Protections in Consumer Lending Act

II 116TH CONGRESS 1ST SESSION S. 1205 To amend the Equal Credit Opportunity Act to require creditors to request demographic information from applicants for certain types of credit in order to prevent discriminatory lending practices with respect to those applicants, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 11, 2019 Mrs. GILLIBRAND (for herself, Ms. KLOBUCHAR, Mr. WYDEN, and Mr. BLUMENTHAL) introduced the following bill; which was read twice and re- ferred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Equal Credit Opportunity Act to require credi- tors to request demographic information from applicants for certain types of credit in order to prevent discrimina- tory lending practices with respect to those applicants, 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 ‘‘Protections in Con- 4 sumer Lending Act’’. 5 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 2 •S 1205 IS SEC. 2. COLLECTION OF DEMOGRAPHIC INFORMATION. 1 (a) IN GENERAL.—The Equal Credit Opportunity 2 Act (15 U.S.C. 1691 et seq.) is amended by inserting after 3 section 704B (15 U.S.C. 1691c–2) the following: 4 ‘‘SEC. 704C. COLLECTION OF DEMOGRAPHIC INFORMATION. 5 ‘‘(a) DEFINITIONS.—In this section— 6 ‘‘(1) the terms ‘annual percentage rate’ and ‘in- 7 terest’ have the meanings given those terms in sec- 8 tion 987(i) of title 10, United States Code; 9 ‘‘(2) the term ‘covered transaction’ means— 10 ‘‘(A) the extension of credit with respect to 11 the purchase of a motor vehicle; 12 ‘‘(B) the extension of credit with respect to 13 which the annual percentage rate of interest im- 14 posed is greater than 36 percent; 15 ‘‘(C) the extension of credit— 16 ‘‘(i) in an amount that is less than 17 $15,000; or 18 ‘‘(ii) with respect to which the period 19 of repayment is less than 3 years; and 20 ‘‘(D) the opening of a credit card account; 21 and 22 ‘‘(3) the term ‘covered year’ means a year in 23 which a creditor engages in a covered transaction. 24 ‘‘(b) PURPOSE; SENSE OF CONGRESS.— 25 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 3 •S 1205 IS ‘‘(1) PURPOSE.—The purpose of this section is 1 to provide the Bureau and the public with data that 2 can be used to— 3 ‘‘(A) help determine whether creditors are 4 serving the credit-lending needs of the commu- 5 nities in which the creditors are located; and 6 ‘‘(B) assist in— 7 ‘‘(i) identifying possible discriminatory 8 lending patterns; and 9 ‘‘(ii) enforcing antidiscrimination stat- 10 utes, including this title. 11 ‘‘(2) SENSE OF CONGRESS.—It is the sense of 12 Congress that nothing in this section is intended to 13 encourage unsound lending practices or the alloca- 14 tion of credit. 15 ‘‘(c) COLLECTION OF INFORMATION.— 16 ‘‘(1) IN GENERAL.—Subject to the other provi- 17 sions of this section, after a creditor decides whether 18 to approve an application submitted by an applicant 19 with respect to a covered transaction, the creditor— 20 ‘‘(A) shall— 21 ‘‘(i) request from the applicant the in- 22 formation described in paragraph (2) with 23 respect to the applicant; 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 4 •S 1205 IS ‘‘(ii) when collecting information 1 under clause (i), provide a disclaimer to 2 the applicant regarding— 3 ‘‘(I) the purposes of the collec- 4 tion of the information; and 5 ‘‘(II) the right of the applicant 6 under paragraph (3); 7 ‘‘(iii) itemize the information with re- 8 spect to the application, including any in- 9 formation collected under clause (i), in 10 order to clearly and conspicuously dis- 11 close— 12 ‘‘(I) the number of the applica- 13 tion and the date on which the appli- 14 cation was received; 15 ‘‘(II) the type and purpose of the 16 covered transaction; 17 ‘‘(III) the amount of the credit or 18 credit limit applied for with respect to 19 the covered transaction; 20 ‘‘(IV) if applicable, the amount of 21 the credit or credit limit approved for 22 the applicant with respect to the cov- 23 ered transaction; 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 5 •S 1205 IS ‘‘(V) the type of action taken 1 with respect to the application, the 2 date on which that action is taken, 3 and, if the action taken is to reject 4 the application, the reason for that re- 5 jection; 6 ‘‘(VI) the originator of the cov- 7 ered transaction; 8 ‘‘(VII) the credit score and debt 9 to income ratio of the applicant; 10 ‘‘(VIII) if the covered transaction 11 is a loan, whether or not the loan is 12 amortizing; and 13 ‘‘(IX) any additional data that 14 the Bureau determines would aid in 15 fulfilling the purposes of this section; 16 and 17 ‘‘(iv) in accordance with subsection 18 (e), submit any information collected under 19 clause (i) and the information itemized 20 under clause (iii) to the Bureau, which 21 shall— 22 ‘‘(I) store and maintain that in- 23 formation; 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 6 •S 1205 IS ‘‘(II) make the information avail- 1 able online in accordance with sub- 2 section (e)(5); and 3 ‘‘(III) take the action described 4 in subsection (f) with respect to the 5 information; and 6 ‘‘(B) in carrying out subparagraph (A), 7 may not include in any record the name, spe- 8 cific address, telephone number, electronic mail 9 address, or any other personally identifiable in- 10 formation of the applicant. 11 ‘‘(2) INFORMATION DESCRIBED.—The informa- 12 tion described in this paragraph shall include, with 13 respect to an applicant who submits an application 14 to a creditor in connection with a covered trans- 15 action— 16 ‘‘(A) the age of the applicant; 17 ‘‘(B) the race of the applicant; 18 ‘‘(C) the color of the applicant; 19 ‘‘(D) the sex of the applicant; 20 ‘‘(E) the marital status of the applicant; 21 ‘‘(F) the sexual orientation of the appli- 22 cant; and 23 ‘‘(G) the gender identity of the applicant. 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 7 •S 1205 IS ‘‘(3) RIGHT TO REFUSE.—An applicant with re- 1 spect to a covered transaction may refuse to provide 2 any information requested under paragraph (1) with 3 respect to the covered transaction. 4 ‘‘(d) NO ACCESS BY UNDERWRITERS.— 5 ‘‘(1) LIMITATION.—Where feasible, and subject 6 to paragraph (2), no loan underwriter or other offi- 7 cer or employee of a creditor, or any affiliate of a 8 creditor, involved in making any determination con- 9 cerning an application with respect to a covered 10 transaction may have access to any information pro- 11 vided by the applicant with respect to that covered 12 transaction pursuant to a request for information 13 under subsection (c)(1)(A)(i) in connection with that 14 application. 15 ‘‘(2) LIMITED ACCESS.—If a creditor deter- 16 mines that a loan underwriter or other officer or em- 17 ployee of the creditor, or any affiliate of the creditor, 18 involved in making any determination concerning an 19 application with respect to a covered transaction 20 should have access to any information provided by 21 the applicant with respect to that covered trans- 22 action pursuant to a request for information under 23 subsection (c)(1)(A)(i) in connection with that appli- 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 8 •S 1205 IS cation, the creditor shall provide notice to the appli- 1 cant— 2 ‘‘(A) regarding the access of the under- 3 writer to that information; and 4 ‘‘(B) that the creditor may not discrimi- 5 nate on the basis of that information. 6 ‘‘(e) DISCLOSURE OF INFORMATION TO BUREAU.— 7 ‘‘(1) IN GENERAL.—Not later than March 1 of 8 the year after a covered year for a creditor, the cred- 9 itor shall submit to the Bureau all of the informa- 10 tion that the creditor collected under clause (i) of 11 subsection (c)(1)(A) and itemized under clause (iii) 12 of that subsection during that covered year. 13 ‘‘(2) INFORMATION RETAINED.—Each creditor 14 that submits information to the Bureau under para- 15 graph (1) shall retain a copy of that information in 16 the records of the creditor for not less than 3 years 17 after the date on which the creditor submits the in- 18 formation. 19 ‘‘(3) PROHIBITION.—A creditor that collects in- 20 formation under subsection (c)(1)(A) may not— 21 ‘‘(A) share, exchange, transfer, sell, dis- 22 close, or otherwise permit access to that infor- 23 mation except as provided in this subsection; or 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 9 •S 1205 IS ‘‘(B) use that information for any purpose, 1 including for a purpose relating to marketing, 2 except as provided in this subsection. 3 ‘‘(4) DISCLOSURE STATEMENT.—The Bureau 4 shall make available a disclosure statement based on 5 the information that each creditor submits for a cov- 6 ered year under paragraph (1), which— 7 ‘‘(A) shall include— 8 ‘‘(i) the number of applications for 9 covered transactions that the creditor re- 10 ceived and approved during that covered 11 year; and 12 ‘‘(ii) the zip code and State of resi- 13 dence for each applicant with respect to an 14 application for a covered transaction re- 15 ceived by the creditor during that covered 16 year; and 17 ‘‘(B) may not include any information de- 18 scribed in subsection (c)(1)(B). 19 ‘‘(5) ONLINE DISCLOSURE.—The Bureau 20 shall— 21 ‘‘(A) post a general notice regarding the 22 availability of the information received by the 23 Bureau under paragraph (1); 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 10 •S 1205 IS ‘‘(B) in the notice posted under subpara- 1 graph (A), clearly convey that the information 2 described in that subparagraph is available on 3 the website of the Bureau; and 4 ‘‘(C) when making the information received 5 under paragraph (1) available on the website of 6 the Bureau, ensure that— 7 ‘‘(i) the information is easy for mem- 8 bers of the public to access and under- 9 stand; and 10 ‘‘(ii) accessing and reading the infor- 11 mation does not require the use of any ad- 12 vanced computer program or software. 13 ‘‘(f) BUREAU ACTION.— 14 ‘‘(1) ENSURING NO DISCRIMINATION.— 15 ‘‘(A) IN GENERAL.—The Bureau shall ex- 16 amine the information submitted to the Bureau 17 under subsection (e) or subparagraph (B), as 18 applicable, to ensure that— 19 ‘‘(i) each creditor makes a decision re- 20 garding whether to approve an application 21 for a covered transaction based on the in- 22 ternal requirements and policies of the 23 creditor with respect to the extension of 24 credit; and 25 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 11 •S 1205 IS ‘‘(ii) no creditor with respect to a cov- 1 ered transaction discriminates against an 2 applicant with respect to that covered 3 transaction on the basis of any char- 4 acteristic of the applicant described in sub- 5 section (c)(2). 6 ‘‘(B) INFORMATION FROM OTHER GOVERN- 7 MENT ENTITIES.—For the purposes of subpara- 8 graph (A), the Bureau may rely on information 9 that is collected by another Federal, State, or 10 local government agency and submitted to the 11 Bureau if the Director of the Bureau deter- 12 mines that— 13 ‘‘(i) relying on that information pro- 14 motes transparency; and 15 ‘‘(ii) the information collected by that 16 other agency is substantially similar to the 17 information that is submitted to the Bu- 18 reau under subsection (e). 19 ‘‘(2) ENFORCEMENT.— 20 ‘‘(A) IN GENERAL.—The Bureau may take 21 such action as the Bureau determines to be 22 necessary or appropriate to carry out paragraph 23 (1)(A), including by— 24 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 12 •S 1205 IS ‘‘(i) imposing a civil penalty in an 1 amount described in section 706(b) against 2 a creditor that violates that paragraph; 3 and 4 ‘‘(ii) as appropriate, referring a mat- 5 ter to the Attorney General. 6 ‘‘(B) RULES OF CONSTRUCTION REGARD- 7 ING BONA FIDE ERRORS.— 8 ‘‘(i) UNINTENTIONAL ERRORS.—An 9 error by a creditor in compiling or record- 10 ing information, including an incorrect 11 entry for a census tract number, may not 12 be construed as a violation of this section 13 if the error is unintentional and occurs de- 14 spite the maintenance of procedures by the 15 creditor that are reasonably adapted to 16 avoid those errors. 17 ‘‘(ii) INACCURATE OR INCOMPLETE 18 INFORMATION.—If a creditor, not later 19 than 30 days after the end of each cal- 20 endar quarter, makes a good faith effort to 21 record all information required to be col- 22 lected under clause (i) of subsection 23 (c)(1)(A) and itemized under clause (iii) of 24 that subsection during that quarter and 25 VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205 kjohnson on DSK79L0C42 with BILLS 13 •S 1205 IS some of that information is nevertheless in- 1 accurate or incomplete, the error or omis- 2 sion, as applicable, may not be construed 3 to violate this section if the creditor cor- 4 rects or completes the information before 5 submitting the information to the Bureau 6 under subsection (e). 7 ‘‘(g) REPORTING REQUIREMENT.—Not later than 1 8 year after the date of enactment of this section, and annu- 9 ally thereafter, the Bureau shall submit to Congress a re- 10 port regarding the efforts of the Bureau in carrying out 11 this section.’’. 12 (b) TECHNICAL AND CONFORMING AMENDMENT.— 13 The table of contents for the Equal Credit Opportunity 14 Act (15 U.S.C. 1691 et seq.) is amended by inserting after 15 the item relating to section 704B (15 U.S.C. 1691c–2) 16 the following: 17 ‘‘704C. Collection of demographic information.’’. Æ VerDate Sep 11 2014 03:14 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6301 E:\BILLS\S1205.IS S1 [Text truncated for display. Full text available on Congress.gov.]