119-s2781

[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.''.
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