WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has announced enforcement actions against Climb Credit, a private student lender, and its controlling investor, 1/0 (“One Zero”), for engaging in deceptive advertising practices and failing to fully disclose loan costs. The CFPB’s proposed order, if approved by the court, would require Climb Credit and its affiliates to cease certain marketing practices, disclose accurate financial information, and pay a $950,000 civil money penalty into the CFPB’s victims relief fund.
The CFPB’s investigation revealed that Climb Credit misled borrowers about the quality of its partner schools’ educational programs and graduates’ job placement success. The company claimed it rigorously vetted partner schools for successful job outcomes and salaries, but often failed to do so or relied on unreliable data. This created false impressions about the value of the programs, luring students into loans under misleading terms.
Loan Cost Violations
The CFPB also found that Climb Credit failed to disclose critical loan costs, including origination fees in the finance charges, violating the Truth in Lending Act. At least 15,000 consumers were impacted by these omissions, accumulating over $6 million in undisclosed fees. Additionally, Climb failed to provide accurate annual percentage rates in its marketing materials, further obscuring the true cost of borrowing.
Proposed Remedies
If the court approves, the CFPB’s proposed order would impose several requirements on the defendants to address these violations:
- Truthful Advertising: Climb Credit will be required to inform consumers that it does not verify the quality of educational institutions it finances. The company must also cease making claims about student outcomes such as job placement or salary improvements in its advertising.
- Penalty Payment: A $950,000 civil money penalty will be paid to the CFPB’s victims relief fund to assist affected borrowers.
Broader Implications
This enforcement action aims to hold lenders accountable for misleading practices that harm consumers, especially in the student loan sector. “Climb Credit and its investors lured people into loans under false pretenses,” said CFPB Director Rohit Chopra, emphasizing the importance of transparency in consumer financing.
By addressing these deceptive practices, the CFPB seeks to safeguard borrowers from financial harm and ensure compliance with federal lending laws.
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