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6500 - Consumer Protection CHAPTER 42—EXTORTIONATE CREDIT TRANSACTIONS Sec. 891. Definitions and rules of construction. 892. Making extortionate extensions of credit. 893. Financing extortionate extensions of credit. 894. Collection of extensions of credit by extortionate means. § 891. Definitions and rules of construction For the purposes of this chapter: (1) To extend credit means to make or renew any loan, or to enter into any agreement, tacit or express, whereby the repayment or satisfaction of any debt or claim, whether acknowledged or disputed, valid or invalid, and however arising, may or will be deferred. (2) The term creditor', with reference to any given extension of credit, refers to any person making that extension of credit, or to any person claiming by, under, or through any person making that extension of credit. (3) The term debtor', with reference to any given extension of credit, refers to any person to whom that extension of credit is made, or to any person who guarantees the repayment of that extension of credit, or in any manner undertakes to indemnify the creditor against loss resulting from the failure of any person to whom that extension of credit is made to repay the same. (4) The repayment of any extension of credit includes the repayment, satisfaction, or discharge in whole or in part of any debt or claim, acknowledged or disputed, valid or invalid, resulting from or in connection with that extension of credit. (5) To collect an extension of credit means to induce in any way any person to make repayment thereof. (6) An extortionate extension of credit is any extension of credit with respect to which it is the understanding of the creditor and the debtor at the time it is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person. (7) An extortionate means is any means which involves the use, or an express or implicit threat of use, of violence or other criminal means to cause harm to the person, reputation, or property of any person. (8) The term State' includes the District of Columbia, the Commonwealth of Puerto Rico, and territories and possessions of the United States. (9) State law, including conflict of laws rules, governing the enforceability through civil judicial processes of repayment of any extension of credit or the performance of any promise given in consideration thereof shall be judicially noticed. This paragraph does not impair any authority which any court would otherwise have to take judicial notice of any matter of State law. [Codified to 18 U.S.C. 891] [Source: Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 160), effective May 29, 1968] § 892. Making extortionate extensions of credit (a) Whoever makes any extortionate extension of credit, or conspires to do so, shall be fined under this title or imprisoned not more than 20 years, or both. (b) In any prosecution under this section, if it is shown that all of the following factors were present in connection with the extension of credit in question, there is prima facie evidence that the extension of credit was extortionate, but this subsection is nonexclusive and in no way limits the effect or applicability of subsection (a): (1) The repayment of the extension of credit, or the performance of any promise given in consideration thereof, would be unenforceable, through civil judicial processes against the debtor (A) in the jurisdiction within which the debtor, if a natural person, resided or (B) in every jurisdiction within which the debtor, if other than a natural person, was incorporated or qualified to do business at the time the extension of credit was made. (2) The extension of credit was made at a rate of interest in excess of an annual rate of 45 per centum calculated according to the actuarial method of allocating payments made on a debt between principal and interest, pursuant to which a payment is applied first to the accumulated interest and the balance is applied to the unpaid principal. (3) At the time the extension of credit was made, the debtor reasonably believed that either (A) one or more extensions of credit by the creditor has been collected or attempted to be collected by extortionate means, or the nonrepayment thereof has been punished by extortionate means; or (B) the creditor has a reputation for the use of extortionate means to collect extensions of credit or to punish the nonrepayment thereof. (4) Upon the making of the extension of credit, the total of the extensions of credit by the creditor to the debtor then outstanding, including any unpaid interest or similar charges, exceeded $100. (c) In any prosecution under this section, if evidence has been introduced tending to show the existence of any of the circumstances described in subsection (b)(1) or (b)(2), and direct evidence of the actual belief of the debtor as to the creditor's collection practices is not available, then for the purpose of showing the understanding of the debtor and the creditor at the time the extension of credit was made, the court may in its discretion allow evidence to be introduced tending to show the reputation as to collection practices of the creditor in any community of which the debtor was a member at the time of the extension. [Codified to 18 U.S.C. 892] [Source: Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 160), effective May 29, 1968; as amended by section 330016(1)(L) of title XXXIII of the Act of September 13, 1994 (Pub. L. No. 103--322; 108 Stat. 2147), effective September 13, 1994] § 893. Financing extortionate extensions of credit Whoever willfully advances money or property, whether as a gift, as a loan, as an investment, pursuant to a partnership or profit-sharing agreement, or otherwise, to any person, with reasonable grounds to believe that it is the intention of that person to use the money or property so advanced directly or indirectly for the purpose of making extortionate extensions of credit, shall be fined under this title or an amount not exceeding twice the value of the money or property so advanced, whichever is greater, or shall be imprisoned not more than 20 years, or both. [Codified to 18 U.S.C. 893] [Source: Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 161), effective May 29, 1968; as amended by section 330016(1)(L) of title XXXIII of the Act of September 13, 1994 (Pub. L. No. 103--322; 108 Stat. 2147), effective September 13, 1994] § 894. Collection of extensions of credit by extortionate means (a) Whoever knowingly participates in any way, or conspires to do so, in the use of any extortionate means (1) to collect or attempt to collect any extension of credit, or (2) to punish any person for the nonrepayment thereof, shall be fined under this title or imprisoned not more than 20 years, or both. (b) In any prosecution under this section, for the purpose of showing an implicit threat as a means of collection, evidence may be introduced tending to show that one or more extensions of credit by the creditor were, to the knowledge of the person against whom the implicit threat was alleged to have been made, collected or attempted to be collected by extortionate means or that the nonrepayment thereof was punished by extortionate means. (c) In any prosecution under this section, if evidence has been introduced tending to show the existence, at the time the extension of credit in question was made, of the circumstances described in section 892(b)(1) or the circumstances described in section 892(b)(2), and direct evidence of the actual belief of the debtor as to the creditor's collection practices is not available, then for the purpose of showing that words or other means of communication, shown to have been employed as a means of collection, in fact carried an express or implicit threat, the court may in its discretion allow evidence to be introduced tending to show the reputation of the defendant in any community of which the person against whom the alleged threat was made was a member at the time of the collection or attempt at collection. [Codified to 18 U.S.C. 894] [Source: Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 161), effective May 29, 1968; as amended by section 330016(1)(L) of title XXXIII of the Act of September 13, 1994 (Pub. L. No. 103--322; 108 Stat. 2147), effective September 13, 1994] § 895. Immunity of witnesses [Repealed] [Source: Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 162), effective May 29, 1968; repealed by section 223(a) of title II of the Act of October 15, 1970 (Pub. L. No. 91-452; 84 Stat. 929), effective December 14, 1970] § 896. Effect on State laws This chapter does not preempt any field of law with respect to which State legislation would be permissible in the absence of this chapter. No law of any State which would be valid in the absence of this chapter may be held invalid or inapplicable by virtue of the existence of this chapter, and no officer, agency, or instrumentality of any State may be deprived by virtue of this chapter of any jurisdiction over any offense over which it would have jurisdiction in the absence of this chapter. [Codified to 18 U.S.C. 896] [Source: Section 202(a) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 162), effective May 29, 1968] (b) The table of chapters captioned "Part I--Crimes" at the beginning of part I of title 18 of the United States Code is amended by inserting 42. Extortionate credit transactions 891 immediately above 43. False personation 911 [Source: Section 202(b) of title II of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 162), effective May 29, 1968] TITLE III—RESTRICTION ON GARNISHMENT Sec.
301.
Congressional findings and declaration of purpose.
§ 301. Congressional findings and declaration of purpose (a) DISADVANTAGES OF GARNISHMENT.--The Congress finds: (1) The unrestricted garnishment of compensation due for personal services encourages the making of predatory extensions of credit. Such extensions of credit divert money into excessive credit payments and thereby hinder the production and flow of goods in interstate commerce. (2) The application of garnishment as a creditors' remedy frequently results in loss of employment by the debtor, and the resulting disruption of employment, production, and consumption constitutes a substantial burden on interstate commerce. (3) The great disparities among the laws of the several States relating to garnishment have, in effect, destroyed the uniformity of the bankruptcy laws and frustrated the purposes thereof in many areas of the country. (b) On the basis of the findings stated in subsection (a) of this section, the Congress determines that the provisions of this title are necessary and proper for the purpose of carrying into execution the powers of the Congress to regulate commerce and to establish uniform bankruptcy laws. [Codified to 15 U.S.C. 1671] [Source: Section 301 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970] § 302. Definitions. For the purposes of this title: (a) The term "earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program. (b) The term "disposable earnings" means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld. (c) The term "garnishment" means any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt. [Codified to 15 U.S.C. 1672] [Source: Section 302 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970] § 303. Restriction on garnishment (a) Except as provided in subsection (b) and in section 305, the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed (1) 25 per centum of his disposable earnings for that week, or (2) the amount by which his disposable earnings for that week exceed thirty times the Federal minimum hourly wage prescribed by section 6(a)(1) of the Fair Labor Standards Act of 1938 in effect at the time the earnings are payable, whichever is less. In the case of earnings for any pay period other than a week, the Secretary of Labor shall by regulation prescribe a multiple of the Federal minimum hourly wage equivalent in effect to that set forth in paragraph (2). (b)(1) The restrictions of subsection (a) do not apply in the case of (A) any order for the support of any person issued by a court of competent jurisdiction or in accordance with an administrative procedure, which is established by State law, which affords substantial due process, and which is subject to judicial review. (B) any order of any court of the United States having jurisdiction over cases under chapter 13 of title 11 of the United States Code. (C) any debt due for any State or Federal tax. (2) The maximum part of the aggregate disposable earnings of an individual for any workweek which is subject to garnishment to enforce any order for the support of any person shall not exceed-- (A) where such individual is supporting his spouse or dependent child (other than a spouse or child with respect to whose support such order is used), 50 per centum of such individual's disposable earnings for that week; and (B) where such individual is not supporting such a spouse or dependent child described in clause (A), 60 per centum of such individual's disposable earnings for that week; except that, with respect to the disposable earnings of any individual for any workweek, the 50 per centum specified in clause (A) shall be deemed to be 55 per centum and the 60 per centum specified in clause (B) shall be deemed to be 65 per centum, if and to the extent that such earnings are subject to garnishment to enforce a support order with respect to a period which is prior to the twelve-week period which ends with the beginning of such workweek. (c) No court of the United States or any State, and no State (or officer or agency thereof), may make, execute, or enforce any order or process in violation of this section. [Codified to 15 U.S.C. 1673] [Source: Section 303 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970, as amended by section 501(e)(1), (2), and (3) of title V of the Act of May 23, 1977 (Pub. L. No. 95-30; 91 Stat. 161, 162) effective June 1, 1977; and section 312(a) of title III of the Act of November 6, 1978 (Pub. L. No. 95-598; 92 Stat. 2676), effective October 1, 1979] § 304. Restriction on discharge from employment by reason of garnishment (a) No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness. (b) Whoever willfully violates subsection (a) of this section shall be fined not more than $1,000, or imprisoned not more than one year, or both. [Codified to 15 U.S.C. 1674] [Source: Section 304 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970] § 305. Exemption for State-regulated garnishments The Secretary of Labor may by regulation exempt from the provisions of section 303(a) and (b)(2) garnishments issued under the laws of any State if he determines that the laws of that State provide restrictions on garnishment which are substantially similar to those provided in section 303(a) and (b)(2). [Codified to 15 U.S.C. 1675] [Source: Section 305 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 164), effective July 1, 1970, as amended by section 501(e)(4) of title V of the Act of May 23, 1977 (Pub. L. No. 95-30; 91 Stat. 162), effective June 1, 1977] § 306. Enforcement by Secretary of Labor The Secretary of Labor, acting through the Wage and Hour Division of the Department of Labor, shall enforce the provisions of this title. [Codified to 15 U.S.C. 1676] [Source: Section 306 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 164), effective July 1, 1970] § 307. Effect on State laws This title does not annul, alter, or affect, or exempt any person from complying with, the laws of any State (1) prohibiting garnishments or providing for more limited garnishments than are allowed under this title, or (2) prohibiting the discharge of any employee by reason of the fact that his earnings have been subjected to garnishment for more than one indebtedness. [Codified to 15 U.S.C. 1677] [Source: Section 307 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 164), effective July 1, 1970]
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