THE BLOG

27
Sep

Google’s Payday Loan Company Settles with CFPB

If you’re a payday loan or installment loan lender and you claim you’re going to help consumers build their credit scores, you’d better really do it!

Oh, and if you’re unaware of this factoid, Google funded Lendup!

CONSUMER FINANCIAL PROTECTION BUREAU ORDERS LENDUP TO PAY $3.63 MILLION FOR FAILING TO DELIVER PROMISED BENEFITS
Online Lender Did Not Help Consumers Build Credit or Access Cheaper Loans, As It Claimed

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) took action against online lender Flurish, Inc., doing business as LendUp, for failing to deliver the promised benefits of its products. The CFPB found that the company did not give consumers the opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would. The Bureau has ordered the company to provide more than 50,000 consumers with approximately $1.83 million in refunds. The company will also pay a civil penalty of $1.8 million.

“LendUp pitched itself as a consumer-friendly, tech-savvy alternative to traditional payday loans, but it did not pay enough attention to the consumer financial laws,” said CFPB Director Richard Cordray. “The CFPB supports innovation in the fintech space, but start-ups are just like established companies in that they must treat consumers fairly and comply with the law.”

Flurish, Inc., doing business as LendUp, is an online lending company based in San Francisco, Calif. that offers single-payment loans and installment loans in 24 states. The company began marketing its loans in 2012 as a way for consumers to build credit and improve credit scores, and it offered consumers who participated in the program the ability to progress to loans with more favorable terms, including lower rates and longer repayment periods, over time. The company advertised this opportunity as the ability to move up the “LendUp Ladder.”

According to today’s enforcement action, LendUp did not deliver on its promises. Some of its product offerings weren’t available to consumers where they were advertised. In addition, for a time, the company did not properly furnish information to the credit reporting companies, denying consumers the promised opportunity to improve their creditworthiness. LendUp’s conduct violated multiple federal consumer financial protection laws, including the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the CFPB found that the company:

  • Misled consumers about graduating to lower-priced loans: Many of the benefits the company advertised as available to consumers who moved up the LendUp Ladder were not actually available. Despite the fact that LendUp advertised all of its loans nationwide, loans at the higher levels were not available outside of California for most of the company’s existence. Therefore, borrowers outside of California were not eligible to move up the “LendUp Ladder” and obtain lower-priced loans and other benefits.
  • Hid the true cost of credit: LendUp gave some consumers inaccurate information about the true cost of the loans offered. The company used banner ads on Facebook and other Internet search results that included “slider bars” allowing consumers to view various loan amounts and repayment terms, but it did not disclose the annual percentage rate as required by law.
  • Reversed pricing without consumer knowledge: With one particular loan product, borrowers had the option to select an earlier repayment date. Borrowers who selected an earlier repayment date received a discount on the origination fee. But if a borrower later extended the repayment date, the company would reverse the discount given at origination. The company did not disclose this and, in three states, the company’s loan agreement specifically stated that it would not charge any fees to extend the repayment period. In addition, if a borrower defaulted, any discount received at origination was reversed and added to the amount sent to collections.
  • Understated the annual percentage rate: LendUp offered services that allowed consumers, for a fee, to obtain their loan proceeds more quickly. The company passed along the fee to a third party, but LendUp also retained a portion of the fee from loans made between May 2013 and March 2016. In many instances, these retained fees should have been included in the annual percentage rate calculation; because they were not, the company inaccurately disclosed the finance charges.
  • Failed to report credit information: Although the company began making loans in 2012 and advertised its loans as credit building opportunities, the company did not furnish any information about any loans to credit reporting companies until at least February 2014. Before April 2015, LendUp also failed to have any written policies and procedures about the accuracy and integrity of information furnished to consumer reporting agencies.

Enforcement Action
Under the Dodd-Frank Act, the CFPB has authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws. Under the terms of the CFPB order released today, LendUp is required to:

  • Provide approximately $1.83 million in redress to victims: The company is ordered to pay about $1.83 million to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds.
  • End deceptive loan practices: LendUp must stop misrepresenting the benefits of borrowing from the company, including what loan products are available to consumers and whether the loans will be reported to credit reporting companies. The company must also stop mispresenting what fees are charged, and it must include the correct finance charge and annual percentage rate in its disclosures.
  • End unlawful advertisements: The company must regularly review all of its marketing material to ensure it is not misleading consumers.
  • Ensure accuracy of pricing: The company must regularly test annual percentage rate calculations and disclosures to ensure it complies with the Truth in Lending Act.
  • Pay a $1.8 million civil penalty: LendUp will pay $1.8 million to the CFPB’s Civil Penalty Fund.

The full text of the CFPB’s consent order is available at: http://files.consumerfinance.gov/f/documents/092016_cfpb_LendUpConsentOrder.pdf

The CFPB investigation was conducted in coordination with the California Department of Business Oversight, which today announced a separate settlement with LendUp: http://www.dbo.ca.gov/Press/press_releases/2016/LendUp Settlement Release 09-26-16.pdf

19
Sep

Payday Loan Leads: Ads Better Not Appear on Kids Websites

“The case started when an investigator noticed a payday loan ad on a website designed for children while browsing from a computer used in a payday loan investigation. The website’s advertiser apparently knew the user had visited payday loan websites before.

A 1998 federal law – Children’s Online Privacy Protection Act – prohibits unauthorized collection of children’s personal information on websites directed at users under 13.

The New York attorney general’s office discovered websites for Mattel’s Barbie, Hot Wheels and American Girl; Viacom’s Nick Jr. and Nickelodeon; JumpStart’s Neopets; and Hasbro’s My Little Pony, Littlest Pet Shop and Nerf had payday loan advertisements appearing on them.

“Operation Child Tracker,” a two-year, first-of-its-kind investigation by the New York Attorney General’s office, discovered that websites operated by these companies were home to tracking technology that illegally enabled third-party vendors, such as marketers and advertising companies, to track children’s online activity in violation of COPPA.

How to start a payday loan business“Federal law demands that children are off-limits to the prying eyes of advertisers,” said Attorney General Schneiderman. “Operation Child Tracker revealed that some of our nation’s biggest companies failed to protect kids’ privacy and shield them from illegal online tracking. My office remains committed to protecting children online and will continue our investigation to hold accountable those who violate the law by tracking children.”

The Children’s Online Privacy Protection Act (COPPA)

In 1998, Congress enacted COPPA to protect the safety and privacy of young children online.  COPPA prohibits operators of certain websites from collecting, using, or disclosing personal information (e.g., first and last name, e-mail address) of children under the age of 13 without first obtaining a parent’s consent. The operators of websites directed to children under the age of 13 (a “child-directed website”) and the operators of websites that have actual knowledge that they are collecting personal information from a child under the age of 13 (collectively, “covered operators”) are subject to COPPA.

Companies Agree To Pay Penalties Totaling $835,000, Adopt Comprehensive Reforms To Protect Children From Improper Tracking

According to The Los Angeles Times, “The case started when an investigator noticed a payday loan ad on a website designed for children while browsing from a computer used in a payday loan investigation. The website’s advertiser apparently knew the user had visited payday loan websites before.

07
Sep

CFPB Lost 12,308 Positive PDL Borrower Testimonials on Hillary’s Server

The Consumer Financial Protection Bureau is more dishonest than the lenders they claim they are trying to protect consumers from.

Payday Loan Industry: CFPB Lost 12,308 Positive Borrower Testimonials on Hillary’s Server.

Here’s just one of the 12,308 POSITIVE TESTIMONIALS the CFPB received that were Posted by REAL consumers on the CFPB’s “Tell Your Story” website portal. Note that the total number of testimonials received was 12,546:

January 21, 2016

I used a payday loan and it got me out of a jam. When I pulled out a payday loan, I had no idea what I was doing. After sitting down with someone at the store, they helped me every step of the way and made sure I felt comfortable with pulling out the loan. I’m so glad they were there to help. Rather than a traditional loan, I payday loan startup businessapplied for a pay day loan and the process could not have been better. Everything was explained to me the minute I walked in the store and I had the cash I needed in no time at all. A bank or credit union does not work when you only need a small loan amount to make ends meet. I already live paycheck to paycheck and have little leftover after my monthly bills are paid. When the holiday season comes around, I can’t afford to give my kid gifts. The pay day loan helped me so my child could open a present. In the end this payday loan helped me out of a tough situation.

The Community Financial Services Association of America said documents they received under a Freedom of Information Act request indicate that 12,308 of the 12,546 testimonials submitted to the CFPB’s “Tell Your Story” consumer portal “reflect positive impressions of the industry.”

Here’s another actual payday loan customer story Posted by a REAL payday loan borrower on the CFPB website portal:

January 21, 2016

I really enjoyed working with my local pay day lending store and I think my story is important. Being able to get a loan for a few hundred dollars was not only easy but it was a necessity. There are no other avenues out there that can lend money like that which are not tied to losing a valuable piece of property or giving up your car entirely. This was a great way to make it work for me. Over the holidays, budgets can be stretched fairly thin. I wasn’t even sure I could provide even the most modest presents for the members of my immediate family. Then I got a quick and easy payday loan, and it truly made a difference to the people closest to me. It was enormously helpful and easy to navigate. I didn’t have the money to fix my car after getting in an accident. Although at first hesitant, I found the entire staff to be extremely helpful and polite. In the end, I m glad I went through with the loan as it was quick and hassle-free. I found that using my pay day loan to cover some medical costs I had recently was a great way to not fall behind on my other bills. Medical bills can be very difficult to get under control and are very confusing. This loan was a great solution for me. I thank you for understanding my situation.

So, the CFPB must have misplaced 12,308 positive payday loan consumer testimonials? More than likely these were simply on Hillary Clinton’s private server.

Meanwhile, go here to read all 12,546 payday loan consumer testimonials. CFSA

And, if you want to learn how to make money lending money, visit PaydayLoanUniversity.com