The Community Financial Services Association of America (CFSA), the national trade association for the payday lending industry, has filed a memorandum in support of its previously filed lawsuit against the agencies it accuses of coordinating Operation Choke Point, a government effort that has resulted in banks terminating relationships with payday lenders. The memorandum details the harm the CFSA says it has suffered as a result of this effort. The lawsuit names as defendants the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Federal Reserve), and the Office of the Comptroller of the Currency (OCC). (Our prior legal alert contains a detailed discussion of the CFSA complaint.) 

In three separate motions, the FDIC, the Federal Reserve, and the OCC argued that the court should dismiss the case for lack of jurisdiction because the CFSA has no standing since the alleged injuries cannot be traced back to the agencies, and any such injuries are not redressable by litigation. The agencies further argued that subsequent agency actions have rendered the litigation moot. In addition, the agencies argued that the complaint does not state a claim, because the complaint has not identified a “final agency action” that imposes any rights or obligations through binding language or could have any legal consequences for the plaintiffs.

The CFSA memo argues that the association has standing in its own right because it “has had to divert significant resources away from its primary function of promoting laws that protect consumers’ access to lawful credit options in order to assist members adversely affected by” Operation Choke Point. The CFSA also argues that its members have suffered concrete and particularized injuries as a result of this effort, including the loss of beneficial banking relationships, the need to devote resources to locate new banking partners, and the inability to compete on equal footing with other merchants and commercial depositors for banking relationships.

The CFSA asserts that these injuries were caused directly by the agencies acting in tandem to target payday lenders, and that the banks were not acting independently when deciding to terminate their relationships with their payday lending customers. The CFSA further calls for the court to restrain the agencies from continuing to pressure the banks. Although the CFSA recognizes that its members may never fully recover from the effects of Operation Choke Point, the association is seeking an injunction to prevent the agencies from inflicting any additional injury on the industry.

Dennis Shaul, the CFSA's CEO, commented on the filing: “As stated when the lawsuit was filed, it is unfortunate that CFSA has had to resort to litigation to protect our members’ businesses from the improper federal regulatory overreach of Operation Choke Point. CFSA and our law-abiding members continue to be unjustly harmed by this misguided and unlawful government initiative. Our members continue to suffer a clear violation of their due process rights and severe injury directly caused by the regulatory pressure and overreach of the Defendant agencies.”

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance.

For more information, contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or, CFS Practice Leader Jeremy T. Rosenblum at 215.864.8505 or, or Mark J. Furletti at 215.864.8138 or

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