The Consumer Financial Protection Bureau (CFPB) has announced its suit against Climb Credit and its largest shareholder 1/0 for misrepresenting the quality of its training programmes at partner schools.
Climb Credit, a student lender, allegedly made false claims about graduate hiring rates and salaries at its partner schools and programmes, inducing students to take out loans.
The cases alleges Climb Credit and 1/0 claimed to vet partner schools for “outcomes and value” but offered loans for programmes that failed their own return-on-investment analysis, or which were not analysed at all. The CFPB alleges in over 700 Climb Credit told potential borrowers that a school had passed the return-on-investment analysis even when the defendants internally acknowledged they had low confidence in the school’s claimed job placement rate.
“Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs,” said Rohit Chopra, CFPB, director. “Tens of thousands of students may have been impacted by Climb’s actions, and the CFPB is suing Climb and its investor overlord to halt these activities and get relief for students.”
Additionally, the lawsuit alleges Climb Credit failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures.
In 2020, the Student Borrower Protection Center (SBPC) accused the fintech of engaging in misrepresentation of educational programmes and steering borrowers towards for-profit schools.
The CFPB stated their aim is to stop the unlawful conduct, redress for harmed borrowers, and a civil money penalty, which would be paid into the CFPB’s victim relief fund.
Climb Credit is headquartered in Las Vegas and its co-founder Vishal Garg is also CEO of Better.com. He was noted for firing 900 employees on a Zoom call in 2020. Climb Credit have not responded to Finextra’s request for comment at this time.