The Consumer Financial Protection Bureau filed a proposed settlement against Driver Loan, LLC, and its CEO Angelo Jose Sarjeant over violations of the Consumer Financial Protection Act of 2010.
The settlement would require the defendants to refund about $1 million in deposits to harmed consumers, stop deceptive practices, and pay a civil penalty of $100,000 to the CFPB’s Civil Penalty Fund.
The Doral, Fla.-based company allegedly violated federal law by misrepresenting the risks associated with their deposit product and the annual percentage rate associated with the consumer loans they make. Driver Loan offers short-term, high-interest loans to consumers funded by deposits made by other consumers.
Driver Loan told consumers in 2020 that their deposits would have a fixed and guaranteed 15 percent annual percentage yield, and were deposited at FDIC-insured institutions, neither of which were true, the bureau said. Those funds are also lent to borrowers at rates that violate Florida’s criminal-usury law, rendering the loans uncollectable and creating substantial risk that obligations could not be met to depositors who sought to withdraw their deposited funds, the agency said.
Since 2017, Driver Loan has made more than $30 million in short-term loans, typically to drivers who work with ride-share companies. The loans have ranged from $100 to $500 each and are repayable in 15 daily installments. The CFPB also alleges that Driver Loan deceptively markets its loans as having an APR of 440 percent when the actual APRs are over 900 percent.
“Driver Loan deceived consumers on both sides of its business model. The company deceived depositors seeking a safe rate of return, while deceiving ride-share workers about the cost of its 900 percent APR loans,” said CFPB Acting Director David Uejio. “This case highlights that something is going wrong in the gig economy. The only reason this niche market for high-cost credit exists is because of billion-dollar companies shifting their costs onto their low-income workers.”
The proposed settlement seeks to resolve a pending lawsuit against Driver Loan and Sarjeant filed in federal district court in Florida in November 2020.