Got a gripe about online lending? The Consumer Financial Protection Bureau (CFPB) wants to hear it.
The agency is now accepting complaints from consumers encountering problems with loans from online marketplace lenders. At the same time, it's releasing a consumer bulletin that provides an overview of marketplace lending and outlines tips for consumers who are considering taking out loans from these types of lenders.
“When consumers shop for a loan online we want them to be informed and to understand what they are signing up for,” said CFPB Director Richard Cordray. “All lenders, from online startups to large banks, must follow consumer financial protection laws. By accepting these consumer complaints, we are giving people a greater voice in these markets and a place to turn to when they encounter problems.”
Marketplace lending -- often referred to as “peer-to-peer” or “platform” lending -- is a relatively new kind of online lending. A marketplace lender uses an online interface to connect consumers or businesses seeking to borrow money with investors willing to buy or invest in the loan.
Generally, the marketplace lending platform handles all underwriting and customer service interactions with the borrower. Once a loan is originated, the company generally makes arrangements to transfer ownership to the investors while it continues to service the loan.
Marketplace lending complaints
Because marketplace lenders offer several types of consumer loans, a consumer submitting a complaint should select among the different complaint categories for products and services that best apply to their situation.
For example, a consumer can select products such as “mortgage,” “consumer loan,” or “student loan.” The CFPB forwards complaints to the marketplace lender and works to get a response -- generally within 15 days.
Consumers are given a tracking number after submitting a complaint and can check the status of their complaint by logging on to the CFPB website. The CFPB expects companies to close all but the most complicated complaints within 60 days.
What to do
To submit a complaint, consumers can:
- Go online at www.consumerfinance.gov/complaint
- Call the toll-free phone number at 1-855-411-CFPB (2372) or TTY/TDD phone number at 1-855-729-CFPB (2372)
- Fax the CFPB at 1-855-237-2392
- Mail a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244
The CFPB provides complaint-handling services to consumers in more than 180 languages and to consumers who are deaf, have hearing loss, or have speech disabilities via the Bureau’s toll-free telephone number.
Additionally, through AskCFPB, consumers can get clear, unbiased answers to their questions about financial products and services at consumerfinance.gov/askcfpb or by calling 1-855-411-CFPB (2372).
Marketplace lending consumer bulletin
A marketplace lender may offer different types of financial products such as installment loans, mortgages, student loans, or auto loans. Marketplace lending platforms generally market both new loans and loans that can be used to refinance or consolidate existing debt.
The consumer bulletin offers information for consumers who are considering a loan from a marketplace lender, including:
- Important consumer protections apply: Marketplace lenders are required to follow federal and state consumer financial protection laws.
- Be careful about refinancing certain types of debt: While some marketplace lenders may advertise lower interest rates, in some cases consumers could lose important loan-specific protections by refinancing an existing debt. Specifically, consumers should know that they may sign away certain federal benefits, such as income-driven repayment for federal student loans or servicemember benefits related to debt incurred prior to entering active duty.
What to do
The consumer bulletin also highlights general steps consumers should take when shopping for a loan, including a loan from a marketplace lender. Key tips include:
- Before taking out a loan, consumers should evaluate how much they can afford and really need to borrow. Consumers should understand the total cost of the loan as well as what the total monthly cost will be each month.
- Consumers should check their credit report to make sure there are no errors that could keep them from getting credit or getting the best available terms on a loan. Consumers should be sure the information in the report is accurate and up-to-date.
- Consumers who consider interest rates offered by multiple lenders or brokers may see substantial differences in the rates. Consumers should compare the costs and terms of loans to find the deal that is best for them.