US Office of Consumer Affairs orders fintech firm LendUp to suspend new loans and pay penalty

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WASHINGTON, Dec 21 (Reuters) – (This Dec 21 story corrects LendUp’s liquidation date from 2020 to 2022)

The U.S. Consumer Financial Protection Bureau (CFPB) has ordered LendUp Loans to pay a $100,000 fine, stop issuing new loans and suspend collection of some outstanding loans after repeated deceptive marketing campaigns and other Fair Lending violations, the agency said Tuesday.

The Oakland, Calif.-based lender, which offers financing to online consumers who have traditionally been overlooked by banks because they are considered too risky, accepted the order, the CFPB said.

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“We are shutting down this fintech’s lending operations for repeatedly lying and illegally defrauding its customers,” CFPB Director Rohit Chopra said.

LendUp, which had attracted the attention of prominent Silicon Valley investors, expects to complete the liquidation of its operations in early 2022, a spokesperson told Reuters.

Tuesday’s order comes after a September 2021 CFPB lawsuit alleging LendUp continued to violate a 2016 order stemming from similar charges.

LendUp misled consumers about the benefits of repeat borrowing; violated the 2016 CFPB order; and failed to provide timely and accurate adverse action notices to clients as required by fair lending laws, the agency added.

In 2017, PayPal Inc. (PYPL.O)invested in LendUp as part of its efforts to gain an edge over competitors in the highly competitive digital payments market.

The agency said Alphabet Inc. (GOOGL.O) GV, formerly known as Google Ventures, along with other California-based venture capital giants Andreessen Horwitz and Kleiner Perkins, held a stake in LendUp.

The CFPB was created in the aftermath of the 2007-2009 global financial crisis to crack down on predatory lenders. Progressives and advocates have long criticized short-term lenders for charging borrowers annualized interest rates often reaching several hundred percent.

Chopra, hired by Democratic President Joe Biden to help tackle inequality in lending, said his ambitious agenda includes the agency’s focus on enforcing laws on companies that repeatedly violate laws. consumer finance laws, with a particular focus on fintech and other technology companies.

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Reporting by Katanga Johnson in Washington; Editing by Dan Grebler and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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