All covered loans, whether short-term or longer-term, are at the mercy of particular collection limitations. The CFPB has cited to the “substantial risk of consumer harm, including substantial fees and, in some cases, the risk of account closure” which may come if lenders are allowed to collect payment from consumers’ checking, savings and prepaid accounts as rationale for the restriction. See Outline of Proposals into consideration and Alternatives Considered, p. 28 (Mar. 26, 2015).
The proposed guideline contains two notice that is key. First, lenders are required to offer at the least three company times advanced written notice before any try to withdraw re re payment from a consumer’s checking, savings or prepaid account. Prohibited re payment transfers are defined broadly and can include electronic fund transfers, ACH transfers, and a merchant account holding transfer that is institution’s of. Proposed 1041.14(a)(1). The proposed notice needs are specific and model kinds are included in the guideline. The payment channel through which collection will be attempted, a break down as to how the payment will be applied, the loan balance, and contact information for the lender in general, however, the notice must contain specific transaction-based information including the exact amount and date of the collection attempt. Proposed 1041.15.
Next, the proposed guideline forbids a loan provider from starting a repayment transfer from a consumer’s account in connection with a loan that is covered the lender’s second consecutive try to withdraw payment has unsuccessful for not enough enough funds unless and before the lender obtains from the buyer a unique and particular authorization to create further withdrawals. Continue reading “Re Re Payment Restrictions”