The Consumer Financial Protection Bureau (CFPB) is suing the fintech startup SoLo Funds, which facilitates peer-to-peer lending, on allegations that it deceived borrowers and unlawfully collected fees while claiming there were none.
“The CFPB is suing SoLo for using digital trickery to hide interest and fees on its online loans,” CFPB Director Rohit Chopra said in a May 17 news statement announcing the lawsuit. “SoLo has run-ins with state regulators multiple times, and we are stopping their bogus tipping scheme.”
The CFPB also claims that businesses collected on loans they shouldn’t have, issued misleading threats about credit reporting, and misrepresented the cost of loans. The CFPB also said that there were no protections built into SoLo Funds’ business plan. 
“SoLo’s advertisements and loan disclosures tout no-interest loans when, in fact, virtually all loans on the SoLo Platform include a lender ‘tip’ that goes to the lender, a SoLo ‘donation’ that goes to SoLo, or both,” the CFPB states.
Rodney Williams and Travis Holoway founded SoLo Funds in 2018 with the goal of lending to underprivileged Americans, especially those who frequently fall victim to predatory lending practices due to their low- to middle-class backgrounds.
Crunchbase reports the business secured venture-backed capital of around $13 million. Some well-known investors that SoLo Funds drew along the road were Endeavour Catalyst, Techstars, Serena Ventures (established by tennis great Serena Williams), and Alumni Ventures.
SoLo Funds reported that in 2023, there will be one million registered users and over 1.3 million downloads.
This latest lawsuit, meanwhile, compounds the company’s previous problems. Last year, the firm resolved several complaints involving claimed predatory lending practices with the District of Columbia and the State of California, as well as a temporary cease-and-desist order with the Connecticut Department of Banking.
The SoLo Funds then made headlines again in December 2023, this time in connection with a Maryland state investigation.
In a statement to Eltrys about the latest CFPB complaint, SoLo Funds states that for the previous 18 months, it has been willingly collaborating with the CFPB to develop a regulated framework. The statement claimed that on May 16, both parties mostly reached an agreement on a course of action and that “we were blindsided the next morning with a suit.”
In a statement, SoLo Funds CEO Travis Holoway challenged minority innovators to develop new models that address financial inequities in our communities. And now that the business is doing that, the “regulators seem driven by press releases when they should be motivated by true consumer protection and empowering equitable solutions.”
The Consumer Financial Protection Bureau (CFPB) stated it is suing SoLo Fund to alter its policies, to reimburse consumers, and to recover financial penalties, including damages, disgorgement, and maybe more civil penalties. The CFPB defines its goals as “prevent future violations, monetary relief in the form of redress to consumers, disgorgement of ill-gotten gains and damages, and the imposition of civil money penalties.”
