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HomeMy WebLinkAboutOrdinance No. 20372 --~= COUNCIL ORDINANCE NUMBER 20372 COUNCIL BILL NUMBER 4929 AN ORDINANCE CONCERNING REGULATION OF PAYDAY LOANS AND ADDING SECTIONS 3.550 THROUGH 3.560 TO THE EUGENE CODE, 1971; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE. ADOPTED: July 10, 2006 PASSED: 7:0 REJECTED: OPPOSED: ABSENT: Papa EFFECTIVE: July 11, 2006 ORDINANCE NO. 20372 AN ORDINANCE CONCERNING REGULATION OF PAYDAY LOANS AND ADDING SECTIONS 3.550 THROUGH 3.560 TO THE EUGENE CODE, 1971; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE. The City of Eugene does ordain as follows: Section 1. Section 3.005 of the Eugene Code, 1971, is amended by adding a section of definitions for "Payday Loans" in alphabetical order, to provide: Payday Loans: Borrower. A natural person who receives a payday loan. Cancel. To annul the payday loan agreement and, with respect to the payday loan agreement returning the borrower and the payday lender to their financial condition prior to the origination date of the payday loan. City manager. The city manager or the manager's designee. Payday lender. A "lender" in the business of making payday loans as defined in ORS 725.600. Payday loan. A payday loan as defined by state law. Principal. The original loan proceeds advanced for the benefit of the borrower in a payday loan excluding any fee or interest charge. Section 2. Sections 3.550 through 3.560 are added to the Eugene Code, 1971, to provide: Payday Loans 3.550 Payday Loans - Purpose. The provisions of sections 3.550 to 3.560 of this code are intended to minimize the detrimental effects that certain payday lending practices have on individuals and families, by regulating payday lenders to require payment of a portion of the original loan amount prior to the renewal of a payday loan, to allow borrowers the ability to cancel a payday loan, and to allow borrowers the ability to convert a payday loan into a payment plan. Except as specifically provided to the Ordinance - 1 3.552 3.554 3.556 3.558 3.560 contrary, the procedures and requirements of sections 3.015 to 3.080 of this code apply to the activities authorized by sections 3.550 through 3.560. Payday Loans - License Reauired. (1) No person shall operate a payday lending business or loan any funds as a payday loan without a current payday lender license to do business issued by the city. Licenses shall be required for each location a lender operates in the city and shall be renewed annually. (2) The city manager shall adopt administrative rules pursuant to section 2.019 of this code, which shall include application criteria and a requirement that the payday lender report its fee schedule in the payday application. (3) The city manager shall adopt the annual cost for the license by administrative order pursuant to section 2.020 of this code. Payday Loans - Inspection of Records. The city reserves the right to review and/or copy the records of any payday lender for purposes of auditing or complaint resolution. Such records shall be made available for inspection during normal business hours within 24 hours of written notice by the city manager. Payday Loans - Payment of Principal Prior to Renewal. A payday lender may not renew a payday loan unless the borrower has paid an amount equal to at least twenty-five percent (25%) of the principal of the original payday loan, plus interest on the remaining balance of the payday loan. The payday lender shall disclose this requirement to the borrower in a minimum of bold 12 point type. Payday Loans - Cancellation. (1) A payday lender shall cancel a payday loan without any charge to the borrower if, prior to the close of the business day following the day on which the payday loan originated, the borrower: (a) Informs the payday lender in writing that the borrower wishes to cancel the payday loan and any future payment obligations; and (b) Returns to the payday lender the uncashed check or proceeds given to the borrower by the payday lender or cash in an amount equal to the principal amount of the payday loan. (2) A payday lender shall disclose to each borrower that the right to cancel a payday loan as described in this section is available to the borrower. The payday lender shall disclose this requirement to the borrower in a minimum of bold 12 point type. Payday Loans - Payment Plan. (1) A payday lender and a borrower may agree to a payment plan for a payday loan at any time. (2) A payday lender shall disclose to each borrower that a payment plan described in this section is available to the borrower after the maximum amount of renewals allowed by state law. The payday lender shall disclose this requirement to the borrower in a minimum of bold 12 point type. Ordinance - 2 (3) After a payday loan has been renewed to the maximum amount allowed by state law, and prior to default on the payday loan, a payday lender shall allow a borrower to convert the borrower's payday loan into a payment plan. Each payment plan shall be in writing and acknowledged by both the payday lender and the borrower. (4) The payday lender shall not assess any fee, interest charge or other charge to the borrower as a result of converting the payday loan into a payment plan. (5) The payment plan shall provide for the payment of the total of payments due on the payday loan over a period of no fewer than 60 days in three or more payments. The borrower may pay the total of payments due on the payment plan at any time. The payday lender may not assess any penalty, fee or other charge to the borrower for early payment on the payment plan. (6) A payday lender's violation of the terms of a payment plan entered into with a borrower under this section constitutes a violation of sections 3.550 through 3.560 of this code. If a payday lender enters into a payment plan with a borrower through a third party that is representing the borrower, the payday lender's failure to comply with the terms of that payment plan constitutes a violation of sections 3.550 through 3.560 of this code. Section 3. The City Recorder, at the request of, or with the concurrence of the City Attorney, is authorized to administratively correct any reference errors contained herein or in other provisions of the Eugene Code, 1971, to the provisions added, amended or repealed herein. Section 4. Pursuant to the provisions of Section 5 below, this Ordinance shall become effective immediately upon its passage by the City Council and approval by the Mayor, retention by the Mayor for more than ten days, or readoption over a Mayoral veto by two-thirds of all members of the City Council, except as provided in this Section 4. Notwithstanding the addition of Sections 3.550 through 3.560 to the Eugene Code, 1971, no citations or other enforcement actions shall be issued or taken for violation of Section 3.552 providing the Payday Lender has, within 60 days of the effective date of this Ordinance, applied for and obtained a license from the City to operate as a Payday Lender. Section 5. In order to serve the important public purpose of protecting the citizens of Eugene from unscrupulous practices of payday loan providers, an emergency is hereby declared Ordinance - 3 to exist, and this Ordinance shall become immediately effective as provided in Section 4 above. Passed by the City Council this Approved by the Mayor this 10th day of July, 2006. 11th day of July, 2006. YW;lV~f ~ ity Recorder )(, <<- ~ ayoh Ordinance - 4