I 
111TH CONGRESS 
1ST SESSION H. R. 1846 
To amend the Truth in Lending Act to establish additional payday loan 
disclosure requirements and preempt certain State laws, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 1, 2009 
Mr. BACA (for himself and Mrs. SCHMIDT) introduced the following bill; which 
was referred to the Committee on Financial Services 
A BILL 
To amend the Truth in Lending Act to establish additional 
payday loan disclosure requirements and preempt certain 
State laws, and for other purposes. 
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 ‘‘Consumer Lending 
Education And Reform Act’’ and the ‘‘C.L.E.A.R. Act’’. 
SEC. 2. PROTECTIONS FOR CONSUMERS. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after section 129A the following new section: 
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‘‘§ 129B Protections for consumers 
‘‘(a) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) AFFILIATE.—The term ‘affiliate’ has the 
same meaning as in section 129(k). 
‘‘(2) ELECTRONIC SIGNATURE.—The term ‘elec-
tronic signature’ means a signatures in digital or 
other electronic form that meets the validity require-
ments of the Electronic Signatures in Global and 
National Commerce Act. 
‘‘(3) EXTENDED
PAYMENT
PLAN.—The term 
‘extended payment plan’ means an amendment to 
the payday loan that is signed in person or electroni-
cally by both the consumer and the creditor reflect-
ing an agreement that the consumer pay the out-
standing balance on a payday loan in 4 equal pay-
ments, where the period between each payment may 
not be less than the duration of the original payday 
loan. 
‘‘(4) HOME STATE.— 
‘‘(A) IN
GENERAL.—The term ‘home 
State’ means, with respect to any creditor or 
any affiliate of a creditor, the State in which 
the primary home office of the creditor or any 
affiliate of the creditor is located. 
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‘‘(B) HOME OFFICE.—The term ‘home of-
fice’ means the office that houses a majority of 
the applicable party’s day-to-day management 
and administrative support functions. 
‘‘(5) INTEREST AND FEES.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘interest and fees’ 
includes any charge payable directly or indi-
rectly by the consumer and imposed directly or 
indirectly by the creditor as an incident to or a 
condition of the extension of credit. 
‘‘(B) CHARGES NOT INCLUDED.—The term 
‘interest and fees’ does not include— 
‘‘(i) any charge for a default, delin-
quency, or similar occurrence; or 
‘‘(ii) any charge imposed when, if for 
any reason, funds are not made available 
to pay an item or authorization delivered 
to the creditor in the manner described in 
subparagraph (A) or (B) of paragraph (1) 
to the extent that— 
‘‘(I) the charge does not exceed 
the greater of $25 or the amount 
charged to the creditor by the credi-
tor’s financial institution; and 
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‘‘(II) the charge is only imposed 
once per each item or authorization 
regardless of whether the item or au-
thorization is presented for payment 
more than once. 
‘‘(6) LOAN
STORE.—The term ‘loan store’ 
means each location operated by a creditor at which 
applications for payday loans are received or the 
proceeds of payday loans are disbursed. 
‘‘(7) PAYDAY LOAN; LOAN.—The terms ‘payday 
loan’ and ‘loan’ mean a closed-end credit trans-
action, evidenced by a loan agreement signed by the 
creditor and the consumer, in person or electroni-
cally, unsecured by any interest in the consumer’s 
tangible personal property with a term of at least 7 
and not more than 90 days in which the amount fi-
nanced does not exceed $2,000 with a finance charge 
exceeding an annual percentage rate of 36 percent, 
and the consumer— 
‘‘(A) receives funds from and incurs inter-
est or a fee payable to a creditor, and contem-
poraneously with the receipt of funds, provides 
a check or other payment instrument to the 
creditor who agrees with the consumer not to 
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‘‘(ii) in the case of an original payday 
loan originated over the Internet, an addi-
tional origination fee in excess of 5 percent 
of the original principal loan amount; 
‘‘(B) require a consumer to pay interest 
and fees that, combined, total more than— 
‘‘(i) in the case of the 1st refinancing 
of an outstanding payday loan, 15 cents 
for every dollar of the outstanding original 
principal loan amount; and 
‘‘(ii) in the case of the 2nd refi-
nancing of an outstanding payday loan, 10 
cents for every dollar of the outstanding 
original principal loan amount; or 
‘‘(C) require a consumer to pay an origina-
tion fee for a payday loan that is refinanced. 
‘‘(2) MANDATORY
DISCLOSURES.—A payday 
lender may not make or refinance a payday loan un-
less the creditor has first provided the consumer 
with a copy of a written loan agreement, which shall 
be signed by the creditor and by the consumer and 
shall include the following information in English 
and in the language in which the loan was nego-
tiated: 
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‘‘(A) A clear and conspicuous description 
of the terms of the loan, including the total cost 
of all fees and other charges in connection with 
the loan stated as a dollar amount, and the con-
sumer’s payment obligations under the loan. 
‘‘(B) The name, address and telephone 
number of the creditor making the loan, and 
the name of title of the individual employee of 
the creditor who signs the loan agreement on 
behalf of the creditor. 
‘‘(C) The following statements, in at least 
14-point bold face type: 
‘‘(i) WARNING.—This loan is not in-
tended to meet long-term financial needs. 
This loan should be used only to meet 
short-term cash needs. 
‘‘(ii) CREDIT
COUNSELING
AVAIL-
ABILITY.—You should consider contacting 
an independent, nonprofit credit counseling 
agency approved by the National Founda-
tion for Credit Counseling (NFCC) or by a 
State or Federal Government agency. You 
may obtain information on how to contact 
an approved counselor near you by calling 
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the National Foundation for Credit Coun-
seling at 1–800–388–2227. 
‘‘(iii) NO CRIMINAL PROSECUTION OR 
SECURITY
INTEREST.—You 
cannot 
be 
prosecuted in criminal court to collect this 
loan, and the creditor may not take or at-
tempt to take an interest in any of your 
personal property to secure his loan. 
‘‘(3) ADDITIONAL
PUBLIC
DISCLOSURES.—A 
payday lender may not make or refinance a payday 
loan to any consumer unless the following notices 
are posted conspicuously in English and Spanish 
and in not less than 1-inch bold print in the credi-
tor’s public lending area in each loan store, or, if the 
loan is made using the Internet, fax or other means, 
are posted conspicuously on the creditor’s public 
internet site relating to any such payday loan: 
‘‘(A) WARNING.—This loan is not intended 
to meet long-term financial needs. This loan 
should be used only to meet short-term cash 
needs. 
‘‘(B) 
CREDIT
COUNSELING
AVAIL-
ABILITY.—You should consider contacting an 
independent, nonprofit credit counseling agency 
approved by the National Foundation for Credit 
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Counseling (NFCC) or by a State or Federal 
Government agency. You may obtain informa-
tion on how to contact an approved counselor 
near you by calling the National Foundation for 
Credit Counseling at 1–800–388–2227. 
‘‘(C) NO CRIMINAL PROSECUTION OR SE-
CURITY INTEREST.—You cannot be prosecuted 
in criminal court to collect this loan, and the 
creditor may not take or attempt to take an in-
terest in any of your personal property to se-
cure his loan. 
‘‘(4) 
CREDITOR
SURETY
BOND
REQUIRE-
MENTS.— 
‘‘(A) IN GENERAL.—A payday lender may 
not make or refinance a payday loan unless the 
creditor has obtained and filed, in accordance 
with subparagraph (B), a surety bond in the 
following amount: 
‘‘(i) A surety bond in the amount of 
$100,000 for each loan store operated by 
the creditor, if the creditor operates fewer 
than 10 loan stores and does not offer any 
payday loans over the Internet. 
‘‘(ii) A surety bond in the amount of 
$1,000,000, if the creditor operates 10 or 
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more loan stores or offers loans over the 
Internet. 
‘‘(iii) Such greater amount as may be 
required by applicable State law. 
‘‘(B) BOND REQUIREMENTS.—The surety 
bond obtained by a payday lender to meet the 
requirements of subparagraph (A) shall be filed 
with, and for the benefit of, the State attorney 
general in the creditor’s home state. 
‘‘(C) AGGREGATION OF LENDER AND AF-
FILIATE
UNDER
CERTAIN
CIRCUMSTANCES.— 
For purposes of this paragraph, a creditor and 
each affiliate of a creditor which has the same 
home State as the creditor may aggregate the 
loan stores operated by such creditor and any 
such affiliate for purposes of determining the 
amount of the surety bond required to be filed 
under subparagraph (A). 
‘‘(5) EXTENDED PAYMENT PLAN.— 
‘‘(A) IN GENERAL.—A payday lender may 
not make or refinance a payday loan unless the 
terms of the loan require the creditor, upon re-
ceiving notice from the consumer of an inability 
to repay prior to close of business on the last 
business day before the original due date of the 
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loan, provides the consumer with notice of and 
the right to opt into an extended payment plan, 
without charge, 1 time in any 12 month period. 
‘‘(B) LIMITATION DURING EXTENDED PAY-
MENT
PLAN.—A creditor may not engage in 
any collection activity (or procure the services 
of any other for such purpose) during the term 
of any extended payment plan. 
‘‘(6) REFINANCING.—A payday lender may 
not— 
‘‘(A) refinance a payday loan for less than 
7 days; 
‘‘(B) refinance a payday loan more than 2 
consecutive times; refinance a payday loan with-
out terminating the previous agreement and en-
tering into a new agreement that the creditor 
and consumer each sign in person or with an 
electronic signature; or 
‘‘(C) require a consumer to pay interest 
and fees in connection with a refinancing that, 
combined, total more than the amount per-
mitted under paragraph (1)(B).’’. 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
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(1) DISCLOSURES.—Section 128(a)(4) of the 
Truth in Lending Act (U.S.C. 1638(a)(4)) is amend-
ed— 
(A) by striking ‘‘or’’ after ‘‘does not exceed 
$5,’’ and 
(B) by inserting ‘‘, or if the loan is subject 
to section 129B’’. 
(2) EFFECT ON OTHER LAWS.—Section 111 of 
the Truth in Lending Act (U.S.C. 1610) is amend-
ed— 
(A) in subsection (b), by inserting ‘‘sub-
section (f) of this section and’’ after ‘‘Except as 
provided in’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(f) PAYDAY LOANS.— 
‘‘(1) IN GENERAL.—The following provisions of 
the law of any State shall not apply to any payday 
loan, or any refinancing of a payday loan, that is 
subject to section 129B: 
‘‘(A) Any provision requiring minimum 
loan terms. 
‘‘(B) Any provision prohibiting, defining or 
limiting any refinancing. 
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‘‘(C) Any provision prohibiting or limiting 
the use of a check or debit authorization to 
originate a payday loan. 
‘‘(D) Any provision prohibiting or man-
dating extended payment plans. 
‘‘(E) Any provision limiting the rate or 
amount of interest and fees or default, delin-
quency or not sufficient fund fees or other 
charges which may be taken, received or re-
served by creditors for payday loans or any refi-
nancing of a payday loan. 
‘‘(2) ENFORCEMENT.—Notwithstanding para-
graph (1), any State may employ or establish State 
laws for the purpose of enforcing the requirements 
of section 129B.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129 the fol-
lowing new items: 
‘‘129A. Fiduciary duty of servicers of pooled residential mortgages. 
‘‘129B. Protections for consumers.’’. 
Æ 
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