SAFE Lending Act of 2022
Bill: S.5099 | Sponsor: Sen. Merkley, Jeff (D-OR)
Policy area: Finance and Financial Sector

Summary:
Stopping Abuse and Fraud in Electronic Lending Act of 2022 or the SAFE Lending Act of 2022
This bill revises requirements related to consumer financial protection and small-dollar lending, including matters concerning remotely created checks, electronic fund transfers, registration of small-dollar lenders, overdraft fees, and the collection of personal information.
Under the bill, remotely created checks may only be issued by a person specifically designated in writing by a consumer and provided to the consumer's depository institution. (A remotely created check is a check not issued by the bank and not signed by the account owner.)
A voluntary agreement to repay a small-dollar consumer credit transaction by an electronic fund transfer is subject to certain protections, including the right of the consumer to stop payment.
Small-dollar consumer credit providers must register with the Consumer Financial Protection Bureau. Any small-dollar consumer credit transaction is subject to the laws of the state in which the consumer resides.
The bill also prohibits overdraft fees on prepaid accounts.

To amend the Truth in Lending Act to address certain issues relating to 
       the extension of consumer credit, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stopping Abuse and Fraud in 
Electronic Lending Act of 2022'' or the ``SAFE Lending Act of 2022''.

SEC. 2. CONSUMER CONTROL OVER BANK ACCOUNTS.

    (a) Prohibiting Unauthorized Remotely Created Checks.--Section 905 
of the Electronic Fund Transfer Act (15 U.S.C. 1693c) is amended by 
adding at the end the following:
    ``(d) Limitations on Remotely Created Checks.--
            ``(1) Definition.--In this subsection--
                    ``(A) the term `remotely created check' means a 
                check, including a paper or electronic check and any 
                other payment order that the Bureau, by rule, 
                determines is appropriately covered under this 
                subsection, that--
                            ``(i) is not created by the financial 
                        institution that holds the customer account 
                        from which the check is to be paid; and
                            ``(ii) does not bear a signature applied, 
                        or purported to be applied, by the person from 
                        whose account the check is to be paid; and
                    ``(B) the term `Federal consumer financial law' has 
                the meaning given the term in section 1002 of the 
                Consumer Financial Protection Act of 2010 (12 U.S.C. 
                5481).
            ``(2) Limitations.--Subject to the limitations in paragraph 
        (3) and any additional limitations that the Bureau may 
        establish, by rule, a remotely created check may only be issued 
        by a person designated in writing by a consumer, with that 
        written designation specifically provided by the consumer to 
        the insured depository institution at which the consumer 
        maintains the account from which the check is to be drawn.
            ``(3) Additional limitations.--
                    ``(A) In general.--A designation provided by a 
                consumer under paragraph (2) may be revoked at any time 
                by the consumer.
                    ``(B) Consumer financial protection laws.--No 
                payment order, including a remotely created check, may 
                be issued by any person in response to the exercise of, 
                or attempt to exercise, any right by a consumer under--
                            ``(i) any Federal consumer financial law; 
                        or
                            ``(ii) any other provision of any law or 
                        regulation within the jurisdiction of the 
                        Bureau.''.
    (b) Consumer Protections for Certain One-Time Electronic Fund 
Transfers.--Section 913 of the Electronic Fund Transfer Act (15 U.S.C. 
1693k) is amended--
            (1) in the matter preceding paragraph (1), by inserting 
        ``(a) In General.--'' before ``No person'';
            (2) in subsection (a)(1), as so designated, by striking 
        ``preauthorized electronic fund transfers'' and inserting ``an 
        electronic fund transfer''; and
            (3) by adding at the end the following:
    ``(b) Treatment for Electronic Fund Transfers in Credit 
Extensions.--If a consumer voluntarily agrees to repay an extension of 
a small-dollar consumer credit transaction, as defined in section 
110(a) of the Truth in Lending Act, by means of an electronic fund 
transfer, the electronic fund transfer shall be treated as a 
preauthorized electronic fund transfer subject to the protections of 
this title.''.

SEC. 3. TRANSPARENCY AND CONSUMER EMPOWERMENT IN SMALL-DOLLAR LENDING.

    (a) Small-Dollar Consumer Credit Transactions.--
            (1) In general.--The Truth in Lending Act (15 U.S.C. 1601 
        et seq.) is amended--
                    (A) by inserting after section 109 (15 U.S.C. 1608) 
                the following:

``SEC. 110. REGISTRATION REQUIREMENT FOR SMALL-DOLLAR LENDERS.

    ``(a) Definition.--In this section, the term `small-dollar consumer 
credit transaction'--
            ``(1) means any transaction that extends credit that is--
                    ``(A) made to a consumer in an amount that--
                            ``(i) is not more than--
                                    ``(I) $5,000; or
                                    ``(II) such greater amount as the 
                                Bureau may, by rule, determine; and
                            ``(ii) shall be adjusted annually to 
                        reflect changes in the Consumer Price Index for 
                        all urban consumers published by the Department 
                        of Labor; and
                    ``(B) extended pursuant to an agreement that is--
                            ``(i)(I) other than an open end credit 
                        plan; and
                            ``(II) payable in 1 or more installments of 
                        less than 12 months (or such longer period as 
                        the Bureau may, by rule, determine);
                            ``(ii) an open end credit plan in which 
                        each advance is fully repayable within a 
                        defined time or in connection with a defined 
                        event, or both; or
                            ``(iii) any other plan as the Bureau 
                        determines, by rule; and
            ``(2) includes any action that facilitates, brokers, 
        arranges, or gathers applications for a transaction described 
        in paragraph (1).
    ``(b) Registration Requirement.--A person shall register with the 
Bureau before issuing credit in a small-dollar consumer credit 
transaction.''; and
                    (B) in section 173 (15 U.S.C. 1666j), by adding at 
                the end the following:
    ``(d) Notwithstanding any other provision of this title, any small-
dollar consumer credit transaction, as defined in section 110(a), shall 
comply with the laws of the State in which the consumer to which credit 
in the transaction is extended resides with respect to annual 
percentage rates, interest, fees, charges, and such other similar or 
related matters as the Bureau may, by rule, determine if the small-
dollar consumer credit transaction is--
            ``(1) made--
                    ``(A) over the internet;
                    ``(B) by telephone;
                    ``(C) by facsimile;
                    ``(D) by mail;
                    ``(E) by electronic mail; or
                    ``(F) through another electronic communication; or
            ``(2) conducted by a national bank.''.
            (2) Technical and conforming amendment.--The table of 
        sections for chapter 1 of the Truth in Lending Act (15 U.S.C. 
        1601 et seq.) is amended by inserting after the item relating 
        to section 109 the following:

``110. Registration requirement for small-dollar lenders.''.
    (b) Prohibition on Certain Fees.--Section 915 of the Electronic 
Fund Transfer Act (15 U.S.C. 1693l-1) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:
    ``(d) Additional Fees Prohibited.--
            ``(1) Definition.--In this subsection, the term `prepaid 
        account' has the meaning given the term by rule of the Bureau.
            ``(2) Prohibition.--With respect to the use of a prepaid 
        account by a consumer--
                    ``(A) it shall be unlawful for any person to charge 
                the consumer a fee for an overdraft with respect to the 
                prepaid account, including a shortage of funds or a 
                transaction processed for an amount exceeding the 
                account balance of the prepaid account;
                    ``(B) any transaction for an amount that exceeds 
                the account balance of the prepaid account may be 
                declined, except that the consumer may not be charged a 
                fee for that purpose; and
                    ``(C) the Bureau may, by rule, prohibit the 
                charging of any fee so that the Bureau may--
                            ``(i) prevent unfair, deceptive, or abusive 
                        practices; and
                            ``(ii) promote the ability of the consumer 
                        to understand and compare the costs of prepaid 
                        accounts.''.

SEC. 4. RESTRICTIONS ON LEAD GENERATION IN SMALL-DOLLAR CONSUMER CREDIT 
              TRANSACTIONS.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by adding at the end the following:

``SEC. 140B. RESTRICTIONS ON LEAD GENERATION IN SMALL-DOLLAR CONSUMER 
              CREDIT TRANSACTIONS.

    ``(a) Definitions.--In this section--
            ``(1) the terms `Internet access service' and `Internet 
        information location tool' have the meanings given those terms 
        in section 231(e) of the Communications Act of 1934 (47 U.S.C. 
        231(e));
            ``(2) the term `sensitive personal financial information' 
        means a social security number, financial account number, bank 
        routing number, bank account number, or security or access code 
        that is immediately necessary to permit access to the financial 
        account of an individual; and
            ``(3) the term `small-dollar consumer credit transaction' 
        has the meaning given the term in section 110(a).
    ``(b) Identification Information.--Any person facilitating, 
brokering, arranging for, or gathering applications for the 
distribution of sensitive personal financial information in connection 
with a small-dollar consumer credit transaction shall prominently 
disclose information by which the person may be contacted or 
identified, including for service of process and for identification of 
the registrant of any domain name registered or used.
    ``(c) Prohibition on Lead Generation in Small-Dollar Consumer 
Credit Transactions.--No person may facilitate, broker, arrange for, or 
gather applications for the distribution of sensitive personal 
financial information in connection with a small-dollar consumer credit 
transaction unless the person is directly providing the small-dollar 
consumer credit to a consumer.
    ``(d) Rule of Construction.--
            ``(1) In general.--Nothing in this section may be construed 
        to limit the authority of the Bureau to further restrict 
        activities covered by this section.
            ``(2) Clarification.--For the purposes of this section, it 
        shall not be considered facilitating the distribution of 
        sensitive personal financial information in connection with a 
        small-dollar consumer credit transaction to be engaged solely 
        in one of the following activities:
                    ``(A) The provision of a telecommunications 
                service, an Internet access service, or an Internet 
                information location tool.
                    ``(B) The transmission, storage, retrieval, 
                hosting, formatting, or translation (or any combination 
                thereof) of a communication, without selection or 
                alteration of the content of the communication, except 
                the deletion of a particular communication or material 
                made by another person in a manner that is consistent 
                with section 230(c) of the Communications Act of 1934 
                (47 U.S.C. 230(c)).''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is 
amended by adding at the end the following:

``140B. Restrictions on lead generation in small-dollar consumer credit 
                            transactions.''.

SEC. 5. STUDIES.

    (a) Definitions.--In this section--
            (1) the term ``appropriate committees of Congress'' means--
                    (A) the Committee on Banking, Housing, and Urban 
                Affairs of the Senate;
                    (B) the Committee on Indian Affairs of the Senate;
                    (C) the Committee on Financial Services of the 
                House of Representatives; and
                    (D) the Committee on Natural Resources of the House 
                of Representatives; and
            (2) the term ``Indian Tribe'' has the meaning given the 
        term in section 4 of the Indian Self-Determination and 
        Education Assistance Act (25 U.S.C. 5304).
    (b) Study Required.--Not later than 180 days after the date of 
enactment of this Act, the Comptroller General of the United States 
shall conduct a study regarding--
            (1) the availability of capital on reservations of Indian 
        Tribes; and
            (2) the impact that small-dollar consumer credit extended 
        through internet and non-internet means to members of Indian 
        Tribes has had on economic opportunity and wealth for members 
        of Indian Tribes.
    (c) Consultation.--In conducting the study required under 
subsection (b), the Comptroller General of the United States shall 
consult, as appropriate, with--
            (1) the Bureau of Consumer Financial Protection;
            (2) the Board of Governors of the Federal Reserve System;
            (3) the Director of the Bureau of Indian Affairs;
            (4) federally recognized Indian Tribes; and
            (5) community development financial institutions operating 
        in Indian lands.
    (d) Congressional Consideration.--The Comptroller General of the 
United States shall submit to the appropriate committees of Congress 
the study required under subsection (b).

SEC. 6. RULEMAKING.

    Not later than 1 year after the date of enactment of this Act, the 
Bureau of Consumer Financial Protection shall adopt any final rules 
that are necessary to implement the provisions of this Act and the 
amendments made by this Act.
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