On April 25, 2018, the FTC sued online lending company LendingClub Corporation in connection with promotional language used by the company in its print and online marketing to attract online borrowers. In its Complaint, the FTC claims that LendingClub engaged in unfair or deceptive acts or practices under the FTC Act, based on LendingClub’s promises of “no hidden fees” in connection with its loans, when in fact the company deducted a hidden up-front fee before disbursing loan funds to borrowers.
The Complaint also went into detail about the various pop-ups and other methods the company used in the online loan application process to disclose fees, and argued that such methods used made it unlikely that an ordinary consumer would be informed of these fees. The FTC also alleged that LendingClub misled loan applicants about loan approval through emails with misleading subject lines such as “Hooray! Investors Have Backed Your Loan,” when in reality many of these applicants were not, in fact, approved.
The allegations set forth in the Complaint teaches an important lesson to companies marketing online loans and lenders. The statements you make in your marketing, and both during and after the loan application process, can have profound legal consequences. Be certain that your promotional statements accurately reflect the loans you’re offering, along with their fees, and design your online application process to ensure that consumers are informed of all fees and charges.
One thing is certain: this will not be the last FTC action against online loan platforms.