Payday Litigation

 

CBF seeks ‘intervenor’ status in case to defend restrictions on predatory lending

Continuing its efforts alongside pastors, churches and Global Missions field personnel to reform predatory lending practices, the Cooperative Baptist Fellowship has requested to join litigation to defend a regulation intended to restrict industry practices that create debt traps for consumers.

CBF is requesting “intervenor” status in a case filed by two industry associations challenging the Consumer Financial Protection Bureau rule that will strengthen protections for consumers against predatory lending tactics. The rule is currently set to be implemented by August 19, 2019. But since the CFPB released the rule last October, the agency has changed its approach to consumer protection, including a plan to reconsider the rule as written.

Because CBF believes strongly in the importance of the current rule, CBF has asked the court to allow it to step into the shoes of a defendant and take the litigation steps necessary to defend the CFPB’s rule against the industry associations’ claims. CBF’s litigation efforts will build on the work of field personnel as well as pastors and churches in direct aid to borrowers, and the efforts of CBF Advocacy in this area. CBF will be represented pro bono by the Public Citizen Litigation Group and the Equal Justice Center.

The case was filed against the CFPB in a federal court in Austin, Texas, in April 2018 by two industry associations, the Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas (CSAT). They claim, among other things, that CFPB did not follow proper procedure in issuing the rule; that CFPB improperly deemed certain lending practices unfair and abusive; that the agency’s authority to address unfair and abusive practices is unconstitutional; and that the agency’s structure is unconstitutional.

Suzii Paynter, CBF’s executive coordinator, is excited about this opportunity to expand and build on CBF’s advocacy for payday lending reform.

“Payday lending is an industry that relies on products designed to be most profitable when borrowers fail,” Paynter said. “CBF’s leadership among the religious community to oppose predatory lending is a matter of faith for us. We are called to bolster human dignity, not diminish it, and to support people created in the image of God, not undermine their flourishing.”

Questions? Learn more in the FAQ section
 

Stephen Reeves, associate coordinator of partnerships and advocacy said, “Advocates in CBF life have worked for years against predatory lending practices, including support of the CFPB. It is wrong to take advantage of others when they’re desperate. This rule is the best hope we have right now to reform these practices nationwide. People of faith should do all we can to stop the abuse of our neighbors for profit. If the CFPB won’t defend its own work, we will.”

Gary Dollar, CBF’s Moderator, said the CBF Governing Board affirms the vital national role CBF is playing to stop predatory lending practices and the effort to seek intervenor status.

“I’m proud that the work of our churches, pastors, field personnel and advocates has resulted in this opportunity to intervene. We are motivated because of the harm these bad loans do to vulnerable people and communities. In this moment, our faith requires us to stand up and defend the rule created to protect families, even when others will not.”

Scarlette Jasper, CBF field personnel serving in McCreary and Pulaski counties and other parts of Kentucky, has been an advocate for her neighbors struggling to make ends meet for years. She provides group workshops and one-on-one financial education that focuses on budgeting and other sustainable financial management skills, and warns people about the pitfalls of payday loans, as part of CBF’s rural development coalition, Together for Hope. She’s also developing a micro-loan program as an alternative for these families.

“Families need a place to go for financial assistance, but they do not need to be taken advantage of,” Jasper said. “These companies prey on the elderly, disabled, and the working poor. This must change and with the support of CBF and others who speak out against lenders’ harmful practices, I pray that it will.”

CBF Coordinator of Global Missions Steven Porter noted that scripture speaks clearly against the exploitation of others and that this type of mission work must be motivated by the witness of Jesus.

“The Bible condemns the exploitation of poor people,” Porter said. “Our actions should be motivated by the words of Jesus who says, ‘Truly I tell you, just as you did it to one of the least of these who are members of my family, you did it to me’ (Mt 25:31-46). As a former CBF field personnel, I saw first-hand those victimized by predatory lending. I thank God for the work of current rural and urban field personnel, partner churches, and even legal partners to fight it. This is mission work that takes Jesus at his word.”

Frequently Asked Questions

 

CBF has taken the unprecedented step of seeking to intervene in litigation over the Consumer Financial Protection Bureau’s payday lending rule. We have taken this step after years of advocacy for payday and auto title lending reform. This action may create questions from our churches, pastors and supporters. This FAQ has been developed in hopes of answering some of the most common questions.

Our advocacy for reform of payday and auto title lending practices has been a hallmark of our early advocacy efforts. The work has been visible and well-publicized. Questions and resources about the issue of payday lending and our advocacy for reform can be found on our predatory lending advocacy page. A collection of related news releases, columns and feature stories highlighting this work can be found here.

This page is only for questions concerning our decision to intervene in the litigation.

 

FAQ

1Why is CBF doing this?
Since 2013 CBF Advocacy has been a national leader among faith communities advocating for reform of payday and auto title lending. There are numerous reasons for this advocacy, but it is primarily based upon the experiences of our pastors, churches and field personnel ministering to those impacted by these predatory products. A major emphasis for this advocacy has been support for a strong rule from the Consumer Financial Protection Bureau. CBF supporters were responsible for hundreds of public comments in support of a strong rule. Through this lawsuit, industry associations are attempting to undo years of work by the CFPB that our advocates supported. Recent actions by new leadership of the Bureau cause concerns about their dedication to vigorously defending the rule. We believe the rule put forth by the Bureau to be a strong mechanism to provide relief for the financially vulnerable harmed by payday loans across the country. After our years of advocacy for strong consumer protections, it is a natural next step for us to step up and defend our interests in the rule in court. CBF leaders including CBF Executive Coordinator Suzii Paynter, CBF Global Missions Coordinator Steven Porter and the CBF Governing Board are fully informed and supportive of this effort.
2What does it mean to be an intervenor?
If the court permits CBF to intervene, CBF will act like a party on the defendant side of the lawsuit, although CBF is not itself being sued. CBF will be able to make and oppose motions and take the other litigation steps necessary to defend the CFPB’s payday rule against the industry association’s claims. To be permitted to intervene, CBF has to satisfy certain legal standards. To show the court that it satisfies these standards, CBF’s motion explains to the court our interest in the CFPB’s payday rule. For example, our motion explains that the payday lending rule will prevent lenders from trapping consumers in cycles of debt. This change will mean that fewer payday borrowers are in crisis and in need of our support; our field personnel will be able to redirect their attention and pursue new mission initiatives. In addition, CBF has spent resources advocating for payday lending reform that can be channeled elsewhere if the rule is implemented as planned.
3Is CBF suing someone (the CFPB)?
No. Due to our extensive work in this area through both direct missions as well as advocacy, we are asking the court for permission for CBF to intervene in the case. If CBF is granted permission to intervene, CBF will act like a defendant in the lawsuit. CBF is not suing anyone, nor are we being sued.
4How much does this cost CBF?
CBF will not incur any costs by seeking to intervene in the litigation. We are being represented pro bono. Therefore, no contributions from individuals or churches will be expended on legal services.
5Who is representing CBF?
CBF is being represented by Public Citizen Litigation Group, the nonprofit, public interest law firm that is part of Public Citizen Foundation, a national nonprofit, nonpartisan consumer advocacy organization based in Washington, D.C.
6What is the basis of the lawsuit?
In April of 2018 two industry associations, the Community Financial Services Association of America and the Consumer Service Alliance of Texas, sued the Consumer Financial Protection Bureau hoping to prevent the implementation and enforcement of the CFPB’s payday lending rule.
7What is CBF hoping for from this litigation?
Ultimately, and most importantly, CBF hopes that by defending the rule in court, the rule will be implemented as planned, by August 19, 2019, and prevent predatory lenders from exploiting the financially vulnerable in their time of desperation. It is wrong for someone to profit off the misery of others. While occasionally short-term small-dollar loans work as advertised, far more often they create a debt-trap that borrows have a hard time escaping. It is wrong to create a product that takes advantage of others. Ultimately, the CFPB payday lending rule seeks to make sure lenders are not profiting off of loans they know their customers have little to no hope of repaying without the need for and extension or re-borrowing.