Bonamici and Cummings Introduce Bill to Stop Abuse and Fraud in Payday Lending

Mar 7, 2013
Press Release

Washington, D.C. – Today, Reps. Suzanne Bonamici (D-Oregon) and Elijah E. Cummings (D-Maryland) introduced the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act of 2013 to help protect consumers from predatory lending practices. The legislation would enable consumers to stop automatic bank withdrawals from payday lenders, require that lenders abide by the laws of the state in which they are lending, ban third party “lead generators” that collect applications and auction them to payday lenders, and provide enhanced enforcement authority to federal regulators.

“Payday lenders can trap consumers in exorbitant loans that lead to increasing debt,” said Bonamici. “Oregon has some of the most aggressive anti-payday lender laws in the country, but online and offshore lenders are using a loophole in federal law to get around those rules. They’re paying lead generators and anonymous third parties to pander their predatory products. The SAFE Lending Act will give the CFPB more authority to regulate these activities.”

“Payday lenders routinely prey on hardworking Americans struggling to make ends meet by charging excessive interest rates that trap them in an endless cycle of debt,” said Cummings.  “The SAFE Lending Act of 2013 will empower consumers, respect States’ rights, help prevent shadow lending, and give State and Federal authorities the tools necessary to combat rogue Internet-based lenders.”

Original cosponsors include: Rep. Earl Blumenauer, Rep. Judy Chu, Rep. John Conyers, Rep. Susan Davis, Rep. Rosa DeLauro, Rep. Keith Ellison, Rep. Raúl Grijalva, Rep. Barbara Lee, Rep. Zoe Lofgren, Rep. Jim McGovern, Del. Eleanor Holmes Norton, Rep. Linda Sánchez, Rep. John Sarbanes, Rep. Mark Takano, Rep. Maxine Waters, and Rep. Peter Welch.

The House bill is a companion bill to S.172, the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act of 2013, which Senators Jeff Merkley (D-OR) and Tom Udall (D-NM) introduced in January.

The SAFE Lending Act of 2013 would:

  • ·Ensure That Consumers Have Control of Their Own Bank Accounts by preventing third parties from gaining control of a consumer's account through remotely created checks (RCCs). It also enables consumers to cancel a debit in connection with a small-dollar (payday) loan to prevent an Internet payday lender from emptying a checking account;
  • ·Close Loopholes and Create a Level Playing Field In State Usury Law Enforcement by requiring all lenders, including banks, to abide by State rules governing small-dollar, payday-like loans. Only states, not the federal government, have usury laws;
  • ·Ban Lead Generators and Anonymous Payday Lending, including banning anonymously registered websites offering payday loans and “lead generators” who falsely identify themselves as payday lenders in order to auction applications; and
  • ·Stop Offshore and Other Illegal Online Payday Lending in Violation of State Law by giving federal regulators the authority on their own behalf and upon petition by state Attorneys General or other local regulators to shut down payment processing for lenders violating State and other consumer lending laws through the Internet.

The bill has been endorsed by Americans for Financial Reform, Center for Responsible Lending, Consumer Federation of America, Consumers Union, National Consumer Law Center, Consumer Action, U.S. PIRG, and Conference of State Bank Supervisors.


113th Congress