WASHINGTON, D.C. – Attorney General Karl A. Racine today announced that Elevate Credit, Inc. (Elevate), a predatory online lender, will pay at least $3.3 million to refund over 2,500 District consumers who were misleadingly marketed high-cost loans and lines of credit, waive over $300,000 in interest owed by those consumers, and pay $450,000 to the District. The company will also be required to stop charging rates above the District’s legal cap of 24% and to cease deceptive and misleading business practices.
“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."
Elevate is an online company incorporated in Delaware that has offered, provided, serviced, and advertised two loan products to District residents. One of these loan products, Rise, is an installment loan product with an advertised Annual Percentage Rate (APR) range of 99-149 percent. The second line of credit product is called Elastic—for which Elevate does not disclose an APR, but which ranges between 129-251 percent. Elevate partners with two state-chartered banks to originate both types of loans, but the company ultimately controls the loans, taking on the risks and reaping most of the profits.
This settlement resolves a lawsuit filed by the Office of the Attorney General (OAG) against Elevate for deceptively marketing these two high-cost loans, which carry interest rates up to 42 times the legal limit. District law sets the maximum interest rates that lenders can charge at 6 percent or 24 percent per year, depending on the type of loan contract. Violations of these limits are illegal under the Consumer Protection Procedures Act (CPPA), which prohibits a broad range of deceptive and unfair business practices, including charging unconscionable interest rates and violating other District laws. Over roughly two years, Elevate made 2,551 loans to District consumers and collected millions of dollars in interest.
As part of the settlement agreement Elevate will be required to:
- Pay a minimum of $3.3 Million in restitution to refund impacted District consumers: The funds will compensate District consumers who paid interest on their loans in an amount greater than they would have paid had the interest due on any loan been calculated at the legal limit of 24% APR.
- Waive over $300,000 in past due interest owed by District consumers who took out loans from Elevate: Elevate will be immediately providing over $300,000 in debt forgiveness to District consumers who would have paid future interest amounts in connection with an outstanding balance on Elevate loans.
- Pay a total of $450,000 to the District.
- Follow District law that protects consumers: Elevate will not on its own, or working with third parties such as out of state banks, engage in any act or practice that violates the CPPA in its offer, servicing, advertisement, or provision of loans or lines of credit to District consumers.
- Cease charging rates above the District’s legal cap: Elevate will not advertise loans or lines of credit to District consumers at an interest rate above 24% APR, the cap in the District. Elevate will not act as a service provider to a lender that provides loans or lines of credit to District of Columbia consumers at an interest rate above 24% APR.
- Delete negative credit reporting: Elevate will facilitate permanent deletion from consumers’ credit reports of any negative credit information associated with the loans and lines of credit that it reported to credit bureaus.
- Accurately represent its company to consumers: Elevate will not represent that it is permitted to offer loans or lines of credit in the District without possessing any required District money lender license.
A copy of the complaint is available here.
A copy of the settlement is available here.
Combatting Predatory Lending
This settlement builds on OAG’s work to hold predatory lenders accountable and shrink the District’s racial wealth gap. In November 2021, OAG announced an over $2 Million settlement with Opportunity Financial, LLC, a predatory online lender that provided deceptive loans to over 4,000 District consumers and charged interest rates at seven times above the District’s rate cap. In January 2021, AG Racine joined a multistate lawsuit against the Trump administration’s True Lender Rule, which made it easier for lenders to bypass state interest rate caps. In August 2020, he joined a coalition of attorneys general in filing suit against the Federal Deposit Insurance Corporation for issuing a rule that would dramatically expand preemption of state interest-rate caps to non-bank entities. Previously, AG Racine led a comment letter opposing the Trump administration’s efforts to eliminate rules protecting consumers from abusive payday and vehicle title loans and led a coalition of 14 states urging the Federal Deposit Insurance Corporation to protect borrowers from abusive lending practices. He also secured more than $3 million in refunds and debt forgiveness for District residents through a lawsuit against another exploitative lender that attempted to get around DC law.
How to Report Illegal or Unfair Business
To report unfair business practices, scams, or fraud, you can submit a consumer complaint to OAG by:
- Texting “COMPLAINT” to 202-738-5212 and following the prompts
- Messaging OAG using the chat feature at: oag.dc.gov/consumer
- Submitting a complaint online at: https://oag.dc.gov/consumer-protection/submit-consumer-complaint
- Calling (202) 442-9828
- Emailing firstname.lastname@example.org