A group of 24 Democratic state attorneys general and the D.C. attorney general have submitted a comment letter to the CFPB setting forth their opposition to the CFPB’s proposal to delay the compliance date for the ability-to-repay (ATR) provisions of its final payday/auto title/high-rate installment loan rule (Payday Rule).  They conclude their letter by threatening to “closely examine whether to take action to address any unlawful action by CFPB” should the CFPB finalize the proposed delay.  (The AGs state in the letter that they will be submitting another comment letter opposing the CFPB’s proposal to rescind the Payday Rule’s ability-to-repay (ATR) in their entirety.)

The comments made by the AGs include the following:

  • The reasons cited by the CFPB in its proposal for “contradicting” its prior UDAAP analysis and prior analysis for setting the August 19, 2019 compliance date “are woefully insufficient and therefore arbitrary and capricious in violation of the [Administrative Procedure Act].”
  • The AGs reference the CFPB’s statement that certain “potential obstacles to compliance” by the August 19 date, specifically recently-enacted changes to state laws and third-party software vendor issues, were unanticipated when the August 19 date was set.  According to the AGs, the state law changes were not unanticipated and instead were taken into account when the August 19 date was set.  With regard to third-party vendor issues, the AGs assert that the “CFPB’s description of these software and vendor implementation impediments is vague, anecdotal, and unsubstantiated; and therefore, this ‘obstacle’ is not a valid basis for delay.”
  • The proposal fails to provide a factual justification for ignoring the Payday Rule’s findings with respect to consumer benefits.
  • Although the CFPB has not proposed to delay the compliance date for the Payday Rule’s payment provisions, the AGs suggest that the CFPB might attempt to do so during the rulemaking process and assert that “no delay is appropriate to any aspect of the [Payday Rule’s] compliance date” and that the payment provisions should go into effect “as scheduled” on August 19, noting that “lenders will have had 21 months to prepare for the Payment Provisions by the time they become effective.”

To the extent the “action” threatened by the AGs is a lawsuit asserting a challenge under the Administrative Procedure Act to a final rule delaying the compliance date for the ATR provisions, it is uncertain whether the AGs would have standing to bring such a lawsuit.