Seeking to derail new legislation, the American Financial Services Association has proposed voluntary restrictions on unsolicited loan checks.
The policy, adopted Wednesday, includes new disclosures, a six-month expiration date for each offer, and protections for consumers whose unsolicited loan checks are stolen.
"Live-check loans by mail have been in the marketplace for many years and provide a useful service to consumers, with very few incidences of fraud or abuse," said Randy Lively, president of the trade group.
A bill is pending in the Senate would outlaw the product. Banks pre- approve consumers for these unsolicited loans and then mail out a check. If the consumer cashes the check, he agrees to the terms of the loan. Some consumers have complained that they did not realize the check was a loan offer.