TAB Bank Under Fire for Predatory Practices

Bank underwrites loans for usurious lenders

Photo by Philipp Pilz on Unsplash

There’s more news about how TAB Bank is a lender of choice for predatory nonbank lenders using “rent-a-bank” schemes to charge triple-digit interest rates.

Taking on the Predators at TAB Bank

Inside Mortgage Finance reports that consumer advocates are specifically targeting TAB’s relationship with EasyPay Finance — a provider of predatory puppy loans as well as auto repair financing.

Steered Into Debt: How EasyPay Finance Traps Consumers in High Interest Loans

Here’s how Inside Mortgage Finance describes the situation:

The groups claimed TAB insufficiently underwrites consumer loans for ability to repay, and that consumer complaints indicated TAB’s loans undermine consumers’ financial health and were deceptive. NCRC President and CEO Jesse Van Tol said CRA evaluations should take qualitative aspects of lending practices into account. “TAB Bank’s partnership with EasyPay is causing direct harm, and the FDIC should downgrade its CRA rating accordingly,” he said. TAB Bank has one physical branch but it makes loans for Carlsbad, CA-based nonbank EasyPay, which offers point-of-service customer financing options for retailers and auto repair shops. EasyPay loans are offered through staff at nonfinancial institutions. To adequately explain the loan product, employees have to comprehend the products well enough to do so, which is difficult to guarantee in retail contexts. The advocacy groups said the desire to increase sales volume and average transaction size creates conflicts of interest as well.

EasyPay has been known to charge interest rates up to 189% by using TAB’s Utah charter. This is a deliberate attempt to evade state rate caps on interest rates.

The FDIC has regulatory authority over TAB bank, but so far, has not taken action against the bank for its participation in usurious practices.

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