Today, January 16, 2018, officially marks the effective date of the Consumer Financial Protection Bureau’s final rule targeting what it refers to as “payday debt traps” (the “Rule”). As outlined in our previous publications (found here and here), the Rule marks a significant change in the landscape for lenders offering short-term loans or longer-term loans with balloon payments, including payday and vehicle title loans. Looming large is the new requirement that lenders determine a borrower’s ability to repay prior to originating covered loans.
Payday lenders recently received their first peek at what life will be like under the CFPB’s watch, and it’s not a pretty picture. In the Bureau’s recently released examination procedures for payday lenders, the CFPB makes clear that it will examine every aspect of a payday lender’s operation, likely well beyond what most payday lenders have experienced to date with the patchwork of state regulation. Read More