Minifinance: CFPB Supervision of Short-Term, Small-Dollar Financial Products and Services

17 minute read | April.25.2012

What acts and practices related to short-term, small-dollar (minifinance) products and services are "abusive?" Until a clearer definition emerges and the Consumer Financial Protection Board's examination and enforcement agenda plays out, John P. Kromer of Orrick set out the important steps minifinance providers should take to minimize the chances of being targeted for enforcement. They write:

The Consumer Financial Protection Bureau ("CFPB") launched its nonbank supervision program on January 5, 2012, and immediately kicked off a payday lending component. Announcing its regulatory authority over payday lending, CFPB Director Richard Cordray promised to devote "much more attention" to the payday lending industry. As evidence of that, the CFPB devoted its first field hearing to payday lending issues and promptly issued examination guidelines for short-term, small-dollar loans. A month later, the CFPB announced a review of checking account overdraft programs through another highly publicized field hearing and seminar.