H.R. 1566 — Introduced in House

I 113th CONGRESS 1st Session H. R. 1566 IN THE HOUSE OF REPRESENTATIVES April 15, 2013 Mr. Luetkemeyer (for himself and Mr. Meeks) introduced the following bill; which was referred to the Committee on Financial Services A BILL To create a Federal charter for Internet consumer credit corporations, and for other purposes. 1. Short title This Act may be cited as the Consumer Credit Access, Innovation, and Modernization Act. 2. Findings; purpose; and intent (a) Findings Congress finds the following: (1) Studies by the Federal Deposit Insurance Corporation (FDIC), National Bureau of Economic Research, FINRA Investor Education Foundation, and other credible parties have shown that roughly half of all American families, including not only lower and moderate income families but also a large segment of middle and higher income families who have poor credit scores and limited disposable incomes, are literally living paycheck-to-paycheck, lacking adequate savings and other resources to cover unplanned expenses that frequently arise in every household. (2) These consumers (in this Act referred to as underserved consumers) include those who are unbanked, having neither a checking or savings account at a depository institution, and those who are underbanked, having such an account and frequently having higher incomes but credit impairments, while nonetheless needing to rely on nondepository financial institutions for short-term, small loans and other credit products and financial services they desperately need, but generally cannot obtain from traditional banking institutions. (3) Credit alternatives for underserved consumers generally are limited and often not well suited to their particular needs and in some instances lack any statutory consumer protections. (4) Programs by the FDIC and other parties to expand access to small loans and other financial products or services for underserved consumers through banking institutions have had very limited success because banks, which typically have relatively high operating costs, generally have been unable to make affordable small personal loans on a widespread, commercially viable basis to these higher risk consumers, most of whom may not even qualify for a loan under the high-credit standards regulators necessarily require insured depositories to maintain. (5) To the extent that depository institutions offer underserved consumers affordable small loans and other financial products or services on a commercially viable basis, they should be encouraged to do so, but it must be recognized that overcoming the practical business obstacles for depositories to offer such products or services appears to be quite difficult at best for most depositories, and given the massive scope of the short-term credit needs of such consumers, depositories most likely will be unable to provide affordable small loans and other financial products or services for a significant number of them. (6) Efforts of governmental, nonprofit, and private sector institutions to help underserved consumers manage their personal finances more effectively through financial education and counseling programs also are important and must continue, but given the tremendous number of consumers who face significant ongoing financial challenges, most such underserved consumers are likely to be unable to overcome their financial difficulties through such efforts. (7) Nondepository creditors historically have been primarily State-regulated, are not federally insured, generally pose little or no systemic or taxpayer risk, typically have lower operating costs and can employ less restrictive credit standards than depositories, and are a major source of small loans and financial products or services for underserved consumers, providing such consumers annually with billions of dollars in credit. (8) A number of nondepository creditors have developed advanced proprietary loan underwriting and servicing procedures and cutting-edge technologies allowing them to offer credit to more underserved consumers, but such creditors lack the authority available to national banks to operate on a multistate or nationwide basis using a single lending charter and subject to strong, uniform Federal regulation that would enable them to maximize their capacities to operate more innovatively and efficiently. (9) Nondepository creditors are instead subject to widely differing State licensing laws that impose substantial cost and compliance burdens, and, more significantly, laws that severely limit the types of financial products or services that may be offered, prevent loans from being provided on a commercially viable basis, stifle innovation, reduce competition, and leave underserved consumers with a limited choice of products or services that in many cases are not well suited to their personal needs and cost significantly more because of these conflicting and outdated restrictive State laws. (10) It is in the national interest and will greatly benefit the millions of underserved consumers who have pressing needs for additional credit alternatives for Congress to adopt legislation to authorize creditors the option of receiving a Federal charter under which they can provide such consumers loans and other financial products and services through the Internet and electronic devices and not traditional brick-and-mortar storefront locations, allowing them to operate more innovatively and efficiently on a nationwide basis. (11) An Internet consumer credit corporation chartered under this Act will be adequately regulated under Federal laws and regulations prescribed by the Comptroller of the Currency and the Director of the Consumer Financial Protection Bureau, and such laws and regulations shall be enforced in accordance with this Act without such corporation being subjected to duplicative and conflicting State laws that in many cases severely and unnecessarily restrict product innovation and choice and raise the cost of the limited credit choices now available to underserved consumers. (12) Allowing such federally regulated lending by Internet creditors as authorized by this Act through the Internet and by electronic devices, but not through traditional storefront, brick-and-mortar locations, on a nationwide basis, is consistent with the fact that consumers’ borrowing habits are shifting rapidly to seeking more financial product and service choices with the convenience, ease of credit access, and more alternatives provided by computers, mobile phones, and other electronic devices, and millions of underserved consumers will be able to secure credit from Internet consumer credit corporations that are subject to applicable State and Federal laws. (13) Small businesses, which are vital to job creation and the health of the Nation’s economy, also have a continuing need for additional credit alternatives, and allowing Internet consumer credit corporations to offer certain financial products and services to small businesses through the Internet and by electronic devices will be in the national interest. (b) Purpose and intent The purpose and intent of this Act is to— (1) provide underserved consumers greater access to innovative, affordable, commercially viable, and better suited financial products and services; (2) create a Federal charter for creditors that offer financial products or services through the Internet and electronic devices and not traditional brick-and-mortar storefront locations and focus their business primarily on meeting the credit needs of underserved consumers and small businesses, enabling such Internet creditors to provide more innovative, affordable, and appropriate credit options, subject to uniform Federal lending standards rather than operating under the widely varying, often conflicting, overly restrictive, and unnecessarily costly system of State lending laws that currently prevent nondepository creditors from offering underserved consumers and small businesses the credit options they need; (3) clarify that Congress understands that even with the more innovative and efficient lending authorized by this Act and reasonable pricing by Internet consumer credit corporations, the cost of commercially viable, short-term, small-dollar credit for higher risk underserved consumers typically will be considerably higher than the cost for other consumers who have no credit impairments and that when the cost of such credit is expressed in terms of an annual percentage rate, in most cases such rate will be much higher than such rate for larger, longer term loans, especially those made to consumers with unimpaired credit records, and therefore it should not be presumed or necessarily concluded that such credit extensions to underserved consumers are unfair or abusive, provided full disclosure of the cost of such credit is made as required by this Act and such corporation has a reasonable basis for determining that an underserved consumer can repay, therefore indicating that the credit is affordable; (4) require that the Comptroller exercise his or her authorities to administer, enforce, and implement the provisions of this Act and regulations prescribed pursuant to this Act to provide for ongoing prudential regulatory oversight of Internet consumer credit corporations and to promptly adopt reasonable and flexible policies and procedures to ensure the approval of Federal charters for qualified applicants, while also promoting the offering of innovative, affordable, and commercially viable financial products or services; and (5) require that the Director exercise his or her authorities to administer, enforce, and implement the provisions of Federal consumer financial laws and applicable provisions of this Act and regulations prescribed pursuant to this Act to ensure that underserved consumers receive effective consumer financial protections, while also promoting the offering of innovative, affordable, and commercially viable financial products or services. 3. Internet Consumer Credit Corporations (a) Federal charter In accordance with the provisions of this Act, and regulations prescribed pursuant to this Act, the Comptroller shall charter creditors which shall become Internet consumer credit corporations (hereinafter referred to as Internet creditors) to offer financial products or services primarily to underserved consumers and small businesses as provided for in this Act. (b) Application required (1) In general A person that desires to obtain a Federal charter under this Act shall submit an application to the Comptroller at such time, in such manner, and accompanied by such information as the Comptroller may require. (2) Expeditious determination The Comptroller shall make a determination as to whether an application submitted under paragraph (1) is approved or denied expeditiously. (c) Requirements In seeking a Federal charter under this Act, an applicant shall meet the following requirements: (1) A business plan shall be established covering at least the initial 3-year period of operation as a commercially viable entity with its primary business activities being to serve the needs of underserved consumers and small businesses for credit and related financial services through the Internet and electronic devices and not through brick-and-mortar locations, and such plan shall— (A) realistically forecast market demand, the intended customer base, competition, economic conditions, financial projections, and business risks; (B) include a marketing plan that describes the types of financial products or services such creditor intends to offer, how it will market them, and how such products or services are expected to be affordable for underserved consumers and small businesses and commercially viable for the creditor; and (C) contain an acceptable plan for— (i) ensuring compliance with all applicable laws and regulations; and (ii) for promptly addressing complaints from underserved consumers and small businesses. (2) A competent and experienced management team of good moral character with expertise in and a commitment to serving the credit needs of underserved consumers, experience in offering financial services products to consumers through the Internet or electronic devices, and awareness and understanding of applicable legal requirements shall be established. (3) Adequate capital structure relative to the operational and financial assumptions and business plans of the applicant, including the cost of utilizing advanced technology and information management systems for its operating and compliance needs, shall be established. (4) No Internet creditor shall be directly or indirectly owned or controlled by any person unless— (A) the person is an individual, a Federal- or State-chartered depository institution, a bank holding company (as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a))), a savings and loan holding company (as defined in section 10(a)(1)(D) of the Home Owners’ Loan Act (12 U.S.C. 1467a(a)(1)(D))), or a nonprofit corporation; or (B) the primary business activity of the person involves— (i) providing financial products or services to consumers; or (ii) owning or controlling persons whose primary business activity is providing financial products or services to consumers. (5) Any other requirements provided for under this Act or in regulations prescribed by the Comptroller consistent with the purposes of this Act. (d) Authority of Internet Creditors Upon receiving a Federal charter pursuant to subsection (a), an Internet creditor shall become, as from the date of the execution of its charter, a body corporate, and, as such, an Internet consumer credit corporation, and in the name designated in the charter it is authorized to— (1) adopt and use a corporate seal; (2) have succession from the date its charter is issued until such time as it be dissolved by the act of its shareholders owning two-thirds of its stock, or until its charter is revoked by the Comptroller, or until terminated by an Act of Congress, or until its affairs are placed in the hands of a receiver and finally wound up by the receiver in accordance with title 11, United States Code, or other applicable law; (3) borrow money, issue stock, and enter into contracts; (4) sue and be sued and complain and defend, in any court of law and equity of competent jurisdiction, as fully as natural persons; (5) elect or appoint directors, and by its board of directors to appoint a president, vice president, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places; (6) prescribe, by its board of directors, bylaws not inconsistent with law, regulating the manner in which its stock shall be transferred, its directors elected or appointed, its officers appointed, its property transferred, its general business conducted, and the privileges granted to it by law exercised and enjoyed; (7) hire employees and consultants and fix their compensation, define their duties, and give such persons appropriate authority to carry on its business operations; (8) enter into joint ventures and other business partnerships with other Internet creditors, depository institutions, State-chartered or licensed nondepository creditors, third-party service providers and vendors, and other parties to promote or facilitate providing as herein authorized commercially viable financial products or services to underserved consumers and small businesses; (9) contribute to community funds, or to charitable, philanthropic, or benevolent instrumentalities conducive to public welfare, such sums as its board of directors may deem expedient and in the interests of the Internet creditor; (10) invest in, or buy or lease, real estate or tangible personal property, including vehicles, equipment, furnishings and furniture, to be used by the Internet creditor in conducting business related operations authorized under this Act; (11) provide loans and other financial services only through the Internet and electronic devices as its board of directors or duly authorized officers or agents may determine, in accordance with this Act and regulations prescribed pursuant to this Act, are appropriate for providing financial products or services to consumers, including underserved consumers, and to small businesses in accordance with the provisions of this Act and regulations prescribed pursuant to this Act; (12) exercise by its board of directors or duly authorized officers or agents, subject to law, all such incidental, implied, or reasonably necessary powers as may be appropriate to carry on its corporate operations and the business of providing commercially viable financial products or services to consumers, including underserved consumers and small businesses in accordance with the provisions of this Act and regulations prescribed pursuant to this Act; (13) be affiliated with, or owned by, an insured depository institution, nondepository creditor, nonprofit organization, or other qualified entities unless otherwise limited by this Act or regulations prescribed pursuant to this Act; (14) acquire or merge with other Internet creditors; and (15) exercise such other powers as may be reasonably necessary or appropriate to offer financial products or services as provided for pursuant to this Act, or provided for through regulations prescribed by the Comptroller pursuant to the provisions of this Act. (e) Duties and responsibilities (1) Comptroller of the Currency The Comptroller shall— (A) ensure that Internet creditors only provide loans and other financial products or services through the Internet and electronic devices and that, to the extent reasonably possible, such creditors primarily focus their business operations on providing underserved consumers a variety of affordable financial products or services that are commercially viable for such creditors, including certain products or services that contain features to facilitate personal savings and enhance the credit record of such consumers; (B) encourage and facilitate— (i) innovation with respect to the financial products or services offered to underserved consumers; and (ii) joint ventures and other business partnerships among Internet creditors, insured depository institutions, other nondepository creditors, third-party service providers and vendors, nonprofit organizations, and other parties in order to ensure greater credit access for underserved consumers and small businesses; (C) provide, through regulations, details on how Internet creditors should be organized, incorporated, and operated in a prudential manner; (D) conduct examination and supervisory activities of Internet creditors to— (i) access their internal controls and management ability; (ii) evaluate their financial condition and risk profile; (iii) determine if they are meeting the needs of underserved consumers and small businesses; and (iv) monitor their compliance with this Act and other applicable laws and regulations that the Comptroller may have administrative responsibly for, and identify areas in which corrective action is needed; (E) consult, cooperate and coordinate, as appropriate, with the Director and with other Federal and State regulatory agencies, including State bank supervisors, to promote much greater availability of innovative, affordable, commercially viable credit for underserved consumers, and consistent regulatory treatment of consumer and small business financial products and services; (F) help ensure that the supervisory activities, including examination schedules, of Internet creditors and affiliated companies are conducted in a coordinated and efficient manner; and (G) adopt adequate safeguards to ensure appropriate privacy and confidentiality protections with respect to individually identifiable personal data and proprietary corporate data. (2) Director of the Bureau of Consumer Financial Protection The Director shall— (A) regulate the offering and provision of consumer financial products or services by Internet creditors under the Federal consumer financial laws pursuant to its authorities under the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5301 et seq.), this Act, and regulations prescribed pursuant to this Act; (B) consult, cooperate, and coordinate, as appropriate, with the Comptroller and with other Federal and State regulatory agencies, including State bank supervisors, to promote— (i) much greater availability of innovative, affordable, commercially viable credit for underserved consumers and small businesses; and (ii) consistent regulatory treatment of consumer and small business financial products or services; (C) help ensure that the supervisory activities, including examination schedules, of Internet creditors and affiliated companies are conducted in a coordinated and efficient manner; and (D) adopt adequate safeguards to ensure appropriate privacy and confidentially protections with respect to individually identifiable personal data and proprietary corporate data. (3) Internet Creditors Each Internet creditor shall— (A) make financial education information available to each consumer it offers a financial product or service, including information on how a consumer may obtain financial counseling services, the benefits of following a regular personal savings program, and how consumers can improve their credit ratings; (B) comply with all applicable Federal laws and regulations, including Federal consumer financial protection law requirements and such State laws, regulations, and enforcement actions as are authorized under the provisions of this Act; (C) provide account access to its customers through the Internet and a toll-free telephone number; (D) provide, in accordance with regulations prescribed pursuant to this Act, to all consumers who are extended credit with a repayment term of 1 year or less by the Internet creditor a clear and conspicuous statement in the loan agreement that discloses the true cost of the loan, including all interest, fees, and other loan-related charges, as a dollar amount and as a percentage of the principal amount of the loan in lieu of the annual percentage rate disclosure that otherwise would be required under the Truth in Lending Act (15 U.S.C. 1601 et seq.) or regulations prescribed pursuant to such Act; (E) report to the Comptroller or Director such data as either may require regarding its activities, including the types of financial products or services provided to underserved consumers and small businesses, and data demonstrating that its business activities are focused primarily on serving underserved consumers and small businesses as required by this Act; (F) offer— (i) an underserved consumer who is unable to repay an extension of credit by an Internet creditor that has a loan repayment term of less than 120 days, an extended repayment plan, at no cost to the consumer, at least once in a 12-month period; and (ii) to the extent reasonably possible, certain financial products or services that contain features to facilitate personal savings that could help underserved consumers enhance their credit records if such consumers fully comply with the terms and conditions of such products or services; and (G) not— (i) accept consumer or commercial deposits; (ii) make commercial loans, except to the extent allowed by the provisions of this Act and regulations prescribed pursuant to this Act, with respect to small businesses; (iii) make a consumer loan with a term of 30 days or less; (iv) make a loan that requires a consumer to repay the loan balance in one lump-sum payment; or (v) extend credit to a consumer— (I) unless the Internet creditor has a reasonable basis for believing that the consumer will have the ability to repay the credit extension; (II) if the maximum principal amount of the credit outstanding from all financial products or services authorized by the Internet creditor to such consumer, in the case of an unsecured credit transaction, exceeds $5,000, or in the case of a secured credit transaction, $25,000, unless a higher amount is authorized by regulations prescribed by the Comptroller; or (III) if the loan terms include a prepayment penalty; or (vi) extend credit to a small business in excess of $25,000. (f) Additional product or service offerings Financial products or services that may be offered to underserved consumers pursuant to this subsection for underserved consumers and certain small businesses may also be offered to other consumers and businesses. (g) Rule of construction Nothing in this Act is intended to provide the Comptroller or the Director with the authority to— (1) regulate financial products or services that are provided or offered by an affiliate company or another entity that the Internet creditor has a business relationship with, but the Internet creditor does not provide or offer to underserved consumers or small businesses in accordance with this Act; (2) determine, directly or indirectly, pricing applicable to an extension of credit offered by an Internet creditor to a consumer or small business pursuant to this Act through a usury limit, a cap on the rate of interest, fees, or other charges, or otherwise; (3) prohibit, directly or indirectly, the offering of a financial product or service to underserved consumers or small businesses by an Internet creditor pursuant to this Act unless a determination is made by the Comptroller or Director, based on a fair and reasonable determination of the facts and circumstances regarding the financial product or service, that offering such a product or service will seriously harm the financial interests of underserved consumers or small businesses; or (4) presume or conclude that a credit extension offered to underserved consumers by an Internet creditor under the provisions of this Act, regulations prescribed by this Act, and such other statutes and regulations as either may have administrative and enforcement authority for is unfair, abusive, or otherwise inappropriate solely on the basis that the interest rates and other charges to such consumers, who typically pose relatively high credit risks, are significantly higher than those on credit extensions offered to other consumers who do not pose such high credit risks. (h) Internet Creditor regulatory fee Each Internet creditor shall pay to the Comptroller an annual fee in a reasonable amount that the Comptroller determines is sufficient, in the aggregate of all such fees paid by Internet creditors, to offset the cost to the Comptroller of carrying out the provisions of this Act. (i) Charter suspension or revocation The Comptroller, pursuant to procedures established in regulations prescribed by the Comptroller, may suspend or revoke the charter of an Internet creditor if there has been a material failure by the Internet creditor to comply with the requirements set forth in the charter, provisions of this Act, or other applicable statutes, regulations, or orders. (j) Relationship to other Federal and State laws (1) Federal law An Internet creditor is subject to— (A) all otherwise applicable provisions of Federal statutes and regulations, including the consumer financial laws listed under section 1002(14) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481(14)), section 987 of title 10, United States Code (relating to consumer credit extended to servicemembers and dependents), and the provisions of this Act and regulations established pursuant to this Act; and (B) the administration and enforcement of such statutes and regulations by the Comptroller, the Director, any other Federal agency, or State attorney general (or the equivalent thereof) having enforcement authority. (2) State law An Internet creditor, or an employee, agent, or other business partner of an Internet creditor, shall not be subject to— (A) State laws that relate to office location, licensing, education, or training that apply to the operations of an Internet creditor, or its employees, agents, or other business partners to the extent that these operations relate to the exercise of its powers or authorities under this Act and implementing regulations to provide financial products or services to underserved consumers and small businesses; or (B) other State laws that— (i) have a discriminatory effect on an Internet creditor compared to the effect of such laws on any other depository or nondepository creditor chartered or licensed in that State; (ii) consistent with the legal standard for preemption in the decision of the Supreme Court of the United States in Barnett Bank of Marion County, N.A. v. Nelson, Florida Insurance Commissioner, et al., 517 U.S. 25 (1996), prevent or significantly interfere with the exercise by an Internet creditor of its powers and authorities as set forth in this Act; or (iii) are preempted by any provision of Federal law. (3) Determination of preemption An Internet creditor may challenge the applicability of a State law as preventing or significantly interfering with the exercise of such creditor’s powers under this Act, or for violating any provision of paragraph (2), in any court of competent jurisdiction, and the Comptroller or Director, by regulation or order, or any court of competent jurisdiction may make a determination, on a case-by-case basis, that a State law prevents or significantly interferes with the exercise of an Internet creditor’s powers under this Act, or violates a provision of paragraph (2), in accordance with applicable law. (k) Enforcement (1) In general The Comptroller or the Director may enforce in any court of competent jurisdiction the provisions of this Act, regulations prescribed pursuant to this Act relating to their respective regulatory authority in this Act, and their respective cease and desist or other orders or regulatory requirements. (2) Action by State The attorney general (or the equivalent thereof) of any State shall have the power to investigate violations of this Act and may bring a civil enforcement action in the name of such State against an Internet creditor in any district court of the United States or in State court that has jurisdiction over the Internet creditor and to secure civil penalties and such other remedies under provisions of this Act or otherwise provided under other applicable law. (3) Consultation required (A) Notice (i) In general When initiating any action in a court or other administrative or regulatory proceeding against any Internet creditor as authorized by this Act to enforce any provision of this Act, including any regulation pursuant to this Act, a copy of the complete complaint filed or to be filed and written notice describing such action or proceeding shall be provided to the Comptroller and the Director by the State attorney general (or the equivalent thereof) prior to or immediately upon instituting the action or proceeding. (ii) Contents of notice The notification required under this paragraph shall, at a minimum, describe— (I) the identity of the parties; (II) the alleged facts underlying the proceeding; and (III) whether there may be a need to coordinate the prosecution of the proceeding so as not to interfere with any action, including any rulemaking, undertaken by the Comptroller or the Director. (B) Comptroller and Director response In any action brought by a State attorney general (or equivalent thereof), the Comptroller and Director may— (i) intervene in the action as a party; and (ii) upon intervening— (I) remove the action to the appropriate United States district court, if the action was not originally brought there; (II) be heard on all matters arising in the action; and (III) appeal any order or judgment, to the same extent as any other party in the proceeding may. (4) Regulations The Comptroller and the Director shall jointly prescribe regulations to implement the requirements of this subsection and, from time to time, consult with State attorneys general (or the equivalent thereof) in order to develop appropriate protocols to coordinate actions with the State attorneys general and other appropriate regulators. (5) Preservation of State authority No provision of this Act shall be construed as modifying, limiting, or superseding the operation of any provision of any Federal consumer financial protection law or regulations prescribed pursuant to such laws that relates to the authority of a State attorney general (or the equivalent thereof) to enforce such Federal law and regulations. (l) Penalties for violations The relief available for violations of provisions of this Act, regulations prescribed pursuant to this Act, or orders or supervisory mandates, including cease and desist orders, with respect to proceedings involving Internet creditors by the Comptroller, the Director, or State attorneys general (or the equivalent thereof) shall be the same as or equivalent to that provided with respect to actions by the Director in section 1055 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5565). (m) Reports to congress Not later than 180 days after the effective date of this Act, and annually for 5 years thereafter, the Comptroller and the Director shall submit to Congress a joint report on their activities and progress in helping to expand access to innovative and affordable credit for underserved consumers and small businesses, and such reports shall include— (1) a descriptive summary of the actions of the Comptroller and the Director during the reporting period to carry out the purposes of this Act; (2) the number of charter applications received by the Comptroller; (3) the number of charter applications that were approved, disapproved, conditionally approved, or are pending and a detailed explanation of each disapproval or conditional approval; (4) a description of any further actions the Comptroller or the Director believes should be undertaken to— (A) facilitate the chartering of qualified nondepository institutions; and (B) increase the number of financial products that are available to help increase competition and consumer choice for underserved consumers; and (5) any recommendations the Comptroller or the Director may have regarding other legislative measures that would improve the ability of an Internet creditor to provide additional financial products or services to underserved consumers or small businesses. (n) Regulations The Comptroller and the Director shall consult and prescribe joint regulations implementing the provisions of this Act not later than 180 days after the effective date of this Act. 4. Definitions In this Act: (1) Affiliate The term affiliate means any person that controls, is controlled by, or is under common control with another person. (2) Affordable The term affordable means that a creditor has a reasonable expectation that a consumer or small business will be able to repay an extension of credit. (3) Commercially viable The term commercially viable means that a reasonable economic profit is expected to be made when a financial product or service is provided to a consumer or small business. (4) Comptroller The term Comptroller means the Comptroller of the Currency. (5) Consumer The term consumer means an individual or agent, trustee, or representative acting on behalf of an individual. (6) Control and controlled by The terms control and controlled by mean that— (A) a person directly or indirectly or acting through 1 or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting stock of a company; (B) a person controls in any manner the election of a majority of the directors or trustees of a company; or (C) the Comptroller makes a determination, after notice and opportunity for hearing, that a person directly or indirectly exercises a controlling influence over the management or policies of a company. (7) Credit The term credit means the right granted by a person to a consumer or a small business to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment for such purchase. (8) Creditor The term creditor has the same meaning as is given such term in section 103(g) of the Truth in Lending Act (15 U.S.C. 1602(g)), and for purposes of this Act, shall include a person who extends credit to a small business pursuant to the provisions of this Act. (9) Director The term Director means the Director of the Bureau of Consumer Financial Protection. (10) Electronic device The term electronic device means an electronic device that communicates by any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic, or photo-optical system that affects interstate or foreign commerce. (11) Extended repayment plan The term extended repayment plan means an installment plan under which a consumer who is unable to repay a credit extension on a loan with a term of less than 120 days on the date due, and who complies with applicable requirements established in regulations pursuant to this Act, may repay a creditor the outstanding balance of the loan in at least 4 substantially equal payments without being charged any additional interest, fees, or other charges. (12) Federal consumer financial laws The term Federal consumer financial laws has the same meaning as is given to that term in section 1002(14) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481(14)). (13) Financial product or service The term financial product or service has the same meaning as is given the term consumer financial product or service in section 1002(5) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481(5)), and for purposes of this Act, shall also include a financial product or service provided to a small business. (14) Insured depository institution and depository institution The terms insured depository institution and depository institution (also referred to herein as depositories) have the same meanings as are given such terms under section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)), and for purposes of this Act, also includes an insured credit union as such term is defined under section 101(7) of the Federal Credit Union Act (12 U.S.C. 1752(7)). (15) Internet The term Internet means the international computer network of interoperable packet-switched data networks. (16) Nondepository creditor The term nondepository creditor means an entity that is chartered or licensed by a State and offers personal loans or other financial products or services to consumers or small businesses, but does not accept consumer or commercial deposits. (17) Person The term person means an individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or any other entity. (18) Primary business activities The term primary business activities means that the business activities of an Internet creditor predominately involve providing financial products and services to underserved consumers and small businesses. (19) Secured credit transaction The term secured credit transaction means— (A) a consumer credit transaction where the performance of the credit obligation is secured by an interest in property; and (B) such transaction is recognized as secured by State or Federal law, provided, however, a consumer’s authorization for an electronic fund transfer as a payment on a financial product or service shall not be considered, for purposes of this Act, as security on a credit transaction. (20) Small business The term small business means a business entity, including a sole proprietorship, that has less than 500 full-time employees. (21) State The term State means— (A) a State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, and the United States Virgin Islands. (22) Underserved consumer The term underserved consumer means a natural person who— (A) does not have a checking or savings account with an insured depository institution; or (B) has a deposit account with an insured depository institution, but has limited or no ability to obtain small personal loans or other nondepository financial products or services from an insured depository institution. (23) Unsecured credit transaction The term unsecured credit transaction means a consumer credit transaction where the performance of the credit obligation is not secured by an interest in property or where the security interest is not recognized by State or Federal law. 5. Conforming amendment to TILA Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended by adding at the end the following: (8) Credit transactions involving extensions of credit with a term of 1 year or less in which the creditor provides consumers in all such credit transactions with a clear and conspicuous statement in the loan agreement that discloses the true cost of the loan, including all interest, fees, and other loan related charges, as a dollar amount and as a percentage of the principal amount of the loan. . 6. Effective date This Act shall be effective 180 days after the date of the enactment of this Act.