Federal government alleges online lender violated law and overcharged military borrowers
The Consumer Financial Protection Bureau has filed a lawsuit against a California-based online lender alleging violating federal law by charging too much interest on loans to active duty members and their dependents.
The CFPB accuses LendUp Loans, LLC of Oakland, Calif., Of charging more than 36% of the annual percentage rate, along with other violations of the military loan law. The allegations concerned more than 4,000 loans made to more than 1,200 borrowers since October 2016, according to the lawsuit, filed Dec. 4 in US District Court for the Northern District of California.
Office officials said the action is part of a wide range of investigations into a number of lenders who may violate the Military Loans Act, a law passed in 2006 to protect military personnel and their dependents from predatory lenders . Among other things, this law limits the amount of interest that can be charged, including fees, to 36%, based on the calculation of the annual percentage rate. This is called the military RPA.
LendUp officials could not immediately be reached for comment. Examples of online lender fees listed on their website include a loan of $ 100 with fees of $ 17.60 for 30 days with a disclosed APR of 214 percent; or for 14 days with a disclosed APR of 459 percent.
Their loan of $ 250 for seven days, at a cost of $ 44; translates to an APR of 918 percent.
The LendUp website bills its loans as an alternative to traditional payday loans and offers several types of loans. They offer lump sum loans and installment loans. Instead of requiring borrowers to repay the full value of their loan with their next paycheck, LendUp is offering up to 30 days for repayment, according to the website. “The added flexibility makes it much easier for you to repay these alternative loans without defaulting on other financial obligations,” the website says.
As of January, the company had issued more than $ 2 billion in addition to 6.5 million loans since 2012, with an average loan value of around $ 300, according to a January release from Business Wire. “Through our loans, education and savings programs, we’ve helped clients increase their credit profile by hundreds of thousands of points in total and saved them hundreds of millions of dollars in interest and fees through to much more expensive products, ”said Anu Shultes, CEO of LendUp. , in the January press release.
CFPB alleges that in addition to violating the 36% APR cap, LendUp granted loans that require military borrowers to submit to arbitration and failed to make certain required disclosures about the loans, including a statement from the Applicable military APR.
The lawsuit asks the court to require LendUp to pay damages, restitution and other measures of financial assistance to the consumers; terminate allegedly void consumer credit contracts from the start; and impose a civil fine on LendUp. He asks the court to demand that LendUp permanently cease committing future violations and to require the lender to correct inaccurate information provided to credit reporting agencies regarding overdue accounts or amounts owed in under consumer credit contracts that would have been void from the start.