Federal: Letter in Opposition to the Empowering States Rights to Protect Consumers Act of 2026

The Honorable Tim Scott
Chairman
Committee on Banking, Housing, and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Elizabeth Warren
Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate
534 Dirksen Senate Office Building

Washington, DC 20510

Re: Letter in Opposition to the Empowering States’ Rights to Protect Consumers Act of 2026.

Dear Chairman Scott and Ranking Member Warren:

On behalf of the American Fintech Council (AFC),  I write to express our opposition to the Empowering States’ Rights to Protect Consumers Act of 2026 (the Act). AFC, a standards based trade association, shares the goal of improving household financial health and expanding access to responsible, affordable credit. However, this proposal would create a state-by-state usury regime that would reduce credit availability to American consumers, increase compliance complexity for responsible providers, and undermine the durable national framework that supports responsible bank-fintech partnerships.

The American Fintech Council (AFC) is the largest and most diverse trade association representing responsible financial technology (fintech) companies and innovative banks. On behalf of over 150 member companies and partners, AFC promotes a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

As noted in multiple reports by the U.S. Government Accountability Office (GAO), responsible fintech providers provide the opportunity for significant consumer and market benefits. Through partnerships with innovative financial institutions, fintech companies have been able to increase access to historically underserved communities, and expand financial options for families long forgotten by traditional financial institutions.

Simply put, the Act attempts to remove financial institutions’ longstanding rights to operate by their “home states’” interest rate laws by amending the Truth in Lending Act to require that financial institutions adhere to individual state’s interest rate laws for all consumer loans. This Act stands in clear contradiction to the well-established statutory and regulatory precedent that affords financial institutions federal preemption of states’ interest rate laws. Both Section 85 of the National Bank Act, as well as Section 521of the Depository Institutions Deregulation and Monetary Control Act have provided the federal preemptive rights to both national and state-chartered financial institutions necessary to ensure that a robust and innovative financial services industry exists in the United States.

This residency-based, multi-jurisdictional APR cap would reduce access to mainstream credit, especially for non-prime and thin-file consumers. Constricting the ability of regulated institutions and their responsible fintech partners to offer risk-based pricing for unsecured credit will predictably tighten underwriting, lower approved credit lines, and shift consumers away from transparent, protected products toward less regulated or more costly alternatives.

The Act would create an operationally unworkable compliance standard for modern credit markets. Linking a permissible APR to the consumer’s state of residence may sound simple, but in practice it forces responsible fintech lenders and their bank partners to operationalize a continuously variable legal standard across fifty states (and potentially local regimes), applied in real time across digital channels. Residency is not always clear-cut, can change, and may differ across co-applicants or authorized users. This uncertainty will increase costs and legal risk for regulated providers, and these costs that ultimately flow through to consumers and reduce credit availability at a time when Americans are feeling financially vulnerable.

AFC has long advocated for a unified regulatory approach that encourages responsible financial innovation and does not subject companies to a patchwork landscape of state laws. The Act would also undermine national consistency that supports responsible bank-fintech partnership lending and innovation. A core virtue of the current federal framework is that it enables supervised, prudentially regulated institutions to offer standardized products nationwide with clear rules of the road, subject to robust federal oversight, safety-and-soundness supervision, and comprehensive disclosure requirements. By displacing that consistency with a state-by-state requirements tied to residence “notwithstanding any other provision of law,” the bill would inject fragmentation into markets that depend on uniformity to effectively serve consumers, comply with existing laws, and mitigate risks to the financial services industry stemming from fraud and illicit activities.

For these reasons, AFC urges the Committee to reject the Empowering States’ Rights to Protect Consumers Act of 2026. We would welcome the opportunity to work with the Committee on efforts that expand competition and consumer choice while preserving access to responsibly underwritten credit, particularly for underserved communities, and that maintain clear, nationally consistent guardrails for regulated institutions and their fintech partners. Thank you for your consideration of our perspectives.

Sincerely,

Ian P. Moloney

Chief Policy Officer

American Fintech Council

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CC:

The Honorable Jack Reed, United States Senate
The Honorable Sheldon Whitehouse, United States Senate
The Honorable Jeff Merkley, United States Senate

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[1] AFC’s membership spans technology platforms, non-bank lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.
[2] U.S. Government Accountability Office, Financial Technology: Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory Oversight, GAO-18-254, (Mar. 22, 2018), available at https://www.gao.gov/products/gao-18-254; and U.S. Government Accountability Office, Financial Technology: Products Have Benefits and Risks to Underserved Consumers, and Regulatory Clarity Is Needed, GAO-23-105536, (Mar. 08, 2023), available at https://www.gao.gov/products/gao-23-105536.
[3] See, 12 U.S.C. § 85 and 12 U.S.C. § 1831(d).

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