The Connecticut Department of Banking has resolved allegations against a company it claimed operated as a small loan provider without a license and violated state banking law by charging annual interest of 43% to 4,280%.
The agency reached a settlement with Solo Funds Inc. through a consent order agreed to by both parties on May 16. SoLo ceased operating in Connecticut in May 2022.
As part of the settlement, SoLo agreed to reimburse 543 Connecticut borrowers all amounts paid as fees – an average of $220 each, totaling nearly $120,000. In addition, SoLo Funds must pay a civil penalty of $100,000.
Through its website and mobile app, Solo allegedly facilitated loans between lenders and borrowers in which the borrowers would pay a monetary “tip” to the lender of up to 12%, as well as an additional “donation” of up to 9% to SoLo.
“The Department has a long history of combating high interest loans in the state – and this matter is no different,” said Banking Commissioner Jorge Perez. “Renaming finance charges as ‘tips’ is in violation of law. We will continue to ensure that companies who use a tipping model in connection with loan offerings operate within the confines of the law.”
The agency’s investigation found that Solo’s excessive interest rates violated the usury rate of 12% set by state law. Small loan companies licensed and regulated by the Connecticut Department of Banking may charge up to 36% interest.
