On May 5, 2026, the Massachusetts Division of Banks announced a settlement resolving allegations that a fintech company engaged in third-party loan servicing activity in Massachusetts without the registration required under the Massachusetts Third Party Loan Servicers Act. According to the settlement agreement, the Division alleged that the company acted as a third-party loan servicer in Massachusetts from at least July 2021 through the present without obtaining the appropriate registration.
The Division alleged that the company engaged in the business of a third-party loan servicer in Massachusetts from at least July 2021 through the date of the settlement without obtaining the required registration. The settlement states that the company submitted an application through the Nationwide Multistate Licensing System in June 2025, after becoming aware that a third-party loan servicer registration was required.
The settlement requires the company to pay $1.9 million to the Massachusetts Division of Banks Settlement Trust and immediately cease and desist from engaging in any activity requiring licensure or registration from the Division without first obtaining the appropriate license or approval. The agreement also requires the company to establish, implement, and maintain policies and procedures designed to prevent future unlicensed activity.
Putting It Into Practice: States continue to scrutinize whether fintech business models fall within existing licensing and registration frameworks (previously discussed here and here). Companies offering consumer-facing financial products should assess whether their activities trigger state servicing, lending, or money transmission requirements and update compliance procedures as necessary.
