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June 3, 2016

Stroock Special Bulletin

By: Julia B. Strickland, Stephen J. Newman, Brian C. Frontino, Quyen T. Truong

On June 2, 2016, the Bureau of Consumer Financial Protection (“CFPB”) released its Proposed Rule (and Official Interpretations and Proposed Disclosures) regarding Payday, Vehicle Title and Certain High-Cost Installment Loans.  The CFPB’s complex proposal calls for multiple variations in regulatory treatment for the different types of loans and borrower scenarios covered under this regulatory scheme.  Accordingly, close analysis will be necessary for providers to determine the compliance requirements applicable to specific offerings. 

What is already clear, however, is that the complex implementation and compliance challenges presented by the Proposed Rule will have major impact on the entire small-dollar, short-term lending market, likely driving many current providers out of business while leading others to explore innovative platforms to fill the void.  The comment period promises to be highly active, presenting some possibility for change before the CFPB’s adoption of a final Rule, which itself is likely to be the subject of rigorous legal challenge.