Fintech Lenders Facing New Scrutiny
Turns out, online lions and lending bears charge predatory interest rates
The fintech industry — nonbank and neobank entities offering services (like short-term loans) that are similar to bank offerings — is facing new scrutiny.
This according to the latest report in Fintech Business Weekly:
The CFPB has also recently upped its rhetoric on so-called “rent-a-bank” arrangements used by fintech lenders, particularly those using them to originate loans above states’ usury caps.
While the lending question is somewhat distinct from “banking-as-a-service,” the consumer regulator could see them similarly, particularly as fintechs like Dave (partnered with Evolve) and MoneyLion (partnered with MetaBank) offer short-term loans and as more BaaS platforms offer credit products.
I’ve written a lot about these “rent-a-bank” schemes and about fintech lenders like Dave and OppFi and their persistence in finding ways to evade state interest rate caps and charge triple-digit interest rates on short-term loans.
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Minnesota Borrowers to Receive Refunds in State’s Settlement with MoneyLion
Online Lending Platform Offered Loans with Rates Up To 645%
The MoneyLion case is particularly egregious — here’s a note on how they got caught charging more than 600% interest rates to Minnesota consumers:
MoneyLion violated Minnesota state law by failing to be licensed by the state when it provided Minnesota-based consumers with certain loans with excessive annual interest rates of up to 645%. The settlement includes more than 700…