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SUMMARY: The Bureau of Consumer Financial Protection (Bureau or CFPB) is issuing this final rule to establish 12 CFR 1041, which creates consumer protections for certain consumer credit products, and the official interpretations to the rule.
First, the rule identifies it as an unfair and abusive practice for a lender to make covered short-term or longer-term balloon-payment loans, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay the loans according to their terms.
The rule exempts certain loans from the underwriting criteria prescribed in the rule if they have specific consumer protections.
Second, for the same set of loans along with certain other high-cost longer-term loans, the rule identifies it as an unfair and abusive practice to make attempts to withdraw payment from consumers’ accounts after two consecutive payment attempts have failed, unless the consumer provides a new and specific authorization to do so.
Finally, the rule prescribes notices to consumers before attempting to withdraw payments from their account, as well as processes and criteria for registration of information systems, for requirements to furnish and obtain information from them, and for compliance programs and record retention.
The rule prohibits 2 evasions and operates as a floor leaving State and local jurisdictions to adopt further regulatory measures (whether a usury limit or other protections) as appropriate to protect consumers.201710_cfpb_final-rule_payday-loans-rule