Kansas Governor Laura Kelly signed House Bill (HB) 2247 into law, bringing significant changes to the Kansas Mortgage Business Act and the Uniform Consumer Credit Code (UCCC). The changes brought about by HB 2247 will largely become effective on January 1, 2025. However, those changes standardizing threshold amounts consistent with federal law will become effective on July 1, 2024.

Highlights of HB 2247 include:

• Threshold Increase.
  • The bill introduces a new definition for “threshold amount” to align with the Truth in Lending Act/Reg. Z threshold, currently $69,500. This is an increase from the previous $25,000 threshold.
• Changes to Territorial Scope Provisions.
  • The bill amends K.S.A. 16a-1-201, which pertains to the territorial scope of the Kansas Mortgage Business Act and the UCCC. A consumer credit transaction is deemed made in Kansas if a written agreement is received by the creditor from a consumer in Kansas, or if the creditor induces a Kansas resident to enter into the transaction by any means of solicitation, including, but not limited to mail, telephone, radio, television, electronic mail, internet or any other electronic means.
• Changes to Licensing Provisions.
  • The bill amends various provisions of the licensing application and notification filing processes.
• New Definitions.
  • An “agent” is a person who is authorized, through express or implied authority, to act on behalf of a licensee or applicant.
  • A “creditor” is a person who regularly engages, directly or indirectly, in extending credit in a consumer credit transaction. The definition now also includes an assignee of a creditor’s right to payment, but this term does not in and of itself impose on the assignee any obligation of the assignor.
  • The bill introduces new requirements for solicitations and published advertisements directed at Kansas residents. According to the bill, all such advertisements, including those on the internet or by other electronic means, must contain the name and license number or unique identifier of the licensee on record with the administrator.
  • Each licensee is required to maintain a record of all solicitations or advertisements for a period of 36 months. However, the term “advertising” does not include business cards or promotional items, such as pens, pencils, hats, and other novelty items.
• Interest Rates.
  • The bill introduces new provisions regarding interest rates for consumer loans incurred pursuant to closed-end credit. According to the bill, a lender may charge a periodic finance charge, calculated according to the actuarial method, not to exceed 36% per annum.
• Nonsufficient Funds (NSF) Fees and Late Fees.
  • The law amends the NSF and late fee provisions, including defining insufficient payment method to cover only a UCC negotiable instrument drawn on any financial institution for the payment of preexisting indebtedness of the drawer or maker, which is refused because the drawer or maker did not have sufficient funds.
• Prepaid Finance Charges
  • The bill provides that prepaid finance charges on consumer loans may not exceed the lesser of 2% of the amount financed or $300.
• Anti-Surcharge Provision
  • This provision provides that a retailer doing business in any sales, service, or lease transaction may not impose a surcharge on a customer who elects to use a credit card unless such retailer discloses the amount of such a surcharge through a clear and conspicuous notice to the customer at the point of entry or the point of sale and in advance of such transaction.
• Right to Cure Provisions.
  • The law amends the right to cure notice provisions.
• Extended Payment Plan Provisions for Small Dollar Loans.
  • The bill provides that small dollar loan borrowers who are unable to repay a loan as contemplated may elect once every 12 months to repay the payday loan by means of an extended payment plan. The extended payment plan terms shall allow the consumer to repay the outstanding payday loan including any fee due in at least four substantially equal installments.
  • No additional loans shall be made to the consumer during an extended payment plan.
  • Lenders shall prominently display the availability of extended payment plans where loans are made and shall disclose the availability of extended payment plans in small dollar loan agreements.