AG Schwalb Secures Settlement With Fin-Tech Lender to Safeguard District Consumers From Deceptive Practices

Precedent-Setting Agreement Offers Roadmap for District and States to Protect Consumers from Predatory Fin-Tech Lenders & Provides Full Restitution to Impacted Consumers

WASHINGTON, DC – Attorney General Brian L. Schwalb today announced a settlement with SoLo Funds Inc. (SoLo), an online fin-tech platform that facilitates and advertises loans to District consumers, which resolves allegations that SoLo deceived consumers about the true cost of the loans on its platform and facilitated loans with over 500% APR on average—far exceeding the District's 24% usury cap. SoLo’s platform is based upon a model in which individual consumers lend money to other individual consumers. In return for the loan, the borrowers were required to pay a percentage of the loan as a ‘tip’ to the lenders. SoLo also solicited borrowers to pay a percentage of the loan to the company as a ‘donation’. 

“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.”

The Office of the Attorney General (OAG) is the first state-level enforcement agency to reach a settlement with SoLo regarding its use of tips and donations to evade usury restrictions. The settlement grants precedent-setting relief for consumers and establishes a roadmap for other state agencies and future litigation targeting predatory fin-tech lending models.

OAG alleged that SoLo engaged in deceptive practices in violation of the District’s Consumer Protection Procedures Act (CPPA), and charged borrowers interest rates in excess of the District’s 24% usury cap.

  • SoLo encouraged borrowers to use its website and application by advertising affordable and flexible loans with no interest and no fees. Yet, by compelling nearly all borrowers to provide monetary "tips" and "donations" to obtain SoLo loans, the APR for the loans exceeded 500% per loan, which is significantly higher than the District's cap of 24%.
     
  • SoLo attracted lenders to its platform by advertising that they could “make a quick return on [their] extra cash.” In reality, for a high percentage of the loans offered by SoLo, the borrowers either failed to repay the loans on time or at all—which SoLo also failed to disclose.

OAG secured robust injunctive relief to prohibit these novel and deceptive practices, as well as full restitution for impacted consumers and a financial penalty. As a result of OAG’s investigation and action, SoLo must:

  • Prevent lenders from being able to see whether or not a borrower is offering a tip to a lender, or the amount of the tip, prior to the lender’s firm commitment to fund a loan.
     
  • Ensure that a borrower’s withholding of a tip or donation will have no impact on loan approval by any lender, nor on the terms of any loan offered or provided to the borrower.
     
  • Clearly disclose on the SoLo interface that tips are optional and that the borrower’s decision on whether to tip or the amount of the tip will not impact the borrower’s ability to borrow.
     
  • Provide honest disclosures about how much a lender can expect to earn through the SoLo platform.
     
  • Pay $30,000, which will include full reimbursement to District borrowers for the tips and donations that they paid to get their loans, as well as a payment to the District.

A copy of the settlement agreement is available here.

This matter was handled by Senior Assistant Attorney General Wendy Weinberg and Assistant Attorney General Emily Barth, with supervision by Adam Teitelbaum, Director of the Office of Consumer Protection, and Jennifer Rimm, Deputy Director of the Office of Consumer Protection.

OAG’s Efforts to Combat Predatory Lending  
This settlement builds on OAG’s work to hold predatory lenders accountable. In 2022, OAG secured nearly $4 million from Elevate Credit, Inc. for advertising misleading high-cost loans with APRs ranging from 99-250%. 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 interest rate cap. In January 2021, OAG 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, OAG 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, OAG 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. OAG 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 Practices
To report unfair business practices, scams, or fraud, you can contact OAG by: