On March 7, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it now accepting complaints from consumers related to problems with loans from online marketplace lenders. The CFPB also announced the release of a consumer bulletin that provides an overview of marketplace lending and outlines tips for consumers who are considering taking out loans from these types of lenders.
Consumer Complaints Related to Online Marketplace Lenders
Marketplace lending, also referred to as “peer-to-peer” or “platform” lending, is a new type of lending program, in which a marketplace lender uses an online interface to connect consumers or businesses seeking to borrow money with investors willing to buy or invest in the loan. Consumers experiencing issues with this type of lending program can now submit their complaints to the CFPB.
Consumer complaints can be submitted to the CFPB in a variety of manners. One of the most popular ways in which consumers submit complaints is via the Consumer Complaint Database. Once the CFPB receives a complaint it forwards the complaint to the relevant company for a response. Companies generally have 15 days to respond to the complaint, unless an extension is secured in the meantime. The consumer complaint and company’s response, if one is provided, is published on the public facing Consumer Complaint Database, which can be accessed and viewed by the public. The information provided on the database can be valuable to not only consumers, but also to companies. For example, it provides a valuable tool for companies to understand how consumers view the quality of the company’s products and services. It also provides companies with an opportunity to evaluate whether complaint trends suggest that problems exist with certain products and services that need to be addressed to avoid or minimize regulatory action. As such, although the Consumer Complaint Database is not generally viewed favorably by financial industry companies, it can provide valuable information. For more information on navigating Consumer Complaint Database and consumer complaint process click here.
Marketplace Lending Consumer Bulletin
In connection with beginning to accept marketplace lending complaints, the CFPB released a consumer bulletin which provides information for consumers who are considering a loan from a marketplace lender. The information included in the bulletin includes:
- Statements concerning the application of state and federal consumer protection laws to marketplace lenders;
- A warning to consumers about refinancing certain types of debt, because doing so may forfeit certain consumer protections.
The bulletin also provides tips to consumers seeking marketplace loans, including:
- Evaluating whether consumers can actually afford by analyzing the total cost of the loan as well as the monthly cost;
- Review their credit reports for errors; and
- Compare loans and shop for the best deal.
You can view the CFPB’s Consumer Complaint Database here: http://www.consumerfinance.gov/complaintdatabase/.
For more information on the CFPB’s consumer complaint process go here: https://www.stinson.com/Resources/PDF_Files/Navigating_CFPBs_Consumer_Complaint_Process.aspx.
You can view the CFPB’s Marketplace Lending Consumer Bulletin here: http://files.consumerfinance.gov/f/201603_cfpb_understanding-online-marketplace-lending.pdf.
ABOUT STINSON LEONARD STREET
Stinson Leonard Street LLP provides sophisticated transactional and litigation legal services to clients ranging from individuals and privately held enterprises to national and international public companies. As one of the 100 largest firms in the U.S., Stinson Leonard Street has offices in 14 cities, including Minneapolis, Mankato and St. Cloud, Minn.; Kansas City, St. Louis and Jefferson City, Mo.; Phoenix, Ariz.; Denver, Colo.; Washington, D.C.; Decatur, Ill.; Wichita and Overland Park, Kan.; Omaha, Neb.; and Bismarck, N.D.
Zane Gilmer is a member of the firm’s litigation practice group. His practice focuses on business litigation and compliance and he is a member of the firm’s CFPB taskforce. Zane works out of the firm’s Denver office and he can be reached at email@example.com or 303.376.8416.
The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.