Ellington’s bill protecting small loan consumers could soon be law

Posted by: Brenda Holmes  | Tuesday, March 6, 2018

STATEHOUSE (March 6, 2018)  Legislation co-authored by State Rep. Jeff Ellington (R-Bloomington) establishing various consumer protections for financial services, including payday loans and rent-to-own agreements, could soon be law.

House Enrolled Act 1397 contains numerous provisions amending Indiana’s statutes concerning consumer credit, banking and rental agreements, clarifying terms, updating processes and bolstering consumer financial protections, could soon be law.

According to Ellington, Indiana allows heavily regulated 14-day loans of up to $550. However, Indiana’s payday lending statute does not adjust the timeframe between when a consumer applies and receives the small loan. Since this transfer of funds can be delayed during online transactions, this legislation would not start the 14-day timeframe until the consumer is in possession of the loaned amount. The act also addresses concerns that some payday lenders could be influencing pay-off of outstanding loans when consumers are eligible for an extended payment plan.

“We want financial consumers to know that if they get in a jam and cannot immediately repay a payday loan, it is their right under state law to request an extended payment plan,” Ellington said. “Under this act, the lender would be prohibited from coercing or discouraging a consumer from exercising that right. It will also ensure that a consumer’s 14-day repayment period does not begin until they actually receive the loan.”

Ellington said the new policy would make it state law that banks may charge no more than a $25 fee for returned electronic fund transfers or skip-a-payment services. This enrolled act would also improve transparency in rent-to-own agreements, requiring companies to disclose an itemized list of all charges and fees in the initial rental payment.

HEA 1397 can now be signed into law by the governor. To learn more visit iga.in.gov

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Rep. Jeff Ellington represents House District 62, which includes

portions of Greene, Monroe, Martin and Daviess counties.

A high-resolution photo of Ellington can be downloaded by clicking here.