Pew Charitable Trusts, Nick Bourke

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October18,2021

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RE: ProposedInteragencyGuidanceonThird‐PartyRelationships:RiskManagement

 FederalReserveBoardDocketNo.OP‐1752

FederalDepositInsuranceCorporationRIN3064‐ZA26

DepartmentoftheTreasury,OfficeoftheComptrolleroftheCurrencyDocketOCC‐2021‐0011

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OnbehalfofPew’sconsumerfinanceteam,Iampleasedtoprovidecommentsontheproposed

guidancenotedabove.Pewisaglobal,non‐governmentalresearchandpublicpolicyorganization

dedicatedtoservingthepublic.Consumerfinance—andinparticular,thesmall‐dollarcreditmarket—is

anareainwhichPewhasdedicatedsignificantresearchandanalysisresourcesformorethanadecade.

Asmallnumberofthird‐party,small‐dollarlendersaremisusingbankpartnershipsinwaysthatpose

harmtoconsumers,putbankreputationsatrisk,andgenerallythreatentheintegrityoffederaland

stateregulatorysystems.Theagenciesshouldworkurgentlyanddecisivelytostopthisrisk—whichnow

existsprimarilythroughahandfulofFDIC‐supervisedbankpartnerships—fromspreading.Notallsmall‐

dollarlendingprogramsarerisky;indeed,banksmall‐dollarloanprogramscanprovidesubstantialnet

benefitstoconsumersandthebankingsystemoverall,iftheyarestructuredwithaffordableinstallment

payments,pricingthatissustainableforboththebankanditscustomers,andotherreasonable

safeguards.

Inmanycases,thirdpartiesprovideessentialservicesthatletbankslendtotheirdeposit

accountholdersquicklyandatlowcost.

Therefore,theagencieswillneedtodrawandenforce

guidelinesthatstopharmfulpartnershipswithoutdiscouragingbeneficialones.

Inourview,basedonPew’sextensiveresearch,itiscriticaltostopharmfulsmall‐dollarcredit

partnershipsimmediately,beforetheytakerootinourbankingsystem,andtodosoinawaythat

fostersmorebeneficialpartnershipsbetweenbanksandnon‐banks.Thisletterfocusesonthisneed

andofferssuggestionsforhowtheagenciescouldaddressthird‐party,small‐dollarcreditpartnershipsin

theproposedguidance.



(Continuedonnextpage.)



ThePewCharitableTrusts,“StandardsNeededforSafeSmallInstallmentLoansfromBanks,CreditUnions”

(2018),https://www.pewtrusts.org/en/research‐and‐analysis/issue‐briefs/2018/02/standards‐needed‐for‐safe‐

small‐installment‐loans‐from‐banks‐credit‐unions.

ThePewCharitableTrusts,“RIN3064‐ZA04(FDICRequestforInformationonSmall‐DollarLending)”(2019),12,

https://www.pewtrusts.org/en/research‐and‐analysis/speeches‐and‐testimony/2019/01/18/pew‐provides‐input‐

to‐fdic‐on‐promoting‐affordable‐small‐loans.

 2

Background:Mostbanksareunderperforminginthesmall‐dollarinstallmentloanspace,whilea

handfulofnon‐banksfillthegapbymisusingpartnershipswithsmallbanks

Inrecentyears,thankstoclearjointguidancefromregulators,anumberoflargerbankshavelaunched

well‐designedsmall‐dollarcreditproductsthatmeettheneedsoftheircustomersdirectly.

Somelarge

bankshavestartedinvestinginproductdevelopmentandsystemsinnovationtomakesuchsmall

installmentloansorlinesofcreditavailabletotheircustomers.However,themajorityofbanksarenot

yetofferingtheircustomerssmall‐dollarinstallmentloansandlinesofcrediteventhoughtheyarewell‐

positionedtodoso.Ifevenafewmoreofthecountry’slargestbanksbeganmakingreasonablesmall

installmentloanalternativesavailabletotheirdepositaccountcustomerswhocurrentlyrelyonpayday

loansorfrequentoverdrafts,financiallyfragileconsumerswouldsavebillionsofdollarsperyear.



Somesmallerbankshavealsoexpandedtheirsmallinstallmentloanofferings;butforsmallerbanks,the

costofdevelopingsystemstooriginateandservicesmallinstallmentloansisusuallyprohibitiveandthis

necessitatespartneringwiththird‐partyserviceproviders.Inmanycases,thesethird‐partyrelationships

arecomprehensivelymanagedandproduceclearbenefitsforbanksandtheircustomers.Potentially

beneficialpartnershipsbetweenbanksandnon‐banksoccurwhenanon‐bankserviceproviderjoins

withabanktohelpthebankserveitsowncustomerswithoutexposingthebankoritscustomersto

unacceptableorunmanageablethird‐partyrisk.Often,thenon‐bankpartnerprovidestechnological

platformsthatincreasethespeedandreducethecostofunderwriting,originating,orservicingloansto

thebank’scheckingaccountcustomers.Whiletheloansmayinsomecasescarryratesthatexceedwhat

anon‐banklendercouldchargeunderthelawsofthestatewherethecustomerresides,theprinciples

ofpreemptionapplybecausethebankisservingitsowncustomersacrossstatelines,holdingtheriskof

loss,consideringandmanagingallpotentialriskfromthirdpartiesinvolvedinthelendingtransactions,

andgenerallyoperatingwithintheestablishedandwell‐containedframeworkoffederalregulationand

supervision.

Butinothercases,absentclearguidanceandeffectivesupervisionbyfederalregulators,thirdparties

actinpotentiallydisreputableorillegalwaysandusebankpartnershipstomakesmall‐dollarloansto

consumerswhohavenorelationshipwiththebankotherthantheloanitself.

Thesethirdpartiesrely

onbankpartnershipsasashieldfromstateconsumerprotectionlawsorstateregulatoryoversight.

As

demonstratedbelow,thiscanalsooccurincaseswherethethirdpartiesholdrelatedstatelicensessuch

aspaydayloanorcheck‐cashinglicenses,andlendersusuallychargefee‐inclusiveratesabove100%or

createelaboratebusinessstructures,sometimesinvolvinghighadd‐onfeesviaadditionalthird‐party

relationshipsthatmayormaynotbeknowntothepartnerbank.Thesearrangementshavethe

potentialtocreateriskthattheirbankpartnersmaybeunabletoassessormanage,whileatthesame

ThePewCharitableTrusts,“BankRegulators'GuidanceAMoveintheRightDirection,butCarriesRisks”(2020),

https://www.pewtrusts.org/en/about/news‐room/press‐releases‐and‐statements/2020/05/20/pew‐bank‐

regulators‐guidance‐a‐move‐in‐the‐right‐direction‐but‐carries‐risks.

Underbankedconsumersspendseveralhundredbilliondollarseachdecadeonfeesandinterestonproductslike

payday,autotitle,rent‐to‐own,pawn,andothersubprimeloans.Forexample,see:CenterforFinancialServices

Innovation,“FinanciallyUnderservedMarketSizeStudy”(2019),https://finhealthnetwork.org/research/2019‐

financially‐underserved‐market‐size‐study/.

Thisisnottosaythatrent‐a‐bankcustomersareunbanked.TheFDIChasfoundonlyabout5.4%ofAmerican

householdsareunbanked,andeverypaydayloancustomerhasacheckingaccountbecausethatisaprecondition

ofgettingtheloan.Instead,rent‐a‐bankpartnershipsoftentargetcustomerswhohavecheckingaccountsatother

banks.

Forexample,see“AGRacineSuesOnlineLenderforMakingPredatoryandDeceptiveLoansto4,000+District

Consumers”(2021),https://oag.dc.gov/release/ag‐racine‐sues‐online‐lender‐making‐predatory‐and.

 3

timeremovingcustomersfromtheprotectionofotherwiseapplicablestateconsumerprotectionlaws.



Suchpartnershipsarecommonlyreferredtoas“rent‐a‐bank”arrangements.

Inshort,third‐partysmall‐dollarcreditarrangementscanputcustomers,thebank,andthebanking

systematrisk,warrantingheightenedscrutinyforrent‐a‐bankconcerns,whiletruepartnerships

betweenbanksandnon‐bankscanhelpimproveservicetothebank’sowncustomersatfairratesand

termsthataresubjecttofederaloversight.





“Rent‐a‐bank”snapshot

A“rent‐a‐bank”arrangementoccurswhenabankpartnerswithanon‐banklendertotargetcustomers

whohavelittleornootherrelationshipwiththebank.Thebanktypicallydoesnotholdtheloansonits

booksorcarrytheriskassociatedwiththeloans,thoughinsomecasesthebankmayactaslenderbut

outsourceoriginationandservicinginwaysthatexposecustomerstovariousinteractionswith(and

chargesfrom)third‐partycompaniesthatmayormaynotbeundercontractwithorevenknownbythe

bank.

Thenon‐banktypicallyarrangesloansatanannualpercentagerate(ortotalcostinclusiveoffees)thatis

substantiallyhigherthanthebankotherwisechargestoitscustomersorwhatthelawoftheborrower’s

stateofresidenceallows.Thesearrangementsarefairlycharacterizedasawayforanon‐banktoform

contractsthatgiveitthebenefitsofnationalbankpreemptionevenwhenallofthebusinessesor

customersinvolvedintheloantransactionarenotsubjecttothesamepoliciesoroversightasthe

bank’sownactivitiesandcustomers,whichiswhythearrangementsareknownas“rent‐a‐bank”or

“rent‐a‐charter”arrangements.



Forpurposesofthiscommentletter,wepresumethatsomebankpartnershipswillconferfederalpreemptionof

statelawstothird‐partylendingarrangementsandsomewillnot.Further,wenotethatthevalidityofpreemption

claimsturnsonfactsandthoughthereissomegrayareainthelegalinterpretations,arecentfederallawchange

madeitharderforcompaniestosucceedintheseclaims.See,e.g.,https://www.davispolk.com/insights/client‐

update/occs‐true‐lender‐rule‐has‐been‐repealed.Regardlessofwhetherpreemptionprinciplesapplytoanygiven

third‐partyarrangement,weasktheagenciestotakenoteofthecriticalriskthatcoulddevelopifthirdpartiesare

enabledtoclaimexemptionfromstate‐leveloversightbecauseofabankpartnershipwhilesimultaneously

engaginginactivitiesandadditionalthird‐partyrelationshipsthatmaybeoutsidethevieworcontrolofbanksand

federalregulators.Examplesofthisbehavior,suchasblendingstate‐licensedcheckcashingactivitieswithbank‐

enabledlendingactivities,arenotedinthefollowingsectionsofthisletter.Accordingly,regulatorsmaywishto

requirebanksandtheirnon‐bankpartnersthatrelyonpreemptionclaimstojustifytheirpositionsandshowhow

theyhavemanagedtherelevantlitigationandotherrisksthatmaybeassociated.

Indeed,leveragingtechnologyandexpertisefromnon‐bankserviceproviderswhocanimprovethespeedand

costofsmall‐dollarlendingmaybethekeytoensuringaccesstosafeandaffordablesmallinstallmentloanswithin

thebankingsystem.Forexample,PewrecentlyencouragedtheCDFIFundtoconcentrateitseffortsonsupporting

thesetypesofpartnershipswhentheyarefocusedonservingthebank’sowncustomers.See:

https://www.pewtrusts.org/en/research‐and‐analysis/speeches‐and‐testimony/2020/09/10/pew‐encourages‐

efficiency‐in‐treasury‐departments‐small‐dollar‐loan‐program‐investments.

Asexplainedbelow,anumberofbusinessesmaybeinvolvedinaloanprogram,includingbusinessesthatcharge

feesfordistributingloanproceeds/cashingloanproceedschecksandbusinessesthatchargefeesforarranging

electronicloanrepayment.Thesebusinessesmayormaynotbecontractedwith—orknownby—thebankthat

servesasthelenderofrecord.Thiscanputcustomersatgreatriskandassociatedchargescanbeextreme,for

examplea10%surchargeonloandisbursementsand/orloanrepayments.

 4

Thoughrent‐a‐bankpartnershipsremainuncommon,theyhavegrowninrecentyearsandmay,if

unchecked,expandrapidly.AccordingtoNationalConsumerLawCenter(NCLC),atleastfivebanks

currentlyengageinthird‐partyrelationshipsthatappeartoraiserent‐a‐bankconcerns.

Eachidentified

bankisregulatedbytheFDIC.AsummaryoftheserelationshipsisprovidedinAppendixA.

Despitethesmallnumberofbanksengaginginthispractice,rent‐a‐bankarrangementshaveexpanded

intomorethanadozenstates,includingstateswherepaydayorotherhigh‐rateloansareotherwise

prohibited.



Further,rent‐a‐bankarrangementsarebeingusedtoallowbanksandtheirpartnerstochargemore

thanwhatstate‐licensedpaydaylenderscharge:Pewisawareofatleastsevenstateswhereunlicensed

paydaylendersusebankpartnershipstochargemorethanstate‐licensedpaydaylenderschargeinthose

states.Thesestatesare:Colorado,Maine,NewMexico,Ohio,Oregon,Virginia,andWashington.

Forexample,anon‐bankcompanyiscurrentlyofferingbank‐enabledsmall‐dollarloansinseveralstates

includingOhio,whereitchargesmorethanacomparableloanfromastate‐licensedpaydaylender.The

non‐bankstatesthatitpartnerswith“FDIC‐insured,statecharteredbanks.”

AsofOctober9,2021,a

$1,000,9‐monthloanfromthiscompanythatisoriginatedbyoneofthesebankscarriedcharges

resultingin160%APR,whilethesameloanfromthecountry’slargestpaydaylender,whichoperates

underanOhionon‐banklenderlicensepursuanttothestate’spaydayloanlawasrevisedin2018,has

anAPRof88%.

Thebank‐enabledloaninthisexamplehasanAPRthatis72percentagepointshigher

thantheequivalentloanfromthestate‐licensedpaydaylenderandcostsnearlydoubleindollarterms.

ThisexampleisconsistentwithothersshowninNCLC’srent‐a‐bankwatchlist(seeAppendixA).



Ingeneral,rent‐a‐bankpartnershipsentailconsumercreditarrangementsthathavecosts,repayment

terms,orothercharacteristicsthatwouldviolateotherwiseapplicablestatelaws.Thoughhighcostsor

ratesareoftenaconcern,otherconcernsapplyaswellincludingotherwiseappliablestatelicensing

rulesorlawsgoverningconsumerprotectionorbusinesspractices.

Thirdpartiesthatcontractwiththe

bankmayresistanyeffortofstateregulatorstoexaminetheirroleinthelendingactivity—evenwhere

statelawmayreasonablybeinterpretedtorequirethenonbankentitytoobtainalicenseforbrokering,

arranging,orservicingloansorwherestatelawprohibitsblendingconsumercreditactivitieswiththe

entity’scorestate‐licensedbusiness(e.g.checkcashing).

NationalConsumerLawCenter,“High‐CostRent‐a‐BankLoanWatchList”(2020),

https://www.nclc.org/issues/high‐cost‐small‐loans/rent‐a‐bank‐loan‐watch‐list.html,accessedonOctober9,2021.

NationalConsumerLawCenter,“ConsumerRent‐a‐BankWatchList–Public.xlsx,”2021,

https://docs.google.com/spreadsheets/d/1XJxKzS6e9hgkRFYAr3idNkLVUcHZmuAm/edit#gid=1917677263,

accessedonOctober9,2021.

Thecompanyliststhefollowingbankpartnersonitswebsite:FinWiseBank,FirstElectronicBank,andCapital

CommunityBank(CCBank).https://www.opploans.com/bank‐servicing/(accessedOctober9,2021).AllareUtah‐

charteredbankssupervisedbytheFDIC.

See:https://www.opploans.com/rates‐and‐terms/ohio/; https://www.advanceamerica.net/store‐

locations/ohio#rates.(EachsiteaccessedOctober9,2021.)

ConferenceofStateBankSupervisors,“StatementfortheRecord:"Rent‐a‐BankSchemesandNewDebtTraps”’

(2020),https://www.csbs.org/policy/statements‐comments/statement‐record‐rent‐bank‐schemes‐and‐new‐debt‐

traps

 5

Twoadditionalexamplesofsmall‐dollarcreditarrangementsfrombank‐nonbankpartnershipsonthe

marketin2021follow,basedonareviewofconsumercomplaints,borrowerloanagreements,and

variouspubliclyavailableadvertisementsanddisclosures.



Example1:NONBANK‐1,astate‐licensedcheckcashingstore,advertisesandarrangesloans,stating

that“thelenderof[theloans]is”BANK‐1,locatedinanotherstate,“MemberFDIC.”

 Termsofloansarenotpubliclydisclosedbutcustomerloanagreementsdescribea“lineof

creditagreement”forloansupto$1,000withanannualpercentagerateforcashadvancesof

35.99%andamonthlyparticipationfeeof$4.99.

 Thecustomeragreementstatesthat“[f]eesmaybechargedbythird‐partiestoaccessloan

proceeds”anddescribesbothchargesforaccessingloanproceeds(upto10%ormore)and

chargesformakingrequiredloanpayments(upto10%ormore).

 AnaddendumtothecustomerloanagreementidentifiesNONBANK‐2termsandconditions

leadingthecustomerto“agree”toenrollinservicesandbesubjecttocertainfees.The

addendumstates:“Bywayofexample,ifthepaymentdueis$100,thefeeis$10.00andyour

debitcardwillbechargedatotalof$110.00.Ifyourequest$300tobefundedinrealtime

directlytoyourbankordebitcard,youwillbechargeda$30.00feeand$270.00,which

representsthenetproceedsafterthe10%feeisdeductedforthecostoftheService,willbe

depositedintoyourbankaccountordebitcard….Youwillbechargedafeeeachtimeyouuse

theService.”TheaddendumtothecustomerloanagreementissignedBANK‐2“byandthrough

itsagent,NONBANK‐3,dbaNONBANK‐2.”

 ItisnotclearifNONBANK‐2orNONBANK‐3hasanycontractualrelationshipwithBANK‐1or

whetherBANK‐1andBANK‐2haveagreementsbetweenthemselves.

 Thoughofferedasa“lineofcredit,”theloanagreementstipulatesthatanyamountborrowedis

dueinfullwithinonemonth.Thepaymentdueincludesalladvancedamountsplusallapplicable

feesandcharges.Thecustomerloanagreementincludesanincentiveforrepeatborrowing.

Customershavereportedthatagentsinthestorehaveencouragedthemtoreborrowifthey

couldnotaffordtherequiredpaymentinasinglelumpsum.

o TheloanagreementdisclosesanAPRof35.99%,apparentlycalculatedaccordingto

disclosurerequirementsforopen‐endcredit.However,ifthecashadvanceandthe

showntransactionchargeswerecalculatedaspartofaone‐month,closed‐endcredit

transaction—whichisarguablymoreappropriategiventherequiredrepaymentterms—

thentheeffectiveAPRona$500advanceunderthesetermsrepaidinonemonthwould

beapproximately48%APR(minimum)to288%APRormore(maximum).



Examplecustomerloanagreementandrelatedmaterialsonfilewithauthor.

UnderrelevantlawincludingfederalRegulationZ(12C.F.R.Part1026),thecalculationofthefinancechargeon

loansthatarenotopen‐endcreditincludesserviceandtransactionfees.Forexample,the“financecharge”

includesany“chargepayabledirectlyorindirectlybytheconsumerandimposeddirectlyorindirectlybythe

creditorasanincidenttooraconditionoftheextensionofcredit.”12C.F.R.1026.4(a).Examplesofcharges

includedinthefinancechargeinfederalregulationinclude“[s]ervice,transaction,activity,andcarryingcharges”

and“(p)oints,loanfees,assumptionfees,finder’sfees,andsimilarcharges.”12C.F.R.1026.4(b).Anexception

appliesforcertain“[f]eeschargedforparticipationinacreditplan,”buttheexceptiondoes“doesnotapplytofees

imposedseparatelyonindividualclosed‐endtransactions”oroncertainprepaiddebitcardtransactions.12C.F.R.

1026.4(c)(4)andOfficialinterpretationofParagraph4(c)(4),https://www.consumerfinance.gov/rules‐

 6

 MinimumAPRcalculationincludeschargesof$19.99(approximately$15in

interestat35.99%annualrateand$4.99monthlyservicefee).



 MaximumAPRcalculationassumesadditionalfeesof$100ormore(allowable

$50chargeforaccessingloanproceeds/cashingloancheckplusallowable

chargeof$50ormoreformakingtheloanpayment).



 Therepaymentafteronemonthwouldbeapproximately$520(minimum)to

$620ormore(maximum).Foraborrowermaking$15anhourandworkingfull

time(earningabout$2,500permonth),thispaymentwouldconsume

approximately20%(minimum)to24%(maximum)oftheirmonthlypre‐tax

income.

 Thesecostsexceedotherwiseapplicablelimitsintheloancustomer’sstate,

includinglimitswhichstate‐licensedpaydaylendersabideby.Therepayment

termsandotheraspectsoftheloanarrangementsdonotcomplywith

otherwiseapplicablelawsinthestate.

 Theloanagreementallowsthelendertouseremotelycreatedchecksorothermeanstodebit

borrowercheckingaccounts.

 Itispossible,butnotclear,thatNONBANK‐1isviolatingthetermsofitsstatecheck‐cashing

licensebyofferingthistypeofcreditatitslicensedstorelocations.



Example2:NONBANK‐1,astate‐licensedcheckcashingstore,offersvehicletitleloansatitsstoresin

partnershipwithout‐of‐statelenderNONBANK‐2andBANK‐1.

 Onitswebsite,NONBANK‐2explainsit“canoftenhelp[financialservicesbusinesses]by

providinganewproducttoexpandtheirbusiness”andthat“partnersofferingtitleloans[can]

earncommissiononfundedloans….”

 NONBANK‐1solicitsloancustomersatitsstoresanddirectsthemtotheNONBANK‐2website,

whichredirectscustomerstoasecondwebsite,brandedNONBANK‐2a,whichstates:“The

NONBANK‐2aloanismadebyBANK‐1,aUtahcharted[sic]bank…MemberFDIC.Allloanswill

beservicedbyNONBANK‐2.”

 TheNONBANK‐2websitefurtherstates:“LoansinArkansas,California,Delaware,Districtof

Columbia,Florida,Indiana,Kansas,Kentucky,Maine,Michigan,Minnesota,Mississippi,

Montana,Nebraska,Oklahoma,Ohio,Oregon,RhodeIsland,SouthDakota,Tennessee,Texas,

Virginia,Washington,andWisconsinaremadebyBANK‐1,memberFDIC.NONBANK‐2isa

serviceagentforBANK‐1.”



Amongotherthings,theseexamplesdemonstratethatsmall‐dollarcreditarrangementscanintroduce

criticalthird‐partyrisk,includingthroughtheactionsofpartiesthatmaynotbeinadirectcontractual

relationshipwithorevenknownbythepartnerbank—suchasthenonbankentitychargingfeesto

processloandisbursementsorpayments.Presumably,thepartnersinthesearrangementswouldclaim

policy/regulations/1026/interp‐4/#4‐c‐3‐Interp‐1.RegulationZtreatsanycreditthatdoesnotmeetthedefinition

ofopen‐endcreditasclosed‐endcredit.12C.F.R.1026.2(a)(10).

TheExcelformulaforcalculatingthisAPRis:=RATE(1,‐519.99,500)*12

TheExcelformulaforcalculatingthisAPRis:=RATE(1,‐619.99,500)*12

 7

thatthetermsoftheloansthemselvesarenotsubjecttostateregulationbasedonfederalpreemption

analysis.Thiswouldbeadebatableclaimthatislikelysubjecttolitigationrisk.

Yetdespitethe

outcomeofthatdebate,itisapparentthateitherthecontractingthird‐partyand/ornon‐contracting

thirdpartiesmaybeengaginginactivitythatviolatesthetermsoftheirstatelicensesorotherapplicable

statelaws,suchasprohibitionsonengagingincertainlendingactivitywithinlicensedcheck‐cashing

stores—orcouldbefoundtobeinviolationunlessthearrangementswerecarefullydesignedand

monitoredforcompliance.Allofthisshowshowthird‐partylendingarrangementscancreatecriticalrisk

ofcustomerharm,reputationalrisktothebank,andrisktotheintegrityoffederalandstateregulatory

regimes.Thesepotentialharmswillgoundetectedorunmanagedifbanksandtheirfederalregulators

donotaddressthemdecisively.



Recommendations:Theagenciesshouldspecificallyaddresssmall‐dollarcreditarrangements

Ourhigh‐levelrecommendationsarethattheagenciesshould:

1. Actdecisivelytostopharmfulsmall‐dollarcreditpartnershipsimmediately,beforetheytake

rootinourbankingsystem,andtodosoinawaythatfostersmorebeneficialpartnerships

betweenbanksandnon‐banks.



2. Addmorespecificguidanceaddressingrent‐a‐bankandotherthird‐partyriskconcernsrelated

tosmall‐dollarcreditarrangementswithnon‐bankpartners.Intheirguidance,theagencies

shouldfocuson,andwherewarrantedestablishprohibitionsorsubstantiallyheightenedlevels

ofriskmanagementrequirementsandscrutinyabout,small‐dollarcreditprograms.Thisis

especiallytrueforanyprogramwithcharacteristicsindicativeofabuseofthebankcharteror

thebankingsystem,suchas:



a. Thebankisnotlendingtoitsowncustomersoritislendingtocustomerswhohaveno

relationshipwiththebankotherthanthethird‐partycreditarrangement.

b. Thebankhasnolong‐termroleorstakeinthecustomerrelationships,suchaswhenthe

bankisindemnifiedbynon‐bankpartnersorotherwisedisposesofallormostofthe

risk.

c. Thenon‐bankpartneroritsaffiliatesarepaydayorvehicletitleloanlenders.

d. Thecreditproductsfeaturetermsthatmimicpaydayloans,suchaseffectiveAPRs

(inclusiveofanypotentialtransactionsurcharges)of100%ormore,balloon‐payment

features,orrepaymenttermsoflessthan45days.



3. Confirmtheagencies’supportforbankstoexpandtheirofferingsofsafesmall‐dollar

installmentloanprogramstotheirdepositaccountcustomers,directlyorinconjunctionwith

third‐partyserviceproviders,asreflectedintheagencies’jointguidancefromMay2020.

The

Seenote7.

TheFDIC,BoardofGovernorsoftheFederalReserveSystem(FRB),OfficeoftheComptrolleroftheCurrency

(OCC),andNationalCreditUnionAdministration(NCUA),“InteragencyGuidanceforResponsibleSmall‐Dollar

Loans(May2020),https://www.fdic.gov/news/financial‐institution‐letters/2020/fil20058.html.Pewprovided

commentontheguidanceathttps://www.pewtrusts.org/en/about/news‐room/press‐releases‐and‐

statements/2020/05/20/pew‐bank‐regulators‐guidance‐a‐move‐in‐the‐right‐direction‐but‐carries‐risks.

 8

agenciesshouldrefinethisguidancetostronglydiscourageballoonpaymentsandrepayment

termsshorterthan45dayswhileencouragingadoptionofsimple,fast,low‐costautomated

underwritingtechnologiessimilartothosedescribedintheOCC’s2018bulletin.



Responsestospecificquestionsposedbytheagenciesfollow.Again,ourcommentsfocusonthird‐party,

small‐dollarcreditarrangements.

1.towhatextentdoestheguidanceprovidesufficientutility…?Inwhatareasshouldthelevelofdetailbe

increasedordecreased…?

a. Werecommendincludingspecificguidanceandexamplesaboutsmall‐dollarcredit

arrangements.Itshouldencouragebankstoprovidesafesmallinstallmentloanstotheirdeposit

accountcustomerswhileaddingnumerousexamplesandguidancedesignedtoavoidrent‐a‐

bankproblemsasfurtherexplainedbelow.

2.Whatotheraspectsofthird‐partyrelationships,ifany,shouldtheguidanceconsider?

a. Theguidanceshouldencourageorrequirebankstoobtaincertificationfromthirdpartiesof

theircompliancewithanyandallrelevantlawsandregulationsofthestatesinwhichthey

operate.

o Thismayincluderequiringthatthebankanditspartnersdocumenttheirfindingsabout

preemptionofstatelendinglaws.

o Further,evenincaseswherefederalpreemptionprinciplesmayapplytothetermsof

theloansthemselves,thirdpartiesshouldberequiredtocertifycompliancewith(or

documenthowtheyareexemptedfrom)otherlawsthatcouldberelevanttothe

businessofthepartnership.Thisisparticularlytrueforthirdpartiesthatholdlicensesas

checkcashersorthatengageinloanbrokering,becausestatelawsoftengovernhow

licenseesorotherpersonsmayblendthesetypesofbusinesseswiththebusinessof

makingorarrangingconsumercredit.

b. Banksshouldberequiredtoreviewandapprovetheentiretyofthefeesandchargesthatmay

applytoaloancustomerinthecourseofapplyingfor,receiving,orrepayingcredit,including

anyfeesandchargesfromthirdpartiesthatarenotindirectcontractualrelationshipwiththe

bank.

3.Inwhatways,ifany,couldtheproposeddescriptionofthird‐partyrelationshipsbeclearer?

a. Theproposedguidancedefinesathird‐partyrelationshipas“anybusinessarrangement…by

contractorotherwise.”Werecommendaddingexplicitexamplesandguidanceaboutthird

partiesthatarenotundercontractwiththebankbutmaychargeloancustomersfeesor

chargesondistributionofloanproceedsormakingofloanpayments(seeExamples1and2in

theprevioussectionofthisletter).

OCCBulletin2018‐14,"InstallmentLending:CoreLendingPrinciplesforShort‐Term,Small‐DollarInstallment

Lending,"issuedonMay23,2018(rescindeduponissuanceofthe2020jointstatement).Pew’srecommendations

arefurtherelaboratedinourcommentonthe2020jointstatement(seenote)andin“StandardsNeededforSafe

SmallInstallmentLoanProgramsFromBanks,CreditUnions”(2018),https://www.pewtrusts.org/en/research‐and‐

analysis/issue‐briefs/2018/02/standards‐needed‐for‐safe‐small‐installment‐loans‐from‐banks‐credit‐unions.

 9

o Ataminimum,theagenciesshoulddefineanysuchentityasa“thirdparty”for

purposesofthisguidance.

o Ideally,werecommendthattheagenciesacttoprohibitorstronglydiscouragethis

practicealtogether(theagenciesshouldprohibitorstronglydiscourageanysmall‐dollar

lendingarrangementinwhichanythirdpartynotundercontractwiththebankmay

imposefeesorchargesinconnectionwiththeloans,includingfeesforcashingloan

proceedschecks,electronicallyreceivingloanproceeds,ormakingloanpayments).The

bankcouldensurethisbyrequiringanythirdpartyitcontractswithtoabidebythese

restrictions.

6.Howcouldtheproposedguidancebetterhelpabankingorganizationappropriatelyscaleitsthird‐

partyriskmanagementpractices?

a. Theagencieshavenotedthattheproposedguidance“isintendedtoprovideprinciplesthatare

usefulforabankingorganizationofanysize….”Becauserent‐a‐bankconcernsarethusfar

concentratedatsmallbanks,andbecausesmallbanksmaylacktheresourcestofullyassessand

controlthecomplexrisksassociatedwiththird‐partysmall‐dollarcreditarrangements,the

agenciesshouldconsiderdevelopingguidanceforsmall‐dollarcreditarrangementsthatis

clearerormorespecificthanotherformsofguidance.

o Forexample,theagenciescoulddevelopspecificexamplesofprohibitedorhighly

discouragedactivities,suchasmakingsmall‐dollarloanstocustomersthatdonotholda

depositaccountwiththebankbeforetakingtheloanorinconnectionwithany

companythatholdsanystatelicensetoconductpaydayorvehicletitlelending,or

makingsmall‐dollarloanswithratesthatexceed100%orwherecustomerspaymorein

feesthantheyreceivedincredit.

o Ortheagenciescoulddevelopachecklistofspecificriskstoconsumersandreputation

thatitexpectsseniorbankofficials(includingpotentiallyboardmembersatsmaller

banks)toreviewandmonitoronanongoingbasis.

o SeealsoQuestion9.

7.Inwhatways,ifany,couldtheproposedguidanceberevisedtobetteraddresschallengesabanking

organizationmayfaceinnegotiatingsomethird‐partycontracts?

a. Assuggestedunderquestion#3above,theagenciesshouldrequireorstronglyencouragebanks

toincludeprovisionsincontractswiththird‐party,small‐dollarcreditpartnerstocontrolfor

rent‐a‐bankconcernsandotherrisksoutlinedinthisletter.

b. Theagenciesmaywishtoconsiderdevelopingalistofstandardorfavoredcontractualterms

thatprotectconsumersandavoidreputationalorotherrisksincludingtermsthatwouldavoid

rent‐a‐bankconcerns.Suchalistmayproveespeciallyusefulforsmallbanksandexaminersof

smallbanks,withrespecttomanagingthecomplexrisksassocia

tedwiththird‐partysmall‐dollar

creditarrangements.Thislistmightincludeprovisionsto:

o Requirethethirdpartytokeepwrittenrecordssufficienttoensurecompliancewiththe

contractandapplicablelaws

o Requirethethirdpartytosubmittoauditingorreviewbythebankanditsfederal

regulator(s)

 10

o Prohibitthethird‐partyfromchargingoracceptinganyfeesinconnectionwithaloan

fromanypersonotherthanthepartnerbank,andfromfacilitatinganyotherthirdparty

fromdoingso

o Prohibitthethird‐partyfromengaginginanyservicesotherthanthosespecificservices

relatedtooriginating,underwriting,orservicingtheloanonbehalfofthebank.



8.Inwhatwayscouldtheproposeddescriptionofcriticalactivitiesbeclarifiedorimproved?

a. Theagenciesshoulddefinethird‐party,small‐dollarcreditarrangementsascriticalactivitiesor

designatethemasactivitiesthatwillbepresumedtobecriticalunlesscircumstancesclearly

warrantotherwise.Thisshouldestablishapresumptionforheightenedriskmanagementand

supervisionrequirementsandresultineliminationofrent‐a‐bankconcerns.

9.Whatadditionalinformation,ifany,couldtheproposedguidanceprovideforbankingorganizations

toconsiderwhenmanagingrisksrelatedtodifferenttypesofbusinessarrangementswiththirdparties?

a. Werecommendthattheagenciesexplicitlyprohibit,stronglydiscourage,orestablish

heightenedexpectationsofriskmanagementandsupervisoryreview(suchasdeemingthe

activitya“criticalactivity”)foranysmall‐dollarcreditprogramwhere:

o Thebankisnotlendingtoitsowncustomers

o Thebankislendingtocustomerswhohavenopre‐existing/nootherrelationshipwith

thebank

o Thebankdoesnotmaintainanongoingrelationshipwiththecustomer(e.g.sellsthe

loans/risk)orisindemnifiedbyathirdparty

o Thepartnerisapaydayorvehicletitlelender(e.g.maintainsstatelicensesinanystate

formakingsuchloansdirectlytoconsumers)

o Loanswillbeoriginatedorserviced,orthirdpartieswillhavetheopportunitytoactwith

acustomer,anywhereotherthanatthebank’sbranchesorelectronicpropertiesunder

controlofthebank

o Loansaredueinlessthan45to90daysorinfewerthanthreeorfourinstallments

o Loansorlinesofcreditmayinclude(directlyorindirectlyfromotherthirdparties)any

feesorchargesthatwouldnotbereflectedintheAPR

o Usagedemonstratescustomercomplaintsorlegalorregulatoryenforcementactions

directedagainstathirdpartyinvolvedinthepartnership.

b. Theagenciesshouldgiveexamplesofbeneficialorencouragedsmall‐dollarcreditprogramsthat

wouldbepresumedtoposeminimalthird‐partyrisk.Theseexamplesshouldincludethe

followingprerequisites:

o Thebankislendingtoitsowndepositaccountcustomers

o Loansmeetstandardsforsafetyandaffordability,suchasbeingrepayableinatleast

threeorfourinstallmentsandinnolessthan45to90daysor

more.



Forrelevantexamplesfromstatelaw,seeVa.CodeAnn.§6.2‐1523.1(A)(4)through(6),

https://law.lis.virginia.gov/vacode/title6.2/chapter15/section6.2‐1523.1/.

See:ThePewCharitableTrusts,“StandardsNeededforSafeSmallInstallmentLoansfromBanks,CreditUnions”

(2018),https://www.pewtrusts.org/en/research‐and‐analysis/issue‐briefs/2018/02/standards‐needed‐for‐safe‐

small‐installment‐loans‐from‐banks‐credit‐unions;BankPolicyInstitute,“BanksReceive‘Go‐Ahead’toMeet

 11

o Loancustomersinteractonlywiththebankthroughallstagesoforiginationandloan

servicing(e.g.thebank’sbranch,website,telephone,orotherelectronicservicing

channels).

o Thenon‐bankpartnerisprovidingservicesforthebankrelatedtooriginatingor

servicingloansinamannerthatisgenerallyinvisibletotheloancustomer.

o Thenon‐bankpartnerisactingunderacontractwiththebankthatprohibitsthethird

partyfromchargingadditionalfeesorfacilitatinganyotherentitytointeractwith

customersorchargefeesinconnectionwiththeloan.

c. Wecautiontheagenciesagainstestablishingunnecessarilyrestrictiveguidelinesrelatedtothe

following:

o APR.AsFormerFDICChairSheilaBairhasexplained

abouttheagency’spriorsmall‐

dollarloanpilotproject,attemptingtolimitbanksmall‐dollarloanprogramstoafixed

APRcapthatpreventsevenefficientbanksfromcoveringtheircostsforsmallerloans

maydomoreharmthangood.Banksthatpricetransparentlywilloftenfindittoo

difficulttosustainsuchprogramsandwillthusavoidservicingcustomersinthismarket,

whileotherlenderswillacttocircumventAPRcapsbyaddingfeesthatarenotincluded

inthecalculationoftheAPR.

Instead,theagenciesshouldfocusonensuringthatthe

APRandallcostsarecompletelyandtransparentlydisclosed,whiletoleratingavariety

ofreasonablepricingonsmall‐dollarloanprograms.Pewrecommendstolerating

double‐digitAPRsthatscaledownforlargeramountswithinasafeandwell‐regulated

banksmall‐dollarinstallmentloanprogram(triple‐digitAPRsareneverjustifiedonsuch

programsandtheagenciescouldjustifiablyprohibitordiscouragethem).

Otherthana

modestmonthlyaccountmaintenancefee,theagenciesshouldstronglydiscouragethe

additionofanyfeesandinparticularthosethatwouldnotbereflectedintheAPR

calculation.

o Coolingoffperiodsorusagelimits.Whilelimitedresearchshowsthatcappingthe

numberofallowableloansorestablishingcooling‐offperiodsbetweenloanscanreduce

usageofharmfulshort‐termpaydayloans,

thereisnoresearch‐basedjustificationfor

suchcapsinthecontextofsafeandtransparentinstallmentloansorlinesofcredit.

Further,someresearchindicatesthatenforcingcooling‐offperiodsorfrequencylimits

candiscourageconsumersfromrepayinginstallmentloansorlinesofcreditearlywhen

ConsumerSmall‐DollarLendingNeeds”(2020),https://bpi.com/banks‐receive‐go‐ahead‐to‐meet‐consumer‐small‐

dollar‐lending‐needs/;ConsumerFinancialProtectionBureau,“NoActionLetterTemplate”(2020),

https://www.consumerfinance.gov/documents/8851/cfpb_bpi_no‐action‐letter.pdf.

SheilaBair,“FDICCommentLetterRIN3064‐ZA04”(January,2019),

https://www.fdic.gov/regulations/laws/federal/2018/2018‐small‐dollar‐lending‐3064‐za04‐c‐049.pdf.

Ibid.Seealso,BankPolicyInstitute,“WhatistheBreak‐EvenCostofSmall‐DollarLoans”(2021),

https://bpi.com/what‐is‐the‐break‐even‐cost‐of‐small‐dollar‐loans/.

Seealsonote23.

See,ConsumerFinancialProtectionBureau,“SupplementalFindingsonPayday,PaydayInstallment,andVehicle

TitleLoans,andDepositAdvanceProducts”(June,2016),Chapter4,

https://files.consumerfinance.gov/f/documents/Payday_Loans_Highlights_From_CFPB_Research.pdf.

 12

theyareabletodoso—perhapsoutoffearofbeingcutofffromaccessingcreditinthe

futureiftheywantorneedit.



10.Whatrevisionstotheproposedguidance,ifany,wouldbetterassistbankingorganizationsin

assessingthird‐partyriskastechnologiesevolve?

a. Theagencieswillbesuccessfuliftheyfosterautomationtechnologywhilemaintainingahigh

degreeofscrutinyonthequalityandsubstanceofsmall‐dollarcreditprograms.Automationis

essentialtothesuccessofanybanksmall‐dollarinstallmentloanalternativetopaydayand

similarloans,becausebanksmustdriveoperatingcostsdownlowenoughtosustainthe

programsevenwhilechargingafairpricetoborrowers.

Inmostcases,bankswillturntonon‐

bankpartnersfortechnologyandinnovativebusinesspracticestohelpstreamline,automate,

expedite,andgenerallyreducethecostoforiginatingandservicingsmall‐dollarloanstothe

bank’scustomers.Thistypeoftechnologyisanecessarycomponentofanysafe,affordable,and

sustainablesmall‐dollarcreditprogram,andforthisreasontheagenciesshouldpromotesuch

partnershipswhenevertheyareassociatedwithsafeandsoundlending.Butinnovative

technologyaloneisnotsufficienttoensuresafetyandsoundness,andforthisreasonthe

agenciesmustscrutinizethenatureofpartnerships,loanterms,customerexperience,and

originationandservicingarrangementscloselyasdiscussedelsewhereinthisletter.

11.Whatadditionalinformation,ifany,couldtheproposedguidanceprovidetobankingorganizationsin

managingtheriskassociatedwiththird‐partyplatformsthatdirectlyengagewithendcustomers?

a. Theagencieshavehighlightedthegeneralrisksthatcanoccurwithrespecttouncontracted

thirdparties;anyadditionstotheguidancethatspecificallydirectsbanksandtheirsupervisors

toconsiderhowcustomersmaybeaffectedbytheactionsofuncontractedthirdpartiesinthe

courseofasmall‐dollarcreditarrangementwouldbewelcome.Banksshouldberequiredto

assessandeliminateortightlycontroltheserisks.Inparticular,thebankshouldconsiderwaysin

whichsmall‐dollarcreditcustomerscouldbeexposedtocharges,solicitations,orpotential

fraudulentactivitywherevertheentiretyofthecustomer’sexperienceisnotconductedatthe

bank’sownbranchorelectronicchannel.Anexampleofapotentiallyintolerablerisk,as

describedinthe“Rent‐a‐banksnapshot”sectionabove,iswhereabankpartnerswithathird

partythathelpsoriginateorserviceloansatitscheck‐cashingstoreswhileotherentities

(possiblynotincontractualrelationshipwiththebank)obtaintherighttochargecustomers

transactionfeesinconnectionwiththeloansashighas10%ormorefordisbursingloan

proceedsand/orprocessingloanpayments.



16.Whatotherfactorsshouldabankingorganizationconsiderindeterminingthetypesof

subcontractingitiscomfortableacceptinginathird‐partyrelationship?Whatadditionalfactorsare

relevantwhentherelationshipinvolvesacriticalactivity?

ThePewCharitableTrusts,“PaydayLendinginAmerica:PolicySolutions”(October2013),

http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2013/pewpaydaypolicysolutionsoct2013pdf.

ThePewCharitableTrusts,“PaydayLoanCustomersWantMoreProtections,AccesstoLower‐CostCreditFrom

Banks”(2017),https://www.pewtrusts.org/~/media/assets/2017/04/payday‐loan‐customers‐want‐

moreprotections.

 13

a. Asexplainedelsewhereinthisletter,werecommendtreatinganythird‐partysmall‐dollarcredit

programasacriticalactivityforpurposesofthisguidanceand/orestablishingheightened

expectationsforriskmanagementandsupervisionwithrespecttosmall‐dollarcredit

arrangements.

b. Inthiscontext,thebankanditssupervisorsshouldconsidertheentiretyoftheentitiesthatare

orcouldpossiblybeinvolvedintheconsumercredittransactions.Thiswouldincludenotjust

thethird‐partycontractee’ssubcontractorsbutalsoanyotherthirdpartythatisaffiliatedinany

waywiththecontracteeorthecustomer’sexperiencewiththecreditoffering,suchasa

companythatchargestransactionfeesforreceivingloanproceedsormakingloanpayments.

SeealsoQuestions3and7,above.

c. Suchscrutinyisnotwarrantedwhenabankmakessmallloanstoitsdepositaccountcustomers

withassistanceofatechnologyproviderandthroughbranchesorelectronicchannels

exclusivelycontrolledbythebank,becauseofthemuchlowercustomerriskinvolvedand

becausethereisalreadysufficientsupervisionofsuchlending.

18.TowhatextentshouldtheconceptsdiscussedintheOCC’s2020FAQsbeincorporatedintothe

guidance?Whatwouldbethebestwaytoincorporatetheconcepts?

a. Note:WecommenthereontheOCC’s2020FAQs,inresponsetoSectionVoftheproposed

guidance.WerefertonumbereditemswithintheFAQreproducedinSectionVoftheproposed

guidanceusingthefollowingformat:[OCC‐1],[OCC‐2],andsoon.Aswiththerestofthis

commentletter,wefocusherespecificallyonthird‐party,small‐dollarcreditprograms.

b. Ingeneral,theguidanceshouldincludespecificprovisionsaboutsmall‐dollarcreditprograms,as

notedthroughoutthisletter(seee.g.Questions6and9).Becauseoftheuniquelycomplexrisks

involved,guidanceaboutthird‐partysmall‐dollarcreditarrangementsshouldbeunusuallyclear

aboutdiscouragingprogramsthatraiserent‐a‐bankconcerns.Additionally,weencouragethe

agenciestobeunusuallyclearaboutwhatsmall‐dollarcreditprogramfeaturesarestrongly

discouragedorprohibited,aswelltheexpectedfeaturesofacceptablesmall‐dollarcredit

arrangements.Suchclaritywillpreventthespreadofrent‐a‐bankconcerns(asseeninthe

handfulofsuchprogramsdiscussedabove)whilealsoencouragingthedevelopmentofsafeand

affordableinstallmentloanalternativestopaydayandsimilarhigh‐rateloans.Smallerbanks

thatlacktheresourcestoinvestigatepotentialcustomerharmsordeveloptheirowntechnology

solutionswillespeciallybenefitfromsuchuniquelyclearguidelines.

c. [OCC‐8]asksWhatthird‐partyrelationshipsinvolvecriticalactivities?Theagenciesshouldclearly

statethattheywilltreatanythird‐party,small‐dollarcreditprogramasacriticalactivitysubject

toheightenedscrutinybecauseofthesignificantcustomerimpactsandreputationalrisksthat

couldmaterializeinanysuchsmall‐dollarcreditprogram.Forsmallerbanks,thismayinclude

holdingseniorexecutivesorboardmembersaccountableforreviewingandapprovinganythird‐

party,small‐dollarloanprogramatthebank.Alternatively,theagenciescouldallowbanksto

treatthird‐party,small‐dollarloanprogramsasnon‐criticalactivitiesonlyiftheymeetcertain

clearthresholdsandstandardssetbytheagencies.SeealsoQuestions6and9above.

d. [OCC‐9]regardinghowbankmanagementshoulddeterminetherisksassociatedwiththird‐party

relationships.Theagenciesshouldconsiderpublishingalistofcommonorpotentialrisks

associatedwiththird‐party,small‐dollarcreditprograms.SeealsoQuestions6and9above.

 14

e. [OCC‐10]statesthatthe“OCCexpectsbankstohavemorecomprehensiveandrigorous

managementofthird‐partyrelationshipsthatinvolvecriticalactivities.”Theagenciesshould

retainthisexpectationandsetclearerexpectationsthatthird‐party,small‐dollarcredit

arrangementswillgenerallybeconsideredcriticalactivities.

f. [OCC‐19]coverswhatshouldabankconsiderwhenenteringamarketplacelendingarrangement

withnonbankentities.Theagenciesshoulddrawcleardistinctionsbetweencreditarrangements

thatserveabank’sowndepositaccountcustomerswithinbranchesorelectronicchannelsfully

controlledbythebankandothertypesofprograms.



Inconclusion,westronglyencouragetheagenciestoacturgentlytopreventthespreadofriskythird‐

partysmall‐dollarcreditarrangementsandtodosoinawaythatencouragesbankstoexpandsafeand

affordablesmall‐dollarinstallmentloanofferingstotheirowndepositaccountcustomers,eitherdirectly

orinwell‐managedpartnershipswithnon‐bankserviceproviders.



Sincerely,

NickBourke

Director,consumerfinance

ThePewCharitableTrusts

[email protected]





 15

APPENDIX A: Rent-a-Bank Loan Watch List - National Consumer Law Center (NCLC)

Non‐Bank

Partner

Product

Name

BankPartner(s) Regulator Installment

Loans

APRs

Enova

(CashNetUSA)

NetCredit RepublicBank&Trust

(Kentucky)

FDIC $2,500‐

$10,000

upto

99.99%

OppLoans(aka

OppFi)

 FinwiseBank(Utah),

CapitalCommunityBank

(CCBank)(Utah),andFirst

ElectronicBank(aUtah

industrialbank)

FDIC $500‐

$4,000

upto

160%

DuveraBilling

Servicesdba

EasyPay

Finance

 TransportationAlliance

BankdbaTABBank(Utah)

FDIC Not

disclosed

Not

disclosed

Elevate Rise FinWiseBank(Utah)and

CapitalCommunityBank

(Utah)

FDIC $500‐

$5,000

99%‐149%

Elevate Elastic RepublicBank&Trust

(Kentucky)

FDIC $500‐

$4,500

upto

109%

AppliedData

Financedba

Personify

Financial

 FirstElectronicBank FDIC $500‐

$10,000

upto

179.99%

Wheels

Financial

Group,LLCdba

LoanMart

(underthe

ChoiceCash

brand)

 CapitalCommunityBank FDIC $500‐

$4,500

80%‐

204%*

Axcess

Financial

(Checkn'Go)

Xact CapitalCommunityBank FDIC $1,000‐

5,000

145%‐

225%

CheckIntoCash CC

Connect

CapitalCommunityBank FDIC upto

$2,400

upto

224.99%

AmericanFirst

Finance

 FinWiseBank FDIC Not

disclosed

Not

disclosed

* Data incomplete. Utah loan example taken from the LoanMart website: Utah Loan Information | 1 800 LoanMart

(accessed October 11, 2021).

Source: NCLC, https://www.nclc.org/issues/high-cost-small-loans/rent-a-bank-loan-watch-list.html

