The Community Financial Services Association of America (CFSA) and Consumer Service Alliance of Texas (CSAT) are contesting the Bureau of Consumer Financial Protection’s (CFPB) small-dollar loan rule.
Both organizations have filed a preliminary injunction against the rule, citing small businesses are already incurring financial costs and laying off employees to comply with the directive.
“Businesses, their employees and communities across the country are already facing the harmful consequences of the Bureau’s misguided rule,” Dennis Shaul, CEO of CFSA, said. “Worse, once fully implemented, the rule would virtually eliminate small-dollar, short-term loans, kill hundreds of small businesses, eliminate thousands of jobs and deny access to credit for millions of Americans.”
Officials said the rule’s requirements would reduce the total volume of storefront small-dollar loans by approximately 92 to 93 percent.
CFSA and CSAT officials said in addition to protecting small-dollar loan businesses from financial costs they are already incurring, a preliminary injunction ensures the Bureau has sufficient time to conduct a thorough and careful reassessment of the rule. It also ensures borrowers whom the rule would otherwise deprive of sources of credit will continue to have access to payday loans until the rule’s legality is resolved.
The Bureau finalized the rule on Oct. 5, 2017, officials said, adding defendants in the lawsuit are the Consumer Financial Protection Bureau and Acting Director CFPB Mick Mulvaney.