GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
S	1
SENATE BILL 723
     

 
Short Title:	Unsolicited Checks to Secure Loans.	()	
Sponsors:	Senators Bingham;  Albertson, Ballance, Cunningham, Garwood, Hagan, Harris, Horton, Hoyle, Kinnaird, Metcalf, Rand, Reeves, Warren, and Weinstein.	
Referred to:	Commerce.	
March 29, 2001

A BILL TO BE ENTITLED
AN ACT TO REQUIRE CERTAIN disclosure and warning STATEMENTS ON UNSOLICITED CHECKs THAT, WHEN CASHED BY THE RECIPIENTS, OBLIGATE THE RECIPIENTs tO repay the amount of the checkS plus interest and fees.

The General Assembly of North Carolina enacts:
SECTION 1.  Article 1 of Chapter 75 of the General Statutes is amended by adding a new section to read:
"§ 75-20.  Unsolicited checks to secure loans.
(a)	No person, firm, or corporation engaged in lending money shall deliver to a person an unsolicited check made out to the recipient that upon cashing, obligates the recipient to repay the amount of the check plus interest and fees, unless all of the following requirements are satisfied:
(1)	The check is attached to a disclosure statement that is easily detachable and that contains in at least 10-point boldface type a statement conspicuously placed in substantially the following form:
'Warning:  This is a loan solicitation. If you cash this check, you are agreeing to borrow the sum of $------ at the ---% rate of interest for a period of --- years. Your monthly payments will be $---- for ---- years. If you are late with a payment, you will be charged the following fees in addition to your monthly payment:  (list fees). All other terms of this loan are clearly identified as loan terms and appear on the back of the check or on this attachment. Read these terms carefully before you cash this check. Cashing this check constitutes a loan transaction.'
(2)	The disclosure statement under subdivision (1) of this subsection also contains on its face in at least 10-point boldface type a statement conspicuously placed in substantially the following form:
'You may cancel this loan agreement at any time prior to midnight of the third business day after the date that you cash this check. See the attached Notice of Cancellation form for an explanation of this right.'
(b)	The person, firm, or corporation engaged in lending money shall furnish the recipient a completed form in duplicate, captioned "Notice of Cancellation," that shall be attached to the disclosure statement under subsection (a) of this section and easily detachable and that shall contain in 10 point boldface type the following information and statements in the same language as that used in the loan agreement:
'Notice of Cancellation

You may cancel this loan, without any penalty or obligation, within three business days from the date you cashed the attached check.
If you cancel, you must make available to the lender any moneys you received upon cashing the check; or you may, if you wish, comply with the instructions of the lender regarding the return of the moneys at the lender's expense and risk.
If you fail to make the moneys available to the lender, or if you agree to return the moneys to the lender and fail to do so, then you remain liable for performance of all obligations under the contract.
To cancel this loan, mail or deliver a signed and dated copy of this cancellation notice or any other written notice, or send a telegram to _________________
_____________(name of lender)
at______________________________,
_____(address of lender's place of business)
I hereby cancel this loan agreement.
______________________
______(date)
_____________________
___________________(borrower's signature)'(c)	A violation of this section is an unfair trade practice under G.S. 75-1.1 and is subject to all of the enforcement and penalty provisions of an unfair trade practice under this Article."
SECTION 2.  This act becomes effective October 1, 2001.