CFPB Issues No-Action Letter On Bank's Small-Dollar Loan Program

The CFPB issued a no-action letter to Bank of America stating that the agency would not take enforcement action against the bank in connection with a small-dollar lending program. Specifically, the CFPB stated that it would not take action under Sections 1031 ("Prohibiting Unfair, Deceptive, or Abusive Acts or Practices") and 1036 ("Prohibited Acts") of Dodd-Frank.

According to the Bank of America no-action letter request, the bank's small-dollar credit product ("Balance Assist") is structured as a fixed-term, amortizing small-dollar installment loan to be paid back over three months. The Balance Assist program would offer loans in increments of $100 up to $500, with a $5 flat administrative fee, regardless of the amount borrowed, and with no other administrative fees charged. Bank of America specified that the Balance Assist product would be offered only to consumers with Bank of America checking accounts with inflows exceeding a predetermined threshold.