Proposed payday rule comment deadline extended

Proposed payday rule comment deadline extendedOn July 22, the CFPB published its proposed rule for Payday, Vehicle Title, and Certain High-Cost Installment Loans. The Bureau also concurrently issued a Request for Information (RFI) which solicits information and evidence regarding to help assess whether there are other categories of loans for which lenders do not determine the consumer’s ability to repay that may pose risks to consumers.

Further, the Bureau requests responses as to whether there are other lender practices with regard to covered loans that may warrant further action by the CFPB in addition to its proposed payday rule.

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: