Federal Court Upholds Key Protection for Payday Loan Borrowers

Andy Spears
2 min readSep 7, 2021

A federal district court has upheld a key provision of a Consumer Financial Protection Bureau (CFPB) rule designed to protect payday, car title, and other borrowers. The rule prevents these lenders from making repeated attempts to debit funds from a borrower’s account. These repeated attempts to debit funds often result in overdraft fees or even the closure of a borrower’s checking account.

Acting CFPB Director Dave Uejio indicated that the move by the court will help ensure consumers are protected:

“I am pleased the court reaffirmed our ability to protect borrowers from unfair and abusive payment practices in the payday lending and other markets covered by the rule. These provisions will prohibit lenders from continuing to attempt to withdraw payment from borrowers’ accounts after two attempts have failed, which will protect borrowers from being hit with multiple fees for returned payments or insufficient funds and reduce the risk that consumers’ accounts will be closed.

“Today’s ruling will provide relief to all those who could face these practices. Under the court’s order, compliance with the rule will become mandatory on June 13, 2022. The CFPB expects lenders to follow the requirements of the payment provisions, consistent with the court’s order.”

Photo by David Clode on Unsplash

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .