A legal challenge to the Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule (the "Payday Rule") issued by the Bureau of Consumer Financial Protection (Bureau)* has been stayed. Thus, the compliance date remains unchanged—for now.
As we noted previously, the Bureau is reexamining its recent Payday Rule, which became effective on January 16, 2017, with full compliance required by August 19, 2019. The two trade associations that had challenged the Payday Rule under the Administrative Procedures Act (APA) have since moved (jointly with the Bureau) to (1) stay their litigation and (2) stay the compliance date of the regulation.
Consumer groups, filing as amici curae, argued that a judicial stay of the rule would circumvent the APA requirements regarding public notice and comment, and standards for postponing rules pending review. The Texas federal court hearing the case agreed, ordering that the case be stayed, but declining to stay the Payday Rule itself.
The Bureau supports the trade associations' request that the court reconsider its decision. In its filing, the Bureau states that it "is currently taking steps to reconsider the Payday Rule through notice-and-comment rulemaking." The Bureau reiterates that a stay is necessary and warranted, in no small part because the agency states it cannot complete the notice and comment process required to rework the Payday Rule before the compliance deadline. The Bureau highlights the 1.4 million comments received on the initial rulemaking proceeding, and anticipates a similar number of comments would be filed should the Payday Rule be reopened. The Bureau's filing also stresses lenders' decreases in revenue, and the possibility of many lenders leaving the market as a concrete harm, with the harm to consumers described as speculative.
Of course, the Bureau could extend the compliance deadline of the Payday Rule through a notice-and-comment rulemaking, and reserve revisiting the substantive provision of the rule for a future process.
*Also known as the Consumer Financial Protection Bureau or CFPB.