Presumably, the lender misrepresented himself in terms of charging hidden fees.
The FTC settlement agreement prohibits LendingClub from “misrepresenting loan applicants”. The company was also required to “clearly and visibly” report the total amount that borrowers would receive, as well as the total amount of any commissions.
In April 2018, the FTC sued LendingClub after discovering that the company had allegedly falsely promised loan applicants that they would receive a certain amount of loans with no hidden fees.
The FTC writes that the company allegedly deducted hundreds of thousands of dollars from what the press release described as “hidden advance payments.”
In addition, the FTC accuses LendingClub of allowing clients to obtain approval to issue loans when they have not.
The FTC also added that LendingClub took money from clients without permission, and an earlier ruling also found that LendingClub informed clients that their loans were “in progress” when funds were not available. The company is also believed to have charged customers with duplicate payments directly from their bank accounts, as well as charging those who canceled automatic payments or paid off their loans. Clients received overdraft fees and deducted them from making other payments.
The LendingClub problems arose several years ago. PIMNTS in 2018, they wrote that the company’s shares reached a new low after statements by regulators that the company secretly increased commissions and charged borrowers even after they paid off their loans.
The Federal Trade Commission (FTC) said LendingClub violated federal laws that protect consumers from “fraudulent and unfair” practices. Because of this, LendingClub shares fell 14 percent at the time.