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Consumer Bitcredit and Marketplace Lending

86 Pages Posted: 10 Apr 2017 Last revised: 13 Oct 2017

Christopher K. Odinet

Southern University Law Center; University of Iowa - College of Law

Date Written: September 22, 2017


The digital economy is changing everything, including how we borrow money. In the wake of the 2008 crisis, banks pulled back in their lending and, as a result, many consumers and small businesses found themselves unable to access credit. A wave of online firms called marketplace lenders have filled the space left vacant by traditional financial institutions. These platforms are fast making antiques out of many mainstream lending practices, such as long paper applications and face-to-face meetings. Instead, through underwriting by automation—utilizing big data (including social media data) and machine learning—loan processing that once took days for mainstream lenders can now be done overnight by fintech firms. The result of these fintech advances has been quicker access to capital, more economic efficiencies, and even greater prospects for access to credit for the unbanked and underbanked. “Click here” is the new “sign on the dotted line.”

But there is a lot still to learn about marketplace lending. How do these firms work and what kinds of products do they offer? Moreover, what role will they play in the future of American debt markets, particularly when it comes to the role of machine learning in assessing a borrower’s creditworthiness? This Article explores these questions and assesses current government responses to the nascent industry. It also surveys the current consumer protection landscape for marketplace lenders and analyzes a multi-year dataset of complaints submitted to the CFPB relative to products offered by these firms. The Article concludes by offering several observations and policy considerations for how consumers navigate this new world of bitcredit.

Keywords: bit credit, digital, lending, banking, consumers, small businesses, fintech, non-banks, lenders, mortgages, CFPB, consumer protection, SEC, Consumer Financial Protection Bureau, credit, access, unbanked, underbanked, machine-learning, loans, underwriting, consumer complaints, privacy, commerce

Suggested Citation

Odinet, Christopher K., Consumer Bitcredit and Marketplace Lending (September 22, 2017). Alabama Law Review, Forthcoming. Available at SSRN:

Christopher K. Odinet (Contact Author)

Southern University Law Center ( email )

P.O. Box 9294
Baton Rouge, LA 70813
United States
225-771-4900 (Phone)


University of Iowa - College of Law ( email )

Melrose and Byington
Iowa City, IA 52242
United States

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