Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32For more information, please visit or 19 PAYDAY LENDING TELEPHONE CONSUMER PROTECTION ACT DEBT COLLECTION checks, and threatening consumers who fail to pay. This year, a number of banks succeeded in securing dismiss- als of consumer class actions alleging that banks have a duty to halt automated clearinghouse debits when they become aware that the debiting party is engaging in illegal activities. The CFPB has moved to tighten payday lending regula- tions for both long- and short-term loans. The New York Department of Financial Services (DFS) has also tried to limit payday lending in the state of New York, and has supported the CFPB’s more aggressive approach to regulating the industry. Both parties in Congress have criticized the proposed rules and have sought to impact the final rule’s provisions. some 2015 Highlights Proposed Rules on Payday Lending. On March 26, 2015, CFPB Director Cordray announced a proposed outline of payday lending regulation that would vastly alter the current rules and regulations. The new rules would address both short-term and longer-term credit products such as (among others) payday loans, deposit advance products, high-cost installment loans, and certain other open-end lines of credit. Other proposals include an all- in APR cap of 36% for longer-term loans, a cooling-off period between loans, limiting the amount of the loan’s principal, and notifying borrowers before accessing bor- rowers’ bank accounts. Director Cordray stated that the purpose of the new regulations would be to return to a lending culture based on the consumer’s ability to repay as opposed to the lender’s ability to collect. Payday Lenders Pay $21 Million and Waive $285 Million in Charges. On January 16, the FTC secured a settle- ment against two online payday lending companies, AMG Services, Inc. and MNE Services, Inc., that it alleged had misrepresented to consumers the costs of their loans and required preauthorized account-debits as a prerequisite for obtaining a loan. The $21 million payment to the FTC is the largest recovery by the FTC in a payday lending case to date. Keeping Payday Lenders out of New York. DFS Superin- tendent Ben Lawsky made clear that New York regula- tors would have the final say over payday loans offered to New York residents by out-of-state lenders. Payday lending is illegal in New York, and Superintendent Lawsky has asked the CFPB to clarify that its proposed payday lending rules will not affect laws banning payday lending in New York. Congress Tries to Influence the CFPB Payday Lending Rules. 12 republicans in the U. S. House of Represen- tatives sent a letter to the CFPB, asking that the CFPB take into account the impact of its proposed payday lending rules on small businesses and rural communi- ties. Looking Ahead to 2016 The CFPB is likely to issue a formal notice of proposed rulemaking involving payday loans sometime in 2016 pursuant to its authority under the Dodd-Frank Act to regulate the short-term lending market. If the proposals outlined by the CFPB remain the same, the new pro- posed rules likely will have a dramatic effect on consum- ers’ access to credit and on the payday lending industry generally. There is little doubt that the regulations will involve tightening available credit and forcing lenders to take into account customers’ existing debt before provid- ing them with credit, as well as potentially capping costs. Regardless of the scope of these new rules, payday lenders are likely to come under continued scrutiny from state regulators and increasing scrutiny from the CFPB, which has expressed skepticism that the industry bene- fits consumers. What to Watch CFPB to issue notice of proposed rulemaking | Continued scrutiny from state regulators | Increasing scrutiny from CFPB | Increased borrower litigation and enforcement actions over loans offered by tribal entities