The CFPB has officially opened up its online forum for accepting consumer complaints geared at those who have experienced issues from online marketplace lenders.
The bureau also released a bulletin about the marketplace lending industry and provided tips for consumers who are looking for alternative financing options.
“When consumers shop for a loan online, we want them to be informed and to understand what they are signing up for,” said CFPB Director Richard Cordray. “All lenders, from online startups to large banks, must follow consumer financial protection laws. By accepting these consumer complaints, we are giving people a greater voice in these markets and a place to turn to when they encounter problems.”
The CFPB has been accepting complaints since its inception in July 2011. The complaints it accepts are in the areas of 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 said it aims to gather a response within 15 days. The CFPB expects companies to close all but the most complicated complaints within 60 days.
For consumers looking to the marketplace lending industry, the CFPB advised the following:
- 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 service member benefits related to debt incurred prior to entering active duty.
The CFPB urges consumers to take the following steps when taking a marketplace lender loan: looking at how much they actually need to borrow, checking their credit reports for errors and always shopping around when evaluating what lending option is best for them.
Last month, MPD CEO Karen Webster weighed in on the subject of marketplace lending, posing the question: Is the tide going out on marketplace lending?
“What’s clear is that once-bullish investors seem to have cooled on the space as these platforms work their way through the natural cycle of business and they wait to see how good the new science of credit risk and underwriting really are. It’s really too early to tell,” Webster wrote.
She even touched on the regulation aspect.
“At the same time, regulators are circling the space, uncertain about how to classify — and, therefore, regulate — them. Marketplace lending proponents say that, unlike the financial crisis in 2008 that had the real possibility to bring down the financial system and do real harm to the economy, the only people who could be hurt by a marketplace lending meltdown are the fat cat hedge funds and PE firms who have a lot of money to burn. Maybe. And maybe there won’t be any contagion like there was in 2001. But we’ve never been through a cycle like this with lending platforms like this, so we’ll all be watching this play out in real time.”
Certainly, that’s what we’ll see once CFPB’s consumer complaints are collected.