On July 7, 2020, the Consumer Financial Protection Bureau (CFPB) published a final rule, and related materials, related to the Payday lending and other small dollar products. The Payday Lending rules have been unfolding for several years.
The final rule, implemented as Regulation OO, 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.
With its actions today, the CFPB is moving forward with implementing the payments provisions of the 2017 final rule. These provisions prohibit lenders from making a new attempt to withdraw funds from an account where two consecutive attempts have failed unless consumers consent to further withdrawals. The payment provisions also require such lenders to provide consumers with written notice before making their first attempt to withdraw payment from their accounts and before subsequent attempts that involve different dates, amounts, or payment channels. These provisions are intended to increase consumer protections from harm associated with lenders’ payment practices.
The CFPB also issued guidance clarifying the payments provisions’ scope and assisting lenders in complying with those provisions.
The final rule is effective 90 days after publication in the Federal Register, which is expected soon. The payments provisions are currently stayed by court order, the CFPB will seek to have them go into effect with a reasonable period for entities to come into compliance.
Following are links for:
- The CFPB’s press release;
- The final rule; and
- The ratification of the payments provisions.