The Federal Trade Commission has sued LendingClub Corp (NYSE: LC), accusing the online lender of deceiving clients with hidden fees, withdrawing
double payments from client accounts and continuing to charge borrowers even after they paid off loans.
The lawsuit alleges LendingClub failed to confirm consumers' acknowledgement of its information-sharing policy; falsely told
loan applicants their loans were investor-backed to delay pursuits of loans elsewhere; and falsely and outspokenly promised loans
with "no hidden fees."
The complaint filed in U.S. District
Court Wednesday accuses the firm of ultimately causing “substantial injury to consumers."
Benzinga left messages with LendingClub on Wednesday seeking comment on the lawsuit.
Why It’s Important
FTC lawsuits historically pressure share prices, and this particular
report inspired a 7-percent mid-day sell-off.
So far, no Street authorities have commented on the case and whether it affects the bull-leaning consensus. The Buy-Hold ratio
for LendingClub remains 6-10, and no analysts have Sell ratings on the stock.
Several companies in the lending space will be on hand at the Benzinga Global
Fintech Awards next month. These fintech companies look to disrupt the current model, and this event is a chance to
showcase the leading minds and disruptors in financial technology.
What’s Next
The FTC said it's intent on ending LendingClub's practices.
“Stopping this kind of conduct will help consumers make informed choices about loan offers," Reilly Dolan, acting director of
the FTC’s Bureau of Consumer Protection, said in a statement.
LendingClub's stock was trading at $2.94 at the time of publication Wednesday, down 9.82 percent on the day.
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