LendingClub, the online lender, has agreed to pay $18 million in order to settle charges of reportedly deceiving customers, the Federal Trade Commission (FTC) reported Thursday (July 15).
Allegedly, the lender had misrepresented itself in terms of how it charged hidden fees.
The FTC settlement bans LendingClub from “making misrepresentations to loan applicants.” The company has also been required to “clearly and conspicuously” communicate the total amount of how much borrowers will obtain as well as the total for any fees.
In April 2018, the FTC sued LendingClub, finding that the company had allegedly falsely promised loan applicants that they would get a specific amount of loans without any hidden fees.
The FTC writes that the company had allegedly deducted hundreds of thousands of dollars from what the press release said was “hidden up-front fees.”
In addition, the FTC charges that LendingClub had said customers would be able to be approved for loans when they were not.
The FTC also added that LendingClub took money from customers without authorization, and an earlier ruling also found that LendingClub told customers their loans were “on the way” when the funds were not. The company is also alleged to have withdrawn double payments from customers directly from their bank accounts as well as charged the ones who had canceled automatic payments or paid off their loan. Customers incurred overdraft fees and kept them from making other payments.
LendingClub’s troubles date back several years. PYMNTS wrote in 2018 that the company’s stock hit a new low after allegations from regulators that it had been secretly adding on fees and charging borrowers even after they had paid off their loans.
The Federal Trade Commission (FTC) said LendingClub had violated federal laws protecting consumers from “deceptive and unfair” practices. Because of that, LendingClub stock dropped by 14 percent at that time.