Pre-CFPB Federal Regulation of Payday Lending

Pre-CFPB Federal Regulation of Payday Lending

Ahead of the enactment of this Dodd-Frank Act (the Act), federal enforcement of substantive customer lending rules against non-depository payday lenders had generally speaking been limited by prosecution that is civil the Federal Trade Commission (FTC) of unjust and misleading functions and methods (UDAP) proscribed by federal legislation. Even though it could possibly be argued that unjust techniques had been involved, the FTC failed to pursue state-law rollover or usury violations. Due to the general novelty regarding the lending that is tribal, and maybe more to the point due to the tendency of FTC defendants to stay, you will find no reported decisions about the FTC’s assertion of jurisdiction over TLEs.

The FTC’s many general general public (and maybe its very very first) enforcement action against a purported tribal-affiliated payday loan provider had not been filed until September 2011, once the FTC sued Lakota money after Lakota had tried to garnish customers’ wages without receiving a court purchase, so that you can gather on pay day loans. The FTC alleged that Lakota had illegally unveiled consumers’ debts for their employers and violated their substantive legal rights under other federal legislation, including those concerning payments that are electronic. The truth, much like the majority of of this other FTC payday-lending-related instances, ended up being quickly settled. Therefore, it gives little guidance to inform future enforcement actions because of the FTC or the CFPB.

The Looming Battle Over CFPB Authority

Article X associated with the Act developed the customer Financial Protection Bureau with plenary supervisory, rulemaking and enforcement authority pertaining to payday lenders. The Act will not differentiate between tribal and lenders that are non-tribal. TLEs, which can make loans to customers, autumn squarely inside the definition of “covered persons” underneath the Act. Continue reading “Pre-CFPB Federal Regulation of Payday Lending”