Bureau sues online lender once more for misrepresentation of products, services

An Oakland, Calif.-based online lending firm faces a lawsuit – again – from the federal consumer financial protection agency for allegedly misrepresenting products and services and for failing to provide adverse-action notices to applicants, the agency said Wednesday.

In a release, the Consumer Financial Protection Bureau (CFPB) said it filed a lawsuit against LendUp Loans, LLC, accusing the firm of violating a 2016 consent order. In doing so, CFPB alleged, the firm was “deceiving tens of thousands of borrowers.”

The agency said it ordered the California firm in 2016 to pay $1.83 million in consumer redress and a $1.8 million civil penalty. It noted it also ordered LendUp to stop misleading consumers with false claims about the cost of loans and the benefits of repeated borrowing.

However, since then, CFPB alleged, LendUp “has continued with much of the same illegal and deceptive marketing.” The agency said it also alleged that LendUp “illegally failed to provide timely and accurate notices to consumers whose loan applications were denied.”

According to the bureau, LendUp offers single-payment and installment loans to consumers and portrays itself as an alternative to payday lenders. “A central component of LendUp’s marketing and brand identity is the ‘LendUp Ladder,’” the agency said. “LendUp told consumers that by repaying loans on time and taking free courses offered through its website, consumers would move up the ‘LendUp Ladder’ and, in turn, receive lower interest rates on future loans and access to larger loan amounts.

“LendUp was not telling consumers the truth,” CFPB stated in its complaint.

The bureau said it seeks an injunction, damages or restitution to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.

The agency also said the firm is subject to a 2021 stipulated final judgment that resolved the CFPB’s claims that LendUp violated the Military Lending Act in connection with its extensions of credit.

CFPB Sues LendUp Loans for Violating 2016 Consent Order and Deceiving Borrowers