March 13, 2019

Nacha Files Comments on CFPB Payday Lending Rulemaking

The purpose of the CFPB request was to propose a delay to the effective date of the mandatory underwriting provisions of the regulation promulgated by the CFPB in November 2017 governing Payday, Vehicle Title, and Certain High-Cost Installment Loans (the “Final Rule”). The Final Rule also contained a set of requirements and limitations with respect to attempts to withdraw payments from consumers’ checking or other accounts in connection with specific loan types (the “Payment Provisions”). The NPRM did not propose to delay the effective date of the Payment Provisions, but had requested comments on crossover effects on the Payment Provisions from delayed implementation of the rest of the Final Rule. Moreover, the NPRM notes that the CFPB has received a number of informal requests related to the Payment Provisions and that the CFPB will examine those issues and consider whether a separate rulemaking is appropriate. The purpose of the Nacha comment was to encourage the CFPB to undertake that separate rulemaking as soon as possible in light of certain significant deficiencies in the Payment Provisions as they relate to payments in the automated clearing house (“ACH”) Network overseen by Nacha. Both the Payment Provisions themselves and the manner by which they were adopted should be revisited by the CFPB.

The primary points of the letter included:

  • The CFPB Relied on Stale Data
  • The CFPB Did Not Adequately Consider the Impact of the Nacha Rules and Nacha Enforcement Efforts
  • The Final Rule Will Impact Common Industry Practices Across Industries
  • The Payment Provision Should Apply Equally to Any Payment Type