Colorado Bank Partnership Lawsuits Settled
The Attorney General of Colorado announced that the state has reached a settlement in two bank partnership lawsuits (Fulford v. Avant of Colorado, LLC and Fulford v. Marlette Funding, LLC). At the core of the lawsuit was the alleged partnership between several nonbanks with out-of-state banks. Under federal law, national banks and state-chartered banks can lend in Colorado at interest rates that exceed Colorado’s limits.
The Colorado AG alleged that two nonbanks, Avant and Marlette, illegally partnered with or “rented” two out-of-state banks, WebBank and Cross River Bank, in order to lend at rates exceeding the state’s usury rate cap.
Under the settlement the two banks and their nonbank partners agreed to not lend to Colorado consumers at rates exceeding 36% and will provide consumers with additional protections. The companies settled with Colorado for $1,050,000 and will also contribute $500,000 to the state’s Money Wi$ser program, which supports financial education in K-12 schools.
These cases are significant in the ongoing legal debate over the “true lender” in the online lending industry.
August 21st, 2020 by Dan Bucherer