Assemblywoman NANCY F. MUNOZ
District 21 (Morris, Somerset and Union)
Includes payday lending as a violation of the consumer fraud act.
CURRENT VERSION OF TEXT
An Act concerning certain loans and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. It shall be an unlawful practice for any person to engage in the business of making deferred deposit loans.
b. As used in this section, “deferred deposit loan” means any transaction in which a short-term cash advance is made to a consumer who is a resident of this State in exchange for the consumer’s personal check, in the amount of the cash advance plus a fee, whereby the lender agrees to defer depositing or presenting the personal check until a certain date.
c. The provisions of this act shall apply to a deferred deposit loan transaction if the lender, wherever located, induces a consumer to enter into the transaction by any means, including, but not limited to: in-person contact, Internet, mail, telephone, print, radio, or television.
d. A violation of any provision of this section is a violation of P.L.1960, c.39 (C.56:8-1 et seq.), and shall be subject to all remedies and penalties available pursuant to P.L.1960, c.39 (C.56:8-1 et seq.) in addition to any other remedies or penalties provided by law.
2. This act shall take effect immediately.
This bill provides that, in addition to any other remedies and penalties provided by law, it is an unlawful practice under the consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.), for any person to engage in the business of making deferred deposit or “payday” loans to consumers in this State.
In a payday loan, the lender typically cashes a consumer’s personal check and agrees to defer presentment or deposit of the check until the consumer’s next payday, usually 10 to 30 days later. The amount of the consumer’s check includes both the finance charge paid to the lender and the cash proceeds to the customer. Although the annual percentage rates associated with payday loans may violate existing usury statutes and other laws, this bill expressly prohibits payday loans by making this practice a violation of the consumer fraud act. The bill’s provisions apply to payday loans made by lenders, wherever located, and made by any means, including, but not limited to: in-person contact, Internet, mail, telephone, print, radio, or television.
An unlawful practice under the consumer fraud act is punishable by a monetary penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. In addition, a violation can result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.