Regulators take consumer protection and compliance seriously. This is true for both financial institutions and fintechs.
In 2021, the CFPB forced GreenSky, a fintech that lets merchants offer financing to consumers, to refund or cancel up to $9 million in loans and pay a $2.5 million civil penalty for violating UDAAP (Unfair, Deceptive and Abusive Acts and Practices).
Here are some of the most common federal consumer protection laws fintechs should be aware of when partnering with a financial institution:
Community Reinvestment Act (CRA). Encourages banks to help meet the credit needs of their communities, particularly low- and moderate-income neighborhoods.
Equal Credit Opportunity Act (ECOA). Prohibits discrimination in credit transactions on grounds such as sex, marital status, age, race, religion, color, national origin and the receipt of public assistance funds.
Fair Credit Reporting Act (FCRA). Protects consumers against inaccurate or misleading information in credit files maintained by credit reporting agencies.
Fair Debt Collection Practices Act. Prohibits abusive debt-collection practices.
Fair Housing Act. Prohibits discrimination in the extension of housing credit on the basis of race, color, religion, national origin, sex, handicap, or family status.
Gramm-Leach-Bliley Act (GLBA/Reg P). Governs the protection of consumers’ nonpublic personal information.
Home Mortgage Disclosure Act (HMDA). Requires mortgage lenders to annually disclose to public data about home loan applications, originations, and refinancings. Data collected, which is made public, includes geography, ethnicity, race, sex, and income of applicants and borrowers, as well as pricing data.
Real Estate Settlement Procedures Act (RESPA). Requires that the nature and costs of real estate settlements be disclosed to borrowers.
Unfair, Deceptive and Abusive Acts or Practices (UDAAP). A UDAAP is any act or practice that is considered unfair, deceptive, or abusive in banking.
Based on the pervasiveness of the violation, its root cause, severity of the consumer harm and duration. The greater the weakness in the CMS, the larger the consumer impact, and the longer or more severe the violation (or consumer harm), the more overall violations regulators will find.
Does your fintech have the people, processes, and policies in place to handle these regulations--as well as the myriad others that you’ll need to know, in order to partner with financial institutions? Our software and services can help. 
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