Starting March 30, 2025, payday and installment lenders must begin complying with important new requirements when they try to collect money from borrowers’ accounts.
The CFPB issued a regulation in 2017 adopting a two-strikes-and-you’re-out rule for covered lenders. Under that rule, after two tries to withdraw money from a borrower’s account have failed, covered lenders can’t try again unless the borrower specifically authorizes another attempt. The rule addresses lenders’ unfair and abusive practice of repeatedly trying to withdraw money from an account to pay off the loan, even after the account had been shown to be empty. That practice can trigger a pile of additional fees for the borrower while it rarely benefits lenders.
The regulation was originally set to take effect in 2019 but was delayed by litigation brought to block the rule. The court of appeals hearing the case ultimately rejected the payday lenders’ claims, affirmed the rule, and upheld the CFPB’s finding that the prohibited practice was unfair. More recently, it rejected the payday lenders’ efforts to further delay the rule and confirmed that the rule will finally take effect March 30, as the CFPB previously announced.
