CFPB Sues LendUp Loans for Alleged Violation of the 2016 Consent Ordinance and Alleged Further Deception of Borrowers | Ballard Spahr LLP
The CFPB has filed a lawsuit against online lender LendUpLoans, based in Oakland, Calif., Alleging that LendUp violated a 2016 consent order that required the lender to take over $ 3.5 million in consumer lawsuits as well as paying civil penalties and misleading consumers with alleged false claims about borrowing costs and the benefits of repeated borrowing.
By doing complaint The CFPB, filed last week in the U.S. District Court for the Northern District of California, accuses LendUp of continuing to pursue the same illegal and fraudulent marketing that was the basis of the 2016 Consent Order and allegedly fail to provide timely and accurate notifications have to consumers whose loan applications have been denied. The complaint alleges violations of the Consumer Financial Protection Act, the Equal Credit Opportunity Act (“ECOA”), and the ECOA Executive Order, Regulation B, imposing a civil fine.
LendUp offers individual and installment loans to consumers, markets itself as an alternative to payday loans and uses the brand identity âThe LendUp Ladderâ. The company’s website tells consumers that the LendUp leaders are “Incentives”[s] acting responsibly and enabling[s] Borrowers get access to apply for larger loans at lower interest rates over time. “
The CFPB claims that this statement is not only misleading but blatantly wrong. The investigation found that 140,000 repeat borrowers were being charged the same or higher interest rates on loans despite working up the steps of the LendUp ladder. The research also found that many borrowers were restricted from accessing larger loans even after reaching the top of the lend-up ladder. In addition, the CFPB alleges that in violation of ECOA and Regulation B, LendUp failed to provide timely adverse action notices on over 7,400 loan applications and issued over 71,800 adverse action notices without detailing why the loan was denied.
In one Press releaseActing director Dave Uejio accused LendUp of “structure”[ing] its deal on wholesaling deception and keeping borrowers in debt cycles, âadding that the bureauâ will not tolerate this illegal regime or allow this company to continue hunting down vulnerable consumers â.