I 
110TH CONGRESS 
1ST SESSION H. R. 2871 
To amend the Truth in Lending Act and the Federal Deposit Insurance 
Act to prohibit payday loans based on checks drawn on, or authorized 
withdrawals from, depository institutions and to prohibit insured deposi-
tory institutions from making payday loans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 26, 2007 
Mr. UDALL of New Mexico (for himself, Mr. GUTIERREZ, Mr. ELLISON, and 
Ms. SCHAKOWSKY) introduced the following bill; which was referred to 
the Committee on Financial Services 
A BILL 
To amend the Truth in Lending Act and the Federal Deposit 
Insurance Act to prohibit payday loans based on checks 
drawn on, or authorized withdrawals from, depository 
institutions and to prohibit insured depository institu-
tions from making payday loans, 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 ‘‘Payday Loan Reform 
Act of 2007’’. 
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SEC. 2. PROHIBITION ON PAYDAY LOANS BASED ON 
CHECKS DRAWN ON, OR AUTHORIZED WITH-
DRAWALS FROM, DEPOSITORY INSTITUTIONS. 
Section 128 of the Truth in Lending Act (15 U.S.C. 
1638) is amended by adding at the end the following new 
subsection: 
‘‘(e) PROHIBITION ON PAYDAY LOANS BASED ON 
CHECKS DRAWN
ON, OR AUTHORIZED WITHDRAWALS 
FROM, DEPOSITORY INSTITUTIONS.— 
‘‘(1) IN GENERAL.—A creditor may not make a 
payday loan to any person, if the creditor knows or 
has reasonable cause to believe that— 
‘‘(A) any personal check or share draft 
that the creditor receives from the person in ex-
change for the loan is drawn on a depository in-
stitution; or 
‘‘(B) any account that will be debited in 
exchange for the loan is a transaction account 
or share draft account at a depository institu-
tion. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) 
DEPOSITORY
INSTITUTION.—The 
term ‘depository institution’ has the same 
meaning as in section 19(b)(1)(A) of the Fed-
eral Reserve Act. 
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‘‘(B) PAYDAY
LOAN.—The term ‘payday 
loan’ means any transaction in which a short- 
term cash advance is made to a consumer in ex-
change for— 
‘‘(i) the personal check or share draft 
of the consumer, in the amount of the ad-
vance plus a fee, where presentment or ne-
gotiation of such check or share draft is 
deferred by agreement of the parties until 
a designated future date; or 
‘‘(ii) the authorization of a consumer 
to debit the transaction account or share 
draft account of the consumer, in the 
amount of the advance plus a fee, where 
such account will be debited on or after a 
designated future date.’’. 
SEC. 3. PROHIBITION ON INSURED DEPOSITORY INSTITU-
TIONS MAKING PAYDAY LOANS. 
Section 18 of the Federal Deposit Insurance Act (12 
U.S.C. 1828) is amended by adding at the end the fol-
lowing: 
‘‘(y) PROHIBITION ON INSURED DEPOSITORY INSTI-
TUTIONS MAKING PAYDAY LOANS.— 
‘‘(1) IN GENERAL.—An insured depository in-
stitution may not make or extend— 
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‘‘(A) any payday loan, either directly or in-
directly; or 
‘‘(B) any loan or credit to any other lender 
for purposes of financing a payday loan or refi-
nancing or extending any payday loan. 
‘‘(2) PAYDAY LOAN DEFINED.—For purposes of 
this subsection, the term ‘payday loan’ means any 
transaction in which a short-term cash advance is 
made to a consumer in exchange for— 
‘‘(A) the personal check or share draft of 
the consumer, in the amount of the advance 
plus a fee, where presentment or negotiation of 
such check or share draft is deferred by agree-
ment of the parties until a designated future 
date; or 
‘‘(B) the authorization of the consumer to 
debit the transaction account or share draft ac-
count of the consumer, in the amount of the ad-
vance plus a fee, where such account will be 
debited on or after a designated future date.’’. 
SEC. 4. PENALTIES AND REMEDIES. 
(a) CONTRACT VOID.—Any credit agreement, promis-
sory note, or other contract prohibited under any amend-
ment made by this Act shall be void from the inception 
of such agreement, note, or contract. 
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(b) CLARIFICATION OF LIABILITY.—Section 130(a) 
of the Truth in Lending Act (15 U.S.C. 1640(a)) is 
amended by inserting after the penultimate sentence the 
following new sentence: ‘‘Any creditor who violates section 
128(e) with respect to any person shall be liable to such 
person under paragraphs (1), (2) and (3).’’ 
(c) PRESERVATION
OF OTHER REMEDIES.—The 
remedies and rights provided under any amendment made 
by this Act are in addition to and do not preclude any 
remedy otherwise available under law to the person claim-
ing relief under any provision of law, including any award 
for general, consequential, or punitive damages. 
SEC. 5. EFFECTIVE DATE. 
The amendments made by this Act shall take effect 
at the end of the 30-day period beginning on the date of 
the enactment of this Act and shall apply to all loans initi-
ated on or after such date and to any extension or renewal 
of loans made on or after such date. 
Æ 
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