I 
118TH CONGRESS 
1ST SESSION H. R. 3880 
To prohibit private passenger automobile insurers from using certain income 
proxies to determine insurance rates and eligibility. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 6, 2023 
Mrs. WATSON COLEMAN (for herself, Ms. TLAIB, and Mr. TAKANO) intro-
duced the following bill; which was referred to the Committee on Finan-
cial Services, and in addition to the Committee on Energy and Com-
merce, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To prohibit private passenger automobile insurers from using 
certain income proxies to determine insurance rates and 
eligibility. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Prohibit Auto Insur-
ance Discrimination Act’’ or the ‘‘PAID Act’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
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(1) Private passenger automobile insurance 
companies are institutions which help spread risk of 
loss over a collective group of policyholders. 
(2) Private passenger automobile insurance is 
mandated in all States but New Hampshire. Legal 
penalties for operating a vehicle without liability in-
surance in these States range from fines, to license 
suspensions or revocations, to imprisonment. 
(3) The private passenger automobile insurance 
industry uses different variables to predict the over-
all costs and risks of drivers. The analysis and use 
of these variables ultimately help the automobile in-
surer set premium rates charged to consumers which 
the automobile insurer determines to be actuarially 
supported. 
(4) A pure loss ratio, a measurement of profit-
ability in insurance, is defined as losses divided by 
premiums. Statistical correlations between certain 
variables and pure loss ratios should be interpreted 
to mean that the selected variable relates to profit-
ability, but not necessarily to the risk that an indi-
vidual will get into an automobile accident. 
(5) A growing trend in the private passenger 
automobile insurance industry is to use income prox-
ies for underwriting and rating. The use of income 
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proxies such as a driver’s education level, occupa-
tion, employment status, home ownership status, 
credit score, consumer report, previous insurer, and 
prior purchase of insurance by the industry as vari-
ables that significantly influence the insurance pre-
miums charged to drivers has become commonplace. 
Use of these income proxies in this fashion results 
in higher rates being charged to lower income driv-
ers while lower rates are being charged to the more 
affluent driver. 
(6) The American public is largely unaware 
that a person’s education level, occupation, employ-
ment status, home ownership status, credit score, 
consumer report, ZIP Code, census tract, previous 
insurer, and prior purchase of insurance may be sig-
nificant factors used to determine eligibility for pre-
ferred auto insurance rates regardless of the per-
son’s driving history. As a result of the individual’s 
ineligibility for preferred rates, the driver’s policy 
and rate will be only offered from an affiliate com-
pany that has higher rates. 
SEC. 3. REQUIREMENTS FOR PRIVATE PASSENGER AUTO-
MOBILE INSURERS. 
(a) USE OF CERTAIN FACTORS AND INCOME PROX-
IES PROHIBITED.—It shall be unlawful for a private pas-
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senger automobile insurer, or any of its affiliate insurers, 
to take into consideration any of the factors described in 
subsection (b) relating to a consumer in determining that 
consumer’s eligibility for automobile insurance or in calcu-
lating the rate for that consumer. 
(b) FACTORS.—The factors referred to in subsection 
(a) are— 
(1) gender; 
(2) level of education; 
(3) occupation; 
(4) employment status; 
(5) home ownership status; 
(6) ZIP Code or adjacent ZIP Codes; 
(7) census tract; 
(8) marital status; 
(9) credit score or credit-based insurance score; 
(10) consumer report; 
(11) previous insurer; or 
(12) prior purchase of insurance of a consumer 
from that automobile insurer. 
(c) SUBMISSIONS
TO FTC REGARDING CERTAIN 
BUSINESS PRACTICES.—Not later than 1 year after the 
date of the enactment of this Act, and every 2 years there-
after, each private passenger automobile insurer, and each 
of its affiliate insurers, shall submit to the Federal Trade 
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Commission such information as the Commission may re-
quire to demonstrate that the marketing, underwriting, 
rating, claims handling, and fraud investigations of such 
private passenger automobile insurer or affiliate insurer 
(as the case may be), and any algorithm or model used 
by such private passenger automobile insurer or affiliate 
insurer (as the case may be) for such marketing, under-
writing, rating, claims handling, or fraud investigations, 
do not disparately impact any group of customers based 
on race, color, national or ethnic origin, religion, sex, sex-
ual orientation, disability, gender identity, or gender ex-
pression. 
(d) PUBLIC AVAILABILITY
OF INFORMATION.—All 
underwriting rules and rate filings for use by any private 
passenger automobile insurer shall be available for public 
inspection and may not be considered proprietary trade 
secret information. 
(e) REASONABLE PROCEDURES TO ASSURE COMPLI-
ANCE.—No person shall be held liable for any violation 
of this Act if the person shows by a preponderance of the 
evidence that at the time of the alleged violation the per-
son maintained reasonable procedures to assure compli-
ance with the provisions of this Act. 
(f) RULES OF CONSTRUCTION.— 
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(1) FACTORS
AND
METHODS
INFLUENCING 
PREMIUMS.—For the purposes of this Act, a viola-
tion of subsection (a) shall be considered to have oc-
curred whenever the consideration of any of the fac-
tors described in subsection (b) prevents the con-
sumer from obtaining insurance at the lowest rate 
available to the consumer from a private passenger 
automobile insurer or any of its affiliates. Actions 
considered a violation of such subsection include the 
usage or consideration of any such factor resulting 
in— 
(A) the determination of a consumer’s eli-
gibility for automobile insurance or the calcula-
tion of the rate for that consumer; 
(B) an action which prevents a consumer 
from receiving certain rebates or discounts; 
(C) an action which prevents a consumer 
from obtaining insurance from an automobile 
insurer or any of its affiliate companies; 
(D) a denial, cancellation, non-renewal, or 
change in policy or coverage terms; or 
(E) any other impact on a consumer’s pre-
mium for insurance. 
(2) AUTHORITY OF FEDERAL AND STATE AGEN-
CIES.—Nothing in this Act is intended to affect the 
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authority of any Federal or State agency to enforce 
a prohibition against unfair or deceptive acts or 
practices, including the making of false or mis-
leading statements in connection with a credit or in-
surance transaction that is not initiated by the con-
sumer. 
SEC. 4. ENFORCEMENT. 
(a) ENFORCEMENT BY FEDERAL TRADE COMMIS-
SION.— 
(1) UNFAIR
OR
DECEPTIVE
ACTS
OR
PRAC-
TICES.—A violation of this Act shall be treated as 
an unfair and deceptive act or practice proscribed 
under section 5 of the Federal Trade Commission 
Act (15 U.S.C. 45). 
(2) POWERS
OF
COMMISSION.—The Federal 
Trade Commission shall enforce this Act in the same 
manner, by the same means, and with the same ju-
risdiction, powers, and duties as though all applica-
ble terms and provisions of the Federal Trade Com-
mission Act (15 U.S.C. 41 et seq.) were incor-
porated into and made a part of this Act. Any per-
son who violates this Act shall be subject to the pen-
alties and entitled to the privileges and immunities 
provided in the Federal Trade Commission Act. 
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(3) AMOUNT
OF
PENALTY.—Notwithstanding 
the penalties set forth in section 5 of such Act, a 
person who violates this Act shall be liable for a civil 
penalty of not less than $2,500 per violation. 
(4) REGULATIONS.—The Federal Trade Com-
mission shall prescribe, in accordance with section 
553 of title 5, United States Code, such regulations 
as are necessary to carry out the purposes of this 
Act, including regulations as may be necessary or 
appropriate to administer and carry out the pur-
poses and objectives of this Act, and to prevent eva-
sions thereof or to facilitate compliance therewith. 
(b) ACTIONS BY CONSUMERS.— 
(1) WILLFUL
VIOLATIONS.—Any private pas-
senger automobile insurer who willfully violates this 
Act with respect to any consumer is liable to that 
consumer in an amount equal to the sum of— 
(A) any actual damages sustained by the 
consumer as a result of the failure; 
(B) such amount of punitive damages as 
the court may allow; and 
(C) in the case of any successful action to 
enforce any liability under this paragraph, the 
costs of the action together with reasonable at-
torneys’ fees as determined by the court. 
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(2) NEGLIGENT VIOLATIONS.—Any private pas-
senger automobile insurer who is negligent in failing 
to comply with any requirement imposed under this 
Act with respect to any consumer is liable to that 
consumer in an amount equal to the sum of— 
(A) any actual damages sustained by the 
consumer as a result of the failure; and 
(B) in the case of any successful action to 
enforce any liability under this paragraph, the 
costs of the action together with reasonable at-
torneys’ fees as determined by the court. 
(3) ATTORNEYS’ FEES.—Upon a finding by the 
court that an unsuccessful pleading, motion, or other 
paper filed in connection with an action under this 
subsection was filed in bad faith or for purposes of 
harassment, the court shall award to the prevailing 
party attorney’s fees reasonable in relation to the 
work expended in responding to the pleading, mo-
tion, or other paper. 
(4) JURISDICTION OF COURTS; LIMITATION OF 
ACTIONS.—An action to enforce any liability created 
under this subsection may be brought in any appro-
priate United States district court, without regard to 
the amount in controversy, or in any other court of 
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competent jurisdiction, not later than the earlier 
of— 
(A) 2 years after the date of discovery by 
the plaintiff of the violation that is the basis for 
such liability; or 
(B) 5 years after the date on which the 
violation that is the basis for such liability oc-
curs. 
(c) ACTIONS BY STATES.— 
(1) IN GENERAL.—In any case in which the at-
torney general of a State, or an official or agency of 
a State, has reason to believe that an interest of the 
residents of such State has been or is threatened or 
adversely affected by an act or practice in violation 
of this Act, the State, as parens patriae, may bring 
a civil action on behalf of the residents of the State 
in an appropriate State court or an appropriate dis-
trict court of the United States to— 
(A) enjoin such act or practice; 
(B) enforce compliance with this Act; 
(C) obtain damages, restitution, or other 
compensation on behalf of residents of the 
State; or 
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(D) obtain such other legal and equitable 
relief as the court may consider to be appro-
priate. 
(2) NOTICE.—Before filing an action under this 
subsection, the attorney general, official, or agency 
of the State involved shall provide to the Federal 
Trade Commission a written notice of such action 
and a copy of the complaint for such action. If the 
attorney general, official, or agency determines that 
it is not feasible to provide the notice described in 
this paragraph before the filing of the action, the at-
torney general, official, or agency shall provide writ-
ten notice of the action and a copy of the complaint 
to the Federal Trade Commission immediately upon 
the filing of the action. 
(3) AUTHORITY OF FEDERAL TRADE COMMIS-
SION.—On receiving notice under paragraph (2) of 
an action under this subsection, the Federal Trade 
Commission shall have the right— 
(A) to intervene in the action; 
(B) upon so intervening, to be heard on all 
matters arising therein; and 
(C) to file petitions for appeal. 
(4) RULE OF CONSTRUCTION.—For purposes of 
bringing a civil action under this subsection, nothing 
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in this Act shall be construed to prevent an attorney 
general, official, or agency of a State from exercising 
the powers conferred on the attorney general, offi-
cial, or agency by the laws of such State to conduct 
investigations, administer oaths and affirmations, or 
compel the attendance of witnesses or the production 
of documentary and other evidence. 
SEC. 5. RELATION TO STATE LAW. 
This Act does not annul, alter, affect, or exempt any 
person subject to the provisions of this Act from complying 
with the laws of any State with respect to the collection, 
distribution, or use of any information on consumers, the 
prevention or mitigation of identity theft, or the regulation 
of the business of insurance, except to the extent that 
those laws are inconsistent with any provision of this Act, 
and then only to the extent of the inconsistency. 
SEC. 6. DEFINITIONS. 
For the purposes of this Act, the following definitions 
apply: 
(1) AFFILIATE.—The term ‘‘affiliate’’ means an 
entity that, directly or indirectly, through one or 
more intermediaries, controls, is controlled by, or is 
under common control with another entity. For pur-
poses of this paragraph, the term ‘‘control’’ means 
the possession, directly or indirectly, of the power to 
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direct or cause the direction of the management and 
policies of the entity, whether— 
(A) through the ownership of voting securi-
ties; 
(B) by contract other than a commercial 
contract for goods or non-management services; 
(C) by contract for goods or non-manage-
ment services where the volume of activity re-
sults in a reliance relationship; or 
(D) by common management. 
Control shall be presumed to exist if an entity and 
its affiliates directly or indirectly own, control, hold 
with the power to vote, or hold proxies representing 
10 percent or more of the voting interests of an enti-
ty. 
(2) AUTOMOBILE INSURER.—The term ‘‘auto-
mobile insurer’’ means an insurer authorized to 
transact or transacting automobile insurance, motor 
vehicle insurance, automobile or motor vehicle liabil-
ity insurance, or any similar insurance business in 
the United States. 
(3) CENSUS TRACT.—The term ‘‘census tract’’ 
means any small, relatively permanent statistical 
subdivision of a county, as used by the United 
States Census Bureau. 
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(4) CONSUMER REPORT.—The term ‘‘consumer 
report’’ has the meaning given such term in section 
603 of the Fair Credit Reporting Act (15 U.S.C. 
1681a), except that such term does not include any 
communication to the extent such communication re-
lates to the driving history or place of residence of 
a consumer. 
(5) CREDIT-BASED
INSURANCE
SCORE.—The 
term ‘‘credit-based insurance score’’ means a rating 
based in whole or in part on a consumer’s credit in-
formation used in underwriting and rating of con-
sumers that takes into account certain elements of 
an individual’s credit history to predict how likely 
such individual is to have an insurance loss. 
(6) CREDIT SCORE.—The term ‘‘credit score’’ 
has the meaning given such term in section 
609(f)(2) of the Fair Credit Reporting Act (15 
U.S.C. 1681g(f)(2)). 
(7) EMPLOYMENT STATUS.—The term ‘‘employ-
ment status’’ means a consumer’s status as a cur-
rent full-time employee, part-time employee, em-
ployed, unemployed, underemployed, or any other 
such designation which indicates a consumer’s work 
status. 
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(8) HOME
OWNERSHIP
STATUS.—The term 
‘‘home ownership status’’ refers to whether a con-
sumer currently owns any real property which may 
be used as a residence. 
(9) LEVEL OF EDUCATION.—The term ‘‘level of 
education’’ refers to the highest grade level com-
pleted in a secondary school or trade school, a pro-
fessional licensure or certification, or the highest un-
dergraduate or graduate college degree obtained. 
Such term does not include the completion of a traf-
fic safety course or scholastic achievement while en-
rolled in a school, college, or university. 
(10) OCCUPATION.—The term ‘‘occupation’’ 
means a consumer’s current lawful employment posi-
tion in a career or identifiable trade category. 
(11) PRIVATE PASSENGER AUTOMOBILE.—The 
term ‘‘private passenger automobile’’ means a 4- 
wheel motor vehicle, whether owned or leased to an 
individual or individuals, and that is of a private 
passenger or station wagon type, or that is a motor 
vehicle with a pickup body, a delivery sedan, a pas-
senger van, a sports utility vehicle, or a panel truck 
or a camper type vehicle, and that— 
(A) is not used as a public or livery con-
veyance for passengers; 
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(B) is not rented to others; 
(C) has a gross vehicle weight of less than 
15,000 pounds; and 
(D) is not primarily used in the course of 
an occupation, profession, or business of a per-
son other than farming or ranching. 
Such term includes a motor vehicle owned by a farm 
family co-partnership or farm family corporation, 
which is principally garaged on a farm or ranch and 
otherwise meets the definition contained in this 
paragraph. 
SEC. 7. EFFECTIVE DATE. 
This Act shall take effect 1 year after the date of 
enactment of this Act. 
Æ 
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