PECOS, Texas–The U.S. District Court for the Western District of Texas has granted summary judgment in favor of the CFPB in an action filed by two trade groups challenging the payment provisions of the Bureau’s 2017 final rule covering “Payday, Vehicle Title, and Certain High-Cost Installment Loans.”
But the court has stayed the August 19, 2019 compliance date for 286 days after final judgment as requested by the plaintiffs.
The ruling was hailed by the CFPB.
The plaintiffs had challenged the 2017 Rule’s payment provisions’ compliance date and asked the court to set aside the 2017 Rule and the Bureau’s ratification of the payment provisions of the 2017 Rule as unconstitutional and in violation of the Administrative Procedures Act.
But in granting the summary judgment to the Bureau, the Buckley Firm noted the court ruled that the ratification “was valid and cured the constitutional injury caused by the 2017 Rule’s approval by an improperly appointed official.” Among other things, the court also concluded that the payment provisions, as a matter of law, “are consistent with the Bureau’s statutory authority and are not arbitrary and capricious,” and that the Bureau properly considered the costs and benefits of such payment provisions, the Buckley Firm added.
However, in granting the plaintiffs’ request for a longer stay, the court stated it was persuaded by the plaintiffs’ arguments “that they should receive the full benefit of the temporary stay and that a more substantial compliance date allows time for appeal,” consistent with the fact that the “stay was requested with 445 days left until the implementation deadline, and it was entered with 286 days remaining.”
CFPB Response
“I am pleased the court reaffirmed our ability to protect borrowers from unfair and abusive payment practices in the payday lending and other markets covered by the rule,” said CFPB Acting Director Dave Uejio. “These provisions will prohibit lenders from continuing to attempt to withdraw payment from borrowers’ accounts after two attempts have failed, which will protect borrowers from being hit with multiple fees for returned payments or insufficient funds and reduce the risk that consumers’ accounts will be closed.
“Today’s ruling will provide relief to all those who could face these practices,” Uejio continued. “Under the court’s order, compliance with the rule will become mandatory on June 13, 2022. The CFPB expects lenders to follow the requirements of the payment provisions, consistent with the court’s order.”