Business Law

Business Law News 2016, Issue 3

A Primer to the CFPB Proposed Payday Rule: What You Need to Know

Caren Enloe

Caren Enloe is a partner with Smith Debnam Narron Drake Saintsing & Myers, LLP, a Raleigh North Carolina law firm where she leads the firm’s consumer financial services litigation and compliance team. Enloe is the author of a blog titled Consumer Financial Services Litigation and Compliance ( and is a frequent speaker on current topics and trends affecting the consumer financial services industry.

In July of 2016, the Consumer Financial Protection Bureau ("CFPB") issued its proposed payday rule.1 According to the CFPB, payday loans are short-term loans that are typically due on the borrower’s next payday. The rule is designed to "cut off repeated debit attempts to rack up fees" and applies to certain short-term and longer-term credit products that are aimed at "financially vulnerable consumers."

Hailed as an attempt to end "payday traps," the 1,334-page missive addresses both short-term loans and certain longer-term, high cost loans. In addition to restricting the structure of the loans, the proposed rule places limitations on how lenders collect on covered loans and mandates extensive record retention policies.2

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