The Federal Trade Commission sued LendingClub Wednesday alleging it cheated customers by improperly deducting payments after claiming it charged “no hidden fees.”
The lawsuit also alleges the peer-to-peer online lender charged customers twice some months, and billed some customers who had already canceled automatic payments, according to Bloomberg.
“This case demonstrates the importance to consumers of having truthful information from lenders, including online marketplace lenders,” Reilly Dolan, acting director of the FTC’s Bureau of Consumer Protection, said in a statement. “Stopping this kind of conduct will help consumers make informed choices about loan offers.”
LendingClub pushed back against the allegations insisting it had a “longstanding record of consumer satisfaction.”
“We support the important role that the FTC plays in encouraging appropriate standards and best practices. In this case, we believe the FTC is wrong, and are very disappointed that it was not possible to resolve this matter constructively with the agency’s current leadership,” LendingClub’s statement read.
The lawsuit also alleges that LendingClub told loan applicants that investors had backed their loans even when it was unlikely that they’d ever receive a loan, the FTC said.
The practice caused consumers to delay seeking credit elsewhere, according to the FTC.
LendingClub’s shares fell 14 percent to $2.80 Wednesday.
