Loans at 99% to 251% Interest?!?
Advocates at the National Consumer Law Center applaud District of Columbia Attorney General Karl Racine’s announcement today that DC has reached a settlement with predatory rent-a-bank lender Elevate that requires it to abide by the District’s interest rate limits and to provide over $4 million in relief to wronged consumers.
“Companies that lend monies to District residents cannot charge more than 24% interest,” said AG Racine. “This settlement will put money back into the pockets of District consumers who were illegally overcharged. District consumers should be skeptical of any lender, including so-called fin-tech companies, that promise easy money without any financial consequence. The truth is often buried in the fine print. Interest rates like those involved in this settlement often exceed 100 percent and have a devastating impact on individuals who are in need of an honest and lawful loan. This resolution is part of my office’s continued focus on protecting DC residents from these predatory lenders.”
Noting that online operators such as Elevate often use rent-a-bank schemes to seek to avoid state rate caps, consumer advocates at the National Consumer Law Center (NCLC) encouraged other jurisdictions to follow DC’s lead.
“DC Attorney General Racine has once again shown that states can stand up to predatory rent-a-bank schemes trying to evade state laws,” said Lauren Saunders, associate director at the National Consumer Law Center. “The FDIC now must stop FinWise Bank, Republic Bank & Trust, and other rogue banks from fronting for predatory lenders across the country.”
“States should follow DC’s lead and challenge predatory rent-a-bank schemes within their borders,” Saunders added. “Due to DC’s strong actions, most rent-a-bank lenders are staying out of DC, but they continue to offer illegal 100% APR loans in other states.”
NCLC notes that while the DC settlement is good news for consumers, Elevate continues to evade state rate caps in 20 other states.