H.R. 1576 Unsolicited Loan Consumer Protection Act
HR 1576 IH
April 27, 1999
Mr. HINCHEY introduced the following bill; which was referred to the Committee on Banking and Financial Services
- 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 `Unsolicited Loan Consumer
SEC. 2. UNSOLICITED CHECKS PROHIBITED.
- (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 new
`SEC. 140. SOLICITATIONS FOR CONSUMER LOANS.
- `(a) IN GENERAL- No consumer credit which is otherwise subject
to this title may be extended by any creditor through the use of a check
or other negotiable instrument which has been sent by the creditor to
the consumer in connection with a solicitation by the creditor for such
extension of credit, unless the consumer has submitted an application
for, or otherwise requested, such extension of credit before receiving
the check or instrument.
- `(b) CONSUMER NOT LIABLE FOR ANY UNSOLICITED CHECK UNLESS THE
CONSUMER ACTUALLY RECEIVES AND NEGOTIATES SUCH CHECK-
- `(1) IN GENERAL- If any creditor violates subsection (a)
and includes an unsolicited check or other negotiable instrument in a
solicitation to a consumer for an extension of credit which the consumer
has not applied for or requested, the consumer shall not be liable for
the amount of any such check or other instrument unless the consumer
actually receives and negotiates such check or instrument.'.
- `(2) BURDEN ON CREDITOR- Notwithstanding any rule of
evidence or other provision of law--
- `(A) the issuance of a check or other negotiable
instrument by a creditor in violation of subsection (a) creates a
rebuttable presumption that such check or instrument was not received or
negotiated by the consumer to whom it was issued; and
- `(B) the burden of proof, in any action by a creditor
to enforce liability of the consumer for the amount of any such check or
instrument, shall be upon the creditor to show that such check or
instrument was received by the consumer and was negotiated by the
consumer with the knowledge that such negotiation was creating a
liability for such amount.
- `(3) INFORMATION ON LIABILITY CREATED IN VIOLATION OF
SUBSECTION (a) MAY NOT BE REPORTED TO OR RECEIVED BY ANY CONSUMER
REPORTING AGENCY- No information on any liability alleged by a creditor
to have been established through the issuance of a check or other
negotiable instrument in violation of subsection (a) may be reported to
or received by any credit reporting agency (as defined in section 603 of
the Fair Credit Reporting Act) or included in any consumer credit report
under such Act.'.
- (b) CLERICAL AMENDMENT- The table of sections for chapter 2 of
the Truth in Lending Act is amended by adding at the end the following
- `140. Solicitations for consumer loans.'.
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