Sens. Tom Cotton (R-AR), Doug Jones (D-AL) and Jeff Merkley (D-OR) recently introduced a measure designed to halt the predatory practice of sending high-interest loans to consumers in the form of live checks.
The Unsolicited Loan Act of 2018 would prohibit correspondence in which consumers, many of which officials said unknowingly believe they have received money from their bank or financial institution, receive the loan checks in connection with a high-interest loan.
“People should understand clearly when they are taking on debt,” Cotton said. “But because live checks mailed directly to consumers don’t require an application or any previous relationship with the consumer, many individuals don’t realize that these checks are actually high-interest loans until it’s too late. Just like Congress ended the practice of mailing live credit cards nearly 50 years ago, Congress should pass our bill now to stop this underhanded practice.”
Jones said as working Americans look to make ends meet, lenders will often target cash-strapped families with the mailings.
“It is unconscionable that someone would take advantage of another person’s dire financial situation to make a quick buck for themselves,” he said. “We need to end this predatory lending tactic and pass this legislation to protect consumers and their pocketbooks.”
Officials said the National Consumer Law Center has endorsed the legislation on behalf of its low-income clients.