The "Prohibit Auto Insurance Discrimination Act" (PAID Act) aims to prevent private passenger automobile insurers from using specific factors, often considered income proxies, when determining insurance rates and eligibility. Congress finds that the widespread use of variables such as a driver's education level, occupation, employment status, and credit score has led to higher premiums for lower-income drivers, while more affluent drivers may receive lower rates. This legislation seeks to address these disparities by prohibiting such practices.

Specifically, the bill makes it unlawful for insurers to consider factors including gender, level of education, occupation, employment status, home ownership status, ZIP Code or adjacent ZIP Codes, census tract, marital status, credit score or credit-based insurance score, consumer report, previous insurer, or prior purchase of insurance. These prohibitions apply to both determining a consumer's eligibility for automobile insurance and calculating their premium rate. Any use of these factors that prevents a consumer from obtaining insurance at the lowest available rate or impacts their premium constitutes a violation.

To ensure compliance, the bill mandates that insurers submit information to the Federal Trade Commission (FTC) every two years, demonstrating that their marketing, underwriting, and rating practices do not disparately impact any group based on characteristics like race, color, or gender. All underwriting rules and rate filings must be made publicly available, removing their status as proprietary trade secrets. Violations of the Act are treated as unfair or deceptive acts under the FTC Act, carrying a minimum civil penalty of $2,500 per violation, and consumers can pursue private actions for actual and punitive damages. States are also empowered to bring civil actions to enforce the Act on behalf of their residents.