LendUp penalized by CFPB and California for violations

The Consumer Financial Protection Bureau (CFPB or Bureau) and the California Department of Business Oversight (DBO), after a coordinated investigation, have separately announced settlements with Flurish, Inc., doing business as LendUp, requiring the firm to make restitution to consumers.

The CFPB found that the firm failed to deliver the promised benefits of its products, by not giving consumers the opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would. The Bureau ordered the company to provide more than 50,000 consumers approximately $1.83 million in refunds, and pay a civil penalty of $1.8 million. The Bureau said that some of LendUp's product offerings weren’t available to consumers where they were advertised, and, for a time, the company did not properly furnish information to credit reporting companies, denying consumers the promised opportunity to improve their creditworthiness. The CFPB also found that LendUp hid the true cost of credit when it failed to provide an annual percentage rate in Internet ads when required; reversed pricing without informing consumers, and understated the APR on some loans.

The DBO found over 385,000 violations of two state consumer protection laws in examinations under those laws. The violations included the charging of illegal fees, understatement of APRs, conditioning approval of payday loans upon the consumer's use of an installment loan product and imposing incorrect interest rates that resulted in overcharges. The DBO ordered LendUp to pay $1.62 million in consumer refunds, a $100,000 penalty and $965,462 in costs.

• CFPB press release
• CFPB consent order
• California DBO press release
• California DBO settlement agreement