Is Consumer Financial Protection Lacking Among Peer-to-Peer Lende
Consumer lending platforms, also known as crowdfunding, or peer-to-peer lenders, have inundated the consumer lending space since 2008. Although the Consumer Financial Protection Bureau (CFPB) has wreaked havoc on the mortgage industry since the onset of the financial crisis in 2008, they don’t seem to be taking notice of the wave of new consumer lending platforms that are popping up overnight. In fact, peer-to-peer lenders seem to be completely untouched by new consumer lending regulations. The good news is that the emergence of these new mediums for lending and borrowing have given consumers more options than they ever had before. But how are these online platforms regulated under the CFPB, and how will consumers be protected?
In order to start a consumer lending platform like Prosper.com for example, you need a registration from the SEC. Although the SEC regulates the raising of capital for such ventures, who is regulating the consumer lending side of it all to ensure that consumers are protected? What about personal identifying information? How will this be protected with so many fly-by-night lending platforms out there with no credibility or reputation to build on? It seems the CFPB has been so busy policing the mortgage industry that it has taken a blind eye. But maybe not? In August of this year Lending Club agreed to settle with the CFPB and will pay restitution to borrowers in the program to the tune of $700,000 for alleged “borrower confusion” about the terms of a deferred interest product. However they are not admitting any wrong doing in the said settlement with the CFPB.
With a new crowdfunding platform being launched every week in this Country, how will the CFPB keep up with protecting consumers and their financial information? Please share your own insights, experiences, and other thoughts on this topic. I’d like to see what other consumers have to say about this.
