Payday Lending

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The plaintiffs challenging the CFPB payday lending rule should not be entitled to an en banc rehearing because the issues they cite already have become final and the time for rehearing has lapsed, the CFPB said last week responding to a request for such a rehearing. The rule prohibits lenders from continuing to attempt to withdraw money from a borrower’s account after two prior attempts failed for lack of sufficient funds, unless the lender obtains new authorization from the borrower.… Continue Reading

After the Supreme Court’s long-awaited 7-2 decision in CFSA v. CFPB that the Consumer Financial Protection Bureau’s (“CFPB’s”) funding mechanism did not violate the appropriations clause of the U.S. Constitution, the case was remanded to the Fifth Circuit, which affirmed the judgment of the district court and reinstated its own judgment in favor of the CFPB on plaintiffs’ three other challenges to the Payday Lending Rule (the “Rule”) that the Fifth Circuit panel had previously rejected:

  1. That the payday lending rule’s promulgation violated the Administrative Procedure Act;
  2. That the rule was promulgated by a CFPB Director unconstitutionally insulated from presidential removal; and
  3. That the CFPB’s UDAAP rulemaking authority violates the Constitution’s separation of powers.
… Continue Reading

On June 14, the CFPB announced that its payday lending rule would become effective on  March 30, 2025.  However, the CFPB ignored the possibility of further litigation in CFSA v. CFPB, the case challenging the payday lending rule that has been pending since 2017.  

After the U.S. Supreme Court’s decision in CFSA v.… Continue Reading

In a blog post published at the end of last week, the CFPB announced that its payday lending rule (Rule) would go into effect on March 30, 2025.  Because the Rule’s ability to pay requirements were rescinded, the only remaining provisions of the Rule are its “payment provisions.”  Those provisions:

  • Prohibit lenders from attempting to withdraw payment for a covered loan from a borrower’s account after two consecutive attempts have failed due to lack of sufficient funds, unless the borrower specifically provides new authorization to do so; and
  • Require lenders to give consumers certain notices, such as advance notice before attempting to withdraw a payment for the first time and notice of the consumer’s rights when two consecutive payment attempts fail.
… Continue Reading

On December 22, 2023, the Attorney General of Montana released an opinion (the “Opinion”) concluding that certain earned wage access (EWA) products are not “consumer loans” or “deferred deposit loans” under Montana law and do not, therefore, require licensure by the Montana Division of Banking and Financial Institutions. The Opinion only applies to EWA products that are:

  1. fully non-recourse, meaning providers do not: have any legal or contractual right to repayment from consumers, engage in any debt collection activities, sell or assign any balances, or report any non-payment to a consumer reporting agency;
  2. not conditioned on payment of any mandatory interest, fee, or other compensation; and
  3. limited in amount to the consumer’s accrued income.
… Continue Reading

On April 5, 2023, the Consumer Financial Protection Bureau (CFPB) brought an action against James R. Carnes and Melissa C. Carnes, both individually and as co-trustees of the James R. Carnes Revocable Trust and the Melissa C. Carnes Revocable Trust, for allegedly hiding money through a series of fraudulent transfers in order to avoid paying more than $40 million in restitution and penalties for illegal payday lending activities. … Continue Reading

The CFPB and All American Check Cashing have filed a status report with the Mississippi federal district court indicating that they have agreed to a settlement conference before a magistrate judge.

The case was remanded to the district court by the en banc Fifth Circuit, which ruled that the CFPB’s enforcement action against All American could proceed despite the unconstitutionality of the CFPB’s single-director-removable-only-for-cause-structure at the time the enforcement action was filed. … Continue Reading

Proponents of the Payday Loan Interest Rate Cap ballot initiative in Michigan met the June 1, 2022 deadline to appear on the November 2022 ballot in the state.  If not picked up by the state legislature this summer, the proposal would ask voters to approve a state statute capping payday loan interest rates, that can currently reach over 370% APR, at no more than 36% APR.… Continue Reading

The Fifth Circuit held  oral argument yesterday in the appeal filed by the trade groups challenging the payment provisions in the CFPB’s 2017 final payday/auto title/high-rate installment loan rule (2017 Rule).  Click here for the recording of the oral argument.

The trade groups have appealed from the district court’s final judgment granting the CFPB’s summary judgment motion and staying the compliance date for the payment provisions until 286 days after August 31, 2021 (which would have been until June 13, 2022). … Continue Reading