Sponsors (12)
Introduced February 27, 2025 by Jeff Merkley · Last progress February 27, 2025
The bill strengthens consumer protections, privacy, and oversight for small‑dollar and prepaid accounts—benefiting low‑income borrowers and improving transparency—at the cost of higher compliance burdens, potential reductions in small‑loan availability or product features, and some legal and operational complexity for lenders and banks.
Low‑income and prepaid account holders will face fewer surprise fees and overdraft charges because overdraft fees are banned on consumer prepaid accounts, banks may decline transactions that would overdraw, and the CFPB can prohibit other unfair prepaid fees by rule.
Consumers (especially low‑income borrowers) get stronger protections around small‑dollar loan repayments and remotely created checks — one‑time ACH/EFT loan repayments are covered by EFTA rights, consumers can revoke written designations for remotely created checks, and banks must limit acceptance of such checks — reducing fraud and giving error-resolution rights.
Small‑dollar lenders must register with the CFPB and be subject to supervision, and the CFPB is required to issue implementing rules within a year, creating clearer regulatory oversight and enforcement of borrower protections.
Small‑dollar lenders and banks will face increased compliance and operational costs from new registration, disclosure, payment‑treatment, and privacy rules, which could reduce the supply of small loans or cause lenders to raise prices, disproportionately affecting borrowers who rely on short-term credit.
Restrictions on brokers, lead generators, and some repayment options may make it harder for some borrowers to find or apply for small‑dollar credit, reducing marketing channels and access particularly for people with limited alternatives.
The CFPB's one‑year deadline for final rules risks rushed rulemaking with less public input and review, potentially producing lower‑quality rules and imposing abrupt compliance burdens on institutions and taxpayers.
Based on analysis of 6 sections of legislative text.
Expands consumer protections for small-dollar loans, restricts remotely created checks and data brokers, requires CFPB registration for small-dollar lenders, bans prepaid overdraft fees, and orders a GAO Tribal study.
Limits certain electronic repayment methods and expands consumer protections for small-dollar loans by treating one-time electronic repayments as preauthorized transfers under federal law. Requires small-dollar lenders and brokers to register with the Consumer Financial Protection Bureau, bans many brokers from handling or distributing sensitive consumer financial data unless they are the direct lender, and restricts remotely created checks and some prepaid-account overdraft fees. Directs the GAO to study access to capital and the effects of small-dollar credit on Indian Tribes and requires the CFPB to issue final implementing rules within one year.