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NYDFS sends survey request to online lenders

The New York Department of Financial Services has sent a letter directed to businesses that the DFS “understands…may be involved in online lending in the State of New York” and that asks recipients to complete a “New York Marketplace Lending Survey” that they can access online.

The letter states that the DFS is conducting the survey to gather information for a public report that it is required to issue by July 1, 2018 and which must include information about online lenders operating in New York and their business practices, including lending practices, interest rates and costs charged, and consumer complaints and investigations about the industry.  The report will also include an analysis of the primary differences between online lending products and those of traditional lenders, the risks and benefits of the products offered, other forms of credit that would be available to such borrowers in the absence of online lending opportunities, the types and availability of credit products for individuals and businesses, and access to capital by New York consumers.

Last month, we reported that identical bills had been introduced in the New York Assembly and Senate that would direct the DFS to issue the online lending report.  Those bills are intended to amend legislation signed into law by New York Governor Cuomo in December 2017 that created a seven-person task force to study online lending and issue a report by April 15, 2018.  The bills would eliminate the task force and provide that the report is to be prepared by the DFS by July 1, 2018 “in consultation with stakeholders, including online lenders, consumers and small businesses.”

In the letter, the DFS states that it is directed to issue the report by legislation passed by the New York legislature “which is subject to a chapter amendment.”  Our research indicates that neither of the identical bills have yet been signed by Governor Cuomo and that a “chapter amendment signature” is legislation signed by the Governor with the understanding that additional, minor, or technical amendments will be made at a later date.  Presumably the DFS has sent the letters in anticipation of the amendments contemplated by the bills becoming law.

In December 2015, the California Department of Business Oversight announced that it was launching an inquiry into the marketplace lending industry and, in April 2016, it issued a summary report of aggregate data provided by the companies that responded to the DBO’s online survey that was part of the inquiry.

Copyright © by Ballard Spahr LLPNational Law Review, Volume VIII, Number 80

About this Author

Scott Pearson, Ballard Spahr Law Firm, Los Angeles, Business Litigation Attorney

Scott Pearson focuses his practice on the defense of regulatory enforcement actions and class actions, other complex business litigation, and regulatory compliance counseling. Martindale-Hubbell rates Mr. Pearson "at the highest level of professional excellence." He has been called "a true expert in complex litigation and consumer class actions" and "a no-nonsense bulldog lawyer who is highly respected by his peers and the judiciary."

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James Kim, Ballard Spahr Law Firm, Los Angeles, Financial Law Litigation Attorney
Of Counsel

Mr. Kim advises companies and individuals in matters involving financial regulation and litigation, and the myriad of federal consumer financial laws, such as Title X of Dodd-Frank (UDAAP), TILA, RESPA, EFTA, and the FDCPA. He has represented clients in examinations and investigations with the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), U.S. Department of Justice (DOJ), U.S. Securities and Exchange Commission (SEC), and various state and local agencies. His practice focuses on...