Online Lenders Drawing More Scrutiny By Regulators
by James Rufus Koren, Los Angeles Times
Online lenders, led by San Francisco’s Lending Club, have grown explosively over the last few years, lending billions to consumers who can quickly get large sums by simply filling out a few online forms.
Now state and federal officials look to be taking steps toward more tightly regulating the industry.
The Consumer Financial Protection Bureau this week called for borrowers to alert the federal agency of any complaints they have about the firms, a move seen in the industry as a potential prelude to further action by the consumer watchdog.
“It’s likely a signal that the bureau has decided to send to companies: Watch out, our eyes are on you,” said Scott Pearson, a partner in the Los Angeles office of law firm Ballard Spahr who represents marketplace lenders. “It’s a sign that the regulators are paying attention to what marketplace lenders are doing.”
The CFPB’s call for complaints comes the same week that California officials are moving forward with a broad inquiry into the online lending business.
Both the state Department of Business Oversight and the CFPB have turned their attention to so-called marketplace or peer-to-peer lenders — online firms that offer loans to consumers and small businesses, then sell those loans to investors.
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