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Loan terms: Loans cannot be less than 13 days nor more than 45 days. If a consumer has or has had loans
outstanding for a period in excess of 45 consecutive days, no payday lender may offer or make a loan to the
consumer for at least 7 calendar days after the date on which the outstanding balance of all payday loans made
during the 45 consecutive day period is paid in full. Total principal amount of all of the consumer's outstanding
payday loans cannot exceed the lesser of $1,000 or 25% of the consumer's gross monthly income. No payday loan
may be made to a consumer who has an outstanding balance on 2 payday loans. Before entering into a loan
agreement with a consumer, a lender must use a commercially reasonable method of verification to verify that the
proposed loan agreement is permissible under this Act. If the consumer has or has had one or more payday loans
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Prepared by the National Consumer Law Center, November 2005
outstanding for 35 consecutive days, any payday loan outstanding on the 35th consecutive day shall be payable
under the terms of a repayment plan at the consumer's request. The consumer has until 28 days after the default
date of the loan to request a repayment plan. Within 48 hours after the request, the lender must prepare the
repayment plan agreement and both parties must execute the agreement. Execution of the repayment plan
agreement shall be made in the same manner in which the loan was made and shall be evidenced in writing. Once
the loan becomes subject to a repayment plan, the loan shall not be construed to be in default until the default
date provided under the terms of the repayment plan.
Permitted charges: No lender may charge more than $15.50 per $100 loaned on any payday loan over the term
of the loan. This charge is considered fully earned as of the date on which the loan is made. If there are insufficient
funds to pay a check, Automatic Clearing House debit on the day of presentment and only after the lender has
incurred an expense, a lender may charge a fee not to exceed $25. Only one such fee may be collected by the
lender with respect to a particular check, ACH debit, or item even if it has been deposited and returned more than
once. A lender shall present the check, ACH debit for payment not more than twice. A fee charged under this
subsection (a) is a lender's exclusive charge for late payment. Insufficient fund fee.
Prohibited acts: Loan rollovers; threatening to use or using the criminal process in this or any other state to
collect on the loan; using any device or agreement that would have the effect of charging or collecting more fees or
charges than allowed by this Act, including, but not limited to, entering into a different type of transaction with the
consumer; engaging in unfair, deceptive, or fraudulent practices in the making or collecting of a payday loan; using
or attempting to use the check provided by the consumer in a payday loan as collateral for a transaction not related
to a payday loan; knowingly accepting payment in whole or in part of a payday loan through the proceeds of
another payday loan provided by any licensee; knowingly accepting any security for a payday loan; charging any
fees or charges other than those specifically authorized by this Act; threatening to take any action against a
consumer that is prohibited by this Act or making any misleading or deceptive statements regarding the payday
loan or any consequences thereof; Making a misrepresentation of a material fact by an applicant for licensure in
obtaining or attempting to obtain a license. Including any of the following provisions in loan documents: a
confession of judgment clause; a waiver of the right to a jury trial, if applicable, in any action brought by or against
a consumer, unless the waiver is included in an allowed arbitration clause; a mandatory arbitration clause that is
oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers; or a provision in which
the consumer agrees not to assert any claim or defense arising out of the contract. Selling any insurance of any
kind whether or not sold in connection with the; collecting a delinquency or collection charge on any installment
regardless of the period in which it remains in default; collecting treble damages on an amount owing from a
payday loan; Refusing, or intentionally delaying or inhibiting, the consumer's right to enter into a repayment plan
pursuant to this Act; charging for, or attempting to collect, attorney's fees, court costs, or arbitration costs incurred
in connection with the collection of a payday loan; making a loan in violation of this Act; garnishing the wages or
salaries of a consumer who is a member of the military; failing to suspend or defer collection activity against a
consumer who is a member of the military and who has been deployed to a combat or combat-support posting;
contacting the military chain of command of a consumer who is a member of the military in an effort to collect on a
payday loan; advertising for loans transacted under this Act may not be false, misleading, or deceptive. Payday
loan advertising, if it states a rate or amount of charge for a loan, must state the rate as an annual percentage
rate. No licensee shall conduct the business of making loans under this Act within any office, suite, room, or place
of business in which any other business is solicited or engaged in unless the other business is licensed by the
Department or, in the opinion of the Secretary, the other business would not be contrary to the best interests of
consumers and is authorized by the Secretary in writing.
Penalties: Material violations of this Act constitute a violation