Consumer Financial Protection Bureau headquarters in Washington, D.C.
The CFPB announced Friday that it will not prioritize enforcement of key consumer protections set to take effect March 30, under its Payday, Vehicle Title, and Certain High-Cost Installment Loans Regulation, specifically the so-called "Bounced Payment Rule."
This provision, the last remaining section of the original 2017 payday loan rule, restricts payday lenders, high-cost installment lenders charging over 36% APR, and certain "Buy Now, Pay Later" (BNPL) providers from making repeated attempts to withdraw funds from borrowers’ bank accounts after two failed payment attempts. The rule was designed to prevent consumers from being hit with multiple non-sufficient funds and overdraft fees.
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“It’s outrageous that the CFPB will not enforce the law that prohibits payday lenders and other 200% APR lenders from continually debiting people’s accounts,” Lauren Saunders, associate director of the National Consumer Law Center, said. “Current CFPB leadership is now refusing to enforce the law.”
The CFPB defended its move by citing a desire to shift resources toward more “pressing threats to consumers,” including those impacting servicemembers, veterans and small businesses. The agency also signaled it may propose a rule change to further narrow the regulation.
CU Times reached out to America’s Credit Unions and the Defense Credit Union Council (DCUC) for comment concerning Friday’s announcement.
America’s Credit Unions Head of Regulatory Advocacy James Akin said, “We encourage the CFPB to ensure that predatory payday lenders are not given free rein to exploit vulnerable consumers. A balanced regulatory approach is essential to protect hard-working taxpayers, servicemen, veterans and small businesses while preserving the availability of fair, community-based credit options.”
DCUC Chief Advocacy Officer Jason Stverak said, “While we respect the CFPB’s vision to better protect consumers, including hardworking taxpayers, servicemembers, veterans and small businesses, we strongly caution against consideration to reduce or lessen enforcement and/or oversight of these lenders.”
He added that DCUC is “concerned that pausing enforcement of these critical protections could put these consumer communities at greater risk and undo hard-earned safeguards against abusive lending practices.”
Consumer advocates warned this delay could leave vulnerable borrowers unprotected. “Buy now, pay later lenders that make unaffordable loans should not be allowed to keep hitting your bank account after payments bounce twice,” Saunders said. “It’s unconscionable.”
The debate underscored ongoing tensions over the CFPB’s role in regulating high-cost lending practices.
More Rule Revoking
In a joint filing dated March 26, the Financial Technology Association and the CFPB asked the U.S. District Court for the District of Columbia to pause ongoing litigation concerning a CFPB interpretive rule. The case challenges the CFPB’s rule under Regulation Z, which classifies the use of digital user accounts for accessing BNPL loans as subject to the Truth in Lending Act. The plaintiffs had intended to seek summary judgment but agreed to the stay after the CFPB indicated its new leadership is planning to revoke the interpretive rule entirely.
To conserve judicial resources and allow time for potential rule revocation, the parties jointly requested that the court stay the proceedings. They proposed that the CFPB provide a status update by June 2, and every 30 days thereafter, until revocation is complete. The filing cited the court’s discretion to stay litigation when an agency’s rulemaking may moot the case and help avoid unnecessary litigation.
This pause will allow the CFPB to reconsider the rule and may resolve the lawsuit without further court intervention.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
