CFPB Sues Online Lender for Violating Earlier Consent Order, Allegedly Deceiving Borrowers

The Consumer Financial Protection Bureau yesterday filed a lawsuit against LendUp Loans, accusing the company of violating a consent order from 2016 in which it paid $3.6 million in fines and restitution for misleading borrowers about the cost of its loans and the benefits of repeated borrowing. Five years later, the company is essentially still making the same promises, the CFPB accused, while also alleging that LendUp failed to provide proper notifications to borrowers whose loan applications were denied.

A copy of the complaint can be accessed by clicking here.

LendUp was also sued by the CFPB in 2020 for allegedly violating the Military Lending Act.

LendUp promotes what it calls the “LendUp Ladder,” which offered points borrowers who repaid their loans on time and took free courses offered through the lender’s website. Those points could then be used to climb the ladder and earn lower interest rates on subsequent loans. The problem is that many borrowers who ascended to higher rungs on the ladder did not receive lower rates, according to the CFPB. About 80,000 borrowers took out 340,000 loans between 2016 and 2020 and were charged the same interest rates as they were charged when they were lower down on the ladder. In fact, in many cases, the interest rates were higher when borrowers climbed the ladder.

“LendUp lures consumers with false promises that repeat borrowing would allow them to ‘climb the LendUp Ladder’ and unlock lower interest rates. For tens of thousands of borrowers, the LendUp Ladder was a lie,” said CFPB Acting Director Dave Uejio, in a statement. “Not only did LendUp structure its business around wholesale deception and keeping borrowers in cycles of debt, the company doubled down after getting caught the first time. We will not tolerate this illegal scheme or allow this company to continue preying on vulnerable consumers.”

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