Senators introduce Safe Lending Act to Protect Consumers (Payday Lending)
SENATORS INTRODUCE SAFE LENDING ACT TO PROTECT CONSUMERS FROM PREDATORY PRACTICES IN PAYDAY LENDING
Today, Oregon’s Senator Jeff Merkley and Senators Tom Udall (D-NM), Bernie Sanders (I-VT), Patty Murray (D-WA), Dick Durbin (D-IL), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), Edward J. Markey (D-MA), Ron Wyden (D-OR), and Cory Booker (D-NJ) introduced the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act. The SAFE Lending Act would crack down on some of the worst abuses of the payday lending industry, particularly in online payday lending, and protect consumers from deceptive and predatory practices that strip wealth from working families.
In recent years, many states have put in place tough laws to stop abusive lending. However, payday lending remains a problem online, with internet sites operating both within the U.S. and offshore, subverting existing consumer laws. Internet lenders hide behind layers of anonymously registered websites and “lead generators” to evade enforcement. Even when the lending violates the law, abusive payday lenders can empty consumers’ bank account before they have a chance to assert their rights. Payday lenders with access to consumers’ bank accounts are also issuing the money from loans on prepaid cards that include steep overdraft fees. When these cards are overdrawn, the payday lender then can reach into the consumer’s bank account and charge the overdraft fee, piling on further debts.
“Payday lenders’ innovation in finding new ways to gouge vulnerable families is deplorable but, sadly, all too predictable,” said Merkley. “In a rapidly evolving market, it’s critical that our laws and regulations keep up with new and predatory threats to consumers’ pocketbooks. It’s up to us to help keep working families from being caught in a vortex of debt, and I encourage both Congress and the Consumer Financial Protection Bureau to block unscrupulous lenders from preying on hardworking families.”
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The SAFE Lending Act of 2016 puts in place three major principles to make the consumer lending marketplace safer and more secure:
Ensure That Consumers Have Control of their Own Bank Accounts
1.Ensure that a third party can’t gain control of a consumer’s account through remotely created checks (RCCs) – checks from a consumer’s bank account created by third parties. To prevent unauthorized RCCs, consumers would be able to preauthorize exactly who can create an RCC on his or her behalf, such as when traveling.
Allow consumers to cancel an automatic withdrawal in connection with a small-dollar loan. This would prevent an Internet payday lender from stripping a checking account without a consumer being able to stop it.
2.Allow Consumers to Regain Control of their Money and Increase Transparency
Require all lenders, including banks, to abide by state rules for the small-dollar, payday-like loans they may offer customers in a state. Many individual states currently have much tougher laws than the federal government. There is currently no federal cap on interest or limit on the number of times a loan can be rolled over.
Increase transparency and create a better understanding of the small-dollar loan industry by requiring payday lenders to register with the Consumer Financial Protection Bureau.
Ban overdraft fees on prepaid cards issued by payday lenders who use them to gain access to consumers’ funds and to add to the already exorbitant costs of payday loans.
Require the CFPB to monitor any other fees associated with payday prepaid cards and issue a rule banning any other predatory fees on prepaid cards.
3.Ban 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. This practice is rife with abuse and has even led to fraudulent debt collection.
The SAFE Lending Act bans lead generators and anonymously registered websites in payday lending.
rest at link
https://www.merkley.senate.gov/news/press-releases/senators-introduce-safe-lending-act-to-protect-consumers-from-predatory-practices-in-payday-lending?utm_source=tw&utm_medium=social&utm_campaign=SAFE-Act
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