April 4, 2026
CFPB vs. SoLo Funds: Dismissed With Prejudice | The Complete Regulatory Record
At a Glance , What You Need to Know
SoLo Funds has faced regulatory scrutiny at both the state and federal level since 2022. The complete record shows: every single state resolution was reached without any admission of wrongdoing and without any adjudicated finding that SoLo misled or harmed borrowers. The primary proven issue across all six states was licensing , not deception. The CFPB, which had access to four years of investigative data and full litigation discovery, permanently dismissed its federal lawsuit with prejudice on February 24, 2025. The headline allegation , that SoLo misled borrowers about interest , was raised in regulatory press releases across six states and by the CFPB. It was never proven in court. It was never ruled upon by a judge. It was never adjudicated through due process. Not once.
We’re going to give you the full regulatory record. Not the version that sounds best for us. The version that’s true , because we believe our members, our lenders, and the broader public deserve to understand exactly what happened, what it cost, and what it proved.
The short version: every state action was resolved without any admission of wrongdoing. The federal case was permanently dismissed. Additionally, through all of it, not a single court or regulatory body issued a final determination that SoLo Funds harmed its members.
Here is the complete story.
How It Started: A Genuinely New Model in a Framework Built for Old Ones
SoLo Funds launched in 2018 with a model that had never existed before. Not a bank. Not a payday lender. Not a traditional peer-to-peer platform. A community marketplace , where members borrow from and lend to each other, with voluntary tips going directly to lenders and optional donations supporting the platform.
The regulatory frameworks that govern consumer lending were built for a different era. Rate caps, licensing requirements, APR calculations , all of them were designed around traditional loan structures with fixed interest charges. SoLo’s model, in which tips are set by borrowers and go to other members rather than to a corporate lender, didn’t fit neatly into any existing category.
That friction between innovation and legacy frameworks is the origin of every regulatory action SoLo has faced. Not predatory intent. Not consumer harm. A genuinely novel model colliding with rules that weren’t written for it.
As SoLo’s Head of Regulatory and Government Affairs Kyle George put it at the time: “Despite the regulatory focus on fintechs, our financial system is dominated by traditional products which are the most significant culprits of predatory behavior. The status quo does not work. If policymakers are sincere about protecting borrowers and effecting change, they must embrace new models. They cannot legislate by enforcement, suffocate innovation, and then wonder why nothing changes.”
The Complete State Regulatory Record: Six States, Zero Admissions of Wrongdoing , and a Critical Distinction That Has Never Been Reported Clearly
Between 2022 and 2024, SoLo Funds reached resolutions with regulators in six states. The public narrative around these actions has consistently conflated two very different types of allegations. Here, we separate them , because the distinction matters enormously.
The allegations that were primarily at issue in every state: licensing. SoLo was operating in states where regulators concluded it needed licenses it did not yet have , as a small loan broker, lender, and in some cases as a collection agency. These are operational and administrative questions about regulatory classification. They are not findings that SoLo harmed consumers.
The allegation that made the headlines but was never adjudicated: misleading borrowers. Every state action included language about disclosures and interest rates. Not one of those allegations was ever tested in court, adjudicated by a judge, or resulted in a final finding that SoLo deceived its members. Every single resolution was a negotiated consent , entered into before any evidentiary hearing , specifically to avoid litigation and get back to serving members faster.
Here is the complete record, state by state.
California , May 2023
Regulator: California Department of Financial Protection & Innovation (DFPI) Core issue: Operating without a California Financing Law (CFL) license as a lender or broker. The DFPI made regulatory “Findings of Fact” , but these were the regulator’s own characterizations, not adjudicated determinations. What was never found: No court, no judge, and no evidentiary proceeding ever determined that SoLo deceived California borrowers. The DFPI’s own consent order states explicitly that it “does not create or give rise to any private rights or remedies against SoLo, create any liability for SoLo, or limit any defenses of SoLo against claims of any kind” from anyone outside the order. Resolution: Consent order. SoLo paid $50,000, agreed to business practice modifications, and paused California operations , voluntarily, and before the order was even finalized. Admission of wrongdoing: None. Outcome: SoLo resumed California operations under a clear licensing framework.
Connecticut , May 2023
Regulator: Connecticut Department of Banking Core issue: Operating without a small loan license and a consumer collection agency license , licensing and operational classification questions, not a finding of consumer harm. What was never found: The Connecticut consent order uses unambiguous legal language: SoLo agreed to sanctions “without admitting or denying the allegations contained in the Notice.” That is a direct quote from the filed consent order. Connecticut never held a hearing. No evidence was tested. No judge ruled on the merits. Resolution: Consent order. SoLo paid a $100,000 civil penalty and reimbursed Connecticut borrowers all fees. Admission of wrongdoing: None , explicitly stated in the order. Outcome: SoLo received a clear licensing pathway to resume serving Connecticut residents.
District of Columbia , May 2023
Regulator: DC Office of the Attorney General Core issue: Whether tips on SoLo’s platform exceeded DC’s 24% usury cap when treated as interest , a legal classification dispute about how an innovative model fits existing frameworks, not a finding of intentional deception. What was never found: The DC resolution was a consent judgment , a negotiated agreement entered without any trial or evidentiary hearing. The OAG’s characterizations in its press release were allegations, not judicial findings. No court ruled that SoLo deceived DC consumers. Resolution: Consent judgment. SoLo paid $30,000 in consumer restitution and updated its disclosure practices. Admission of wrongdoing: None. Settlement resolved allegations without any finding of liability. Outcome: SoLo resumed DC operations with updated consumer disclosures.
Pennsylvania , July 2024
Regulator: Pennsylvania Attorney General Core issue: Whether SoLo’s tip and donation model violated Pennsylvania’s Loan Interest Protection Law , again, a legal classification question, not an adjudicated finding of deceptive intent. What was never found: Pennsylvania’s resolution took the form of an Assurance of Voluntary Compliance , a specific legal instrument that Pennsylvania law explicitly does not treat as an admission of wrongdoing or a finding of liability. No court reviewed the evidence. No judge ruled on the merits of the misleading-borrowers allegation. Resolution: Assurance of Voluntary Compliance. SoLo paid $158,924 in restitution to 1,309 consumers, $25,000 in civil penalties, and modified its business practices. Admission of wrongdoing: None. An AVC is explicitly not an admission of fact or law under Pennsylvania procedure. Outcome: SoLo committed to Pennsylvania compliance standards going forward.
Maryland , August 2024
Regulator: Maryland Commissioner of Financial Regulation Core issue: Unlicensed activity as a credit services business and collection agency , a licensing classification question. What was never found: Maryland’s consent order was a negotiated resolution. No hearing was held. No judicial finding of consumer deception was made. Resolution: Consent order. SoLo paid $25,000 (with $100,000 conditionally waived upon compliance) and provided consumer restitution. Admission of wrongdoing: None. Resolution reached through negotiated consent, not adjudicated findings. Outcome: Resolved with SoLo committed to Maryland licensing requirements.
Massachusetts , October 2024
Regulator: Massachusetts Division of Banks Core issue: Licensing requirements under Massachusetts small loan company law. What was never found: The Massachusetts consent order contains the most explicit language of any state action. SoLo entered the agreement “solely for the purpose of settling this matter and without admitting any allegations of fact or the existence of any violations of law.“ That is a direct quote from the filed Massachusetts consent order. Resolution: Consent order focused on licensing compliance. Admission of wrongdoing: None , explicitly stated in the order. Outcome: SoLo agreed to Massachusetts licensing framework going forward.
The Pattern Across All Six States: What Was and Was Never Found
Every single state action shares the same defining legal characteristic: no admission of wrongdoing. No finding of liability. No adjudicated determination that SoLo deceived or harmed its members.
The core allegation that generated headlines , that SoLo misled borrowers about interest , was raised in regulatory notices and press releases. It was never tested in court. It was never ruled upon by a judge. It was never proven through an evidentiary proceeding. In every state, SoLo chose to resolve and move forward , because our 3 million members could not wait for years of litigation.
The primary proven issue across all six states was the same: licensing. SoLo was operating in regulatory frameworks that had not been designed for a peer-to-peer community lending model. The company worked with each jurisdiction, modified its practices where required, and obtained or aligned with the appropriate licensing structure. That is not predatory behavior. That is what responsible innovation looks like in a system that is still catching up.
The distinction between “allegations in a press release” and “findings proven through due process” is not a technicality. It is the foundation of how legal accountability works. Additionally, the record, read carefully, shows that the core misleading-borrowers claim was alleged , and then resolved , without ever being proven.
The Federal Case: CFPB Files Suit. Then Sees the Evidence. Then Dismisses Permanently.
In May 2024, having conducted a four-year investigation, the Consumer Financial Protection Bureau under Director Rohit Chopra filed suit against SoLo Funds in the U.S. District Court for the Central District of California (case no. 24-cv-04108), alleging deceptive practices around loan cost disclosures.
What matters most about that filing is the context surrounding it.
SoLo had been voluntarily cooperating with the CFPB for 18 months prior to the lawsuit. We were working with them. According to our own account, we had “primarily agreed on a path forward.” Then, without warning, we were blindsided by the suit.
The CFPB’s four-year investigation, its 18 months of cooperation with SoLo, and its full litigation discovery ultimately led to one conclusion: the case should not proceed.
On February 24, 2025, a joint stipulation to dismiss was filed , signed by the CFPB’s own chief legal officer , and the case was dismissed with prejudice.
With prejudice. Permanently. Irrevocably. The CFPB agreed, in a federal court filing, that these claims will never be brought against SoLo Funds again.
Here is what the evidence showed during litigation: for a $100 loan on the SoLo platform, the average tip was $10.40 and the average donation was $6.20 , together, less than half the cost of a single overdraft fee or bounced check. SoLo’s loans cannot be rolled over, refinanced, or extended. Borrowers can only hold one loan at a time. There is no compounding interest. The amount owed on day 45 is the same as on day 450.
The CFPB’s own acting director, Russell Vought, did not hold back: “The CFPB was wrong and we dismissed the case. Shockingly, the CFPB tried to destroy this company, which incurred millions in legal fees and had to lay off 30% of its workforce. The weaponization of ‘consumer protection’ must end.”
Our CEO Travis Holoway said it plainly: “In deciding to bring this case against SoLo, the CFPB sought to shut SoLo down so underserved consumers could not get help to finance necessities such as groceries, rent, and utility bills. SoLo is thankful that when they examined the evidence in the case, they saw the benefit of SoLo’s innovative model.”
What the Full Record Actually Proves
Here is the complete regulatory ledger , every action, every resolution, every outcome , side by side:
| Jurisdiction | Action Type | Resolved | Admission of Wrongdoing | Final Finding of Harm |
| California | Consent Order | ✅ Yes | ❌ None | ❌ None |
| Connecticut | Consent Order | ✅ Yes | ❌ None | ❌ None |
| District of Columbia | Consent Judgment | ✅ Yes | ❌ None | ❌ None |
| Pennsylvania | Assurance of Voluntary Compliance | ✅ Yes | ❌ None | ❌ None |
| Maryland | Consent Order | ✅ Yes | ❌ None | ❌ None |
| Massachusetts | Consent Decree | ✅ Yes | ❌ None | ❌ None |
| CFPB (Federal) | Lawsuit | ✅ Dismissed with prejudice | ❌ None | ❌ None |
Seven regulatory actions. Seven resolutions. Zero admissions of wrongdoing. Zero final judicial or administrative findings of consumer harm. One permanent federal dismissal.
That is the complete record.
The Bigger Picture: Innovating Without a Rulebook
We want to be honest about something that rarely gets said clearly in fintech regulatory coverage: building a genuinely new financial model means operating in spaces where the rules don’t yet exist.
SoLo’s tipping model is not a legal evasion. It is a design philosophy , one in which borrowers determine the value of a loan, lenders receive 100% of the tip, and the platform exists to serve the community rather than extract from it. The $39 billion in excess fees that cash-poor Americans paid in 2025 alone , according to our own Cash Poor Report , was not paid on SoLo. It was paid to the legacy financial products that existing regulations were built to protect.
Every state action SoLo faced centered on the question of whether tips should be classified as interest under frameworks written decades before community-powered fintech existed. That is a legitimate regulatory question. SoLo engaged with it in every jurisdiction, modified its practices where required, and resolved every action , without ever admitting that the tips were something other than what they were: voluntary payments from borrowers to their neighbors.
The CFPB, with four years of investigation and full discovery behind it, concluded that the answer to that question did not support continuing the case.
We didn’t win every argument. However, the record is clear: we never harmed our members. No regulator ever proved that we did. Additionally, the only federal court with the full evidentiary record permanently dismissed the case.
What This Cost , and Why We’re Still Standing
We won’t minimize what this regulatory period cost us.
Thirty percent of our workforce. Millions in legal fees. Years of leadership attention diverted from building the platform our members deserve. That is the real cost of being a small, disruptive, Black-founded fintech that builds something the existing system doesn’t have a category for.
And yet , we are still here.
With a B Corp score of 139.4. With our BBB Accreditation restored. With a 4.5-star Trustpilot rating from over 2,000 verified members. With $1.4 billion in transactions facilitated. With a CFPB lawsuit that is permanently closed.
What kept us here was not the absence of challenges. It was the presence of a mission worth fighting for , and 3 million members who showed up for each other even while a federal agency was trying to shut their platform down.
That’s community. That’s SoLo.
Frequently Asked Questions
Was the CFPB lawsuit against SoLo Funds dismissed? Yes. On February 24, 2025, the CFPB dismissed its lawsuit against SoLo Funds with prejudice in the U.S. District Court for the Central District of California (case no. 24-cv-04108). A dismissal with prejudice is permanent , the same claims can never be brought again.
Did SoLo Funds admit wrongdoing in any state regulatory settlement? No. Every state resolution , in California, Connecticut, the District of Columbia, Pennsylvania, Maryland, and Massachusetts , was reached without any admission of wrongdoing or liability. In each case, SoLo chose to resolve and move forward rather than engage in prolonged litigation.
Has any court or regulator ever found that SoLo Funds harmed consumers? No court or regulatory body has ever issued a final adjudicated finding that SoLo Funds harmed its members. All state actions were resolved by negotiated consent orders without admission of liability. The federal CFPB case was permanently dismissed before any such finding could be made.
What does “dismissed with prejudice” mean legally? A dismissal with prejudice is a final, permanent legal action. It means the case cannot be reopened and the same claims cannot be refiled by the same plaintiff. It is the strongest form of case closure available in federal court, and it means the CFPB permanently gave up its right to pursue these specific claims against SoLo Funds.
Why did so many states take action against SoLo Funds? The state actions were driven by a fundamental question: whether voluntary tips on a peer-to-peer lending platform should be classified as interest under lending laws written decades before community-powered fintech existed. SoLo chose to resolve each action cooperatively, modify its practices where required by state law, and continue serving its members , rather than fight prolonged legal battles that would have kept it out of those states indefinitely.
What is an Assurance of Voluntary Compliance? An Assurance of Voluntary Compliance (AVC) is a legal mechanism in which a company voluntarily agrees to modify its practices and, in some cases, provide restitution , without admitting that it violated any law. It is specifically not an admission of wrongdoing and does not constitute a judicial finding of liability. SoLo Funds used this mechanism in Pennsylvania.
Is SoLo Funds a legitimate and legal platform? Yes. SoLo Funds is a legitimate, BBB Accredited, Certified B Corporation. The CFPB case is permanently closed. All state regulatory actions are fully resolved. SoLo has facilitated over $1.4 billion in transactions since 2018 and holds a 4.5-star “Excellent” rating on Trustpilot from over 2,000 verified members. Banking services are provided by Bangor Savings Bank, Member FDIC.
We built something new. We fought to keep it. We’re not done. Join SoLo.
SoLo Funds is an AI-powered community banking solution providing unparalleled returns and access to capital for millions of Americans. Founded in 2018 by Travis Holoway and Rodney Williams, SoLo Funds pioneered a model of financial services that are equitable, empowering, and people-led. SoLo Funds, Inc. is a Certified Benefit Corporation and BBB Accredited. Banking services are provided by Bangor Savings Bank, Member FDIC.