Online Lender Elevate Pays $4 Million Settlement for Violating DC Law

Advocate Andy

Payday lender was charging 99%-251% interest on loans

Advocates at the National Consumer Law Center applaud District of Columbia Attorney General Karl Racine’s announcement today that DC has reached a settlement with predatory rent-a-bank lender Elevate that requires it to abide by the District’s interest rate limits and to provide over $4 million in relief to wronged consumers.

“Companies that lend monies to District residents cannot charge more than 24% interest,” said AG Racine. “This settlement will put money back into the pockets of District consumers who were illegally overcharged. District consumers should be skeptical of any lender, including so-called fin-tech companies, that promise easy money without any financial consequence. The truth is often buried in the fine print. Interest rates like those involved in this settlement often exceed 100 percent and have a devastating impact on individuals who are in need of an honest and lawful loan. This resolution is part of my office’s continued focus on protecting DC residents from these predatory lenders.”

Noting that online operators such as Elevate often use rent-a-bank schemes to seek to avoid state rate caps, consumer advocates at the National Consumer Law Center (NCLC) encouraged other jurisdictions to follow DC’s lead.

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“DC Attorney General Racine has once again shown that states can stand up to predatory rent-a-bank schemes trying to evade state laws,” said Lauren Saunders, associate director at the National Consumer Law Center. “The FDIC now must stop FinWise Bank, Republic Bank & Trust, and other rogue banks from fronting for predatory lenders across the country.”
“States should follow DC’s lead and challenge predatory rent-a-bank schemes within their borders,” Saunders added. “Due to DC’s strong actions, most rent-a-bank lenders are staying out of DC, but they continue to offer illegal 100% APR loans in other states.”

NCLC notes that while the DC settlement is good news for consumers, Elevate continues to evade state rate caps in 20 other states.

Elevate continues to make Rise-branded installment loans at rates of 99% to 149% in 20 states that prohibit those rates. Elevate also offers the Elastic line of credit at triple-digit rates in numerous states. DC earlier reached a $2 million settlement with OppFi (aka OppLoans), but OppFi continues to make 160% APR rent-a-bank loans in 28 states that do not allow that rate.

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Advocates suggest that national action implementing rate caps is the surest path to reining-in excessive interest rates.

Congress can also take action by passing the Veterans and Consumers Fair Credit Act, which would cap interest rates on lenders, including banks, at 36% and stop predatory rent-a-bank schemes. “Interest rate limits are the simplest and most effective protection against evasions of state laws by predatory rent-a-bank lenders,” said Saunders.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN
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