SoFi and LendingClub Have Very Different Days

Two new companies in the financial space, LendingClub and SoFi had very different days recently. It just goes to show you how quickly this new financial niche is moving.

LendingClub Had a Bad Day

LendingClub stormed onto the playing field as a peer-to-peer lender. In the early days, I was even one of the many people that help invest small amounts in many personal loans to help consumers.

But with growth, sometimes there can be challenges.

According to the Federal Trade Commission, more than $10 million is being returned to consumers that were overcharged by undisclosed fees by LendingClub.

The FTC sued LendingClub in April 2018, charging that the company falsely promised loan applicants that they would receive a specific loan amount with “no hidden fees,” when in reality the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. The FTC also alleged that LendingClub told consumers they were approved for loans when they were not and took money from consumers’ bank accounts without authorization.

The FTC is sending refunds via PayPal to 15,748 LendingClub customers who complained to the company or the FTC about the hidden fees. Recipients have until February 16, 2022 to accept the payments. Recipients who have questions about their payments should call the refund administrator, Rust Consulting, at 833-630-1417. The FTC never requires people to pay money or provide account information to get a refund.

In addition, between January 18 and 20, the FTC will email additional LendingClub customers who took out loans before January 6, 2017 and repaid the loan. The email will provide instructions on how to request a refund. LendingClub customers who believe they may be eligible for a refund but do not receive an email by January 20 should contact the refund administrator at 833-630-1417. The deadline for additional consumers to file claims is February 16, 2022.

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SoFi Steps Up to a Party

So while LendingClub was getting kicked in the nuts, SoFo was conditionally approved to become a bank.

The Office of the Comptroller of the Currency (OCC) conditionally approved applications from Social Finance Inc. (SoFi) to create SoFi Bank, National Association (SoFi Bank, N.A.), as a full service national bank headquartered in Cottonwood Heights, Utah. As part of the transaction, SoFi Bank, N.A. will acquire Golden Pacific Bank, National Association, a national bank insured by the Federal Deposit Insurance Corporation.

I’m sure SoFi is now going to face more regulatory hurdles in its new role as a recognized bank. Congratulations?

For example, the conditions to become a bank require specific capital contributions, adherence to an Operating Agreement, and confirmation that the resulting bank will not engage in any crypto-asset activities or services.

Steve Rhode

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