S.780 - Stopping Abuse and Fraud in Electronic Lending Act of 2025; SAFE Lending Act of 2025 (119th Congress)
Summary
The Stopping Abuse and Fraud in Electronic Lending Act of 2025 (SAFE Lending Act) aims to amend the Truth in Lending Act and the Electronic Fund Transfer Act to protect consumers from abusive lending practices, particularly in the context of small-dollar, electronic lending. It introduces measures to control bank account access, enhance transparency, and restrict lead generation. The bill also mandates a study on the availability of capital and the impact of small-dollar lending on Indian Tribes.
Expected Effects
This bill will likely increase consumer protection by limiting unauthorized access to bank accounts through remotely created checks and by treating electronic fund transfers for small-dollar loans as preauthorized transfers. It also introduces registration requirements for small-dollar lenders and restricts certain fees associated with prepaid accounts. Furthermore, it restricts the distribution of sensitive personal financial information in connection with small-dollar loans.
Potential Benefits
- Increased consumer control over bank accounts, reducing the risk of unauthorized withdrawals.
- Greater transparency in small-dollar lending, enabling consumers to make more informed decisions.
- Reduced fees associated with prepaid accounts, making them more affordable for consumers.
- Restrictions on lead generation, protecting consumers' sensitive financial information.
- A study on the impact of small-dollar lending on Indian Tribes, potentially leading to more tailored and effective regulations.
Potential Disadvantages
- Increased compliance costs for lenders, potentially leading to reduced availability of small-dollar loans.
- Potential for unintended consequences due to overly restrictive regulations, limiting access to credit for some consumers.
- The registration requirement for small-dollar lenders may create barriers to entry for new lenders, reducing competition.
- The study requirement adds to government expenses, although the cost is likely minimal.
- Possible legal challenges from the lending industry, arguing that the regulations are overly burdensome or infringe on their rights.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with Congress's power to regulate commerce (Article I, Section 8) by addressing consumer credit and financial transactions. It also touches on due process concerns (5th and 14th Amendments) by aiming to protect consumers from unfair lending practices. The bill's focus on consumer protection and regulation of financial institutions falls within the scope of powers delegated to Congress.
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).