No official summary available for this bill.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2781 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 2781
To amend the Truth in Lending Act to establish a national usury rate
for consumer credit transactions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 11, 2025
Mr. Durbin (for himself, Mr. Blumenthal, and Mr. Whitehouse) introduced
the following bill; which was read twice and referred to the Committee
on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Truth in Lending Act to establish a national usury rate
for consumer credit transactions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting Consumers from
Unreasonable Credit Rates Act of 2025''.
SEC. 2. FINDINGS.
Congress finds that--
(1) attempts have been made to prohibit usurious interest
rates in America since colonial times;
(2) at the Federal level, in 2006, Congress enacted a
Federal 36-percent annualized usury cap for servicemembers and
their families for covered credit products, as defined by the
Department of Defense, which curbed payday, car title, and tax
refund lending around military bases;
(3) notwithstanding such attempts to curb predatory
lending, high-cost lending persists in all 50 States due to
loopholes in State laws, safe harbor laws for specific forms of
credit, and the exportation of unregulated interest rates
permitted by preemption;
(4) due to the lack of a comprehensive Federal usury cap,
consumers have paid as much as approximately $12,000,000,000 on
high-cost overdraft loans, $8,600,000,000 on storefront and
online payday loans, $3,800,000,000 on car title loans, and
additional amounts in unreported revenues on high-cost online
installment loans;
(5) cash-strapped consumers pay on average approximately
400-percent annual interest for payday loans, 300-percent
annual interest for car title loans, 17,000-percent for bank
overdraft loans, and triple-digit rates for online installment
loans;
(6) a national maximum interest rate that includes all
forms of fees and closes all loopholes is necessary to
eliminate such predatory lending; and
(7) alternatives to predatory lending that encourage small
dollar loans with minimal or no fees, installment payment
schedules, and affordable repayment periods should be
encouraged.
SEC. 3. NATIONAL MAXIMUM INTEREST RATE.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by adding at the end the following:
``SEC. 140B. MAXIMUM RATES OF INTEREST.
``(a) In General.--Notwithstanding any other provision of law, no
creditor may make an extension of credit to a consumer with respect to
which the fee and interest rate, as defined in subsection (b), exceeds
36 percent.
``(b) Fee and Interest Rate Defined.--
``(1) In general.--For purposes of this section, the fee
and interest rate includes all charges payable, directly or
indirectly, incident to, ancillary to, or as a condition of the
extension of credit, including--
``(A) any payment compensating a creditor or
prospective creditor for--
``(i) an extension of credit or making
available a line of credit, such as fees
connected with credit extension or availability
such as numerical periodic rates, annual fees,
cash advance fees, and membership fees; or
``(ii) any fees for default or breach by a
borrower of a condition upon which credit was
extended, such as late fees, insufficient funds
fees, overdraft fees, and over-limit fees;
``(B) all fees which constitute a finance charge,
as defined by rules of the Bureau in accordance with
this title;
``(C) credit insurance premiums, whether optional
or required;
``(D) all charges and costs for ancillary products
or optional services offered in connection with or
incidental to the credit transaction; and
``(E) any costs payable in connection with products
that involve--
``(i) the provision of funds to the
consumer in an amount that is based, by
estimate or otherwise, on the wages that the
consumer has accrued in a given pay cycle; and
``(ii) repayment to the third-party
provider via automatic means at or after the
end of the pay cycle.
``(2) Tolerances.--
``(A) In general.--With respect to a credit
obligation that is payable in at least 3 fully
amortizing installments over at least 90 days, the term
`fee and interest rate' does not include--
``(i) application or participation fees
that in total do not exceed the greater of $30
or, if there is a limit to the credit line, 5
percent of the credit limit, up to $120, if--
``(I) such fees are excludable from
the finance charge pursuant to section
106 and regulations issued thereunder;
``(II) such fees cover all credit
extended or renewed by the creditor for
12 months; and
``(III) the minimum amount of
credit extended or available on a
credit line is equal to $300 or more;
``(ii) a late fee charged as authorized by
State law and by the agreement that does not
exceed either $8 per late payment or $8 per
month; or
``(iii) a creditor-imposed insufficient
funds fee charged when a borrower tenders
payment on a debt with a check drawn on
insufficient funds that does not exceed $15.
``(B) Adjustments for inflation.--The Bureau may
adjust the amounts of the tolerances established under
this paragraph for inflation over time, consistent with
the primary goals of protecting consumers and ensuring
that the 36-percent fee and interest rate limitation is
not circumvented.
``(c) Calculations.--
``(1) Open end credit plans.--For an open end credit plan--
``(A) the fee and interest rate shall be calculated
each month, based upon the sum of all fees and finance
charges described in subsection (b) charged by the
creditor during the preceding 1-year period, divided by
the average daily balance; and
``(B) if the credit account has been open less than
1 year, the fee and interest rate shall be calculated
based upon the total of all fees and finance charges
described in subsection (b)(1) charged by the creditor
since the plan was opened, divided by the average daily
balance, and multiplied by the quotient of 12 divided
by the number of full months that the credit plan has
been in existence.
``(2) Other credit plans.--For purposes of this section, in
calculating the fee and interest rate, the Bureau shall require
the method of calculation of annual percentage rate specified
in section 107(a)(1), except that the amount referred to in
that section 107(a)(1) as the `finance charge' shall include
all fees, charges, and payments described in subsection (b)(1)
of this section.
``(3) Adjustments authorized.--The Bureau may make
adjustments to the calculations in paragraphs (1) and (2), but
the primary goals of such adjustment shall be to protect
consumers and to ensure that the 36-percent fee and interest
rate limitation is not circumvented.
``(d) Definition of Creditor.--As used in this section, the term
`creditor' has the same meaning as in section 702(e) of the Equal
Credit Opportunity Act (15 U.S.C. 1691a(e)).
``(e) No Exemptions Permitted.--The exemption authority of the
Bureau under section 105 shall not apply to the rates established under
this section or the disclosure requirements under section 127(b)(6).
``(f) Disclosure of Fee and Interest Rate for Credit Other Than
Open End Credit Plans.--In addition to the disclosure requirements
under section 127(b)(6), the Bureau may prescribe regulations requiring
disclosure of the fee and interest rate established under this section.
``(g) Relation to State Law.--Nothing in this section may be
construed to preempt any provision of State law that provides greater
protection to consumers than is provided in this section.
``(h) Civil Liability and Enforcement.--In addition to remedies
available to the consumer under section 130(a), any payment
compensating a creditor or prospective creditor, to the extent that
such payment is a transaction made in violation of this section, shall
be null and void, and not enforceable by any party in any court or
alternative dispute resolution forum, and the creditor or any
subsequent holder of the obligation shall promptly return to the
consumer any principal, interest, charges, and fees, and any security
interest associated with such transaction. Notwithstanding any statute
of limitations or repose, a violation of this section may be raised as
a matter of defense by recoupment or setoff to an action to collect
such debt or repossess related security at any time.
``(i) Violations.--Any person that violates this section, or seeks
to enforce an agreement made in violation of this section, shall be
subject to, for each such violation, 1 year in prison and a fine in an
amount equal to the greater of--
``(1) three times the amount of the total accrued debt
associated with the subject transaction; or
``(2) $50,000.
``(j) State Attorneys General.--An action to enforce this section
may be brought by the appropriate State attorney general in any United
States district court or any other court of competent jurisdiction
within 3 years from the date of the violation, and such attorney
general may obtain injunctive relief.''.
SEC. 4. DISCLOSURE OF FEE AND INTEREST RATE FOR OPEN END CREDIT PLANS.
Section 127(b)(6) of the Truth in Lending Act (15 U.S.C.
1637(b)(6)) is amended by striking ``the total finance charge
expressed'' and all that follows through the end of the paragraph and
inserting ``the fee and interest rate, displayed as `FAIR', established
under section 141.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. (text: CR S6577)
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line