Online lender LendingClub Corporation agreed to pay $18 million to settle Federal Trade Commission charges that the company deceived consumers about hidden fees that it charged and about whether their loan applications were approved.
In addition, the settlement bars LendingClub from making misrepresentations to loan applicants and requires that the company clearly and conspicuously disclose the amount of any prepaid, up-front, or origination fee and the total amount of funds that borrowers will receive.
“Companies that profit by preying on consumers don’t just harm the families they cheated — they also harm their competitors that play by the rules. LendingClub fleeced consumers looking for a loan online, and will pay $18 million for its alleged misconduct,” said Samuel Levine, Acting Director of the FTC’s Bureau of Consumer Protection. “Moving forward, when it comes to misconduct in the financial services arena, the FTC will bring joint actions with state and federal partners to seek penalties that deter wrongdoing market-wide, before it can harm consumers.”
The FTC sued LendingClub in April 2018, charging that the company falsely promised loan applicants that they would receive a specific loan amount with “no hidden fees,” when in reality the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. The FTC also alleged that LendingClub told consumers they were approved for loans when they were not, and took money from consumers’ bank accounts without authorization.
In an earlier ruling, the court found that LendingClub falsely told loan applicants that their loans were “on the way” and “100% Backed” while knowing that many of them would never get a loan. And according to the FTC’s complaint, the company also withdrew double payments from consumers’ accounts and charged those who cancelled automatic payments or paid off their loan, which led to overdraft fees and prevented borrowers from making other payments.
The Commission vote approving the stipulated final order was 4-0-1, with Chair Khan not participating. It was filed in the U.S. District Court for the Northern District of California, San Francisco Division.
NOTE: Stipulated final orders or injunctions, etc. have the force of law when approved and signed by the District Court judge.
