The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: CS/SB 1478
INTRODUCER: Banking and Insurance Committee and Senator Gibson
SUBJECT: Consumer Finance Loans
DATE: March 17, 2021 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Arnold Knudson BI Fav/CS
2. CM
3. RC
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 1478 makes several amendment to the Florida Consumer Finance Act in ch. 516, F.S.
The bill:
 Expressly prohibits prepayment penalties for consumer finance loans;
 Requires all consumer finance loans, including refinancing, made on or after October 1,
2021, to have minimum loan terns of 6 months.
The bill authorizes an applicant for licensure or a licensee to provide a surety bond, certificate of
deposit, or letter of credit in the amount of $25,000, in lieu of meeting the requirement to
maintain $25,000 in liquid assets. A company with at least one currently licensed location must
provide a rider or surety bond of at least $5,000 for each additional license; however, the
maximum aggregate requirement for such a company is $100,000.
The bill takes effect October 1, 2021.
BILL: CS/SB 1478 Page 2
II. Present Situation:
Consumer Finance Loans
The 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.
Florida’s prohibition on usury generally prohibits6 interest rates in excess of 18 percent per
annum simple interest on any loan, advance of money, line of credit, or forbearance. 7 Licensed
consumer finance lenders, however, may offer interest rates greater than 18 percent per annum
simple interest, up to the limits provided in ch. 516, F.S.8 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 $25,000.9
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
Section 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
Various lenders and credits licensed or chartered under the laws of the United States or specified chapters of the Florida
Statutes may charge interest at the maximum rate of interest permitted by law for similar loans or extensions of credit. See s.
687.12(1), F.S.
7
Section 687.02, F.S
8
Section 687.12, F.S.
9
Section 516.031(1), F.S.
BILL: CS/SB 1478 Page 3
The original principal amount is the amount financed, as defined by the federal Truth in Lending
Act (TILA)10 and TILA’s federal implementing regulations.11 For the purpose of determining
compliance with these statutory maximum interest rates, the interest rate computations used must
be simple interest.12 In the event that two or more interest rates are applied to the principal
amount of a loan,13 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.14 The APR charged by a lender may not exceed the APR that must be computed
and disclosed according to TILA and its implementing regulations.15 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.16
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.17
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 $20.18
10
Codified at 15 U.S.C. § 1601 et seq.
11
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).
12
Id.
13
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.
14
Section 516.031(1), F.S.
15
Section 516.031(2), F.S.
16
Section 516.031(4), F.S.
17
Section 516.031(5), F.S.
18
Section 516.031(3), F.S.
BILL: CS/SB 1478 Page 4
Because the above list of permissible fees does not include a prepayment penalty, then impliedly
a licensee is prohibited from charging a prepayment penalty.19
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.20
Licenses granted under the Act are for a single place of business21 and must be renewed every
two years.22 As of February 16, 2021, there are 170 licensed consumer finance loan companies
operating in Florida operating across a total of 382 locations.23
The yearly data for licensure under ch. 516, F.S., is contained in the charts below.24
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
318 44 136 82 48 72 192 30 52 32
Received
Applications
228 136 125 76 43 64 95 29 18 19
Approved
Active
589 607 568 609 532 584 626 600 390 386
Licenses
Renewals &
496 1 542 0 523 1 569 0 388 0
Reactivations
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
175 41 82 116 66 102 55 96 109 100
Received
Applications
137 37 53 113 37 81 36 83 104 98
Approved
Active
347 303 293 349 331 349 338 373 348 390
Licenses
Renewals &
226 0 258 0 312 0 326 0 342 0
Reactivations
An application to become a consumer finance lender must be accompanied by a nonrefundable
application fee of $625 and a nonrefundable investigation fee of $200.25 Licenses must be
renewed biennially, at which time the licensee must pay a nonrefundable biennial license fee of
$625.26 At the time of application, the applicant must provide evidence of liquid assets of at least
19
Id.; Office of Financial Regulation, Agency Analysis of 2021 House Bill 895, p. 2 (Feb. 17, 2021).
20
Section 516.35(2), F.S.
21
Sections 516.01(1) and 516.05(3), F.S.
22
Sections 516.03(1) and 516.05(1) & (2), F.S.
23
Office of Financial Regulation, supra note 16.
24
Office of Financial Regulation, Active Licenses, https://www.flofr.com/sitePages/documents/finregstats.pdf (last visited
Mar. 21, 2021).
25
Sections 516.03(1), F.S.
26
Id.; s. 516.05(1), F.S.
BILL: CS/SB 1478 Page 5
$25,000.27 Failure to maintain liquid assets of at least $25,000 constitutes grounds for denial of
license.28 Each location of a consumer finance lender must be separately licensed.29
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.30
Deferred Presentment Transactions (Payday Loans)
Deferred presentment transactions, commonly referred to as “payday loans”, are another
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.31 The only persons who may
engage in deferred presentment transactions are financial institutions as defined in
s. 655.005, F.S.,32 and money services business licensed under ch. 560, F.S., part II33 or part III.34
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.35 Fees may not
exceed 10 percent of payment provided to the drawer plus a verification fee of up to $5.36
The term of a deferred presentment agreement may not be less than seven days or greater
than 31 days.37
 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
27
Section 516.03(1), F.S.
28
Section 516.07(1), F.S.
29
Section 516.05(3), F.S.
30
Section 516.02(4), F.S.
31
Section 560.402(2) & (3), F.S.
32
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.
33
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.
34
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.
35
Section 560.404(5), F.S.
36
Section 560.404(6), F.S.
37
Section 560.404(8), F.S.
BILL: CS/SB 1478 Page 6
outstanding transaction balance (exclusive of fees) of up to $1,000.38 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.39 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.40 Prepayment penalties are prohibited.41
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.42 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.43 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.44
If the drawer in a deferred presentment installment transaction informs the deferred presentment
provider in writing or in person by noon of the business day before a scheduled payment that the
drawer cannot pay in full the scheduled payment, the provider must give the drawer one
opportunity to defer a scheduled p