For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.com 21 account for the full balance of the loan. To determine a borrower’s ability to repay, the lender would be required to conduct a “full payment test,” showing the borrower can afford the loan and her or his existing financial obligations. However, lenders would be able to avoid this requirement by offering an option which allows borrowers to pay debts more gradually under a principal payoff option. In addition, the Rule specifically exempts less risky credit extensions offered by community banks or credit unions. The Rule also would exclude certain advances of earned wages made under wage-advance programs offered by employers or their business partners. Additionally, the Rule has components that would cover payday loans and loans “with terms of more than 45 days that have (1) a cost of credit that exceeds 36 percent per annum; and (2) a form of ‘leveraged payment mechanism’ that gives the lender a right to withdraw payments from the consumer’s account.” These provisions would prohibit lenders from making more than two unsuccessful attempts to debit a borrower’s account without additional borrower authorization. Lenders would also be required to give consumers written notice before the first attempt to debit the consumer’s account to collect payment for any loan covered by the Rule. The new Rule, which the CFPB first proposed in June 2016, and which received more than one million comments, was to be effective January 2018, although compliance with some provisions is not required until August 2019. In January 2018, the CFPB announced that it was reopening the rulemaking process and would reconsider the Rule. It remains to be seen how the Rule’s provisions will be affected, but given the turnover at the CFPB and that Director Mulvaney (and other Administration officials) are known opponents of the Rule, it is unlikely to remain as once envisioned. Virginia, Florida, and Georgia Attorneys General Settle with Online Payday Lender. In January, the Florida Attorney General’s office and the Florida Office of Financial Regulation, in conjunction with a pending Florida class action, entered into consent orders with online payday lender Western Sky Financial, LLC, CashCall, Inc., and their affiliated entities, resolving allegations that the companies used a “rent-a-tribe” scheme to skirt Florida’s APR interest caps. That same month, in the largest settlement secured by the Virginia Attorney General’s Predatory Lending Unit to date, the Virginia Attorney General’s office entered into a settlement agreement with CashCall, Inc. and its president and CEO, concerning the company’s efforts to avoid state usury laws. And in February, the Georgia Attorney General’s office also reached a settlement with CashCall, Inc. and Western Sky Financial, LLC over similar claims. These settlements resolve the state enforcement actions brought in 2016 against CashCall, Inc. involving payday lending. The CFPB action initiated against CashCall, Inc. in 2016 remains pending. All told, these state settlements secured over $80 million in consumer relief. Operator of Online Payday Lending Firm Convicted of TILA and RICO Violations. In November, Richard Moseley, operator of a network of online payday lenders and loan servicers, was convicted of violating RICO and TILA by charging consumers illegal interest rates on payday loans and by making deceptive and misleading disclosures to borrowers. The loan agreements materially understated the total cost of the loans and the length of repayment. For example, the loan agreements represented that a $100 loan would cost the borrower $30 in interest, but in fact, the lender charged a $30 “finance fee” each month and did not apply any of the payment to the principal, causing the borrower to pay an additional $30 each pay period. According to the acting U.S. Attorney prosecuting the case, Moseley’s network of companies obtained $220 million from consumers by burying key loans terms in fine print. FTC Obtains $4.1 Million Judgment Against Operation That Sold Lists of Fake Payday Loan Debts to Debt Collectors. In October, a federal court entered a default judgment against Joel Jerome Tucker and others for selling lists of fake payday debts to debt collectors, who then attempted to collect on the debts. The lists included the names of millions of consumers who were subsequently harassed for debts they did not owe. This judgment follows the $1.3 billion judgment the FTC obtained against Tucker’s brother (a well-known racecar driver) last year related to a purported payday lending scheme. Fourth Circuit Rejects Arbitration Request Under Payday Loan Agreement. In a loss for payday lenders affiliated with tribal entities, the Fourth Circuit affirmed a North Carolina district court’s refusal to