Washington DC — This afternoon, the Consumer Financial Protection Bureau (CFPB) and the payday lending industry trade groups jointly filed a request that a federal judge indefinitely delay the compliance date for the CFPB’s own regulation on payday lending. Payday loans are small, triple-digit interest rate loans that often become a debt trap for low- and moderate-income consumers.
The motion comes in a lawsuit filed by two payday lending trade groups, the Consumer Financial Service Association of America and the Consumer Service Alliance of Texas. The trade groups sued the CFPB seeking to overturn the Bureau’s payday loan consumer protection rules. The request is unusual in that the consumer protection agency jointly filed the motion with lawyers for the payday lending industry.
“The Trump Administration is siding with payday lenders in seeking an indefinite delay for already long-overdue safeguards on predatory triple-digit interest rate loans,” explained Christopher Peterson, Financial Services Director at the Consumer Federation of America. “This is a profound disappointment for anyone who cares about the welfare of struggling consumers.”
The jointly filed motion:
- Requests a suspension of the lawsuit while the Bureau reconsiders its own consumer protections rules. The jointly filed motion asks for a “stay” in the litigation that would indefinitely suspend the lawsuit while the federal government considers changes to the CFPB rules.
- Seeks to delay the compliance date of the CFPB’s payday lending rules. The jointly filed motion seeks to delay the compliance date set forth in the payday lending rules until 445 days after final judgment in the lawsuit. Because both parties are simultaneously seeking to suspend the lawsuit itself, the delay in the implementation of the consumer protection rules could last years or, in effect, be permanent.
- Requests permission from the court to waive the CFPB’s normal obligations to defend itself. Under normal court procedures, a federal judge would expect the CFPB to defend itself by answering the payday lending industry’s allegations. Instead of defending itself, the Bureau asked for permission to stand-down in the payday lenders’ lawsuit.
“The Consumer Bureau spent years studying to craft compromise rules that would provide protection against some of the very worst abuses in payday lending,” said Peterson. “But now, under the Trump Administration, the Consumer Bureau is working hand-in-hand with the payday lending industry to facilitate triple-digit interest rate loans to the working poor.”
“Instead of protecting the public, under the Trump Administration, the Consumer Bureau is capitulating to some of the worst predators in consumer finance by refusing to defend its own work,” said Peterson. “This is a sad day for those that hoped for a federal agency focused on protecting the public from special interests.”
Contact: Christopher L. Peterson, 202-387-6121 x1020