SB 259

This bill exempts from payday loan regulation any transaction in which no

finance charge or other charge or fee is imposed against or accepted from the loan

recipient.

Under current law, a person must be licensed by the Division of Banking

(division) in the Department of Financial Institutions to originate or service a payday

loan involving a Wisconsin resident. A “payday loan" is defined as a transaction

between an individual with an account at a financial establishment and another

person (payday lender) in which the payday lender agrees to accept a check or

electronic fund transfer (EFT) authorization from the individual, to delay

negotiating the check or initiating the EFT for a period of time, and to extend a loan

to the individual for a term of 90 days or less. Current law imposes various

requirements and restrictions applicable to payday lenders and payday loan

transactions. However, there is an exemption from the payday loan licensing

requirement and all other payday loan requirements and restrictions for banks,

savings banks, savings and loan associations, trust companies, credit unions, and

their affiliates.

This bill creates a transaction-based exemption from the requirements and

restrictions applicable to payday loans. These requirements and restrictions do not

apply to any transaction in which no finance charge, as defined under federal

Truth-in-Lending Act regulations, and no other fees or charges of any kind, are

required or accepted, at any time, from the person receiving the loan.