Licensee Practices and Recipient Rescission and Payment
AS 06.50.400 - AS 06.50.560
Sec. 06.50.400. Advance agreement
(a) An advance shall be documented in a written agreement that is signed by the advance recipient and on a form approved by the department.
(b) The agreement must clearly and conspicuously disclose
(1) the name of the licensee;
(2) the date of the advance;
(3) the principal amount of the advance;
(4) a statement of the total amount of fees that may be charged under AS 06.50.460(a) as a condition of making the advance, expressed both as a dollar amount and as an annual percentage rate;
(5) the repayment terms;
(6) the due date;
(7) an itemization of all disbursements, including disbursements to third parties;
(8) the name and title of the employee who signs the agreement on behalf of the licensee; and
(9) any other item required to be disclosed under state or federal law.
(c) The written agreement required by (a) of this section may not require an advance recipient to waive any rights under 15 U.S.C. 1692--1692o (Fair Debt Collection Practices Act) or other state or federal laws that regulate debt collection practices.
Sec. 06.50.410. Maximum amount of advances
A licensee, including a licensee with more than one location, may not make advances to an advance recipient that exceed $500 outstanding in advances to the recipient at one time.
Sec. 06.50.420. Prohibition on dividing advance amount or increasing number of advances
A licensee may not induce or permit an advance recipient to divide the amount of an advance, or to become obligated, directly, contingently, or both, for more than one advance at the same time, if the purpose or result is to obtain additional origination fees under AS 06.50.460(a)(1).
Sec. 06.50.430. Prohibition on collateral and services
The licensee may not accept collateral or services as security for or payment of an advance.
Sec. 06.50.440. Duration of advances
The minimum duration of an advance is 14 days.
Sec. 06.50.450. Prohibition on advances on behalf of another
A licensee may not make an advance to a person who purports to be acting on behalf of another person.
Sec. 06.50.460. Fees
(a) Notwithstanding any other provision of law, except for the fee allowed under AS 06.50.510(b)(3) and where federal law provides otherwise, a licensee may only charge
(1) a nonrefundable origination fee in an amount not to exceed $5; and
(2) a fee that does not exceed $15 for each $100 of an advance, or 15 percent of the total amount of the advance, whichever is less.
(b) A licensee may not charge a fee other than the fees allowed under (a) of this section.
(c) The fees allowed by (a) of this section are considered earned at the time of the transaction and may not be prorated.
(d) A licensee may not charge the advance recipient an additional fee to access the proceeds of an advance.
Sec. 06.50.470. Renewal of advance
(a) The minimum term of a renewal of an advance is 14 days.
(b) A licensee may not renew an advance more than two consecutive times, after which the licensee shall require the advance recipient to repay the advance in full.
(c) A licensee may not renew an advance for fees greater than the fees under AS 06.50.460(a).
Sec. 06.50.480. Rescission
A person who receives an advance may rescind an advance without cause and without cost, except for the nonrefundable origination fee, at any time before the close of business on the business day following the day on which the advance was made by paying the principal amount of the advance to the licensee in cash or other immediately available funds.
Sec. 06.50.490. Prohibited arbitration requirement
A licensee may not require a recipient to agree to mandatory arbitration.
Sec. 06.50.500. Posted fee notice
A licensee shall post a notice in each business location that discloses the fees that the licensee charges for advances. The fees in the notice must be expressed as a dollar amount, as an annual percentage rate for 14 days for each $100, and as an annual percentage rate for 30 days for each $100. The notice must also contain any other reasonably necessary information required by the department by regulation. The notice shall be posted so that it is conspicuous to an advance recipient or a potential advance recipient. The lettering in the notice must be legible and at least one inch in height.
Sec. 06.50.510. Required disclosures before disbursement
(a) Before disbursing funds under an advance, a licensee shall provide a clearly written statement that is separate from the written advance agreement required by AS 06.50.400(a). This disclosure statement must be reviewed and signed by the advance recipient. The licensee shall keep the signed original in the advance file for the recipient and give a copy to the recipient.
(b) The disclosure statement required by (a) of this section must
(1) indicate the advance is intended to address short-term, not long-term, financial needs;
(2) include an explanation of all fees for advances and renewals of advances;
(3) state that the licensee may charge an advance recipient a bad check fee for costs as allowed under AS 09.68.115(a)(2) if a payment is returned unpaid;
(4) state that, in the event of the advance recipient's default, the licensee may sue the recipient and recover up to $700 over the amount of the payment and, if the payment is a check, recover as permitted under AS 06.50.550(b);
(5) give the department's address and telephone number for receiving calls regarding customer complaints and concerns;
(6) state that the licensee may not accept collateral or services for an advance;
(7) state that the check given as security for the advance may be negotiated as part of the advance;
(8) state that
(A) the advance recipient may rescind the advance without cause at any time before the close of business on the business day following the day on which the licensee makes the advance by paying the principal amount of the advance to the licensee in cash or other immediately available funds;
(B) if the advance recipient rescinds under this paragraph, the origination fee is not refundable, but the licensee may not charge the recipient another fee, except for a bad check fee for costs as allowed under AS 09.68.115(a)(2) if the payment is returned unpaid;
(9) state that a criminal action may not be brought against the advance recipient for failure to pay the advance; and
(10) include other information reasonably required by the department to inform and protect advance recipients.
Sec. 06.50.520. Payment by licensee
(a) A licensee may give an advance recipient the amount of the advance in cash, by the licensee's business check, by a money order, or by a reasonable electronic payment mechanism, including an electronic funds transfer to the advance recipient's account.
(b) A licensee may not use another form of payment than the form of payment authorized in (a) of this section to make an advance to an advance recipient. In this subsection, “another form of payment” includes coupons, merchandise, services, or chattel of any kind.
Sec. 06.50.530. Payment by advance recipient
(a) An advance recipient may repay an advance
(1) in cash;
(2) by negotiation of the recipient's check that secures the advance; or
(3) with the agreement of the licensee, a debit card, a cashier's check, an electronic funds transfer from the recipient's bank account, or a reasonable electronic payment mechanism to which the parties agree.
(b) An advance is paid in full when the advance recipient repays the advance under (a) of this section, or when the advance recipient rescinds the advance under AS 06.50.480.
(c) A licensee may not accept payment of an advance from the proceeds of another advance provided by the same licensee.
Sec. 06.50.540. Default fees
If a payment received from an advance recipient is returned unpaid to a licensee, the licensee may not collect the fees allowed by this chapter unless the fees are disclosed in the agreement for the advance under AS 06.50.400.
Sec. 06.50.550. Collection or court action after default
(a) If an advance recipient defaults, before assigning the payment obligation to a third party for collection and before initiating a court action against the recipient, a licensee
(1) shall attempt in good faith to contact the advance recipient at reasonable times by telephone or mail to discuss the delinquency and to offer the recipient a payment plan under (2) of this subsection;
(2) shall offer the recipient a payment plan under which
(A) the recipient may repay the delinquent advance over an extended period of time, which may not exceed six months;
(B) at least five percent of the outstanding balance is due when the payment plan is signed;
(C) an additional fee by the licensee is not allowed, except for a bad check fee for costs as allowed under AS 09.68.115(a)(2);
(3) in addition to the contact required by (1) of this subsection, shall send a certified letter to the recipient's last known address at least 15 days before the action that makes the offer described in (2) of this subsection and that informs the recipient of the licensee's intent to proceed with a court action.
(b) The licensee may initiate a court action against a defaulting recipient to recover damages and costs allowed under AS 09.68.115 if the licensee has complied with (a) of this section. Notwithstanding AS 09.68.115, the total of all damages and costs, including damages recovered under AS 09.68.115(a), may not exceed the amount of the payment by $700.
Sec. 06.50.560. Threat of criminal action prohibited
A licensee may not threaten an advance recipient with criminal action as a result of the recipient's default.
Sec. 06.50.600. Regulations
The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this chapter.
Sec. 06.50.610. Relationship to federal and other state law
(a) If a provision of this chapter is preempted by or conflicts with federal law in a particular situation, the provision does not apply to the extent of the preemption or conflict.
(b) If a provision of this chapter conflicts with another state law in a particular situation, the provision in this chapter governs to the extent of the conflict.
Sec. 06.50.900. Definitions
In this chapter, unless the context requires otherwise,
(1) “advance” means a deferred deposit advance;
(2) “advance recipient” means a borrower to whom an advance is made;
(3) “control,” in the case of a person who is not a natural person, means direct or indirect ownership, the right to vote or otherwise control 10 percent or more of the governance interests of the entity, or the ability of a person to elect a majority of the directors;
(4) “deferred deposit advance” means a transaction in which a person
(A) accepts a dated check from a person seeking an advance;
(B) agrees to hold the check for a specified period of time before depositing or otherwise negotiating the check; and
(C) pays to the advance recipient, credits to the account of the advance recipient, or pays to another person on behalf of the advance recipient the amount of the check less the charges allowed under this chapter;
(5) “department” means the Department of Commerce, Community, and Economic Development;
(6) “license” means a license issued under this chapter;
(7) “licensee” means a person to whom a license has been issued under this chapter.