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Pre-CFPB Federal Regulation of Payday Lending

Pre-CFPB Federal Regulation of Payday Lending

Before the enactment of this Dodd-Frank Act (the Act), federal enforcement of substantive customer financing guidelines against non-depository payday lenders had generally speaking been limited by prosecution that is civil the Federal Trade Commission (FTC) of unjust and misleading acts and techniques (UDAP) proscribed by federal legislation. Though it could possibly be argued that unfair techniques had been included, the FTC would not pursue state-law usury or rollover violations. Due to the general novelty associated with tribal financing model, as well as perhaps more to the point due to the you can try tids out tendency of FTC defendants to stay, you can find no reported decisions concerning the FTC’s assertion of jurisdiction over TLEs.

The FTC’s many general general general public (and maybe its very very first) enforcement action against a purported payday that is tribal-affiliated had not been filed until September 2011, once the FTC sued Lakota money after Lakota had tried to garnish customers’ wages without finding a court purchase, so that you can gather on pay day loans. The FTC alleged that Lakota had illegally unveiled consumers’ debts with their companies and violated their substantive legal rights under other federal regulations, including those associated with electronic repayments. The situation, much like the majority of for the other FTC payday-lending-related instances, had been quickly settled. Hence, it offers small guidance to inform future enforcement actions because of the FTC or even the CFPB.

The Looming Battle Over CFPB Authority

Article X associated with Act created the customer Financial Protection Bureau with plenary supervisory, rulemaking and enforcement authority with regards to payday lenders. The Act will not differentiate between tribal and non-tribal loan providers. TLEs, which can make loans to customers, autumn squarely in the concept of “covered people” underneath the Act.