WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Climb Credit, Inc., a student loan provider, and its principal shareholder, 1/0 Holdco LLC. The suit alleges that the companies engaged in deceptive practices by misleading students about the value and outcomes of training programs offered by their partner schools, while also obscuring the true costs of their loans.
The CFPB’s claims focus on accusations that Climb Credit and 1/0 misrepresented the quality of educational programs, falsely promoting them as thoroughly vetted for return on investment and value. These programs, which include vocational paths such as coding bootcamps, were marketed using “Quality Verified” badges and a comparison tool that touted high returns on investment, despite the defendants’ alleged failure to conduct rigorous vetting.
CFPB Director Rohit Chopra stated, “Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs.” The bureau’s investigation suggests that these tactics may have adversely affected tens of thousands of students, leading them to rely on Climb Credit as a trustworthy intermediary in selecting educational programs financed through its loans.
The lawsuit further accuses the defendants of ignoring internal red flags, such as inadequate program assessments and low confidence in job placement rates, which were nevertheless presented to prospective borrowers as having passed the company’s analysis. Additionally, Climb Credit is alleged to have violated federal consumer financial laws by failing to properly disclose finance charges and annual percentage rates, thereby obscuring the true cost of loans from consumers.
As part of its enforcement action under the Consumer Financial Protection Act and the Truth in Lending Act, the CFPB is seeking to halt these purportedly unlawful practices, secure redress for affected borrowers, and impose a civil monetary penalty. Any penalties collected would be directed to the CFPB’s victims relief fund, aimed at providing restitution to those harmed by such deceptive practices.
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