WASHINGTON — A coalition of consumer advocates has submitted a letter to the FDIC in connection with the agency's Community Reinvestment Act (CRA) examination of FinWise Bank, with the groups alleging the bank has been the subject of “hundreds of complaints” about “predatory puppy loans,” among other practices.
According to the consumer groups, FinWise Bank’s lending through American First Finance, Elevate, and Opportunity Financial (OppFi), includes loans at up to 160% APR and “raises serious consumer protection issues and fails to meet the convenience and needs of the communities it serves.”
“FinWise Bank’s predatory credit that borrowers can’t afford to repay and that evades state interest rates does not meet the convenience and needs of communities as required by the CRA,” said Lauren Saunders, associate director at the National Consumer Law Center.
Earlier this year, the groups noted the FDIC downgraded another bank, Transportation Alliance Bank, over unfair or deceptive acts or practices by one of its partners, likely EasyPay Finance.
FinWise Bank’s partner American First Finance has a business model similar to that of EasyPay Finance, offering predatory puppy loans and other deceptive, high-cost loans through retail stores for pets, furniture, auto repairs and appliances.
‘Scammers and Liers’
In their letter, the groups stated American First Finance has twice as many complaints as EasyPay, with one person complaining, “I purchase a puppy … and it was super cute but… American first finance if you read this YOU GUYS ARE SCAMMERS AND LIERS dont trust them guys!!!!!!”
According to the organizations, two of FinWise Bank’s other rent-a-bank lenders, Elevate and OppFi, have rates well over 50% for charge-offs, a measure of debts unlikely to be collected, illustrating high-rates of default and the predatory nature of their loans.
“FinWise Bank, chartered in Utah and supervised by the FDIC, is one of only a few rogue banks that front for predatory lenders,” the groups stated. “Most states have interest rate limits to stop predatory lending, but predatory lenders try to evade state laws by laundering their loans through banks, which are exempt from state rate caps.”
The Signees
The letter was signed by Accountable.US, Americans for Financial Reform, Center for Responsible Lending, Consumer Action, Consumer Federation of America, National Community Reinvestment Coalition, NCLC (on behalf of its low-income clients), Public Citizen, U.S. PIRG, and Woodstock Institute.
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