Sponsors (12)
The bill increases consumer protections and transparency—especially for remote small‑dollar lending and prepaid accounts—at the cost of added compliance and administrative burdens that could raise costs, reduce some credit options and strain regulators' rulemaking resources.
Low-income and other consumers who use remote small‑dollar credit gain stronger protections: remote loans must register with the CFPB, are subject to applicable state interest‑rate and fee laws, and CFPB retains authority to impose further restrictions.
Prepaid-account holders (often low‑income consumers) are protected from overdraft fees on prepaid accounts and may benefit from CFPB authority to limit or ban other excessive prepaid fees, improving cost transparency and reducing surprise charges.
Consumers can control whether others may create remotely created checks on their account by providing written designation to their bank and can revoke it at any time, reducing unauthorized debits and giving account holders clearer immediate control.
Banks, payment processors, small-dollar lenders, brokers and other intermediaries will face substantial new compliance and administrative costs (registration, EFTA treatment, disclosures, system changes), which could raise operating costs and be passed on to customers or reduce market competition.
Increased regulatory and platform constraints (registration requirements, barred lead generators, and higher compliance burdens) may reduce availability of small‑dollar credit or increase loan prices, disproportionately harming low‑income borrowers who rely on these products.
Changes allowing institutions to decline prepaid transactions that exceed balances and potential bans on some prepaid fees could cause more point‑of‑sale declines or push prepaid providers to cut offerings or raise other fees, inconveniencing consumers who rely on prepaid cards.
Based on analysis of 6 sections of legislative text.
Requires registration and consumer protections for small‑dollar loans (≤$5,000), limits third‑party lead generation of sensitive financial data, bans prepaid overdraft fees, and requires CFPB rules and a GAO study.
Introduced February 27, 2025 by Jeff Merkley · Last progress February 27, 2025
Creates new federal rules for small‑dollar consumer loans (generally $5,000 or less), including a registration requirement for originators and facilitators, stronger consumer protections for electronic payments and prepaid accounts, limits on third‑party lead generation of sensitive financial data, and deadlines for agency action and a GAO study. The bill also subjects certain remote small‑dollar loans and loans made by national banks to state usury and related laws as determined by the Bureau of Consumer Financial Protection (CFPB).