Alternative Finance
Practice Overview
Alternative finance companies — payday lenders, auto title lenders, check cashing services, deposit advance services, and many fintech companies, among others — provide businesses and consumers with financial products that are typically not offered within the traditional banking system. Because they operate within a different regulatory environment and often have more focused product offerings, alternative finance companies face strategic and legal considerations that are unique to their business model.
Buckley has long-standing experience with alternative finance products. Our lawyers have advised clients since the inception of retail payday lending — representing first movers in that space in both litigation and regulatory matters even before the enactment of specific laws addressing payday lending. In the years since, we have expanded to cover all forms of alternative finance products, as well as new products being developed through fintech platforms.
We guide alternative finance companies through all stages of their business. During periods of growth, we perform transactional due diligence for investors and other counterparties. As the law evolves, we provide our clients with tailored advice in response to changing regulatory expectations and new federal and state laws.
Our lawyers regularly represent clients in supervisory or enforcement matters before the Consumer Financial Protection Bureau, the Federal Trade Commission, the Department of Justice, state banking departments, state attorneys general, and other government regulators. We also represent clients who have been asked to testify before Congress and other legislative bodies. And, when necessary, we effectively defend alternative finance providers — and their officers and directors — in and out of court during class actions and government litigation.
Examples of our alternative finance representations include:
- Legal guidance throughout the alternative finance life cycle: We advised an alternative finance fintech company from its start-up phase, developing and evolving all aspects of its small-business financing products, providing state and federal regulatory and licensing advice, negotiating bank partnership and investor agreements, representing the company in presentations to state and federal regulators, and through discussions about applying to become its own bank
- Defending clients during first-of-their-kind government investigations: We represented a small-dollar lender offering alternatives to payday loans in a Military Lending Act investigation, as well as two money transmitters in a Remittance Transfer Rule investigation; in each instance, Buckley lawyers guided companies as the CFPB took its first actions under new rules with potentially dramatic implications for our clients and the industry
- Product development: We played a major role in developing a novel retail credit product for a tax preparer, spanning white-board conception to full implementation, and including the negotiation of cooperative strategic relationships with multiple banking partners
- Payday lending: We have represented payday lenders in CFPB and FTC supervisory and enforcement matters relating to a variety of business models (single-state license/choice-of-law, multiple-state license, online, tribal, and offshore), have advised payday lenders on state regulatory inquiries regarding possible violations of state law, have defended payday lenders in class actions alleging unfair or deceptive trade practices and usury violations, and have represented private equity firms considering investments in payday lenders
- Litigation financing: We have advised litigation finance companies regarding federal and state lending laws and successfully represented a litigation finance company in a state attorney general enforcement action
Articles
"Equipment finance: Understanding licensing obligations" by Kathryn L. Ryan (Equipment Leasing & Finance Magazine)
Licensing Considerations, Generally The applicability of state licensing laws may depend on multiple factors, including transaction structures, business entity types and whether the activities are appropriately classified as “commercial” or another type of non-consumer transaction. Although the...
Articles
News & Blogs
North Dakota passes law on money transmitter licensure
On March 15, the North Dakota governor signed SB 2119 , which revises provisions related to money transmitters. The act, among other things, provides that a “person may not engage in the business of money transmission or advertise, solicit, or hold itself out as providing money transmission unless...
InfoBytesFed to launch FedNow in July
On March 15, the Federal Reserve Board announced a July launch date for its FedNow Service. (Covered by a Special Alert here .) Beginning the first week of April, the Fed will start formally certifying participants, with early adopters completing a customer testing and certification program in...
InfoBytesCFPB publishes BNPL borrower profiles
On March 2, the CFPB released a report examining the financial profiles of Buy Now, Pay Later (BNPL) borrowers using data pulled from the agency’s Making Ends Meet survey and its access to credit bureau data. The report follows previous Bureau research conducted on the BNPL market (covered by...
InfoBytesSupreme Court agrees to review constitutionality of CFPB’s funding, but not on an expedited basis
The Supreme Court granted the CFPB's request to review the U.S. Court of Appeals for the Fifth Circuit’s decision in Community Financial Services Association of America v. Consumer Financial Protection Bureau but so far has not expedited consideration of the case. Without quick action to expediate...
InfoBytesSupreme Court “relist” of CFPB petition for certiorari threatens prolonged legal limbo
The Supreme Court recently had the opportunity to grant the CFPB’s pending petition for certiorari seeking review of the U.S. Court of Appeals for the Fifth Circuit’s holding in Community Financial Services Association of America v. Consumer Financial Protection Bureau . The 5th Circuit found that...
InfoBytesCFPB urges Supreme Court review of 5th Circuit decision
The CFPB recently filed a reply brief in its petition for a writ of certiorari asking the U.S. Supreme Court to review whether the U.S. Court of Appeals for the Fifth Circuit erred in holding that the Bureau’s funding structure violates the Appropriations Clause of the Constitution, and to consider...
InfoBytes4th Circuit affirms certification of class action in tribal lending case
On January 24, the U.S. Court of Appeals for the Fourth Circuit concluded that a district court did not abuse its discretion when certifying a class action. The lawsuit alleges an individual who orchestrated an online payday lending scheme violated the Racketeer Influenced and Corrupt Organization...
InfoBytesColorado AG releases consumer lending study
On January 23, the Colorado attorney general announced that it sent a study examining the availability of consumer lending in the state to the Colorado General Assembly. Among other things, the study analyzed the availability of safe and affordable credit in Colorado and focused on the availability...
InfoBytesCFPB asks Supreme Court to review 5th Circuit decision
On November 14, the DOJ, on behalf of the CFPB, submitted a petition for a writ of certiorari asking the U.S. Supreme Court to review whether the U.S. Court of Appeals for the Fifth Circuit erred in holding that the Bureau’s funding structure violates the Appropriations Clause of the Constitution...
InfoBytesDistrict Court approves payday settlement
On November 10, the U.S. District Court for the Southern District of Mississippi issued a final settlement order resolving allegations that a Mississippi-based payday lender violated the CFPA in connection with check cashing services and small dollar loans. As previously covered by InfoBytes , the...
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Recent Blog Posts
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March 24, 2023
North Dakota passes law on money transmitter licensure
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March 17, 2023
Fed to launch FedNow in July
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March 3, 2023
CFPB publishes BNPL borrower profiles
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March 1, 2023
Supreme Court agrees to review constitutionality of CFPB’s funding, but not on an expedited basis
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February 22, 2023
Supreme Court “relist” of CFPB petition for certiorari threatens prolonged legal limbo