A proposed class action claims online lender Helix Financial and its partner bank have engaged in a “rent-a-bank” scheme whereby they issue loans with illegal interest rates to Georgia residents.
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The 32-page lawsuit alleges that despite state usury law, which prohibits unlicensed lenders from issuing loans with interest rates at more than 16 percent, Helix—operated by defendant Hyphen, LLC—and Lead Bank have “brazenly” extended payday loans that are “plainly unlawful” and regularly have annual percentages rates (APRs) in excess of 400 percent.
According to the suit, Georgia’s Payday Lending Act (PLA) explicitly prohibits loans for which a “de facto lender” claims to function as an agent for an exempt financial institution. The case contends that Helix purports to be a “brand” of its Missouri-based partner bank—referring to itself as “Helix by Lead Bank” on its website—which the lender says is responsible for issuing and servicing the loans made to consumers.
However, in reality, the complaint alleges, Helix is an entirely separate company that handles every material step of the unlawful loan transactions.
“[A] cursory examination of the true relationship between Helix and Lead Bank, as well as between Helix and Georgia borrowers, demonstrate [sic] that Helix is the true lender,” the filing argues. “And, moreover, Helix has plainly employed a scheme, device, or contrivance—i.e., its claim that it is a ‘brand’ of its partner bank—in an attempt to evade Georgia’s restrictions on payday lending.”
On its website, Helix often refers to itself as a “lender” and admits that it sets loan application criteria, makes lending decisions and approves consumers for loans, the lawsuit relays. Per the suit, the company manages all loan-related customer inquiries, oversees borrower acquisition, and operates the website.
What’s more, as soon as a loan is issued by Lead Bank, the borrower is immediately informed that it has been transferred to Helix for servicing, the case adds.
“[T]he bank’s brief involvement in each loan transaction is a mere façade to allow Helix to make blatantly unlawful loans to consumers,” the complaint charges. “This is precisely the sort of rent-a-bank scheme that the Georgia General Assembly has declared unlawful.”
As the filing tells it, Helix has “jumped around from bank to bank” in recent years and reportedly switched from using Lead Bank “as a cover for its scheme” to Kansas-based Kendall Bank in January 2021. According to the lawsuit, Helix again moved on in September 2022, this time to its current partner, Missouri’s Bank of Orrick.
The plaintiff, a Georgia resident, was issued by the online lender in December 2019 a $700 loan with an APR of a “whopping” 547 percent, “more than 34 times the legal limit provided under the PLA,” the suit contends.
The case shares that the plaintiff is apparently not alone in her experience with the lender.
“Helix, with the help of its partner banks, lulled countless borrowers into believing that they were applying for and receiving legitimate, lawful loans, only to learn that Helix was the de facto, and predatory, lender lurking in the shadows,” the complaint claims. “Helix’s conduct is plainly governed by, and unlawful under, the PLA.”
The lawsuit looks to represent any Georgia residents who entered into a loan agreement with Helix Financial with an APR that exceeded 16 percent.
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