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1071 Small Business Data Collection Rule Stayed (Again)

By Tori K. Shinohara, Jeffrey P. Taft & Francis L. Doorley on February 7, 2025
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As we reported earlier this week, the CFPB’s new Acting Director and Treasury Secretary, Scott Bessent, has directed Bureau employees not to make any filings or appearances in litigation, other than to seek a pause in the proceedings. This directive played out almost immediately this week—including in a case before the Fifth Circuit brought by several trade associations challenging the Bureau’s small business data collection final rule (“1071 rule”). The case was slated for oral arguments before the Fifth Circuit on February 3, but in light of the directive from the Acting Director, CFPB counsel appeared and, without addressing the merits of the case, notified the court that they had been instructed by new leadership not to make any appearances in litigation except to seek a pause in proceedings. The court then directed each side to announce, in writing, its posture regarding the current status of the case. In response, the CFPB stated in writing that it no longer opposes the plaintiffs’ motion to stay the 1071 rule’s compliance deadlines (the first of which is in July 2025) for 90 days to give the Acting Director time to consider the issues. Today, the Fifth Circuit issued an order granting plaintiffs’ motion for a stay pending the appeal, but subject to modification at any time. As a result, the 1071 rule’s compliance deadlines are tolled for plaintiffs’ and intervenors in the litigation.

Notably, this is the second time that the 1071 rule has been stayed by a federal court. We previously reported on the prior nationwide stay, which ultimately resulted in the Bureau delaying the original compliance deadlines by 290 days.

Although the stay is a welcome relief for covered small business lenders—many of whom have been working industriously to get ready for the July compliance deadline—it creates additional uncertainty in the industry regarding the implementation of the 1071 rule. Because the 1071 rule became effective in August 2023, it is not subject to the new administration’s regulatory freeze, nor is it subject to the Acting Director’s directive to halt new rulemakings that have not yet become effective. It remains to be seen what actions the Bureau’s new leadership may take with respect to the substantive requirements set forth in the 1071 rule.

Photo of Jeffrey P. Taft Jeffrey P. Taft

Jeffrey Taft is a partner in the Firm’s Financial Services Regulatory & Enforcement group and the Cybersecurity and Data Privacy practice. His practice focuses primarily on bank regulation, bank receivership and insolvency issues, payment systems, consumer financial services and cybersecurity/privacy issues. He has…

Jeffrey Taft is a partner in the Firm’s Financial Services Regulatory & Enforcement group and the Cybersecurity and Data Privacy practice. His practice focuses primarily on bank regulation, bank receivership and insolvency issues, payment systems, consumer financial services and cybersecurity/privacy issues. He has extensive experience counseling financial institutions, merchants, technology companies and other entities on various federal and state banking and consumer credit issues, including compliance with the Bank Holding Company Act, National Bank Act, International Banking Act, Consumer Financial Protection Act, Truth-in-Lending Act, the Fair Credit Reporting Act, the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act, state unfair or deceptive acts or practices statutes, CFPB’s UDAAP authority and the development and implementation of privacy, cybersecurity and information security programs under the Gramm-Leach Bliley Act, the NYDFS cybersecurity regulation and industry standards, such as PCI DSS and NIST.

Read Jeff’s full bio.

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Photo of Francis L. Doorley Francis L. Doorley

Frank Doorley is a partner in Mayer Brown’s Washington DC office and a member of the Financial Services Regulatory & Enforcement group. He handles a broad range of federal and state regulatory compliance matters, primarily for consumer financial product and service providers.  Frank…

Frank Doorley is a partner in Mayer Brown’s Washington DC office and a member of the Financial Services Regulatory & Enforcement group. He handles a broad range of federal and state regulatory compliance matters, primarily for consumer financial product and service providers.  Frank has significant experience advising lenders, consumer finance providers, and investors on compliance obligations under federal and state law. His experience covers a range of products and program structures, including Fintech and marketplace lending programs, retail and home improvement financing, general-purpose unsecured credit, and small business lending and alternative financing. He regularly provides guidance on federal consumer financial laws such as the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA) and the CFPB Mortgage Servicing Rules, Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Servicemembers Civil Relief Act (SCRA) and prohibitions on unfair, deceptive, and abusive acts and practices (UDAAP).

Read Frank’s full bio.

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  • Posted in:
    Financial
  • Blog:
    Consumer Financial Services Review
  • Organization:
    Mayer Brown
  • Article: View Original Source

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