Predatory Fintech Lender SoLo Funds Plots Return to DC, California
Fintech lender SoLo Funds, a company that was shut down from doing business in Connecticut because its loans sometimes had interest rates of 4000% APR, has announced plans to return to doing business in both the District of Columbia and California.
Based on Connecticut’s analysis of loans facilitated in the state, the typical principal amount was $100, with an average ‘lender tip’ of $21 and an average ‘donation’ to Solo of $10 — equating to APRs that ranged from 43% to as much as 4,280%.
Here’s more on SoLo’s settlement with DC, where the Attorney General’s office found the lender charging in excess of 500% APR for short-term loans:
DC Attorney General Brian Schwalb noted that SoLo Funds used a lending model based on tips in order to hide the true cost of loans offered on the platform. Often, the interest rates on these loans would exceed 500% — far in excess of the rate cap in DC of 24%.
“Our office will not tolerate Fin-tech lenders resorting to new, deceptive practices that adversely impact vulnerable residents who are frequently ineligible for traditional loans,” said AG Schwalb. “SoLo sought to disguise exorbitant interest charges by deceptively calling them “tips” and “donations.” This settlement makes clear that we will take decisive legal action against predatory lending models in the District and nationwide, regardless of whether the predatory lender is a brick-and-mortar store or operates entirely online.”
And SoLo is already crowing about plans to return to California:
SoLo says the settlement it has reached with California will allow the company to soon resume offering loans to California customers. Presumably, those loans will be within the rate cap required by California statute.
“Today’s announcement builds upon the momentum of last week’s announcement that we will be resuming business in the District of Columbia,” said Kyle George, SoLo’s Head of Regulatory & Government…