On November 30, the District of Columbia Attorney General’s Office (DC AG) announced a settlement with an online lender targeting consumers with below-average credit, under which the lender agreed to pay $1.5 million in refunds to consumers and $250,000 to the District, and to waive over $640,000 in interest. Further, the agreement obligates the lender to reduce its interest rates to below the District’s cap and to cease engaging in allegedly misleading business practices.
The settlement resolves a lawsuit filed in April 2021 alleging that the lender provided loans at 160% APR, far exceeding the District’s 24% rate cap, misrepresenting its loans as “fast and easy cash,” and deceiving consumers into believing that its loans would help build credit. According to the DCC AG, although the lender was not a licensed moneylender in the District, it used a rent-a-bank structure, under which loans are provided by an out-of-state bank in an attempt to evade the District’s interest rate cap. However, the DC AG concluded that the online lender, “ultimately controls these loans, taking on the risks and reaping the benefits,” and so was the true lender.
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