D.C. Attorney General Brian L. Schwalb said Wednesday that the city has reached a settlement with SoLo Funds Inc., an online fintech platform that facilitates and advertises loans, on the grounds of deception.
The OAG said SoLo duped D.C. residents about the true cost of the loans on its platform and facilitated the financial payments with over 500% APR on average — far exceeding the District’s 24% usury cap and in violation of the city’s Consumer Protection Procedures Act.
“Our office will not tolerate fintech lenders resorting to new, deceptive practices that adversely impact vulnerable residents who are frequently ineligible for traditional loans,” the attorney general said. “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,” Schwalb said.
As a result of OAG’s action, SoLo must take the actions including to ensure 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 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 disclosure about how much a lender can expect to earn through the SoLo platform; and 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 payment to the city.