New Rules for Payday Lenders

Print Friendly, PDF & Email

blogpostpic4-24New Regulations Coming for Payday Lenders

According to multiple sources, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency are expected to issue new guidelines this week governing certain aspects of short term loans (also referred to as “payday loans” and “cash advances”), as well as the way that these financial products are marketed to consumers.  In addition, the Consumer Financial Protection Bureau (CFPB) issued a report that is highly critical of the payday lending industry, and announced that it intends to use its authority to help protect consumers from the potential debt traps and other economic hardships that these types of loans can help create.

It is expected that federal regulators will require, among other things, that lenders determine a consumer’s ability to repay a loan prior to offering that consumer a payday loan or cash advance.  Lenders will also be required to wait thirty days before offering a consumer a payday loan – with this cooling off period designed to prevent consumers from taking out a series of loans to help pay off prior loans that are due.  In addition, lenders will have to provide clearer information regarding the interest rates associated with the cash advance loans.

Complying with the New Regulatory Framework

Payday lenders must at all times ensure that their marketing and lending practices comply with all applicable state and federal laws and regulations, including the anticipated guidelines to be issued by the FDIC and the Comptroller of Currency.  This mandate is especially relevant given the CFPB’s stated intention to focus on the payday lending industry, as well as recent actions by the Federal Trade Commission (FTC).

Entities that fail to comply with the requirements of applicable law could find themselves facing regulatory action from numerous regulatory bodies, which could result in significant fines and court-directed changes to business practices.

If you are interested in learning more about this topic, or need to review your payday or cash advance lending practices based on these shifts in regulatory guidance, please contact us at your convenience.

Attorney Advertising

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

Schedule a Call
In The Know

Trending Topics

New York Sweepstakes Law blog- Klein Moynihan Turco

New York Sweepstakes Law: Are You Compliant?

Print Friendly, PDF & Email

In general, a lottery exists when entrants pay for the chance to win a prize. States alone reserve the right to administer lotteries. Businesses can eliminate one element of what would otherwise be an illegal lottery, in order to transform it into a legal promotional game. If the requirement to

TCPA surveys

An Ad or not an Ad: NY Weighs in on TCPA Surveys

Print Friendly, PDF & Email

Another day, another court decision that refines constitutes a Telephone Consumer Protection Act (“TCPA”) unsolicited fax advertisement. A Manhattan-based federal court recently issued a decision that removes faxed invitations to participate in a survey from the TCPA definition of advertisement. In drawing this distinction for TCPA surveys, the Court held

NY sports gambling law- Klein Moynihan Turco

Agreement Reached to Enact NY Sports Gambling Law

Print Friendly, PDF & Email

This week, Governor Andrew Cuomo and the New York State Legislature agreed to a budget deal that will bring mobile sports betting to the State through a unique NY sports gambling law.  Upon the Governor’s signature, NY sports gambling is primed to become the nation’s largest market. However, New York

UK and US Social Media Influencer Laws

UK and US Social Media Influencer Laws

Print Friendly, PDF & Email

In September of 2020, the United Kingdom’s (“UK”) Committee of Advertising Practice (“CAP”) reviewed the Instagram accounts of 122 UK-based social media influencers to determine whether content was being properly flagged as advertising in accordance with applicable social media influencer laws. This past March, the UK Advertising Standards Authority (“ASA”)

Share on facebook
Share on google
Share on twitter
Share on linkedin