Colorado 'true lender' settlement brings legal clarity for fintechs

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By Jennifer Kang
19 Aug 2020

The Colorado attorney general reached a settlement with marketplace lenders Avant and Marlette Funding on Tuesday that enables the lenders to keep working with partner banks under safe harbour provisions if they comply with rules set out by the state. Market participants said the settlement is a clear win for online lenders, as it brings legal certainty, and it may guide other states in resolving “true lender” issues.

The near four-year battle between marketplace lenders and Colorado began when the state’s attorney general sued Avant and Marlette in separate actions, claiming they had charged interest rates beyond the maximum allowed in Colorado. The suits also named all 36 securitization trusts that had bought Avant and ...

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