CA-based lender ordered to pay over $200K for tip and donation scheme

( WJET/WFXP )– Pennsylvania’s attorney general announced they’ve secured a settlement worth more than $200,000 with a California company that allegedly deceived customers into thinking they were receiving interest-free loans.

AG Michelle Henry announced Tuesday the settlement with SoLo Funds Inc., who marketed themselves as a community finance platform that matches individual lenders with borrowers seeking small-dollar loans that would be paid off in 35 days or less, with the settlement payout totaling $208,171.51 along with other penalties.

As part of their platform, SoLo claimed 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. However, the loans were not interest-free and were subjecting borrowers to what the AG called outrageously inflated interest rates.

“This predatory lender used their tip and donation configuration to deceive consumers into paying outrageous and illegal interest rates on loans,” Attorney General Henry said. “This settlement puts a stop to the company’s manipulative conduct and their ongoing collection efforts while providing relief to those who were tricked into the scheme.”

Under the settlement, the AG said SoLo must adhere to the following involving borrowers and lenders in PA:

• 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; and
• 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.

Overall, SoLo must pay $158,000 in restitution, $25,000 in civil penalties and costs of investigation totaling $25,171.51 in addition to ceasing collection efforts on any unpaid principal, tips, donations and fees for loans involving a borrower or lender located in Pennsylvania, totaling over $530,000. SoLo must also change its practices to be compliant with PA law.

The AG went on to say any 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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