Advance Fee Loan Scam Prevention Act of 1993

Summary: Advance Fee Loan Scam Prevention Act of 1993 - Amends Federal criminal law to prohibit the receipt of advance fees by unregulated loan brokers arranging consumer credit for individuals. 
Grants the Federal Trade Commission enforcement powers under this Act.  Establishes criminal penalties and civil forfeiture penalties for violations of this Act.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Advance Fee Loan Scam Prevention Act 
of 1993''.

SEC. 2. TITLE 18 AMENDMENT.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1033. Loan broker advance fees and fraud
    ``(a) It shall be unlawful for a loan broker--
            ``(1) to solicit an advance fee in connection with--
                    ``(A) arranging or attempting to arrange consumer 
                credit;
                    ``(B) offering to find for any individual consumer 
                credit; or
                    ``(C) advising any individual as to how to obtain 
                consumer credit;
            ``(2) to make or use any false or misleading 
        representations or omit any material fact in the offer or sale 
        of the service of a loan broker; or
            ``(3) to engage, directly or indirectly, in any conduct 
        that operates or would operate as fraud or deception upon any 
        person in connection with the offer or sale of the services of 
        a loan broker, notwithstanding the absence of reliance by the 
        person to whom the loan broker's services are offered or sold.
    ``(b) Whoever knowingly violates subsection (a) of this section 
shall be fined under this title or imprisoned for not more than 5 
years, or both
    ``(c) Any violation of subsection (a) shall--
            ``(1) be treated as a violation of a rule of the Federal 
        Trade Commission issued pursuant to section 18(a)(1)(B) of the 
        Federal Trade Commission Act; and
            ``(2) be subject to enforcement by the Federal Trade 
        Commission under the enforcement and penalty provisions 
        applicable to violations of such rules.
    ``(d) For purposes of section 3005(a) of title 39, a violation of 
subsection (a) of this section by any person shall constitute prima 
facie evidence that such person is engaged in conducting a scheme or 
device for obtaining money or property through the mail by means of 
false representations.
    ``(e) For purposes of this section--
            ``(1) the term ``loan broker''--
                    ``(A) means any person who, in or affecting 
                interstate or foreign commerce--
                            ``(i) for, or in expectation of, a 
                        consideration, arranges or attempts to arrange 
                        or offers to find for any individual, consumer 
                        credit;
                            ``(ii) for, or in expectation of, a 
                        consideration, assists or advises an individual 
                        on obtaining, or attempting to obtain, consumer 
                        credit; or
                            ``(iii) acts or purports to act for, or on 
                        behalf of, a person described in clause (i) or 
                        (ii) of this subparagraph, for the purpose of 
                        soliciting individuals interested in obtaining 
                        consumer credit; and
                    ``(B) does not include--
                            ``(i) any insured depository institution 
                        (as defined in section 3(c)(2) of the Federal 
                        Deposit Insurance Act), any insured credit 
                        union (as defined in section 101(7) of the 
                        Federal Credit Union Act), or any depository 
                        institution which is eligible for deposit 
                        insurance under the Federal Deposit Insurance 
                        Act or the Federal Credit Union Act and has 
                        deposit insurance coverage provided by any 
                        State;
                            ``(ii) any lender approved by the Federal 
                        Housing Administration, Farmers Home 
                        Administration, or Department of Veterans 
                        Affairs;
                            ``(iii) any seller or servicer of mortgages 
                        approved by the Federal National Mortgage 
                        Association or the Federal Home Loan Mortgage 
                        Corporation; or
                            ``(iv) any consumer finance company, retail 
                        installment sales company, securities broker or 
                        dealer, real estate broker or real estate 
                        salesperson, attorney, credit card company, 
                        installment loan licensee, mortgage broker or 
                        lender, or insurance company if such person 
                        is--
                                    ``(I) licensed by and subject to 
                                regulation or supervision by any agency 
                                of the United States or by the State in 
                                which the person seeking to utilize the 
                                services of the loan broker resides; 
                                and
                                    ``(II) is acting within the scope 
                                of that license or regulation;
            ``(2) the term ``advance fee''--
                    ``(A) means any fee (including any advance payment 
                of interest or other fees for any extension of consumer 
                credit) which is assessed or collected by a loan broker 
                from any person seeking the consumer credit before the 
                extension of such credit; and
                    ``(B) does not include--
                            ``(i) any amount that the loan broker can 
                        demonstrate is collected solely for the purpose 
                        of payment to unaffiliated, third party vendors 
                        for actual expenses incurred and payable before 
                        the extension of any consumer credit; or
                            ``(ii) any application fee or other charge 
                        assessed or collected--
                                    ``(I) by a retail seller of 
                                property that is primarily for 
                                personal, family, or household purposes 
                                or automobiles;
                                    ``(II) in connection with a 
                                consumer credit transaction in which a 
                                purchase money security interest 
                                arising under an installment sales 
                                contract (or any equivalent consensual 
                                security interest) is created or 
                                retained against any such property or 
                                automobile being sold by the retail 
                                seller to the person seeking the 
                                extension of credit; or
                                    ``(III) in connection with a 
                                residential real estate transaction 
                                that is secured by a first lien on the 
                                property, including a purchase, 
                                refinancing, or consolidation of an 
                                extension of credit; and
            ``(3) the terms ``consumer'' and ``credit'' have the 
        meanings given to such terms in section 103 of the Truth in 
        Lending Act.''.
    (b) Civil Forfeiture.--Section 981(a)(1)(C) of title 18, United 
States Code, is amended--
            (1) by striking ``title or a violation'' and inserting 
        ``title, a violation''; and
            (2) by inserting ``, or a violation of section 1033 of this 
        title'' before the period.
    (c) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is amended by adding at the 
end the following:

``1033. Loan broker advance fees and fraud.''.