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106TH CONGRESS

1ST SESSION H. R. 1576

To amend the Truth in Lending Act to prohibit the distribution of any

negotiable check or other instrument with any solicitation to a consumer

by a creditor to open an account under any consumer credit plan or

to engage in any other credit transaction which is subject to such

Act, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 27, 1999

Mr. HINCHEY introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To amend the Truth in Lending Act to prohibit the distribution of any negotiable check or other instrument with

any solicitation to a consumer by a creditor to open

an account under any consumer credit plan or to engage

in any other credit transaction which is subject to such

Act, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Unsolicited Loan Con5 sumer Protection Act’’.
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1 SEC. 2. UNSOLICITED CHECKS PROHIBITED.

2 (a) IN GENERAL.—Chapter 2 of the Truth in Lend3 ing Act (15 U.S.C. 1631 et seq.) is amended by adding

4 at the end the following new section:

5 ‘‘SEC. 140. SOLICITATIONS FOR CONSUMER LOANS.

6 ‘‘(a) IN GENERAL.—No consumer credit which is oth7 erwise subject to this title may be extended by any creditor

8 through the use of a check or other negotiable instrument

9 which has been sent by the creditor to the consumer in

10 connection with a solicitation by the creditor for such ex11 tension of credit, unless the consumer has submitted an

12 application for, or otherwise requested, such extension of

13 credit before receiving the check or instrument.

14 ‘‘(b) CONSUMER NOT LIABLE FOR ANY UNSOLIC15 ITED CHECK UNLESS THE CONSUMER ACTUALLY RE16 CEIVES AND NEGOTIATES SUCH CHECK.—

17 ‘‘(1) IN GENERAL.—If any creditor violates sub18 section (a) and includes an unsolicited check or

19 other negotiable instrument in a solicitation to a

20 consumer for an extension of credit which the con21 sumer has not applied for or requested, the con22 sumer shall not be liable for the amount of any such

23 check or other instrument unless the consumer actu24 ally receives and negotiates such check or instru25 ment.’’.
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1 ‘‘(2) BURDEN ON CREDITOR.—Notwithstanding

2 any rule of evidence or other provision of law—

3 ‘‘(A) the issuance of a check or other nego4 tiable instrument by a creditor in violation of

5 subsection (a) creates a rebuttable presumption

6 that such check or instrument was not received

7 or negotiated by the consumer to whom it was

8 issued; and

9 ‘‘(B) the burden of proof, in any action by

10 a creditor to enforce liability of the consumer

11 for the amount of any such check or instru12 ment, shall be upon the creditor to show that

13 such check or instrument was received by the

14 consumer and was negotiated by the consumer

15 with the knowledge that such negotiation was

16 creating a liability for such amount.

17 ‘‘(3) INFORMATION ON LIABILITY CREATED IN

18 VIOLATION OF SUBSECTION (a) MAY NOT BE RE19 PORTED TO OR RECEIVED BY ANY CONSUMER RE20 PORTING AGENCY.—No information on any liability

21 alleged by a creditor to have been established

22 through the issuance of a check or other negotiable

23 instrument in violation of subsection (a) may be re24 ported to or received by any credit reporting agency

25 (as defined in section 603 of the Fair Credit Report-
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1 ing Act) or included in any consumer credit report

2 under such Act.’’.

3 (b) CLERICAL AMENDMENT.—The table of sections

4 for chapter 2 of the Truth in Lending Act is amended

5 by adding at the end the following new item:

‘‘140. Solicitations for consumer loans.’’.

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