Picking the right lender, taking out loans, and trying to make your monthly payments is stressful enough. You shouldn’t have to deal with unanticipated or dubious charges on top of all that, especially when the lending institution specifically states that you won’t be charged those fees. In a rather satisfying turn of events, the FTC is targeting one such institution for doing just that, alleging the LendingClub misled customers with its “No Hidden Fees” claims.
LendingClub’s Hidden Fees “Deceptive”
On April 25, the Federal Trade Commission (FTC) charged LendingClub with deceptive business practices. They say LendingClub offered loans with “no hidden fees” and then charged customers hundreds or thousands of dollars in up-front fees by deducting the amounts directly from the loan. In addition to these allegations, the FTC’s charges also include the following:
- Deceptively representing that consumers would receive loans, but instead declining to approve their loans
- Withdrawing money from borrowers’ bank accounts without borrowers’ authorization; in some cases, continuing to charge those who had cancelled automatic payments or had already paid off their loans
- Failing to deliver required privacy notices to customers
The FTC says that LendingClub’s own internal review found that its claims about the hidden fee and the amount consumers would actually receive “could be perceived as deceptive as its likely to mislead the consumer.” And yet the company seemed to make its claim about no hidden fees even more conspicuous after that.
When the FTC has “reason to believe” that the law has been or is being broken, and that it’s in the public’s interest to take legal action, they file a complaint with the court. In this case, they believe LendingClub violated the FTC Act and the Gramm-Leach-Bliley Act (protecting consumer financial information), and the complaint was filed in a San Francisco federal court.
If you believe your lending institution engaged in deceptive or unfair business practices, consult an attorney to see if you can take any legal action against them to protect your rights and seek compensation.