Bill Overview
Title: SAFE Lending Act of 2022
Description: This bill revises requirements related to consumer financial protection and small-dollar lending, including matters concerning remotely created checks, electronic fund transfers, registration of small-dollar lenders, overdraft fees, and the collection of personal information. Under the bill, remotely created checks may only be issued by a person specifically designated in writing by a consumer and provided to the consumer's depository institution. (A remotely created check is a check not issued by the bank and not signed by the account owner.) A voluntary agreement to repay a small-dollar consumer credit transaction by an electronic fund transfer is subject to certain protections, including the right of the consumer to stop payment. Small-dollar consumer credit providers must register with the Consumer Financial Protection Bureau. Any small-dollar consumer credit transaction is subject to the laws of the state in which the consumer resides. The bill also prohibits overdraft fees on prepaid accounts.
Sponsors: Sen. Merkley, Jeff [D-OR]
Target Audience
Population: Individuals relying on small-dollar lending services and electronic fund transfers
Estimated Size: 30000000
- The SAFE Lending Act of 2022 affects small-dollar consumer lending, which includes payday loans and other short-term, high-interest credit products. These products are used by millions of people, particularly those who are unbanked or underbanked, who lack access to traditional credit sources.
- Globally, the number of people who rely on small-dollar lending can be difficult to pin down precisely, but it's safe to assume hundreds of millions may engage in these financial services, especially in regions lacking robust banking infrastructures.
- Provisions such as regulation of electronic fund transfers will impact everyone globally involved in e-commerce and financial transactions across borders, as financial institutions adapt to these new rules.
- Protection measures regarding overdraft fees and electronic fund transfers will affect any individual globally who uses these mechanisms, hence broadening the scope of the population impacted.
Reasoning
- The SAFE Lending Act of 2022 affects primarily those using small-dollar lending services such as payday loans, personal advances, and similar financial products. Often, these services are utilized by individuals with limited access to traditional financial services including lower-income households and unbanked populations.
- With the policy implementation budget being somewhat modest, the reach will likely be targeted at the most vulnerable who will see immediate effects, such as reduced overdraft fees and protections from unlawful financial practices.
- A wide array of individuals may use electronic fund transfers and face potential overdraft fees, including those comfortably within the banking system — showing broader but variable impact.
- In crafting interviews, I included samples that represent users directly impacted by lending or regulation changes like small-dollar credit buyers, unbanked individuals, and prepaid card users. There's also representation of those not impacted directly to assess perceptions in broader financial behavior.
Simulated Interviews
Retail Worker (Houston, Texas)
Age: 29 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- The policy could protect me from high fees that come with payday loans.
- I usually rely on payday loans to handle emergencies, and knowing there's more oversight is promising.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 8 | 4 |
| Year 20 | 8 | 4 |
Truck Driver (Des Moines, Iowa)
Age: 47 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- It's a relief knowing overdraft fees on prepaid accounts will be stopped.
- I chose prepaid to avoid bank fees; this adds more security to my choice.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Retired (Miami, Florida)
Age: 63 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- I don't use small-dollar loans, but the policy sounds beneficial for others who do.
- I would like to see more protection as financial institutions can sometimes be predatory.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Software Developer (San Jose, California)
Age: 34 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 4/20
Statement of Opinion:
- I don't see a direct impact on my situation, but it seems it's geared towards protecting vulnerable groups.
- Policies like these might make online transactions safer, which indirectly benefits everyone.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Freelancer (Brooklyn, New York)
Age: 40 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- I'm hopeful that these changes will provide more stability and less financial stress for me and others in similar situations.
- Having clearer regulations can prevent being taken advantage of in financial crunch times.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Elementary School Teacher (Phoenix, Arizona)
Age: 52 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- I have stable finances, so I won't be directly affected, but it's great that others have more protection.
- These policies could improve the overall financial landscape in the community.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Graduate Student (Boston, Massachusetts)
Age: 28 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The act could be a good shield against unexpected banking fees which are sometimes burdensome.
- I foresee relief from surprise charges on prepaid cards.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Factory Worker (Detroit, Michigan)
Age: 58 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- I'm apprehensive about banking due to past fees.
- These changes could give me more confidence to trust financial institutions again.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Small Business Owner (Atlanta, Georgia)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- We rarely use small-dollar credit, but it's comforting to know there's more regulation should we require such options.
- As a business owner, knowing employees have financial protection is reassuring.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
College Student (Orlando, Florida)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- It's good to know future financial transactions will have more consumer focus.
- Though I may not need it now, these protections seem wise for anyone entering the workforce.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $7000000)
Year 2: $5000000 (Low: $3000000, High: $7000000)
Year 3: $5000000 (Low: $3000000, High: $7000000)
Year 5: $5000000 (Low: $3000000, High: $7000000)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The adaptability of financial institutions to new regulations might impact the economic outcomes.
- Potential reduced availability of small-dollar loans could impact those who rely on these services for short-term financial needs.
- There could be increased transparency and reduced financial abuse, benefiting consumers overall.