Payday Lending

A federal court has ordered that a stay of the compliance date for the Consumer Financial Protection Bureau’s (CFPB) payday lending rule pending further notice.

The ruling comes following the bureau’s recent announcement that it will proceed with plans to revisit its rule regulating short-term, small-dollar loans.

Find out more details about the court’s decision and the industry’s reaction.

The lack of regulatory scrutiny placed on fintech companies compared with banks and credit unions has been a major cause of concern and pushback as their presence continues to grow in the financial marketplace.

Although a recent development with one fintech may invite increased regulatory scrutiny, industry insiders would point out that it still gets off fairly easy from a regulatory perspective.

Read on for details of Square Inc.’s recent launch into installment credit and how the move highlights questions about fintech’s regulatory responsibility in our interview with Carrie Hunt, executive vice president of government affairs and general counsel for the National Association of Federally-Insured Credit Unions.

Following up on acting director Mick Mulvaney’s previously stated intention to reconsider the agency’s payday lending rule, the Consumer Financial Protection Bureau has said it expects to issue proposed rules in January that would alter the rule’s ability to repay (ATR) requirements but not affect its payment provisions.

The bureau said it believes the ATR provisions hold “greater consequences” than other portions of the rule.

Find out more details about when the bureau plans to issue its proposed changes.

The Consumer Financial Protection Bureau’s (CFPB) more lenient approach to enforcement under acting director Mick Mulvaney, compared with that of former Director Richard Cordray, has been called out by critics but a recent settlement with a small-dollar lender presented something new for the Mulvaney-run bureau.

What is noteworthy about it consent order against Cash Express LLC is the fact that, for the first time under Mulvaney, the bureau cited an action as “abusive” when invoking its UDAAP authority.

Learn more details about what practices the bureau determined to be abusive and deceptive, respectively, per the consent order, and what restitution the company is liable to pay.

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.