The bill, HB 5042, repeals the provisions of the general laws that allow deferred deposit providers, commonly known as "payday lenders." It introduces a new section titled "Definitions" in Section 19-14-1, which clarifies terms related to financial services, including the removal of the definition of "deferred-deposit transaction" that previously encompassed payday loans. The bill modifies the definition of "loan" to include educational loans while excluding payday loans and similar transactions.

Additionally, the bill amends Section 19-14.1-10 regarding "Special exemptions," specifying that no license to make or fund loans shall be required for individuals engaging in deferred deposit transactions while holding a valid license to cash checks. It also includes a new section, 19-14.2-1, which prohibits any person from using devices or subterfuge to evade the requirements of the chapter, including disguising loans as other types of transactions.

The bill outlines limits on fees for check cashing services and requires licensees to post clear fee schedules. It also prohibits lenders from charging interest or fees exceeding specified limits for loans of $5,000 or less. The repeal of the existing section on deferred deposit transactions effectively eliminates payday lending in the state. All changes are set to take effect on January 1, 2027.

Statutes affected:
5042: 19-14-1, 19-14.1-10, 19-14.2-1, 19-14.4-5.1
5042  SUB A: 19-14-1, 19-14.1-10, 19-14.2-1, 19-14.4-5.1