CFPB Plans to Review its Promulgated Rules and Begins with the Overdraft Rule
On May 15, 2019, the CFPB published the plan it intends to use to review its rules pursuant to the Regulatory Flexibility Act (RFA), and it is seeking comments on this plan. In furtherance of this plan, the CFPB has announced that it will review the Overdraft Rule found in Regulation E (which implements the federal Electronic Fund Transfer Act (EFTA)) and seeks comments on certain topics related to the economic impact of this rule on small entities.
Section 610 of the RFA (Section 610) generally requires federal agencies to review rules they have issued that have or will have a significant economic impact on a substantial number of small entities, and the agencies must publish a plan for periodic review of those rules. The review is meant to determine whether the rules should be continued without amendment, or should be revised or rescinded (consistent with the stated objectives of the applicable statutes) to minimize any significant economic impact of the rules on a substantial number of small entities. This review must take place within ten years of each rule’s publication as a final rule. The CFPB, which was created in 2010 through the Dodd-Frank Wall Street Reform and Consumer Protection Act, indicated that it anticipates performing these types of reviews in the coming years to comply with Section 610 and thus is now publishing this plan.
According to the plan, each year, starting the review about nine years after each rule’s publication, the CFPB will first determine which rules are subject to Section 610 review and may also decide to exercise its discretion to review other rules issued by the CFPB or by the CFPB’s predecessor agencies that may not otherwise be subject to a Section 610 review. It will then publish a list of rules it intends to review in the upcoming year and a notice for each such rule with, among other things, a brief description of the rule and an invitation for public comment. The factors to be considered during the review include: (i) the continued need for the rule; (ii) the nature of public complaints or comments about the rule; (iii) the rule’s complexity; (iv) the extent to which the rule overlaps, duplicates, or conflicts with federal, state, or other rules; and (v) the length of time since the rule has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the rule.
The first rule to be reviewed pursuant to the CFPB’s Section 610 plan is the Overdraft Rule, which generally limits the ability of financial institutions to assess overdraft fees for paying ATM and one-time debit card transactions that overdraw consumers’ accounts. When publishing its plan to review the Overdraft Rule, the CFPB included related information, such as the Federal Reserve Board’s original intent for the Overdraft Rule (which it published while it still held rulemaking authority for the EFTA) and the CFPB’s understanding of the current market based on its research. Consistent with the review plan, the CFPB seeks public comment on, among other things: (i) the nature and extent of the economic impacts of the Overdraft Rule as a whole and of its major components on small entities; and (ii) whether and how the CFPB by rule could reduce the costs of the Overdraft Rule on small entities, consistent with the objectives of the EFTA and Overdraft Rule.
Comments regarding the CFPB’s plan for its Section 610 review must be received by July 15, 2019, and comments regarding the Overdraft Rule must be received by July 1, 2019.
