Sponsors (4)
The bill strengthens consumer protections against fraud, surprise fees, and abusive small-dollar lending practices and accelerates regulatory action, but it raises compliance costs and legal/regulatory complexity that could reduce the availability and speed of small-dollar credit and payment options for vulnerable consumers.
Millions of consumers (especially small-dollar borrowers and everyday bank customers) gain stronger fraud and consumer-control protections: they can revoke remotely created checks, banks must limit who can create such checks, and consumers get clearer error-resolution and liability protections when voluntary electronic repayments are treated as preauthorized EFTs.
People who use small-dollar loans and low-income consumers gain greater oversight and enforcement against abusive practices because small-dollar lenders, brokers, and fintech facilitators must register with the CFPB and state consumer protections will apply to remote loans.
Consumers who use prepaid accounts and buy goods on prepaid cards get protections reducing surprise fees and overdrafts, and the CFPB has authority to ban other prepaid-account fees—improving price transparency and lowering financial harm.
Small-dollar credit availability and certain payment options could shrink: registration, new documentation rules, state-law application, and limits on how repayments and lead generators operate may deter lenders, raise compliance costs, and reduce remote or fast-entry credit options for low-income borrowers.
Businesses, banks, payment originators, and lenders face higher administrative and compliance costs (including building direct intake systems if lead generators are curtailed), which may be passed to consumers via higher fees, interest rates, or reduced services.
Applying state rate and fee laws to remote or nationally chartered small-dollar loans and treating voluntary repayments as preauthorized EFTs could create legal uncertainty and reduce cross-state lending, making remote credit more expensive or scarce.
Based on analysis of 6 sections of legislative text.
Creates CFPB registration for small-dollar lenders, limits remotely created checks and lead-generation of sensitive financial data, bans prepaid overdraft fees, and applies state protections to remote small-dollar loans.
Official title: To amend the Truth in Lending Act to address certain issues relating to the extension of consumer credit, and for other purposes.
Introduced February 27, 2025 by Suzanne Bonamici · Last progress February 27, 2025
Limits how certain small-dollar loans and remotely created payment orders are made and marketed, strengthens consumer protections, and restricts third-party lead generators from collecting or sharing sensitive financial data unless they themselves make the loan. It creates a CFPB registration requirement for small-dollar lenders, extends state consumer law protections for remote small-dollar loans and national banks, bans overdraft fees on prepaid accounts, and directs the GAO to study access to capital on Indian lands. The CFPB must write implementing rules within one year.