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Online lender to pay $3.63 million for failing to deliver promised benefits

CFPB logoLendUp, an online lender, will pay $3.63 million because it didn’t give consumers the opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would.

The Consumer Financial Protection Bureau has ordered the company to provide more than 50,000 consumers with about $1.83 million in refunds. The company will also pay a civil penalty of $1.8 million.

“LendUp pitched itself as a consumer-friendly, tech-savvy alternative to traditional payday loans, but it did not pay enough attention to the consumer financial laws,” Richard Cordray, director of the bureau said Thursday. “The CFPB supports innovation in the fintech space, but start-ups are just like established companies in that they must treat consumers fairly and comply with the law.”

LendUp began offering loans in 2012 as a way for consumers to build credit and improve credit scores, and it offered consumers who participated in the program the ability to move up to loans with more favorable terms, including lower rates and longer repayment periods, over time. The company advertised this opportunity as the ability to move up the “LendUp Ladder.”

The bureau said some of its offerings weren’t available to consumers where they were advertised. In addition, the company didn’t properly furnish information to the credit reporting companies, denying consumers the promised opportunity to improve their creditworthiness.

In addition to returning money to consumers and paying a fine, the company agreed to end deceptive loan practices, end unlawful advertisements, and make sure annual percentage rates and disclosures are accurate.

Copyright 2016, Rita R. Robison, Consumer Specialist

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