Consumer groups to CFPB: Implement payday rule
Consumer advocates want the Consumer Financial Protection Bureau to move ahead with implementing a key provision of the payday lending rule even though a judge last year delayed it from going into effect.
Public Citizen, the Americans for Financial Reform Education Fund, the Center for Responsible Lending and the National Consumer Law Center said in a letter Monday to CFPB Director Kathy Kraninger that the bureau was “abandoning its consumer-protection mission” by not enforcing payment protections for payday loan customers.
“Lenders take direct access to borrowers’ accounts and attempt, again and again, to repay themselves from those accounts, even when borrowers lack funds for repayment,” the groups said in the letter. “The repeat hits to accounts cause borrowers to shoulder multiple non-sufficient funds, overdraft, or other fees, lead to checking account closures, and painfully hamper borrowers’ ability to manage their finances.”
The rule has been at the center of a Texas court case in which companies are trying to throw out restrictions that had been finalized under former CFPB Director Richard Cordray.
The CFPB under Kraninger proposed an overhaul of the rule in February that would roll back tough underwriting requirements. But the bureau left intact the payment restrictions that limit the number of times a lender can try to debit borrowers’ bank accounts.
Still, U.S. District Judge Lee Yeakel, who is presiding over the Texas lawsuit, stayed the rule's effective date — including the payment provisions — to give the agency time to rewrite the regulation.
The four advocacy groups questioned why the CFPB did not ask Yeakel in an Aug. 2 court filing to lift the stay given that the bureau acknowledged in a March 8 filing that there was no basis for the delay.
“The CFPB’s failure to make this request ... is inexcusable,” the groups said in their letter.
They said they are concerned that the CFPB used the lawsuit essentially to delay the rule without public notice. The advocacy groups filed amicus briefs alleging the stay of the Aug. 19, 2019, compliance date was improper.