CFPB Sues LendUp Alleging Online Lender Broke Consent Order

The Consumer Financial Protection Bureau (CFPB) is alleging in court that LendUp Loans has violated a 2016 consent order and deceived borrowers, according to a press release.

In 2016, the CFPB cracked down on LendUp’s habit of misleading users on the cost of loans and the benefits of borrowing repeatedly, the release stated. At the time of the original order, the CFPB hit LendUp with a fine for $1.83 million in consumer redress and a $1.8 million civil penalty.

Now, the CFPB alleged per the release that LendUp has continued doing much of the same things for which it was originally reprimanded.

In addition, the CFPB said LendUp did not provide timely and accurate notices to users who had been denied on their loan applications, the release stated.

“LendUp lures consumers with false promises that repeat borrowing would allow them to ‘climb the LendUp Ladder’ and unlock lower interest rates,” said CFPB Acting Director Dave Uejio in the release. “For tens of thousands of borrowers, the LendUp Ladder was a lie. Not only did LendUp structure its business around wholesale deception and keeping borrowers in cycles of debt, the company doubled down after getting caught the first time. We will not tolerate this illegal scheme or allow this company to continue preying on vulnerable consumers.”

In other CFPB news, the agency put forward new rules this month that could help small- to medium-sized businesses (SMBs) get access to credit.

Read more: CFPB Proposal to Help SMBs Gain Access to Credit

The proposal would have lenders reveal information about their lending to SMBs, including “the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered.” In addition, the CFPB also rolled out a new web portal for small business owners.

“Small businesses are the primary job creators and wealth builders in communities across the country,” Uejio said at the time. “After homeownership, small business ownership is the primary means by which families and communities build wealth. Yet too often, small business development is starved for want of access to responsible, fairly priced credit.”