Stopping Abuse and Fraud in Electronic (SAFE) Lending Act

Senators Introduce SAFE Lending Act

On April 7, 2016, several Democratic Senators introduced the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, SAFE 2016, which is designed to change the manner in which certain short-term unsecured consumer lending is conducted. The legislation would amend the Truth in Lending Act to establish additional requirements on lenders making certain “small-dollar consumer credit transactions,” where small-dollar transactions are defined as loans of $5,000 or less.

Introduced in advance of forthcoming Consumer Finance Protection Bureau (CFPB) payday lending regulations, SAFE 2016 sets up an interesting legislative and regulatory dynamic.  There is the obvious issue of the extent to which the legislation will be inconsistent with the new CFPB’s regulations. But there is also a fierce legislative fight brewing, as many members of Congress – including other Democrats – have already expressed support for the manner in which many payday lenders conduct business.