where such account will be debited on or
after a designated future date.’’.
SEC. 4. TRUTH IN LENDING ACT AMENDMENTS.
(a) CLARIFICATION
OF APPLICATION
TO PAYDAY
LOANS.—For purposes of clarifying that payday loans
have always been within the definition of credit, section
103(e) of the Consumer Credit Protection Act (15 U.S.C.
1602(e)) is amended, effective as of the date of the enact-
ment of this Act, by inserting before the period at the end
‘‘, including any payday loan (as defined in section
18(v)(2) of the Federal Deposit Insurance Act)’’.
(b) PROHIBITION ON CERTAIN UNSAFE AND UN-
SOUND LENDING PRACTICES.—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, INSURED 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) the personal check or share draft the
creditor receives from the person, in exchange
for the loan, is drawn on an insured depository
institution or insured credit union; or
‘‘(B) the account the creditor receives per-
mission from the person to debit, in exchange
for the loan, is a transaction account or share
draft account at an insured depository institu-
tion or an insured credit union.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply:
‘‘(A) INSURED CREDIT UNION.—The term
‘insured credit union’ has the meaning given
the term in section 101 of the Federal Credit
Union Act.
‘‘(B) 
INSURED
DEPOSITORY
INSTITU-
TION.—The term ‘insured depository institu-
tion’ has the meaning given the term in section
3 of the Federal Deposit Insurance Act.
‘‘(C) PAYDAY LOAN DEFINED.—The term
‘payday loan’ means any transaction in which a
short-term cash advance is made to a consumer
in exchange for—
‘‘(i) a consumer’s personal check or
share draft, in the amount of the advance
plus a fee, where presentment or negotia-
tion of such check or share draft is de-
ferred by agreement of the parties until a
designated future date; or
‘‘(ii) a consumer’s authorization to
debit the consumer’s transaction or share
draft account, in the amount of the ad-
vance plus a fee, where such account will
be debited on or after a designated future
date.’’.
(c) CIVIL LIABILITY.—
(1) IN
GENERAL.—Section 130(a)(2) of the
Truth in Lending Act (15 U.S.C. 1640(a)(2)) is
amended—
(A) in subparagraph (A)—
(i) by inserting ‘‘clauses (i) and (ii)
of’’ after ‘‘except that the liability under’’;
(ii) by striking ‘‘$100’’ and inserting
‘‘$200’’; and
(iii) by striking ‘‘$1,000’’ and insert-
ing ‘‘$10,000’’; and
(B) in subparagraph (B), by striking ‘‘less-
er of $500,000 or 1 per centum of the net
worth of the creditor’’ and inserting ‘‘greater
of—
‘‘(i) the amount determined by multi-
plying the maximum amount of liability
subparagraph (A) for each such failure to
comply in an individual action by the num-
ber of members in the certified class; or
‘‘(ii) the amount equal to 2 percent of
the creditor’’.
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—Section 130(a) of the Truth in Lending
Act is amended—
(A) in the matter preceding paragraph (1),
by striking ‘‘equal to the sum of—’’ and insert-
ing ‘‘equal to the sum of amounts determined
under the following paragraphs, whichever
apply:’’; and
(B) in the 4th sentence which begins after
the end of paragraph (4) by striking ‘‘disclo-
sures referred to in section 128’’ and inserting
‘‘disclosures referred to in section 128(a)’’.
SEC. 5. EFFECTIVE DATE.
Except as provided in section 4(a), which is a clari-
fication of existing law, the requirements of this Act and
the amendments made by this Act shall take effect at the
end of the 90-day period beginning on the date of the en-
actment of this Act and shall apply to payday loans initi-
ated on or after such date and to an extension or renewal
of a payday loan made on or after such date.
Æ