Consumer Financial Protection Bureau Settles with LendUp Loans, LLC for Military Lending Act Violations

Consumer Financial Protection Bureau

WASHINGTON, D.C. — The Consumer Financial Protection Bureau has filed a proposed settlement to resolve its December 4, 2020 lawsuit against LendUp Loans, LLC (LendUp) alleging violations of the Military Lending Act (MLA).

The action is the first resolution in the Bureau’s broader sweep of investigations of multiple lenders that may be violating the MLA. LendUp, which has its principal place of business in Oakland, California, is an online lender that offers single-payment and installment loans to consumers. If entered by the court, the proposed settlement would require LendUp to provide $300,000 in redress to consumers and to pay a $950,000 civil money penalty. The settlement would also enjoin LendUp from committing future violations of the MLA and from collecting on, selling, or assigning any debts arising from loans that failed to comply with the MLA. It would also require LendUp to correct or update the information it provided to consumer reporting agencies about affected consumers.

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The MLA puts in place protections in connection with extensions of consumer credit for active-duty service members and their dependents, who are defined as “covered borrowers.” These protections include a maximum allowable annual percentage rate of 36%, known as a Military Annual Percentage Rate (MAPR), a prohibition against required arbitration, and certain mandatory loan disclosures. The Bureau’s complaint, filed in the United States District Court for the Northern District of California, alleged that since October 2016, LendUp made over 4,000 single-payment or installment loans to over 1,200 covered borrowers in violation of the MLA. The Bureau specifically alleged that LendUp’s violations of the MLA included extending loans with a MAPR that exceeds the MLA’s 36% cap, extending loans that require borrowers to submit to arbitration, and failing to make certain required loan disclosures, including a statement of the applicable MAPR.

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The complaint is available at: https://files.consumerfinance.gov/f/documents/cfpb_lendup-loans-llc_complaint_2020-12.pdf.

The proposed stipulated final judgment and order is available at: https://files.consumerfinance.gov/f/documents/cfpb_lendup-loans-llc_stipulated-final-judgment-order_2021-01.pdf.

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