The Consumer Financial Protection Bureau (CFPB), a government agency that protects people in financial matters, is suing Climb Credit, a company that gives loans to students.
What Climb Credit allegedly did wrong
Lied about schools: They told students that the schools they worked with were good and would help them get jobs, but that wasn't always true.
Hid the true cost of loans: They didn't tell students the real cost of their loans, making them seem cheaper than they were, the CFPB said.
Tricked students: They basically tricked students into taking out loans for schools that weren't very good.
What the CFPB wants
Make them stop: They want Climb Credit to stop the practices that it says are harming students.
Help the students: They want Climb Credit to pay back the students they harmed.
Punish the company: They want Climb Credit to pay a fine.
More about the Climb Credit case
The CFPB sued student lender Climb Credit, and its largest shareholder 1/0 (“one zero”), for inducing students to take out loans by misrepresenting the quality of the training programs at their partner schools and making false claims about graduates’ hiring rates and salaries.
The lawsuit alleges Climb Credit and 1/0 claimed to have vetted its partners’ schools for “outcomes and value” but in fact offered loans for programs that had failed the defendants’ own return-on-investment analysis or which they had not analyzed at all.
The lawsuit also alleges that the defendants failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures. The CFPB is asking the court to order Climb Credit and 1/0 to stop their illegal practices, compensate the borrowers they harmed, and pay a civil penalty to the CFPB’s victim relief fund.
“Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs,” said CFPB Director Rohit Chopra. “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.”