US District Court issues nationwide Section 1071 injunction
Injunction provides 10-month approximate delay for covered financial institutions
The United States District Court for the Southern District of Texas has issued an expanded, nationwide injunction granting relief from the implementation of Section 1071 of the Dodd-Frank Act.
The court issued an injunction on Oct. 26 for all covered financial institutions against the implementation of Section 1071. Last week’s court action follows a preliminary injunction issued July 31 by the Southern District of Texas on behalf of the American Bankers Association, Texas Bankers Association and McAllen, Texas-based Rio Bank.
Section 1071 of the Dodd-Frank Act requires covered financial institutions to collect and report application data, including applicant’s business and demographic information, to the Consumer Financial Protection Bureau, according to the CFPB’s website.
While the initial compliance standards effective date for the largest group of lenders – those who facilitate more than 2,500 covered transactions – was set for Oct. 1, 2024, the injunction delays compliance deadlines for 10 months, according to a release by the Equipment Leasing and Finance Association.
ELFA, as well as the National Equipment Finance Association and other financial associations, advocated against the implementation of Section 1071, which contributed to the Southern District’s decision to create a nationwide injunction, according to the court filing.
The nationwide injunction also presents a scenario where Section 1071 could be stopped entirely, Andy Fishburn, vice president of federal government relations at ELFA said during an Oct. 24 panel at ELFA’s Convention in Phoenix.
“The litigation route is probably the highest possibility of stopping [1071],” he said. “The most likely scenario that we could see where it would go away, would be a nationwide injunction that gets a long delay and then a change in administration ends it.”
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