CFPB awards $40M for LendUp misled users

The Consumer Financial Protection Bureau (CFPB) is compensating 118,101 consumers with nearly $40 million after being misled by the fintech company LendUp Loans.

LendUp, headquartered in Oakland, California, promised consumers lower interest rates on future loans and access to larger loan amounts through its "LendUp Ladder" scheme. This involved repaying loans promptly and participating in free online courses. Despite these promises, many customers did not receive the promised benefits.

Over the years, the CFPB has taken action against LendUp for misleading marketing and violating fair lending laws, including a 2016 directive to correct its marketing statements and a 2020 lawsuit for breaching the Military Lending Act. Most recently, in September 2021, the CFPB sued LendUp for not honoring its previous commitments and misinforming consumers about the advantages of repeat borrowing, leading to a settlement where LendUp agreed to cease issuing new loans and to pay penalties.

The compensation totaling $39,833,748.87 is sourced from the CFPB's victims relief fund. Affected consumers will receive their payments via Epiq Systems on May 8, 2024.

Visa unveils POS lending API

Visa has launched an application programming interface (API)-based service dubbed ‘Embedded Lending’ that allows merchants to offer installment loans at the point of sale (POS).

It's a part of its wider strategy to drive digital inclusion, help borrower, and businesses, and spark economic growth.

The platform is introduced to circumvent the need for a separate loan origination activity, thereby simplifying the lending process.

Ryan McEndarfer, CEO at Bank Payments, asserts the halo effect caused by the service will boost customer loyalty and repeat sales.

However, merchants need to consider if they should carry the cost of capital or outsource it to a financial partner.

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