On March 17, 2025, Maryland lawmakers introduced House Bill 693, a legislative proposal aimed at enhancing transparency and accountability in sales-based financing transactions. The bill seeks to address concerns regarding discrepancies between estimated and actual annual percentage rates (APRs) provided to consumers by financing providers.

One of the key provisions of House Bill 693 mandates that providers opting for an "opt-in" method must submit an annual report to the Commissioner of Financial Regulation. This report will detail the estimated APRs given to recipients and the actual APRs of completed transactions. The Commissioner will evaluate whether any deviations between these rates are reasonable, taking into account extraordinary circumstances that may affect the financing terms.

If the Commissioner determines that a provider has reported an unreasonable deviation between estimated and actual APRs, the bill allows for the imposition of stricter reporting requirements, compelling the provider to revert to a historical method for calculating projected sales volume. This provision aims to protect consumers from potential misleading practices in financing offers.

The bill also includes specific disclosure requirements for providers when extending closed-end financing offers. These disclosures must include the total amount of financing, any fees deducted, the total repayment amount, and the finance charge, ensuring that consumers have a clear understanding of their financial commitments.

Debate surrounding House Bill 693 has highlighted concerns from both consumer advocacy groups and financing providers. Advocates argue that the bill is a necessary step toward consumer protection, while some providers express apprehension about the potential administrative burden and the implications of stricter oversight.

The economic implications of this bill could be significant, as it may lead to increased compliance costs for financing providers. However, proponents believe that enhanced transparency could foster greater consumer trust and potentially stimulate more responsible lending practices.

As House Bill 693 progresses through the legislative process, its outcomes could reshape the landscape of sales-based financing in Maryland, balancing the need for consumer protection with the operational realities of financing providers. The bill's future will depend on ongoing discussions and potential amendments as it moves toward a vote.