Why the Project 2025 guy is suddenly suddenly advocating for a fintech accused of deceiving customers
New York (CNN) — It’s taken just a few weeks in office, but the Trump administration’s apparent vision for economic populism is coming into focus: a blueprint for mass layoffs, creeping inflation, and a dissolution of consumer safeguards reviled by many wealthy Republican donors and politicians.
On Monday, Russell Vought, the Project 2025 co-author and newly confirmed head of the White House budget office, lamented the “weaponization” of consumer protection while endorsing a lending platform that has faced a litany of lawsuits that claimed the company preyed on and lied to people seeking short-term, interest-free loans.
To hear Vought tell it, the company he promoted in an X post over the weekend, SoLo Funds, created an “innovative solution” to allow borrowers and lenders to connect, only to have a US government watchdog try to “destroy” it. Vought recently took over as acting director of the Consumer Financial Protection Bureau and was announcing in his post the end of the CFPB’s legal action against SoLo.
The post, along with the Elon Musk-led effort to disband the CFPB, reflects a 180-degree shift in the federal government’s approach to protecting consumers. Advocates like Democratic Sen. Elizabeth Warren say the Trump administration’s actions threaten to strip away the very safety net designed to prevent a repeat of the 2008 financial crisis.
What is SoLo?
Think of SoLo as a kind of Uber for short-term loans: You need a few hundred bucks to repair your car or make rent, while someone else has a few hundred just sitting in their bank account. SoLo makes the match. You get your loan, and the lender gets their money back, plus an optional “tip,” when that loan is repaid. SoLo, which has claimed to connect people with no mandatory fees and 0% interest, brands itself as an alternative to predatory payday lenders that gouge borrowers with exorbitant fees.
But since its founding in 2018, SoLo has faced accusations from hundreds of customers and officials from at least five states over business practices that resemble the same deceptive practices SoLo claims to abhor.
Last year, the CFPB sued SoLo, accusing the LA-based fintech company of deceiving borrowers by hiding interest and fees on its loans that ultimately saddled its customers with APRs “in excess of 300%” and some as high as 1,000%, according to a May 2024 press release, which has since been removed from the CFPB’s website.
Several former SoLo Funds employees told Bloomberg News in October that the company’s founders ordered them to bury “toggle off” donation options on the lending platform — a claim SoLo denied.
Now, as the Trump administration guts the CFPB — “another woke, weaponized arm of the bureaucracy,” per the Trump White House — the defanged agency is dropping its case against SoLo.
SoLo has rejected the CFPB’s claims in court documents, and in a statement to CNN Tuesday, said it welcomed the end of the litigation. Richard Freshwater, SoLo’s general counsel, said the CFPB “had no issues with SoLo’s approach regarding tips and donations” when the company began operating in 2018. He added that “there is no federal law stating/concluding that tips/donations are finance charges.”
Defanging regulators
The SoLo case appears to be the first CFPB action to be withdrawn since Vought temporarily took over the agency, ordering workers to stand down and removing its insignia from its Washington, DC, headquarters, according to Reuters. It’s unlikely to be the last.
“We are now seeing what it means for the Trump Administration to destroy the Consumer Financial Protection Bureau — it is letting off scot-free a deceptive company that claimed 0% APR for payday loans of 400% APR or higher, with interest disguised in fake ‘tips’ and ‘donations’ that virtually everyone was forced to pay,” Lauren Saunders, associate director at the nonprofit National Consumer Law Center, said in a statement. “No state should tolerate a company flagrantly deceiving borrowers and ignoring state rate caps and licensing laws.”
Its CEO, Travis Holoway, said SoLo “is proud to have over 2 million users that have injected $1 billion into working-class communities via its peer-to-peer community finance platform, and we look forward to continuing this critical work now that this costly litigation is behind us.”
Musk and Vought have moved quickly to gut CFPB, whose enforcement actions have resulted in nearly $20 billion of consumer relief potentially to about 195 million people, according to the agency. That’s alarming consumer advocates and ethics experts, but is sure to delight the agency’s conservative opponents who view it as little more than an agency for harassing and micromanaging businesses.
Musk, Trump’s biggest political donor, has what critics view is a clear interest in undermining the CFPB’s power, as it would have directly overseen his own businesses’ forays into peer-to-peer payments, as my colleague Matt Egan recently reported.
Musk and the White House previously declined to comment. And while the White House has said Musk, officially an unpaid special government employee, will file a financial disclosure form, it said that form would not be shared with the public.
Musk has vowed to “delete” the consumer agency, and the right-wing Project 2025 roadmap calls for Congress to abolish it. But Vought, who didn’t immediately respond to CNN’s request for comment, said in a court filing Monday that the administration intends to keep the CFPB operating, albeit in a “substantially more streamlined and efficient” form. Much of the CFPB staff remains in limbo after Musk’s mass firings were halted by a judge earlier this month.
“The CFPB is the cop on the beat. If you want the cops to stay away, you get rid of the police department,” Kathleen Engel, a research professor at Suffolk University Law School, told Matt recently. “We’re talking about a real wild west situation.”
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