Payday Lending Rule Status Update

The Consumer Financial Protection Bureau's “Payday, Vehicle Title, and Certain High-Cost Installment Loans” rule has been held up by a federal court case in Texas. Although the rule's Aug. 19, 2019, effective date has passed, the U.S. District Court for the Western District of Texas (Austin Division) upheld implementation of the rule pending the court's decision in Community Financial Services Association of America, Ltd. and Consumer Service Alliance of Texas v. Consumer Financial Protection Bureau [and its director].

On July 29, the court ordered that the parties submit briefs and responses by Aug. 16 concerning what would be the appropriate compliance date if the court were to deny Plaintiffs’ motion for summary judgment and grant Defendants’ motion for summary judgment. Those briefs and responses have been filed. Lenders now face the risk that the court could rule soon in favor of the CFPB, allowing the rule to take effect.

The Bureau's brief argued that the rule should become effective within 30 days of the court's lifting of the stay. The trade groups argued that any order lifting the stay should set the compliance date either 445 days or 286 days from the lifting of the stay, reflecting the time left for compliance when the stay was sought (445 days before Aug. 19, 2019) or entered (286 days before Aug. 19, 2019). The trade groups suggested they would appeal if the court rules in favor of the Bureau.