THE BURNED OVER DISTRICT

The area of online lending should be an area that calls for stronger regulation than standard brick and mortar lending. As of now it has less and the industry is quietly. desperately trying to prove they don't need any more regulation.

A central plank of their strategy is to prove that the industry can tame itself without the need for additional government intervention. By distancing themselves from payday lenders and other businesses whose predatory tactics have drawn regulatory fire, online lenders hope to avoid a similar crackdown.

The up-and-coming industry, which offers fast access to loans for consumers and small businesses, is trying to recover from a difficult summer. Renaud Laplanche, the founder of Lending Club, one of the largest online lenders matching potential borrowers with would-be investors, resigned in May over the mishandling of some loans. Soon after that, several companies, including Lending Club, Prosper Marketplace and Avant, announced that they were cutting jobs because of falling demand from investors.

At the same time, consumer advocates have increased warnings that a lack of federal oversight of the lenders could leave some borrowers with unduly high fees or shut out of the market altogether.

But the lenders are beginning to regroup. They have hired lobbyists, mingled at a slate of financial technology conferences and appeared eager to tell their story before lawmakers and regulators start drafting new rules.

“At a minimum, you want policy makers to understand the nuts and bolts of your business, so they give you a fair shake,” said Brandon R. Barford, a partner at Beacon Policy Advisors, a Washington research firm.

Last year, a group of firms and small-business experts called the Responsible Business Lending Coalition published a “bill of rights” for borrowers of small-business loans and other credit products. Dozens of lenders representing community development financial institutions and online companies have signed on to the agreement, which calls for clear disclosures, no hidden penalty fees and high confidence that a borrower will be able to repay the loan, among other provisions.

Regulated procedures and penalties for violations would do much to shine the light of respectability on the industry, but it would severely reduce the opportunity for big and fast profit before the law catches up.