Head of Industry, Banking/Fintech @ Taktile | Publisher @ Fintech Business Weekly | Board Advisor
Why is the Acting Director of the CFPB promoting an illegal, unlicensed peer-to-peer payday lender that charges as much as 4,000% APR? Russ Vought, the Director of the Office of Management and Budget and Acting Director of the CFPB, caused the CFPB to dismiss its suit against unlicensed P2P payday lender SoLo Funds and tweeted that the CFPB tried to "destroy" the company. Vought misleading claims that SoLo Funds offers loans for "no interest," despite nearly all borrowers incurring a so-called "tip," "donation," or both -- with fees equivalent to APRs that reach over 4,000%. SoLo Funds has faced legal and regulatory actions in Minnesota, Pennsylvania, Connecticut, California, and Washington, DC, as well as facing civil litigation from consumers, including a putative class action. Vought describes the company as an "innovative solution," ignoring both history and the law. SoLo Funds' model is the payday loan equivalent of what Lending Club and Prosper developed around 2005 -- but those companies worked with chartered banks to originate their loans and (eventually) offered the receivables as registered securities to retail investors. SoLo does not hold lending licenses, instead claiming it is merely a platform that matches borrowers with lenders -- something akin to the Uber of payday lending. But the individual lenders on its platform are not licensed; SoLo acts as a debt collector, despite lacking relevant licensing; SoLo acts as a consumer reporting agency, despite lacking the relevant licenses or complying with the Fair Credit Reporting Act; and SoLo offers an unlicensed and unregulated insurance product, "SoLo Lender Protection," that purports to reimburse lenders a proportion of principal if borrowers default. All of which begs the question, why is the Acting Director of the CFPB carrying water for an illegal, unlicensed peer-to-peer payday lender?
Are the tips and donations mandatory to use the service like interest? Does someone default if they don't tip? If someone invites folks to their birthday party and ask them to donate to a favorite charity instead of bringing gifts, I guess they have to get a lending license per Jason 😀 Most of the enforcement actions in the previous administration were policy positions to protect incumbents like the war against Crypto. This was to protect pay day lenders which were big donors who were losing business with alternate models like the one referenced above
Because they're setting a precedent to lay the foundation for their bosses to offer similar products.
Acting CFPB Director’s support for SoLo Funds, an unlicensed payday lender, likely stems from a deregulatory agenda. He dismissed the CFPB’s lawsuit and misleadingly claimed SoLo offers “no interest” loans, despite borrowers paying disguised fees leading to APRs over 4,000%. His backing may be due to ideological support for fintech, political motives, or a push to weaken consumer protections. By labeling SoLo “innovative,” overlooks its legal violations, including unlicensed lending and debt collection. His stance prioritises deregulation over consumer protection, benefiting predatory lending practices.
Because it's all a grift.
Is anyone surprised? The former head of the FAA isn't a pilot and doesn't have any knowledge of the aviation industry. Congressman Johnson thinks that the island of Guam will tip over if the Navy moves their base from one end to the other. I could go on, and on, and on....
The bad players have caused the oversite; those of us who try to do the right thing have been punished for the sins of others. Now, what happens when it is the Wild West? The 95% who play by the rules are at a disadvantage.
Sickening. Love how APRs that reach over 4,000% are considered an "innovative solution." As to the why? Easy, this guy will go to work for them after the CFPB is unwound. He's probably got an offer for them already and thought he'd do a bit of free advertising.
Shameful abuse and why it’s more important than ever to create fintech products that support , rather than abuse the most financially vulnerable.
I guess they figured that if they don't call it a payday loan company then it doesn't count as one, so they can virtue signal by going after the other payday loan companies.
Teacher, writer, speaker, reader
6d"SoLo does not hold lending licenses, instead claiming it is merely a platform that matches borrowers with lenders -- something akin to the Uber of payday lending. But the individual lenders on its platform are not licensed; SoLo acts as a debt collector, despite lacking relevant licensing; SoLo acts as a consumer reporting agency, despite lacking the relevant licenses or complying with the Fair Credit Reporting Act; and SoLo offers an unlicensed and unregulated insurance product, "SoLo Lender Protection," that purports to reimburse lenders a proportion of principal if borrowers default. All of which begs the question, why is the Acting Director of the CFPB carrying water for an illegal, unlicensed peer-to-peer payday lender?" 👏