Payday Lending

The Consumer Financial Protection Bureau’s 17th edition of Supervisory Highlights details trends the bureau’s examiners observed at covered banks, credit unions and certain nonbanks pertaining to debt collection, mortgage servicing, payday lending, auto loan servicing, credit card account management and small business lending from December 2017 to May 2018.

The latest edition is absent some noteworthy portions that have been staples of past reports, such as information about mortgage origination examinations and non-public enforcement activity. However, the inclusion of examiners’ findings from small business lending exams was new, and provided insight about compliance with Equal Credit Opportunities Act requirements among such entities.

Learn what lessons the latest edition has for the industry.

The future of the Consumer Financial Protection Bureau’s (CFPB) payday lending rule has been mired in uncertainty since acting director Mick Mulvaney’s January announcement that he intended to “revisit” it, and seemed quite bleak after Mulvaney filed an amicus brief in June supporting the plaintiffs in a case challenging the rule’s validity.

Independent Community Bankers of America (ICBA) Assistant Vice President and Regulatory Counsel Rhonda Thomas-Whitley told Dodd Frank Update the fact that Kathy Kraninger’s nomination to the director’s chair at the bureau is still pending full Senate approval is reason enough for any interested party reluctant to make any predictions about the likelihood of such a move.

Find out more details about considerations that could work against the rule’s chances of surviving reconsideration by the bureau.

An online payday lender and 20 interrelated entities recently settled with the Consumer Financial Protection Bureau (CFPB) over allegations that the defendants unlawfully originated short-term, small-dollar loans and initiated unauthorized collections on them without consumers’ knowledge.

In light of the defendants’ limited ability to pay, the settlement stipulates that the company’s obligation to pay a monetary penalty redressing consumers for money unlawfully collected from them will be suspended as long as they comply with the terms of a bureau consent order.

Find out more information about the terms of the settlement.

The Consumer Financial Protection Bureau (CFPB) recently announced a settlement with a small-dollar lending company for multiple “deceptive” acts that violate the Truth in Lending Act (TILA). The company is being given the opportunity to settle for less than a third of the more than $1.5 million judgment against it. 

The order suspends full payment of the judgment subject to Triton’s payment of $500,000 to affected consumers, and providing the company abides by certain terms.

Find out more about the settlement and the company’s violations.

The Consumer Financial Protection Bureau’s (CFPB) recent settlement with a payday lender charged with harassing borrowers and mishandling credit report data exemplified the difference in the agency’s mentality under Mick Mulvaney’s leadership as opposed to Richard Cordray’s.

Goodwin Law Partner Anthony Alexis, former assistant director and head of enforcement at the CFPB, referenced multiple guidance materials outlining theories for prosecuting business organizations while explaining to Dodd Frank Update the circumstances under which companies typically see reduced penalties.

Find out more details about the case and the bureau’s decision to drop certain charges.

In an unusual saga revolving around the Consumer Financial Protection Bureau’s (CFPB) payday lending rule, two groups of payday lenders involved in a lawsuit challenging the rule’s validity requested the litigation and the rule’s compliance date be stayed pending further action by the bureau.

The bureau filed a brief supporting the merits of the groups’ contentions that the date should be stayed and that the rule may be arbitrary and capricious. 

Find out more about what reasons the bureau gave for its position.

Legislation to require the Consumer Financial Protection Bureau (CFPB) to provide useful guidance in a timely fashion has gained a significant amount of industry supports as it awaits action by the House Financial Services Committee.

If enacted, H.R. 5534, known as the “Give Useful Information to Define Effective” (GUIDE) Compliance Act, would amend the Consumer Financial Protection Act to place certain guidance requirements on the bureau when it proposes a rule.

Find out more details about the measure, which has garnered a wealth of industry backing.

A report on the economic well-being of U.S. households in 2017 released by the Federal Reserve shows improved financial conditions among individuals of all education levels over the past five years. However, the report also indicates that approximately 40 percent of Americans were ill-equipped to cover an unexpected expense of $400 or more.

About 5 percent of consumers indicated that they would consider taking out a payday loan to cover such an expense, whereas 43 percent said they would put the debt on a credit card and 26 percent said they’d borrow from friends or family.

Find out more about the report’s findings, and how one association representing payday lenders interpreted the data.

Little more than a week after the deadline expired for repealing the Consumer Financial Protection Bureau’s (CFPB) payday lending rule, the Office of the Comptroller of Currency (OCC) issued its own policy statement regarding short-term, small-dollar lending.

CFPB acting director Mick Mulvaney and several industry leaders are among those who have expressed support for the OCC’s new guidance.

Learn more about how banks are advised to approach the installment loan marketplace.

With the deadline to repeal the Consumer Financial Protection Bureau’s (CFPB) payday lending rule now in the rearview mirror, covered parties may feel inclined to review plans for compliance with the controversial regulation. However, as the rule’s future remains far from certain, many financial industry participants may understandably take more of a wait-and-see approach.

The fact that the payday repeal resolution was not passed comes as little surprise to many industry insiders, such as Consumer Bankers Association (CBA) Associate General Counsel and Vice President David Pommerehn, who spoke with Dodd Frank Update about the matter.

Find out more about what likely lies ahead for the rule, and the potential implications for the financial industry.