LendUp Loans, LLC
On September 8, 2021, the Bureau filed a lawsuit in the United States District Court for the Northern District of California against LendUp Loans, LLC. LendUp is an online lender offering single-payment and installment loans to consumers. The Bureau alleged that LendUp’s brand identity is tied to its marketing claims that, that through on-time payments and repeat borrowing, borrowers will accrue points and ascend the “LendUp Ladder,” gaining access to loans with more favorable interest rates or larger loan amounts as consumers reach higher Ladder levels. In 2016, the Bureau issued an administrative consent order against LendUp to address the Bureau’s finding that LendUp misled consumers about the benefits of its loans. That order prohibits LendUp from misrepresenting the benefits of borrowing from the company. In this action, the Bureau alleged that, though LendUp claimed that consumers who ascended the LendUp Ladder would gain access to lower interest rates and larger loans, many borrowers did not actually get those benefits. The Bureau alleged that LendUp’s marketing claims were deceptive under the Consumer Financial Protection Act of 2010 and violated the prohibitions of the Bureau’s 2016 order. The Bureau also alleged that LendUp failed to timely issue required adverse-action notices and failed to provide accurate denial reasons on its adverse-action notices to thousands of loan applicants, in violation of the Equal Credit Opportunity Act and Regulation B, and that these violations also constitute violations of the CFPA.
On December 21, 2021, the Bureau filed a proposed stipulated final judgment and order to settle the lawsuit, which the court entered on December 30, 2021. The order imposes an injunction, prohibiting LendUp from offering or providing consumer credit, or assisting others that are offering or providing consumer credit; from collecting on, selling, or assigning outstanding subject loans, or assisting others in doing so; from selling consumer information; and from making misrepresentations in the sale or collection of consumer debt, or assisting others in doing so. The order also imposes a $100,000 civil money penalty and requires the payment of $40,500,000 in consumer redress, to be suspended upon payment of the civil money penalty based on LendUp’s demonstrated inability to pay.