The consumer has one deposit account. On day 1, the lender initiates a payment transfer in connection with Loan 1. That payment transfer fails. The lender does not initiate any other payment transfers on day 1 or day 2. On day 3, the lender initiates a single immediate payment transfer at the consumer’s request in connection with Loan 2. That payment transfer fails. The lender has now initiated two consecutive failed payment transfers. The lender cannot re-initiate the failed single immediate payment transfer at the consumer’s request but can initiate a new single immediate payment transfer at the consumer’s request. Comment 8(b)(2)(ii)-3. The lender cannot initiate any other payment transfers (i.e., payment transfers that are not single immediate payment transfers) from the consumer’s account in connection with either loan unless the lender obtains the new and specific authorization pursuant to 12 CFR 1041.8(c). 12 CFR §1041.8(b)(1).

No. A transfer that qualifies for the Payday Lending Rule’s conditional exclusion for certain transfers initiated by a lender that is also the account holding institution is not a “payment transfer” under the Payday Lending Rule. 12 CFR §1041.8(a)(ii) and Comment 1041.8(a)(1)(ii)-1. Under the Payday Lending Rule, only a successful “payment transfer” resets the prohibition on two consecutive failed payment transfers. 12 CFR §1041.8(b)(2)(i)(B).

The Payday Lending Rule does not define the term “business day

The Payday Lending Rule prohibits a lender from initiating certain payment transfers after the lender has initiated two consecutive failed payment transfers from a consumer’s account. As discussed in Payday Lending Rule Payment Transfers FAQ 8, a failed payment transfer is the second failed payment transfer if the immediately preceding payment transfer was a first failed payment transfer. 12 CFR §1041.8(b)(2)(ii). A failed payment transfer is a first failed payment transfer if it meets one of several conditions set out in 12 CFR §1041.8(b)(2)(i). One of these conditions is that the immediately preceding payment transfer was successful. In other words, if a lender initiates a successful payment transfer, the next payment transfer that fails is not a second failed payment transfer. It is a first failed payment transfer. 12 CFR §1041.8(b)(2).

The Payday Lending Rule excludes certain transfers from the definition of “payment transfer.” As discussed in Payday Lending Rule Payment Transfers FAQs 4 through 6, there is a conditional exclusion from the definition of “payment transfer” for transfers initiated by a lender that is also the institution holding the consumer’s account if certain conditions are met. If such a transfer satisfies both of the conditions in 12 CFR 1041.8(a)(1)(ii), the transfer is not a payment transfer. Thus, even if such a transfer is successful it is not a “payment transfer” and cannot satisfy the condition set out in 12 CFR §1041.8(b)(2)(i).

” A lender may use any reasonable definition of business day, including the definition of “business day” from another consumer finance regulation, such as Regulation E, as long as the lender uses the definition consistently when implementing the Rule’s requirements.

Rather, the actual substance of the lender’s action as well as other relevant facts and circumstances will determine whether the lender’s action was taken with the intent of evading the requirements of the rule

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Lenders should keep in mind that the Payday Lending Rule prohibits lenders from taking any action with the intent of evading the prohibitions on certain payment transfer attempts. 12 CFR §1041.8(e). In determining whether a lender has acted with the intent of evading the requirements of the rule, the form, characterization, label, structure, or written documentation of the lender’s action shall not be dispositive. Comment 1041.8(e).