The Payday, Vehicle Title, and Certain High-Cost Installment Loans (Payday) Rule has been unfolding for years. The final rule is effective on October 20, 2020; however, the Payment Provisions are currently stayed by court order. The order is expected to be lifted soon and the CFPB is seeking to have the Payday Loan Rules go into effect with a reasonable period for entities to come into compliance.
With most new rules the options are comply or die – either fully implement the rule or risk violations. With the Payday Rule we have advocated for several years that the option is compliance or avoidance. Either build a comprehensive compliance management system to cope with the rule, or management your loan programs to assure that any covered loans are made under one of the coverage exceptions.
Most depository institutions do not make a large volume of “covered loans”. For those with limited covered loans, it is reasonable to take advantage of the exceptions or to tweak the product line-up to avoid the massive new rules.
This manual provides a review of the the current status of the massive new rule and explains, section by section, the various requirements.