Utah Bank Named in DC Settlement Against Payday Lender

Advocate Andy

FinWise Bank partnered with lender charging 149% interest on loans

The District of Columbia yesterday announced a settlement with online lender Elevate that will refund millions of dollars to consumers. The agreement was reached as a result of Elevate violating interest rate caps in DC — the maximum rate for a loan there is 24%.

Loans at 99% to 251% Interest?!?. Rent-a-bank lender Elevate pays $4… | by Andy Spears | Feb, 2022 | Medium

In order to get around the rate cap, Elevate partnered with a Utah bank known as FinWise. Utah’s ABC4 has more:

Elevate Credit, Inc. (Elevate) was laundering loans with up 149% APR to D.C. consumers through Utah FinWise Bank to evade DC’s interest rate limits.
Elevate was charging 99% to 149% interest on installment loans in DC despite the District’s 24% interest rate cap.

Consumer advocates were quick to condemn FinWise for their complicity in the rent-a-bank scheme:

“Utah’s FinWise Bank was helping the predatory lender Elevate to make loans up to 149% APR that are illegal in DC, but the DC Attorney General showed that states can stop rent-a-bank schemes enabled by rogue Utah banks,” said Lauren Saunders, associate director at the National Consumer Law Center. “The FDIC now must stop FinWise Bank and three other Utah Banks — Capital Community Bank, First Electronic Bank, and TAB Bank — from fronting for predatory lenders across the country.”

Consumer Groups Call for FDIC Action on Predatory Lending | by Andy Spears | Feb, 2022 | Medium

In a letter to regulators, consumer groups including Consumer Federation of America and National Consumer Law Center called for further action to stop banks from enabling predatory lending:

“FDIC-supervised banks are helping predatory lenders make loans up to 225% APR that are illegal in almost every state. These rent-a-bank schemes often operate under the guise of innovative ‘fintech’ products, even as their high-cost, high-default business model inflicts harms similar to those inflicted by traditional payday lenders…. Rent-a-bank schemes have flourished at FDIC banks in the past few years, and it is time for that to come to an end.”

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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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