The Consumer Financial Protection Bureau is now accepting consumer complaints about online marketplace lenders, the bureau reported Monday. It also released a consumer bulletin to educate consumers about this type of lending.
“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.”
Marketplace lenders use an online platform to connect consumers or businesses seeking to borrow money with investors willing to buy or invest in the loan. These lenders offer a variety of loans, including installment loans, mortgages, student loans and auto loans.
The CFPB's Complaint Database is a collection of more than 530,000 complaints about a range of consumer financial products and services, which it has been compiling since 2011. It includes basic, anonymous, individual-level information about the complaints received, including the date of submission, the consumer’s zip code, the relevant company, the product type, the issue the consumer is complaining about, and the company’s response.
The bureau sends all complaints to respective companies for a response, and publishes both the complaint and the response.
The mortgage industry has taken issue with the Complaint Database because, as the CFPB explains on its website: "We don’t verify all the facts alleged in these complaints, but we take steps to confirm a commercial relationship between the consumer and the company."
Interestingly, consumers can already file complaints about marketplace lenders on the Complaint Database through the "mortgage" product category or other categories. So why call out a specific type of lender to consumers? The CFPB Monitor, published by the Consumer Financial Services Group at Ballard Spahr, sees it as an overt shot across the bow of marketplace lenders.
"The CFPB’s objectives in taking these actions are questionable, since consumers already could complain about marketplace loans using the CFPB’s existing loan categories. Rather than seeking to provide additional protection to consumers, perhaps the CFPB’s primary objective is to warn marketplace lenders that they are clearly on the CFPB’s radar screen."
The bureau has come under fire for the amount of data it is collecting generally, which the complaint database feeds into. In 2014, the Government Accountability Office study found that the CFPB collects financial data on up to 600 million consumer credit card accounts, without sufficient security or privacy protections. The study confirmed the existence of personal identifiers in CFPB's data collections and raised concerns that the bureau lacked written policies and procedures for data privacy and protection.
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