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F I S C A L I M P A C T R E P O R T

SPONSOR Anderson

DATE TYPED 02/11/05 HB 378/aHCPAC

SHORT TITLE Clarify Misleading Extensions of Credit

SB

ANALYST Ford

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General (AGO)

SUMMARY

Synopsis of HCPAC Amendment

The House Consumer and Public Affairs Committee amendments correct a typo by replacing

references to “blank check” with “bank check.” The amendments also replace the requirement

that the word “loan” be printed in contrasting colors on the front of the check with a requirement

that the word be printed in “legible letters, at least five times larger than the next smaller letters

printed on the check, prominently displayed.”

Synopsis of Original Bill

House Bill 378 enacts a new section of the Unfair Practices Act to provide that extending pre-

approved credit with a blank check without adequate notification that it is a loan constitutes a

misleading extension of credit. The bill further provides that a clear and prominent notice, in-

cluding an explanation of interest due and other terms of the credit, accompanying an extension

of pre-approved credit is not a misleading extension of credit. Finally, House Bill 378 provides

that “adequate notification” means the printing of the word “loan” in large, contrasting color let-

ters on the front of the blank check instrument.

House Bill 378/aHCPAC -- Page 2

Significant Issues

The AGO notes that this bill may be challenged as conflicting with federal law. The AGO fur-

ther notes that current protections afforded under the false advertising statutes and the Unfair

Practices Act may cover this practice.

TECHNICAL ISSUES

The bill requires the word “loan” to be printed in large letters on the front of a blank check in-

strument. However, the word “large” is subject to interpretation. And amendment to specify the

minimum font size of the letters may be helpful.

EF/lg