SAN FRANCISCO, June 2, 2016 /PRNewswire-USNewswire/ -- LendUp, a Silicon Valley-based startup focused on expanding access to safe credit for traditionally underbanked consumers, today released the following statement applauding the intent of the Consumer Financial Protection Bureau's (CFPB) new proposed rules for payday lenders:
"As a mission-driven startup committed to redefining the way underbanked consumers access financial services, LendUp shares the CFPB's goal of reforming the deeply troubled payday lending market. While we are still reviewing the full proposal and will need some time to determine its full impact, we fully support the intent of the newly released industry rules," said LendUp CEO and co-founder Sasha Orloff. "As it summarizes its concerns, the CFPB criticizes payday lenders' business models that 'deviate substantially from the practices in other credit markets.' We couldn't agree more. That is precisely why we built the LendUp Ladder to lower rates over time for successful borrowers. High-cost debt cycles have defined the short-term lending space for far too long and businesses need to align their success with that of their customers. Equally important, we welcome the CFPB's new emphasis on stronger underwriting and credit risk evaluations—something our business has invested in since day one. We also applaud its efforts to enforce compliance with existing laws and regulations, including electronic fund transfer laws.
"We started LendUp because the traditional banking system wasn't working for more than half of Americans and the payday market was fraught with abusive practices. While we know there are some in the industry who will characterize these changes as 'the end' of short-term lending, we believe it is disingenuous to say curbing predatory practices equates to restricting access to credit—in fact, we know that's not the case, because many of the protections the CFPB is calling for are already part of LendUp's DNA. We believe the intent of these new rules points to a critical reset in ensuring a safe and functioning credit market for underbanked consumers, and we look forward to working with the Bureau and other key stakeholders to finalize them."
In addition to requiring stronger underwriting and ensuring more robust enforcement of existing industry laws and regulations, the CFPB's new rules also seek to rein in aggressive automatic account withdrawals that result in excessive insufficient fund charges. LendUp applauds these changes, as it already gets express permission and provides multiple notifications to consumers before withdrawing funds from their accounts, sends free payment reminders via text and email, and allows customers to choose their own payment dates.
LendUp builds technology that expands credit access and choice for the more than 80 million Americans who currently have limited options within the traditional banking system. It develops safe, transparent products designed to help customers get access to more credit at lower rates over time where and when available, which furthers LendUp's goal of improving financial literacy and providing customers with an opportunity to build their credit scores. LendUp is located in downtown San Francisco and is backed by prominent Silicon Valley investors including Y-Combinator, Google Ventures, Susa Ventures, Data Collective, Kleiner Perkins, Andreessen Horowitz Seed Fund, Kapor Capital, QED, Eagle Cliff Investors, Yuri Milner and Thomvest Ventures, plus other highly regarded angels and entrepreneurs.
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