The Consumer Financial Protection Bureau is expected to propose a rule allowing it to supervise online marketplace lenders, according to a Wall Street Journal article today.
“The agency aims to unveil a proposal this fall to supervise the largest so-called installment lenders that essentially offer small-dollar loans with set payment periods as well as lenders who tie such loans to car titles,” the Journal reported. “The CFPB is now considering broadening its definition of ‘installment’ lending to wrap in marketplace lenders, which operate online and offer similar types of small-dollar loans with set payments.”
The move would follow CFPB action in March to begin accepting consumer complaints about online marketplace lenders, often considered a signal of future rulemaking. The bureau’s expected action would help to fill a gap in the oversight of nonbank online lenders, which — although subject to consumer protection laws — do not receive regular regulatory exams.
“For customers, a loan is a loan and a payment is a payment,” ABA President and CEO Rob Nichols pointed out in an op-ed earlier this year. “The features may be the same regardless of whether the company has a charter or not, but the confusion about who regulates whom — and in what ways — is leading to gaps in consumer protection.”
