Federal Court Upholds Stay on CFPB Payday Lending Rule

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On March 19, 2019, the U.S. District Court for the Western District of Texas upheld the stay of the August 19, 2019 compliance date of the CFPB’s Payday Lending Rule (Rule), as well as litigation regarding challenges to the Rule’s underwriting provisions.  The CFPB along with trade groups had previously requested a stay of a lawsuit brought against the CFPB challenging the Rule, along with the effective date of the Rule itself, in order to give the CFPB time to reconsider the Rule.

The August 19, 2019 compliance date of the rule was stayed by the court in November 2018.  This recent decision follows the CFPB’s February 2019 notice of proposed rulemaking, which proposed to delay the Rule’s compliance date to November 19, 2020, and rescind certain underwriting provisions of the Rule.  As a result of this proposed rulemaking, several trade groups had asked the court to delay compliance dates until the underwriting rollback had been completed.  According to the court, the parties disagree about how long the litigation stay and the compliance date-stay should continue with regard to payment provisions of the Rule.  The court ordered the parties to file a Joint Status Report informing the court about proceedings related to the Rule and corresponding litigation by May 17, 2019. 

The case is Community Financial Services Association of America Ltd., et al. v. Consumer Financial Protection Bureau et al., No. 1:18-cv-00295 (W.D. Tx).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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