VPLC Supports the 2013 SAFE Lending Act
Monday, February 4th, 2013
Many online lenders think they are immune to state laws – The Stopping Abuse and Fraud in Electronic Lending Act of 2013 (SAFE Lending Act) aims to change that. The Virginia Poverty Law Center supports the legislation to combat internet payday lenders from skirting Virginia law. Read VPLC’s press release on this issue.
The SAFE Lending Act is a bill filed by U.S. Senators Merkley, Durbin, Blumenthal, and Udall and would ensure that all lenders are playing by the same rules by:
- Requiring all online small-dollar lenders (such as payday lenders) to comply with state law if it provides better consumer protections than federal law;
- Preventing banks from making payday loans in violation of the state law where the consumer resides;
- Providing new federal enforcement measures to protect consumers from online payday lenders that seek to evade state consumer protection laws, such as by locating their businesses off-shore, or affiliating with a Native American Tribe and claiming the right to assert the tribe’s sovereign immunity; and
- Empowering Native American Tribes to enlist the help of the CFPB where needed to protect their members from abusive payday lending on the reservation, and respecting tribal laws that provide stronger consumer protections than are available under state law.
The SAFE Lending Act would also protect consumers’ bank accounts by:
- Closing the single payment loophole in the Electronic Fund Transfer Act and ensure that consumers have control over how lenders access their bank accounts for payment and collections of high-cost loans;
- Safeguarding consumers’ personal information by banning “lead generators” who collect information like Social Security numbers, income and bank account information; and
- Prohibiting lenders from using a borrower’s bank account numbers to create unsigned checks used to withdraw funds, even when consumers have opted out of making payments electronically.