Dodd-Frank Act

A Closer Look at the CFPB’s Proposed Debt Collection Rules – Part Three: Important Details Relating to Disclosures and Debt Validation Notices

August 30, 2019 By Morey Barnes Yost, Anoush Garakani

A&B Abstract

This blog post is part three of a five-part series examining the Consumer Financial Protection Bureau’s (the “CFPB” or “Bureau”) proposed rule amending Regulation F (“Proposed Rule”), which implements the Fair Debt Collection Practices Act (“FDCPA”) to prescribe rules governing the activities of debt collectors.

In part one of this series, we provided a brief overview of the FDCPA and the Proposed Rule’s most impactful provisions. In part two, we summarized the key provisions of the Proposed Rule relating to debt collector communications with consumers. This post summarizes the key provisions of the Proposed Rule relating to debt collectors’ disclosures to consumers. These include provisions relating to key proposed disclosures, namely the requirements relating to debt validation notices, and the electronic provision of required disclosures.

Background

Section 809(a) of the FDCPA requires that within five days after the initial communication with the consumer in connection with the collection of any debt, a debt collector must provide the consumer with a validation notice (unless the required information is contained in the initial communication, or the consumer has paid the debt). The statute requires the notice to include:

The amount of the debt;
The name of the creditor to whom the debt is owed;
A statement that unless the consumer disputes the validity of the debt (or any portion thereof) within 30 days after receipt of the notice, the debt collector will assume the debt to be valid;
A statement that if the consumer notifies the debt collector in writing during the 30-day period that the debt (or any portion thereof) is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer, and the debt collector will mail the consumer a copy of the verification or judgment; and
A statement that, upon the consumer’s request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

Proposed Debt Validation Notice Requirements

To address perceived inadequacies in the processes relating to validation and verification, the Bureau has proposed Section 1006.34 to clarify what validation information debt collectors must provide to consumers.

First, the Proposed Rule would clarify that a debt collector may satisfy the initial disclosure requirement by sending a consumer a validation notice that satisfies the delivery requirements of proposed Section 1006.42(a): (1) in the initial communication; or (2) within five days thereafter. However, as under Section 809(a), the disclosure requirement does not apply if the consumer has paid the debt prior to the time the notice is required to be sent. As these provisions are largely consistent with the statute, they do not appear to present significant challenges for implementation.

Second, the Proposed Rule would require the validation information to be “clear and conspicuous,” which the CFPB would define consistent with how that term is used in other consumer financial services laws and implementing regulations. Accordingly, for a disclosure to satisfy the standard, it would have to be: (1) readily understandable; (2) for a written or electronic disclosure, in a location and type size that are readily noticeable to consumers; and (3) for and oral disclosure, given at a volume and speed that are sufficient for a consumer to hear and comprehend it.

Third, the Proposed Rule would require a debt collector to include in the validation notice information about the debt that would be sufficient to enable the consumer to identify, and determine whether they owe, the debt. Specifically, such information would include:

the consumer’s name and mailing address, which would have to be the most complete information the debt collector obtained from the creditor or another source;
the name of the creditor, which the CFPB proposes to make the creditor as of the itemization date;
the account number;
the amount of the debt;
information about consumer protections, including the right to dispute a debt and to request the name and address of the original creditor, as provided under Section 809(b) of the FDCPA; and
a consumer response form that a consumer may use to exercise such rights (e.g., submitting a dispute or requesting original creditor information), which would include express elective statements that a consumer could use to ensure that debt collectors provide the appropriate information.

Fourth, to comply with the validation disclosure requirements of Section 809(a) of the FDCPA and 12 C.F.R. § 1006.34 of the Proposed Rule, the CFPB has proposed a Model Validation Form (B-3). The Bureau would permit a debt collector to adjust the content, format and placement of certain validation information within the model form, provided that the resulting disclosures are substantially similar to the model.

Disclosure of the Amount of Debt

The proposed requirements relating to the amount of the debt are worth note. First, the Proposed Rule would require a debt collector to disclose both: (1) the current amount of the debt; and (2) the amount of the debt as of the “itemization date.” The amount would have to be presented in tabular format, and reflect interest, fees, payments, and credits (or, if applicable, a disclosure that no interest, fees, payments, or credits were assessed or applied to a debt). The Bureau has requested comment on whether the itemization should be more detailed, whether itemization is practicable for all categories of debt, and whether the proposed itemization would cause conflicts with other applicable laws and requirements.

Second, the Proposed Rule would define the “itemization date” as any of the following reference dates on which the debt collector can ascertain the amount of the debt: (1) the last statement date; (2) the charge-off date; (3) the last payment date; or (4) the transaction date; Notably, while the Proposed Rule would allow a debt collector flexibility in determining which reference date to choose as the “itemization date,” it would require a debt collector to use the same date consistently for disclosures for that same consumer, to ensure that changes in the reference do not undermine the Bureau’s purpose of providing clear and consistent information in disclosures under proposed Section 1006.34. Additionally, debt collectors would have to take care to identify the creditor as of the chosen itemization date. The CFPB has requested comments on whether: (1) the proposed definition of “itemization date” will facilitate disclosure, (2) would capture all debt types; (3) whether additional clarification is needed; and (4) whether the potential reference dates should be ordered in a hierarchy in order to improve consumer understanding of the required disclosures.

Third, the Proposed Rule includes special disclosure requirements for the amount of the debt for debt collectors collecting mortgage debt that is subject to Regulation Z, 12 C.F.R. § 1026.41. Given that that regulation requires the delivery of regular periodic statements that includes itemized fee information, the CFPB’s proposal reflects that for such loans the “amount of the debt” information that would otherwise be required under the Proposed Rule would already be delivered to consumers. Accordingly, the Proposed Rule would permit a debt collector collecting a mortgage debt subject to the periodic statements requirement of Regulation Z a copy of the most recent periodic statement provided to the consumer at the same time as the validation notice, and refer to the periodic statement in the notice, in order to satisfy the itemization requirement. In doing so, the Proposed Rule would provide flexibility to mortgage servicers in complying with the “amount due” itemization requirement. The Bureau is requesting comment on how this exemption would apply to servicers exempt from the periodic statement requirement (e.g., for borrowers in bankruptcy). However, we note that the periodic statement requirements also do not apply to open-end and reverse mortgage loans. Thus, it appears that servicers of open-end and reverse mortgage loans would not be given the same flexibility in complying with the “amount due” itemization requirement. In addition, it is unclear whether the provision of a periodic statement, in lieu of the itemized amount due, could create borrower confusion to the extent the amount listed on the periodic statement materially differs from the “current amount of the debt,” which must continue to be disclosed.

Proposed Validation Period Requirements

In addition to the validation notice requirements discussed above, Section 809 of the FDCPA requires a debt collector to satisfy certain requirements if a consumer, within the 30-day validation period: (1) disputes a debt; or (2) requests the name and address of the original creditor. To ensure that consumers can take advantage of this protection, the Proposed Rule would require a debt collector to disclose to a consumer the date on which the verification right expires (i.e., the date on which the 30-day period ends).

The Proposed Rule would define the validation period as beginning on the date on which a debt collector provides the validation information, and ending 30 days after the consumer receives or is assumed to receive such information. Under the Proposed Rule, the latter date would be any date that is at least five business days (excluding Saturdays, Sundays, and legal public holidays) after the debt collector provides the validation information. If a consumer does not receive the original validation notice, and the debt collector sends a subsequent notice, the Proposed Rule would calculate the validation period from the date of receipt (or assumed receipt) of the subsequent notice.

The Bureau is seeking comment on how debt collectors determine the end of the validation period, and on whether the timing presumption should be modified (including to account for differences in mail versus electronic delivery).

Proposed Provisions Relating to Translation of Disclosures

To address concerns regarding LEP consumers, the Proposed Rule would include provisions relating to the translation of information from validation notices.

Specifically, the Bureau proposes to permit a debt collector to include in a validation notice optional information (in Spanish) on how a consumer may request the notice in Spanish, if the debt collector chooses to provide a Spanish-language translation. To determine the potential impact of this provision, the CFPB has requested comments on: (1) debt collectors’ current Spanish-language, and other non-English language, collection activities; (2) examples of supplemental Spanish-language instructions to request a translated validation notice; and (3) the benefits and risks of such an approach.

Further, the Proposed Rule would allow a debt collector to provide a translation of the validation notice in any language other than English if the debt collector: (1) also sends an English-language validation notice in the same transmittal; or (2) previously sent an English-language validation notice. This provision of the proposal recognizes, but does not mirror, obligations that may arise under state law regarding the provision of translated documents to LEP consumers. By declining to mandate multiple translations, the Bureau’s proposal would avoid imposing significant costs on debt collectors who may not deal with significant LEP populations. However, the Bureau is seeking comment on whether a debt collector should be required to provide a translated non-English validation notice (in a language other than Spanish) at the request of the consumer. Such a requirement could expand the cost of compliance with the Proposed Rule, particularly for debt collectors whose exposure to LEP consumers is more limited.

Electronic Disclosure Requirements

To recognize the role that electronic communications play in debt collection activities, the Proposed Rule would:

Permit debt collectors to include electronic contact information (website and email address) in the validation notice;
If a debt collector sends a validation notice electronically, require the debt collector to include a statement regarding how a consumer can take responsive actions (e.g., disputing the debt) electronically, and permit the debt collector to include such information in a disclosure that is not provided electronically;
Require a debt collector to provide required disclosures in a manner that is reasonably expected to provide actual notice and in a form that the consumer can keep and access later; and
If a debt collector provides required disclosures electronically, mandate compliance with the federal E-SIGN Act or equivalent processes.

The Bureau is giving particular consideration to how consumers might respond to electronic validation notices. Specifically, the Proposed Rule considers how a debt collector may include prompts and hyperlinks in validation notices to facilitate consumer responses. The former director of the Federal Trade Commission’s Bureau of Consumer Protection, David Vladeck, recently published an opinion article in which he highlighted several cybersecurity concerns related to the permissible use of hyperlinks under the Proposed Rule. Specifically, the former director noted that:

Encouraging use of hyperlinks by unknown parties undermines government warnings about the risks of doing so and exposes consumers to criminal exploitation. Scammers pushing links with viruses, malware, and identity theft scams are almost certain to impersonate debt collectors. Consumers will face a catch-22: Click and risk a virus or a scam, or don’t click and miss potentially legitimate information about why a debt collector is going after you and how to dispute the debt.

In light of the risks highlighted by the former director, and other consumer advocates, it is unclear whether the Proposed Rule’s provisions on the use of hyperlinks will make their way into a Final Rule.

Takeaway

While the Proposed Rule would provide debt collectors some flexibility in determining how to comply with the validation notice requirements, the scope of issues on which the Bureau has requested comment in connection with these provisions leaves open the possibility that the new requirements could be significantly more burdensome to implement. As parts four and five of this blog series will discuss in greater depth, the final requirements that the Proposed Rule would impose, and its nuances, are important to note for debt collectors.

QM Patch Update: CFPB Proposes to Let Patch Expire

August 4, 2019 By Stephen Ornstein

A&B Abstract

The CFPB has issued an Advance Notice of Proposed Rulemaking regarding the fate of the “QM Patch,” indicating that it will not extend the “QM Patch” permanently.

Advanced Notice of Proposed Rulemaking

In a surprise development, on July 25, 2019, the Consumer Financial Protection Bureau (“CFPB”) issued an advance notice of proposed rulemaking (“ANPR”) seeking public comment regarding the fate of the “QM Patch,” which is scheduled to expire no later than January 10, 2021. The comment period is short, reflecting the urgency of promulgating a final rulemaking before the impeding “QM Patch” termination. Comments must be received by the CFPB within 45 days after publication of the ANPR in the Federal Register.

Background

The CFPB created the “QM Patch” as a temporary provision of the qualified mortgage (“QM”)/ability-to-repay (“ATR”) regulations adopted pursuant to the Dodd-Frank Act. It exempts lenders from having to underwrite loans with debt-to-income (“DTI”) ratios not exceeding 43% in accordance with the exacting standards of Appendix Q to Regulation Z if the loans otherwise meet the definition of a QM and are eligible for purchase by, among others, Fannie Mae and Freddie Mac.

The CFPB’s Proposal

In seeking public comment in the ANPR, however, the CFPB announced that it does not intend to extend the “QM Patch” permanently. This shocking pronouncement has potentially profound ramifications for the residential mortgage lending markets. A substantial proportion of the markets have relied extensively on the “QM Patch” in underwriting qualified mortgages, not to mention significantly reducing the role of the GSEs in these markets. For years, GSE critics have complained about Fannie Mae’s and Freddie Mac’s dominance of the residential lending markets. Yet the January 2021 “QM Patch” expiration would raise critical questions: Will the private markets be able to absorb the GSE’s large share of qualified mortgage lending? If not, what are the possible detrimental impacts on consumers, especially those in distressed communities?

Other QM Changes?

In the ANPR, the CFPB indicates that it may make other significant changes to the qualified mortgage regulations, based in part on the public comments it receives. For example, the CFPB is considering whether the general QM definition should retain a direct measure of a consumer’s personal finances, such as DTI or residual income and how that measure should be structured. The CFPB is also seeking comment on whether the definition should: (1) include an alternative method for assessing financial capacity, or (2) be limited to the express statutory criteria. Under one approach that seems to be attracting the CFPB’s interest, bright-line pricing delineation would replace the DTI criteria altogether. Under such an approach, loans with APRs exceeding the average prime offer rate by certain thresholds would be deemed rebuttable presumption QM loans or non-QM loans, as the case may be. Loans not exceeding certain thresholds would receive safe harbor QM status. Under such a bright line pricing delineation method, the loans would have to comply with other statutory criteria in order to retain QM status.

Takeaway

The 45-day deadline for comments seems rushed, especially considering the dramatic effect that changes to the qualified mortgage rules could have on the residential mortgage finance and housing markets. Further, in an ideal world, the CFPB should be considering amendments of the qualified mortgage/ability-to-repay rules in tandem with the federal high cost mortgage, the residential mortgage risk retention, and the loan originator compensation rules as a holistic approach rather than in isolation.

A Closer Look at the CFPB’s Proposed Debt Collection Rules – Part One

August 1, 2019 By Anoush Garakani

A&B Abstract:

On May 7, 2019, the Consumer Financial Protection Bureau (the “CFPB” or “Bureau”) issued a proposed rule that would significantly amend Regulation F (the “Proposed Rule”), which implements the Fair Debt Collection Practices Act (“FDCPA”), to prescribe rules governing the activities of debt collectors that are subject to the FDCPA. The Bureau recently extended the comment period from August 19, 2019 to September 18, 2019.

Overview of Blog Series

This blog post is part one of a five-part series that will take a deeper dive into the topics covered by the Proposed Rule as well as those issues the Bureau has chosen not to address. This five-part series will cover the following topics:

Part one will provide a brief history of the FDCPA and the Proposed Rule and provide a high-level overview of the Proposed Rule’s coverage and scope of applicability and a summary of the Proposed Rule’s most impactful provisions.
Part two will discuss the Proposed Rule’s communication requirements, including (i) time and place restrictions, (ii) restrictions on telephone call volume, (iii) text and email communications, and (iv) resolution of the “voicemail paradox” through the use of limited-content messages. In addition, this part will focus on the operational challenges created by the Proposed Rule and what debt collectors should be thinking about when considering whether to submit comments to the Bureau.
Part three will address the Proposed Rule’s disclosure requirements, including (i) expanded requirements for Validation of Debt notices, (ii) a safe harbor for use of the Bureau’s new proposed model Validation of Debt form, and (iii) requirements for the provision of electronic disclosures.
Part four will discuss the Proposed Rule’s conduct provisions, including provisions addressing (i) decedent debt, (ii) time-barred debt, (iii) credit reporting restrictions, and (iv) transfers of debt.
Finally, part five will discuss several issues that are not addressed by the Proposed Rule, whether the provisions of the Proposed Rule could be applied to first-party collection activities based on UDAAP principles, and the potential interplay between the Proposed Rule and state debt collection laws.

History of the FDCPA and the Proposed Rule

For decades the FDCPA was enforced by the Federal Trade Commission (“FTC”). However, prior to the Dodd-Frank Act, no federal regulator had rulemaking authority under the FDCPA. As a result, the FDCPA was the subject of countless, and often times inconsistent, interpretations fashioned by the courts and federal regulators.

When the Dodd-Frank Act transferred the FDCPA from the FTC to the CFPB, it also empowered the Bureau with rulemaking authority to prescribe regulations with respect to the collection of debts by debt collectors, as defined by the FDCPA. The Bureau began this process in 2013 by issuing an Advanced Notice of Proposed Rulemaking (“ANPR”). Following the ANPR, the Bureau, in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy, convened a Small Business Regulatory Enforcement Fairness Act panel in 2016 to consult with representatives of small businesses that might be affected by the rulemaking.

With its issuance of the Proposed Rule, the Bureau has taken the first step in providing industry with clearer rules of the road in applying the provisions of the FDCPA to modern debt collection practices.

Below we provide a high-level overview of the Propose Rule’s most significant provisions.

Overview of Proposed Rule

The provisions of the Proposed Rule can be broken into the following categories:

Coverage and Scope of Applicability
- Proposed Covered Persons
  - Who is a “Debt Collector”? The Proposed Rule’s proposed definition of “debt collector” generally restates the FDCPA’s definition of “debt collector,” including the exceptions, with only minor wording and organizational changes for clarity.
  - Who is a “Consumer”? Similarly, the Proposed Rule would largely restate the FDCPA’s definition of “consumer.” However, the Bureau proposes to interpret the term to include a deceased natural person who is obligated or allegedly obligated to pay a debt. Similarly, for purposes of certain communications provisions, the Proposed Rule interprets the term “consumer” to include a confirmed successor-in-interest and the personal representative of a deceased consumer’s estate.
- Proposed Covered Products
  - Consumer Financial Product or Service Debt: While the Proposed Rule generally restates the FDCPA’s definition of “debt,” with only minor wording and organizational changes, certain parts of the Proposed Rule would only apply when a debt collector covered by the FDCPA is collecting debt related to a “consumer financial product or service” as defined in the Dodd-Frank Act.
Conduct and Communication Provisions: The Proposed Rule would:
- Electronic Communications Generally: Identify safe harbor procedures for debt collectors who unintentionally communicate with an unauthorized third party about a consumer’s debt when trying to communicate with the consumer by email or text message.
- Option to Opt-Out: Require a debt collector to include, in emails, text messages, and other electronic communications, an option for the consumer to opt-out from such future communications.
- Communication Media Restrictions: Prohibit a debt collector from communicating or attempting to communicate with a consumer through a medium of communication that the consumer has requested the debt collector not use, such as a specific telephone number or email address.
- Time and Place Restrictions for Electronic Communications: Clarify that calls to mobile telephones and electronic communications, such as texts and emails, are subject to the FDCPA’s prohibition on communicating at unusual and inconvenient times and places.
- Use of Workplace Email Addresses: Unless an exception applies, prohibit a debt collector from contacting a consumer using an email address that the debt collector knows or should know is provided by the consumer’s employer.
- Social Media Platforms: Prohibit debt collectors from contacting consumers through social media platforms, unless such contact is made through the platform’s private messaging function.
- Limited-Content Message: Define, and provide example language for, a “Limited-Content Message” that a debt collector could send by, for example, voicemail or text. The content of a Limited-Content Message would not be considered a “communication.” Thus, if a Limited-Content Message is heard or observed by a third party, it would not constitute a prohibited third-party disclosure.
- Telephone Call Frequency Limits: Prohibit a debt collector from calling a consumer about a particular debt more than seven times within a seven-day period, subject to certain limited exceptions. The proposal would also prohibit a debt collector from engaging in more than one telephone conversation with a consumer about a particular debt within a seven-day period. As a result, a debt collector who stays within the proposed limits would not be found to have engaged in repeated or continuous telephone calls or conversations with the intent to harass, as prohibited by the FDCPA.
- Decedent Debt: Clarify how and with whom a debt collector can communicate about a deceased consumer’s debt, as well as how the requirements regarding validation notices and disputes apply after a consumer passes away.
- Time-Barred Debt: Prohibit a debt collector from suing or threatening to sue on time-barred debt if the debt collector knows or should know that the applicable statute of limitations has expired.
- Communicating Before Credit Reporting: Prohibit a debt collector from reporting collection items to consumer reporting agencies unless the debt collector has already communicated with the consumer.
- Transfers of Debt: Unless an exception applies, prohibit a debt collector from transferring a debt to another debt collector if the debt collector knows or should know that the debt has been paid or settled, the debt has been discharged in bankruptcy, or an identity theft report has been filed with respect to the debt.
Disclosure Requirements: The Proposed Rule would:
- Provision of Electronic Disclosures: Generally, require a debt collector to provide required disclosures in a manner that is reasonably expected to provide actual notice, and in a form that the consumer may keep and access later. Debt collectors who provide the required disclosures electronically would need to either comply with the E-SIGN Act or a set of alternative procedures. The Proposed Rule would also impose certain requirements related to the delivery and format of required electronic disclosures.
- Validation Notice: Require a debt collector to include in the validation of debt notice certain information about the debt, including (i) the account number and an itemization of the debt, (ii) certain information about consumer protections, such as information about the right to dispute a debt, and (iii) a consumer response form that consumers could use to take certain actions, such as submitting a dispute or requesting the original creditor’s information. In addition, the Proposed Rule would permit a debt collector to (i) include statements in the validation of debt notice informing consumers how they may request the notice in Spanish, if the collector chooses to provide a Spanish-language translation, and (ii) provide a validation notice translated into any language, if the debt collector also sends an English-language validation notice in the same communication or if the debt collector previously sent an English-language validation notice.
- Model Validation Notice: Permit a debt collector to comply with FDCPA’s validation of debt provisions and the Proposed Rule’s disclosure requirements by using proposed Model Form B-3.

Takeaway

The issuance of the Proposed Rule clearly reflects the investment of significant time and consideration by the Bureau. As the Proposed Rule is significant in scope, we expect the Bureau will engage in a similar undertaking as it considers comments submitted by debt collectors and other industry stakeholders.

House Committee Holds Hearing on “Ending Debt Traps in the Payday and Small Dollar Credit Industry”

May 16, 2019 By Nanci Weissgold, Sam Bragg

On April 30, 2019, the House Committee on Financial Services held a hearing on “Ending Debt Traps in the Payday and Small Dollar Credit Industry,” which focused on three potential bills.

Discussion Draft of Protecting Consumers from Debt Traps and Unreasonable Rates Act

This draft, based on legislation sponsored by Senators Durbin and Merkley and Representatives Cartwright and Cohen in prior Congresses, would impose a 36 percent usury APR cap for all open-end and closed-end consumer credit transactions, including mortgages, car loans, overdraft loans, car title loans, and payday loans. The bill would permit initial application fees and the recovery of ongoing lender costs, such as insufficient funds fees and late fees. The proposal would not preempt stricter state laws, and it would create specific penalties for violations of the cap and allow for enforcement through civil courts and by state Attorneys General.

H.R.1285, the Improving Access to Traditional Banking Act of 2019

Introduced by Rep. David Scott, this bill would establish the Consumer Bureau the Office for Under-Banked, Un-Banked, and Underserved Consumers. This office would, in part, periodically study and report on barriers for individuals and families that do not participate in the traditional banking system, coordinate with other agencies, and develop strategies to increase participation in the traditional banking system.

Fund Small Dollar Loan Program

Subcommittee Chairman Meeks led a letter to the Appropriations Committee requesting $10 million to fund Dodd-Frank’s Small Dollar Loan Program, which is administered by the Community Development Financial Institutions Fund (CDFI Fund). Joined by several other Members, this letter promotes the prioritization of Section 1206 of the Dodd-Frank Act, which authorized the CDFI Fund to provide financial assistance for the creation of loan loss reserves to support small dollar loan offerings among CDFIs, including certified banks and credit unions. The program has never been funded but would help individuals build credit, access affordable capital and enter the mainstream financial system.

A&B Takeaway

Though each of the three bills were mentioned during the hearing, the majority of the discussion focused on the first bill and attempting to reach consensus on the 36% percent usury cap, which is the rate currently applied nationwide with respect to loans made to military personnel. Various witnesses and Congressmen testified about the perils and advantages of payday lending, but consensus appeared to exist regarding a few points: (1) many unbanked and underbanked individuals need access to some form of credit like payday loans; (2) some payday lenders make predatory loans that trap consumers in a debt cycle; and (3) online payday lending is more likely to be predatory or create a debt trap. Additionally, most witnesses and Congressmen appeared to agree that the 36% usury rate cap is a potentially viable compromise. Lastly, there was some discussion of the CFPB’s plan to rescind the Payday Rule. Many witnesses and Congressmen expressed the view that this regulation was a long-time coming and that rescinding the Rule would be a huge missed opportunity for consumers.

In all, the key takeaway from this hearing is that discussions are taking place in the legislature with the goal of implementing national usury caps (be that with respect to individual products like small-dollar loans or across the entire lending industry). Yet another example is the bill introduced by Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez, just over a week after this hearing, proposing a national consumer credit interest rate cap at 15%. While this bill hasn’t necessarily gained traction, it made quite a splash in the media and is helping drive the discussion over how to best regulate interest rates nationwide.