LendingClub Hidden Fees Lawsuit Investigation

Members of the military have special rights under the Military Lending Act that protect them when seeking personal loans while on active duty, including the right to have a dispute filed in court.

If you received a LendingClub loan while on active duty, contact our attorneys to learn more about your rights.

The FTC complaint alleges that LendingClub’s advertising frequently touts that it has no hidden fees, including in online banner advertisements, paid blog posts, television and radio advertising, and even through the mail. However, when LendingClub presents consumers a loan offer, it obscures an origination fee it deducts from the loan amount it promises. As a result, the amount of money that LendingClub disburses to borrowers is substantially smaller than the promised loan amount. LendingClub also charges interest on the money it deducts as an origination fee, even though customers never receive the money in their account.

On desktop computers, a small green dot appears next to the word APR. This green dot mentions an up-front origination fee collected out of the borrower’s loan proceeds. If a borrower does not click on this green dot, there is no disclosure on this page where a customer could learn about the origination fee.

On a mobile device, there is no green dot. If a borrower happens to tap on the APR, a popup would show that mentions the origination fees.

According to the FTC complaint, LendingClub is well aware that many consumers don’t know about the origination fee. LendingClub’s training materials list “I didn’t receive the full loan amount” as one of the two main post-disbursement complaints from borrowers. LendingClub quarterly complaint reviews have proposed “highlighting [the] origination fee” to lower the number of complaints. Similarly, one LendingClub compliance review noted: “The origination fee is disclosed on the offer page tooltip, but is not readily apparent unless an applicant clicks on the tooltip. This omission could be perceived as deceptive as it is likely to mislead the consumer.” According to one LendingClub investor, LendingClub ads “prominently state [ ] there are ‘No Hidden Fees’ yet the documents we reviewed contain a large ($300 to $450) origination fee that only appears once.”

In addition to the hidden fee described above, the FTC complaint explains that LendingClub tells borrowers that their loan has been approved before the borrower’s application is actually approved. In reality, LendingClub performs additional credit review processes and rejects tens of thousands of borrowers after it has already told them that their loan was approved. According to the FTC complaint, this may cause borrowers to turn down offers from competitors or stop looking for credit because they believed they already obtained a loan from LendingClub.