Fintech Lender LendUp Shuttered by Consumer Bureau
Action Comes Following Multiple Violations of Consumer Protection Laws
The Consumer Financial Protection Bureau (CFPB) announced today it has reached an agreement with LendUp that means the lender will stop doing business.
“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.”
As a result of the order, LendUp Loans has 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 alleging that it continued to engage in illegal and deceptive marketing in violation of a 2016 CFPB order.
LendUp Loans, headquartered in Oakland, California, offered single-payment and installment loans to consumers online and pitched itself as an alternative to payday lenders. LendUp attracted equity and debt investments from prominent investors, including Google Ventures, Andreessen Horwitz, Kleiner Perkins, PayPal Holdings, and QED Investors.
LendUp has been subject to multiple enforcement actions by the CFPB. In addition to ordering LendUp in 2016 to stop misrepresenting the benefits of borrowing from the company, the CFPB sued LendUp in 2020 for allegedly violating the Military Lending Act and obtained a judgment against LendUp in that action.
The action against LendUp comes as the CFPB is exploring ways to protect consumers in the Fintech lending space. At the same time, consumer groups are pushing for additional regulations.
