Think Finance, Inc.: A Look at the Rise and Fall of a Fintech Innovator

Think Finance, Inc. emerged in the early 2000s as a pioneer in the burgeoning fintech industry, aiming to provide online lending solutions to underserved consumers. Headquartered in Fort Worth, Texas, the company built its business around offering short-term, high-interest loans, targeting individuals with limited or poor credit histories who often lacked access to traditional banking services.

The company's business model centered on utilizing sophisticated algorithms and data analytics to assess credit risk and automate the lending process. Brands like Elevate, Rise Credit, and Elastic were marketed as convenient and accessible options for borrowers facing immediate financial needs. Think Finance emphasized the speed and ease of obtaining loans, often promising quick approvals and funds deposited directly into borrowers' accounts.

Think Finance’s rapid growth attracted significant venture capital investment, allowing the company to expand its product offerings and reach a wider customer base. It touted its commitment to responsible lending, highlighting financial education resources and aiming to help borrowers improve their credit scores. The company positioned itself as a technology-driven alternative to payday lenders, arguing its use of advanced analytics allowed for more accurate risk assessment and potentially more favorable terms for borrowers.

However, beneath the veneer of innovation and responsible lending, Think Finance faced increasing scrutiny and legal challenges. Regulators and consumer advocacy groups raised concerns about the extremely high interest rates charged on its loans, often exceeding state usury limits. These rates, combined with fees, resulted in an effective annual percentage rate (APR) that could climb into the triple digits. Critics argued that Think Finance's lending practices trapped vulnerable borrowers in cycles of debt, exacerbating their financial difficulties rather than alleviating them.

Multiple lawsuits were filed against Think Finance, alleging that the company was engaged in predatory lending practices and circumventing state laws through complex business structures involving Native American tribes. These "rent-a-tribe" schemes, as they became known, allowed Think Finance to claim tribal sovereign immunity from state regulations. These legal battles proved costly and damaging to the company's reputation.

The mounting legal pressure, coupled with regulatory investigations and declining profitability, ultimately led to Think Finance filing for bankruptcy in 2017. The bankruptcy proceedings involved the resolution of numerous lawsuits and the distribution of assets to creditors. Following bankruptcy, some of the company’s technology assets were acquired and repurposed by other entities.

Think Finance's story serves as a cautionary tale about the potential pitfalls of fintech innovation when it operates in a regulatory gray area. While the company initially aimed to provide access to credit for underserved populations, its high-interest lending practices and legal battles ultimately overshadowed its technological advancements. The case highlights the need for robust regulatory oversight in the rapidly evolving fintech landscape to protect consumers from predatory lending practices and ensure fair and responsible financial innovation.