CFPB Issues First 'No Action' Letter to Fintech Company

The CFPB has issued its first “no action” letter to the Upstart Network, a company that used alternative data to make credit and pricing decisions.

As part of the “no action” letter, the CFPB stated that it has no intention of taking action against the company with respect to the Equal Credit Opportunity Act at the present time. In exchange, the company will regularly report lending and compliance data to the agency.

Upstart, based in San Carlos, Calif., provides an online lending platform for consumers to apply for personal loans, including credit cards and debt consolidation. It also sells its software to credit unions and other financial institutions.

The CFPB is studying how alternative data may be used to make credit available for customers who have little or no credit history.

Upstart will provide the CFPB with information concerning the loan applications it receives, how it makes decisions about which loans to approve and how it will mitigate risk to consumers.

The CFPB’s “no action” letters are designed to help innovations where regulatory uncertainty exists for emerging products. Companies may apply for a statement from the bureau for an innovative product or serve that “offers the potential for significant consumer benefit where there is substantial uncertainty about whether or how specific provisions of law would be applied,” according to the CFPB. 

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