District Court Denies Stay of Compliance Date for the CFPB’s Payday Lending Rule

The District Court for the Western District of Texas recently denied the CFPB’s attempt to stay the compliance date of the Payday Lending Rule, which was drafted under former director Richard Corday.  The CFPB along with trade groups had requested a stay of a lawsuit brought against the Bureau challenging the Rule, along with the effective date of the Rule itself, in order to give the Bureau time to reconsider the Rule.

The lawsuit against the Bureau was originally filed in April by two payday lender trade groups, who argued against the Payday Lending Rule on the basis that the restrictions that the Rule places on issuers of payday loans are too costly and time-consuming.  The lender trade groups argued that these restrictions would ultimately harm consumers and force them to get other inferior and more costly alternative forms of credit.  The lender trade groups and the Bureau agreed that the trade groups presented a substantial case on the merits on some of its claims, and therefore requested a stay of the lawsuit against the Bureau and a stay of the compliance date for the Payday Lending Rule.

The District Court granted the stay for the lawsuit against the Bureau, but denied the stay of the compliance date for the Payday Lending Rule, which is currently set to go into effect on August 19, 2019.

The citation for the District Court’s ruling is Community Financial Services Association of America, Ltd., v. Consumer Financial Protection Bureau, No. 1:18-cv-295-LY.