Chapter 359 Oregon Laws 2003

AN ACT

SB 159

Relating to payday loans; creating new provisions; and amending ORS 725.600 and 725.610.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 725.600 is amended to read:

725.600. As used in ORS 725.600 to 725.625:

(1) A lender is:

(a) “In the business of making title loans” if at least 10 percent of all loans made by the lender are title loans.

(b) “In the business of making payday loans” if at least 10 percent of all loans made by the lender are payday loans.

(2) “Lender” includes individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies. “Lender” does not include a financial institution or trust company, as those terms are defined in ORS 706.008.

(3)(a) “Payday loan” means a loan, other than a purchase money loan:

(A) Made primarily for personal, family or household purposes;

(B) Made for a period of 60 days or less or for which the lender may demand repayment within 60 days; and

(C) Usually evidenced by a check or electronic repayment agreement provided by or on behalf of the borrower.

(b) “Payday loan” does not include a loan for a period of more than 60 days, the repayment of which the lender may accelerate upon a default by the borrower.

[(3)] (4) “Title loan” means a loan, other than a purchase money loan:

(a)(A) Secured by the title to a motor vehicle, recreational vehicle, boat or mobile home;

(B) Made for a period of 60 days or less;

(C) With a single payment payback; and

(D) Made by a lender in the business of making title loans; or

(b) That is secured, substantially equivalent to a title loan as defined in paragraph (a) of this subsection, and designated as a title loan by rule or order of the Director of the Department of Consumer and Business Services.

SECTION 2. ORS 725.610 is amended to read:

725.610. A person may not act as an agent or facilitator for the purpose of making a title or payday loan without first obtaining a license under this chapter, regardless of whether the principal making the loan is required to obtain a license.

SECTION 3. Sections 4 and 5 of this 2003 Act are added to and made a part of ORS 725.600 to 725.625.

SECTION 4. A lender in the business of making payday loans may not:

(1) Include in a payday loan contract:

(a) A hold-harmless clause;

(b) A confession of judgment or other waiver of the right to notice and the opportunity to be heard in an action;

(c) An agreement by the consumer not to assert any claim or defense arising out of the contract against the lender or any holder in due course; or

(d) An executory waiver or a limitation of exemption from attachment, execution or other process on real or personal property held by, owned by or due to the consumer, unless the waiver or limitation applies only to property subject to a security interest executed in connection with the loan;

(2) Conduct a payday loan business where liquor or lottery tickets are sold or where gambling devices are located;

(3) Charge the consumer more than one fee under ORS 30.701 per loan transaction for dishonored checks when the consumer issues more than one check to the lender. However, the lender may recover from the consumer any fee charged to the lender by an unaffiliated financial institution for each dishonored check;

(4) Renew a payday loan more than three times; or

(5) Make a new payday loan to a consumer on the same day that a previous payday loan expires if the lender has renewed the previous payday loan three times. The lender shall wait at least until the next day after the expiration date of the previous loan before making the new loan to the consumer.

SECTION 5. (1) A person claiming to be aggrieved by a practice that violates section 4 of this 2003 Act, or the person’s attorney, may file with the Director of the Department of Consumer and Business Services a verified complaint in writing. The person shall state in the complaint the name and address of the lender alleged to have committed the unlawful practice and the particulars of the alleged unlawful practice. The director may require the person to set forth in the complaint other information that the director considers pertinent. The person may file the complaint no later than one year after the alleged unlawful practice.

(2) After the filing of a complaint under this section, the director may cause an investigation to be made under ORS 725.310.

SECTION 6. Sections 4 and 5 of this 2003 Act and the amendments to ORS 725.600 and 725.610 by sections 1 and 2 of this 2003 Act apply to payday loans offered on or after the effective date of this 2003 Act.

Approved by the Governor June 13, 2003

Filed in the office of Secretary of State June 13, 2003

Effective date January 1, 2004

__________