FTC Announces $3.85 Million Settlement with Online Lender

FTC

​On April 15, 2019, the FTC announced that it had reached a settlement with an online lending company for $3.85 million, resolving allegations​ that the company had engaged in unfair and deceptive loan servicing practices in violation of Section 5 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45​, the Telemarketing Sales Rule, 16 C.F.R. Part 310, and Section 913(1) of the Electronic Fund Transfer Act (EFTA), 15 U.S.C. § 1693k, and its implementing​ Regulation E, 12 C.F.R. § 1005.10.  According to the FTC, the online lender allegedly violated these provisions when it made unauthorized charges on customers’ accounts and required that borrowers make automatic payments from their bank accounts.  For example, the FTC claimed that the company had charged customers their monthly payments twice or more in one month and refused to refund such duplicate payments despite complaints.  The company also allegedly advertised that borrowers could use credit or debit cards to make payments on installment loans offered on its website, when in fact consumers were unable to do so.

The Stipulated Order, filed in the U.S. District Court for the Northern District of Illinois, permanently enjoins the company from making false representations regarding its methods of payment, fees, and payoff balances, and requires the company to pay $3.85 million in equitable relief, which will be used for consumer redress.  The settlement also requires the company to submit future compliance notices to the FTC.

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