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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 Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129A the following
new section:
''Sec. 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 'electronic
signature' means a signatures in digital or other electronic
form that meets the validity requirements 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 electronically by both the consumer and the creditor
reflecting an agreement that the consumer pay the outstanding
balance on a payday loan in 4 equal payments, 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.
''(B) Home office.--The term 'home office' 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 indirectly 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,
delinquency, 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
creditor's financial institution; and
''(II) the charge is only imposed
once per each item or authorization
regardless of whether the item or
authorization 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 transaction, evidenced by a
loan agreement signed by the creditor and the consumer, in
person or electronically, 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 financed 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 interest or a
fee payable to a creditor, and contemporaneously with
the receipt of funds, provides a check or other payment
instrument to the creditor who agrees with the consumer
not to deposit or present the check or payment
instrument for more than 1 day; or
''(B) receives funds from and incurs interest or a
fee payable to a creditor, and contemporaneously with
the receipt of funds, authorized the creditor to
initiate a debt or debits to the consumer's deposit
account (by electronic fund transfer or remotely
created check) after 1 or more days.
''(8) Payday lender.--The term 'payday lender' means any
creditor with respect to a payday loan.
''(9) Refinancing.--The term 'refinancing' means the use of
the proceeds of 1 payday loan obtained from a creditor to pay
off any amount due to that creditor.
''(b) Protections for Consumers.--
''(1) Interest and fee cap.--A payday lender may not--
''(A) require a consumer to pay--
''(i) in the case of any original payday
loan, interest and other fees and charges that
total more than 15 cents for every dollar
loaned; and
''(ii) in the case of an original payday
loan originated over the Internet, an
additional 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 refinancing
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 origination fee
for a payday loan that is refinanced.
''(2) Mandatory disclosures.--A payday lender may not make
or refinance a payday loan unless 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 negotiated:
''(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 consumer'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 intended
to meet long-term financial needs. This loan
should be used only to meet short-term cash
needs.
''(ii) Credit counseling availability.--You
should consider contacting an independent,
nonprofit credit counseling agency approved by
the National Foundation 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 the National Foundation for Credit
Counseling 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 attempt 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
creditor'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 availability.--You should
consider contacting an independent, nonprofit credit
counseling agency approved by the National Foundation
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 the
National Foundation for Credit Counseling at 1-800-388-
2227.
''(C) No criminal prosecution or security
interest.--You cannot be prosecuted in criminal court
to collect this loan, and the creditor may not take or
attempt to take an interest in any of your personal
property to secure his loan.
''(4) Creditor surety bond requirements.--
''(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 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 affiliate 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 receiving 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 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 payment 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 without
terminating the previous agreement and entering 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 permitted under paragraph
(1)(B).''.
(b) Technical and Conforming Amendments.--
(1) Disclosures.--Section 128(a)(4) of the Truth in Lending
Act (U.S.C. 1638(a)(4)) is amended--
(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 amended--
(A) in subsection (b), by inserting ''subsection
(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.
''(C) Any provision prohibiting or limiting the use
of a check or debit authorization to originate a payday
loan.
''(D) Any provision prohibiting or mandating
extended payment plans.
''(E) Any provision limiting the rate or amount of
interest and fees or default, delinquency or not
sufficient fund fees or other charges which may be
taken, received or reserved by creditors for payday
loans or any refinancing of a payday loan.
''(2) Enforcement.--Notwithstanding paragraph (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 following new items:

''129A. Fiduciary duty of servicers of pooled residential mortgages.
''129B. Protections for consumers.''.
Consumer Lending Education And Reform Act or the C.L.E.A.R. Act - Amends the Truth in Lending Act to limit the interest, fees and charges that a payday lender may require a consumer to pay with respect to an original payday loan and a refinanced payday loan.

Prohibits a payday lender from: (1) requiring a consumer to pay an origination fee for a payday loan that is refinanced; or (2) making or refinancing a payday loan unless the creditor has first provided the consumer with a copy of a written loan agreement, signed by the creditor and by the consumer, which includes specified information in English and in the language in which the loan was negotiated.

Requires a payday lender to file a surety bond.

Prohibits a payday lender from making or refinancing a payday loan unless the terms of the loan require the creditor, upon receiving notice of consumer's inability to repay, to provide the consumer with notice of and the right to opt into an extended payment plan, without charge, one time in any 12-month period.

Prohibits a creditor from engaging in any collection activity (or procuring the services of any other for such purpose) during the term of any extended payment plan.