PayPal : District Court Vacates CFPB Mandatory Disclosure And Thirty-Day Credit Linking Requirements

In PayPal, Inc. v. Consumer Financial Protection Bureau, et al., the U.S. District Court for the District of Columbia (the "Court") vacated the CFPB's short-form disclosure requirement and thirty-day credit linking restriction.

In the Court's opinion, Judge Richard J. Leon explained that the CFPB does not have the authority to impose the short-form disclosure requirement under CFPB Rule 1005.18(b) ("Pre-Acquisition Disclosure Requirements") because Congress has authorized the CFPB to issue model clauses for optional use only as disclosures, not as mandatory disclosure clauses. Additionally, Judge Leon stated, the CFPB's thirty-day credit linking restriction under CFPB Rule 1026.61(c)(1)(iii) ("Hybrid prepaid-credit cards") exceeds the authority given to the CFPB by Congress, as it does not just impose a disclosure requirement, but also regulates the terms of a consumer's access to, or use of, credit.

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