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
CFPB issues Summer ’23 supervisory highlights
On July 26, the CFPB released its Summer 2023 issue of Supervisory Highlights , which covers enforcement actions in areas such as auto origination, auto servicing, consumer reporting, debt collection, deposits, fair lending, information technology, mortgage origination, mortgage servicing, payday...
InfoBytesHawaii amends money transmitter provisions
On July 3, the Hawaii governor signed HB 1027 (the “Act”) into law, amending several provisions relating to the Money Transmitters Modernization Act. The Act adds and amends several definitions. Changes include defining “money,” “receiving money or monetary value for transmission,” and “tangible...
InfoBytesCFSA says CFPB funding violates Constitution
On July 3, the Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas filed their brief with the U.S. Supreme Court, urging the high court that the CFPB’s independent funding structure is “unprecedented and must be stopped before it spreads without...
InfoBytesCFPB launches medical-debt inquiry with HHS and Treasury
On July 7, the CFPB, Department of Health and Human Services, and the Treasury Department announced they are looking into high-cost specialty financial products such as medical credit cards and installment loans used by patients to pay for health care. These products, the agencies explained, were...
InfoBytesConnecticut amends requirements for small lenders
On June 29, SB 1033 (the “Act) was enacted in Connecticut to amend the banking statutes. The Act, among other things, (i) redefines “small loan”; (ii) redefines “APR” to be calculated based on the Military Lending Act and include the cost of ancillary products among other fees as part of the “...
InfoBytesMaryland says crypto enforcement could affect money transmitter licensure
On June 22, the Maryland Commissioner of Financial Regulation issued an advisory on recent enforcement actions by Maryland and federal securities enforcement agencies against cryptocurrency-related businesses that could potentially impact businesses pursuing money transmitter licensure. The actions...
InfoBytesConnecticut joins states enacting commercial financing disclosures and lender and broker registration requirements
On June 28, Connecticut became the latest state to require certain providers of sales-based commercial financing to provide disclosures to borrowers and that such providers and brokers register with the state. SB 1032 (the “Act”) defines “commercial financing” as any extension of sales-based...
InfoBytesFlorida enacts commercial financing disclosure requirements
On June 23, the Florida governor signed HB 1353 (the “Act”), creating the Florida Commercial Financing Disclosure Law and imposing several requirements on commercial financing providers and brokers. The Act defines a “provider” as “a person who consummates more than five commercial financing...
InfoBytesNew Jersey says realty company misled consumers about homeowner program
On June 6, the New Jersey attorney general and the New Jersey Division of Consumer Affairs filed an action against a realty company and its principals (collectively, “defendants”) for allegedly violating the state’s Consumer Fraud Act by making deceptive misrepresentations about its “Homeowner...
InfoBytesTexas enacts Money Services Modernization Act
On May 29, the Texas governor signed SB 895 (the “Act”) to enact the Money Services Modernization Act, the money transmitter model law created by industry and state experts. The goal of the Act is to create a set of consistent and coordinated standards relating to the regulation of money service...
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Our Alternative Finance Team
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Recent Blog Posts
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July 28, 2023
CFPB issues Summer ’23 supervisory highlights
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July 14, 2023
Hawaii amends money transmitter provisions
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July 7, 2023
CFSA says CFPB funding violates Constitution
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July 7, 2023
CFPB launches medical-debt inquiry with HHS and Treasury
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July 7, 2023
Connecticut amends requirements for small lenders