Archive: 1 November 2017

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“True Lender” Litigation Heats Up: Small Business Sues Marketplace Lender and Partner Bank, Alleging Conspiracy to Evade Usury Laws

“True Lender” Litigation Heats Up: Small Business Sues Marketplace Lender and Partner Bank, Alleging Conspiracy to Evade Usury Laws

By David D. Christensen and Jennifer Janeira Nagle

Over the last several years, a number of U.S. state and federal government enforcement actions have challenged the viability of the bank partnership model that many marketplace lenders have used to fund consumer and small business loans. Specifically, regulators have argued that, in partnerships where the non-bank entity controls much of the funding process or the bank has little-to-no risk of loss, the non-bank entity is the “true lender.”

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