WASHINGTON — An appeals court has approved delaying the implementation of the Consumer Financial Protection Bureau’s payday lending rule, in a win for small-dollar lenders that challenged the rule’s restrictions on accessing consumer bank accounts.
In an Oct. 14 ruling, the U.S. Court of Appeals for the Fifth Circuit sided with payday and auto title lenders, determining that they don’t have to comply with the CFPB rule that is scheduled to go into effect in June while the Community Financial Services Association of America and the Consumer Service Alliance of Texas appeal a previous court decision that ruled in favor of the CFPB.
At issue is a provision of the CFPB’s payday lending rule that
In August, a judge at the U.S. District Court for the Western District of Texas rejected the case of the industry groups challenging the rule, and denied their motion to delay the effective date of the rule while they appealed his ruling. But the Fifth Circuit overturned that decision, allowing for the payday lending rule to remain on pause until the appeals process is completed.
Last year, under former CFPB Director Kathy Kraninger, the agency
But the Kraninger-era rule preserved the original rule’s limits on the ability of payday lenders to access bank accounts, drawing the ire of small-dollar lenders. Dave Uejio, who served as acting director of the CFPB until Rohit Chopra was recently confirmed as the agency’s permanent director, had signaled that the CFPB would look to reverse Kraninger’s rule and reinstate the original 2017 regulation.