The distribution of unsolicited loan instruments in Massachusetts would be banned under a bill passed unanimously by the Senate.

Taking the appearance of a check, documents appear in the mail that, if cashed, can trigger a loan with high interest rates approaching 30 percent, said Sen. Kathleen O'Connor Ives, who sponsored legislation seeking to end the practice.

"These arguably predatory loans have been around since the 1980s and are known as loan checks, instant loan checks or live checks," said O'Connor Ives (D-Newburyport). She said, "They tempt an already over-extended financially strained consumer to incur even more debt at higher costs."

Under the bill (S 2194) that cleared the Senate Thursday on a 37-0 vote, those who send unsolicited loan instruments would be punished by fines of up to $5,000 for each violation.

Sen. Linda Dorcena Forry said many "unaware" consumers, including individuals who are elderly or disabled, are being misled with unsolicited loans. "Financial institutions continue to send out checks to unsuspecting customers who then cash these checks not realizing they are accepting a loan," she said.

Forry, who filed the bill in the House in 2011, said she is "hopeful" the House will take it up and heartened by the fact that it emerged from a joint committee dominated by House members. The bill cleared the Committee on Consumer Protection and Professional Licensure by an 11-to-0 vote.

After a meeting with Senate President Stan Rosenberg and Gov. Charlie Baker on Monday, House Speaker Robert DeLeo said he has yet to discuss the bill with key members of the House.

"We haven't discussed it yet in the House, nor have I discussed it with the chair or any of the members of the committee that it would go to," DeLeo said. "There has been no discussion relative to that."
Forry said she has "not really seen anyone lobbying hard against" the bill.

The Senate adopted a Forry amendment creating an exemption for financial institutions that have a pre-existing relationship with the person receiving the loan solicitation.

The Senate also adopted an amendment filed by Sen. John Keenan that broadens that scope of the ban to include "any line of credit," which he said would include credit card companies.

Another provision sponsored by Keenan sets out a process for notifying the attorney general when violations are discovered.

According to the office of Attorney General Maura Healey, there are a number of "loan scams" perpetrated on consumers and the top prosecutor's office takes action against predatory lenders.