The American Financial Services Association (AFSA) has expressed concerns regarding the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, stating that it would negatively impact consumers by banning convenience checks and introducing additional registration requirements. This statement was released on AFSA's website on March 6.
"The bill would prohibit convenience checks and require state-licensed installment lenders to register with the Consumer Financial Protection Bureau (CFPB," said Bill Himpler, President and CEO. "The co-sponsors provide no real rationale for why they are pushing for such changes. Particularly at a time when their American's may be most in need of access to credit."
According to Senator Jeff Merkley's website, the SAFE Lending Act was reintroduced by Democratic lawmakers with the intent to shield consumers from predatory lending practices, particularly those prevalent in online payday lending. The bill seeks to address deceptive practices that can ensnare consumers in cycles of debt.
The proposed legislation includes measures such as mandating all lenders, including banks, to comply with state interest rate caps and prohibiting third parties from creating remotely created checks without consumer consent. It also allows consumers to cancel automatic withdrawals linked to small-dollar loans, according to information on Representative Suzanne Bonamici's website.
Public Interest Research Group (PIRG) reports that 18 states and the District of Columbia have established interest rate caps to protect residents from payday loan debt traps. However, predatory lenders often use online platforms to bypass these state regulations.
AFSA's mission focuses on safeguarding access to credit and consumer choice. The association advocates for responsible lending practices and strives to ensure that consumers have access to credit options tailored to their financial needs.
