The Consumer Financial Protection Bureau on Thursday dropped a suit in Kansas federal court against four payday lenders, the latest signal the Trump-appointed interim director of the agency is shifting enforcement priorities.
CFPB enforcement attorneys in other cases have requested deadline extensions. Separately, the bureau’s enforcers, in talks with defense lawyers, are proposing agreements that would temporarily stop the running of the statute of limitations on certain allegations, giving the agency more time to make decisions about how to proceed.
The Obama-era CFPB had sued the four payday companies in April, alleging they had mistreated customers by collecting on debts that were not legally owed. The agency said the debts were void because their annual interest rates, ranging from 440 percent to 950 percent, violated state interest rate caps.
The payday loan industry has been perhaps the biggest immediate beneficiary of Mick Mulvaney’s tenure atop the CFPB as the interim director. Earlier this week, Mulvaney, the White House budget director, said the CFPB planned to reconsider rules, finalized last year, that put restrictions on high-cost payday loans. Mulvaney has launched an agencywide review of cases, and Thursday’s action could be the first of other moves to drop lawsuits and shift resources to other matters. Mulvaney did not ask for any additional funding for the agency.
Citing their affiliation with a Native American tribe, the companies, represented by Beth Wilkinson, a name partner at Wilkinson Walsh + Eskovitz, argued they were not subject to the state licensing requirements and interest rate caps. On Wednesday, the CFPB filed a notice of voluntary dismissal. The bureau offered no explanation for the move, which was first reported by Bloomberg.
“[T]his case should never have been brought in the first place. We’re pleased that the bureau has decided to withdraw a lawsuit that was diverting the tribe’s resources and attention away from economic activity that benefits the Tribe’s members and its neighbors,” Lori Alvino McGill, a Wilkinson Walsh partner, said in a statement.
The dismissal of the case drew the ire of consumer interest groups.