Overview:
- Entity Involved: US Consumer Financial Protection Bureau (CFPB).
- Target: SoLo Funds, a peer-to-peer (P2P) lending platform.
- Allegation: Deceiving borrowers about the total cost of loans.
Key Allegations:
- Misleading Advertising: Claimed zero-cost loans but used digital dark patterns leading almost every borrower to pay at least one fee.
- Fee Structure: Marketed fees as “tips” and “donations” but failed to offer a zero-fee option.
- Loan Funding Bias: Loans were less likely to be funded if borrowers did not pay a fee to lenders; only 0.5% of loans did not include a fee.
- False Threats and Collections: Accused of making false threats and collecting money not owed by consumers.
- Social Credit Score: Created a social credit score system without adequate safeguards.
CFPB Actions Sought:
- Injunctions: To prevent future violations.
- Monetary Relief: For affected borrowers.
- Forfeiture: Of ill-gotten gains.
- Civil Penalty: Monetary penalty against SoLo Funds.
Statements:
- CFPB: Rohit Chopra, CFPB director, criticized SoLo for using digital tricks to obscure fees and interest, describing the scheme as deceptive.
- SoLo Funds: Claims to have been “blindsided” by the lawsuit, having worked with the CFPB on a regulatory framework for 18 months. CEO Travis Holoway accused regulators of being driven by publicity rather than genuine consumer protection.
Background:
- Operation Since: 2018.
- Platform Function: Brokers short-term personal loans between users.
Current Status:
- CFPB Lawsuit: Announced seeking various legal and financial remedies against SoLo Funds.
SoLo Funds Response:
- Surprise: Claimed unexpected nature of the lawsuit.
- Cooperation Claim: Asserted ongoing voluntary collaboration with the CFPB for regulatory compliance.
