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 and Moorari K. Shah (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
PA AG settles with collector over payday loan scheme
On April 9, the Pennsylvania attorney general announced settlements with the former CEO of a since-dissolved lender and a debt collector to resolve claims that the collector charged borrowers interest rates as high as 448 percent on loans and lines of credit. The AG alleged that the former CEO “...
InfoBytesCourt signals approval of tribal lending settlement
On April 7, the U.S. District Court for the Eastern District of Virginia preliminarily approved a revised class action settlement concerning allegations that an operation used tribal sovereign immunity to evade state usury laws when charging unlawful interest on loans. The plaintiffs filed a class...
InfoBytesFTC to ban “deceptive” mobile-banking app
On March 29, the FTC announced a proposed stipulated final order against the operators of a mobile banking app to settle allegations that the defendants deceived users about their supposedly high-interest bank accounts and falsely promised users “24/7” access to their funds. As previously covered...
InfoBytesCFPB to address harm created from revocation of payday rule’s ability to repay standard
On March 23, CFPB acting Director Dave Uejio published a blog post highlighting the Bureau’s belief that harms in the small dollar lending market identified by its 2017 final rule covering “Payday, Vehicle Title, and Certain High-Cost Installment Loans” still exist. As previously covered by...
InfoBytesIllinois enacts 36 percent rate cap for consumer loans, creates state community reinvestment act
On March 23, the Illinois Governor signed the Predatory Loan Prevention Act, SB 1792 , which prohibits lenders from charging more than 36 percent APR on all non-commercial consumer loans under $40,000, including closed-end and open-end credit, retail installment sales contracts, and motor vehicle...
InfoBytesCFPB declines to stay $51 million order for online payday lender
On March 9, the CFPB denied a request made by a Delaware online payday lender and its CEO (collectively, “respondents”) to stay a January 2021 final decision and order requiring the payment of approximately $51 million in restitution and civil money penalties, pending appellate review. As...
InfoBytes6th Circuit: Delegation clause in arbitration agreement keeps case out of court
On March 4, the U.S. Court of Appeals for the Sixth Circuit determined that a district court “exceeded its authority” when it ruled that an arbitration agreement was unenforceable in a case disputing an allegedly predatory loan. According to the 6th Circuit opinion, the plaintiff claimed she was...
InfoBytesNew Jersey charges MCA provider with deceptive practices
On December 8, the New Jersey attorney general announced an action against a merchant cash advance provider, its parent company, and six other associated entities (collectively, “defendants”) alleging the defendants violated the New Jersey Consumer Fraud Act (CFA) and the General Advertising...
InfoBytesCFPB seeks comment on payday loan disclosure testing
On November 12, the CFPB published a notice and request for comment in the Federal Register detailing a plan for payday loan disclosure testing. The Bureau notes that a contractor will conduct one-on-one consumer interviews to evaluate potential options for payday loan disclosures. The interviews...
InfoBytesBank gets NAL from CFPB using small-dollar template
On November 5, under the CFPB’s revised no-action letter (NAL) policy, the Bureau issued a NAL to a national bank regarding certain small-dollar credit products offered by the bank. As previously covered by InfoBytes , in May, the Bureau approved a template in response to a request by a nonpartisan...
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Our Alternative Finance Team
Partners
Recent Blog Posts
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April 15, 2021
PA AG settles with collector over payday loan scheme
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April 14, 2021
Court signals approval of tribal lending settlement
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March 31, 2021
FTC to ban “deceptive” mobile-banking app
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March 26, 2021
CFPB to address harm created from revocation of payday rule’s ability to repay standard
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March 26, 2021
Illinois enacts 36 percent rate cap for consumer loans, creates state community reinvestment act