Civil Rights and Consumer Groups Warn Approval of Merger Would Harm Communities of Color

Washington, DC — In a letter to Federal Reserve Chair Powell, advocates raised the alarm regarding predatory lending practices targeting communities of color. The Center for Responsible Lending, Leadership Conference on Civil and Human Rights, Legal Defense Fund, NAACP, and National Consumer Law Center urged the Federal Reserve Board to deny an application for Enova – which operates consumer brands CashNetUSA and NetCredit and small business lender OnDeck – to acquire Grasshopper Bank. This acquisition would create a new national bank that can legally charge up to 100% APR and potentially even higher, including in states where those rates are prohibited for Enova and other non-bank lenders.

These objections are grounded in a new analysis which uncovered that a disproportionate number of complaints against Enova were generated in predominantly Black and Latino communities, raising questions of equity and disparate impact. The letter cites Enova’s record of predatory lending and harm to communities of color, pointing out:

  • “[D]ata indicate there are thousands of complaints nationwide lodged against Enova, centered among communities of color. We conducted a review of the Consumer Financial Protection Bureau (CFPB) complaint database and uncovered a disproportionately high level of complaints from majority-minority Zip Code Tabulation Areas (ZCTA).”
  • “[By becoming a nationally chartered bank,] Enova will expand its exorbitant 100% APR lending nationally…. It is unprecedented for a national bank to be associated with [such] a loan program.”
  • “High-cost lending poses high credit risks and default rates, with [Enova’s] chargeoff rates exceeding 50%, violating requirements for prudent credit underwriting, putting the safety and soundness of the bank at risk.”
  • “Enova’s history of engaging in high-cost lending to individuals and small businesses are not only high-risk for the de novo financial institution but harmful to consumers. Indeed, Enova has been subject to multiple enforcement actions and several private litigation actions related to consumer protection violations.”

In 2023, the Consumer Financial Protection Bureau (CFPB) labeled Enova a “repeat offender,” after finding it had continued illegal behavior after an order was issued against it in 2019. This illegal behavior included Enova withdrawing funds without borrowers’ consent and deceiving borrowers with false statements and omissions.

View the full text of the civil rights and consumer groups’ letter.

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Press Contact: Matthew Kravitz matthew.kravitz@responsiblelending.org