The Bad News Banks
If you think short-term loans with rates up to 225% are only the product of those shady stores in town or sketchy online lenders, you’d be wrong. Instead, a number of online payday predators actively partner with “legitimate” FDIC-backed banks to prey on consumers.
Now, groups advocating for consumers are naming names and calling out the predators who partner with banks as well as the banks who perform what is essentially a money laundering service for legalized loan sharks.
In a press release, more than a dozen groups including Consumer Federation of America (CFA) and National Consumer Law Center (NCLC) make direct claims about these “rogue” banks.
Consumer advocates are aware of “six rogue banks fronting for high-cost non-bank consumer lenders, enabling loans up to 225% APR that are illegal for the non-bank lender to make directly.” Four of the banks are chartered in Utah: FinWise Bank, Capital Community Bank, First Electronic Bank and Transportation Alliance Bank (TAB Bank). The letter also cites Republic Bank & Trust of Kentucky and Lead Bank of Missouri. The high-cost lenders using banks to launder their loans include EasyPay Finance, Elevate Credit, OppLoans, the installment loan brand of the payday lender CashNetUSA, and the auto title lender LoanMart, among others.