The Marketplace Lending Association (MLA) joined as the latest Signatory to the “Guidelines for Investing in Responsible Digital Financial Services.” These guidelines were co-developed by an Investor Working Group of more than 30 members including IFC, CDC and DEG, among others, through feedback and lessons culled from existing global industry principles and frameworks.

The MLA represents some of the most prominent online lenders in the US. Names like Prosper, LendingClub, and SoFi are members, in addition to investors such as CIM and Victory Park Capital. These platforms have sought to differentiate their services from some platforms that do not provide risk-based pricing for borrowers and amortizing loans.

The Ten Guidelines are as follows, with proposed actions that signatories can adapt:

  1. Promote Responsible Investment in Digital Finance
  2. Manage Risks Comprehensively with Growth of Digital Inclusion
  3. Foster a Proportionate Legal and Regulatory Framework
  4. Facilitate Interoperability and Infrastructures for DFS Ecosystems
  5. Establish Customer Identity, Data Privacy and Security Standard
  6. Promote Fair and Transparent Pricing
  7. Improve Disclosure of Terms and Conditions for Customers
  8. Enhance Customer Services For Problem Resolution and Product Innovation
  9. Prevent Over-Indebtedness, Strengthen Digital Literacy and Financial Awareness
  10. Track Progress to Mitigate Risks and Expand DFS Opportunities

Nathaniel Hoopes, Executive Director of the MLA, said he was proud that their association continues to voluntarily support the highest standards in digital finance:

“In California, we’ve seen how voluntary industry standards can play a crucial role in seeding sound public policy ideas in the area of disclosure. Here, the MLA is signing onto investment guidelines that seek to ensure that investors – both large and small — are evaluating digital financial services companies through a lens of both responsibility and innovation.”

Jacob Haar, Managing Partner of Community Investment Management and the Chair of MLA’s Investor Council added that digital financial services have the potential to be transformative solutions to increase financial health and inclusion globally.

“As the leading investor group funding responsible innovation in lending, we believe that it is incumbent on us to support best practices in the industry to protect customers and create alignment among all stakeholders.”

According to Martin Holtmann, IFC’s Manager of Digital Finance and Microfinance, opportunities for digital finance, or Fintech, have increased but so have the risk – particularly for lower income individuals.

“The Guidelines focus on embedding consumer protection into digital financial services and incorporate IFC’s due diligence practices for digital users and customers into investments. The guidelines will benefit digital financial service providers and their customers by helping investors to better evaluate and manage risks associated with digital transformation and we welcome MLA as a signatory and their commitment to our shared goals.”

The online lending industry in the US remains fragmented largely due to operational standards. Some Merchant Cash Advance platforms (MCAs) have been criticized for their lending services and potential for creating debt traps for borrowers. Of course, there is the PayDay lending segment which provides a valuable service but has also been lambasted by some as charging exceptionally high interest rates.

About MLA

MLA, a professional trade association, was formed in 2016 now has more than 30 active members. The goals of the Association are to promote a transparent, efficient, and customer-friendly financial system by supporting the responsible growth of marketplace lending, fostering innovation in financial technology, and encouraging sound public policy at the state and federal level.

To be eligible to join the association MLA companies must abide by the highest standards of business conduct in providing credit and services to consumers and businesses. For more information about MLA, its members and its membership standards, visit the MLA website at