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Republican Groups Sue CFPB Over Payday Lenders, Ruling This Term

The Supreme Court is set to rule this term in a case that could lead to the elimination of the Consumer Financial Protection Bureau. A federal agency tasked with protecting consumers from predatory lending and banking practices, the CFPB is being sued by two trade groups representing industries it regulates: The groups filed their suit in 2018 over a rule aimed at protecting borrowers from payday lenders, the Intercept reports. The case is the latest step in a yearslong conservative fight to dismantle the CFPB. At least 13 states, including red states like Arkansas and Georgia, have limited or made payday lending illegal, and others have passed recent ballot initiatives to crack down on the industry. Despite widespread approval among Republican voters to regulate or prohibit payday lending, Republican officials in more than 20 states are backing industry groups in the suit. All but two of the 28 members of the Republican Attorneys General Association, or RAGA, sought to intervene in the case. The move came after payday lending and banking industry groups regulated and fined by the CFPB poured out millions of dollars in campaign contributions.


“These are states where supermajorities of Republican voters disapprove of payday lending and want meaningful regulation,” said Chris Peterson, a professor at the University of Utah College of Law who previously advised CFPB’s director and worked in the agency’s enforcement office. “But the attorney generals are collecting millions of dollars in campaign contributions to undermine the only serious effort to regulate payday loans. The hypocrisy is galling.” The groups that sued — the Community Financial Services Association of America and the Consumer Service Alliance of Texas — objected to a rule prohibiting payday lenders from saddling consumers with overdraft fees by charging people with insufficient account funds multiple times after a first transaction failed. They argued that the CFPB’s funding structure was unconstitutional and that Congress has to authorize any withdrawals of money from the Treasury Department. The Supreme Court is set to hear oral arguments in the case on October 3. Groups regulated by the CFPB and others that supported the original suit have given at least $7.7 million to RAGA since April 2018, when industry associations first sued the agency over the automatic withdrawal rule. Since the suit was filed, payday lenders and banks regulated by the CFPB have given RAGA more than $3.2 million, and groups that filed amicus briefs supporting the suit have given RAGA more than $4.5 million

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