Despite the winds of deregulation blowing in Washington, DC, on April 25th the Federal Trade Commission (FTC) filed suit against the nation’s largest online lender (Lending Club) for allegedly engaging in deceptive practices.
The online lender issued a press release contesting the allegations made by the FTC as “legally and factually unwarranted.” See here. It further explains in a detailed blog post its side of the story and its approach to consumer disclosure at issue in the FTC’s complaint.
This action is a significant development for online lenders at a time when the other federal agency with primary responsibility for consumer financial protection, the CFPB, has seen a change in leadership and significantly curtailed its enforcement activities pending reviews of its policies and procedures. It is notable that the FTC took action with only two commissioners available to vote on moving forward and it will be interesting to see whether this an isolated case involving a legacy investigation or whether it portends a more activist enforcement mode for the FTC under Trump administration-appointed leadership. In the meantime, all online lenders would be wise to evaluate the statements and disclosures made in their advertisements and on their websites to ensure that they are in compliance with applicable laws, especially laws prohibiting unfair and deceptive acts and practices such as the Federal Trade Commission Act and similar state laws.