District of Columbia Attorney General Today Announce Reached an agreement with SoLo Funds, a fintech firm that enables peer-to-peer lending, to resolve a lawsuit accusing SoLo Funds of engaging in predatory lending practices.
The alleged practices include that Los Angeles-based SoLo Funds failed to tell customers the “true cost of loans on its platform,” and that it “facilitated loans with an average annual interest rate of more than 500% — far more than other funds in the region.” 24% Usury Cap,” according to a written statement from the Attorney General’s Office.
In addition, OAG claims that the company “advertises affordable and flexible loans without interest and fees,” but then requires borrowers to “pay a percentage of the loan as a ‘tip’ to lenders” and “persuades borrowers to put a The loan is paid to the company as a ‘donation.'” The OAG office also claimed that “SoLo lures lenders to its platform by advertising that they can ‘get (their) extra cash quickly,’ but “in reality, there is very little for SoLo to offer.” For the vast majority of loans, borrowers either didn’t pay back their loans on time or at all — something SoLo didn’t disclose either. “
“Our office will not tolerate new, deceptive practices by fintech lenders that adversely affect vulnerable residents who often do not qualify for traditional loans,” said Attorney General Brian Schwab. Schwalb said in a written statement. “SoLo attempted to disguise exorbitant interest charges by deceptively calling them ‘tips’ and ‘donations.’ This settlement makes it clear that we will take decisive legal action against predatory lending patterns in the District and nationwide, It doesn’t matter if the predatory lender is a bricks-and-mortar lender or operates entirely online.”
SoLo Funds has agreed to make certain changes to its practices regarding tips and donations and to provide “honest disclosure” to borrowers and lenders. The settlement also includes a payment of $30,000 to reimburse D.C. borrowers for tips and donations to obtain loans, as well as payments to D.C.
The attorney general’s office also said it was “the first state law enforcement agency to reach a settlement with SoLo for its use of tips and donations to evade usury restrictions.”
May 2022, Connecticut offers SoLo funds A temporary cease and desist order alleging similar violations of state rules on tips and donations, as well as “failure to disclose tips and lack of a lending and collection license in the state.”
Meanwhile, D.C. settlements follow suit Agreement with the California Department of Financial Protection and Innovation It was announced this week that SoLo Funds will be able to resume operations in California.
“SoLo has created a groundbreaking and innovative community finance model — as evidenced by our recent inclusion on the 2023 CNBC Disruptor 50 list,” Rodney Williams, SoLo’s co-founder and president, said via email. As such, we cannot be easily relegated to traditional frameworks. Our recent settlements in DC and CA are the result of discussions with each jurisdiction’s department, and we appreciate their embrace of innovative ideas around a more inclusive financial system. SoLo Now Focused on the future, we are excited to resume operations in the District of Columbia and California.”
In February, TechCrunch reported that SoLo Funds had gained more than 1 million registered users and more than 1.3 million downloads, making it the “largest and first Black-owned personal finance platform,” Williams said at the time.
SoLo Funds has processed more than 800,000 loans since 2020, according to the company. It has also raised more than $13 million in venture-backed capital from firms including Serena Ventures and ACME Capital.