all records within ten business days prior to cessation. All records must be retained at least two years.

9. Any lender licensed pursuant to this section who fails, refuses or neglects to comply with the provisions of this section, or any laws relating to consumer loans or commits any criminal act may have its license suspended or revoked by the director of finance after a hearing before the director on an order of the director to show cause why such order of suspension or revocation should not be entered specifying the grounds therefor which shall be served on the licensee at least ten days prior to the hearing.

10. Whenever it shall appear to the director that any lender licensed pursuant to this section is failing, refusing or neglecting to make a good faith effort to comply with the provisions of this section, or any laws relating to consumer loans, the director may issue an order to cease and desist which order may be enforceable by a civil penalty of not more than one thousand dollars per day for each day that the neglect, failure or refusal shall continue. The penalty shall be assessed and collected by the director. In determining the amount of the penalty, the director shall take into account the appropriateness of the penalty with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require.

(L. 1990 H.B. 961, A.L. 1998 H.B. 1189, A.L. 2001 H.B. 738 merged with S.B. 186, A.L. 2002 S.B. 884, A.L. 2003 S.B. 346)

Chapter 408
Legal Tender and Interest
Section 408.100

August 28, 2005




Applicability of section--rate of interest.
408.100. This section shall apply to all loans which are not made as permitted by other laws of this state except that it shall not apply to loans which are secured by a lien on real estate, nonprocessed farm products, livestock, farm machinery or crops or to loans to corporations. On any loan subject to this section, any person, firm, or corporation may charge, contract for and receive interest on the unpaid principal balance at rates agreed to by the parties.

(L. 1951 p. 875 ?? 408.031, A.L. 1959 H.B. 320, A.L. 1979 S.B. 305, A.L. 1985 H.B. 358 & 440, A.L. 1998 S.B. 792)