Some of the upstart companies in online borrowing are exhibiting their own troubling traits, according to interviews with borrowers, legal aid lawyers and consumer advocates.
News Story (NATIONAL)
New York Times (NYT)
September 13, 2015
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Tags: Consumer Protection
Organizations mentioned/involved: MFY Legal Services (New York City)
Some borrowers like Mr. Mansour said they ended up closing their bank accounts because they thought it was the only way to stop the lenders from taking out the money.
“It can lead to people feeling trapped,” said Peter Barker-Huelster, a lawyer at MFY Legal Services in New York, who has advised clients with marketplace loans. “They don’t approach the lender to work out a lower payment because they think there is no way around it.”
Although the $12 billion in marketplace loans issued last year represents only a fraction of the overall consumer and small-business lending market, the industry has all the ingredients to become systemically significant.