SAFE Lending Act of 2019

II 116TH CONGRESS 1ST SESSION S. 656 To amend the Truth in Lending Act to address certain issues relating to the extension of consumer credit, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 5, 2019 Mr. MERKLEY (for himself, Ms. HARRIS, Mr. MARKEY, Mr. BLUMENTHAL, Mrs. MURRAY, Mr. BOOKER, Mr. WYDEN, Ms. DUCKWORTH, Mrs. FEIN- STEIN, Mr. DURBIN, Mr. UDALL, Mr. VAN HOLLEN, Ms. SMITH, Mr. SANDERS, Ms. KLOBUCHAR, Mrs. GILLIBRAND, Ms. BALDWIN, Mr. CARDIN, and Mr. HEINRICH) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Truth in Lending Act to address certain issues relating to the extension of consumer credit, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stopping Abuse and 4 Fraud in Electronic Lending Act of 2019’’ or the ‘‘SAFE 5 Lending Act of 2019’’. 6 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 2 •S 656 IS SEC. 2. CONSUMER CONTROL OVER BANK ACCOUNTS. 1 (a) PROHIBITING UNAUTHORIZED REMOTELY CRE- 2 ATED CHECKS.—Section 905 of the Electronic Fund 3 Transfer Act (15 U.S.C. 1693c) is amended by adding at 4 the end the following: 5 ‘‘(d) LIMITATIONS ON REMOTELY CREATED 6 CHECKS.— 7 ‘‘(1) DEFINITION.—In this subsection— 8 ‘‘(A) the term ‘remotely created check’ 9 means a check, including a paper or electronic 10 check and any other payment order that the 11 Bureau, by rule, determines is appropriately 12 covered under this subsection, that— 13 ‘‘(i) is not created by the financial in- 14 stitution that holds the customer account 15 from which the check is to be paid; and 16 ‘‘(ii) does not bear a signature ap- 17 plied, or purported to be applied, by the 18 person from whose account the check is to 19 be paid; and 20 ‘‘(B) the term ‘Federal consumer financial 21 law’ has the meaning given the term in section 22 1002 of the Consumer Financial Protection Act 23 of 2010 (12 U.S.C. 5481). 24 ‘‘(2) LIMITATIONS.—Subject to the limitations 25 in paragraph (3) and any additional limitations that 26 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 3 •S 656 IS the Bureau may establish, by rule, a remotely cre- 1 ated check may only be issued by a person des- 2 ignated in writing by a consumer, with that written 3 designation specifically provided by the consumer to 4 the insured depository institution at which the con- 5 sumer maintains the account from which the check 6 is to be drawn. 7 ‘‘(3) ADDITIONAL LIMITATIONS.— 8 ‘‘(A) IN GENERAL.—A designation pro- 9 vided by a consumer under paragraph (2) may 10 be revoked at any time by the consumer. 11 ‘‘(B) CONSUMER FINANCIAL PROTECTION 12 LAWS.—No payment order, including a re- 13 motely created check, may be issued by any per- 14 son in response to the exercise of, or attempt to 15 exercise, any right by a consumer under— 16 ‘‘(i) any Federal consumer financial 17 law; or 18 ‘‘(ii) any other provision of any law or 19 regulation within the jurisdiction of the 20 Bureau.’’. 21 (b) CONSUMER PROTECTIONS FOR CERTAIN ONE- 22 TIME ELECTRONIC FUND TRANSFERS.—Section 913 of 23 the Electronic Fund Transfer Act (15 U.S.C. 1693k) is 24 amended— 25 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 4 •S 656 IS (1) in the matter preceding paragraph (1), by 1 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘No person’’; 2 (2) in subsection (a)(1), as so designated, by 3 striking ‘‘preauthorized electronic fund transfers’’ 4 and inserting ‘‘an electronic fund transfer’’; and 5 (3) by adding at the end the following: 6 ‘‘(b) TREATMENT FOR ELECTRONIC FUND TRANS- 7 FERS IN CREDIT EXTENSIONS.—If a consumer voluntarily 8 agrees to repay an extension of a small-dollar consumer 9 credit transaction, as defined in section 110(a) of the 10 Truth in Lending Act, by means of an electronic fund 11 transfer, the electronic fund transfer shall be treated as 12 a preauthorized electronic fund transfer subject to the pro- 13 tections of this title.’’. 14 SEC. 3. TRANSPARENCY AND CONSUMER EMPOWERMENT 15 IN SMALL-DOLLAR LENDING. 16 (a) SMALL-DOLLAR CONSUMER CREDIT TRANS- 17 ACTIONS.— 18 (1) IN GENERAL.—The Truth in Lending Act 19 (15 U.S.C. 1601 et seq.) is amended— 20 (A) by inserting after section 109 (15 21 U.S.C. 1608) the following: 22 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 5 •S 656 IS ‘‘SEC. 110. REGISTRATION REQUIREMENT FOR SMALL-DOL- 1 LAR LENDERS. 2 ‘‘(a) DEFINITION.—In this section, the term ‘small- 3 dollar consumer credit transaction’— 4 ‘‘(1) means any transaction that extends credit 5 that is— 6 ‘‘(A) made to a consumer in an amount 7 that— 8 ‘‘(i) is not more than— 9 ‘‘(I) $5,000; or 10 ‘‘(II) such greater amount as the 11 Bureau may, by rule, determine; and 12 ‘‘(ii) shall be adjusted annually to re- 13 flect changes in the Consumer Price Index 14 for all urban consumers published by the 15 Department of Labor; and 16 ‘‘(B) extended pursuant to an agreement 17 that is— 18 ‘‘(i)(I) other than an open end credit 19 plan; and 20 ‘‘(II) payable in 1 or more install- 21 ments of less than 12 months (or such 22 longer period as the Bureau may, by rule, 23 determine); 24 ‘‘(ii) an open end credit plan in which 25 each advance is fully repayable within a 26 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 6 •S 656 IS defined time or in connection with a de- 1 fined event, or both; or 2 ‘‘(iii) any other plan as the Bureau 3 determines, by rule; and 4 ‘‘(2) includes any action that facilitates, bro- 5 kers, arranges, or gathers applications for a trans- 6 action described in paragraph (1). 7 ‘‘(b) REGISTRATION REQUIREMENT.—A person shall 8 register with the Bureau before issuing credit in a small- 9 dollar consumer credit transaction.’’; and 10 (B) in section 173 (15 U.S.C. 1666j), by 11 adding at the end the following: 12 ‘‘(d) Notwithstanding any other provision of this title, 13 any small-dollar consumer credit transaction, as defined 14 in section 110(a), shall comply with the laws of the State 15 in which the consumer to which credit in the transaction 16 is extended resides with respect to annual percentage 17 rates, interest, fees, charges, and such other similar or re- 18 lated matters as the Bureau may, by rule, determine if 19 the small-dollar consumer credit transaction is— 20 ‘‘(1) made— 21 ‘‘(A) over the Internet; 22 ‘‘(B) by telephone; 23 ‘‘(C) by facsimile; 24 ‘‘(D) by mail; 25 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 7 •S 656 IS ‘‘(E) by electronic mail; or 1 ‘‘(F) through another electronic commu- 2 nication; or 3 ‘‘(2) conducted by a national bank.’’. 4 (2) TECHNICAL AND CONFORMING AMEND- 5 MENT.—The table of sections for chapter 1 of the 6 Truth in Lending Act (15 U.S.C. 1601 et seq.) is 7 amended by inserting after the item relating to sec- 8 tion 109 the following: 9 ‘‘110. Registration requirement for small-dollar lenders.’’. (b) PROHIBITION ON CERTAIN FEES.—Section 915 10 of the Electronic Fund Transfer Act (15 U.S.C. 1693l– 11 1) is amended— 12 (1) by redesignating subsection (d) as sub- 13 section (e); and 14 (2) by inserting after subsection (c) the fol- 15 lowing: 16 ‘‘(d) ADDITIONAL FEES PROHIBITED.— 17 ‘‘(1) DEFINITION.—In this subsection, the term 18 ‘prepaid account’ has the meaning given the term by 19 rule of the Bureau. 20 ‘‘(2) PROHIBITION.—With respect to the use of 21 a prepaid account by a consumer— 22 ‘‘(A) it shall be unlawful for any person to 23 charge the consumer a fee for an overdraft with 24 respect to the prepaid account, including a 25 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 8 •S 656 IS shortage of funds or a transaction processed for 1 an amount exceeding the account balance of the 2 prepaid account; 3 ‘‘(B) any transaction for an amount that 4 exceeds the account balance of the prepaid ac- 5 count may be declined, except that the con- 6 sumer may not be charged a fee for that pur- 7 pose; and 8 ‘‘(C) the Bureau may, by rule, prohibit the 9 charging of any fee so that the Bureau may— 10 ‘‘(i) prevent unfair, deceptive, or abu- 11 sive practices; and 12 ‘‘(ii) promote the ability of the con- 13 sumer to understand and compare the 14 costs of prepaid accounts.’’. 15 SEC. 4. RESTRICTIONS ON LEAD GENERATION IN SMALL- 16 DOLLAR CONSUMER CREDIT TRANSACTIONS. 17 (a) IN GENERAL.—Chapter 2 of the Truth in Lend- 18 ing Act (15 U.S.C. 1631 et seq.) is amended by adding 19 at the end the following: 20 ‘‘SEC. 140B. RESTRICTIONS ON LEAD GENERATION IN 21 SMALL-DOLLAR CONSUMER CREDIT TRANS- 22 ACTIONS. 23 ‘‘(a) DEFINITIONS.—In this section— 24 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 9 •S 656 IS ‘‘(1) the terms ‘Internet access service’ and 1 ‘Internet information location tool’ have the mean- 2 ings given those terms in section 231(e) of the Com- 3 munications Act of 1934 (47 U.S.C. 231(e)); 4 ‘‘(2) the term ‘sensitive personal financial infor- 5 mation’ means a social security number, financial 6 account number, bank routing number, bank ac- 7 count number, or security or access code that is im- 8 mediately necessary to permit access to the financial 9 account of an individual; and 10 ‘‘(3) the term ‘small-dollar consumer credit 11 transaction’ has the meaning given the term in sec- 12 tion 110(a). 13 ‘‘(b) IDENTIFICATION INFORMATION.—Any person 14 facilitating, brokering, arranging for, or gathering applica- 15 tions for the distribution of sensitive personal financial in- 16 formation in connection with a small-dollar consumer 17 credit transaction shall prominently disclose information 18 by which the person may be contacted or identified, includ- 19 ing for service of process and for identification of the reg- 20 istrant of any domain name registered or used. 21 ‘‘(c) PROHIBITION ON LEAD GENERATION IN SMALL- 22 DOLLAR CONSUMER CREDIT TRANSACTIONS.—No person 23 may facilitate, broker, arrange for, or gather applications 24 for the distribution of sensitive personal financial informa- 25 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 10 •S 656 IS tion in connection with a small-dollar consumer credit 1 transaction unless the person is directly providing the 2 small-dollar consumer credit to a consumer. 3 ‘‘(d) RULE OF CONSTRUCTION.— 4 ‘‘(1) IN GENERAL.—Nothing in this section 5 may be construed to limit the authority of the Bu- 6 reau to further restrict activities covered by this sec- 7 tion. 8 ‘‘(2) CLARIFICATION.—For the purposes of this 9 section, it shall not be considered facilitating the dis- 10 tribution of sensitive personal financial information 11 in connection with a small-dollar consumer credit 12 transaction to be engaged solely in one of the fol- 13 lowing activities: 14 ‘‘(A) The provision of a telecommuni- 15 cations service, an Internet access service, or an 16 Internet information location tool. 17 ‘‘(B) The transmission, storage, retrieval, 18 hosting, formatting, or translation (or any com- 19 bination thereof) of a communication, without 20 selection or alteration of the content of the 21 communication, except the deletion of a par- 22 ticular communication or material made by an- 23 other person in a manner that is consistent 24 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 11 •S 656 IS with section 230(c) of the Communications Act 1 of 1934 (47 U.S.C. 230(c)).’’. 2 (b) TECHNICAL AND CONFORMING AMENDMENT.— 3 The table of sections for chapter 2 of the Truth in Lend- 4 ing Act (15 U.S.C. 1631 et seq.) is amended by adding 5 at the end the following: 6 ‘‘140B. Restrictions on lead generation in small-dollar consumer credit trans- actions.’’. SEC. 5. STUDIES. 7 (a) DEFINITIONS.—In this section— 8 (1) the term ‘‘appropriate committees of Con- 9 gress’’ means— 10 (A) the Committee on Banking, Housing, 11 and Urban Affairs of the Senate; 12 (B) the Committee on Indian Affairs of the 13 Senate; 14 (C) the Committee on Financial Services of 15 the House of Representatives; and 16 (D) the Committee on Natural Resources 17 of the House of Representatives; and 18 (2) the term ‘‘Indian tribe’’ has the meaning 19 given the term in section 4 of the Indian Self-Deter- 20 mination and Education Assistance Act (25 U.S.C. 21 5304). 22 (b) STUDY REQUIRED.—Not later than 180 days 23 after the date of enactment of this Act, the Comptroller 24 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 12 •S 656 IS General of the United States shall conduct a study regard- 1 ing— 2 (1) the availability of capital on reservations of 3 Indian tribes; and 4 (2) the impact that small-dollar consumer credit 5 extended through internet and non-internet means 6 to members of Indian tribes has had on economic 7 opportunity and wealth for members of Indian 8 tribes. 9 (c) CONSULTATION.—In conducting the study re- 10 quired under subsection (b), the Comptroller General of 11 the United States shall consult, as appropriate, with— 12 (1) the Bureau of Consumer Financial Protec- 13 tion; 14 (2) the Board of Governors of the Federal Re- 15 serve System; 16 (3) the Director of the Bureau of Indian Af- 17 fairs; 18 (4) federally recognized Indian tribes; and 19 (5) community development financial institu- 20 tions operating in Indian lands. 21 (d) CONGRESSIONAL CONSIDERATION.—The Comp- 22 troller General of the United States shall submit to the 23 appropriate committees of Congress the study required 24 under subsection (b). 25 VerDate Sep 11 2014 04:06 Mar 15, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S656.IS S656 kjohnson on DSK79L0C42 with BILLS 13 •S 656 IS SEC. 6. RULEMAKING. 1 Not later than 1 year after the date of enactment 2 of this Act, the Bureau of Consumer Financial Protection 3 shall a [Text truncated for display. Full text available on Congress.gov.]