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Yes. The Payday Lending Rule defines “unusual withdrawal” as a payment transfer that meets one or more of the following conditions: (1) varies in amount from the regularly scheduled payment amount or an amount that deviates from the scheduled minimum payment due in the periodic statement for open-end credit; (2) the payment transfer date is on a date other than the date of the regularly scheduled payment; (3) the payment channel will differ from the payment channel of the transfer directly preceding it; or (4) the transfer is for the purpose of re-initiating a returned transfer. 12 CFR §1041.9(b)(3)(ii)(C). If any of these conditions are met, a lender must provide an unusual payment withdrawal notice in advance of initiating the unusual payment withdrawal from the consumer’s account. 12 CFR §1041.9(b)(1) and (3). The Payday Lending Rule does not provide an exception for small variations in the amount from the regularly scheduled payment amount. Thus, even if the payment amount differs by a few dollars, an unusual payment withdrawal notice must be provided.
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For purposes of the Payday Lending Rule, the cost of credit includes all finance charges as set forth in Regulation Z, 12 CFR §1026.4. These amounts are included in the cost of credit without regard to whether the credit is extended to a consumer or is consumer credit as those terms are defined in Regulation Z, 12 CFR §1026.2(a)(11) and (12). 12 CFR §1041.2(a)(6)(i).
Yes. The Payday Lending Rule exempts two types of loans from coverage and excludes eight additional types of loans from coverage. The two exemptions are discussed in Payday Lending Rule Covered Loans Questions 5 through 8 and Section 2.5 of the Small Entity Compliance Guide.
Maybe. The Payday Lending Rule does not include a specific exemption or exclusion for loans originated pursuant to the PAL II program, but such loans may be exempt or excluded depending on their terms.
For information on loans that are excluded from coverage under the Payday Lending Rule, see Payday Lending Rule Covered Loans Question 9.
No. Advances of wages that constitute credit are excluded from the Payday Lending Rule only if all of the following are satisfied:
As noted in the statement on supervisory and enforcement practices regarding certain large loans under the Payday Lending Rule released on , while the Bureau monitors and assesses the effects of the Payment Provisions, it does not intend to take supervisory or enforcement action under the Payment Provisions with regard to covered loans that exceed the Regulation Z coverage threshold in 12 CFR §1026.3(b). From , the Regulation Z threshold amount is $58,300. See Comment 1026.3(b)-3.xi.
For additional information on the timing for providing the first withdrawal notice for a loan that becomes a covered loan after it is made, see comments 1041.3(b)(3)-3 and 1041.9(b)(1)(i)-2.
If an open-end loan becomes a covered longer-term loan because the cost of credit exceeds 36 percent at the end of a billing cycle, the lender must begin complying with the Payday Lending Rule at the beginning of the next billing cycle. 12 CFR §1041.3(b)(6)(ii)(B); comment 1041.3(b)(3)-3.ii. To illustrate, a lender may extend an open-end credit plan with monthly payments and a leveraged payment mechanism. At consummation and again at the end of the first billing cycle, the plan is not covered because the cost of credit is below 36 percent. At the payday loans Lorain Ohio end of the second billing cycle, the plan’s cost of credit is 45 percent. Beginning on the first day of the third billing cycle and thereafter for the duration of the plan, the lender must comply with the Payday Lending Rule. Comment 1041.3(b)(3)-3.ii.
(1) A payment transfer initiated by a one-time electronic fund transfer within one business day after the lender obtains the consumer’s authorization for the one-time electronic fund transfer, or
The Payday Lending Rule prohibits a lender from initiating payment transfers in connection with covered loans in certain circumstances. Generally, a lender cannot initiate such a payment transfer from a consumer’s account if the lender has previously initiated two consecutive failed payment transfers from that account. 12 CFR §1041.8. However, the Rule does allow a lender to initiate a single immediate payment transfer at the consumer’s request from a consumer’s account after the lender has initiated two consecutive failed payment transfers from that account. 12 CFR 1041.8(c); Comment 1041.8(c)-1; Comment 8(b)(2)(ii)-3. A lender might also choose to initiate a single immediate payment transfer at the consumer’s request after a first failed payment transfer or before any payment transfers from an account have failed. If the lender does so and the single immediate payment transfer at the consumer’s request fails, it is counted as a failed payment transfer.