CFPB Issues Final Rule on Payday Loans

Consumer Financial Protection Bureau

On July 7, the Consumer Financial Protection Bureau (CFPB) issued a final rule concerning payday loans in order to maintain consumer access to credit and competition in the marketplace. The final rule rescinds the mandatory underwriting provisions of the 2017 rule after re-evaluating the legal and evidentiary bases for these provisions and finding them to be insufficient. The final rule does not rescind or alter the payments provisions of the 2017 rule.

The Bureau also issued guidance clarifying the payments provisions’ scope and assistance to lenders in complying with those provisions. In addition, the Bureau ratified the payment provisions in light of the U.S. Supreme Court’s recent decision in Seila Law.

The California and Nevada Credit Union Leagues had called on the CFPB to expand the exemption for National Credit Union Administration (NCUA) PAL loans to include all current and future iterations of the PAL program. Last year, the NCUA authorized a second PALs program (PALs II). The CFPB’s final rule does not provide a blanket exception for all NCUA PAL programs and notes that PALs II loans will likely not meet the safe harbor exemption as the loan amounts are larger and likely will have terms longer than 45 days.

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