SAFE Lending Act of 2016

Summary: Stopping Abuse and Fraud in Electronic Lending Act of 2016 or the SAFE Lending Act of 2016 This bill amends the Electronic Fund Transfer Act (EFTA) to declare that a remotely created check may only be issued by a person specifically designated in writing by the consumer to the insured depository institution at which the consumer maintains the account from which the check is drawn.  A remotely created check is a paper or electronic check that:  is not created by the financial institution that holds the customer account from which the check is to be paid; and does not bear a signature applied, or purported to be applied, by the account holder.  A consumer may revoke authorization for remotely created checks at any time.  The bill prohibits issuance of any payment order in response to a consumer's exercise of federal consumer financial rights. Any voluntary electronic fund transfer to repay a small-dollar consumer credit transaction shall be treated as preauthorized under the Truth in Lending Act (TILA). The TILA is amended to require registration with the Consumer Financial Protection Bureau (CFPB) by any small-dollar lender that facilitates, brokers, arranges, or gathers applications for small-dollar consumer credit (of up to $5,000, adjusted for inflation) extended pursuant to an open-end, non-open-end, or other CFPB-determined credit plan meeting specified criteria. Small-dollar consumer credit transactions must comply with state law where the consumer resides. The EFTA is amended to:  declare unlawful overdraft fees charged on a general-use prepaid card, and authorize the CFPB to prohibit fees for declined transactions involving such a card.   The TILA is further amended to prohibit a person from certain activities, including distributing sensitive personal financial information, in connection with a small-dollar consumer credit transaction, if that person ("lead generator") does not itself grant the credit directly to the consumer. The Government Accountability Office (GAO) shall study: (1) the availability of capital on Indian reservations, and (2) the impact on tribal economic opportunity and wealth of small-dollar consumer credit extensions to tribal members through Internet and non-Internet means.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stopping Abuse and Fraud in 
Electronic Lending Act of 2016'' or the ``SAFE Lending Act of 2016''.

SEC. 2. CONSUMER CONTROL OVER BANK ACCOUNTS.

    (a) Prohibiting Unauthorized Remotely Created Checks.--Section 905 
of the Electronic Fund Transfer Act (15 U.S.C. 1693c) is amended by 
adding at the end the following:
    ``(d) Limitations on Remotely Created Checks.--
            ``(1) Definition.--In this subsection, the term `remotely 
        created check' means a check, including a paper or electronic 
        check and any other payment order that the Bureau, by rule, 
        determines is appropriately covered by this subsection, that--
                    ``(A) is not created by the financial institution 
                that holds the customer account from which the check is 
                to be paid; and
                    ``(B) does not bear a signature applied, or 
                purported to be applied, by the person from whose 
                account the check is to be paid.
            ``(2) Limitations.--Subject to the limitations in paragraph 
        (3) and any additional limitations that the Bureau may 
        establish, by rule, a remotely created check may only be issued 
        by a person designated in writing by the consumer with the 
        designation specifically provided in writing by the consumer to 
        the insured depository institution at which the consumer 
        maintains the account from which the check is to be drawn.
            ``(3) Additional limitations.--
                    ``(A) In general.--An authorization provided under 
                paragraph (2) may be revoked at any time by the 
                consumer.
                    ``(B) Consumer financial protection laws.--No 
                payment order, including a remotely created check, may 
                be issued by any person in response to the exercise of, 
                or attempt to exercise, any rights by a consumer under 
                any Federal consumer financial law, as defined in 
                section 1002 of the Consumer Financial Protection Act 
                of 2010 (12 U.S.C. 5481), or any other provision of any 
                law or regulation within the jurisdiction of the 
                Bureau.''.
    (b) Consumer Protections for Certain One-Time Electronic Fund 
Transfers.--Section 913 of the Electronic Fund Transfer Act (15 U.S.C. 
1693k) is amended--
            (1) by inserting ``(a) In General.--'' before ``No 
        person'';
            (2) in subsection (a)(1), as so designated, by striking 
        ``preauthorized electronic fund transfers'' and inserting ``an 
        electronic fund transfer''; and
            (3) by adding at the end the following:
    ``(b) Treatment for Electronic Fund Transfers in Credit 
Extensions.--If a consumer voluntarily agrees to repay an extension of 
a small-dollar consumer credit transaction, as defined in section 
110(a) of the Truth in Lending Act, by means of an electronic fund 
transfer, the electronic fund transfer shall be treated as a 
preauthorized electronic fund transfer subject to the protections of 
this title.''.

SEC. 3. TRANSPARENCY AND CONSUMER EMPOWERMENT IN SMALL-DOLLAR LENDING.

    (a) Small-Dollar Consumer Credit Transactions.--The Truth in 
Lending Act (15 U.S.C. 1601 et seq.) is amended--
            (1) by inserting after section 109 (15 U.S.C. 1608) the 
        following:

``SEC. 110. REGISTRATION REQUIREMENT FOR SMALL-DOLLAR LENDERS.

    ``(a) Definition.--In this section, the term `small-dollar consumer 
credit transaction' means any transaction that extends, facilitates, 
brokers, arranges, or gathers applications for credit that is--
            ``(1) made to a consumer in an amount of not more than 
        $5,000, or such greater amount as the Bureau may, by rule, 
        determine, with the amount to be adjusted annually to reflect 
        changes in the Consumer Price Index for all urban consumers 
        published by the Department of Labor; and
            ``(2) extended pursuant to an agreement that is--
                    ``(A)(i) other than an open-end credit plan; and
                    ``(ii) payable in 1 or more installments of less 
                than 12 months (or such longer period as the Bureau 
                may, by rule, determine);
                    ``(B) an open-end credit plan in which each advance 
                is fully repayable within a defined time or in 
                connection with a defined event, or both; or
                    ``(C) any other plan as the Bureau determines, by 
                rule.
    ``(b) Registration Requirement.--A person shall register with the 
Bureau before issuing credit in a small-dollar consumer credit 
transaction.'';
            (2) in section 173 (15 U.S.C. 1666j), by adding at the end 
        the following:
    ``(d) Notwithstanding any other provisions of this title, any 
small-dollar consumer credit transaction, as defined in section 110(a), 
shall comply with the laws of the State in which the consumer resides 
with respect to annual percentage rates, interest, fees, charges, and 
such other similar or related matters as the Bureau may, by rule, 
determine if the small-dollar consumer credit transaction is--
            ``(1) made over--
                    ``(A) the Internet;
                    ``(B) telephone;
                    ``(C) facsimile;
                    ``(D) mail;
                    ``(E) electronic mail; or
                    ``(F) other electronic communication; or
            ``(2) conducted by a national bank.''; and
            (3) in the table of sections of chapter 1, by inserting 
        after the item relating to section 109 the following:

``110. Registration requirement for small-dollar lenders.''.
    (b) Prohibition on Certain Fees.--Section 915 of the Electronic 
Fund Transfer Act (15 U.S.C. 1693l-1) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:
    ``(d) Additional Fees Prohibited.--
            ``(1) Definition.--In this subsection, the term `general-
        use prepaid card' has the meaning given the term--
                    ``(A) in subsection (a)(2); or
                    ``(B) by rule of the Bureau.
            ``(2) Prohibition.--With respect to the use of a general-
        use prepaid card by a consumer--
                    ``(A) it shall be unlawful for any person to charge 
                the consumer a fee for an overdraft, including a 
                shortage of funds or a transaction processed for an 
                amount exceeding the account balance on the general-use 
                prepaid card;
                    ``(B) any transaction for an amount exceeding the 
                account balance on the general-use prepaid card may be 
                declined, except that the consumer may not be charged a 
                fee for that purpose; and
                    ``(C) the Bureau may, by rule, prohibit the 
                charging of any fee so that the Bureau may--
                            ``(i) prevent unfair, deceptive, or abusive 
                        practices; and
                            ``(ii) promote the ability of the consumer 
                        to understand and compare the costs of general-
                        use prepaid cards.''.

SEC. 4. RESTRICTIONS ON LEAD GENERATION IN SMALL-DOLLAR CONSUMER CREDIT 
              TRANSACTIONS.

    Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is 
amended by adding at the end the following:

``SEC. 140B. RESTRICTIONS ON LEAD GENERATION IN SMALL-DOLLAR CONSUMER 
              CREDIT TRANSACTIONS.

    ``(a) Definitions.--In this section--
            ``(1) the term `sensitive personal financial information' 
        means the social security number, financial account number, 
        bank routing number, bank account number, or any required 
        security or access code that is immediately necessary to permit 
        access to the financial account of an individual; and
            ``(2) the term `small-dollar consumer credit transaction' 
        has the meaning given the term in section 110(a).
    ``(b) Identification Information.--Any person facilitating, 
brokering, arranging, gathering applications for, or distributing 
sensitive personal financial information in connection with a small-
dollar consumer credit transaction shall prominently disclose 
information by which the person may be contacted or identified, 
including for service of process and for identification of the 
registrant of any domain name registered or used.
    ``(c) Prohibition on Lead Generation in Small-Dollar Consumer 
Credit Transactions.--No person may facilitate, broker, arrange, gather 
applications for, or distribute sensitive personal financial 
information in connection with a small-dollar consumer credit 
transaction, unless the person is directly providing the small-dollar 
consumer credit to the consumer.
    ``(d) Rule of Construction.--
            ``(1) In general.--Nothing in this section may be 
        interpreted to limit the authority of the Bureau to further 
        restrict activities covered by this section.
            ``(2) Clarification.--It shall not be considered 
        `facilitating' in connection with a small-dollar consumer 
        credit transaction to be engaged solely in 1 of the following 
        activities:
                    ``(A) The provision of a telecommunications 
                service, or of an Internet access service or Internet 
                information location tool (as those terms are defined 
                in section 231 of the Communications Act of 1934 (47 
                U.S.C. 231)).
                    ``(B) The transmission, storage, retrieval, 
                hosting, formatting, or translation (or any combination 
                thereof) of a communication, without selection or 
                alteration of the content of the communication, except 
                that deletion of a particular communication or material 
                made by another person in a manner consistent with 
                section 230(c) of the Communications Act of 1934 (47 
                U.S.C. 230(c)).''.

SEC. 5. STUDIES.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Government Accountability Office (in this 
section referred to as the ``GAO'') shall conduct a study regarding--
            (1) the availability of capital on reservations of Indian 
        tribes (as defined in section 4 of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b)); 
        and
            (2) the impact that small-dollar consumer credit extended 
        through Internet and non-Internet means to members of Indian 
        tribes has had on economic opportunity and wealth for members 
        of Indian tribes.
    (b) Consultation.--In conducting the study described in subsection 
(a), the GAO shall consult, as appropriate, with--
            (1) the Bureau of Consumer Financial Protection;
            (2) the Board of Governors of the Federal Reserve System;
            (3) the Bureau of Indian Affairs;
            (4) federally recognized Indian tribes; and
            (5) community development financial institutions operating 
        in Indian lands.
    (c) Congressional Consideration.--The study described in 
subsections (a) and (b) shall be presented to the Committee on Banking, 
Housing, and Urban Affairs and the Committee on Indian Affairs of the 
Senate and the Committee on Financial Services and the Committee on 
Natural Resources of the House of Representatives.

SEC. 6. RULEMAKING.

    Not later than 1 year after the date of enactment of this Act, the 
Bureau of Consumer Financial Protection shall adopt any final rules 
necessary to implement the provisions of this Act and the amendments 
made by this Act.