Consumer Protection and Choice Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Protection and Choice 
Act''.

SEC. 2. DEFERRED PRESENTMENT TRANSACTION REQUIREMENTS.

    (a) In General.--Chapter 2 of the Truth in Lending Act is amended 
by inserting after section 128A (15 U.S.C. 1638A) the following new 
section:
``Sec. 128B. Deferred presentment transaction requirements
    ``(a) Prohibition on Deferred Presentment Transactions.--A deferred 
presentment transaction is prohibited except as authorized by this 
section.
    ``(b) Regulation of Deferred Presentment Transactions and Deferred 
Presentment Providers.--If the Director of the Bureau determines that a 
State has in effect a covered deferred presentment law, any regulations 
of the Bureau with respect to deferred presentment transactions and 
deferred presentment providers shall not apply in such State.
    ``(c) Covered Deferred Presentment Law Defined.--For purposes of 
this section, the term `covered deferred presentment law' means a law 
or regulation of a State that provides for the licensing of deferred 
presentment providers and the regulation of deferred presentment 
transactions, which may be accomplished through existing State 
authority, and that meets the following requirements:
            ``(1) Database.--The law or regulation must establish a 
        database of deferred presentment transactions to assist 
        deferred presentment providers with complying with the 
        requirements of this section, which may be operated by a 
        private company selected by the State.
            ``(2) Deferred presentment provider requirements.--The law 
        or regulation must require a deferred presentment provider to--
                    ``(A) be licensed by the State;
                    ``(B) provide to the State the results of a 
                background check, including fingerprinting, of each 
                officer and principal of the deferred presentment 
                provider;
                    ``(C) secure a copy of a valid State-issued form of 
                identification from a consumer before entering into a 
                deferred presentment transaction;
                    ``(D) verify through the State deferred presentment 
                transaction database that a consumer entering into a 
                deferred presentment transaction with the deferred 
                presentment provider--
                            ``(i) does not have an outstanding deferred 
                        presentment transaction; and
                            ``(ii) did not have an outstanding deferred 
                        presentment transaction within the previous 24-
                        hour period; and
                    ``(E) report to the State deferred presentment 
                transaction database operator immediately--
                            ``(i) upon entering into a deferred 
                        presentment transaction agreement--
                                    ``(I) the name of the consumer that 
                                provided a check or other payment 
                                instrument for deferred presentment;
                                    ``(II) the consumer's social 
                                security number or employment 
                                authorization alien number;
                                    ``(III) the consumer's address;
                                    ``(IV) the consumer's driver's 
                                license number or identifier from other 
                                valid State-issued form of 
                                identification;
                                    ``(V) the amount of the deferred 
                                presentment transaction;
                                    ``(VI) the date such deferred 
                                presentment transaction is made and the 
                                date on which repayment of the deferred 
                                presentment transaction is due; and
                                    ``(VII) such other information as 
                                the State determines appropriate; and
                            ``(ii) upon repayment by the consumer of 
                        the amount owed under a deferred presentment 
                        transaction agreement or after such deferred 
                        presentment transaction agreement is otherwise 
                        settled, the date and time on which the amount 
                        owed under such deferred presentment 
                        transaction agreement is satisfied.
            ``(3) Deferred presentment transaction agreement 
        requirements.--The law or regulation must require that the 
        terms of a deferred presentment transaction agreement--
                    ``(A) limit the total amount of all interest and 
                fees that may be charged to a consumer by a deferred 
                presentment provider with respect to a deferred 
                presentment transaction to no more than 10 percent of 
                the amount of such a deferred presentment transaction 
                and no more than a $5 processing fee;
                    ``(B) limit the duration of the deferred 
                presentment transaction to a period no longer than 31 
                days or less than 7 days;
                    ``(C) limit the amount of the deferred presentment 
                transaction to no more than $500, exclusive of allowed 
                fees;
                    ``(D) be in writing;
                    ``(E) provide that the consumer shall--
                            ``(i) have the right to rescind any 
                        deferred presentment transaction agreement 
                        within the first 24 hours of the deferment 
                        period; and
                            ``(ii) pay any allowable processing fee 
                        regardless of such rescission; and
                    ``(F) include such other information as the State 
                determines to be appropriate.
            ``(4) Treatment of past-due amounts.--The law or regulation 
        must require that if a consumer fails to repay the amount due 
        pursuant to a deferred presentment transaction agreement by the 
        contractual repayment date, a deferred presentment provider 
        shall provide an additional 60-day grace period, without any 
        additional charge, for the consumer to repay such amount before 
        the deferred presentment provider may request payment for the 
        check or other payment instrument or pursue other civil 
        remedies, subject to the conditions that the grace period 
        will--
                    ``(A) terminate immediately if, before the end of 
                the 7-day period beginning on the date of the 
                contractual repayment date, the consumer failed to make 
                an appointment to attend a course with a consumer 
                credit counseling agency and inform the deferred 
                presentment provider of such appointment; and
                    ``(B) be deemed to have terminated at the end of 
                the 7-day period beginning on the date of the 
                contractual repayment date if, before the end of the 
                60-day period beginning on the date of the contractual 
                repayment date, the consumer failed to complete a 
                course with a consumer credit counseling agency and 
                inform the deferred presentment provider of the 
                completion of such course.
    ``(d) Compliance.--A deferred presentment transaction that complies 
with the requirements of this section and applicable State law shall 
not be considered to be an unfair, deceptive, or abusive act or 
practice.
    ``(e) Effective Date.--The requirements of this section shall take 
effect on the date that is 24 months after the date of the enactment of 
this section.
    ``(f) Definitions.--For purposes of this section:
            ``(1) Deferment period.--The term `deferment period' means 
        the number of days a deferred presentment provider agrees to 
        wait before depositing, presenting, or redeeming a consumer's 
        check or other payment instrument under a deferred presentment 
        transaction agreement.
            ``(2) Deferred presentment provider.--The term `deferred 
        presentment provider' means a person who holds a license to be 
        a deferred presentment provider in the State in which a 
        deferred presentment transaction agreement is entered into and 
        who provides currency or other payment instrument to a consumer 
        as part of a deferred presentment transaction.
            ``(3) Deferred presentment transaction.--The term `deferred 
        presentment transaction' means a transaction in which currency 
        or other payment instrument is provided to a consumer in 
        exchange for a consumer's check or other payment instrument and 
        an agreement that such consumer's check or other payment 
        instrument shall be held for a deferment period prior to 
        presentment, deposit, or redemption.
            ``(4) Deferred presentment transaction agreement.--The term 
        `deferred presentment transaction agreement' means the 
        underlying agreement establishing a deferred presentment 
        transaction.
            ``(5) Other payment instrument.--The term `other payment 
        instrument' means a draft, warrant, money order, traveler's 
        check, or electronic instrument (other than currency).
            ``(6) State.--The term `State' means each of the several 
        States, the District of Columbia, and each territory and 
        possession of the United States.
            ``(7) State deferred presentment transaction database.--The 
        term `State deferred presentment transaction database' means 
        the database established by the State that issued the 
        consumer's form of identification.''.
    (b) Clerical Amendment.--The table of contents at the beginning of 
chapter 2 of the Truth in Lending Act is amended by inserting after the 
item relating to section 128A the following new item:

``128B. Deferred presentment transaction requirements.''.

SEC. 3. MORATORIUM AND SAFE HARBOR.

    (a) Moratorium.--The Bureau of Consumer Financial Protection may 
not promulgate or enforce any regulation related to deferred 
presentment providers with respect to deferred presentment transactions 
during the 24-month period beginning on the date of enactment of this 
Act.
    (b) Safe Harbor.--The Bureau of Consumer Financial Protection may 
not impose any additional requirements related to deferred presentment 
providers with respect to deferred presentment transactions in a State 
if such State has enacted a covered deferred presentment law by the 
effective date in subsection (e) of section 128B of the Truth in 
Lending Act, as added by section 2(a).
    (c) Payday Loans.--The Bureau of Consumer Financial Protection--
            (1) may not regulate payday loans during the 24-month 
        period beginning on the date of enactment of this Act; and
            (2) may regulate payday loans in a State after such period 
        only if such State has not enacted a covered deferred 
        presentment law.
    (d) Definitions.--For purposes of this section:
            (1) TILA definitions.--The terms ``covered deferred 
        presentment law'', ``deferred presentment provider'', 
        ``deferred presentment transaction'', and ``State'' shall have 
        the meanings given such terms under section 128B of the Truth 
        in Lending Act, as added by section 2(a).
            (2) Payday loan.--The term ``payday loan'' means a loan 
        described under section 1024(a)(1)(E) of Public Law 111-203 (12 
        U.S.C. 5514(a)(1)(E)), except that such term does not include a 
        deferred presentment transaction.

Summary: Consumer Protection and Choice Act This bill amends the Truth in Lending Act to prohibit a deferred presentment transaction except as provided under this Act. A deferred presentment transaction is one in which currency or other payment is provided to a consumer in exchange for a consumer's check or other payment instrument and an agreement that such check or payment instrument shall be held for a deferment period prior to presentment, deposit, or redemption. If the Consumer Financial Protection Bureau (CFPB) determines that a state has in effect a law that provides for the licensing of deferred presentment providers and the regulation of deferred presentment transactions, and that meets the requirements specified by this Act, any CFPB regulations concerning such transactions and providers shall not apply in such state. Such a state law must: require a provider to be licensed by the state, establish a transaction database. Require a provider to verify through such database that a consumer entering into such a transaction does not have an outstanding transaction. Require a provider to report immediately to such database information about each transaction entered into and each transaction paid or settled. Require that a transaction agreement be in writing and allow the consumer to rescind the agreement within the first 24 hours. Require a transaction agreement to limit the interest and fees to no more that 10 of the transaction amount, the processing fee to $5, the transaction amount to $500, and the duration of the transaction to no less than 7 days and no more than 31 days. And allow a 60-day grace period after the contractual repayment date for a consumer to repay the amount due, subject to early termination if a consumer fails to complete a course with a consumer credit counseling agency. The bill makes these changes effective 24 months after enactment and prohibits the CFPB from establishing or enforcing any regulation governing deferred presentment transactions or payday loans during such period.