DES MOINES — A Utah-based bank must cease issuing loans in Iowa that exceed the state’s interest rate cap and provide refunds to consumers who were charged the illegal interest rates under a settlement reached with Iowa Attorney General Tom Miller and the Iowa Division of Banking.  

The agreement, in the form of an Assurance of Discontinuance, settles an investigation into Transportation Alliance (TAB) Bank, of Ogden, Utah, and service provider, EasyPay.  

Miller alleged that TAB Bank failed to comply with the Iowa Consumer Credit Code by offering consumer installment loans that far exceeded the maximum finance charge of 21% APR. From March 1, 2020, to April 8, 2022, Transportation Alliance Bank, through EasyPay, made approximately 1,611 consumer installment loans to Iowans, primarily through auto repair shops and pet stores.  

In one case, the interest on a $1,500 loan for an Iowa City couple came to 188.9%. The final cost of their loan would be $3,327.  

“There’s a reason Iowa law caps interest rates at 21%, to protect consumers,” Miller said. “These types of high-interest loans careen consumers into debt they can never repay.”  

A related complaint 

Miller’s Consumer Protection Division began looking into TAB Bank’s lending practices after being contacted in March 2021 by an Iowa City couple who obtained an EasyPay loan when purchasing a puppy from Petland.  

The couple, whose story was featured in the Iowa Capital Dispatch, reached out to the AG’s office to file a complaint against Petland after the puppy died. The puppy was found to have serious illnesses almost immediately after adoption, requiring thousands of dollars in veterinary care.  

Upon receipt of the complaint, the AG’s office found the couple had purchased the puppy for approximately $5,000, paying $500 out of pocket and signing financing papers for the purchase through a $1,500 loan and putting $3,000 on a credit card.  

The interest rates on the loan caught the attention of investigators, including a stipulation of the $1,500 loan that stated if the couple did not pay the debt in 90 days the interest rate would jump to 188.9%.  

“These types of loans are unconscionable,” Miller said. “My office has worked to prevent these types of lending situations. So-called ‘rent-a-bank' schemes attempt to circumvent our laws and put consumers deeper in debt.”  

Miller has been vocal in the need to curb “rent-a-bank" lending, in which banks act as lenders in name only, passing along their state law exemptions to non-bank lenders.

TAB Bank voluntarily ceased making loans in Iowa as of April 8, 2022. Under today’s settlement, however, if the company does plan to resume lending, it must inform the state and the Iowa Department of Banking not less than 30 days in advance with written notice.  

Consumer restitution 

Under the settlement, the restitution plan will apply to Iowa residents who received consumer installment loans from the bank with assistance of EasyPay between March 1, 2020, and April 8, 2022. The bank has 90 days to provide restitution directly to consumers.  

TAB Bank did not admit to any wrongdoing or violations of the law under the Assurance