Federal authorities abandon legal proceedings against SoLo Funds
In a significant turn of events, the Consumer Financial Protection Bureau (CFPB) has dropped its lawsuit against SoLo Funds, a fintech company based in Los Angeles. The lawsuit, which was filed in May 2022, alleged that SoLo had misled consumers by falsely advertising its loans as having zero interest and no hidden fees.
The dismissal of the case, which was filed on July 11, 2025, comes after a series of regulatory actions against SoLo, including cease and desist orders and settlements involving loan forgiveness and restitution. The mutual dismissal suggests a negotiated resolution or settlement terms between the parties, rather than a conventional court judgment or a dismissal solely in favour of one party.
The CFPB's lawsuit against SoLo focused on issues related to loan cost disclosures and state licensing. One of the key points of contention was SoLo's "tip" structure, which the CFPB argued obscured the total cost of loans.
The dismissal of the case against SoLo reflects the CFPB further distancing itself from the actions of former director Rohit Chopra. Russ Vought, the acting director of the CFPB and leader of the Office of Management and Budget, stated that the CFPB "shockingly" tried to "destroy" SoLo.
Travis Holoway, CEO of SoLo Funds, stated in a news release that the CFPB's initial intention was to shut down SoLo to prevent underserved consumers from accessing necessary financing. He also expressed hope that innovation will be rewarded, especially when it fosters competition and lowers consumer costs.
SoLo has entered into settlements or resolutions with regulators in California, Connecticut, and Washington, D.C. For instance, former Pennsylvania Attorney General Michelle Henry reached a settlement with SoLo last July, requiring the company to pay $158,000 in restitution, $25,000 in civil penalties, and about $25,170 in investigation costs. SoLo was also required to modify its business practices in Pennsylvania and cease all collection efforts.
Not everyone is pleased with the CFPB's decision to drop the lawsuit against SoLo. Christine Chen Zinner, senior policy counsel at the progressive nonprofit Americans for Financial Reform, criticized the move, accusing the CFPB of giving fintech predators a green light to rip off their customers.
The dismissal was filed by Mark Paoletta, chief legal officer for the CFPB and general counsel for the Office of Management and Budget. The exact terms of the settlement between SoLo and the CFPB have not been disclosed.
The dismissal of the CFPB's lawsuit against SoLo Funds signifies a potential shift in the business and finance landscape, as the fintech company now avoids a costly legal battle over loan cost disclosures and state licensing. Despite the negotiations, the case has sparked controversy, with critics accusing the CFPB of enabling predatory practices in the fintech industry.
