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introduced by Senators Jack Reed (D-RI) and Bill Hagerty (R-TN) and Representatives John Rose (R-TN) and Ritchie Torres (D-NY). If enacted, this pro-consumer legislation would curb the abusive use of mortgage credit “trigger leads” to all but a very limited set of circumstances. Trigger leads happen when consumers apply for a mortgage, and the lender puts in an inquiry to a credit reporting agency to pull their credit. Under the Fair Credit Reporting Act, credit reporting acts are currently allowed to resell consumer information to prospective creditors, if they are ready to make consumers a “firm order of credit.” As a result, though, many consumers have been inundated with hundreds of phone calls, texts, and mails, just moments after they applied for a mortgage: adding confusion and stress during an already very stressful time. This law would stop this practice, allowing credit reporting agencies to pass on consumer information only in a very limited set of circumstances, in cases where potential lenders already have a firm relationship with the consumer (for instance, as their current bank or credit union where they hold deposits).

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Dear Chairman Barr and Ranking Member Foster:

As consumer protection and civil rights organizations, we write to express our concerns with two legislative proposals being discussed at today’s hearing, namely H.R. 6789, the Rectifying UDAAP Act and a still unintroduced bill to amend the Truth in Lending Act to allow covered entities to offer small-dollar credit products and for other purposes.  These proposals are deeply misguided, and our organizations urge Committee Members to oppose and prevent their advancement.

H.R. 6789, the “Rectifying UDAAP Act”

 This bill would narrow the scope of UDAAP under the Consumer Financial Protection Act and hinder the ability of the CFPB to determine when an activity is an unfair, deceptive and abusive practice. It would hamper the CFPB’s ability to identify UDAAPs and significantly raise the threshold for abusiveness. The bill accomplishes the long-standing goal of preventing the CFPB from defining discriminatory practices as UDAAPs, even though discrimination is inherently unfair and harmful.

It would slow down the CFPB’s efforts to implement enforcement actions. For example, because it permits entities that self-report violations to have special notification rights, it extends delays between the identification of a UDAAP and an enforcement action to prevent it. It would also introduce new hurdles to providing monetary relief.

By requiring the CFPB to conduct unnecessary rulemaking to establish policies and procedures for issuing penalties, it could leave consumers at risk of being harmed by UDAAPs. It is also concerning that the bill would require the rulemaking to include a cost-benefit analysis, as such a step could lead to the result where the profits derived by an unfair or discriminatory practice are weighted as a benefit.

We strongly oppose this bill.

 H.R. ___, a bill to amend the Truth in Lending Act to allow covered entities to offer small-dollar credit products and for other purposes.

In the guise of adopting safeguards for small-dollar credit, this bill would exempt any bank or other creditor that offers specified small-dollar loans from any civil penalties or damages for violation and law in the entire Title 15 of the United States Code in connection with the small-dollar product. That title covers 122 chapters, including the entire Chapter 41, which includes the Truth in Lending Act, the Restrictions on Garnishment of Social Security and other federal benefits, the Credit Repair Organizations Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, and the Electronic Fund Transfer Act, as well as the antitrust provisions of Chapter 1 and many other laws. Lenders would be able to violate these laws with impunity.

We strongly oppose this bill.

Americans for Financial Reform

Center for Responsible Lending

Consumer Federation of America

National Consumer Law Center (on behalf of its low-income clients)

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Read the February 8th Letter

Read the February 22nd Letter

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Specifically, CFA asked that the Committee adopt the Department’s recommendations to retain an agent fee line as a new source of operating funds, create two additional administrative positions, and implement a 9% increase in ASF (appropriated special funds) authority for mandatory expense increases.

By providing more resources to the Insurance Department, Delaware will see substantial benefits in the form of better consumer protection, more efficient regulation and a stronger insurance market.

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Auto insurers use numerous socioeconomic factors, such as credit scores, education, and occupation, to unfairly discriminate against consumers and charge them higher premiums. DISB has written a report on unfair bias in auto insurance, but it has not yet been released and has been sent to the Mayor’s Office for questions and approval. CFA is eager to review the impending report and calls on DISB to issue the report without delay.

CFA also urged the Department Committee to work with the DISB to protect DC residents from the risks of climate change posed by the insurance industry. Insurance companies should not be funding fossil fuel projects that increase climate change and harm consumers, and Travelers Insurance especially should not be funding them. They should play a constructive, not a destructive role in solving this crisis.

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We support the broader purpose of the Basel III reforms, which is aimed at promoting greater financial security in the banking system, tackling undercapitalization, and reducing outsized risk-taking by larger banks. The Basel Committee articulated its international standards for bank safety and soundness in the wake of the 2008 financial crisis. Member countries committed to implementing these requirements in 2017. The recent 2023 US banking crisis reinforced the need for enhanced capital requirements. The comment letter also highlighted this as the need to reduce “the privatization of gains and the socialization of losses.”

At the same time, our comment recognizes the need to change small parts of the proposal, which would impact mortgage affordability and access for lower-income borrowers and borrowers of color. Indeed, as also argued by the National Fair Housing Alliance, this part of the proposal risks imperiling fair lending access and is based on risk-standards inconsistent with the actual risk associated with the mortgage products often used by these consumers. For example, a large part of the risk of high-LTV products, those with a down payment of under twenty percent, is taken on by mandatory private mortgage insurance (PMI). While we recognize the importance of changing this element of the Basel III proposal, and of protecting lower-income borrowers and borrowers of color, this proposed change does not delegitimize or change the broader need for improved capital standards.

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Telematics, or usage-based insurance, are insurance programs that capture consumers’ driving data via devices, built-in technology, and mobile phones. The programs use that data to assess consumers’ driving behavior, driving patterns, and sometimes additional data, to calculate insurance premiums.

While telematics holds potential for both encouraging safer driving and increasing fairness in pricing, telematics needs thorough oversight and guardrails for consumers. Instead of A7614, the legislature should pass a different telematics bill, S553. Sponsored by Senator Kevin Thomas, S553 provides a framework to allow telematics to offer benefits to consumers while ensuring fair pricing and protecting consumers from unfair and unnecessary exploitation of the data collected by insurers.

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The decision to classify BIAS as a telecommunications service was originally made in an order of the FCC we call the 2015 Open Internet Order, which was upheld by the Court in 2016. It was reflected over 50 years of regulatory oversight over the Internet, based on the principle that ex ante regulation ensured nondiscriminatory access (before the fact) to the Internet. It has resulted in a dramatic and virtuous cycle of economic development, and should be continued.

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The critically important Credit Card Penalty Fees rule will help ensure that the late fees charged on credit card accounts are “reasonable and proportional” to the late payment as required under the Truth in Lending Act (TILA). The proposal would adjust the safe harbor dollar amount for late fees to $8 and eliminate a higher safe harbor dollar amount for late fees for subsequent violations of the same type; prevent credit card companies from adjusting the safe harbor dollar amount every year for inflation; and provide that late fee amounts must not exceed 25 percent of the required payment.

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The groups further urged the CFPB to expand supervision to other large non-bank companies that offer similar payment services access through debit cards, prepaid cards, or in person. The comment included specific requests to ensure supervision extends to larger participants in correctional payments services and government benefit cards markets.

The CFPB should move forward expeditiously, as it is vital to ensure payment apps and digital wallets operate under the same rules as traditional payment systems.

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The Department’s proposed rule would ensure that all investment professionals provide advice that is in retirement investors’ best interest and that any conflicts of interest do not taint their advice. We urge the Department to finalize this proposal without undue delay.

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