/>iOn July 23, a coalition of consumer advocacy organizations filed a lawsuit against the CFPB and Acting Director Russel Vought in the U.S. District Court for the District of Columbia, alleging the agency unlawfully delayed implementation of its small-business lending data collection rule. The complaint asserts violations of the Equal Credit Opportunity Act and the Administrative Procedure Act in connection with the Bureau’s recent policy changes surrounding its Section 1071 rule.
The rule (previously discussed here, here, and here) requires lenders to report demographic and other application data for small-business credit applicants. Although the CFPB initially defended the rule in court and against repeal efforts, the Bureau has since shifted its approach. Under Vought’s leadership, the CFPB extended compliance deadlines, agreed to litigation-based stays, and publicly stated it would not prioritize the rule’s enforcement—moves that plaintiffs argue amount to unlawful abandonment of statutory responsibilities.
Putting It Into Practice: This lawsuit highlights mounting pressure on the CFPB to move forward with implementing the Section 1071 rule, despite internal policy shifts and external litigation. Lenders subject to the rule should continue monitoring the case for judicial rulings or further administrative action.
