Part 1041 - Payday, Vehicle Title, and Certain High-Cost Installment Loans

"The Payday Lending Rule became effective on January 16, 2018. However,the Rule’s general compliance date is August 19, 2019. Thus, by its terms, the Rule does not require lenders to comply with the Rule’s payment provisions or the related compliance program and record retention requirements until August 19, 2019. The compliance date, however, was stayed pursuant to a court order issued in Community Financial Services Association v. CFPB, No. 1:18-cv-00295 (W.D. Tex. Nov. 6, 2018). As a result, lenders have no obligation to comply with the Rule until the court-ordered stay is lifted." (Small entity compliance guide for the rule)

The CFPB rescinded the mandatory underwriting provisions of the rule effective October 20, 2020, and ratified the remaining provisions. These changes have been posted in our Regulations pages.

The U.S. District Court for the Western District of Texas issued a summary judgment in favor of the CFPB and lifted its stay of the compliance date, but ordered that the compliance date be postponed to June 13, 2022. The plaintiffs in the case have filed an appeal from the District Court's decision with the U.S. Court of Appeals for the Fifth Circuit, which has now stayed the June 13, 2022, compliance date until 286 days after the appeal from the District Court's order has been resolved.

A three-judge panel of the Fifth Circuit Court of Appeals on October 19, 2022, declared that the Bureau's funding mechanism is unconstitutional and vacated this regulation. The CFPB can appeal that ruling to the full Fifth Circuit and ultimately to the Supreme Court. The ruling was appealed to the U.S. Supreme Court, which reversed the decision of the Fifth Circuit and remanded the case for further proceedings.

SCOTUS entered its judgment on June 17, 2024. This means that the 286-day period set by the Fifth Circuit will result in a March 30, 2025, effective date for the rule.

The CFPB has released an updated Small Entity Compliance Guide for the payment provisions of the rule, and FAQs.

For a table of Federal Register documents affecting this regulation, click HERE