“Congressman Emanuel Cleaver, II announced today the findings of his investigation into the small business lending practices of Financial Technology (FinTech) companies. Last year, Congressman Cleaver launched an investigation to study the methods that FinTech companies use to protect consumers against discriminatory practices. One of the primary focuses of the survey was the use of automated algorithms in loan applications. While many FinTech companies claim their algorithms protect against discrimination, many respondents failed to demonstrate how they protect consumers from unintentional discrimination. It is imperative that automated lending algorithms avoid geographical and race-based biases. Companies mentioned in this investigation include LendUp, Fora Financial, Biz2Credit, Kabbage, LendingClub, and OnDeck Capital, Inc. It should be noted that LendUp is in fact a consumer lending company, however they agreed to participate in this investigation. “The initial findings are clear as day. We need to further understand how lenders may be intentionally or unintentionally offering higher interest rates to minorities and underserved communities, and work to implement industry-wide best practices” said Congressman Cleaver

The investigation results can be read here. Three key findings in the investigation revealed:

1. FinTech loans are more likely to be used by minority-owned companies
2. More action is needed in order to limit unfair business practices
3. Some participants have implemented practices that should be widely adopted…”