As the industry anxiously awaits the release of the Consumer Financial Protection Bureau’s debt collection rule (is today the day? Sign up for a webinar on the chance it is), another rule released by the Bureau is under attack from consumer advocates, in what could be a sign of what’s to come once the debt collection rule is released.
A pair of consumer advocacy groups — the National Association for Latino Community Asset Builders and the Center for Responsible Lending — filed a lawsuit in federal court yesterday seeking to nullify changes that were made by the CFPB to its payday lending rule. A copy of the complaint can be accessed by clicking here.
The CFPB originally issued a payday lending rule in 2017, which included a controversial provision requiring lenders assess a borrower’s ability to repay a loan prior to making it. The CFPB was sued, after which it pulled back the rule and re-wrote it, rescinding many of the ability to repay requirements. A published report later accused the CFPB of manipulating data to justify its re-writing of the rule.
Now, the CFPB is being sued again, this time for not going far enough to protect consumers.
“This rule is a slap in the face to consumers and is particularly ill-timed when so many people are facing financial distress due to the pandemic,” said Rebecca Smullin, who will be serving as the plaintiff’s lead attorney in the suit. “The CFPB’s rule appears to be crafted solely to boost lenders’ profits, contrary to the consumer financial protection mission of the agency.”
In filing the suit, the plaintiffs are accusing the CFPB of violating the Administrative Procedures Act and are seeking to have the updated rule repealed.
