Personal Finance News
CFPB Drops Suits Against Capital One, Solo Funds
With major changes underway at the U.S. Consumer Financial Protection Bureau (CFPB), the agency has now dropped several cases it had in the works.
What’s happening:
Several cases filed by the CFPB against banks, lenders, and FinTechs in recent months are now being withdrawn. This comes as acting CFPB Director Russell Vought in conjunction with the Department of Government Efficiency (DOGE) have moved to terminate hundreds of agency employees and halt other work that had been set in motion by former Director Rohit Chopra.
As CNBC reports, one of these dismissed cases involved Capital One. Filed just last month, the CFPB accused the bank of tricking customers out of a combined $2 billion in interest. This claim stems from the launch of 360 Performance Savings account, which replaced the similarly named 360 Savings account. According to the agency, Capital One froze the interest rate for 360 Savings customers and failed to inform them about the 360 Performance Savings account — which, at one point, offered interest rates that were 14 times higher.
Another withdrawn lawsuit was one against the peer-to-peer lender app SoLo Funds. In that suit, the CFPB took issue with SoLo’s pricing model. Specifically, they argued that the app misled customers about the cost of loans. For example, they noted that, while SoLo did make it possible for customers to opt out of a “Donation” to the platform, this option needed to be toggled off in Settings rather than being included as part of the loan request interface. Furthermore, they found that only a small percentage of loan requests that did not offer a “Tip” to lenders were ultimately filled.
Among the other suits that have been dismissed in recent days include one against Rocket Homes, another aimed at Berkshire Hathaway-owned Vanderbilt Mortgage and Finance, and more.
What they’re saying:
In a blog post, SoLo Funds CEO Travis Holoway celebrated the news of the suit’s dismissal, saying, “As a disruptive fintech leader, SoLo, a certified benefit corporation, is proud to have over 2 million users that have injected $1 billion into working-class communities via its peer-to-peer community finance platform, and we look forward to continuing this critical work now that this costly litigation is behind us.”
Holoway went on to say, “In deciding to bring this case against SoLo, the CFPB sought to shut SoLo down so underserved consumers could not get help to finance necessities such as groceries, rent, and utility bills. SoLo is thankful that when they examined the evidence in the case, they saw the benefit of SoLo’s innovative model. We remain hopeful that innovation will be rewarded where the goal is fostering competition and lowering consumer costs.”
My thoughts:
Although this resolution has pretty much been a foregone conclusion for a few weeks now, it’s interesting to see it come to fruition. As for the companies impacted, while Capital One is no doubt relieved with the update, I’m sure the development means much more to smaller startups like Solo Funds.
Of course, how you feel about these companies being let off the hook likely depends on your politics. Personally, I had mixed feelings about each case as I saw legitimate gripes mixed in with what I thought were some overblown accusations. So, I’m now carrying the hope that each of these entities has learned from this episode and will make adjustments going forward. Do I think that will actually happen? I’ll leave that for you to decide.
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