Letter to the CFPB Regarding Payment Protections in its Payday Lending Rule

Letter to CFPB on Payment Protections (08/12/2019)

On August 12, 2019, Public Citizen, along with Americans for Financial Reform Education Fund, the Center for Responsible Lending, and the National Consumer Law Center, sent a letter to the Consumer Financial Protection Bureau (CFPB) urging it to take immediate action to implement part of the agency’s payday lending rule, whose compliance date is August 19, 2019.

The letter regards the Rule’s payment provisions, which protect consumers by restricting payday and vehicle-title lenders from attempting to withdraw money from borrowers’ bank accounts after two attempts have failed. The safeguards will help consumers avoid fees for unsuccessful debit attempts that can also put their bank accounts in jeopardy. But the CFPB has been refusing to take steps to implement the provisions and protect consumers.

The CFPB released its payday lending rule in 2017, after five years of research, outreach and analysis, and set August 19, 2019 as the compliance date for the payment provisions and other consumer protections. Soon after the Rule was released, however, the agency’s leadership changed. First under its new acting director, Mick Mulvaney, and then under its new director, Kathleen Kraninger, the CFPB began taking steps to weaken the Rule. In February 2019, the CFPB proposed delaying and rescinding the Rule’s ability to-repay provisions, which protect consumers by requiring that lenders generally determine borrowers’ ability to repay their loans. In June 2019, it issued a rule delaying the compliance date for those protections. And, without offering any justification, the agency has failed to support the timely implementation of the Rule’s payment protections.

In fall 2018, at the request of the CFPB and industry groups challenging the Rule, the U.S. District Court for the Western District of Texas stayed the rule’s August  19 compliance date. Then, the CFPB acknowledged in a March 2019 court filing that there was no basis for continuing the stay of the payment protections’ compliance date as industry plaintiffs requested at the time. However, in that and later filings, the CFPB did not ask the court to lift the stay on the payment protections part of the Rule. The court has left the stay in place.

The letter calls on the CFPB to immediately request that the court lift the stay of the compliance date for Rule’s payment provisions and to support timely implementation of these consumer protections.