SBPC Provides Federal Regulators With Evidence of New SoFi Scheme to Sell Fake Financial Product Using FDIC’s Likeness
March 22, 2023 | WASHINGTON, D.C. — Moments ago, the Student Borrower Protection Center (SBPC) sent a letter to the Federal Deposit Insurance Corporation (FDIC) and Consumer Financial Protection Bureau (CFPB) demanding immediate action against SoFi Bank (SoFi) to halt a new, egregious, and illegal scheme to cheat consumers and steal business away from honest banks.
On Wednesday morning, SoFi launched a new cash management product, marketing “the opportunity to get FDIC insurance up to $2 million on all bank balances”—an amount eight times larger than the amount of FDIC insurance offered for individual deposit accounts under federal law. In reality, SoFi is acting as a lead generator for an unspecified number of unknown banks, directing its customers to open as many as 8 different bank accounts in what is known as a cash sweep. SBPC warned regulators that “SoFi represents that it ‘offers access’ to a financial product that does not exist, prominently misrepresents the extent of deposit insurance offered by SoFi to SoFi depositors, and misuses the FDIC’s name and logo in the process.”
“SoFi’s latest scheme shows that regulators need to treat CEO Anthony Noto’s company like a wounded animal—a danger to the public with nothing left to lose,” said SBPC Executive Director Mike Pierce. “Rather than compete for customers with honest banks by offering products and services that people need, scandal-plagued SoFi has chosen to deceive its customers yet again.”
A copy of SBPC’s letter to FDIC Chair Martin Gruenberg and CFPB Director Rohit Chopra is available here: https://protectborrowers.org/wp-content/uploads/2023/03/SoFi-Letter-March-22-2023.pdf
Founded in 2011, SoFi was once the leader of a booming private student loan refinancing industry. SoFi’s stock has declined by approximately 80 percent since its peak. This latest series of SoFi abuses comes on the heels of a clumsy lawsuit filed by the FinTech giant earlier this month aimed at forcing millions of student loan borrowers back into repayment. Together, these recent actions paint a picture of a failing firm frantically grasping at profitability and taking on increasing levels of risk.
SBPC’s statement in response to SoFi’s lawsuit aimed at blocking the student loan payment pause: Failing Private Student Lender Sues Biden Administration to Force Student Loan Bills for Tens of Millions
A copy of the lawsuit filed by SoFi against the U.S. Department of Education is available here: https://protectborrowers.org/wp-content/uploads/2023/03/Sofi.pdf
About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.