Colorado Attorney General’s Office and online lending company reach settlement to continue compliance with state rate caps, keep large lender in Colorado
Feb. 9, 2024 (DENVER)—Attorney General Phil Weiser today announced a settlement with Colorado-licensed lending company Prosper Marketplace, Inc. that extends a 2019 agreement to keep Prosper’s loan lending at or below Colorado’s rate caps. The initial 2019 agreement came following a state investigation that uncovered Prosper was lending to Colorado consumers at rates higher than allowed by state law.
“This action underscores that lenders are required to operate under our rate caps,” Weiser said. “Prosper’s continued compliance with our state’s rate caps and willingness to work with our office to ensure fair and safe lending practices to Coloradans represents a standard for online lending – one that other companies should pay attention to and follow.”
The state’s 2019 investigation initially revealed that Prosper partnered with WebBank—a Utah-chartered bank—to make loans to Colorado consumers via Prosper’s website. In doing so, Prosper lent to Coloradans at rates that exceeded Colorado state law, but were compliant with Utah state law. Under then-existing law, this practice would have been legal if WebBank were the true lender. The investigation indicated however that Prosper was the true lender of the loans, making this practice illegal. Since that 2019 action, Prosper has complied with Colorado’s rate caps.
In 2023, the Colorado General Assembly passed House Bill 23-1229. The law, which goes into effect on July 1, opts Colorado out of a federal law allowing out-of-state state-chartered banks to lend at rates allowed under the state in which they are chartered—even if those rates exceed those allowed under Colorado law. The new law means these banks will no longer be able to lend to Coloradans at rates higher than allowed by state law.
Along with continued compliance, Prosper will pay $10,000 to the Colorado Department of Law as part of this settlement. The funds can be used for any restitution where possible, consumer or creditor education, consumer credit or consumer protection enforcement, or efforts to advance the public welfare.
Consumers who believe they have been unfairly treated by lending companies are encouraged to file a complaintwith the attorney general’s office.
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