Durbin, Boxer, Senators Introduce Bill To Crack Down On Predatory Lending Practices

Legislation would cap interest rates & fees for all consumer credit transactions

[WASHINGTON, D.C.] –U.S. Senators Dick Durbin (D-IL) and Barbara Boxer (D-C) today joined U.S. Senators, Jeff Merkley (D-OR), Richard Blumenthal (D-CT) and Sheldon Whitehouse (D-RI) in introducing the Protecting Consumers from Unreasonable Credit Rates Act - a bill to eliminate the excessive rates and fees that some consumers are charged for payday loans, car title loans and other types of credit. 

The bill - introduced today in the House of Representatives by U.S. Representatives Matt Cartwright (D-PA) and Steve Cohen (D-TN) - would create an interest rate and fee cap of 36% for all consumer credit transactions, putting an end to the excessive rates which can top 300%.  The 36% cap is similar to usury laws already enacted in many states and is the same as the cap already in place for military personnel and their families.

“Despite the economic gains we have made as a nation in recent years, many working families continue to struggle. For some, payday lenders offer a quick way to make ends meet, but often with devastating consequences,” said Durbin. “With interest rates of two and three hundred percent of value of the loan, these excessive rates and hidden fees have crippling effects on those who can afford it least. Capping interest rates and fees for consumers will help protect working families from these predatory lending practices—it’s the right thing to do.”

“It is unconscionable that these companies are preying on Americans who are struggling to make ends meet,” Senator Boxer said. “This legislation will protect working families by capping the interest rates and fees that lenders can charge consumers.”


Efforts to address the exorbitant interest rates charged on many payday loans have often failed because of the difficulty in defining predatory lending. By setting a relatively high interest rate as the cap and applying that cap to all credit transactions, the Protecting Consumers from Unreasonable Credit Rates Act overcomes the problem and puts all consumer transactions on the same, sustainable, path. In doing so, consumers are protected, predatory lending practices are ended and consumers will be helped in using credit more wisely.

“Pennsylvania recognizes that predatory lending disproportionately harms economically disadvantaged individuals – people who are already struggling financially,” said Rep. Cartwright.  “My consumer-friendly legislation would provide relief from exorbitant fees for many low-income consumers across the country.  Capping interest rates and fees for all consumers will not only protect working families but also enable our economic recovery.”

“Throughout my career, I have always worked to shield people from those who would take advantage of them through predatory lending practices that can wreak havoc on people’s lives and perpetuate a cycle of indebtedness. Both justice and morality dictate that reasonable caps on interest be enacted to protect borrowers from devious lenders,” said Cohen.

Specifically, the Protecting Consumers from Unreasonable Credit Rates Act would:

  • Establishes a maximum APR equal to 36% and apply this cap to all open-end and closed-end consumer credit transactions, including mortgages, car loans, credit cards, overdraft loans, car title loans, refund anticipation loans, and payday loans.
  • Encourage the creation of responsible alternatives to small dollar lending, by allowing initial application fees and for ongoing lender costs such as insufficient funds fees and late fees.
  • Ensure that this federal law does not preempt stricter state laws.
  • Create specific penalties for violations of the new cap and supports enforcement in civil courts and by State Attorneys General. 

Protecting Consumers from Unreasonable Credit Rates Act is supported by 70 national and state groups, including the Americans for Financial Reform, Consumer Federation of American, Public Citizen, the Center for Responsible Lending, and Consumers Union.