Suits in CO Test Madden Doctrine

No Colorado Collateral in Marlette ABS Due to Suits Against Marketplace Lenders
– Debtwire

Debtwire quoted Manatt’s Brian Korn, chair of the firm’s digital finance and marketplace lending practice, in an article about suits filed by Colorado's Uniform Credit Code Administrator against Marlette Funding and Avant over the rates charged by the online unsecured consumer lenders.

The CUCCA is implementing aspects of the U.S. District Court for the Southern District of New York's decision in the Madden vs. Midland ruling, according to Korn. That ruling prohibited online lenders from sidestepping the usury laws of their states, but is only enforceable in New York, Vermont and Connecticut.

"It's certainly a test of whether the Second Circuit's Madden doctrine can be extended," Korn said. The difference between the Madden and Marlette cases is that Madden was decided under the National Bank Act, while Cross River claims pre-emption under the Federal Deposit Insurance Act, he explained.

Read the article here

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