Sec. 501. Equal access to income share agreements
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It shall be unlawful for any ISA provider to discriminate against any applicant, with respect to any aspect of an income share agreement— on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); because all or part of the applicant’s income derives from any public assistance program (except for those excluded from the definition of income established by the income share agreement); or because the applicant has in good faith exercised any right under this Act. It shall not constitute discrimination for purpose of subsection
(a)for an ISA provider— to make an inquiry of the applicant’s age or of whether the applicant’s income derives from any public assistance program, if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of creditworthiness as provided in regulations of the Bureau; to use any empirically derived credit system that considers age if that system is demonstrably and statistically sound in accordance with regulations of the Bureau, except that in the operation of such a system, the age of an elderly applicant may not be assigned a negative factor or value; to make an inquiry of, or to consider the age of, an elderly applicant when the age of that applicant is to be used by the creditor in the extension of credit in favor of the applicant; or to use any empirically derived system that considers the expected future income of an applicant to determine whether to approve an application or to establish the financial and other terms of an income share agreement, if that empirically derived system is demonstrably and statistically sound and reasonably designed such that approved applicants are all reasonably expected to pay substantially similar effective annual percentage rates as other similarly situated applicants, except that in accordance with any regulations of the Bureau in the operation of such a system to project an applicant’s expected future income, an ISA provider— may not consider an applicant’s status as a member or potential member of any of the classes described in subsection (a); may consider an applicant’s current employment status, current debt and other financial obligations, or current and past income (as of the date of application); or in the case of educational ISAs, may consider the historical income of consumers who have made comparable progress toward the completion of the educational program in which the applicant is or is expected to be enrolled or toward a reasonably comparable educational program. It shall not be a violation of subsection
(a)for an ISA provider to refuse to extend an income share agreement— that is offered pursuant to— any financial assistance program expressly authorized by law for an economically disadvantaged class of persons; any financial assistance program administered by a nonprofit organization for its members or an economically disadvantaged class of persons; or any special purpose financial assistance program that— is carried out by a for-profit organization to meet special social needs; and meets standards prescribed in regulations by the Bureau; or if the refusal is required by, or made pursuant to, a program described in paragraph (1). Not later than 30 days (or such longer reasonable time as specified in regulations of the Bureau for any class of income share agreement transaction) after the date on which an ISA provider receives a completed application for an income share agreement, the ISA provider shall notify the applicant of— the action taken by the ISA provider with respect to the application; in the case of an adverse action, a clear and accurate disclosure of the applicant's right to a written statement of reasons in accordance with paragraph
(2)within 60 days after receiving the notice under this paragraph; and the identity of the person or office from which the statement of reasons described in paragraph
(2)may be obtained. Each applicant against which an adverse action is taken shall be entitled to a written statement from the applicable ISA provider regarding the specific reasons for that adverse action, if the request is made by the applicant not later than 60 days after receiving the notice of an adverse action under paragraph (1). An ISA provider shall provide an applicant with the statement of reasons under subparagraph
(A)by the date that is not more than 30 days after the date of the consumer's request. Notwithstanding subparagraph (A), the statement described in this paragraph may be provided orally if the oral notification advises the applicable applicant of the right of the applicant to have the statement of reasons confirmed in writing, upon written request by the applicant. If a third party requests that an ISA provider make a specific extension of an income share agreement directly or indirectly to an applicant, the statement under this paragraph may be made directly by the ISA provider, or indirectly through the third party, if the identity of the ISA provider is disclosed. The requirements of this paragraph may be satisfied by a verbal statement or notification in the case of an ISA provider that acted on not more than 150 applications during the calendar year preceding the calendar year in which the applicable adverse action is taken, as determined under regulations of the Bureau. The Bureau shall prescribe regulations to carry out the purposes of this section. The regulations prescribed under subparagraph
(A)may contain such classifications, differentiation, or other provisions, and may provide for such adjustments for any class of transactions, as in the judgment of the Bureau are necessary or proper to effectuate the purposes of this section, to prevent circumvention or evasion of this section, or to facilitate or substantiate compliance with this section. In prescribing regulations under paragraph (1), the Bureau shall be guided by the Equal Credit Opportunity Act ( 15 U.S.C. 1691 et seq. ) and part 1002 of title 12, Code of Federal Regulations, or any successor regulations. Subject to subparagraph (B), the regulations prescribed under paragraph
(1)may exempt from the provisions of this section any class of transactions that is not primarily for personal, family, or household purposes, or any business or commercial income share agreement or investment contract made available by a financial institution, except that a particular type of income share agreement within such a class may be exempted only if the Bureau makes an express finding that applying this section, or of any provision of this section, to the income share agreement would not contribute substantially to effectuating the purposes of this section. An exemption granted under subparagraph
(A)shall be— for not longer than 5 years; and extended only if the Bureau makes a subsequent determination, in the manner described by that subparagraph, that the exemption remains appropriate. Pursuant to the regulations prescribed under paragraph (1), an entity making business or commercial income share agreements shall maintain such records or other data relating to those agreements as may be necessary to evidence compliance with this section or enforce any action pursuant to the authority of this section, except that in no event shall those records or data be maintained for a period of less than 1 year. Notwithstanding any power granted to any Federal agency under this section, the deference that a court affords to a Federal agency with respect to a determination made by that agency relating to the meaning or interpretation of any provision of this section that is subject to the jurisdiction of the agency shall be applied as if that agency were the only agency authorized to apply, enforce, interpret, or administer the provisions of this section. The administrative enforcement of this section shall be consistent with section 704 of the Equal Credit Opportunity Act ( 15 U.S.C. 1691c ) and the regulations implementing such section 704. The incentives for self-testing and self-correction under section 704A of the Equal Credit Opportunity Act ( 15 U.S.C. 1691c–1 ), and the regulations implementing such section 704A, shall apply to ISA providers offering income share agreements. Section 705 of the Equal Credit Opportunity Act ( 15 U.S.C. 1691d ), and the regulations implementing such section 705, shall apply to ISA providers offering income share agreements in the same manner in which those provisions apply to creditors offering loan products. Section 706 of the Equal Credit Opportunity Act ( 15 U.S.C. 1691e ), and the regulations implementing such section 706, shall apply to ISA providers offering income share agreements. Each year, the Bureau and the Attorney General shall, respectively, submit to Congress reports concerning the administration of the functions of the Bureau and the Attorney General, respectively, under this section, including such recommendations as the Bureau and the Attorney General, respectively, determine necessary or appropriate. Each report of the Bureau submitted under paragraph
(1)shall include the assessment of the Bureau of the extent to which compliance with the requirements of this title is being achieved and a summary of the enforcement actions taken by each of the agencies assigned administrative responsibilities under subsection (f).
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- 15 USC 1691c–1
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Sec. 501
Equal access to income share agreements
Cite15 USC 1691c–1
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