• CFPB Attacks FinTech Provider Using Tribal Lending Model
  • March 7, 2018 | Author: Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • In late 2017, the Consumer Financial Protection Bureau (CFPB) filed a complaint against a Texas-based FinTech company that provided servicing for three entities with tribal ownership that claimed to make loans under tribal, not state, law (the respective tribes are located in Louisiana, Montana, and Oklahoma). The company provided marketing, origination, and loan servicing (including payment processing) to facilitate internet-based high cost, small dollar loans by the tribal lenders. The CFPB alleged that, because the company effectively controlled the tribal lenders and took most of the lending risk under the arrangement, the loans were not subject to tribal law and therefore violated state licensing and usury laws. The CFPB’s complaint faults the company for its role in allegedly deceiving consumers into repaying loans that were not legally owed under applicable state law. The CFPB’s complaint argues that the company’s actions constituted unfair, deceptive, and abusive practices under the Consumer Financial Protection Act of 2010. The complaint seeks relief for harmed consumers, monetary penalties, and an injunction prohibiting the company from collecting further loan payments. For questions concerning this case and its impact on bank partnership models, please contact Christopher Rahl.