HR1658-119

What This Bill Does

The SAFE Lending Act is a broad small-dollar credit bill aimed at payday-style loans, lead generation, and payment-account control. It amends the Electronic Fund Transfer Act so remotely created checks may be issued only by a person designated in writing by the consumer and specifically provided to the consumer's bank. It amends the Truth in Lending Act to create a CFPB registration requirement for small-dollar consumer credit transactions of $5,000 or less, with CPI adjustments and coverage for brokers, arrangers, and application gatherers. It also restricts lead generators that handle sensitive financial information such as Social Security numbers, account numbers, routing numbers, bank account numbers, or access codes; those firms must identify themselves and cannot transfer the data without the consumer's express informed consent. GAO must study small-dollar credit availability and effects on members of Indian Tribes.

Who Benefits and How

Consumer borrowers benefit because lenders and payment processors need written account authorization for remotely created checks. Small-dollar loan applicants benefit from clearer lead-generator disclosures and consent rules before sensitive financial data is transferred. Indian Tribes benefit from a GAO study focused on credit availability and wealth effects on reservations. Bureau of Consumer Financial Protection staff benefit from a registration system for covered small-dollar lenders and brokers.

Who Bears the Burden and How

Small-dollar lenders must register with the CFPB and structure products around covered transaction definitions. Lead-generation companies must disclose contact information, domain registration information, and obtain informed consent before transferring sensitive data. Depository institutions must manage consumer designations for remotely created checks drawn on accounts. Government Accountability Office staff must study reservation credit access and consult financial, Tribal, and consumer agencies.

Key Provisions

• Requires written consumer designation before a remotely created check may be issued against a bank account.
• Creates CFPB registration for lenders and brokers of covered small-dollar consumer credit transactions.
• Requires lead generators to disclose identifying and service-of-process information.
• Bars transfer of sensitive personal financial information without express informed consumer consent.
• Directs GAO to study small-dollar credit availability and effects on members of Indian Tribes.