FDIC and CFPB Must Take Immediate Action to Halt SoFi’s Latest Lawbreaking Effort to Prey on Customers and Exploit the Banking Crisis

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.” 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