Via Electronic Submission
The Honorable Richard CordrayConsumer Financial Protection Bureau1700 G Street NWWashington, DC 20552
Re: Proposed rulemaking on payday, car name, and particular high-cost installment loans, Docket No.
Dear Director Cordray:
Many thanks for the opportunity to submit responses regarding the CFPB’s proposed rule on payday, vehicle name, and high-cost that is certain loans. On the behalf of companies located in the 14 states, in addition to the District of Columbia, where lending that is payday forbidden by state legislation, we compose to urge the CFPB to issue your final guideline that may bolster states’ efforts to enforce their usury and other customer security legislation against payday lenders, loan companies, as well as other actors that seek which will make, gather, or facilitate illegal loans within our states.
Our jurisdictions, which represent significantly more than 90 million people—about one-third of this country’s population—have taken the stance, through our long-standing usury laws and regulations or even more current legislative and ballot reforms, that strong, enforceable price caps are sound general general public policy and also the simplest way to finish the pay day loan financial obligation trap. Our states also have taken enforcement that is strong against predatory financing, leading to vast amounts of debt settlement and restitution to its residents.[1] However, payday loan providers continue steadily to you will need to exploit loopholes within the regulations of a number of our states; claim which they will not need to adhere to our state legislation (for instance, when it comes to loan providers purporting to have tribal sovereignty); or just disregard them completely.
Therefore maybe perhaps perhaps not sufficient for the CFPB just to acknowledge the presence of, and perhaps perhaps not preempt, laws into the states that prohibit pay day loans.[2] Instead, the CFPB should fortify the enforceability of our state laws and regulations, by declaring when you look at the last guideline that providing, gathering, making, or facilitating loans that violate state usury or other consumer security laws and regulations is definitely an unjust, misleading, and abusive work or practice (UDAAP) under federal legislation. The enforcement actions that the Bureau has brought throughout the last couple of years against payday loan providers, loan companies, payment processors, and lead generators offer a stronger foundation for including this explicit dedication into the payday lending rule.[3]
The CFPB’s success in its federal lawsuit against payday lender CashCall provides an especially strong basis for including this type of supply into the rule that is final. Here, the CFPB sued CashCall and its own loan servicer/debt collector, alleging which they involved with practices that have been unjust, deceptive and abusive under Dodd-Frank, included generating and gathering on loans that violated state caps that are usury certification guidelines and had been consequently void and/or uncollectible under state legislation.[4] The court consented, saying the following:
On the basis of the undisputed facts, the Court concludes that CashCall and Delbert Services engaged in a practice that is deceptive because of the CFPA. By servicing and gathering on Western Sky loans, CashCall and Delbert Services developed the “net impression” that the loans had been enforceable and that borrowers were obligated to settle the loans according to the regards to their loan agreements….[T]hat impression was patently false – the mortgage agreements were void and/or the borrowers weren’t obligated to pay for.[5]
Critically, the court clearly rejected the defendants’ argument that Congress hadn’t authorized the CFPB to transform a state law breach as a breach of federal law, keeping that “while Congress failed to want to turn every breach of state law in to a violation associated with CFPA, that does not imply that a violation of a situation legislation can’t ever be a breach regarding the CFPA.”[6]
Consequently, by deeming conduct in breach of relevant state usury and lending regulations UDAAPs, the CFPB would make such conduct a breach of federal law also, thus offering all states a better course for enforcing their laws and regulations. Without this type of supply within the last guideline, state solicitors General and banking regulators, however authorized by Dodd-Frank to enforce federal UDAAP violations, would continue steadily to need certainly to prove that particular functions or methods meet with the appropriate standard, susceptible to the courts’ final dedication.
In addition, also where states have strong statutory prohibitions against not only illegal lending nevertheless the facilitation and number of unlawful loans,[7] some state legislation charges could be too little to efficiently deter unlawful financing. For all payday lenders and associated entities, these charges are simply just the expense of conducting business. The higher charges under Dodd-Frank for federal UDAAP violations would offer a stronger enforcement tool to state solicitors General and regulators, along with a more deterrent that is effective unlawful lending.
The CFPB also needs to explain that wanting to debit a borrower’s deposit take into account a repayment on a unlawful loan is unauthorized and so a breach associated with federal Electronic Fund Transfer Act and Regulation E. this could establish that loan providers collecting re re payments on unlawful loans in this way are breaking not merely state rules, but federal legislation too.
We many thanks for the continued consideration of y our issues, and hope that the CFPB’s rule that is final to strengthen our states’ abilities to enforce our state rules and protect our residents through the pay day loan debt trap.
Arizona Community Action Association Arkansans Against Abusive Payday Lending Center for Economic Integrity (AZ) The Collaborative of NC Community Legal Services of Philadelphia (PA) Connecticut Association for Human solutions DC 37 Municipal workers Legal Services (NY) Empire Justice Center (NY) Georgia Watch Granite State Organizing Project (NH) Hebrew payday loans DE Free Loan Society (NY) IMPACCT Brooklyn (NY) Lower East Side People’s Federal Credit Union/PCEI, Inc. (NY) The Midas Collaborative (MA) Maryland Consumer Rights Coalition Montana Organizing venture MFY Legal Services (NY) New Economy Project (NY) New Hampshire Legal Assistance brand brand New Jersey Citizen Action ny Public Interest analysis Group (NYPIRG) North Carolina Assets Alliance North Carolina Coalition for Responsible Lending new york Council of Churches new york Justice Center Pennsylvania Public Interest analysis Group (PennPIRG) Philadelphia Unemployment venture (PA) Reinvestment Partners (NC) Rural Dynamics (MT) United Valley Interfaith venture (NH, VT) western Virginia focus on Budget and Policy
