UTAH (ABC4) – Four Utah banks have been named for laundering predatory loans of up to 225% APR through “rent a bank” programs last week. On Tuesday, one of these banks’ predatory lenders reached a deal with the District of Columbia (DC) to reimburse many of their consumers.
Elevate Credit, Inc. (Elevate) was laundering loans with up to 149% APR to DC consumers through Utah FinWise Bank to evade DC interest rate limits.
Elevate was charging 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 evade DC interest rate limits and will also require Elevate to provide at least $3.3 million in relief to harmed consumers, a statement said. Press.
The company will have to reimburse more than 2,500 consumers in the district who were deceptively marketed for high-cost loans and lines of credit, waive more than $300,000 in interest owed by those consumers, and pay $450,000 to the district.
The company will also be required to stop charging rates above the district’s 24% statutory cap and to cease misleading and deceptive marketing practices.
Elevate, which is incorporated in Delaware, partnered with FinWise Bank to issue the loans and disguise them as bank loans not subject to state interest rate laws.
The company offers two loan products to residents of the district.
One such loan product, Rise, is an installment loan product with an advertised annual percentage rate (APR) range of 99-149%.
The second line of credit product is called Elastic, for which Elevate does not disclose an APR, but which ranges between 129 and 251%.
“Utah’s FinWise Bank was helping predatory lender Elevate make loans up to 149% APR that are illegal in DC, but DC’s attorney general has shown states can stop bank leasing programs enabled by Utah’s rogue banks,” Lauren Saunders said. , associate director at 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 acting as a front for predatory lenders across the country.”
DC Attorney General Karl A. Racine said banks aren’t the real lenders because Elevate controls the loans, bears the risk, and reaps most of the profits — which is why Elevate will pay the price instead of the lender. Utah FinWise Bank.
On February 4, 15 national consumer and civil rights groups wrote a letter to the FDIC board asking them to stop four banks in Utah and two others in Kentucky and Missouri from helping predatory lenders to evade state interest rate laws.