Utah Bank’s Predatory Lending Partner Pays $4 Million Settlement
UTAH (ABC4) – Four Utah banks were called out last week for laundering robbery loans of up to 225% APR through “rent-a-bank” programs. On Tuesday, one of these banks’ predatory lenders reached a Comparison with the District of Columbia (DC) reimburse many of their consumers.
Elevate Credit, Inc. (Elevate) has laundered loans at up to 149% APR to DC consumers through Utah FinWise Bank to circumvent DC interest rate limits.
Elevate charged 99% to 149% interest on installment loans in DC despite the district’s 24% interest rate cap.
The settlement will prevent Elevate from laundering loans to DC consumers through Utah FinWise Bank to circumvent DC interest rate caps and also requires Elevate to provide at least $3.3 million in relief to aggrieved consumers, it said it in a press release.
The company is required to forgive more than $300,000 in interest owed by those consumers to more than 2,500 consumers in the district who were misleadingly marketed with expensive loans and lines of credit, and pay the district $450,000.
The company is also being asked to stop collecting fees in excess of the district’s legal cap of 24% and to stop fraudulent and deceptive business practices
Elevate, which is incorporated in Delaware, has partnered with FinWise Bank to originate the loans and disguise them as bank loans that are not subject to state interest rate laws.
The Company offers two credit products to district residents.
One such lending product, Rise, is an installment loan product with an advertised annual percentage rate (APR) of 99 to 149 percent.
The second lending product is called Elastic — for which Elevate doesn’t disclose an APR, but it ranges from 129 percent to 251 percent.
“FinWise Bank in Utah helped predatory lender Elevate make loans at up to 149% APR that are illegal in DC, but the DC Attorney General showed states can stop Rent-a-Bank programs run by… rogue banks in Utah,” said Lauren Saunders, associate director of the National Consumer Law Center. “The FDIC must now stop FinWise Bank and three other Utah banks — Capital Community Bank, First Electronic Bank, and TAB Bank — from lobbying for predatory lenders across the country.”
DC Attorney General Karl A. Racine says the banks aren’t the real lenders because Elevate controls the loans, takes on the risks and gets most of the profits — which is why Elevate will pay the price instead of Utah FinWise Bank.
On Feb. 4, 15 national consumer and civil rights groups wrote a letter to the FDIC board, urging them to block four banks in Utah and two others in Kentucky and Missouri from helping predatory lenders circumvent state interest rate laws.