To amend the Truth in Lending Act to prohibit the distribution of any negotiable check or other instrument with any solicitation to a consumer by a creditor to open an account under any consumer credit plan or to engage in any other credit transaction which is subject to such Act, 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 `Unsolicited Loan Consumer Protection Act'.

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 section:

`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 new item:

`140. Solicitations for consumer loans.'.

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Tuesday, April 27, 1999