H.R.1658 - Stopping Abuse and Fraud in Electronic Lending Act of 2025; SAFE Lending Act of 2025 (119th Congress)
Summary
H.R. 1658, the SAFE Lending Act of 2025, aims to amend the Truth in Lending Act and the Electronic Fund Transfer Act to protect consumers in electronic lending and small-dollar consumer credit transactions. The bill focuses on preventing abuse and fraud by increasing consumer control over bank accounts and enhancing transparency in lending practices. It also mandates a study on the impact of small-dollar credit on Native American tribes.
Expected Effects
The bill will likely lead to increased regulation of small-dollar lending and electronic fund transfers. Consumers may experience greater protection against unauthorized transactions and predatory lending practices. Lenders will face stricter compliance requirements, potentially increasing operational costs.
Potential Benefits
- Increased Consumer Protection: Limits unauthorized remotely created checks and provides more control over electronic fund transfers.
- Enhanced Transparency: Requires registration for small-dollar lenders and mandates compliance with state laws regarding interest rates and fees.
- Reduced Predatory Lending: Prohibits certain fees associated with prepaid accounts and restricts lead generation practices.
- Study on Impact to Native American Tribes: Requires a study on the availability of capital and the impact of small-dollar credit on tribal communities.
- Empowerment: Gives consumers more power over their finances.
Potential Disadvantages
- Increased Compliance Costs for Lenders: Stricter regulations may increase operational costs for lenders, potentially leading to reduced availability of small-dollar loans.
- Potential Reduction in Access to Credit: Some lenders may exit the market due to increased regulatory burden, limiting access to credit for some consumers.
- Possible Unintended Consequences: Restrictions on lead generation could impact legitimate marketing practices.
- Bureaucratic Overhead: The registration requirement for small-dollar lenders could create additional administrative burden for the Bureau of Consumer Financial Protection.
- Potential for Innovation Stifling: Over-regulation could stifle innovation in the financial technology sector.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the Commerce Clause (Article I, Section 8) by regulating financial transactions that cross state lines. It also relates to Congress's power to regulate currency and banking. The bill does not appear to infringe upon any specific constitutional rights, such as those protected by the First Amendment or the Second Amendment. The Fifth Amendment's due process clause is relevant, ensuring fair procedures for lenders affected by the regulations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).