Springstone Financial has been ordered by the Consumer Financial Protection Bureau to pay $700,000 to redress victims of deceptive credit enrollment practices.
In a statement Thursday (Aug. 20), the regulatory agency said that “many consumers” who signed up for the deferred interest loan products tied to dental offices via Springstone had done so in the belief that the loans were interest-free. In fact, said the CFPB, interest on those loans began to accrue from the day work was performed and was added to the bill if outstanding balances were not paid in full before the end of the promotional periods.
The CFPB said roughly 3,200 customers signed up for the loan product and wound up being charged (and paid) deferred interest.
The dental promotions stemmed from Springstone’s health care financing program, which from January 2009 through the end of 2014 offered two types of financing: installment loans and deferred interest loans. Through a network of 9,000 health care providers, Springstone, which is owned by Lending Club, offered those two financing options and were shepherded through the application process by the aforementioned providers. CFPB said that providers told patients that the loans with the deferred interest option were classified as “interest-free” when in fact interest charges came in at about 23 percent in the event that balances on dental work were not paid in full by the time the promo periods ended.
In the order handed down by the CFPB, the $700,000 is earmarked to repay consumers and address the deceptive marketing practices. In a statement accompanying the order, CFPB Director Richard Cordray stated that “deceiving patients in need of medical care into paying for services with risky credit adds insult to injury. The bureau will not tolerate financial companies or their providers taking advantage of distressed patients and their loved ones with misleading sales pitches.”