Small Dollar Loan Certainty Act

This Act may be cited as the Small Dollar Loan Certainty Act.

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended by inserting after section 109 the following:

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.

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.

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.

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.

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.

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.

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.

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.

Each covered entity that offers a small-dollar credit product shall comply with all disclosure requirements set forth by this title.

A covered entity may not impose any prepayment penalty, overdraft fee, or nonsufficient funds fee in connection with a small-dollar credit product.

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.

In this section:

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.

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.

The term insured credit union has the meaning given the term in section 101 of the Federal Credit Union Act.

The term insured depository institution has the meaning given the term in section 3 of the Federal Deposit Insurance Act.

The term small-dollar product means a loan or line of credit with a value of $3,500 or less.

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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:

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