Online lender LendUp has ceased operations over allegations it continued to engage in illegal and deceptive marketing in violation of a 2016 order from the Consumer Financial Protection Bureau. It agreed to halt making any new loans and collecting on certain outstanding loans, as well as to pay a penalty, to resolve a September 2021 lawsuit which also accused the fintech company of fair lending violations.
Backed by prominent tech and venture capital firms, including Paypal and Alphabet, LendUp offered single-payment and installment loans to consumers online and pitched itself as an alternative to payday lenders.
The September lawsuit stemmed from a 2016 consent order in which the Oakland, Calif., fintech was ordered to pay $1.83 million in consumer redress and a $1.8 million civil penalty over deceptive marketing claims. Earlier this year, LendUp was also subject to a stipulated final judgement from the CFPB over violations of the Military Lending Act.
LendUp misrepresented the benefits of repeat borrowing and failed to provide timely and accurate adverse-action notices required by fair lending laws, according to the consent order, which also requires LendUp to pay a $100,000 civil money penalty and refrain from selling customer information.
“LendUp was backed by some of the biggest names in venture capital,” said CFPB Director Rohit Chopra. “We are shuttering the lending operations of this fintech for repeatedly lying and illegally cheating its customers.”