Special Alert: More Turbulence for Marketplace Lending - CFPB Prevails in "True Lender" Litigation
Buckley Special AlertJohn P. Kromer, Matthew P. Previn, Walter E. Zalenski, Jeffrey P. Naimon
After what seems to be an extended season of heavy weather for marketplace lending, a federal district court in California unleashed a late-Summer lightning storm in Consumer Financial Protection Bureau v. CashCall, Inc. In a CFPB action leveled against the so-called “tribal model” of online lending, the court held that defendants, CashCall and its affiliated entities and owner, engaged in deceptive practices by collecting on loans that exceeded the usury limits in various states. Although the case focused on the tribal model – a structure where the loan is made by an entity located on tribal land and subsequently transferred to an assignee not affiliated with the tribe – the court’s opinion raises critical issues about the extent to which its analysis applies to the more common “bank partnership model” of marketplace lending.
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Questions regarding the matters discussed in this Alert may be directed to any of our lawyers listed below, or to any other Buckley Sandler attorney with whom you have consulted in the past.
- Walter E. Zalenski, (202) 461-2910
- John P. Kromer, (202) 349-8040
- Jeffrey P. Naimon, (202) 349-8030
- Matthew P. Previn, (212) 600-2310
- Valerie L. Hletko, (202) 349-8054