Payday loan: a juxtaposition of recent CFPB actions | Alston and Bird


A&B Summary: Three recent actions by the Consumer Financial Protection Bureau (“CFPB”), on consecutive days, highlight inconsistencies in the CFPB’s current approach to payday lending.

Motion to dismiss the NALCAB suit

On Monday, March 22, 2021, the CFPB filed in DC Federal District Court a memorandum in support of his petition to dismiss a lawsuit filed last year by the National Association of Latin American Community Asset Builders (NALCAB). The lawsuit challenged the CFPB’s 2020 Final Rule that overruled the mandatory underwriting provisions of its 2017 payday loan rule. The CFPB memorandum convincingly argues that NALCAB does not have standing to bring its challenge because (among other things) its alleged injuries are purely speculative and, therefore, the tribunal has no jurisdiction in the matter to hear the case.

Mandatory subscription

A day later, on Tuesday March 23, 2021, CFPB Acting Director Uejio released a blog post stating that notwithstanding its motion to dismiss NALCAB’s amended complaint, the CFPB “continues to believe that repayment capacity is an important underwriting standard”. He further alleged that the business model of payday lenders “depends on the inability of consumers to repay their loans” and that “these practices cause harms which must be addressed by the CFPB”, including through the development of rules, if applicable.

Consumer complaints

Two days later, on Wednesday March 24, 2021, the CFPB published its 2020 Annual Report on Consumer Response. The report notes that the CFPB received around 542,300 consumer complaints in 2020, an increase of over 50% from the number of complaints received in 2019. Acting Director Uejio said in his introduction to the report: “The global pandemic was perhaps the most disruptive long-term event we will see in our lives. Unsurprisingly, the shockwaves it sent across the globe were deeply felt in the consumer financial market.

Notably, however, the volume of complaints relating to decreases 24% in 2020. The CFPB received only 1,600 payday loan complaints in 2020, or only 0.3% of all complaints received. Of these, around 600 complaints were either forwarded to other agencies or deemed incomplete, so that only around 1,000 complaints were actually sent to businesses for review and response. And of those, 83% were closed with an explanation provided by the company, suggesting that complainants may have simply been wrong about certain facts about their payday loan, while only 1% (or 10 complaints ) resulted in monetary relief for consumers. .


In a February 10, 2021 blog post, Acting Director Uejio pledged that consumer complaints and other consumer contributions would be treated as crucial data that informs CFPB’s policy making. Therefore, the CFPB can be expected to examine whether the scarcity of payday loan complaints can be reconciled with its belief that the payday lending model depends on harm to consumers and whether discretionary regulation is appropriate. in the light of competing priorities.

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