Consumer Protection and Choice Act

To amend the Truth in Lending Act to establish deferred presentment transaction requirements, and for other purposes. 1. Short title This Act may be cited as the Consumer Protection and Choice Act 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 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 (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 (2) Deferred presentment provider The term deferred presentment provider (3) Deferred presentment transaction The term deferred presentment transaction (4) Deferred presentment transaction agreement The term deferred presentment transaction agreement (5) Other payment instrument The term other payment instrument (6) State The term State (7) State deferred presentment transaction database The term State deferred presentment transaction database . (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. . 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 State (2) Payday loan The term payday loan Public Law 111–203 12 U.S.C. 5514(a)(1)(E)

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.