[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8356 Introduced in House (IH)]
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118th CONGRESS
2d Session
H. R. 8356
To amend the Truth in Lending Act to provide for a safe harbor for
small-dollar credit products, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 10, 2024
Mrs. Kim of California introduced the following bill; which was
referred to the Committee on Financial Services
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A BILL
To amend the Truth in Lending Act to provide for a safe harbor for
small-dollar credit products, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Dollar Loan Certainty Act''.
SEC. 2. SAFE HARBOR FOR SMALL-DOLLAR CREDIT PRODUCTS.
(a) In General.--The Truth in Lending Act (15 U.S.C. 1601 et seq.)
is amended by inserting after section 109 the following:
``Sec. 110. Safe harbor for small-dollar credit products
``(a) In General.--If a covered entity complies with the
requirements set forth in subsections (b), (c), and (e) with respect to
the offering of a small-dollar product to a consumer, such covered
entity shall not be liable in connection with such offering of a small-
dollar product, for--
``(1) any civil money penalties from any enforcement action
brought by the Bureau, the appropriate Federal banking agency,
or the National Credit Union Administration for a violation of
this title; or
``(2) any damages or other monetary relief through a
private right of action brought under this title.
``(b) Product Structure Requirements.--
``(1) In the case of an installment loan.--If a small-
dollar credit product is structured by a covered entity as an
installment loan--
``(A) the repayment term shall be more than 45
days;
``(B) payments shall be fully amortized across more
than one payment;
``(C) rollovers into new small-dollar credit
products shall be prohibited; and
``(D) the covered entity may not issue any small-
dollar credit product to a consumer if such consumer
has a small-dollar credit product open with such
covered entity at the time such consumer applies for a
small-dollar credit product.
``(2) In the case of a line of credit.--If a small-dollar
credit product is structured by a covered entity as a line of
credit--
``(A) the repayment term for each draw shall be
more than 45 days unless a single payment is used and
the draw is not more than 10 percent of the lesser of
$3,500 or 20 percent of the total amount of a
consumer's average monthly direct deposits during the
preceding six months; and
``(B) payments for each draw shall be fully
amortized across more than one payment, except in the
case of any single-payment loans.
``(3) Rules of construction.--
``(A) In general.--Nothing in this subsection may
be construed to prohibit the Bureau, a Federal banking
agency, or the National Credit Union Administration
from issuing a cease-and-desist order or restitution
order under this title against a covered entity.
``(B) Enforcement of other statutes.--Nothing in
this subsection may be construed to prohibit the
Bureau, a Federal banking agency, or the National
Credit Union Administration from enforcing any
provision of law not contained within this title
against a covered entity.
``(c) Underwriting Requirements.--When considering whether to offer
a small-dollar credit product to a specific consumer, a covered
entity--
``(1) shall use sound underwriting processes; and
``(2) may analyze internal or external data sources,
including consumer deposit account activity, to assess the
creditworthiness of a consumer.
``(d) Rule of Construction.--Nothing in this title may be construed
to prohibit a covered entity from offering a small-dollar product that
does not comply with the safe harbor requirements set forth under this
section.
``(e) Additional Limitations and Requirements.--
``(1) Balloon payments.--No payment required in association
with a small-dollar credit product offered by a covered entity
may be greater than double the amount of any other payment
required in association with such product.
``(2) Disclosures.--Each covered entity that offers a
small-dollar credit product shall comply with all disclosure
requirements set forth by this title.
``(3) Penalties and fees.--A covered entity may not impose
any prepayment penalty, overdraft fee, or nonsufficient funds
fee in connection with a small-dollar credit product.
``(4) Transfer of amounts.--Amounts made available to a
consumer through a small-dollar credit product offered by a
covered entity shall be disbursed to the account of such
consumer by such covered entity not later than 5 days after the
approval of the consumer for the small-dollar credit product.
``(f) Definitions.--In this section:
``(1) Covered entity.--The term `covered entity' means--
``(A) an insured depository institution;
``(B) an insured credit union;
``(C) a third party with whom an insured depository
institution has contracted for products or services
related to origination, servicing, or administrative
management of a small-dollar credit product; or
``(D) a third party with whom an insured credit
union has contracted for products or services related
to origination, servicing, or administrative management
of a small-dollar credit product.
``(2) Federal banking agency definitions.--The terms
`appropriate Federal banking agency' and `Federal banking
agency' have the meaning given those terms, respectively, in
section 3 of the Federal Deposit Insurance Act.
``(3) Insured credit union.--The term `insured credit
union' has the meaning given the term in section 101 of the
Federal Credit Union Act.
``(4) Insured depository institution.--The term `insured
depository institution' has the meaning given the term in
section 3 of the Federal Deposit Insurance Act.
``(5) Small-dollar credit product.--The term `small-dollar
product' means a loan or line of credit with a value of $3,500
or less.''.
(b) Clerical Amendment.--The table of contents for chapter 1 of the
Truth in Lending Act is amended by striking the item relating to
section 110 and inserting the following:
``110. Safe harbor for small-dollar credit products.''.
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