LendingClub Charged By Federal Trade Commission For Hidden Loan Fee Deception, Stock Dips Double Digits
Online lender LendingClub has been hit with charges initiated by the Federal Trade Commission related to consumer complaints and compliance issues. This is not the first time the lender has found itself in hot water and these latest headlines are already causing serious issues with the company’s stock values.
According to Bloomberg, the Federal Trade Commission says that LendingClub has repeatedly utilized deceptive and unfair practices in dealing with its customers. The FTC details that LendingClub’s compliance department itself has sometimes noted these alleged violations and this complaint has seemingly had a strong and immediate impact share prices.
LendingClub’s stock prices had already been trending down this year, but they fell again significantly after the FTC complaint emerged. The Los Angeles Times notes that the company’s stock value hovered around $3 on Wednesday as word spread about the new allegations, at times declining by double-digit values.
The FTC filed this new complaint in federal court in California. It alleges that LendingClub has sometimes taken double payments out of the accounts of its borrowers and the lender is also accused of taking undisclosed fees out of loan amounts given to consumers.
Allegations indicate that LendingClub has sometimes charged its borrowers additional amounts even after the loans have been repaid. In addition, some potential borrowers were led to believe that their request had been backed by investors, even when that was not the case and the company supposedly knew that the loan would never be approved.
LendingClub plummets after the company is accused by the FTC of deception on hidden loan fees https://t.co/AptfQYXdsz pic.twitter.com/jOIvE9HimI
— Bloomberg Markets (@markets) April 25, 2018
LendingClub says that it is disappointed by the lawsuit. After the filing, it released a statement detailing that the allegations coming from the FTC “cannot be reconciled” with their “longstanding record of consumer satisfaction that’s reflected in every available objective metric.”
MarketWatch adds that the company’s statement says that it supports the FTC and the role it fulfills, but they believe that the current complaint is wrong. The organization also noted that they are disappointed that the issues could not be resolved with the current FTC leadership.
LendingClub is a major player in the peer-to-peer online lending community and this new FTC complaint isn’t its first business setback in the last couple of years. People will be curious to see whether it bounce back and flourish again or if these Federal Trade Commission complaints against LendingClub turn out to be more than the lender can overcome.
