Sponsors (4)
The bill strengthens consumer fraud protections and oversight for small-dollar lending and prepaid products—improving safety and transparency for many low-income consumers—while imposing compliance, disclosure, and legal requirements that could raise costs, add regulatory uncertainty, and reduce availability or convenience of some small-dollar credit and payment options.
Consumers (including small-dollar borrowers) can revoke written authorizations for remotely created checks and gain EFTA-style protections for voluntary electronic repayments, reducing fraud risk, limiting unauthorized withdrawals, and narrowing consumer liability.
Low-income consumers seeking small-dollar loans gain stronger oversight because lenders, brokers, and facilitators must register with the CFPB and state consumer-protection laws can apply to remote small-dollar loans, improving enforcement against abusive practices.
Users of prepaid accounts and consumers who buy goods with prepaid products receive protections (e.g., limits on overdraft fees and CFPB authority to ban other prepaid fees), reducing surprise charges and improving price transparency.
New registration, documentation, disclosure, and operational requirements will impose significant compliance and administrative costs on lenders, fintech facilitators, banks, and payment originators that are likely to be passed to consumers via higher fees or reduced services.
Registration mandates, state-law exposure for remote loans, treating voluntary repayments as preauthorized EFTs, and limits on lead generators could reduce availability of small-dollar credit (especially fast or remote products), making it harder for low-income borrowers to obtain short-term financing.
Applying state rate/fee rules to remote or nationally chartered loans and narrow safe-harbor language for intermediaries creates legal uncertainty and cross-state compliance complexity that may chill remote lending and platform activity.
Based on analysis of 6 sections of legislative text.
Adds CFPB registration and consumer protections for small-dollar loans, limits remotely created checks and lead-generation of sensitive data, bans prepaid overdraft fees, and orders a GAO study on tribal lending.
Introduced February 27, 2025 by Suzanne Bonamici · Last progress February 27, 2025
Establishes new consumer protections and registration rules for small-dollar loans and tighter limits on remotely created checks and third-party lead generation. It defines “small-dollar consumer credit” (generally loans up to $5,000, adjustable by the CFPB), requires lenders and certain facilitators to register with the Consumer Financial Protection Bureau, and treats voluntary electronic repayments of small-dollar loans as preauthorized electronic fund transfers with associated protections. The bill also bars the sharing or distribution of sensitive financial data by lead generators unless the party collecting the data is the actual lender, prohibits overdraft fees on prepaid accounts (and allows declines of transactions that would overdraw), applies state consumer-protection law to remote or national-bank small-dollar loans, directs a GAO study on capital and small-dollar lending on Indian lands, and requires the CFPB to issue implementing rules within one year.