The Consumer Financial Protection Bureau today announced that “it will not prioritize enforcement or supervision actions” with respect to its 2017 small-dollar lending rule, which was to take effect March 30. The CFPB further advised that it is “contemplating issuing a notice of proposed rulemaking to narrow the scope of the rule.”
When issued in 2017, the rule included prescriptive underwriting provisions and payment provisions, but it now includes only the payment provisions after the CFPB rescinded the rule’s underwriting provisions in 2020. The payment provisions prohibit lenders, including banks, from making a new attempt to withdraw funds from an account after two consecutive failed attempts without consumer consent. Significantly, those provisions exempt attempted transfers by institutions that hold the borrower’s account and do not charge insufficient funds or overdraft fees for the attempted withdrawal.
The rule also includes a complete exemption for banks and other depository institutions that made 2,500 or fewer small-dollar loans in each of the current and previous years and for which these loans account for no more than 10% of revenues. ABA advocated for this provision to protect banks’ flexibility to serve their customers’ small-dollar credit needs.
Relatedly, on March 7, the trade association representing payday lenders filed a petition asking the Supreme Court to review the rule. The court has not ruled on the petition.
