The Consumer Financial Protection Bureau (CFPB) regulates small-dollar, short-term lending under federal rules designed to prevent abusive debt rollover cycles.
1. Key CFPB Consumer Protections
- Two-Attempt Payment Limit Rule: A lender cannot attempt more than two consecutive failed debit attempts against a borrower's bank account without obtaining renewed written authorization, preventing cascading overdraft fees.
- Mandatory Pre-Withdrawal Notices: Lenders must deliver written or electronic disclosures at least 3 business days before initiating an ACH debit that differs in amount or timing from the original schedule.
- State Rollover Prohibitions: Most regulated states limit borrowers to a maximum of 3 consecutive loan rollovers before mandating a 30-day cooling-off period.