Madden v. Midland Funding isn’t the only recent legal case that raises questions about the “rent a bank” business model employed by many marketplace lenders.

On Aug. 31, the U.S. District Court for the Central District of California ruled that CashCall was the true lender onb loans issued by Western Sky Financial, a type of tribal lender. The court sided with the Consumer Financial Protection Bureau, which charged that Western Sky Financial’s loans violated usury laws in 16 states – and that its partnership with a tribal banking institution in South Dakota did not provide CashCall with federal pre-emption over state statutes.

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