AG Henry: $208K settlement reached over donation scheme

PENNSYLVANIA (WTAJ) — Attorney General Michelle Henry has announced a settlement with a California-based lender over an alleged illegal tip and donation scheme.

The settlement is with SoLo Funds, Inc., regarding the platform’s tip and donation features attached to loans made on its platform. According to Henry, the feature led borrowers to believe that they were obtaining interest-free loans while actually subjecting them to outrageously inflated interest rates.

Under the settlement, the company will also pay restitution in the amount of $158,000, civil penalties in the amount of $25,000 and costs of investigation totaling $25,171.51.

SoLo markets itself as a community finance platform that matches individual lenders with borrowers seeking small loans with a repayment term of 35 days or less. As part of these loans, SoLo claims that borrowers may voluntarily agree to pay a “tip” to thank the lender for the loan and a “donation” for the maintenance of SoLo’s platform.

The Office of Attorney General alleged the company engaged in violations of Pennsylvania lending laws and unfair and deceptive practices. Under the terms of the agreement, SoLo will modify its business practices in Pennsylvania, pay partial restitution, civil penalties, and costs, and cease all collection efforts.

Under the terms of the settlement, SoLo agreed to modify its business practices to comply with Pennsylvania law including:

• Making or facilitating loans through its platform where the interest rate/finance charge of the loan exceeded that allowed under Pennsylvania’s Loan Interest Protection Law and Consumer Discount Company Act .
• Issuing loan disclosures stating a $0 finance charge for loans made on the SoLo platform where the borrower agreed to pay a tip and/or donation.
• Advertising that its loans are “0% APR” with “no finance charge” when the loans include a tip and/or donation.
• Directing collections notices to consumers stating that delinquent accounts will be reported to Credit Reporting Agencies, when in fact SoLo did not report account information to Credit Reporting Agencies.

SoLo will also cease collection efforts on any unpaid principal, tips, donations, and fees for loans involving a borrower or lender located in Pennsylvania, totaling over $530,000. Pennsylvania consumers who borrowed funds through the SoLo platform will receive further communications if they are eligible for a restitution payment.

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Consumers who believe they may have been harmed by SoLo Funds should file a complaint online, contact the Office of Attorney General by phone at 1-800-441-2555 or by email at scams@attorneygeneral.gov .

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