Bill to Curb Payday Lending Abuses Introduced in Congress

Last week, legislation was introduced in Congress to protect consumers from deceptive and predatory payday lending practices.

The Stopping Abuse and Fraud in Electronic (SAFE) Lending Act was introduced in the Senate by U.S. Sen. Jeff Merkley (D-OR) and in the House by Reps. Suzanne Bonamici (D-OR) and Pramila Jayapal (D-WA).

The SAFE Lending Act of 2022 would incorporate into law three major principles to make the consumer lending marketplace more secure.

One is to ensure that consumers have control of their own bank accounts.

The second is to allow consumers to regain control of their money and increase transparency. This would require all lenders, including banks, to abide by state rules for the small-dollar, payday-like loans they may offer customers in a state. Also, payday lenders would be required to register with the Consumer Financial Protection Bureau. In addition, it would ban overdraft fees on prepaid cards issued by payday lenders and require the CFPB to monitor any other fees associated with payday prepaid cards.

The third principle is a ban on lead generators and anonymous payday lending. Some websites describe themselves as payday lenders but are actually “lead generators” that collect applications and auction them to payday lenders and others.

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