Consumer complaint received 2025-04-11 00:00:00
Product: Payday loan, title loan, personal loan, or advance loan — Installment loan
Issue: Getting the loan — 
Company: Upstart Holdings, Inc.
State: SC

Complaint narrative:
XXXX XXXX XXXX XXXX XXXX, SC, XXXX Upstart Holdings Inc XXXX XXXX XXXX XXXX, XXXX XXXX XXXX XXXX, California XXXX FORMAL COMPLAINT TO THE CONSUMER FINANCIAL PROTECTION BUREAU ( CFPB ) Subject : Upstart 's Systemic Discrimination via Biased AI, Non-Compliance with Regulators, and Violation of Consumer Rights *** I. INTRODUCTION I, XXXX XXXX, allege that Upstart XXXX XXXX XXXX ( " Upstart '' ) has engaged in systemic, willful discrimination through its AI-driven lending platform, violating the Equal Credit Opportunity Act ( ECOA ), Fair Credit Reporting Act ( FCRA ), Fair Debt Collection Practices Act ( FDCPA ), and Fair Housing Act ( FHA ) XXXX This complaint integrates : 1. Upstarts documented pattern of racial and educational bias ( per XXXX XXXX XXXX XXXX XXXX XXXX ) ; 2. Its refusal to comply with regulatory mandates ( including its XXXX CFPB XXXX XXXX conditions ) ; 3. Its role in perpetuating harm via flawed credit decisions, including reliance on XXXX erroneous data. 

The CFPB must audit Upstart under XXXX XXXX XXXX XXXX its AI training data, and compel corrective action for affected borrowers.

*** II. FACTUAL BACKGROUND 1. Denied Loan Application ( {$4000.00} Personal Loan ) - Upstarts A
dvertised Policy : Promotes loans up to {$50000.00} to underserved borrowers ( per web site ). 
- My Application ( XX/XX/XXXX ) : Upstart denied credit citing Serious delinquency, '' " High balances, '' and " Too many delinquent accounts '' ( see Adverse Action Notice, attached ). 
- Critical Flaw : The notice relied on XXXX erroneous credit report, which falsely listed 13 negative items ( CFPB Complaint ID # XXXX ). Upstarts AI algorithm failed to verify, flag, or offer a timely investigation into the apparent errors violating FCRA 1681s-2 ( b ).

2. Upstarts Biased AI System - Training Data Flaws : - Upstarts AI uses non-traditional data, including education history, which functions as a proxy for race : " Upstarts use of cohort-level standardized test data imported the disparate impact of these tests into the lending context '' ( XXXX XXXX Initial Report, p. XXXX ). 

- Exclusion of Denied Applicants : " The training data only includes loans that have already been previously approved by Upstart ... [ omitting ] how any of the applicants that were denied loans by Upstart would have performed '' ( Third Report, p. XXXX ). 
This creates algorithmic bias favoring wealthier, non-minority borrowers. 

- Proxy Discrimination Against XXXX Graduates : > " Over 95 % of XXXX  fell into the bottom half of Upstarts rankings '' ( Initial Report, p. 23 ).

> " Other cohort-level educational data, such as school attended or major/program of study, have also been noted as possible sources of fair lending risk '' ( Initial Report, p. 17 ).

3XXXX XXXX Errors and Upstarts Negligence - 13 Erroneous Items : XXXX inaccurately reported delinquencies, high balances, and derogatory accounts ( see CFPB complaint # XXXX ). 

- Upstarts Failure to Investigate : Despite FCRAs " reasonable investigation '' mandate ( 15 U.S.C. 1681s-2 ( a ) ( B ) ), Upstart relied on flawed data to deny my application. 

*** XXXX. XXXX XXXX XXXX XXXX XXXX 1. Ignoring CFPBs No-Action Letter ( NAL ) Requirements - XXXX XXXX Conditions XXXX Required Upstart to adopt a Model Risk Assessment Plan, including fair lending testing and transparency : Upstarts XXXX No Action Letter and Model Risk Assessment Plan ... requires Upstart to provide the Bureau with model documentation ; test its model and variables or groups of variables for adverse impact and predictive accuracy by group ; report results to the Bureau ; and research approaches that may produce less discriminatory alternative models '' ( Initial Report, p. 24 ).

- Upstarts Non-Compliance : - Failed to adopt less discriminatory alternatives recommended by the Monitor : As noted, Upstart disagrees with and has declined to adopt the Monitor 's recommended approach for assessing whether a less discriminatory alternative model would be considered comparable to a Baseline model in terms of reasonably meeting Upstart 's legitimate business needs. ( XXXX Report, XXXX ) - Withheld denied applicant data, preventing bias detection : " The training data only includes loans that have already been previously approved by Upstart '' ( Third Report, p. 10 ). 2. Defiance of Congressional Scrutiny -
2020 Senate Banking Committee Report : Flagged Upstarts use of education data as unlawfully discriminatory : " The report specifically identified Upstarts use of the school an applicant had attended and found problematic the use of non-individualized cohort-level educational data '' ( Initial Report, p. 22 ).

- Upstarts Response : Disputed findings without addressing systemic bias. 

3. Pattern of Discriminatory Outcomes - CFPB Complaint Database : Over 120+ complaints ( XXXX ) allege : Unremoved tradelines post-settlement ( e.g., CFPB # XXXX ). 

- Racial disparities in pricing for XXXX Applicants : " XXXX applicants experienced adverse approval/denial AIR disparities... only the disparities for XXXX applicants were below 90 % and therefore practically significant '' ( Third Report, p. 8 ).

*** IV. LEGAL VIOLATIONS 1. ECOA 1002.6 ( a ) Disparate Impact & Proxy Discrimination - Education Data as a Proxy : " Upstarts use of cohort-level educational data ( e.g., SAT scores, school rankings ) disadvantages minority borrowers '' ( Initial Report, p. 23 ).

- Failure to Adopt Less Discriminatory Alternatives : " Thus, we recommended a methodology based on the Uncertainty Interval, and relying on that methodology we identified a potential alternative model that would have reduced disparities experienced by XXXX applicants. However, Upstart updated its model prior to completion of the analyses discussed in the Third Report. '' ( Third Report, p. 11 ).

2. FCRA 1681s-2 ( b ) Failure to Investigate Disputed Items - Upstarts reliance on XXXX erroneous report without verification constitutes reckless disregard for consumer rights.

3. FDCPA 1692e Deceptive Practices - False Denial Reasons : The adverse action notice cites " serious delinquency '' and " high balances, '' but these were based on disputed XXXX errors. 

4. Fair Housing Act Algorithmic Discrimination - Upstarts AI perpetuates XXXX disparities, violating XXXX XXXX on discriminatory practices : " XXXX disparities exist across lending markets in everything from approval rates and pricing to the availability of safe credit products and services '' ( Initial Report, p. 3 ).

*** V. REQUESTED RELIEF 1. Immediate Actions - Subpoena Upstarts AI Code : Order Upstart to reveal the full set of data its AI was trained on. 
- XXXX XXXX Demographic Loan Data. Subpoena demographic breakdowns of loan approvals/rejections to prove disparate impact -Order Upstart to immediately approve and disburse the original {$4000.00} loan ( no hard pulls ) under ECOA Regulation B ( XXXX XXXX XXXX ), overriding AI bias via a manual review. 

2. Judicial Remedies - Statutory Damages : - FCRA Violations ( 15 U.S.C. 1681n/o ) : {$1000.00} per violation ( 13 errors {$1000.00} = {$13000.00} ).

- ECOA Violations ( 12 U.S.C. 1691e ) : {$5000.00} minimum, plus treble damages under SCs UDAP law.

- UDAP Violation : {$10000.00} minimum ( filed with SC Attorney General ).

- Injunctive Relief - Corrective Loan Terms : Grant a {$10000.00} loan at 0 % APR, convertible to cash after 90 days, to offset harm caused by Upstarts discriminatory practices. 

- Equitable Relief : - Third-Party Audit of Upstarts AI models.

- Public Disclosure of demographic loan data.

- Punitive Damages : For willful disregard of Monitorship findings.

- Attorneys Fees & Costs under FCRA, ECOA, and SC UDAP.

3. Class Certification - Certify a nationwide class of borrowers harmed by Upstarts biased AI.

*** VI. SUPPORTING EVIDENCE 1. Attachments : - Upstarts Adverse Action Notice. 
- CFPB Complaint # XXXX ( XXXX Errors XXXX. 
- XXXX XXXX XXXX Reports ( Initial, Second, Third, and Fourth ). 
2. Legal Citations : - ECOA 1002.6 ( a ) : Prohibits discriminatory credit practices.

- FCRA 1681s-2 ( a ) : Requires reasonable investigation of disputes.

VII. CONCLUSION Upstarts conduct is systemic, intentional, and unlawful. Its refusal to address algorithmic bias, disregard for CFPB requirements, and reliance on flawed credit data violate federal law. This complaint seeks to halt its discriminatory practices and secure justice for all harmed borrowers.

Demand for Action : 1. Immediate investigation of Upstarts AI and lending practices.

2. Subpoena Upstarts AI code, training data, and demographic loan data to quantify harm.

3. Compel corrective action for affected borrowers. 

Sincerely, XXXX XXXX

Company response to consumer: Closed with explanation