Washington, D.C. – Today, Oregon’s Senator Jeff Merkley introduced the Deceptive Loan Check 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. Customers often assume that their financial institutions have sent refunds or some other business-related sum and unknowingly deposit the checks. In small fine print, these institutions lay out that this “check” is actually a predatory loan with a very high interest rate.
“Sending out checks to vulnerable populations that turn out to be predatory loans is just beyond the pale,” Merkley said. “There’s no place for tricks in our financial system. If a company can’t win customers’ business by actually telling them what they’re offering, they should go find another line of work.”
Merkley’s 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. This common sense solution protects consumers without constricting credit for consumers who want it.
The bill is cosponsored by Senators Sherrrod Brown (D-OH) and Sheldon Whitehouse (D-RI) and endorsed by Americans for Financial Reform, AARP Consumer Federation of America, and the National Consumer Law Center (on behalf of its low income clients).
Merkley, a leader on consumer financial protection in the Senate, has introduced two additional bills this week to protect consumers. On Monday he introduced legislation to keep consumers’ credit from being harmed by paid-off medical debt and yesterday he introduced legislation to crack down on online payday lending. These bills would ensure that Oregonians are treated fairly and are not victims of scams in the financial marketplace.