The CFPB Small-Dollar Lending Rule: Ability-to-Repay Underwriting Standards

The Consumer Financial Protection Bureau (CFPB) enforces federal regulations governing consumer credit underwriting and bank debiting practices.

Two-Failed-Attempt Debit Rule

Under CFPB regulations, lenders cannot attempt more than two consecutive debit withdrawals against a consumer's bank account if previous attempts failed due to insufficient funds, protecting consumers from compounding bank overdraft charges.

Ability-to-Repay (ATR) Assessment

Responsible lenders evaluate borrower debt-to-income (DTI) ratios, verifying that net monthly income after living expenses is sufficient to retire the advance without defaulting on fundamental housing or food obligations.