The Consumer Financial Protection Bureau (CFPB) last week released a small entity compliance guide for its short-term, small-dollar loan rule, otherwise known as the “payday” rule. Though the bureau proposed updates to the rule earlier this month, that proposal does not address the payment-related requirements of the rule covered in this small entity compliance guide.
According to the bureau, the guide highlights information that may be helpful when implementing the payment-related questions of the rule. However, the CFPB strongly emphasized that the guide is not a substitute for reviewing the rule itself.
The rule applies to lender that make “covered loans,” which generally include:
The guide specifically notes that certain loans that “generally conform to the NCUA’s requirements for Payday Alternative Loan program are exempted from being covered loans.”
The rule’s payment provisions impose two types of requirements regarding lenders’ repeated attempts to withdraw payments from consumers’ accounts after prior attempts have failed due to insufficient funds:
A lender making a covered loan must develop and follow written policies and procedures designed to ensure compliance with the rule, and must also retain evidence of compliance for 36 months.
The rule outlines the types and format of information that lenders must retain.