Pre-CFPB Federal Regulation of Payday Lending

Pre-CFPB Federal Regulation of Payday Lending

Before the enactment associated with the Dodd-Frank Act (the Act), federal enforcement of substantive customer financing regulations against non-depository payday lenders had generally speaking been limited by civil prosecution by the Federal Trade Commission (FTC) of unjust and misleading functions and methods (UDAP) proscribed by federal legislation. Though it might be argued that unjust methods had been included, the FTC failed to pursue state-law rollover or usury violations. Due to the general novelty associated with tribal financing model, and maybe more to the point due to the propensity of FTC defendants to stay, you can find no reported decisions about the FTC’s assertion of jurisdiction over TLEs.

The FTC’s many public (as well as perhaps its first) enforcement action against a purported tribal-affiliated payday loan provider had not been filed until September 2011, once the FTC sued Lakota Cash after Lakota had attempted to garnish customers’ wages without finding a court purchase, so that you can collect on payday advances. The FTC alleged that Lakota had illegally unveiled consumers’ debts for their companies and violated their substantive liberties under other federal legislation, including those associated with electronic repayments. The situation, just like the majority of associated with the other FTC cases that are payday-lending-related ended up being immediately settled. Hence, it gives small guidance to inform future enforcement actions because of the FTC or even the CFPB.

The Looming Battle Over CFPB Authority

Article X of this Act created the customer Financial Protection Bureau with plenary supervisory, rulemaking and enforcement authority with regards to payday lenders. The Act does not differentiate between tribal and non-tribal loan providers. TLEs, which can make loans to consumers, autumn squarely in the concept of « covered people » underneath the Act. Tribes aren’t expressly exempted through the conditions of this Act if they perform consumer-lending functions.

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