The Fifth Circuit Court of Appeals, which has been hearing the legal challenge brought by payday lenders to the Consumer Financial Protection Bureau’s small dollar lending rule, issued an order last week clarifying that the rule’s compliance date is March 30, 2025.
The rule seeks to curtail repeated withdrawals from an account — and the assessment of repeated nonsufficient funds fees — by prohibiting the withdrawal of payment from an account after two consecutive unsuccessful withdrawal attempts, through the same or different payment channels, unless the lender obtains the borrower’s authorization for additional withdrawals from the account. The rule excludes from the restriction banks and other lenders that hold the consumer’s account from which the transfer is attempted, if certain conditions are met.
The rule’s compliance date had been stayed pending the payday lenders’ constitutional challenge to the CFPB’s funding structure. This past May, the Supreme Court upheld the CFPB’s funding structure in CFPB v. CFSA.
