July 11, 2018
Today, the New York State Department of Financial Services released its report on online lenders. New York S.B. 6593, enacted in December 2017, established a task force to study online lending in New York State and submit a report to the Governor detailing its findings. A.B. 8938, enacted on June 1, 2018, repealed the task force and, instead, directed the DFS to study and issue a report with recommendations concerning the practices and economic impact of online lending institutions.
To prepare the report, the DFS sent a "New York Marketplace Lending Survey" to online lenders, which requested information for the years 2015, 2016, and 2017. Of the 48 recipients of the survey, DFS received responses from 35, although not all of the 35 respondents answered all of the survey questions. The survey included questions relating to business models and operations of the online lenders; quantity of New York consumers and small businesses served by them, including those that are unbanked or underbanked; specific loan terms, such as types of loans, loan amounts, loan durations, annual percentage rates, fees and charges; disclosures; underwriting standards; delinquencies; marketing and advertising; securitization practices; and complaints and investigations. The questions segmented borrowers into two groups: individual borrowers and small business borrowers, including those who are unbanked and underbanked.
Based on the survey responses, among other items, the DFS recommends the following actions: (1) equal application of consumer protection laws; (2) application of usury limits to all lending in New York; and (3) licensing and supervision for online lenders not currently licensed.