On August 31, 2021, the U.S. District Court for the Western District of Texas, granted the Consumer Financial Protections Bureau’s (CFPB) motion for summary judgment in Community Financial Services Association of America, Ltd., Consumer Service Alliance of Texas v. Consumer Financial Protection Bureau [and its Director], and ordered that the August 19, 2019, compliance date of the “Payday, Vehicle Title, and Certain High-Cost Installment Loans” Rule (12 CFR Part 1041 – Regulation OO) be stayed until 286 days after the date of the court’s order. Unless the CFPB further amends the rule to delay the effective date further, or the plaintiffs appeal the ruling of the court, the rule will become effective June 13, 2022.
This action likely ends two years of litigation that gave lenders a reprieve from some rather burdensome regulations.
The Payday rule impacts every financial institution. Between now and next June:
- Policies and procedures must be developed or revised;
- Training must be completed; and
- Systems must be developed or updated.
This will be a major program for some lenders. Many lenders can avoid much of the work by operating within the exceptions created within Regulation OO.