5th Circuit Denies Request for Rehearing on Decision Affirming Validity of CFPB Payday Lending Rule

The U.S. Court of Appeals for the Fifth Circuit denied a request for rehearing of a prior decision holding that the CFPB’s payday lending rule was constitutional and had been promulgated in accordance with all necessary procedural requirements.

The underlying 2017 CFPB regulation restricts certain payday lending practices, such as prohibiting lenders from accessing a borrower’s bank accounts in order to collect payments directly from the borrower’s accounts.  A trade group representing non-bank payday lenders challenged the rule as unconstitutional and as having been promulgated in violation of the Administrative Procedure Act.  Although the Fifth Circuit’s original 2022 decision found that the rule had been properly promulgated, the court nevertheless blocked the rule based on a finding that the Bureau’s funding mechanism was unconstitutional—a holding that was later overturned by the Supreme Court.  Additional coverage by WBK of the Fifth Circuit’s initial ruling and of the Supreme Court’s decision are available here and here.

With the Fifth Circuit’s denial of the request for rehearing, the rule in question is slated to go into effect on March 30, 2025.