The Consumer Financial Protection Bureau (CFPB) and peer-to-peer lending platform SoLo Funds have reached an agreement to terminate the agency’s lawsuit against the company, as indicated by recent court documents. The CFPB’s legal action against the Los Angeles-based fintech has been in progress since May 2024. SoLo Funds positions itself as a platform that connects borrowers with lenders without mandatory fees or interest; however, the CFPB’s complaint reveals that some loans facilitated by SoLo Funds have an equivalent annual percentage rate exceeding 1,000%.
SoLo Funds is the first of several enforcement actions that the CFPB appears to be planning to halt. Recently, the CFPB canceled contracts with all expert witnesses involved in ongoing enforcement litigation, as part of a broader effort to eliminate over $100 million in contracts across the agency. Initially, the CFPB sought to pause the case against SoLo Funds while it reviewed its enforcement actions, but SoLo Funds objected, leading Judge Gary R. Klausner of the US District Court for the Central District of California to deny the request in early February.
In February, officials from the Trump administration began efforts to dismantle the CFPB, which was established by Senator Elizabeth Warren following the 2008 financial crisis to safeguard consumer interests. This included the dismissal of the agency’s director and numerous employees, along with the closure of its Washington headquarters. However, plans to terminate most of the CFPB’s workforce, which exceeds 1,500 employees, have recently been put on hold. The initiative to shut down the CFPB was led by Elon Musk and Russell Vought, who oversees the White House’s Office of Management and Budget.
SoLo Funds’ business model attracted nearly 2 million users last year, earned a place on CNBC’s 2023 Disruptor List, and received backing from the venture fund of tennis star Serena Williams. Nonetheless, the company has faced multiple lawsuits, internal strife, and allegations of questionable business practices. The CFPB’s complaint asserts that SoLo Funds misleads consumers by obscuring a “no donation” option, which is buried deep within the app’s settings.
Former employees have indicated that the founders prioritized growth and fundraising over product improvement, often launching new features prematurely and inflating key business metrics for investors. On October 16, a class action lawsuit was filed against SoLo Funds, claiming that the company’s lending practices are “unlawful and deceptive.”
