Archive

Go to:

October 2017
SMTWTFS
1234567
891011121314
15161718192021
22232425262728
293031
< Sep Nov >
Leaguer Email Subscription

You are not currently subscribed. Click Subscribe below to receive the Leaguer email.

CFPB Accepting Complaints on Consumer Loans from Online Marketplace Lenders
Tuesday, March 8, 2016 6:45 AM

Bureau Releases Consumer Bulletin with Information and Tips on Marketplace Lending  

Monday, the Consumer Financial Protection Bureau announced it is accepting complaints from consumers encountering problems with loans from online marketplace lenders. The Bureau is also releasing 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. 

Millions of consumers take out personal loans online. Marketplace lending—often referred to as “peer-to-peer” or “platform” lending—is a relatively new kind of online lending. 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. Generally, the marketplace lending platform handles all underwriting and customer service interactions with the borrower. Once a loan is originated, the company generally makes arrangements to transfer ownership to the investors while it continues to service the loan.

Marketplace Lending Consumer Bulletin

A marketplace lender may offer different types of financial products such as installment loans, mortgages, student loans, or auto loans. Marketplace lending platforms generally market both new loans and loans that can be used to refinance or consolidate existing debt. Monday’s consumer bulletin offers information for consumers who are considering a loan from a marketplace lender, including:

  • Important consumer protections apply: Marketplace lenders are required to follow federal and state consumer financial protection laws.
  • Be careful about refinancing certain types of debt: While some marketplace lenders may advertise lower interest rates, in some cases consumers could lose important loan-specific protections by refinancing an existing debt. Specifically, consumers should know that they may sign away certain federal benefits, such as income-driven repayment for federal student loans or servicemember benefits related to debt incurred prior to entering active duty.

 

The consumer bulletin also highlights general steps consumers should take when shopping for a loan, including a loan from a marketplace lender. Key tips include:

  • Look at income and spending: Before taking out a loan, consumers should evaluate how much they can afford and really need to borrow. Consumers should understand the total cost of the loan as well as what the total monthly cost will be each month.
  • Check credit reports: Consumers should check their credit report to make sure there are no errors that could keep them from getting credit or getting the best available terms on a loan. Consumers should be sure the information in the report is accurate and up-to-date.
  • Shop around: Consumers who consider interest rates offered by multiple lenders or brokers may see substantial differences in the rates. Consumers should compare the costs and terms of loans to find the deal that is best for them.  

View the consumer bulletin.

The CFPB began accepting complaints as soon as it opened its doors nearly five years ago in July 2011. It currently accepts complaints on many consumer financial products, including: mortgages, bank accounts and services, credit cards, student loans, auto and other consumer loans, credit reporting, debt collection, and payday loans.

 

The CFPB forwards complaints to the marketplace lender and works to get a response—generally within 15 days. The CFPB expects companies to close all but the most complicated complaints within 60 days.