HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 895 Consumer Finance Loans
SPONSOR(S): Commerce Committee, Insurance & Banking Subcommittee, Stevenson
TIED BILLS: IDEN./SIM. BILLS: CS/SB 1478
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 18 Y, 0 N, As CS Hinshelwood Luczynski
2) Commerce Committee 22 Y, 0 N, As CS Hinshelwood Hamon
SUMMARY ANALYSIS
The Florida Consumer Finance Act in ch. 516, F.S., permits licensed lenders to make secured or unsecured
loans up to $25,000 with a tiered interest rate structure such that the maximum annual interest rate allowed on
each tier decreases as principle amounts increase:
 30 percent on the first $3,000.
 24 percent on principal above $3,000 and up to $4,000.
 18 percent on principal above $4,000 and up to $25,000.
Consumer finance lenders must maintain liquid assets of at least $25,000. The bill authorizes consumer finance
lenders to provide a surety bond, certificate of deposit, or letter of credit of a specified amount in lieu of
maintaining liquid assets.
Consumer finance lenders are permitted to charge a borrower certain fees, including up to $25 for investigating
the credit and character of the borrower. The exclusion of “prepayment penalties” from the list of permissible
fees implies that consumer finance lenders are prohibited from charging prepayment penalties. The bill provides
an express prohibition on prepayment penalties for consumer finance loans.
Consumer finance loans are repayable in installments every two weeks, semimonthly, or monthly, but there is
no minimum or maximum loan term. The bill requires a minimum loan term of at least 6 months for every loan,
including a refinancing, made on or after October 1, 2021.
Consumer finance loans are subject to the federal Truth in Lending Act (TILA) and its implementing regulations,
which are commonly referred to as Regulation Z. Rulemaking authority for Regulation Z was previously under
the Board of Governors of the Federal Reserve System but was transferred to the Consumer Financial
Protection Bureau, effective July 21, 2011. The bill replaces two statutory references to “Board of Governors of
the Federal Reserve System” with “Bureau of Consumer Financial Protection” in order to reflect current federal
law.
The bill has no impact on state or local governments and an indeterminate but likely positive impact on the
private sector.
The bill provides an effective date of October 1, 2021.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives .
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 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Consumer Finance Loans
The Office of Financial Regulation’s (OFR’s) Division of Consumer Finance is responsible for the
licensing and regulation of non-depository financial service entities and individuals, and conducts
examinations and complaint investigations for licensed entities to determine compliance with Florida
law.
One of the loan products regulated by the OFR’s Division of Consumer Finance is the Florida
Consumer Finance Act, ch. 516, F.S. (“the Act”). Loans permitted under the Act are commonly referred
to as “consumer finance loans”, which are “loan[s] of money, credit, goods, or choses in action,1
including, except as otherwise specifically indicated, provision of a line of credit, in an amount or to a
value of $25,000 or less for which the lender charges, contracts for, collects, or receives interest at a
rate greater than 18 percent per annum.”2 Although consumer finance loans may be secured or
unsecured, the Act prohibits lenders from taking a security interest in certain types of collateral.3
Consumer finance loans made pursuant to the Act must be repaid in periodic installments as nearly
equal as mathematically practicable, except that the final payment may be less than the amount of the
prior installments.4 Installments may be due every two weeks, semimonthly, or monthly.5 There is no
minimum or maximum loan term under the Act. Consumer finance loans have a tiered interest rate
structure such that the maximum annual interest rate allowed on each tier decreases as principle
amounts increase:
 30 percent on the first $3,000.
 24 percent on principal above $3,000 and up to $4,000.
 18 percent on principal above $4,000 and up to $25,000.6
The original principal amount is the amount financed, as defined by the federal Truth in Lending Act
(TILA)7 and TILA’s federal implementing regulations.8 For the purpose of determining compliance with
these statutory maximum interest rates, the interest rate computations used must be simple interest.9 In
the event that two or more interest rates are applied to the principal amount of a loan,10 a lender may
charge interest at a single annual percentage rate (APR) which would produce at maturity the total
amount of interest as permitted by the tiered interest rate structure above.11 The APR charged by a
1 “Chose in action” is defined as “1. A property right in personam, such as a debt owed by another person . . . 2. The right
to bring an action to recover a debt, money, or thing. 3. Personal property that one person owns but another person
possesses, the owner being able to regain possession through a lawsuit.” BLACK’S LAW DICTIONARY 101 (3d ed. 1996).
2 S. 516.01(2), F.S.
3 See s. 516.031(1), F.S. (prohibition on taking a security interest in land for a loan less than $1,000); s. 516.17, F.S.
(prohibition on assignment of, or order for payment of, wages given to secure a loan).
4 S. 516.36, F.S. This section does not apply to lines of credit.
5 Id.
6 S. 516.031(1), F.S.
7 Codified at 15 U.S.C. § 1601 et seq.
8 Currently, the statute references TILA’s implementing regulations as “Regulation Z of the Board of Governors of the
Federal Reserve System.” s. 516.031(1), F.S. However, the Dodd-Frank Wall Street Reform and Consumer Protection
Act, Pub. L. No. 111-203, H.R. 4173, 124 Stat. 1376-2223, 111th Cong. (July 21, 2010), commonly referred to as the
“Dodd-Frank Act”, transferred rulemaking authority for TILA to the Bureau of Consumer Financial Protection, effective July
21, 2011. See also Truth in Lending (Regulation Z), 76 Fed. Reg. 79768 (Dec. 22, 2011). The bill replaces two statutory
references to “Board of Governors of the Federal Reserve System” with “Bureau of Consumer Financial Protection” in
order to reflect current federal law.
9 Id.
10 For example, on a principle amount of $3,500, an interest rate of 30 percent per annum may be applied to $3,000 of the
principle amount, and an interest rate of 24 percent per annum may be applied to the remaining $500 of the principal
amount.
11 S. 516.031(1), F.S.
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 lender may not exceed the APR that must be computed and disclosed according to TILA and its
implementing regulations.12 A licensee may not induce or permit a borrower to divide a loan and may
not induce or permit a person to become obligated to the licensee under more than one loan contract
for the purpose of obtaining a greater finance charge than would otherwise be permitted under the
parameters described above.13
If consideration for a new loan contract includes the unpaid principal balance of a prior loan with the
licensee, then the principal amount of the new loan contract may not include more than 60 days’ unpaid
interest accrued on the prior loan.14
The Act prohibits lenders from directly or indirectly charging borrowers additional fees as a condition to
the grant of a loan, except for the following allowable fees:
 Up to $25 for investigating the credit and character of the borrower;
 A $25 annual fee on the anniversary date of each line-of-credit account;
 Brokerage fees for certain loans, title insurance, and appraisals of real property offered as
security;
 Intangible personal property tax on the loan note or obligation if secured by a lien on real
property;
 Documentary excise tax and lawful fees for filing, recording, or releasing an instrument securing
the loan;
 The premium for any insurance in lieu of perfecting a security interest otherwise required by the
licensee in connection with the loan;
 Actual and reasonable attorney fees and court costs;
 Actual and commercially reasonable expenses for repossession, storing, repairing and placing
in condition for sale, and selling of any property pledged as security;
 A delinquency charge of up to $15 for each payment in default for at least 10 days, if agreed
upon in writing before the charge is imposed; and
 A bad check charge of up to $20.15
The exclusion of “prepayment penalties” from the list of permissible fees implies that consumer finance
lenders are prohibited from charging prepayment penalties.16
Optional credit property, credit life, and disability insurance may be provided at the borrower’s expense
via a deduction from the principal amount of the loan.17
Licenses granted under the Act are for a single place of business18 and must be renewed every two
years.19 As of February 16, 2021, there are 170 licensed consumer finance loan companies operating
in Florida operating across a total of 382 locations.20
The yearly data for licensure under ch. 516, F.S., is contained in the charts below.21
Chapter 516, F.S., Licenses by Year
00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10
Applications Received 318 44 136 82 48 72 192 30 52 32
12 S. 516.031(2), F.S.
13 S. 516.031(4), F.S.
14 S. 516.031(5), F.S.
15 S. 516.031(3), F.S.
16 Id.; Office of Financial Regulation, Agency Analysis of 2021 House Bill 895, p. 2 (Feb. 17, 2021).
17 S. 516.35(2), F.S.
18 Ss. 516.01(1) and 516.05(3), F.S.
19 Ss. 516.03(1) and 516.05(1) & (2), F.S.
20 Office of Financial Regulation, supra note 16.
21 Office of Financial Regulation, Active Licenses, https://www.flofr.com/sitePages/documents/finregstats.pdf (last visited
Mar. 16, 2019).
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 Applications Approved 228 136 125 76 43 64 95 29 18 19
Active Licenses 589 607 568 609 532 584 626 600 390 386
Renewals & Reactivations 496 1 542 0 523 1 569 0 388 0
Chapter 516, F.S., Licenses by Year (Cont'd)
10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20
Applications Received 175 41 82 116 66 102 55 96 109 100
Applications Approved 137 37 53 113 37 81 36 83 104 98
Active Licenses 347 303 293 349 331 349 338 373 348 390
Renewals & Reactivations 226 0 258 0 312 0 326 0 342 0
An application to become a consumer finance lender must be accompanied by a nonrefundable
application fee of $625 and a nonrefundable investigation fee of $200.22 Licenses must be renewed
biennially, at which time the licensee must pay a nonrefundable biennial license fee of $625.23 At the
time of application, the applicant must provide evidence of liquid assets of at least $25,000, and a
licensee must at all times maintain such liquid assets.24 Each location of a consumer finance lender
must be separately licensed.25
The Act does not apply to persons doing business under state or federal laws governing banks, savings
banks, trust companies, building and loan associations, credit unions, or industrial loan and investment
companies.26
Deferred Presentment Transactions (Payday Loans)
Although the bill relates only to consumer finance loans under ch. 516, F.S., questions often arise as to
how consumer finance loans compare to other consumer loans authorized in statute, particularly
payday loans. Deferred presentment transactions, commonly referred to as “payday loans”, are a small-
dollar loan product under the OFR’s regulatory authority. These transactions are governed by ch. 560,
F.S., part IV.
A deferred presentment transaction means providing currency or a payment instrument in exchange for
a drawer’s (borrower’s) check and agreeing to hold the check for a number of days until depositing,
presenting, or redeeming the payment instrument.27 The only persons who may engage in deferred
presentment transactions are financial institutions as defined in s. 655.005, F.S.,28 and money services
business licensed under ch. 560, F.S., part II29 or part III.30
22 S. 516.03(1), F.S.
23 Id.; s. 516.05(1), F.S.
24 Ss. 516.03(1) and 516.07(1)(b), F.S.
25 S. 516.05(3), F.S.
26 S. 516.02(4), F.S.
27 S. 560.402(2) & (3), F.S.
28 Section 655.005, F.S., defines a “financial institution” to mean a state or federal savings or thrift association, bank,
savings back, trust company, international bank agency, international banking corporation, international branch,
international representative office, international administrative office, international trust entity, international trust company
representative office, qualified limited service affiliate, credit union, or an agreement corporation operating pursuant to s.
25 of the Federal Reserve Act, 12 U.S.C. ss. 601 et seq. or Edge Act corporation organized pursuant to s. 25(a) of the
Federal Reserve Act, 12 U.S.C. ss. 611 et seq.
29 Licensure as a money transmitter. A money transmitter is defined by s. 560.103(23), F.S., as a corporation, limited
liability company, limited liability partnership, or foreign entity qualified to do business in this state which receives
currency, monetary value, or payment instruments for the purpose of transmitting the same by any means, including
transmission by wire, facsimile, electronic transfer, courier, the Internet, or through bill payment services or other
businesses that facilitate such transfer within this country, or to or from this country. Money transmitters may engage in
check cashing under ch. 560, F.S., part III.
30 Licensure as a check casher. A check casher is defined by s. 560.103(6), F.S., as a person who sells currency in
exchange for payment instruments received, except travelers checks.
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 There are two types of payday loan products permitted in Florida:
 Deferred presentment transaction not repayable in installments: The face amount of a check
taken for deferred presentment may not exceed $500, exclusive of fees.31 Fees may not exceed
10 percent of payment provided to the drawer plus a verification fee of up to $5.32 The term of a
deferred presentment agreement may not be less than seven days or greater than 31 days.33
 Deferred presentment installment transaction: A deferred presentment installment transaction is
repayable in installments, has a term of 60 to 90 days, and may have an outstanding transaction
balance (exclusive of fees) of up to $1,000.34 The permissible fees are a verification fee of up to
$5 and up to 8 percent of the outstanding transaction balance on a biweekly basis.35 The
installment periods must be 13 days to one calendar month, except that the first installment
period may be longer than the remaining installment periods by not more than 15 days.36
Prepayment penalties are prohibited.37
A deferred presentment provider may not enter into a deferred presentment transaction with a drawer
who has an outstanding deferred presentment transaction with any provider or within 24 hours of the
termination of a previous transaction.38 In order to enforce this restriction, the OFR maintains a
database against which a deferred presentment provider must verify each transaction before entering
into the deferred presentment agreement.39 A deferred presentment provider may not engage in the
rollover of a deferred presentment agreement and may not redeem, extend, or otherwise consolidate a
deferred presentment agreement with the proceeds of another deferred presentment transaction made
by it or an affiliate.40
For deferred presentment transactions not repayable in installments, if the drawer, by the end of the
deferment period, informs the deferred presentment provider in person that the drawer cannot redeem
or pay in full in cash the amount due, the drawer must be given a grace period that extends the term of
the agreement for 60 additional days.41 As a condit