SENTATE PROHIBITS UNSOLICITED LOANS

By Bob Katzen

 

   On March 24, 2016, the Senate 37-0, approved a bill that would prohibit banks from issuing unsolicited loans, often in the form of a check, through the mail, unless the recipient is already a customer of the bank. And even those customers would have ten days to rescind the loan and pay the bank back the entire amount, without any interest or fees. 

   Another provision prohibits the person to whom the loan is sent from being held liable for any debt incurred by the unauthorized use of the loan by someone else. The measure also imposes fines of up to five years in prison and a $25,000 fine on any bank or person who violates this law.

   Supporters said these loans prey upon unsuspecting victims including the sick and elderly. They noted the recipient does not understand all the fine print and suddenly is paying enormous interest rates and fees.

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