EBay Inc. is facing a probe by the Consumer Financial Protection Bureau (CFPB) over a loan program that mimics a structure used by high-interest lenders to evade state rules before the practice was stamped out by regulators.
The program, called Bill Me Later, is a service of the online marketplace's PayPal unit that relies on Salt Lake City, Utah-based Comenity Capital Bank to make loans that are then purchased and managed by EBay, according to regulatory filings. Under federal law, banks can lend in any state without being licensed there or complying with local interest rate caps.
So-called payday lenders used similar arrangements to avoid state rules before regulators and state attorneys general ended the practice, said Margot Saunders, a lawyer with the National Consumer Law Center.
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