State of Nevada Department of Business and Industry, Financial Institutions Division v. Dollar Loan Center., LLCAnnotate this Case
Enacted in 2005, in response to the "debt treadmill," NRS Chapter 604A regulates the payday loan industry, including deferred deposit loans and loans with an annual interest rate greater than 40 percent. If a borrower cannot repay such a loan within 35 days, NRS 604A.480 subsection 1 allows for an extension but a licensee cannot extend the period beyond 60 days and cannot "add any unpaid interest or other charges accrued ... to the principal amount of the new deferred deposit loan or high-interest loan." However, under subsection 2, certain new deferred deposit or high-interest loans are exempt from those restrictions: A licensee may offer a new loan to satisfy an outstanding loan for a period of not less than 150 days and at an interest rate of less than 200 percent. The licensee must follow all of subsection 2's requirements for the new loan to be exempted. Subsection (2)(f) permits a loan under subsection 2 if the licensee does “not commence any civil action or process of alternative dispute resolution on a defaulted loan or any extension or repayment plan thereof." Reversing the district court, the Nevada Supreme Court held that NRS 604A.480(2)(f) bars a licensee from bringing any type of enforcement action on a refinancing loan made under NRS 604A.480(2) and is not merely a condition precedent to making a refinancing loan under the subsection.