Sponsored by:


District 8 (Burlington)






     Regulates payday loans made by licensed check cashers.



     Introduced Pending Technical Review by Legislative Counsel


An Act regulating certain loans made by check cashers and supplementing P.L.1993, c.383 (C.17:15A-30 et seq.).


     Be It Enacted by the Senate and General Assembly of the State of New Jersey:


     1.  a.  Notwithstanding the provisions of section 18 of P.L.1993, c.383 (C.17:15A-47) and N.J.S.2C:21-19 to the contrary, it shall not be unlawful for a licensee to engage in a deferred deposit transaction on the licensee's premises pursuant to the provisions of this section.

     b.  (1)  A licensee may defer the deposit of a personal check written by a customer for up to 30 days.  The face amount of the check shall not exceed $500.  Each deferred deposit shall be made pursuant to a written agreement that has been signed by the customer and by the licensee or an authorized representative of the licensee.  The written agreement shall contain a statement of the total amount of any fees charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate.  The written agreement shall authorize the licensee to defer deposit of the personal check until a specific date not less than 7 days and not more than 30 days from the date the written agreement was signed and executed.  The written agreement shall not permit the licensee to accept collateral.  No licensee shall enter into any deferred deposit agreement unless the customer acknowledges that the customer's sole means of support is not Social Security income benefits or periodic governmental benefits payments.

     (2)  A customer who enters into a deferred deposit agreement and offers the customer's own personal check, bearing a genuine signature and drawn on an existing checking account, to a licensee in accordance with the deferred deposit agreement shall not be subject to any criminal penalty for the failure to comply with the terms of that agreement.

     (3)  Every deferred deposit agreement shall provide for the right of a customer to rescind the transaction by returning in cash, or through certified funds, 100 percent of the amount advanced by a licensee for a deferred deposit agreement no later than 5:00 p.m. on the first day of business conducted by the licensee following the execution of the deferred deposit agreement.  Except as set forth in this paragraph, a deferred deposit agreement shall not be subject to the customer's right of rescission unless both the customer and the licensee agree to the rescission.  If a customer exercises the right of rescission under this paragraph, no fee for the rescinded transaction shall be charged to the customer, nor shall any licensee charge or impose on any customer a fee for exercising the right of rescission pursuant to this paragraph.

     c.  (1)  A licensee may charge a cumulative fee of no more than $10 to open an initial account or issue an optional identification card for providing deferred deposit check cashing services, or both.  A replacement optional identification card may be issued at a cost not to exceed $5.

     (2)  A licensee shall provide a receipt to the customer for each deferred deposit transaction.

     (3) Notwithstanding any inconsistent provision of law, a licensee may charge a fee for cashing a personal check, for deferred deposit, in an amount not to exceed 10% of the total amount of the personal check.

     (4)  A licensee who enters into a deferred deposit agreement and accepts a check drawn on insufficient funds, or any assignee of that licensee, shall not be entitled to recover damages in any action except for the amount of the check, prejudgment interest, and costs not to exceed $250.

     (5)  For a deferred deposit transaction, a fee not to exceed $25 may be charged for the return of a dishonored check by a depository institution.

     (6)  No amount in excess of the amounts authorized by this section shall be directly or indirectly charged by a licensee  pursuant to a deferred deposit agreement.

     (7)  Any person who violates any provision of this section shall be liable for a civil penalty not to exceed $2,000 for each violation, which shall be assessed and recovered in a civil action brought by the Attorney General in a court of competent jurisdiction.  Any action brought pursuant to this paragraph shall be commenced within two years of the date on which the act or transaction upon which the action is based occurred.

     (8)  A willful violation of this section by a licensee is crime of the fourth degree.

     (9)  Any person who is injured by any violation of this section by a licensee may bring an action for the recovery of damages, an equity proceeding to restrain and enjoin those violations, or both.  The amount awarded may be up to three times the damages actually incurred, but in no event less than the amount paid by the aggrieved customer to a licensee subject to this section.  If the plaintiff prevails, the plaintiff shall be awarded reasonable attorneys' fees and costs.

     (10)  No licensee shall enter into a deferred deposit agreement with a customer if the amount of the fees chargeable for the transaction, in accordance with this section, will exceed $500 for the calendar year in which the advance of funds is made in accordance with the deferred deposit agreement.

     d.  There shall be no extensions, renewals or novations, of any kind, of a deferred deposit agreement or the further deferral of the deposit  of a check for a fee, except as set forth in this subsection, and no deferred deposit transaction shall be undertaken by the licensee until all prior deferred deposit transactions have been fully completed and payment has been received by the licensee for the check subject to the deferral of deposit.  Notwithstanding the other provisions of this subsection, and provided that the total amount of any outstanding deferred deposit transactions does not, and will not, exceed $700, a licensee may grant no more than one extension to an individual for a fee which does not exceed $50.  Except for the single extension permitted under this subsection, if the total obligation does not exceed $700, no licensee shall enter into another deferred deposit agreement with a customer until a cooling off period of at least one full calendar day shall have transpired.

     e.  No licensee shall conduct a deferred deposit transaction with a person who is under the age of 21 years.

     f.  No licensee shall conduct a deferred deposit transaction with a person who fails to provide information regarding his current employment.

     g.  As used in this section, "deferred deposit" means a transaction whereby the licensee refrains from depositing a personal check written by a customer until a specific date, pursuant to a written agreement.


     2.  This act shall take effect on the 120th day after enactment.





     This bill allows licensed check cashers to make small unsecured emergency advance or "payday" consumer loans of up to $500 and regulates those loan transactions.  In a payday loan, the lender cashes a customer's personal check and agrees to defer presentment of the check until the customer's next payday, typically 10 to 30 days later.  The amount of the customer's check includes both the finance charge paid to the lender and the cash proceeds to the customer.  The bill limits the fee rate chargeable by the licensee to 10% of the total amount of the customer's personal check, and specifies that the deferment must be for not less than seven days and not more than 30 days.

     In addition, the bill prohibits more than one outstanding payday loan to a borrower; provides for a cooling off period between payday loans to a customer; limits the total annual transaction fees chargeable per customer; prohibits payday loans to customers whose sole means of support is Social Security or government benefits payments; and provides for the right to rescind a payday loan by the close of the next business day.