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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8338 Reported in House (RH)]

<DOC>

                                                 Union Calendar No. 652
118th CONGRESS
  2d Session
                                H. R. 8338

                          [Report No. 118-789]

 To regulate small-dollar, short-term credit products, to protect the 
 privacy of lenders, and to improve the unfair, deceptive, or abusive 
    acts or practices authority of the Bureau of Consumer Financial 
                  Protection, 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

                            December 3, 2024

                     Additional sponsor: Mr. Flood

                            December 3, 2024

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on May 10, 
                                 2024]

_______________________________________________________________________

                                 A BILL

 
 To regulate small-dollar, short-term credit products, to protect the 
 privacy of lenders, and to improve the unfair, deceptive, or abusive 
    acts or practices authority of the Bureau of Consumer Financial 
                  Protection, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Clarity in Lending 
Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                 TITLE I--SMALL-DOLLAR CREDIT PRODUCTS

Sec. 101. Safe harbor for small-dollar credit products.

    TITLE II--RECTIFYING UNDEFINED DESCRIPTIONS OF ABUSIVE ACTS AND 
                               PRACTICES

Sec. 201. Mitigating factors in assessing civil penalties.
Sec. 202. Rulemaking relating to unfair, deceptive or abusive acts or 
                            practices.
Sec. 203. Authority to declare an act unlawful based on discrimination 
                            or service as government contractor.
Sec. 204. Clarifying the abusive standard for the Bureau of Consumer 
                            Financial Protection.
Sec. 205. Notice and opportunity to cure.
Sec. 206. Abusive, unfair, or deceptive acts or practices enforcement 
                            actions.
Sec. 207. Look-back provisions for the Bureau of Consumer Financial 
                            Protection.

 TITLE III--SMALL LENDERS EXEMPT FROM NEW DATA AND EXCESSIVE REPORTING

Sec. 301. Small business loan data collection.

                      TITLE IV--BANK LOAN PRIVACY

Sec. 401. Rulemaking requirement.

                 TITLE I--SMALL-DOLLAR CREDIT PRODUCTS

SEC. 101. 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 inserting after the item for section 
109 the following:

``110. Safe harbor for small-dollar credit products.''.

    TITLE II--RECTIFYING UNDEFINED DESCRIPTIONS OF ABUSIVE ACTS AND 
                               PRACTICES

SEC. 201. MITIGATING FACTORS IN ASSESSING CIVIL PENALTIES.

    Section 1055(c) of the Consumer Financial Protection Act of 2010 
(12 U.S.C. 5565(c)) is amended by adding at the end the following:
            ``(6) Rulemaking.--The Bureau shall, not later than 180 
        days after the date of the enactment of this paragraph, issue a 
        rule that establishes policies and procedures relating to the 
        imposition of civil monetary penalties sought under this 
        subsection, including the application of the mitigating factors 
        described in paragraph (3).''.

SEC. 202. RULEMAKING RELATING TO UNFAIR, DECEPTIVE OR ABUSIVE ACTS OR 
              PRACTICES.

    (a) In General.--Section 1031 of the Consumer Financial Protection 
Act of 2010 (12 U.S.C. 5531) is amended by striking subsection (b) and 
inserting the following:
    ``(b) Rulemaking.--
            ``(1) In general.--The Bureau may prescribe rules 
        applicable to a covered person or service provider identifying 
        as unlawful unfair, deceptive, or abusive acts or practices in 
        connection with any transaction with a consumer for a consumer 
        financial product or service, or the offering of a consumer 
        financial product or service. Rules under this section may 
        include requirements for the purpose of preventing such acts or 
        practices.
            ``(2) Cost-benefit analysis required.--Any final rule 
        issued by the Bureau relating to abusive, unfair, or deceptive 
        acts or practices shall include a cost-benefit analysis.
            ``(3) Definition of abusive act or practice.--The Bureau 
        shall, not later than 180 days after the date of the enactment 
        of this subsection, issue a rule that defines the term `abusive 
        act or practice' for the purposes of this section.''.
    (b) Opportunity for Comment.--The Bureau of Consumer Financial 
Protection shall, not later than 180 days after the date of the 
enactment of this subsection, allow the public to submit comments with 
respect to any confusion about how the Bureau of Consumer Financial 
Protection uses its authority with respect to unfair, deceptive, or 
abusive acts or practices.

SEC. 203. AUTHORITY TO DECLARE AN ACT UNLAWFUL BASED ON DISCRIMINATION 
              OR SERVICE AS GOVERNMENT CONTRACTOR.

    Section 1031 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5531), as amended by section 204, is further amended by adding 
at the end the following:
    ``(h) Authority To Declare an Act Unlawful Based on Discrimination 
or Service as Government Contractor.--The Bureau may not interpret the 
authority of the Bureau relating to unfair, deceptive, or abusive acts 
and practices to include--
            ``(1) discriminatory practices; or
            ``(2) acts or practices by a covered person performing the 
        acts or practices pursuant to a contract with a Federal agency 
        (as defined under section 701(b) of title 5, United States 
        Code).''.

SEC. 204. CLARIFYING THE ABUSIVE STANDARD FOR THE BUREAU OF CONSUMER 
              FINANCIAL PROTECTION.

    Section 1031 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5531) is amended--
            (1) by redesignating subsections (e) and (f) as subsections 
        (f) and (g); and
            (2) by striking subsection (d) and inserting the following:
    ``(d) Abusive.--
            ``(1) In general.--The Bureau shall have no authority under 
        this section to declare an act or practice of a covered person 
        abusive in connection with the provision of a consumer 
        financial product or service, unless the act or practice--
                    ``(A) intentionally and materially interferes with 
                the ability of a consumer to understand a term or 
                condition of a consumer financial product or service; 
                or
                    ``(B) takes unreasonable advantage of--
                            ``(i) a lack of understanding by the 
                        consumer with respect to the possible impact, 
                        material risks, costs, or conditions of the 
                        product or service, or the likelihood of the 
                        risks, costs, or conditions of the product or 
                        service negatively affecting the consumer; and
                            ``(ii) the reasonable reliance the consumer 
                        places on an affirmative action or 
                        representation of such covered person to induce 
                        such consumer to rely on such action or 
                        representation.
            ``(2) Abusive actions.--An act or practice shall not be 
        considered abusive if the act or practice--
                    ``(A) is also unfair or deceptive; or
                    ``(B) is otherwise prohibited by Federal consumer 
                financial law.
    ``(e) Good-Faith Effort To Comply.--
            ``(1) In general.--The Bureau may not seek monetary relief 
        from a covered person under this section unless the covered 
        person has not established by a preponderance of the evidence 
        that they made a good-faith effort to comply.
            ``(2) Authority to seek legal or equitable remedies.--The 
        limitation described in paragraph (1) shall not restrict the 
        authority of the Bureau to seek legal or equitable remedies, 
        such as damages and restitution, to redress an identifiable 
        consumer injury caused by the abusive acts or practices of such 
        covered person.''.

SEC. 205. NOTICE AND OPPORTUNITY TO CURE.

    Section 1031 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5531), as amended by section 203, is further amended by adding 
at the end the following:
    ``(i) Notice and Opportunity To Cure.--
            ``(1) In general.--If a covered person self-identifies a 
        potential unfair, deceptive, or abusive act or practice carried 
        out by such covered person, the Bureau shall, not later than 90 
        days after such self-identification, provide a written notice 
        in the form of a potential action and request for response 
        letter or a notice and opportunity to respond and advise letter 
        of the potential unfair, deceptive, or abusive act or practice 
        to such covered person and inform the covered person that such 
        person has 180 days after the date the covered person receives 
        such notice to cure such potential unfair, deceptive, or 
        abusive act before the Bureau may pursue other legal action.
            ``(2) Tolling of statute of limitations.--Any applicable 
        statute of limitations that applies to conduct under which the 
        Bureau has given notice and an opportunity to cure shall not 
        toll until--
                    ``(A) the covered person cures the potential 
                unfair, deceptive, or abusive act or practice and 
                notifies the Bureau that such act or practice has been 
                cured;
                    ``(B) the covered person notifies the Bureau that 
                such covered person will not cure the act or practice; 
                or
                    ``(C) the 180-day period to cure ends.''.

SEC. 206. ABUSIVE, UNFAIR, OR DECEPTIVE ACTS OR PRACTICES ENFORCEMENT 
              ACTIONS.

    Section 1031 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5531), as amended by section 205, is further amended by adding 
at the end the following:
    ``(j) Unfair, Deceptive, or Abusive Acts or Practices Enforcement 
Actions.--Enforcement actions brought by the Bureau under this section 
shall be brought in--
            ``(1) the United States district court located where the 
        covered person has its headquarters location; or
            ``(2) the United States District Court for the District of 
        Columbia.
    ``(k) Enforcement Actions.--
            ``(1) In general.--If the Bureau brings an enforcement 
        action under this section, the Bureau shall state with 
        particularity the circumstances that the Bureau alleges 
        constitute a violation of this section.
            ``(2) Alternative claims.--If the Bureau brings an 
        enforcement action under this section--
                    ``(A) claiming that an activity is unfair or 
                deceptive, the Bureau may not claim in the alternative 
                that the activity is abusive; and
                    ``(B) claiming that an activity is abusive, the 
                Bureau may not claim in the alternative that the 
                activity is unfair or deceptive.''.

SEC. 207. LOOK-BACK PROVISIONS FOR THE BUREAU OF CONSUMER FINANCIAL 
              PROTECTION.

    (a) In General.--Subtitle B of title X of the Consumer Financial 
Protection Act of 2010 (12 U.S.C. 5511 et seq.) is amended by adding at 
the end the following new section:

``SEC. 1029B. EXAMINATION PERIOD LIMITATIONS.

    ``(a) In General.--When enforcing Federal consumer financial laws, 
the Bureau may not seek a civil money penalty for any violation that 
occurred prior to the most recent assignment of a consumer compliance 
rating that had not been identified in writing as a material finding or 
supervisory concern at the time the rating was assigned.
    ``(b) Exception in Cases of Fraud or a Material 
Misrepresentation.--Subsection (a) shall not apply to a violation that 
involved fraud or a material misrepresentation.
    ``(c) Rule of Construction.--The limitation described in subsection 
(a) may not be construed to restrict the ability of the Bureau to seek 
other forms of legal or equitable relief available under subparagraphs 
(A) through (G) of section 1055(a)(2).''.
    (b) Clerical Amendment.--The table of contents in section 1(b) of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act is 
amended by inserting after the item relating to section 1029A the 
following:

``Sec. 1029B. Examination period limitations,''.

 TITLE III--SMALL LENDERS EXEMPT FROM NEW DATA AND EXCESSIVE REPORTING

SEC. 301. SMALL BUSINESS LOAN DATA COLLECTION.

    Section 704B of the Equal Credit Opportunity Act (15 U.S.C. 1691c-
2) is amended--
            (1) in subsection (g), by adding at the end the following:
            ``(4) Compliance with covered rule.--
                    ``(A) In general.--With respect to the covered 
                rule, the Bureau shall provide a financial institution 
                a 3-year period beginning on the date the covered rule 
                was issued to comply with the rule.
                    ``(B) Safe harbor.--After the end of the 3-year 
                period described under subparagraph (A), the Bureau 
                shall provide a 2-year safe harbor to a financial 
                institution during which the financial institution is 
                required to comply with the covered rule but is not 
                subject to any penalties for failure to comply with the 
                covered rule.
                    ``(C) Covered rule defined.--In this paragraph, the 
                term `covered rule' means the final rule of the Bureau 
                titled `Small Business Lending Under the Equal Credit 
                Opportunity Act (Regulation B)' (88 Fed. Reg. 35150, 
                published May 31, 2023).''; and
            (2) in subsection (h)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) Financial institution.--The term `financial 
        institution' means--
                    ``(A) any partnership, company, corporation, 
                association (incorporated or unincorporated), trust, 
                estate, cooperative organization, or other entity that 
                engages in any financial activity; and
                    ``(B) in each of the previous 2 calendar years 
                originated not less than 500 credit transactions for 
                small businesses.''; and
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) Small business.--The term `small business' means any 
        entity with gross annual revenues of $1,000,000 or less in the 
        most recently completed fiscal year.''.

                      TITLE IV--BANK LOAN PRIVACY

SEC. 401. RULEMAKING REQUIREMENT.

    Section 704B(e)(4) of the Equal Credit Opportunity Act (15 U.S.C. 
1691c-2(e)(4)) is amended--
            (1) by striking ``The Bureau may,'' and inserting:
                    ``(A) In general.--The Bureau may,''; and
            (2) by adding at the end the following:
                    ``(B) Rulemaking requirement.--The Bureau shall, 
                before deleting or modifying data under this paragraph, 
                issue, through advance notice and comment, a rule that 
                includes a description of what modifications and 
                deletions the Bureau intends to make to the data and 
                how such modifications and deletions will advance a 
                privacy interest.''.
                                                 Union Calendar No. 652

118th CONGRESS

  2d Session

                               H. R. 8338

                          [Report No. 118-789]

_______________________________________________________________________

                                 A BILL

 To regulate small-dollar, short-term credit products, to protect the 
 privacy of lenders, and to improve the unfair, deceptive, or abusive 
    acts or practices authority of the Bureau of Consumer Financial 
                  Protection, and for other purposes.

_______________________________________________________________________

                            December 3, 2024

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
```