Sponsors (12)
The bill strengthens consumer protections, privacy, and oversight for small‑dollar and prepaid accounts—benefiting low‑income borrowers and tribal communities—but increases compliance burdens and regulatory complexity that could raise costs or reduce access to small‑dollar credit for some consumers.
Low‑income borrowers and prepaid account users gain stronger consumer protections for small‑dollar loan repayments and prepaid accounts (one‑time ACH/EFT repayments get EFTA protections like error resolution and disclosure; overdraft fees on consumer prepaid accounts are banned and transactions that would overdraw may be declined).
Borrowers receive clearer enforcement and oversight because small‑dollar lenders must register with the CFPB, enabling supervision, enforcement, and application of state rate/fee protections to remote loans.
Consumers gain stronger rights and fraud protections around remotely created checks and small‑dollar loan repayments (ability to revoke written designations, limits on acceptance of remotely created checks, reducing unauthorized debits).
Small‑dollar lenders, brokers, and banks face significant new compliance, registration, and operational costs, which may be passed on to borrowers or strained smaller providers.
Credit availability and remote lending channels may shrink (lenders could stop offering certain repayment options or exit markets; online brokers/lead generators may be barred), making it harder for some borrowers to find small‑dollar credit.
Applying consumer protections and state rate/fee laws to remote loans and treating one‑time loan repayments as preauthorized transfers may create legal and operational complexity for banks and payment processors, potentially delaying legitimate merchant or bank-initiated actions.
Based on analysis of 6 sections of legislative text.
Tightens EFTA protections, treats certain small‑dollar loan repayments as preauthorized EFTs, requires CFPB registration for small‑dollar lenders, bans prepaid overdraft fees, restricts brokers of sensitive loan data, and orders CFPB rulemaking within one year.
Official title: 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 Jeff Merkley · Last progress February 27, 2025
Creates new consumer protections for small-dollar loans and electronic payments by tightening rules on remotely created checks, treating certain one-time electronic repayments as preauthorized transfers under the Electronic Fund Transfer Act, banning overdraft fees on prepaid consumer accounts, and requiring small-dollar lenders and certain facilitators to register with the Consumer Financial Protection Bureau. It also bars most third parties from brokering or distributing sensitive personal financial information tied to small-dollar loans, mandates a GAO study on credit in Indian Country, and directs the CFPB to issue implementing rules within one year.