The
Oakland, California-based lender, which offers funding to online
consumers who traditionally have been overlooked by banks
because they are considered too risky, agreed to the order, the
CFPB said.
"We are shuttering the lending operations of this fintech for
repeatedly lying and illegally cheating its customers," said
CFPB Director Rohit Chopra.
LendUp, which had attracted attention from prominent Silicon
Valley investors, expects to complete a wind-down of its
operations in early 2020, a spokesman told Reuters.
Tuesday's order comes after a September 2021 CFPB lawsuit
alleging that LendUp continued to violate a 2016 order stemming
from similar charges.
LendUp deceived consumers about the benefits of repeat
borrowing; violated the CFPB's 2016 order; and failed to provide
timely and accurate adverse-action notices to clients as
required by fair lending laws, the agency added.
In 2017, PayPal Inc invested in LendUp as part of its efforts to
gain an edge on rivals in the highly competitive digital
payments market.
The agency said that Alphabet Inc's GV, formerly known as Google
Ventures, as well as other California-based venture capital
giants, Andreessen Horwitz and Kleiner Perkins, had a stake in
LendUp.
The CFPB was created in the wake of the 2007-09 global financial
crisis to crack down on predatory lenders. Progressives and
advocates have long criticized short-term lenders for saddling
borrowers with annualized interest rates that often reach
several hundred percent.
Chopra, tapped by Democratic President Joe Biden to help address
inequities in lending, has said his ambitious agenda includes
sharpening the agency's enforcement focus on companies that
repeatedly violate consumer finance laws, with a particular
focus on fintech and other technology companies.
(Reporting by Katanga Johnson in Washington; Editing by Dan
Grebler and Jonathan Oatis)
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