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U.S. consumer bureau orders fintech firm LendUp to halt new loans, pay fine

U.S. consumer bureau orders fintech firm LendUp to halt new loans, pay fine
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Seal of the Consumer Financial Protection Bureau (CFPB) at their headquarters in Washington, DC, US, May 14, 2021. REUTERS/Andrew Kelly

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WASHINGTON (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) said on Tuesday it had ordered LendUp Loans to pay a $100,000 fine, halt issuance of new loans and halt collection of some outstanding loans after repeated misleading marketing and other fair lending operations. violations.

The French central bank said the Oakland, California-based lender, which provides financing to online consumers traditionally overlooked by banks because they are considered too risky, has approved the order.

“We are shutting down the lending operations of this financial technology due to the repeated lying and illegal deception of its clients,” said Rohit Chopra, Director of CFPB.

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A spokesperson told Reuters that LendUp, which has attracted the attention of notable Silicon Valley investors, expects to finish its operations in early 2020.

Tuesday’s order follows a lawsuit brought by the CFPB in September 2021 alleging that LendUp continued to violate a 2016 order arising from similar charges.

LendUp deceived consumers about the benefits of frequent borrowing; violated the 2016 CFPB order; And, the agency added, it failed to provide timely and accurate notifications of adverse actions to clients as required by fair lending laws.

In 2017, PayPal Inc. (PYPL.O) joined LendUp as part of its effort to gain an advantage over competitors in the highly competitive digital payments market.

The CFPB was created in the aftermath of the 2007-2009 global financial crisis to suppress predatory lenders. Progressives and advocates have long criticized short-term lenders for stressing borrowers with annual interest rates that often reach several hundred percent.

Chopra, who has been tapped by Democratic President Joe Biden to help address lending inequalities, said his ambitious agenda includes increasing the agency’s law enforcement focus on companies that repeatedly violate consumer finance laws, with a particular focus on fintech and other companies. technology companies.

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(Katanga Johnson reports in Washington). Editing by Dan Grebler

Our Standards: Thomson Reuters Trust Principles.

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