ELFA Addresses New Proposals Regarding Section 1071 of Dodd-Frank Act



On Dec. 14, the Equipment Leasing and Finance Association responded to the Consumer Financial Protection Bureau’s proposals regarding Section 1071 of the Dodd-Frank Act.

The association has remained actively engaged with the CFPB to make sure Section 1071 of the Dodd-Frank Act doesn’t make it more burdensome for ELFA members and their customers to do business together. Section 1071, once in force, will require commercial financiers to collect certain demographic information about their customers.

The CFPB had issued the new proposals in coordination with its panel meetings required by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). This represents the most detailed look that the public has had at the approach that the CFPB is utilizing with regard to Section 1071 since it was passed a decade ago.

Of note, the proposals would exempt true leases but cover most other small business finance transactions by commercial finance companies. There are some exemptions in the proposals, but, for the most part, these will only exempt the smallest finance companies. While fair lending rules have always applied to commercial finance, if the data collection proposals were to be enacted in anything approximating the SBREFA proposals, this new level of regulation would be a watershed moment in the commercial finance space, especially for non-bank commercial finance companies.

The ELFA comments took a three-step approach. First, the comments attempted to gain meaningful exemptions, then, if exemptions couldn’t be utilized, the association advocated for simple rules (e.g., a bright-line revenue test to define small business) and, lastly, the ELFA pushed for an indemnification of finance companies from having to verify demographic information provided by their customers such as the ethnicity of business owners.

The Full CFPB proposal can be found here, and the ELFA’s comment letter can be found here.


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Terry Mulreany
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