CFPB Shuts Down LendUp’s New Loan Business, Fines FinTech

The Consumer Finance Protection Bureau (CFPB) has said LendUp Loans has to pay a $100,000 penalty, stop issuing loans and stop collecting some outstanding ones after the company received too many deceptive marketing complaints, Reuters reported.

CFPB Director Rohit Chopra said the agency is shutting down the company’s lending operations for “repeatedly lying and illegally cheating its customers,” according to the report.

LendUp Loans offers funding to online customers who have usually been overlooked because they are considered to be too risky, the report stated.

According to the allegations, LendUp deceived its customers about the benefits of repeat borrowing and violated a similar 2016 order, per the report. It also did not provide a timely and accurate notice of adverse action, which is required by law.

The CFPB said LendUp agreed with the order, according to the report.

PayPal was among the investors in LendUp in 2017, as part of the payment giant’s effort to get ahead of rivals in the digital payments market, the report stated.

The order came after a CFPB lawsuit from September, alleging that LendUp continued to violate an order from 2016.

Read more: CFPB Sues LendUp Alleging Online Lender Broke Consent Order

At the time of the 2016 order, the CFPB hit LendUp with a fine for $1.83 million in consumer redress and a $1.8 million civil penalty.

“For tens of thousands of borrowers, the LendUp Ladder was a lie,” said CFPB Acting Director Dave Uejio at the time, referring to the advertisements that LendUp put out saying that repeated borrowing could help consumers “climb the LendUp Ladder.”

“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,” Uejio added.