CFPB sued LendUpLoans, an online lender based in Oakland, Calif., Alleging that LendUp violated a 2016 consent order that required the lender to pay more than $ 3.5 million in consumer redress as well as civil penalties and stop misleading consumers with alleged misrepresentation about the cost of loans and the benefits of repeatedly borrowing.
In the Complaint filed in U.S. District Court for the Northern District of California last week, the CFPB accuses LendUp of continuing to engage in the same illegal and deceptive marketing that was the basis of the 2016 consent order, as well than allegedly failing to provide timely and accurate advice. consumers whose loan applications have been refused. The complaint alleges violations of the Consumer Financial Protection Act, the Equal Credit Opportunities Act (“ECOA”) and the ECOA implementing regulation, Regulation B. The CFPB requests a injunction, damages or restitution to consumers, restitution of ill-gotten gains and the imposition of a civil fine.
LendUp offers consumers both single payment and installment loans, presenting itself as an alternative to payday lenders and using the brand identity “The LendUp Ladder”. The company’s website tells consumers that the LendUp scale is “encouraging[s] responsible actions and allow[s] borrowers have access to apply for larger loans at lower interest rates over time.
The CFPB alleges that this statement is not only misleading, but manifestly false. Its investigation found that 140,000 recurring borrowers had to pay the same or higher interest rates on loans despite moving up the LendUp scale. The survey also found that many borrowers had reduced their access to larger loans, even after reaching the top of the LendUp ladder. Further, the CFPB alleges that LendUp failed to provide a timely notice of adverse action on over 7,400 loan applications and issued over 71,800 notices of adverse action without specifically describing why the loan was issued. was refused, in violation of ECOA and Regulation B.
In a Press release, Acting Director Dave Uejio accused LendUp of “structuring[ing] its activity around wholesale deception and keeping borrowers in debt cycles, “adding that the Bureau” will not condone this illegal scheme or allow this company to continue to prey on vulnerable consumers. “