S. 2352 — PROTECTED Act

This section revises small business lending data collection requirements under Section 704B of the Equal Credit Opportunity Act (15 U.S.C. 1691c-2) as follows: (1) in subsection (c), authorizes financial institutions to inform applicants in writing that the Bureau of Consumer Financial Protection requires annual reporting of such data to the federal government, that an applicant's response will not affect the credit decision, and that providing the information is voluntary; (2) in subsection (e)(2), strikes subparagraphs (C), (G), and (H) and redesignates the remaining subparagraphs; (3) in subsection (e)(4), requires the Bureau, prior to deleting or modifying data, to issue rules after notice and comment describing the changes and how they advance privacy interests; and (4) adds new subsection (e) paragraphs prohibiting use of applicant demographic data obtained other than directly from the applicant; barring use of applicant response rates in compliance determinations; providing a two-year safe harbor from Bureau enforcement beginning on the effective date; setting the effective date as three years after the Bureau completes its Regulatory Flexibility Act and Paperwork Reduction Act analyses; and defining covered "financial institutions" as entities engaging in financial activity that originated at least 2,500 small business credit transactions in each of the prior two calendar years (excluding those with less than $10 billion in assets, Farm Credit System institutions, community development financial institutions as defined in 12 U.S.C. 4702, and equipment or vehicle financing lenders) and "small business" as an entity with gross annual revenues of not more than $1 million in the preceding fiscal year. (As background, Section 704B requires covered lenders to collect and report applicant and loan data—including race, ethnicity, and sex—to the Bureau for fair lending oversight; these changes limit collection methods, narrow coverage, delay implementation, and add applicant disclosures and Bureau procedures.)