Kiva the Latest P2P Lender to Hit Regulatory Hurdles
Kiva, the microfinancing startup, has changed its rules so that Kiva Credits — microloan payments made to lenders — now expire after five years.
In a blog post, Kiva officials said the rule change was a result of state regulations:
Because of state laws, however, if you don’t use your account for roughly 3-5 years, many states require us to consider your funds as “abandoned property” and turn it over to the relevant state government for safekeeping on your behalf.
Kiva now offers the option for lenders with Kiva Credits outstanding to either: 1) make a request for the money; 2) allow for the funds to be re-lent through the site; or 3) allow for the funds to be donated to Kiva.
The rule changes apply to inactive Kiva accounts, meaning those that have not been used or modified in 24 months.
The change is yet the latest example of government regulation impinging on startup online lending ventures. For several months now, peer-to-peer lenders have been forced to register with the Securities and Exchange Commission as investment enterprises selling bonds. Prosper, for example, continues to be embroiled in this regulatory handcuff.
More than $140 million of loans have been made through Kiva. The site boasts more than 720,000 members.
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