Protections in Consumer Lending Act

I 116TH CONGRESS 1ST SESSION H. R. 2324 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 HOUSE OF REPRESENTATIVES APRIL 15, 2019 Mr. GARCI´A of Illinois introduced the following bill; which was referred to the Committee on Financial Services 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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 2324 IH 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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 2324 IH ‘‘(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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 2324 IH ‘‘(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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 2324 IH ‘‘(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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 2324 IH ‘‘(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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 2324 IH ‘‘(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 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 2324 IH 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) PROHIBITION ON SHARING INFORMATION WITH 7 THIRD PARTIES.— 8 ‘‘(1) IN GENERAL.—Other than disclosures to 9 the Bureau required by subsection (f), creditors may 10 not share, exchange, transfer, sell, lease, rent, pro- 11 vide, disclose, or otherwise permit access to any 12 third party the information provided by applicants 13 pursuant to a request for information under sub- 14 section (c)(1)(A)(i). 15 ‘‘(2) THIRD PARTY.—The term ‘third party’ 16 means any person, partnership, or corporation that 17 is not— 18 ‘‘(A) the person, partnership, or corpora- 19 tion that is sharing the information; and 20 ‘‘(B) solely performing an outsourced func- 21 tion of the creditor if the person, partnership, 22 or corporation is contractually or legally prohib- 23 ited from using, storing, or sharing the personal 24 VerDate Sep 11 2014 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 2324 IH information after the conclusion of the 1 outsourced function. 2 ‘‘(f) DISCLOSURE OF INFORMATION TO BUREAU.— 3 ‘‘(1) IN GENERAL.—Not later than March 1 of 4 the year after a covered year for a creditor, the cred- 5 itor shall submit to the Bureau all of the informa- 6 tion that the creditor collected under clause (i) of 7 subsection (c)(1)(A) and itemized under clause (iii) 8 of that subsection during that covered year. 9 ‘‘(2) INFORMATION RETAINED.—Each creditor 10 that submits information to the Bureau under para- 11 graph (1) shall retain a copy of that information in 12 the records of the creditor for not less than 3 years 13 after the date on which the creditor submits the in- 14 formation. 15 ‘‘(3) PROHIBITION.—A creditor that collects in- 16 formation under subsection (c)(1)(A) may not— 17 ‘‘(A) share, exchange, transfer, sell, dis- 18 close, or otherwise permit access to that infor- 19 mation except as provided in this subsection; or 20 ‘‘(B) use that information for any purpose, 21 including for a purpose relating to marketing, 22 except as provided in this subsection. 23 ‘‘(4) DISCLOSURE STATEMENT.—The Bureau 24 shall make available a disclosure statement based on 25 VerDate Sep 11 2014 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 2324 IH the information that each creditor submits for a cov- 1 ered year under paragraph (1), which— 2 ‘‘(A) shall include— 3 ‘‘(i) the number of applications for 4 covered transactions that the creditor re- 5 ceived and approved during that covered 6 year; and 7 ‘‘(ii) the zip code and State of resi- 8 dence for each applicant with respect to an 9 application for a covered transaction re- 10 ceived by the creditor during that covered 11 year; and 12 ‘‘(B) may not include any information de- 13 scribed in subsection (c)(1)(B). 14 ‘‘(5) ONLINE DISCLOSURE.—The Bureau 15 shall— 16 ‘‘(A) post a general notice regarding the 17 availability of the information received by the 18 Bureau under paragraph (1); 19 ‘‘(B) in the notice posted under subpara- 20 graph (A), clearly convey that the information 21 described in that subparagraph is available on 22 the website of the Bureau; and 23 VerDate Sep 11 2014 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 2324 IH ‘‘(C) when making the information received 1 under paragraph (1) available on the website of 2 the Bureau, ensure that— 3 ‘‘(i) the information is easy for mem- 4 bers of the public to access and under- 5 stand; and 6 ‘‘(ii) accessing and reading the infor- 7 mation does not require the use of any ad- 8 vanced computer program or software. 9 ‘‘(g) BUREAU ACTION.— 10 ‘‘(1) ENSURING NO DISCRIMINATION.— 11 ‘‘(A) IN GENERAL.—The Bureau shall ex- 12 amine the information submitted to the Bureau 13 under subsection (e) or subparagraph (B), as 14 applicable, to ensure that— 15 ‘‘(i) each creditor makes a decision re- 16 garding whether to approve an application 17 for a covered transaction based on the in- 18 ternal requirements and policies of the 19 creditor with respect to the extension of 20 credit; and 21 ‘‘(ii) no creditor with respect to a cov- 22 ered transaction discriminates against an 23 applicant with respect to that covered 24 transaction on the basis of any char- 25 VerDate Sep 11 2014 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 2324 IH acteristic of the applicant described in sub- 1 section (c)(2). 2 ‘‘(B) INFORMATION FROM OTHER GOVERN- 3 MENT ENTITIES.—For the purposes of subpara- 4 graph (A), the Bureau may rely on information 5 that is collected by another Federal, State, or 6 local government agency and submitted to the 7 Bureau if the Director of the Bureau deter- 8 mines that— 9 ‘‘(i) relying on that information pro- 10 motes transparency; and 11 ‘‘(ii) the information collected by that 12 other agency is substantially similar to the 13 information that is submitted to the Bu- 14 reau under subsection (e). 15 ‘‘(2) ENFORCEMENT.— 16 ‘‘(A) IN GENERAL.—The Bureau may take 17 such action as the Bureau determines to be 18 necessary or appropriate to carry out paragraph 19 (1)(A), including by— 20 ‘‘(i) imposing a civil penalty in an 21 amount described in section 706(b) against 22 a creditor that violates that paragraph; 23 and 24 VerDate Sep 11 2014 23:36 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2324.IH H2324 pamtmann on DSKBFK8HB2PROD with BILLS 13 •HR 2324 IH ‘‘(ii) as appropriate, referring a mat- 1 ter to the Attorney General. 2 ‘‘(B) RULES OF CONSTRUCTION REGARD- 3 ING BONA FIDE ERRORS.— 4 ‘‘(i) UNINTENTIONAL ERRORS.—An 5 error by a creditor in compiling or record- 6 ing information, including an incorrect 7 entry for a census tract number, may not 8 be construed as a violation of this section 9 if the error is unintentional and occurs de- 10 spite the maintenance of procedures by the 11 creditor that are reasonably adapted to 12 avoid those errors. 13 ‘‘(ii) INACCURATE OR INCOMPLETE 14 INFORMATION.—If a creditor, not later 15 than 30 days after the end of each cal- 16 endar quarter, makes a good faith effort to 17 record all information required to be col- 18 lected under clause (i) of subsection 19 (c)(1)(A) and itemized under clause (iii) of 20 that subsection during that quarter and 21 some of that information is nevertheless in- 22 accurate or incomplete, the error or omis- [Text truncated for display. 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