So today I decided write a thread on Twitter about my career (tangentially speaking)! The thread was a bit brief, because character limits (while necessary) are quite aggy. The day-in and day-out of my job can get very tedious. But seeing these landmark cases (that I reference in this thread) puts everything into perspective. The work I do, ultimately can have direct impact on consumers (and I am a consumer just like the people I help!).
To summarize some major points of the Avant (Chicago-based FinTech company) case from April 2019…
- Avant forced consumers to repay their loans through automatic (pre-authorized) payments from their bank accounts. This is a violation of Regulation E which explicitly states: “No financial institution or other person may condition an extension of credit to a consumer on the consumer’s repayment by preauthorized electronic fund transfers […]“.
- Avant also told people that after they completed their loan application, they could change their payment method to “paper check, money order, debit card or credit card”. But when consumers tried to pay by these methods, in many instances, Avant refused.
- The lawsuit also alleges that Avant charged consumers’ credit cards or took payments from their bank accounts without permission. One consumer’s monthly payment was debited from their account *11* times in one day.
The full text from the FTC alleges that Avant’s limited software system was to blame for these problems. Imagine that you receive hundreds of millions in VC and can’t figure out how to actually facilitate the servicing of the loans you’re soliciting.
The main reason I chose this case in particular is because of the rise of FinTech companies, it’s all about “disruption”. The rush to get to market, the pressure to turn a profit for investors – these challenges often push compliance off on the back burner, but having knowledgeable people on your team (even on retainer) can make the difference between whether or not you’re cutting checks for a settlement and legal fees.