1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

ALDEN F. ABBOTT

Acting General Counsel

KATHARINE ROLLER

MATTHEW WILSHIRE (CA Bar No. 224328) 

DAVID LINCICUM

Attorneys 

Federal Trade Commission

600 Pennsylvania Avenue, N.W. 

Washington, D.C. 20580 

Phone: (202) 326-3582 

Facsimile: (202) 326-3768 

Email: kroller@ftc.gov; mwilshire@ftc.gov; dlincicum@ftc.gov

Attorneys for Plaintiff Federal Trade Commission

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

 v. 

LENDINGCLUB CORPORATION,

d/b/a Lending Club, 

Defendant.

Case No. ____________ 

COMPLAINT

 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 1 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

2 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges:

1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act 

(“FTC Act”), 15 U.S.C. § 53(b), and the Privacy of Consumer Financial Information Rule 

(“Privacy Rule”), 16 C.F.R. Part 313, recodified at 12 C.F.R. § 1016 (“Reg. P”), and issued 

pursuant to Sections 501-504 of the Gramm-Leach-Bliley Act (“GLB Act”), 15 U.S.C. §§ 6801-

6803, to obtain permanent injunctive relief, rescission or reformation of contracts, restitution, the 

refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief for 

Defendant’s acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and 

the Privacy Rule, 16 C.F.R. Part 313, recodified at 12 C.F.R. § 1016. 

JURISDICTION AND VENUE

2. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 

1345, and 15 U.S.C. §§ 45(a) and 53(b).

3. Venue is proper in this district under 28 U.S.C. § 1391(b)(1), (b)(2), (c)(2), (c)(3), and 

(d), and 15 U.S.C. § 53(b).

INTRADISTRICT ASSIGNMENT

4. Assignment to the San Francisco Division is proper because at all relevant times 

Defendant has conducted business, marketed its services, and provided its services in the county 

of San Francisco.

PLAINTIFF

5. The FTC is an independent agency of the United States Government created by statute. 

15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which 

prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also enforces 

the Privacy Rule, 16 C.F.R. Part 313, recodified at 12 C.F.R. § 1016, which requires financial 

institutions to protect the privacy of consumer information. 

6. The FTC is authorized to initiate federal district court proceedings, by its own attorneys, 

to enjoin violations of the FTC Act, and the Privacy Rule, and to secure such equitable relief as 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 2 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

3 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

may be appropriate in each case, including rescission or reformation of contracts, restitution, the 

refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 

56(a)(2)(A), and 16 C.F.R. Parts 313 & 314. 

DEFENDANT

7. Defendant LendingClub Corporation, also doing business as Lending Club (“Lending 

Club”), is a Delaware corporation with its principal place of business at 71 Stevenson Street, 

Suite 300, San Francisco, California 94105. Lending Club transacts or has transacted business in 

this district and throughout the United States. At all times material to this complaint, Lending 

Club has advertised, marketed, and distributed unsecured personal loans to consumers 

throughout the United States. 

COMMERCE

8. At all times material to this Complaint, Defendant has maintained a substantial course of 

trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. 

§ 44. 

DEFENDANT’S BUSINESS ACTIVITIES

9. Defendant offers unsecured consumer loans through its website, www.lendingclub.com. 

Defendant advertises its loan offerings and handles consumer interactions during the life of the 

application and loan, including application processing, assessment of creditworthiness, and loan 

servicing, although the loans are formally issued by a bank. 

10. Defendant lures prospective borrowers by promising “no hidden fees,” but when the loan 

funds arrive in consumers’ bank accounts, they are hundreds or even thousands of dollars short 

of expectations due to a hidden up-front fee that Defendant deducts from consumers’ loan 

proceeds. Defendant is persisting in this conduct despite warnings from its own compliance 

department that Defendant’s concealment of the up-front fee is “likely to mislead the consumer.” 

Defendant also has misled consumers about whether their loan applications have been approved, 

stringing consumers along by, for example, telling consumers, “Hooray! Investors Have Backed 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 3 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

4 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Your Loan” when Defendant knew many such consumers would never receive a loan. Based on 

these misrepresentations, consumers believed that Defendant’s funds were forthcoming, and did

not apply for credit with Defendant’s competitors. And with numerous consumers who have 

received a loan, Defendant has withdrawn double payments from consumers’ accounts and 

continued to charge consumers who cancelled automatic payments or even paid off their loans 

entirely, costing consumers overdraft fees and preventing them from making other payments. 

11. In addition, Defendant failed to provide consumers with clear and conspicuous privacy 

notices. 

Consumers’ Application Process

12. Many consumers first learn of Defendant’s products through its advertisements. In 

those advertisements, Defendant often represents that it charges “no hidden fees.” For example, 

many of Defendant’s mail advertisements include a line that states, “FEES: There are no hidden 

fees or prepayment penalties.” An example of such an advertisement is attached as Exhibit A. 

Many other mail advertisements prominently represent in bold type, “No hidden fees or 

prepayment penalties,” directly underneath a large, colorful exclamation point. An example of 

such a representation from Defendant’s mail advertisements appears below. An example of an 

advertisement in which this representation appears is attached as Exhibit B. 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 4 of 30

I 

• 

No hidd.n f- or 

p~paymant p•nalti• 

We offer llexible oan amounts and 

terms. there are NO hidden fees and no 

penalties for paying off your loan earl¥-
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

5 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

13. Defendant’s online advertisements also frequently represent that its loans contain “no 

hidden fees.” An example of an online banner advertisement making this representation appears 

below. 

 

14. In addition, Defendant created online advertising in the form of paid blog posts 

promoting its product on popular financial blogs; many of these posts included the “no hidden 

fees” representation. For example, a blog post that Defendant created that still appears on the 

credit website Quizzle states, “[O]nce you’re approved, your money goes straight into your 

account, with no hidden fees.” 

15. Consumers who view Defendant’s online, mail, or television advertisements or hear 

Defendant’s radio advertisements are directed to apply for Defendant’s loans by visiting 

Defendant’s website, www.lendingclub.com. When consumers visit the home page of 

Defendant’s website to apply for a personal loan, they have seen a screen similar to the 

following: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 5 of 30

i;nLendlngGlub 

Cut ~own your debt with 

fixect monthly payments 

o 1-li.dden Fees 

f) o Prepayment Penalties 

View Your Offers 

Yo u'rn a eady pre,sapprovedl 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

6 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

The page has asked consumers “How much do you need?” 

16. Consumers who visit Defendant’s home page on a mobile device see a screen similar to 

the following: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 6 of 30

i;!! LendingClub 

Personal Loans Auto Refinancing 

Financial Innovation 

Lending Club is the world's largestonline 

marketplace connecting borroV11Srs and 

investors. W3're transforming the banking 

system to make credit more afordable and 

investing more rewarding. We operate at a 

Business Loans 

INVESTORS' 

Patient Solutions 

•••• ••• •••• •••• 

BORR'1WER 

C:' 

~ Help 

Investing How It Works At>out us 

Personal Loans up to $40,000 

I How much do you need? 

[ What is it for? ,, 

[ 1-iow is your credit? ,, 

12] Respond to mail 

Check Your Rate 

Won't impact your a-edit score 

Featured Borrower 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

7 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Again, Defendant asks consumers, “How much do you need?” 

17. Consumers next see a page titled “Check Your Rate,” similar to the example below:

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 7 of 30

Personal Loans up to 

$40,000 

Ho\ai rruch do you need? 

What is it for? 

How is your credit? 

Check Your Rate 

v\bn't i~t your credit score 

orlearn about Investing 

Financial Innovation 

Lending Club is the world's largest online marketplace 

connecting borrowers and investors. We're transforming the 

banking system to make credit more affordable and investing 

more rewarding. We operate at a lower cost than traditional 

bank lending programs and pass the savings on to borrowers 

in the form of lower rates and to investors in the form of solid 

returns. 

INVESTORS' 

4 

•••• • •• .... •••• 

BORROWER 

Monthly Paymeo•• 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

8 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

18. Once consumers complete this page, Defendant conducts a credit pull on applicants’ 

credit reports. Defendant then immediately rejects those consumers that it determines do not 

meet certain baseline criteria. Defendant refers to this step as “front-end” denial. Consumers 

who are rejected on the front end are not shown any loan offers from Defendant. 

19. If Defendant determines that a consumer meets Defendant’s baseline lending criteria, 

Defendant has presented consumers a page of loan offers similar to the following: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 8 of 30

Check Your Rate 

Get a custom rate for your $10,000 loan in 1 click 

Application Type LI _1_nd_iv_i_du_a_1 _________ •_,I 

First Name 

Last Name 

Street Address 

City 

State Choose One 

Zip Code 

Date of Birth 

Email Address 

Create Password 

Yearly Individual Income 

Yearly Additional Income 

(Optional) 

Month • Day Year 

(.J Yes, I agree to the 10110..;ng: 

the Terms Of Use 

the ESIGN Act Consent that enables 

all transactions and disclosure delivery to occur electron ically 

• the Credit Profile Authorization and 

for Lending Club to verify my income. 

Get Your Rate 

How it Works Privacy Help 

Checking your rate will not_-

affect your credit score. iiiiill 

Need Help? 

Get Online Help 

IJ Contact us 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

9 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

On this page, Defendant presents consumers with bold-faced offers of a specific “Loan 

Amount.” The only mention of fees on this page is the representation, “No hidden fees,” 

accompanied by an icon of a smiling masked bandit. 

20. On a desktop, a small green dot with a white question mark inside appears beside the 

word “APR.” Defendant describes this dot as the “tooltip.” If a consumer clicks on the tooltip, a 

pop-up bubble appears containing a small-print disclosure such as the following: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 9 of 30

!;!! LendingClub How ,tWlrks Privacy Sign Out Help 

Excellent! You Qualify for a Credit Card Refinance Loan 

We have a great rate for you: 

$10,000 $329.24 (36 payments) 11.39% 14.98% Loan Amount Monthly Payment Interest Rate APR Q 

Get Loan 

§ ~ . @ Fixed interest rate No prepayrrent penalties No hidden fees 

You also qualify for these loan amounts: 

$16,000 $526.78 36 11 .39% 14.98% Get Loan Loan Amount Monthly Payment Months Interest Rate APR Q 

$372.21 60 13.99% 16.81% Get Loan Monthly Payment Months Interest Rate APR Q 

ie:1A nnn ctAt:::n OA ~~ 11 "J:00/_ 1 .A OllOI_ 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

10 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

21. At the bottom of the pop-up, after an explanation of the term “APR,” the text mentions an 

up-front fee that is collected out of consumers’ loan proceeds. If a consumer does not click on 

the tooltip, the pop-up bubble does not appear, and there is no other disclosure on this page from 

which a consumer could learn of the existence of the up-front fee. A consumer does not need to 

click on the tooltip in order to move forward with the loan application. 

22. On a mobile device, the loan offers page also does not mention any fees, other than the 

representation, “No hidden fees.” An example of the mobile loan offers page appears below: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 10 of 30

How it Works Privacy Sign Out Help 

Excellent! You Qualify for a Credit Card Refinance Loan 

i----: 7 

$10,000 

Loan Amount 

Fixed interest rate 

We have a great rate for you: 

$308.73 (36 payments) 

Monthly Payment 

Get Loan 

~ 

L=J 

No prepayment penalties 

6.99% 

Interest Rate 

9.41% 

APR 0 

No hidden fees 

APR stands for Annual 

Percentage Rate, and is a 

measure of the total cost of 

credit as an annual rate. The 

APR is comprised of the 

annual interest you pay at a 

rate of 6.99% - which is 

ultimately paid each month 

to the investors who enable 

your loan - and a one-time 

ori gination fee of 3.5% 

($350.00) that is collected 

out of your loan proc eeds. 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

11 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

If a consumer were to tap on the APR, he or she would be shown a pop-up bubble similar to that 

shown to a consumer viewing the loan offers page on a computer who clicks on the tooltip. 

Otherwise, the pop-up bubble would not appear, and there is no other disclosure on this page 

from which a consumer could learn of the existence of the up-front fee.

23. Although Defendant tells consumers that its loans contain “No hidden fees,” Defendant 

nevertheless charges consumers an up-front fee that is not clearly and conspicuously disclosed. 

This fee is calculated as a percentage—on average, approximately 5 percent—of the consumer’s 

requested loan amount, and often amounts to more than a thousand dollars. 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 11 of 30

E:©ellent! You Qualify for a Oreilfrt Card RJefin:ance Loan 

We have a great rate for you: 

$110,000 

Loan Amo11 t 

Monthly Payment $329.24 

Months 36 

Interest Rate 11 .39% 

APR 14.98% 

Get Loan 

Filced · erest ra e 

You also qualify for these loan amounts: 

$16,000 

Per l.bnt l,bnths Interest Rate APR 

$526.78 36 H .39% 14.98% Get Loa n 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

12 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

24. Defendant deducts the hidden up-front fee from the promised “Loan Amount” before 

disbursing the loan funds to the consumer. As a result, the amount of money that Defendant 

disburses to a consumer’s bank account is always substantially smaller than the promised “Loan 

Amount.” And because consumers must pay interest on the entire “Loan Amount,” including the 

fee, Defendant’s hidden fee leaves consumers paying interest on principal that they never 

received.

25. Consumers frequently complain to Defendant that they were not aware of the up-front fee 

that would be deducted from the full “Loan Amount” that they requested. For example, one 

consumer reported that he applied for $15,000 to cover relocation expenses, and was surprised to 

receive only $14,000—an amount insufficient to cover his relocation—after Defendant deducted 

a $1,000 up-front fee. Another consumer applied for a $30,000 loan in order to consolidate his 

credit card debt at a lower interest rate; because Defendant deducted a $1,200 up-front fee, 

however, the consumer was unable to pay off his credit card debt in full, leaving him with more 

bills to pay than he had before. 

26. Defendant is aware that many consumers do not know about the up-front fee and expect 

to receive the full loan amount. Defendant’s training materials for customer service 

representatives list “I didn’t receive the full loan amount” as one of the two main postdisbursement complaints that representatives should be prepared to address. And Defendant’s 

quarterly complaint reviews have proposed “highlighting [the] origination fee” to address 

complaint volumes. In addition, internal compliance reviews repeatedly cite the concealment of 

the fee as a significant problem for consumers. For example, one 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.” One of Defendant’s largest investors also warned Defendant that the upfront fee “is not clear and conspicuous and could be subject to a UDAAP claim,” referring to an 

unfair or deceptive acts and practices claim. The investor’s legal counsel also told Defendant 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 12 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

13 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

that Defendant’s ads “prominently state[] that there are ‘No Hidden Fees’ yet the documents we 

reviewed contain a large ($300 to $450) origination fee that only appears once,” and warned this 

“relative obscurity” could make it a target in a law enforcement action. 

27. Defendant has ignored these warnings. Rather than improving over time, Defendant’s 

violations have become more egregious over the years: when redesigning the application flow in 

the winter of 2014, Defendant increased the prominence of the “No hidden fees” representation 

and decreased the prominence of the tooltip. 

28. On the Loan Offer page, where a consumer is presented with the “No hidden fees” 

representation, the accompanying bandit icon, and the “Loan Amount,” the consumer may accept 

the offered terms by clicking a button reading “Get Loan” or “Continue.” If a consumer clicks 

on this button, he or she is then sent to a page titled “Loan Details,” similar to the example 

below: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 13 of 30

!;!lLendingClub f-bw ~ 'lwrks Privacy Sign Out Help 

Loan Deta ils 

" --- ,- -, , ' , ' 

+ I ' + I 4 I 

' ' I • , • , .. . .. . -.. Check '!bur Rate Loan Details 

Just a few more details before you get your 

credit card refinance loan 

Personal Information 

PnmaryPhone C~-----------~ I

Choose one 

Social Security Number 

Employment Status Choose one 

f-bwdid you hear about us? (Optional) Choose One 

Next • 

P!t!IW •ni.t you, homt or 

mobi!t phont numbtr 

My Home 

Need Help? 

Get Online Help 

IJ Contact us 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

14 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

The screen states, in large type: “Just a few more details before you get your [purpose] loan.” 

The same representation appears on the mobile version of the “Loan Details” page. 

29. Consumers who click the “Next” button are then shown a page titled “Loan Rate & 

Terms.” An example of the desktop version of the page appears below: 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 14 of 30

!:!!LendingCllub 

Loan IRate & Terms 

+ 0 + ,,. --... , ' I 

. . . ·-· 

TRUTH IN LEN DING DISCLOS RE STATEMENT 

u,_, 

~ bBSl"K 

Bofrl)lm!r 

- 2156ol..,ITl8(Bra eEo1 ~ ISil Dll 

~"La"'Cl'!' Ul 11 

)5 

PER CENTAOE 

..... 

,..,... 

$. .24 

lll9.50 

fltl'i;,jCECH/1.AGE ,lv,wunlfri~ d Total-of Plty~ lll 

dolarwnrom lhe- lkama.:mcrti1edt ThcitmOIJft)1)111,;,1 

cre:tu,fl c:;-...: ,n ~ :.edtol'tl'- cr,m ~ p.l•: aen yc:u 

~betnrl 1H, Iii 

a::»11.UCF¥.Qf'D 

'tli119fl J)i]yl'1)):n~ iJrt: !IU'.J(t:) 

"toir1rsr. P:l'JIMnl 'MIi Df! ,111e me m nm Wr cne esu:1 r,:e of 

v,ou- io.an ar.:i 1">£in mor 'I mer€1-an£ir F&>,mer al'tl due on m F.!~ur~ oa1e e.Jen morm. thrur oi..,;, oaw n. me 29n . • Dlfl <1 r 31R arw=I ~ ,c;l,l'TI:if'Tf m.)11111 Ii ~hDffil y,our 0t1~nl'!11'1I bl:I on tr'lel.l':!l D:ly<0rm mo nltl. 

~..., W. 1.1 "'111~ •l~IIL'tl\lu~~ 1111.mlls~ iu1n lh1:1 itc:1.1ti1 11w 

0-:m., ,or,c..ir1C1 an. 

Lare c. tiar~et;· 11'your p-c1~amv-us ..iooryciur t5 <d ay ~ri;,:;e pe.rlM )'OU idl tie i:; 1:11118d Gi ltiite i'OO Er:1 U1:11 Iha gr&at er o 

5. O.,Qr tne l:Jl! p~mernYnOunt or 1-15. Tt1 1s ree e maro£oa oNy -0nce aer 1e paym£inL 

~~nl polK'/ If ~u JI.I'/ 11 f ~ur ]o;Jl"I ~.:irly )'OU ~I net be: ch;r;i~ ;a ~ n~ty In lh~ ~ crla full p~pay~ nt, )'DU may 

tte urtit1£11:l m a 1'01.Jrnl or oart 011:fle nnirl(e ch;1111 

')IS!f! )'OIJ borr~r -111 rr,e,11( ro, nny .ad1lonll klro,m,ili®, lbOO, floopa;rTllf!n11 <1era11.1111 «-OCl"ter mmtert retMed to ;.x.-

lOaH, 

Omt!r !Mf1 fMiYt'renl iill~ . [1!:f11S me~ II:!) 'fii ll MC:rl:!Me If ~00 IN:i:!1~1!' ~it lhai'l 100'!,\, auna ilQ. ~1)31(11k!!l:t (Jf 

Iha u Nlm;ata • mDUr.11 of thll loan~ yau, APR M l not c hang.1. 511:1,tgcl i o )'our r1gh1 La c anc at, ;,in unncu141d loan 

llll)' l5t1JE'fl)fl' 1eu. tn11nffitl ftll reque:UMIOOl'l&moont I rtl!lt: nCM10Dl!it h.Jncledb)'1tl?end'Olltnt! llstng per 

lol.il Am>unt aq~bnf 'S1,0 000.ll) 

Ofl!Jll'\illlOfl Feoo: '5500.00 

lbl:lll Pr001mt RMe rteel. 1-"9,5 0.00 

Lm.uc c- eS!i'U P~,~1 rei:i. '/Alen 3 p.a~·m&n t fa il!! ard 18 relei:lfd l.¥J r,1H OOn l !.'DU .r., 11 be ch:ug@d .an Uns1m:e8slil 

Payment Fee ot S 1~ bJ cover the co5l Lendl"'CI 01.0 nun on he tram.icbon. 

6:Kh ater°Tll1 to callau vi fTIOflllll)' payme,n1 1s "-Ofl5HH1red 61 iEQ.iriile O'.ins.at.1on. so en u-isucwi~1 P.i)TTle,nt Fee 

'MIi ti@ a,ses.::edror 1:1 a(h railei!J.all1:1mal 

You, Bff' riot re<1 ulrec1 ro <:llfr t!m IMc aoratim!'nL m!'ff'tt be~fntse ~~ heYe rt-c:e lved u1t1% ,dls,cfoiJJrt-e or 

i.lgnud ;a borrlWllllr ;,ignci11111111. 

1 hil EklltaWllt ~GlaQITI .ind Iha CtQChl Sca11:1 ~CG. 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

15 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

30. The only place the up-front fee is disclosed on this page is the unbolded itemization that 

appears sandwiched between more prominent, bolded paragraphs. In most standard screen 

configurations, the unbolded list appears “below the fold,” such that consumers would need to 

scroll down in order to see it. 

31. On a mobile device, if a consumer clicks the green button on the Loan Offer page, the 

consumer is taken to a page featuring links to the Borrower Agreement and Credit Score Notice

and a large “I Agree” button that allows consumers to move forward with the loan application 

process. If a consumer clicks on the button, the consumer’s application is complete. A version 

of this page that Defendant has presented appears below as it would appear on many

smartphones, including iPhones and other models: 

At numerous times, on an iPhone 5 and similar models, the Truth in Lending tab would appear 

below the fold. 

32. In the version appearing above, if, instead of clicking on the large green “I Agree” button, 

a consumer goes further on the screen, sees the Truth in Lending Disclosure Statement, and 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 15 of 30

1;i!LendingClub 

Loan Rate & Terms 

Ottdl:Y~ ••~--•----o L.NnDt:14 Lo.ffl • rms 3uk 

~- Aimutd 

80l"rower Agrt-t-ment 

C~dit Sc:ore No6c-• 

Cliclong ... Agr••• below 00nn1tu~5 your eS.cuon11:: 

wanat1.1re- and aooeptsnt:e of tne BOJTowM Agreem.nt. 

and lh• •---• •• C,..cht Score Hotic•. and th• Trud\ in Ltnding Oitclosur• St111tm.nt. 

I Agree 

ThH4 agre• m• nll. wl also be 1va ab,. for you r r• v..w by 

vs<t.ing www J.ndlngclub.com and naVJgaung to 

'"Agr.-ements.~ 

Tnnh In LAnding Olsclosur• SD•m.nt 

Lenc:fe,r WebBan 

21 S South State Strut 

Su:t• 800 

Safi: lake Crty, U 8 4 111 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

16 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

scrolls down, a Truth in Lending box with the loan terms would appear. In versions in which the 

green “I Agree” button does not appear near the top of the screen, a consumer must also scroll 

down in order to see the Truth in Lending Disclosure Statement and a Truth in Lending box. 

Below that, a schedule of payments appears. If a consumer were to scroll further down, toward 

the bottom of the screen, between a paragraph of bolded language and another paragraph, an 

origination fee would be listed. The below screenshot is an example of this section of the mobile 

page.

On many devices, information about the up-front fee and total amount received is not displayed 

until the consumer has scrolled down approximately four times. A version of this page that 

Defendant has presented appears below in its entirety.

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 16 of 30

I I I your loan. 

Late ch arg es: If yo1.J1 paym ent anives after your 15 

day grsoe period , you wil be ch arged a late fee 

equ al to the g reater of: 5.00 % of the late p aym e11t 

am ount or S15. This fee is ch arged only o nce per 

late payment. 

Prepaym ent poicy: If you pay off your loan ea,ty, you 

wil not be ch arged a penalty. In the event of a ful 

pr-epayment. yo u m ay b e entitled to a re fund of part 

of the fin ance charge . 

See y our borrowe r agreem ent for any additio11a l 

information about nonpayment, default, or othe r 

m atte rs re lated to your loan. 

I 

(e) means estimate 

Othe r than payment dates, item s m ark ed (e) w ill 

decrease ifyou rece ive less than 100% funding. 

Rega rdless of the ulti m ate a m ount of the loan, your 

APR w ill not change. Subject to your right to cancel, an 

unsecured loan may issue for less than the fu ll 

reques ted loan a m ount if it i s not 100% funded by the 

end of the li sting peri od. 

Total Amount Requested: S 10 ,000.00 

Origrl ation Fees: S500.00 

Tot al Amount Received : SQ .500.00 

Unsuccessful payment fee . Wh en a paym ent fails end is 

rejected by your bank, you wil be cha,ged an 

Unsuccessful Paym ent Fee of S 15 to cover the cost 

Lendrlg C lub rlcurs on th e tran saction. 

Each attem pt to co ct a m onthty paym ent is con sxl ered 

a separate tran saction. so an Un successfu l Paym ent Fee 

wil be assessed for e ach failed attem pt. 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

17 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 17 of 30

• • 0 tM:ii w,:.::11..1 1.:.r-ttcni ~, ~- ,_,.,~ e--ri'a--,11 

~.., ....... •t..:-,z,,.11--,1tl ti1Klnr.1 

~ ~ , , ;n •,-n~ .. r~:~, ._:~:.~.~- Tn ... .la Ll'l'WaGti.'ldc-Mu1 l'~N. 

n u,.,1g .. ""'° .. ~b ,u u,:11,w-_..,.-<1trp: U"" l'II,..... .. ~ 

mt.!'Q ~t1g,::ka.1cm11nJ -6o11; 1r.r~i:, 

· ·~~~'1,e-1JS. 

r,,..t,l•l....t"'II .__...fl•_..., 

'.IK1E!1 .. 

~10:3N1'1~9~ 

~r.~:D 

5-1UIH1.11,U'T~111 

-

~~ MWW•i.1 lii!t. .. ~1111•,. 

\'oa tnl IDfftMU •111 br,:l __ ....,,,'"""r a-. iUU~M-9 "!I'"• i..a.1 ............ .a1o11111rr,1, 

..._.,..r.,-,.-,n..- -•111'?• ... ,_,. -~-1,., ... ............ ,,.,_ ~~n~•""""' 

WJW'IIII b .,_,.,,_,..,._,.. 

llillt..-m .. ,twr rl'l'ft•I~ 

,,.., .. !,!{~~ 

ba-6-Jll:;-.tbfran •1u,,...,. .... .,, ,,,..,1oW,1 

I.aw, llh• ~H; r.:1<1•~·,...·"" ft:!"'M-1 i11Ur~,r 1 I 

NtP7~0H•d. f'lulil H ~~ I ••t le:~ 

£1Hll::ifHparll•~,J);.,I :fU. !11• IIIJn<t.rll 

M'(..:0.ori.J~Sii!i 1 • l't• il lhlf1~ '11""1' :l'W:il-i:,tl 

bt.t:n,.,,,rt. 

l",::rjrt"u lp,!q lfr,:,,,p.1 ,•t1,11 U'"Q:1,..1 ,. JC• 

IU!lf'D'~ill~Hplt,'!"J'!'~Ofl,)f6f; I 

P"'P•Y""'lt""'t.~;.,,,-._ • .,...'-':lw• .. ~•fp1n tl"i'I• __ ,_ .. 

.Jtt l IU' blfr~ ~a,ttP.,tnl l'if lilt a()Hjllllll 

l 1fl:ffl'l:III01Jola,in.::.ap:1Jn,trtl, !»iHl1,, ffllil'»r 

nltillnT'911 bdl•J'"-"k>-• n. 

OIMr ,unp)ff•K-..., .._,, n11i..~u .. , ,.-ti 

M«tiK-4 r~Nttc-t~I IHS-At ~10-.l"lflofftD, 

flll1ga1dr.111 Dfh utaina .,,,.,,,. : f l:tw Ian, r11r 

APR wllln.:ilth.J,wi. 1.u-.u.1:»yMrrf11tlllD~I.U-~.ln 

~IIStd lNlHflill,l:Uue:l'(f"~JNn Mi 

AIJ,M~l'IWI• •nC10.1..t.if1thn21 ltMIFM.kd~ tt-. 

•l'd d h • l:Hlagp• ,l l'l,L 

T1:• l "~=-.1,lf!.~1u1:::1.IIO.O: to 

""r'-. ,11+~ 1ro1 10 

T111!A.,._..1F'1n.......:I ~':!DC!'! 

Un.KICIIUi.i l~'l'Hfflfl .. "Wh1r.•~1-"iLil...111•dD 

~l)e-Jt,:W.lt-l .... 'foii'ii!l t-e ot+I .. MD, 

U~:w:an~J f'•ltT"t .. FM,:rl!::l§J,::,-~t••e-31 

ndl11i1C.::lbncu:..1'lL'W L: l l'IUCID'1 

• ..ti•·~;p-11, nlta • ..,,,,.N;w-,•;n-•n ... r.allii,:l• "ll .:1 

~ .Y.'Dlt"JI~ l'b•~'l SI d• 1.>tt,U1Q!•9'ill F~Atn1 fie! 

•1 .. ~'l::o-1-.dlr iJ!M..,t'I. 

c.,...:.1, =-»r.11M1 I'" ... H 1'-' • tl.:a li:I nlll, ... Nr.nt.ru bf 

<Ale~ Jtt!?: t1i c-e-1IT~~ Ir !lll).,~ 

'roH.1:IN Wl:l'Hj.On.:im~pu,i,;,-n.11.,.p-ra•,, 1,u.r•t, blCiUS<ll )Ill.I h;ie,i, rH~Wi Nl-.4 oliUilO'S-IIM K 

1, gNd • bMl-1-1 •lril-•t. 

------------

1 /lq11 flj 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

18 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

33. In fact, many consumers who apply for a loan from Defendant do not know that 

Defendant will deduct an up-front fee from their loan proceeds. Indeed, consumers frequently 

complain that they only discovered the fee after Defendant disbursed their loan proceeds, when 

they noticed that the amounts disbursed were smaller than they were expecting. At least tens of 

thousands of consumers contacted Defendant after their loan proceeds were disbursed to ask 

about the up-front fee or to ask why they did not receive the full loan amount. Many consumers 

who have complained that they were not aware of the up-front fee attempted to cancel their loans 

once they learned of the fee, preferring a loan from a competitor or no loan at all. 

34. On desktops and mobile phones, after consumers agree to the loan terms and enter bank 

account information, they then click a “Done!” button and are taken to a screen that has stated, in 

large type: “Your [amount requested] loan is on the way. What’s next?” The amount that 

Defendant promises is “on the way” is the same “Loan Amount” that Defendant promised the 

consumer on the Loan Offer page. For example, a consumer who was promised a $10,000 loan 

amount will see on this screen a representation that “Your $10,000 loan is on the way.” Below 

these representations has appeared a “To-Do List” of tasks such as “Confirm your email address” 

and “Verify your bank account information.” The contents of the “To-Do List” vary for each 

consumer. 

Communication of Approval 

35. Although Defendant has told each consumer who completed a loan application that his or 

her “loan is on the way,” a consumer’s application in fact must undergo two additional processes 

after completion in order to receive final approval. First, an application must attract sufficient 

investor backing, and second, an application must pass Defendant’s stringent “back-end” credit 

review—so called to distinguish it from the lighter, “front-end” review that Defendant conducts 

while the consumer’s application is still in progress. 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 18 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

19 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

36. If a consumer has garnered investor funding—but before Defendant has finished the 

“back-end” review of their applications—Defendant has sent such consumers various email 

messages communicating that the consumers will receive loans. For example, Defendant has 

sent at least approximately 196,000 consumers an email the subject line of which reads “Hooray! 

Investors Have Backed Your Loan.” An example of this email appears below. 

37. The body of the email begins, in large, bold print, “Your Loan is 100% Backed,” and 

continues: “Great news! Investors have backed your loan 100%. Your money is almost in your 

hands. You can always visit your Account Summary to view the details of your loan. Welcome 

to Lending Club! All the best, Lending Club.” Upon reading this and similar emails, many 

consumers have believed that their loans have been approved, and that they would soon receive 

their loan funds. 

38. In reality, however, many consumers who received such emails were subsequently 

rejected based on Defendant’s “back-end” credit review and never received a loan from 

Defendant. For example, of the at least approximately 196,000 consumers who received the 

above email, at least approximately 43,000 were subsequently rejected. The “back-end” credit

review is searching and often involves, inter alia, an additional credit inquiry, a phone call to the 

consumer, requests for additional documentation, and detailed review of the consumer’s tax and

bank records. 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 19 of 30

LendingClub 

Your Loan is 100% Backed 

H1Toomy, 

Great news! lnves ors have oocked your loan 100%. Yoor money 1s almost in your 

harids. You can always visit your Aoeount Summ:iry to view the details of your 

loon Weloome lo Lending Ck.lb\ 

Al the bes 

Leriding C lub 

FIND USON: 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

20 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

39. Defendant frequently issues back-end denials even to consumers who provide Defendant 

with all the documents that Defendant requests and whose applications were truthful, based upon 

its further evaluation of the consumer. Defendant has also issued back-end denials to consumers 

based on errors by Defendant. For example, Defendant acknowledged having incorrectly denied 

one consumer’s application on the ground that her mailing address and residential address did 

not match when in fact, the consumer lived at a “rural route” address, meaning that she received 

mail at a post office box rather than her physical address.

40. Defendant was aware that many consumers believed that they were already approved for 

loans when, in fact, they were not. Defendant’s training materials list “What does that mean? I 

thought I was approved” as a commonly asked question that customer service representatives 

should expect to hear, as shown in the screenshot below. 

In addition, Defendant received numerous complaints from consumers who were rejected after 

Defendant’s email had led them to believe that their loans were forthcoming and that they were 

already approved, including some who did not seek other credit or turned down offers from 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 20 of 30

My loan was removed ... App Decisions 

"What does that mean? I thought I was approved." 

Initial Review Verified Email Status Verified 

ID V Not Required Residence V Not Required 

Employment V Not Required Income V Foiled 

Bank NameV Not Required Fraud V Not Required 

Reserves V Not Required 

Actions A dec1s1on has been made O\ler this loan apphcat,on actions are hmrted 

Counter Offer Status 

None Subnwt 

ewAmount Assign To 

00 0 I Reduce I 

06/19/ 14 08 26 

Assigned Date 06116/14 

Reset Status 

Apphcatlon declined 

Reasons 

- Income was misstated on the apphcat1on 

Comments HS 

Descfipb<M'I 

Bank Accou 

Phone V 

Income 4 

DebtV 

Comments 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

21 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Defendant’s competitors because they believed that they had already obtained a loan from 

Defendant.

Defendant’s Unauthorized Bank Account Withdrawals

41. Defendant’s default method of receiving consumers’ scheduled monthly payments is 

automatic electronic bank account withdrawal via ACH transfer. 

42. In numerous instances, Defendant has withdrawn money from consumers’ bank accounts 

without consumers’ authorization, or in amounts in excess of the amount consumers authorized 

Defendant to withdraw. 

a. In numerous instances, Defendant has charged consumers double payments without 

authorization, improperly withdrawing consumers’ monthly payments twice in one 

month. 

b. In numerous other instances, Defendant has automatically withdrawn consumers’ 

monthly payment amount even after those consumers have already paid off their loans. 

c. In numerous other instances, when consumers have asked Defendant to stop automatic 

ACH withdrawals because they wished to pay by check or use a different bank account, 

Defendant has disregarded those requests and continued to charge consumers via 

automatic withdrawal anyway.

43. Most consumers only learn of Defendant’s unauthorized charges when they check their 

bank statements, or when they learn that their accounts have been overdrawn. 

44. As a result of Defendant’s unauthorized charges, many consumers are forced to pay 

overdraft fees, while other consumers are unable to pay other bills because they do not have 

access to the money that Defendant improperly withdrew. 

45. Defendant’s internal documents highlight the issue of taking money from consumers’ 

bank accounts without authorization. Defendant’s monthly complaint reporting reflected a 

growing number of complaints about the payoff process and about payment processing more 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 21 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

22 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

generally. In addition, Defendant’s own payments department self-reported increasing numbers 

of such transactions. Defendant’s rate of unauthorized bank withdrawals also has often exceeded 

the rates of unauthorized withdrawals made by other companies. 

Defendant’s Gramm-Leach-Bliley Act (“GLB Act”) Violation

46. Defendant is a financial institution subject to the GLB Act, as that term is defined by 

Section 509(3)(A) of the GLB Act, 15 U.S.C. § 6809(3)(A), because, among other things, 

Defendant services loans. 12 C.F.R. § 225.28(b)(1). Defendant collects nonpublic personal 

information, as defined by 16 C.F.R. § 313.3(n) and 12 C.F.R. § 1016.3(p)(1)-(3), such as Social 

Security numbers and bank routing information. Because Defendant is a financial institution that 

collects nonpublic personal information, it is subject to the requirements of the GLB Privacy 

Rule, 16 C.F.R. Part 313, and Reg. P., 12 C.F.R. Part 1016. 

Privacy Rule and Reg. P 

47. The Privacy Rule, which implements Sections 501-503 of the GLB Act, 15 U.S.C. 

§§ 6801-6803, was promulgated by the Federal Trade Commission on May 24, 2000, and 

became effective on July 1, 2001. 16 C.F.R. Part 313. Since the enactment of the Dodd-Frank 

Act on July 21, 2010, the Consumer Financial Protection Bureau (“CFPB”) became responsible 

for implementing the Privacy Rule, and promulgated the Privacy of Consumer Financial 

Information, Regulation P, 12 C.F.R. Part 1016 (“Reg. P”), which became effective on October 

28, 2014. Defendant’s conduct is governed by the Privacy Rule prior to October 28, 2014, and 

by Reg. P after that date. The GLB Act authorizes both the CFPB and the Federal Trade 

Commission to enforce Reg. P. 15 U.S.C. § 6805. 

48. Both the Privacy Rule and Reg. P require financial institutions to provide consumers with 

an initial and annual privacy notice. Both the initial and annual privacy notices must be “clear 

and conspicuous,” 16 C.F.R. § 313.3(b) and 12 C.F.R. § 1016.3(b), and must “accurately 

reflect[] [the financial institution’s] privacy policies and practices.” 16 C.F.R. §§ 313.4 and 

313.5 and 12 C.F.R. §§ 1016.4 and 1016.5. The privacy notice must include specified elements, 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 22 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

23 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

including the categories of nonpublic personal information the financial institution collects and 

discloses, the categories of third parties to whom the financial institution discloses the 

information, and the security and confidentiality policies of the financial institution. 16 C.F.R. 

§ 313.6; 12 C.F.R. § 1016.6. A financial institution must provide its privacy notice so that each 

consumer can reasonably be expected to receive actual notice. 16 C.F.R. § 313.9; 12 C.F.R. 

§ 1016.9. For consumers who conduct transactions electronically, a consumer can “reasonably 

be expected to receive actual notice” if he or she acknowledges receipt of the notice as a 

necessary step to obtaining the financial product or service. 16 C.F.R. § 313.9; 12 C.F.R. 

§ 1016.9; Privacy of Consumer Financial Information, 65 Fed. Reg. 33646-01, at 33665-66 (May 

24, 2000). 

49. Defendant failed to comply with the requirements of the Privacy Rule and Reg. P. 

Specifically, Defendant failed to deliver the initial privacy notice so that each customer can 

reasonably be expected to receive actual notice. 16 C.F.R. § 313.9; 12 C.F.R. § 1016.9. For 

example, until at least the end of 2016, Defendant did not require customers to acknowledge 

receipt of the notice as a necessary step to obtaining a particular financial product or service. 16 

C.F.R. § 313.9, and Reg. P, 12 C.F.R. § 1016.9. Instead, Defendant required customers to agree 

only to Defendant’s Terms of Use, which itself included only a link to Defendant’s privacy 

policy. In order to reach the privacy notice that Defendant was required to provide to customers, 

a customer would need to click on a link that did not indicate it was related to privacy, and then 

further find a link to Defendant’s privacy policy within the lengthy document to which the link 

led. Customers were not provided a clear and conspicuous privacy notice before they submitted 

nonpublic personal information to Defendant. 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 23 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

24 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

50. Customers were only provided a link leading directly to the notice after they had applied 

for a personal loan. Defendant’s own compliance group had recommended repeatedly that the 

company require customer acknowledgment in the years prior to the 2016 change. 

VIOLATIONS OF THE FTC ACT

51. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts or 

practices in or affecting commerce.”

52. Misrepresentations or deceptive omissions of material fact constitute deceptive acts or 

practices prohibited by Section 5(a) of the FTC Act.

53. Acts or practices are unfair under Section 5 of the FTC Act if they cause or are likely to 

cause substantial injury to consumers that consumers cannot reasonably avoid themselves and 

that is not outweighed by countervailing benefits to consumers or competition. 15 U.S.C. 

§ 45(n). 

Count I

Deception: Up-Front Fee

54. In numerous instances in connection with the advertising, marketing, promotion, offering 

for sale, or sale of unsecured loans, Defendant has represented, directly or indirectly, expressly 

or by implication that consumers will not be charged any hidden fees in connection with 

receiving a specific “loan amount.”

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 24 of 30

rEI Yes, I agree via electronic signature to 

• the Terms Of Use 

• the Credit Profile Authorization and 

for Lending Club to verify my income. 

Get Your Rate 

wori t., 
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

25 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

55. In truth and in fact, in numerous instances in which Defendant has made these 

representations, consumers have been charged a hidden up-front fee that is deducted from the 

“loan amount.” 

56. Therefore, Defendant’s representations set forth in Paragraph 54 of this Complaint are 

false and misleading and constitute a deceptive act or practice in violation of Section 5(a) of the 

FTC Act, 15 U.S.C. § 45(a). 

Count II

Deception: Certainty of Loan Approval 

57. In numerous instances in connection with the advertising, marketing, promotion, offering 

for sale, or sale of unsecured loans, after consumers completed loan applications and Defendant 

conducted its front-end review of their applications, but before it had made a final decision 

whether to approve their loans, Defendant has represented, directly or indirectly, expressly or by 

implication, that those consumers would receive loans.

58. In fact, in numerous instances in which Defendant has made these representations, 

Defendant later made a final decision during the back-end review process not to approve the 

loans and consumers therefore did not receive loans. 

59. Therefore, the making of the representations as set forth in Paragraph 57 of this 

Complaint constitutes a deceptive act or practice in or affecting commerce in violation of Section 

5(a) of the FTC Act, 15 U.S.C. § 45(a). 

Count III

Unfairness: Unauthorized Charges

60. In numerous instances, Defendant has withdrawn money from borrowers’ bank accounts 

without borrowers’ authorization, or in amounts in excess of borrowers’ authorization. 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 25 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

26 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

61. Defendant’s actions have caused substantial injury to consumers that consumers cannot 

reasonably avoid themselves and that is not outweighed by countervailing benefits to consumers 

or competition. 

62. Therefore, Defendant’s practices as described in Paragraph 60 above constitute unfair 

acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. §§ 45(a) and 45(n). 

Count IV 

VIOLATIONS OF THE GRAMM-LEACH-BLILEY ACT (“GLB Act”) 

PRIVACY RULE AND REG. P 

63. As described in Paragraph 48, the Privacy Rule and Reg. P require financial institutions 

to provide customers with a clear and conspicuous privacy notice that accurately reflects the 

financial institution’s privacy policies and practices. Further, financial institutions must deliver 

the privacy notice so that each customer could reasonably be expected to receive actual notice.

64. Defendant is a financial institution, as defined in Section 509(3)(A) of the GLB Act, 15 

U.S.C. § 6809(3)(A).

65. As set forth in Paragraph 49, Defendant failed to deliver the initial privacy notice so that 

each customer could reasonably be expected to receive actual notice. Therefore Defendant 

violated the Privacy Rule, 16 C.F.R. § 313.9, and Regulation P, 12 C.F.R. § 1016.9. 

CONSUMER INJURY

66. Consumers have suffered and will continue to suffer substantial injury as a result of 

Defendant’s violations of the FTC Act and the Privacy Rule. In addition, Defendant has been 

unjustly enriched as a result of their unlawful acts or practices. Absent injunctive relief by this 

Court, Defendant is likely to continue to injure consumers, reap unjust enrichment, and harm the 

public interest.

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 26 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

27 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

THIS COURT’S POWER TO GRANT RELIEF

67. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive 

and such other relief as the Court may deem appropriate to halt and redress violations of any 

provision of law enforced by the FTC. The Court, in the exercise of its equitable jurisdiction, 

may award ancillary relief, including rescission or reformation of contracts, restitution, the 

refund of monies paid, and the disgorgement of ill-gotten monies, to prevent and remedy any 

violation of any provision of law enforced by the FTC.

PRAYER FOR RELIEF

 Wherefore, Plaintiff FTC, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), 

the Privacy Rule, Regulation P, and the Court’s own equitable powers, requests that the Court: 

A. Award Plaintiff such preliminary injunctive and ancillary relief as may be 

necessary to avert the likelihood of consumer injury during the pendency of this action and to 

preserve the possibility of effective final relief, including but not limited to, a preliminary 

injunction; 

B. Enter a permanent injunction to prevent future violations of the FTC Act, the 

Privacy Rule, and Regulation P by Defendant; 

C. Award such relief as the Court finds necessary to redress injury to consumers 

resulting from Defendant’s violations of the FTC Act, the Privacy Rule, and Regulation P 

including but not limited to, rescission or reformation of contracts, restitution, the refund of 

monies paid, and the disgorgement of ill-gotten monies; and 

D. Award Plaintiff the costs of bringing this action, as well as such other and 

additional relief as the Court may determine to be just and proper. 

 

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 27 of 30
COMPLAINT Federal Trade Commission

Case No. __________ 600 Pennsylvania Avenue N.W. 

Washington, DC 20580 

28 (202) 326-2222 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Respectfully submitted,

Dated: April 25, 2018 ALDEN F. ABBOTT 

 Acting General Counsel

 /s/ Katharine Roller 

KATHARINE ROLLER

MATTHEW WILSHIRE

DAVID LINCICUM

Federal Trade Commission

600 Pennsylvania Avenue, N.W. 

Washington, D.C. 20580 

Phone: (202) 326-3582, (202) 326-2976, (202) 

326-2773 

Facsimile: (202) 326-3768 

Email: kroller@ftc.gov; mwilshire@ftc.gov; 

dlincicum@ftc.gov

 

 Attorneys for Plaintiff

 FEDERAL TRADE COMMISSION

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 28 of 30
EXHIBIT A 

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 29 of 30

···=L--~"' -c· ~ .b .::: ~,et IU~ng ~u .· PR ' J APPR·OV AL LE R 

To-; lli!!lid Unti Pre--Appl"ov;,I Code: 

S<1m p,le IL S111 ple 3/ 13111 9999-9 999-9'999 

Add s · I R,1t ·: P~pprov- 1 Amount: 

123 Any s re~ Fb:~ d I Up To 

Anyto n , us 12345 S:4 0,. 000. ·001 

.. .. .. - . . --

We are pleas c:I to infcmn you that you hav~ be n pre- proved Fo your loa11 as sp · cifled be·low: 

AMOUNT: You ar pr -approv d for up to $40,000 . 

DELIVERY: Yo,u,could hav., our cash tn a:; litli~ as 7 days. 

t:es re lowe't than m nytrad'tional bank lo ... ns, is is parlfcul riy fmport flt, ooc u5e using 

, wilh intere~t r tes of 12.9'KI, 1 S.9%. 18.% or llre cour~ 

nth • · d How ycu to g t 0:..1 of d bt oon. r. 

PURPOSE: V'lhlJe paying o h g intere5<tdebts is the recomnwrided Widge. you c.m put lt lO\ rd 

h-ome imp:rm _f'nt~, 1n;.jor purc.ha-.es, a VilC:.ttion, or n 011 ! 

FEES: There are no htdd~r) ees or prepa )'lrnent penalt.i~ . 

YPi OF LOAN: This ft!; a no:s;;pll,neral p~ts(mil:11 lo.1n, with low fixed monthly p.lyments and 

fJ@:l<ii:lle. t<!rm~. 

CONSO DATION ADVAINTAGE: If you us yo1Jr loan to pay o fall your c.urr nt er it cards and 

loans, you'll have only on bill to p.iy@,ch mooth nstead o several, ~Il · ri;i -=tLID..i1J . .b.U. ~i.~~ 

tbao yoy gay pow_"" You'll find y<H.HS@lf with morl! l:m!athhg mom and l@:ss s.tres.s, omd your family 1.vill 

njoy he e r .. money you a:n.dd h.w \lery month. 

NIEXT STEPS: Simpl,.ii, visit ww.v.MylnstantOff@r..com and eni.er your Pri!-Approvall Cod~ to 

get your lnst.~nt loan quote. Ih! - ~ai, ru1!.'iou 1 ,~ • Q- • 

D'EAOUNE: Your Pr .AJ)prov d tatm i v.idfd only un:til3/l $/l 7, nd any quot req; 

recefved before 3,pm f..a:stem Time on th~t date. 

must be 

ABO IJ1' •ENDJN.G nus~ Lendlng Clw I~ tne world's large t c nHne .:;n_·~·m m:M{(etpl.ic , and we look 

fonvard lo s.erving you as w Ila ove 1.6 million ot'1er b-0 ow ~ • We pride our !ves on 

provfding ex;:,erie,Y e that i!> e slet and !e com~lica d, and oor go.a l s to, elfver the perfect 

o inatlcm of conv 1l. c , I Mr te . nd frkmdly erv e. 

THANK YOIJ FOR VOUR JNTEREST. T.ike th next st~p now }}fr.Questing you.r re-e lo.-n Quote. 

Rie embet--thete's no cost or obiigaltfon to 1nd ou t how mudh yOIJ c:ouid save ervery month by 

,onsolida i!'lg: you,r high-int re t d bt with or • · liY loan throu9h L" . ir . Club. 

Sim:er£~Y, 

J_ .I ., . .,.ac.~~<'.Z . ,. .:.;,.· <~~""'-"--,P--

EO, · nding Club 
EXHIBIT B

 1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Case 3:18-cv-02454 Document 1 Filed 04/25/18 Page 30 of 30

While others make it easy to get into debt. 

We make it easier to, get out. 

1;11LendlingClub 

<Sample A.Sample> 

<Address;,, 

<Address2> 

<Anytown, US 12345-1234> 

11111 1lnl,llll•l·lh•lhll1•1•• 1hln1••1••·· lwllllM1ln11 

PRE-APPROVED FOR 

¥6$20,000 

Respond by (Raspond_byl 

at MylnstantOffar.com 

Your pre-approval coda: 

[1I234-5678-9ABC] 

<Fname>, let us help you pay off your debt faster and 

you too could save hundreds, even thousands. 

You'ra alraady pra-approvad 

You've been selected for this offer 

because of your good credit history. 

I 

• 

No hiddan ,_ or 

P"-P•ymant p•naltin 

We offer llexible loan amounts and 

terms. there are NO hidden fees and 110 

penal~es for paying off your loan early. 

Pay off high-int•rnt d•bt 

Simplify your life - use your loan for 

debt consolidation, pay,ing off credit 

cards or even a major purchase. 

$ 

S.V• hundrads, •v•n t1housands 

When you pay off your debt faster 

you could save hundreds. even 

thousands in interest. 

Apply onlin1e today- it's fast, easy and only talkes minutes. 

Don't wait too long,. this offer expires [Respond_by]. 

r,:i 

Go 

--

Online 

Get your l1oan qiuote onl in e: MylnmintOtfer.mm 

PnrApproval Code-: [1234-5678-9ABq 

By Phone 

855-363-4151 

Oedk:ated !JS-liaised 

d ient adY'isor 

By Mail 

Compl!!te and re tum the attached Rl!ply card