A group of Democratic senators (joined by two independent Senators) has sent a letter to Leandra English and Mick Mulvaney urging them to abandon any efforts by the CFPB to reconsider its final payday/auto title/high-rate installment loan rule (Payday Rule).
In January 2018, the CFPB announced that it intends to engage in a rulemaking process to reconsider the Payday Rule pursuant to the Administrative Procedure Act. Although the Payday Rule became “effective” on January 16, 2018, the compliance date for the rule’s substantive requirements and limits (Sections 1041.2 through 1041.10), compliance program/documentation requirements (Section 1041.12), and prohibition against evasion (Section 1041.13) is August 19, 2019. The Senators state that they “understand that the CFPB is delaying the rule by granting waivers to companies who would otherwise be taking steps to begin complying with the rule, and that the Bureau may be offering the payday loan industry an opportunity to undermine the rule entirely.” According to the Senators, such actions are “further efforts to undermine the implementation of this important consumer protection rule.”
The Senators also state that they are “troubled by the CFPB’s enforcement actions related to payday lending.” Their letter references the CFPB’s decision to end a lengthy investigation into a payday lending company and its dismissal of a federal court lawsuit filed by the CFPB against four online tribal lenders.
We previously observed that the lawsuit represented another attempt by the CFPB to transform alleged violations of state law into CFPA UDAAP violations. More specifically, the CFPB claimed that because the lenders charged interest at rates that exceeded state usury limits and/or failed to obtain required state licenses, the loans were void or uncollectible in whole or in part as a matter of state law and the defendants’ efforts to collect amounts that consumers did not owe under state law were “unfair,” “deceptive,” and “abusive” under the CFPA as a matter of federal law.