Bill Analysis - House Bill 685 Electronic Transaction Fees/Official Fees (September 1, 2021)
Summary
Bill analysis of House Bill 685, Electronic Transaction Fees/Official Fees, 2021-2022 General Assembly, prepared for the Senate Commerce and Insurance committee and dated September 1, 2021, as of the First Edition. It lists Amy Darden, Staff Attorney, as the preparer. The overview says the bill would allow a consumer finance lender to recover from a borrower the actual cost of a fee imposed by an unaffiliated third party for processing electronic payments and disbursing loan proceeds, and would address fees paid by the seller on a security interest in a consumer credit sale. It says the disclosure requirement would become effective January 1, 2022 and the remainder of Section 1 October 1, 2021.
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“Bill Analysis - House Bill 685 Electronic Transaction Fees/Official Fees (September 1, 2021).”
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HOUSE BILL 685:
Electronic Transaction Fees/Official Fees.
2021-2022 General Assembly
Committee: Senate Commerce and Insurance. If favorable, Date: September 1, 2021
re-refer to Rules and Operations of the Senate
Introduced by: Reps. Strickland, K. Hall, Szoka, D. Hall Prepared by: Amy Darden
Analysis of: First Edition Staff Attorney
OVERVIEW: House Bill 685 would do the following:
• Allow a consumer finance lender to recover from a borrower the actual cost of a fee imposed
on the lender from an unaffiliated third-party for processing electronic payments and
disbursing loan proceeds. Many consumer finance lenders will accept a debit card payment on
a loan amount, and many will load loan proceeds onto a borrower's debit card. In these
instances, the card company charges a fee for this service. Section 1 of the bill would allow the
lender to recover the actual transaction charge imposed by the card company.
• Provide that fees or charges paid by the seller for determining the existence of or to record a
security interest in a consumer credit sale may be included in the amount finance but must be
excluded from the finance charge.
CURRENT LAW, BILL ANALYSIS, AND EFFECTIVE DATE:
The North Carolina Consumer Finance Act specifically authorizes nonbank lenders to make small
unsecured loans. This Act authorizes the Commissioner of Banks to license and supervise loan companies
that make direct consumer loans of $15,000 or less. The Act sets out terms, interest rates, permissible
fees and charges, provides limitations on agreements and practices, and provides for additional
requirements and restrictions for lenders making loans to military service members. Lenders that do not
charge interest rates higher than those permitted by Chapter 24 of the General Statutes are exempt from
this Act. Also exempted are banks, trust companies, savings and loan associations, cooperative credit
unions, agricultural credit corporations, production credit associations, pawnbrokers, and installment
paper dealers.
Section 1 of House Bill 685 would add a new section governing electronic transaction fees. Licensees
would be allowed to recover from the borrower an amount not greater than the actual cost of any fees
charged by a non-affiliate third party for a specific transaction for certain debit card, clearinghouse
transactions, and electronic payments. However, the licensee must offer at least one type of transaction
for account payment and loan disbursement where they will not seek to recover these electronic transaction
fees. The bill also requires the licensee to publicly disclose any third-party fees a borrower will be
charged.
This disclosure requirement would become effective January 1, 2022. The remainder of this section would
become effective October 1, 2021 and applicable to transactions occurring on or after that date.
Legislative Analysis
Jeffrey Hudson
Division
Director H685-SMBB-50(e1)-v-1 919-733-2578
This bill analysis was prepared by the nonpartisan legislative staff for the use of legislators in their deliberations and does not constitute an official statement of legislative intent.
House Bill 685
Page 2
The Retail Installment Sales Act governs consumer credit sales. A consumer credit sale is a sale of
personal, family, household, or agricultural goods or services by a seller that regularly arranges for an
extension of consumer credit, either payable in installments or with a finance charge, where the amount
financed doesn't exceed $75,000, unless it is a debt secured by real property or a manufactured home.
The Act includes limits on finance charge rates and terms of payments.
Section 2 of House Bill 685 would amend the definition of "official fees" to be any fees and charges
prescribed by law to paid by the seller for determining the existence of or for perfecting, releasing, or
satisfying a security interest related to a consumer credit sale. Current law limits the definition to those
amounts paid to a public entity. The section also provides, consistent with federal truth-in-lending laws,
that official fees may be included in the amount financed but must be excluded from the finance charge.
This section would become effective October 1, 2021, and apply to contracts entered into, or renewed or
modified, on or after that date.
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