A recent article in the Financial Times by one of the world’s leading financial bloggers highlights a growing trend in the financial services industry that has seen a dramatic increase in the use of “peer-to-peer” lending platforms.
The Financial Times article points to a report by the US Department of Justice and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) that found the use by financial institutions of platforms such as Uber and other platforms such to provide the option to borrow money through the use the borrower’s smartphone.
It further reported that of the 6,844 reported peer-to, peer-borrow transactions in the United States in the last year, nearly 60 percent of them were made using peer-credit platforms such that borrowers have to provide information, such as name, address, and telephone number.
While these platforms offer an alternative way to borrow, they are not as effective as a lender.
In a statement provided to Breitbart News, the Financial Services Roundtable, a group representing more than 60 financial services companies including American Express, Discover, JPMorgan Chase, and Wells Fargo, said that the reports highlighted the “dangerous trend of predatory lending practices and consumer financial abuses by private and non-profit lenders.”
The group said that in a statement issued Thursday, it was “extremely concerned” by the reports.
“The safety and security of the public are our top priorities,” the statement said.
“We continue to call on regulators to protect consumers by banning predatory lending platforms and the payday loan industry as a whole.”
The roundtable statement also noted that it had recently reached a confidential settlement with two other large payday lenders that were charged with engaging in predatory lending, but did not provide details about the settlement.
“Our goal is to ensure that lenders have access to our customers and we are working closely with the Department of Consumer and Banking on this issue,” the roundtable stated.
“While we do not share all of the information we share with regulators, we do believe the public has a right to know that the payday lending industry is a dangerous one that poses a danger to consumers, their families and businesses.”
The Financial Services Council of the United Kingdom, an industry trade group, told Breitbart News that the report highlighted “a disturbing trend of consumer financial abuse” in the industry and the “unnecessary and unnecessary use of peer-based lending platforms that threaten consumers, limit choice, and increase risk for all.”
The report stated that peer-marketing platforms like Uber and Lyft have not only become a way for consumers to borrow from one another, but also for consumers who wish to use these platforms for personal and business transactions, such that their credit reports are not shared with other lenders.
“These platforms do not provide a service that is directly comparable to a traditional lender, and they do not ensure that borrowers are aware of their options and that they have access and control over their loans,” the report stated.
A spokesperson for the FTC said that while the agency is aware of reports that peer to peer lending platforms have a high risk of fraud and predatory lending behavior, “we do not have enough information to determine whether or not they pose a risk to consumers.”
“The FTC has been working to improve the way that consumers access credit information from financial institutions, and we have made significant progress in that effort,” the spokesperson said.
However, the spokesperson added that “we continue to work with financial institutions to address their concerns.”
“We will continue to monitor this industry closely,” the FTC spokesperson said, “and we will continue working with regulators to make sure that consumers have access, control, and transparency into their loans and to protect their financial well-being.”