A legislative proposal, the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, has been reintroduced by a group of Democrat Senate and House members. The legislation aims to address consumer credit issues but has drawn opposition from the American Financial Services Association (AFSA). The association argues that the bill would negatively impact consumers' access to credit.
According to AFSA, the proposed legislation is misleading and does not support consumer interests. The bill seeks to ban convenience checks and mandates state-licensed installment lenders to register with the Consumer Financial Protection Bureau (CFPB). AFSA contends that there is no substantial justification for these changes, especially when access to credit is crucial for many Americans.
AFSA highlights that most borrowers who secure personal loans from traditional installment lenders face minimal repayment challenges due to strict ability-to-repay standards and structured loan schedules. The association asserts that installment lenders foster successful lending relationships that benefit borrowers. It warns that limiting customer credit options could be detrimental.
The SAFE Lending Act lacks bipartisan support and has not advanced in previous congressional sessions. As a result, its progress appears uncertain. Nonetheless, AFSA plans to continue monitoring developments related to this legislation.