CAIT seeks early rollout of e-commerce policy to curb malpractices

E-commerce giant Amazon would help accelerate California’s efforts to rein in some of the pitfalls of that medium, Under the terms of a letter sent Wednesday to governors in California, Illinois, New York, New Jersey and Massachusetts, from representatives of the Fair Lending Network, an advocacy group, Amazon’s legal chief explained that while the company would remain neutral on the specific issues raised by the outreach to borrowers in those states, it would commit to input on the overall direction of reforms.

A nonprofit group with New York ties is seeking to enlist Amazon in a campaign against unfair lending practices in their biggest market — New York.

The Fair Lending Network, or FLN, was formed this year by a pair of activists who met in 2016 in California while working on the state’s e-commerce policies. Since then, the group has developed a template for negotiations with payday lenders, short-term lenders, auto dealers and retailers and is lobbying state officials.

A nonprofit group with New York ties is seeking to enlist Amazon in a campaign against unfair lending practices in their biggest market — New York.

In its letter, Amazon’s senior legal officer, Monique Morrissey, explained that the company would work with the FLN on its proposal to apply the Working Family Credit Card Act of 2006, a federal consumer protection law that bars lenders from taking credit-card payments directly from consumers’ checking accounts, to retailers in the five states. Amazon would also commit to work with regulators in other states “to address consumer protection issues specific to your state’s economy and the industry.” The letter, which was reviewed by The New York Times, was released the same day as a campaign by the FLN to enlist Amazon, the biggest company in their state, in its campaign against unfair lending practices.

“We believe that certain kinds of consumer credit scoring are unfair and discriminatory,” said Lucas Ramirez, one of the founding FLN activists. “We want to see the marketplace regulated to make sure Amazon and the others don’t get off scot-free.”

State and federal legislatures have been trying for years to address some of the problems inherent in the lending and credit businesses that make up an industry that now represents more than a quarter of the revenue of some big retailers in New York. Much of the discussion over reforming the industry has centered on attempts to create rules that ensure that consumers make honest choices, avoid predatory lending and receive fair repayment terms. For years, many lenders have touted aggressive, difficult-to-interpret loan products as providing “special” opportunities for working-class people, largely in an effort to lure more borrowers to those products.

In his letter, Mr. Ramirez said that Amazon representatives had indicated they would not support the emergence of a system in which no consumer could avoid predatory lending: “We really do encourage Amazon to be directly involved in the reform conversation.”

The FLN, which is based in New York, was spun off from Blue Ocean Global, a company established by a coalition of corporate allies in 2013 that aims to combat the problems created by predatory loans in Latin America. At its current size, the group is unlikely to have much impact in efforts to reform the lending industry, although some of its endorsements do demonstrate how some companies are interested in working with policymakers and regulators to address problems. Amazon, by contrast, has resisted efforts to regulate its business by striking deals with regulators. The company settled a probe into its practices by New York authorities in 2015, but did not open an online marketplace.

The campaign to enlist Amazon was announced the same day that the FLN announced it was seeking more than $20 million to continue its outreach to policymakers in New York, Connecticut, Florida, New Jersey, Pennsylvania and Washington, DC. To expand its message, the group said it was partnering with Legal Momentum, the group started by the writer Zadie Smith, and the Center for Popular Democracy, among others.

The company also said it would not seek a bailout from the state. In an e-mailed statement, Amazon spokesman Adam Sedo said, “the Amazon Support and Lending Program helps millions of eligible Prime members with small loans designed to make purchases easier, particularly members in communities in need of financing. The program never would have a purpose if Amazon, the vendor, were to bail on the marketplace.”