CFPB Says It Won’t Enforce Payday Rule

Last Friday, two days before it was set to go into effect, the Consumer Financial Protection Bureau (CFPB) said that it would not prioritize enforcement or supervision actions with regard to any penalties or fines under the Payday, Vehicle Title, and Certain High-Cost Installment Loans Regulation. 

“The Bureau will instead keep its enforcement and supervision resources focused on pressing threats to consumers, particularly servicemen and veterans,” the Bureau said in its press release. “The Bureau takes this step in the interest of focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses. The Bureau is further contemplating issuing a notice of proposed rulemaking to narrow the scope of the rule.”

It is unclear if the CFPB will be sued for refusing to enforce a final rule that has taken eight years to go into effect, a delay largely due to legal challenges by trade groups. 

The rule barred lenders from repeatedly attempting to withdraw payments from borrowers’ accounts after two failed attempts. It also would have required notices and new authorizations for withdrawals after two consecutive failed attempts, a provision upheld by the U.S. Court of Appeals for the 5th Circuit.

Under the Trump administration, the CFPB is entering uncharted territory by refusing to enforce the rule, and it is unclear if consumers will get any recourse if a lender tries to charge their account multiple times and they are left with nonsufficient funds or overdraft fees.