The CFPB misrepresented SoLo Funds, one of the
nation's most affordable subprime loan options according to a 2023
report on cash-poor Americans.
LOS
ANGELES, May 22, 2024 /PRNewswire/ -- On
Friday, May 17th, the CFPB announced
its first action after its Supreme Court ruling, targeting the
nation's largest consumer-facing black-led and owned fintech, SoLo
Funds. SoLo Funds has been wrongly accused of misconduct regarding
its voluntary tipping fee structure and peer-to-peer community
finance model, despite tips going 100% to community members, being
self-selected, and being significantly more affordable in terms of
cost to Americans. This suit is the CFPB's first order against a
company using an optional tipping fee structure despite its
widespread use amongst more well-funded Silicon Valley-based
companies.
As a new model, SoLo has diligently followed the rules, engaging
with leading legal counsel and approaching regulators requesting
collaboration since its inception. SoLo Funds has been voluntarily
working with the CFPB for the last 18 months, attempting to work
toward a regulatory framework that maintains its affordability for
Americans. We had primarily agreed on a path forward last Thursday
night, and unbeknownst to us, we were blindsided the next morning
with a suit.
"This lawsuit feels selective. Our political leaders challenged
minority innovators to create new models to address our
communities' financial inequalities. That is precisely what we've
created, but regulators have worked hard to stifle innovation and
prevent underserved communities from accessing better financial
products. It's important to note that this call for innovation has
stemmed from a long history of predatory practices and products
that have disproportionately impacted low- to middle-class
communities. Ironically enough, regulators have provided clear
licensing frameworks for the products that harm consumers most
today, such as subprime credit cards and payday loans. The stifling
of innovation has the opposite effect; it increases costs and
limits access to capital. Regulating by enforcement only
perpetuates this inequity. Today, we're experiencing the largest
wealth gap in the history of modern America, and it's a direct
reflection of traditional financial companies and the parties that
protect their interests. Our regulators seem driven by press
releases when they should be motivated by true consumer protection
and empowering equitable solutions," said Travis Holoway, CEO of SoLo Funds.
As a small startup with under 100 employees, SoLo's impact on
Americans has been profound. It has enabled over 1M loans, all 100% funded by similar community
members. This has ultimately saved consumers an estimated
$50M in fees compared to subprime
credit cards. Founded by two best friends from Cleveland and Baltimore, SoLo is a community finance company
powered by people. SoLo enables its members to borrow and lend to
and from each other, fostering community and financial empowerment.
Its lending members make returns via tips while its borrowing
members gain transparent access to emergency loans with dignity at
significantly less cost than the dominant market providers,
subprime credit cards, and payday lenders.
SoLo was founded in 2018 by Travis
Holoway and Rodney Williams.
They had first-hand experience with the difficulties their families
and loved ones had accessing short-term loans and yield-generating
opportunities. The solution they designed now provides access to
short-term capital and member tips at an unprecedented scale. They
have achieved this milestone with limited venture funding. Despite
the challenges, the company has been admired by its users for
solving their real-world problems and giving them a level of
autonomy that other financial institutions have failed to
provide.
Moving forward, we ask for open-mindedness from political and
regulatory leaders. We want to be managed with fairness and
respect. We owe it to our fellow Americans to work together to
address the inequities of our financial system in a way that
protects and empowers them. America deserves viable alternatives to
the traditional subprime credit solutions perpetuating our most
significant wealth gap in history.
About SoLo Funds
SoLo is the leading finance platform focused on underserved
communities. Members borrow on their own terms, and lend to make
industry leading returns or a social impact. As the only
Black-owned fintech Certified B Corp in the U.S. and Canada, SoLo has emerged as the new financial
services leader on pace to deliver $1B back into underserved communities by Q1 '24.
The financial system has failed our communities, excluding them
from returns and access to short term cash. SoLo created something
different, something more human. They went back to the basics,
creating a community where people could support each other
financially. SoLo calls this community finance.
Media contact
Brennan Nevada
Johnson
Brennan@brennannevadainc.com
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SOURCE SoLo Funds