An online lender has agreed to pay more than $1 million to settle a lawsuit alleging violations of the Military Lending Act, including paying up to $300,000 in refunds to service members and family members covered by the law.
In a lawsuit filed Dec. 4 in federal court, the Consumer Financial Protection Bureau accused LendUp Loans, LLC, of Oakland, Calif., of charging in excess of 36 percent annual percentage rate to active duty members and dependents, as well as other violations of the Military Lending Act. The allegations involved more than 4,000 loans made to more than 1,200 borrowers since October, 2016, according to the lawsuit, filed in the U.S. District Court in the Northern District of California.
If approved by the court, the settlement filed Jan. 19 would require LendUp to refund interest, fees and other money to the borrowers, and prevent the company from future violations of the Military Lending Act. LendUp would also be required to correct or update information provided to consumer reporting agencies about these borrowers.
This action “is the first resolution in the Bureau’s broader sweep of investigations of multiple lenders that may be violating the MLA,” CFPB officials stated in their announcement of the settlement.
LendUp will also pay a $950,000 civil money penalty to the CFPB, under the provisions of the settlement.
The settlement acknowledges that LendUp has already refunded interest and fees to a number of the borrowers. LendUp neither admits nor denies the allegations made in the lawsuit.
LendUp officials said they reported the problems themselves to CFPB and fixed the problem three years ago.
The settlement addresses the final closure “of matters we proactively self-reported to the CFPB in 2017,” LendUp officials said in a statement to Military Times. “The issue was remedied by LendUp at that time. For impacted customers, LendUp refunded all interest and fees, whether or not mistakenly collected, and removed all improperly made [Military Lending Act] loans from credit reporting that had delinquency.”
LendUp stopped making loans that didn’t comply with the law in 2017, and they don’t offer loans to active duty service members, officials stated.
The proposed settlement calls for $300,000 to be paid to the affected customers, and the money already paid to these customers will be included in that $300,000. Information was not available from LendUp on how much money has already been paid to customers.
If the total amount of money provided to customers is less than $300,000, LendUp must give the difference to the CFPB. The CFPB will be allowed to use those remaining funds to pay additional restitution to the affected customers; or CFPB can deposit the remainder in the U.S. Treasury.
“We have worked intently and collaboratively to prioritize and bring full relief to our impacted customers and are pleased to have closured with the CFPB,” stated LendUp officials.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.