Peer-to-peer loan platform, sued by multiple states, claims 0% APR for 400% APR loans
WASHINGTON ––Late Friday the Consumer Financial Protection Bureau (CFPB) dismissed, with prejudice, an enforcement action that it had filed last year against SoLo Funds for deceiving borrowers and illegally extracting fees. Under the previous administration, the CFPB had charged SoLo Funds with advertising 0% APR and “no interest” loans but deploying digital dark patterns that resulted in almost every borrower paying one or more fees.
“We are now seeing what it means for the Trump Administration to destroy the Consumer Financial Protection Bureau – it is letting off scot-free a deceptive company that claimed 0% APR for payday loans of 400% APR or higher, with interest disguised in fake ‘tips’ and ‘donations’ that virtually everyone was forced to pay,” said Lauren Saunders, associate director at the National Consumer Law Center. “States now have to pick up the pieces. No state should tolerate a company flagrantly deceiving borrowers and ignoring state rate caps and licensing laws. Several states have already run SoLo Funds out of town and all of the others should, as well.”
SoLo Funds operates a website and mobile lending application that allows consumers to take out loans that are funded by other individuals. The platform expects borrowers to pay a “lender tip fee” and also one of three default “SoLo donation fees.” The complaint filed by CFPB stated that “many loans originated on the SoLo Platform carried an APR in excess of 300% (treating the tip and donation properly as finance charges).” Solo’s own website detailed an “average cost” consisting of an “average tip” of 10.4% of the amount borrowed and “average donation” of 6.2% of amount borrowed for loans generally due in 5 to 15 days. For a 15-day loan, that would be 404% annual percentage rate (APR).
California, Connecticut, the District of Columbia, Maryland, Massachusetts, and Pennsylvania have all entered into consent decrees with SoLo Funds generally requiring SoLo funds to comply with state rate caps or otherwise preventing use of effectively required tips as disguised interest. Their investigations revealed that close to 100% of the people in those states paid fees to get loans.
“The Consumer Financial Protection Bureau is under attack, and without this critical consumer watchdog, people throughout this country who are struggling will be exploited and cheated by companies like SoLo Funds that push flagrantly unlawful, predatory, 400% APR debt trap loans while claiming the loans are 0% APR and have no interest,” Saunders added.
Related Resources
- NCLC Press Release: CFPB’s SoLo Funds Enforcement Action is a Warning for Fintech Payday Lenders, May 20, 2024
- CFPB Press Release: CFPB Sues SoLo Funds for Deceiving Borrowers and Illegally Extracting Fees (May 17, 2025)
- NCLC Press Release: CA, CT, DC Issue Orders Against Fintech Payday Loans that Solicit “Tips,” May 18, 2023
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