The LendUp Ladder of Lament
Customers to receive $40 million in payments due to LendUp's lies
The “LendUp Ladder” seemed like a good idea. LendUp would offer short-term, installment loans to subprime borrowers and if these borrowers paid the loans back on time, they could get access to both more funds and more favorable interest rates.
They’d climb the “LendUp Ladder” to a better financial life.
Trouble is, the LendUp Ladder went nowhere.
Borrowers met the LendUp terms and qualified for the same loan amount and paid the same or higher interest rates.
The entire setup was a bit of a scheme - making lending “better” by incentivizing more borrowing.
LendUp sold the lie that a loan is a great way to get out of debt.
They broke a few laws along the way, though, and then failed to take corrective action.
Now, they’re not allowed to lend and 118,000 of their former customers will receive a share of $40 million in payments.
The action comes as the CFPB ordered LendUp to stop making loans as a result of multiple violations of the law and a failure to adhere to the CFPB's previous orders about those violations. LendUp's pattern of misconduct dates back to 2016.
CFPB Dings Chime
Nonbank banking service provider Chime will pay a settlement of more than $4 million as a result of legal violations identified by the Consumer Financial Protection Bureau (CFPB).
While Chime promised customers that if they closed their accounts, their money would be returned in 14 days or less, in a number of cases, it took as long as three months for Chime to refund the money.
The CFPB found this caused substantial financial hardship to former Chime customers and ordered Chime to pay $1.3 million in refunds and also fined Chime more than $3 million for their misconduct.
“Chime’s customers had to wait weeks or months for access to their own money and were forced to use alternative funds to cover their essential expenses,” said CFPB Director Rohit Chopra. “Fast-growing financial firms must treat their customers fairly and understand that federal law is not a suggestion.”