WASHINGTON — Sen. Jeff Merkley, D-Ore., and nine other Democrats are attempting to block a go-around they say payday lenders use to avoid complying with state laws.

The Stopping Abuse and Fraud in Electronic (SAFE) Lending Act introduced Thursday would prevent payday lenders from using remotely created checks to withdraw from customers' checking accounts.

The Consumer Financial Protection Bureau is coming out with a set of payday loan rules later this year but some lawmakers said the agency will not be able to go far enough under its existing authority.

Merkley said payday lenders can get around his home state's 36% annual percentage rate cap by using a remotely created check.

"The industry has found a way around these tough state laws primarily through the online industry" Merkley said on a call with reporters. "Once they have the checking account number for an individual, they can reach in and take money out of a consumer's checking account at will. These are called remotely created checks or RCCs."

Merkley added that if a company is operating outside of Oregon, the loan they are making might be illegal but it can be "very difficult to track these folks down and hold them accountable."

The legislation would also prevent payday lenders who utilize prepaid cards from offering overdraft and require the Consumer Financial Protection Bureau to monitor other fees associated with prepaid cards. Additionally, it would require payday lenders to register with the CFPB and ban companies that act as lead generators for other payday firms by selling consumers' information.

Presidential candidate Sen. Bernie Sanders, D-Vt., is one of the co-sponsors along with Sens. Tom Udall, D-N.M., Patty Murray, D-Wash., Dick Durbin, D-Ill., Richard Blumenthal, D-Conn., Elizabeth Warren, D-Mass., Tammy Baldwin, D-Wis., Edward J. Markey, D-Mass., Ron Wyden, D-Ore., and Cory Booker, D-N.J.

"The heart of it, first of all, it bans these remotely created checks from being used so a payday loan company cannot bypass state law by just reaching in and grabbing money out of people's accounts and the second thing it does is take on another predatory practice of the payday lending industry which is prepaid cards," Merkley said.

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