CFPB’s Short-Term, Small-Dollar Loan Regulations

Earlier this year, the Consumer Financial Protection Bureau (CFPB) issued its lengthy short-term, small-dollar loan regulations which will require lenders to determine whether applicants can afford to obtain a payday loan. The Bureau’s proposed rule is designed to limit the circumstances under which lenders can issue short-term loans, known as “payday” loans, which can carry interest rates up to 390%.

Report finds that payday lenders circumvent state laws

On June 16, the House Financial Services Committee Democratic staff released a report emphasizing the need for strong and effective federal regulations and consumer protections. The report, which is titled “Skirting the Law: Five Tactics Payday Lenders Use to Evade State Consumer Protection Laws,” gives credence to arguments that state-level regulation of the payday and small-dollar lending industry fails to provide sufficient protections for consumers. The report highlights various tactics that lenders employs to circumvent state laws. Specifically, the report offers several examples of measures lenders have taken to avoid compliance with state regulations: 

House Subcommittee Questions CFPB’s Arbitration Rule

On Wednesday, May 18, the House Financial Institutions and Consumer Credit Subcommittee held a hearing entitled, “Examining the CFPB’s Proposed Rulemaking on Arbitration: Is it in the Public Interest and for the Protection of Consumers?” The hearing follows the release of Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking covering the use of arbitration agreements containing class action waivers in consumer financial services contracts on May 5, 2016.