On January 9, a group of five bi-partisan South Carolina Senators introduced Bill 910, which would, among other things, require persons (non-bank lenders) providing “consumer installment loans” or “deferred presentment loans” to conduct ability to repay (ATR) analysis. Insured state and federally chartered banks and credit unions are exempt from the provisions of the proposed law, which is currently before the Committee on Labor, Commerce, and Industry for review.
The bill would require the ATR analysis to be “included in and documented with the borrower’s loan application” and must consider the borrower’s and any coborrower’s employment, monthly income, and monthly expenses, including, but not limited to, other consumer installment, revolving credit, or deferred presentment loans, compared to the loan’s repayment obligation for the original term and permitted renewals. Likewise, the bill would require a signed statement from the borrower certifying the information provided.
Notably, South Carolina’s Consumer Protection Code includes a broad definition of “payable in installments,” covering consumer loan obligations with “two or more periodic payments,” therefore potentially covering loan products that may otherwise be exempt from federal disclosure requirements under Regulation Z, such as buy-now-pay-later (BNPL) loans. “Deferred presentment services” are deferred-deposit products defined as a written agreement where a provider accepts a check on the date it was written but holds it for a period of time before presenting it for payment.
The bill would prohibit providers of covered installment and deferred-deposit (i.e., payday) loans from:
- Failing to conduct ATR analysis;
- Providing a loan to a consumer who does not satisfy the ATR analysis;
- Mailing an unsolicited check or debit/credit card prompting a consumer to enter into an installment or deferred presentment loan;
- Renewing a consumer installment loan for a third or more time within 180 days of the previous loan renewal;
- Making a deferred presentment loan or paycheck advance loan within 180 days of the previous loan renewal;
- Making a paycheck advance loan within 30 days of the original loan;
- Making an installment or payday loan without a license;
- Adding additional fees to each loan; and
- Targeting low-income communities with marketing materials.
If passed, the bill would take effect upon approval by the Governor.