Present law provides that a licensee under the "Premium Finance Company Act of 1980" does not have the power to charge premium loan charges other than, or in amounts greater than, the following:  Licensees may charge, in the case of the precomputed loan, a service charge in an amount equal to 4% of the total amount of the loan, which charge may be deducted in advance from the principal of the premium loan; provided, that a licensee who contracts for the payment of interest on the balances from time to time outstanding, commonly referred to as a revolving or open-end account, shall be limited to contracting for a service charge not to exceed $15 and payable no more frequently than once per calendar year per premium loan account.  A premium finance agreement may provide for the payment by the insured of a delinquency charge of $2 to a maximum of 5% of the delinquent installment on any installment, which is in default for a period of 10 days or more; provided, that the charge shall not be collected more than once for the same delinquency. If the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge of $5.  A premium finance agreement may provide for payment of collection costs, attorney's fees equal to 15% of the outstanding indebtedness and any other charges that arose because one party breached the contract. CONVENIENCE FEE AUTHORIZED This bill authorizes a licensee under the "Premium Finance Company Act of 1980" to also impose and collect a convenience fee from any insured paying by credit card, debit card, electronic funds transfer, electronic check, or other electronic means in order to offset actual costs incurred by a licensee in accepting and processing payments made by electronic means. The convenience fee may be charged in addition to all other interest and fees allowed by law. Actual Cost This bill prohibits a convenience fee so collected by a licensee from exceeding the actual costs incurred by the licensee. However, a licensee may impose a convenience fee in lieu of the actual cost of the individual payment type that does not exceed the average of the actual cost incurred for the various types of electronic payments for which the licensee imposes a convenience fee. "Actual cost" means actual third-party costs incurred for the processing of payments made by electronic means. For purposes of determining actual costs, if a licensee is a subsidiary of an entity that processes payments made by electronic means, then the costs incurred by the licensee's parent entity are third-party costs. Notice This bill requires a licensee so charging a convenience fee to notify the insured of the amount of the fee prior to completing a transaction, provide an opportunity for the insured to cancel the transaction without incurring a fee, and make available the option to make a payment on a loan by check, cash, or money order directly to the licensee without the imposition of a convenience fee for a card payment or electronic payment. Non-refundable This bill provides that when an insured elects to make a payment to the licensee by credit card, debit card, electronic funds transfer, electronic check, or other electronic means and a convenience fee is imposed and collected, the payment of the convenience fee is not refundable. Payment Card Network Prohibitions This bill prohibits a licensee from charging a convenience fee on any debit card or prepaid card transaction if the payment card network on which the transaction is initiated or processed prohibits such convenience fee by contract, rule, or policy. HANDLING CHARGE AUTHORIZED This bill authorizes licensees under the "Premium Finance Company Act of 1980" to also charge and collect from the insured, through regular billing procedure or otherwise, a handling charge for a draft, check, electronic funds transfer, electronic check, card payment, or any other electronic payment, negotiable order of withdrawal, or like instrument drawn on a bank or other depository institution given by any person in full or partial repayment of a loan or other extension of credit if the instrument is not paid or dishonored by the institution as long as the licensee adheres to the following:  The license may redeposit the instrument with the institution or return the dishonored instrument to the insured or person to whom the credit was extended upon redemption of the instrument.  The license must not collect more than one handling charge on any one check or electronic debit authorization.

Statutes affected:
Introduced: 56-37-109