Introduced on 8/23/05
Enacted on 10/11/05
Effective Date - This Ordinance shall become effective upon signature by the Mayor or upon becoming effective without the Mayor's signature.

Bill Type and Number: Ordinance 2005-1012

Sponsor: Council President Hyde

Date of Introduction: August 23, 2005

Committee(s) of Reference: GOOHS, LUZ, R

Date of Analysis: August 26, 2005

Type of Action: Ordinance Code amendments
 
Bill Summary: The bill amends Ordinance Code Chapter 22 - Small Loan and Consumer Financing and Pawnbrokers - to add a new Part 3 - Payday Loan Practices.  The new part establishes various definitions.   It prohibits payday lenders from including provisions in loan contracts that make the contract enforceable in a jurisdiction other than Jacksonville's courts and prohibits contract clauses requiring unilateral and/or mandatory arbitration and prohibiting a borrower from pursuing remedies in court.  The bill prohibits lenders from  "disguising" their loans by routing them through out-of-state banks for the purpose of invoking interstate commerce protections, and prohibits lenders from threatening or using criminal or civil collection processes not generally available to creditors to collect on defaulted loans.

The bill provides that payday loans made to members of the armed forces or their spouses may not exceed a 36% annual interest rate; that lenders may not garnish military wages or salaries; that collection activity may not be instituted against a military borrower or spouse when the military member has been deployed to a combat posting; prohibits lenders from contacting the commanding officer of a military member or spouse to attempt to enforce collection of a loan; and requires that these conditions must be disclosed in writing to military borrowers and their spouses. 

The bill prohibits payday loan establishments from locating within 600 feet of any other such establishment or within 10 miles of any military installation.  It establishes both civil and criminal penalties for violations in addition to any other remedies that may otherwise be available, and requires payday lenders to submit to the City's Consumer Affairs Division quarterly the zip code of each resident of the city who has entered into a payday loan.

Background Information: The bill's legislative findings state that the regulations are proposed because payday lenders exploit the difficulties of the financially challenged to charge them extremely high interest rates, often do so in a deceptive or misleading manner, frequently structure the transactions so as to evade local regulation by feigning interstate commerce, and frequently prey upon military families who can least afford the excessive charges.

Policy Impact Area: Payday loan regulation

Fiscal Impact: Undetermined

Analyst: Clements

(ordinance attached)