Congress tightens rules on predatory small-dollar lending, bans overdraft fees
H.R. 1658 — SAFE Lending Act of 2025 · Filed by Suzanne Bonamici (D-OR) · 3 cosponsors · Introduced Feb 27, 2025 · Referred to committee
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What it does
The SAFE Lending Act tightens rules on small-dollar loans (up to $5,000) by requiring lenders to register with the Consumer Financial Protection Bureau, banning remotely created checks without explicit written consumer consent, prohibiting overdraft fees on prepaid accounts, and blocking lead-generation companies from selling borrowers' sensitive financial information to lenders unless they are directly providing the credit themselves. The bill aims to reduce fraud and predatory practices in high-risk lending markets.
Why we flagged it
The bill's core mechanism is regulatory tightening on small-dollar lenders and lead generators, with explicit consumer protections against fraud, unauthorized payments, and predatory fees. It is fundamentally a consumer-protection and anti-fraud measure, not a tax or appropriations bill.
What the text implies
- Registration requirement may create compliance barriers for smaller lenders and fintech platforms, potentially reducing credit availability in underserved markets—a trade-off between fraud prevention and access.
- Lead-generation restrictions may reduce marketing efficiency for legitimate small-dollar lenders, raising their customer acquisition costs and potentially increasing loan rates for consumers.
The full analysis lists 4 implications of this text.
Who stands to gain
Community development financial institutions; Traditional banks (reduced competition from predatory lenders); Prepaid card issuers (reduced overdraft fee revenue)