-Online Lenders Alliance Members Must Adhere to Robust Best Practices Designed to Provide Access to Short-Term Credit While Ensuring Consumer Protection-
ARLINGTON, Va. (December 16, 2021)—The Online Lenders Alliance (OLA) today issued updated guidance, known as the OLA Best Practices, for companies in the online short-term, small-dollar credit industry. These Best Practices ensure that consumers are able to access the trustworthy credit they need in a fair, transparent, and responsible way. Members of the Online Lenders Alliance are required to strictly adhere to the guidelines, although OLA encourages all companies—members and nonmembers alike—to abide by their standards for the industry.
“As our industry grows and evolves, so too must the standards that we set for it,” said Andrew Duke, CEO of the Online Lenders Alliance. “OLA’s Best Practices have long covered how our members market loans, communicate with customers, process payments, protect consumer information, collect on accounts, and originate new loans with a high level of standards that ensure fairness and transparency for borrowers. Our updated best practices, which were developed with input from the Financial Health Network, enhance our efforts with new standards focused on improving borrower outcomes.
“Our members have always been required to interpret and apply the Best Practices broadly and in a manner that protects customer interests to the maximum extent possible,” Duke continued. “These updates provide additional layers of consumer protection and will benefit everyone in the online lending ecosystem.”
The updated Best Practices includes key new provisions focused on improving borrower outcomes, which were developed with input from the Financial Health Network. These provisions include ability to repay calculation requirements; allowances for advance payment and no prepayment penalties; a prohibition on the sale of mandatory ancillary products; notification requirements for upcoming payments; loan performance reporting to credit agencies to help borrowers build credit profiles; access to financial literacy assistance; and guidelines regarding the sale of delinquent loans to a third party for the purposes of collection.
Complying with the Best Practices is a requirement for companies or entities to qualify for OLA membership. Within six months of the Best Practices’ approval, all member companies must be in full compliance with them. Applicants must also adhere to OLA’s Antitrust statement, comply with all federal and state antitrust laws, adhere to OLA’s Self-Regulatory Principles, and comply with all other applicable federal and state laws. As a self-policing organization, the OLA Board of Directors takes immediate action if any violation of the Best Practices is discovered.
The complete updated Best Practices is available here.