[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8356 Introduced in House (IH)]

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118th CONGRESS
  2d Session
                                H. R. 8356

  To amend the Truth in Lending Act to provide for a safe harbor for 
         small-dollar credit products, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 10, 2024

    Mrs. Kim of California introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Truth in Lending Act to provide for a safe harbor for 
         small-dollar credit products, 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 ``Small Dollar Loan Certainty Act''.

SEC. 2. SAFE HARBOR FOR SMALL-DOLLAR CREDIT PRODUCTS.

    (a) In General.--The Truth in Lending Act (15 U.S.C. 1601 et seq.) 
is amended by inserting after section 109 the following:
``Sec. 110. Safe harbor for small-dollar credit products
    ``(a) In General.--If a covered entity complies with the 
requirements set forth in subsections (b), (c), and (e) with respect to 
the offering of a small-dollar product to a consumer, such covered 
entity shall not be liable in connection with such offering of a small-
dollar product, for--
            ``(1) any civil money penalties from any enforcement action 
        brought by the Bureau, the appropriate Federal banking agency, 
        or the National Credit Union Administration for a violation of 
        this title; or
            ``(2) any damages or other monetary relief through a 
        private right of action brought under this title.
    ``(b) Product Structure Requirements.--
            ``(1) In the case of an installment loan.--If a small-
        dollar credit product is structured by a covered entity as an 
        installment loan--
                    ``(A) the repayment term shall be more than 45 
                days;
                    ``(B) payments shall be fully amortized across more 
                than one payment;
                    ``(C) rollovers into new small-dollar credit 
                products shall be prohibited; and
                    ``(D) the covered entity may not issue any small-
                dollar credit product to a consumer if such consumer 
                has a small-dollar credit product open with such 
                covered entity at the time such consumer applies for a 
                small-dollar credit product.
            ``(2) In the case of a line of credit.--If a small-dollar 
        credit product is structured by a covered entity as a line of 
        credit--
                    ``(A) the repayment term for each draw shall be 
                more than 45 days unless a single payment is used and 
                the draw is not more than 10 percent of the lesser of 
                $3,500 or 20 percent of the total amount of a 
                consumer's average monthly direct deposits during the 
                preceding six months; and
                    ``(B) payments for each draw shall be fully 
                amortized across more than one payment, except in the 
                case of any single-payment loans.
            ``(3) Rules of construction.--
                    ``(A) In general.--Nothing in this subsection may 
                be construed to prohibit the Bureau, a Federal banking 
                agency, or the National Credit Union Administration 
                from issuing a cease-and-desist order or restitution 
                order under this title against a covered entity.
                    ``(B) Enforcement of other statutes.--Nothing in 
                this subsection may be construed to prohibit the 
                Bureau, a Federal banking agency, or the National 
                Credit Union Administration from enforcing any 
                provision of law not contained within this title 
                against a covered entity.
    ``(c) Underwriting Requirements.--When considering whether to offer 
a small-dollar credit product to a specific consumer, a covered 
entity--
            ``(1) shall use sound underwriting processes; and
            ``(2) may analyze internal or external data sources, 
        including consumer deposit account activity, to assess the 
        creditworthiness of a consumer.
    ``(d) Rule of Construction.--Nothing in this title may be construed 
to prohibit a covered entity from offering a small-dollar product that 
does not comply with the safe harbor requirements set forth under this 
section.
    ``(e) Additional Limitations and Requirements.--
            ``(1) Balloon payments.--No payment required in association 
        with a small-dollar credit product offered by a covered entity 
        may be greater than double the amount of any other payment 
        required in association with such product.
            ``(2) Disclosures.--Each covered entity that offers a 
        small-dollar credit product shall comply with all disclosure 
        requirements set forth by this title.
            ``(3) Penalties and fees.--A covered entity may not impose 
        any prepayment penalty, overdraft fee, or nonsufficient funds 
        fee in connection with a small-dollar credit product.
            ``(4) Transfer of amounts.--Amounts made available to a 
        consumer through a small-dollar credit product offered by a 
        covered entity shall be disbursed to the account of such 
        consumer by such covered entity not later than 5 days after the 
        approval of the consumer for the small-dollar credit product.
    ``(f) Definitions.--In this section:
            ``(1) Covered entity.--The term `covered entity' means--
                    ``(A) an insured depository institution;
                    ``(B) an insured credit union;
                    ``(C) a third party with whom an insured depository 
                institution has contracted for products or services 
                related to origination, servicing, or administrative 
                management of a small-dollar credit product; or
                    ``(D) a third party with whom an insured credit 
                union has contracted for products or services related 
                to origination, servicing, or administrative management 
                of a small-dollar credit product.
            ``(2) Federal banking agency definitions.--The terms 
        `appropriate Federal banking agency' and `Federal banking 
        agency' have the meaning given those terms, respectively, in 
        section 3 of the Federal Deposit Insurance Act.
            ``(3) Insured credit union.--The term `insured credit 
        union' has the meaning given the term in section 101 of the 
        Federal Credit Union Act.
            ``(4) Insured depository institution.--The term `insured 
        depository institution' has the meaning given the term in 
        section 3 of the Federal Deposit Insurance Act.
            ``(5) Small-dollar credit product.--The term `small-dollar 
        product' means a loan or line of credit with a value of $3,500 
        or less.''.
    (b) Clerical Amendment.--The table of contents for chapter 1 of the 
Truth in Lending Act is amended by striking the item relating to 
section 110 and inserting the following:

``110. Safe harbor for small-dollar credit products.''.
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