CFPB Regulations on Short-Term Lending: Ability-to-Repay & Underwriting Standards

The Consumer Financial Protection Bureau (CFPB) maintains continuous oversight over the non-bank small-dollar lending market to prevent unfair, deceptive, or abusive acts and practices (UDAAPs).

1. Core Tenets of CFPB Small-Dollar Rules

Under the CFPB's foundational small-dollar framework, lenders are held to strict standards regarding payment processing and disclosure honesty:

• Anti-Abuse Payment Withdrawal Limits: After two consecutive failed attempts to debit funds from a consumer's bank account via ACH, the lender is prohibited from making further withdrawal attempts without obtaining a new, specific authorization. This prevents spiraling NSF (Non-Sufficient Funds) overdraft fees.
• Transparent Fee Structures: Lenders cannot hide processing charges or require mandatory tips/donations to access core loan services.
• Notice of Upcoming Debit: Lenders must deliver written or electronic notice before initiating a recurring debit transaction.

2. Dispute Escalation Channels

Consumers who encounter non-compliant lending practices can file formal complaints directly through the CFPB Consumer Complaint Database, triggering mandatory vendor responses within 15 days.