Washington, DC – Today, on Halloween, Oregon’s Senator Jeff Merkley and Ohio’s Senator Sherrod Brown introduced the Deceptive Loan Checks Elimination Act, which would prohibit companies from sending “live” loan checks to consumers. In these schemes, financial institutions send unsuspecting customers a check made out to them for some amount. Customers often assume that their financial institutions have sent refunds or some other business-related sum and unknowingly deposit the checks. However, the fine print on these checks actually make them high-cost loans.
“Every day, Oregonians open their mail boxes and get what they think is a treat. But these loan checks are really tricks and drain wealth from families. That kind of deception gives me the creeps,” said Merkley. “Let’s keep the tricks to Halloween and not to the finances of Oregonians.”
“No consumer should be tricked into paying high interest rates and this bill would protect Ohioans from these deceptive practices,” Brown said.
“AARP wants to protect its members from unsolicited loans that are only meant to yield unreasonably high interest rates for unscrupulous financial institutions that do not explain all the terms,” said Joyce A. Rogers, Senior Vice President, Government Affairs, AARP. “This bill would end that practice.”
The Deceptive Loan Check Elimination Act will prohibit financial institutions from sending a “live” loan check unless the consumer requested such a check in writing, and consumers would not be liable for any debt incurred in violation of the Act. These schemes often target seniors and other vulnerable populations and frequently were a hook to trick families into taking out even higher priced subprime mortgages. This common sense solution protects consumers without constricting credit for consumers who want it.
The legislation is endorsed by the AARP, the Center for Responsible Lending, Economic Fairness Oregon, the U.S. Public Interest Research Group, and the National Consumer Law Center (on behalf of its low-income clients).