DC joins two states in stopping rent-a-bank loans by EasyPay Finance and TAB Bank that evade state interest rate laws
WASHINGTON – Advocates applauded today’s announcement by the Office of the Attorney General (AG) of the District of Columbia that DC has forced EasyPay Finance to stop making loans up to 198.98% despite DC’s 24% interest rate limit, and pay a total of $216,548.83, including over $150,000 in restitution to consumers. EasyPay Finance offers loans through auto repair shops, pet stores, furniture stores and other retail locations. EasyPay laundered its loans through Utah-based Transportation Alliance Bank (TAB Bank) in an attempt to claim that the loans were bank loans exempt from DC’s interest rate cap.
“TAB Bank has been fronting for EasyPay Finance to facilitate predatory puppy loans, auto repair loans, and furniture loans using deceptive and unlawful tactics leading to astronomical interest rates up to 189% in violation of interest rate laws,” said Lauren Saunders, associate director of the National Consumer Law Center. “DC’s latest action against EasyPay and earlier lawsuits against OppFi and Elevate have sent a message and pushed predatory rent-a-bank lenders out of DC, showing how states can take a stand to protect their interest rate laws against evasions.”
In April, Colorado entered into a settlement with EasyPay that forced the loans out of that state, and last December Iowa did so in an agreement with TAB Bank. Iowa had an advantage, as it is the only state that has opted out of a federal law that allows out-of-state, state-chartered banks to ignore state interest rate laws across the country, though the Colorado governor just signed a bill opting Colorado out as well.
A series of reports last year highlighted EasyPay Finance’s predatory puppy loans, predatory auto repair loans, and predatory loans that harm veterans and servicemembers. NCLC also issued a Consumer Alert on the EasyPay/TAB Bank auto repair financing practices and, together with other organizations, called on national auto repair chains like AAMCO, Meineke and Midas to stop offering predatory loans through EasyPay and TAB Bank.
Numerous groups highlighted TAB Bank’s role in fronting for predatory loans in a letter to the FDIC, which later downgraded the bank’s Community Reinvestment Act rating after finding that the bank committed unfair or deceptive acts or practices that “impacted a large number of consumers over an extended period of time.” The groups have also urged the FDIC to take action against predatory rent-a-bank lending by FinWise Bank and three other banks: Capital Community Bank, First Electronic Bank, and Republic Bank & Trust.
“Actions by DC and states are important, but ultimately the FDIC needs to stop a handful of rogue banks from fronting for predatory lenders across the country,” Saunders added.
The National Consumer Law Center’s High-Cost Rent-a-Bank Loan Watch List provides maps showing which predatory lenders are operating in which states using banks to evade state interest rate laws.
For more information:
- High-Cost Rent-a-Bank Loan Watch List
- Predatory Puppy Loans by TAB Bank and EasyPay Finance, February 1, 2022
- Consumer Alert: Deceptive Auto Repair Financing Practices, May 10, 2022
- Predatory Auto Repair Loans by TAB Bank and EasyPay Finance, May 11, 2022
- Predatory Lenders TAB Bank & Easypay Finance Harm Veterans & Military Servicemembers, May 24, 2022
- In Evaluating TAB Bank, FDIC Should Consider Consumer Harm, Possible Legal Violations, from Predatory Lending, June 30, 2022
- TAB Bank, Facilitator of Predatory Puppy Loans, Gets Rating Downgraded by FDIC, February 6, 2023
- FDIC Should Downgrade FinWise Bank Over Predatory ‘Rent-a-Bank’ Lending, March 15, 2023
- FDIC Should Downgrade Three Banks Engaged in Predatory “Rent-a-Bank” Lending, March 30, 2023