Online Lender Accused of Continuing to Misrepresent Products and Failing to Provide Timely and Accurate Adverse-Action Notices to Applicants

The Consumer Financial Protection Bureau (CFPB) today filed a lawsuit in federal district court accusing LendUp Loans, LLC of violating a 2016 consent order and deceiving tens of thousands of borrowers. In 2016, the Bureau ordered LendUp to pay $1.83 million in consumer redress and a $1.8 million civil penalty and to stop misleading consumers with false claims about the cost of loans and the benefits of repeated borrowing. In today’s complaint, the CFPB alleges that, in violation of the 2016 order, LendUp has continued with much of the same illegal and deceptive marketing. The CFPB also alleges that LendUp illegally failed to provide timely and accurate notices to consumers whose loan applications were denied.

“LendUp lures consumers with false promises that repeat borrowing would allow them to ‘climb the LendUp Ladder’ and unlock lower interest rates. For tens of thousands of borrowers, the LendUp Ladder was a lie,” said CFPB Acting Director Dave Uejio. “Not only did LendUp structure its business around wholesale deception and keeping borrowers in cycles of debt, the company doubled down after getting caught the first time. We will not tolerate this illegal scheme or allow this company to continue preying on vulnerable consumers.”

LendUp Loans, LLC, headquartered in Oakland, California, offers single-payment and installment loans to consumers and pitches itself as an alternative to payday lenders. A central component of LendUp’s marketing and brand identity is the “LendUp Ladder.” LendUp told consumers that by repaying loans on time and taking free courses offered through its website, consumers would move up the “LendUp Ladder” and, in turn, receive lower interest rates on future loans and access to larger loan amounts.

According to the CFPB’s complaint, LendUp was not telling consumers the truth. The CFPB’s investigation found that 140,000 repeat borrowers were charged the same or higher interest rates for loans after moving up to a higher level on the LendUp Ladder. The investigation also found that many borrowers had their maximum loan size reduced, even after reaching the highest level on the ladder.

Enforcement Action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (CFPA), the CFPB has the authority to take action against companies and people that violate Federal consumer financial laws. The CFPB alleges that LendUp violated the CFPB’s 2016 consent order, the CFPA, the Equal Credit Opportunity Act (ECOA), and ECOA’s implementing regulation, Regulation B. Specifically, the CFPB alleges that LendUp:

• Deceived consumers about the benefits of repeat borrowing: LendUp misrepresented the benefits of repeatedly borrowing from the company by advertising that borrowers who climbed the LendUp Ladder would gain access to larger loans at lower rates when, in fact, that was not true for tens of thousands of consumers.
• Violated the CFPB’s 2016 consent order: The CFPB’s 2016 consent order prohibits LendUp from misrepresenting the benefits of borrowing from the company. LendUp’s continued misrepresentations about the LendUp Ladder violate this order.
• Failed to provide timely and accurate adverse-action notices: Adverse-action notices inform consumers why they were denied credit, and timely and accurate notices are vital to maintain a transparent underwriting process and protect consumers against credit discrimination. LendUp failed to provide adverse-action notices within the 30 days required by ECOA for over 7,400 loan applicants. LendUp also issued over 71,800 adverse-action notices that failed to accurately describe the main reasons why LendUp denied the application as required by ECOA and Regulation B.

The CFPB is seeking an injunction, damages or restitution to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.

LendUp is also subject to a 2021 stipulated final judgment that resolved the CFPB’s claims that LendUp violated the Military Lending Act in connection with its extensions of credit.

A complaint is not a final finding or ruling that the defendant has violated the law.

Read the complaint filed today against LendUp Loans, LLC.

Read the announcement of the 2016 enforcement action and consent order that the CFPB alleges LendUp has since violated.

 El Salvador became the first country in the world to make Bitcoin legal tender on Tuesday, which means businesses will be forced to accept it as payment.

Why Bitcoin? The country is seeking a quick solution to improve its financial system.

• Roughly 70% of the population in El Salvador lacks access to traditional financial services. But you don’t need a bank account to use cryptocurrencies—they can be stored via alternative digital channels like mobile wallets, promoting financial inclusion.
• Nearly one-quarter of El Salvador’s economy is based on remittances, and transferring funds via the Bitcoin blockchain could reduce cross-border transaction fees and speed up transfers, per an Insider Intelligence report.

Our take on why it won't pan out this way: Using Bitcoin as legal tender will not effectively improve access to financial services in El Salvador.

• Its high volatility doesn’t make it ideal for payments. Users are more commonly encouraged to retain Bitcoin in the hope that it accrues value rather than spend it.
• And 75% of Salvadorans have reservations about their country's decision to adopt Bitcoin, with pensioners in particular fearing the use of Bitcoin in their payouts due to its volatility.
• Perhaps most damning is that about two-thirds of the population does not have access to the internet, and some regions even lack electricity, making Bitcoin utterly impractical.
• Finally, financial institutions are concerned Bitcoin could be used to pass illicit proceeds through the El Salvador financial system, making it more challenging to comply with anti-money laundering requirements.

The bigger picture: We don’t expect Bitcoin to take off as legal tender anywhere else. Other governments will focus on using central bank digital currencies (CBDCs) to improve their financial systems with blockchain technology.

Eighty-one countries representing more than 90% of global GDP are exploring CBDCs, withemerging economies leading the race: The Bahamas and Cambodia are already at the implementation phase, highlighting that they see such digital currencies as a more viable route to financial inclusion than Bitcoin.

From the standpoint of technological adaptability, Millennials are among the groups which were able to adjust the most in a brief period of time—a time that is torn and accelerated anew by paradigm shifts all over the board. The older ones (born between 1980–1993) received insights from the preceding generations and accommodated to the best of their ability: lessons that remained from the preceding Gen X's beliefs and habits and what their Baby boomer parents taught. Organic intergenerational exchange is now juxtaposed with exponential technological progress. The reality is, Millennials suffered a clash because of this energetic ambiguity. As a result, they stumbled into a whole new era where everything they've been taught has been distorted and tested. A test that already shows many fruits and reasons to believe that Millennials readjusted swiftly.

The prior generations' values about work, savings, lifestyle, and investments have radically shifted to different priorities. They appreciate investing in new technologies, have other behavioural habits, preferences and expectations towards their future.

Many of them are under the justified impression that merely finishing a bachelor's degree is not enough to find a fulfilling job and the salary of their dreams, as maybe their parents did. 

Millennial traders are the most ambitious

Due to the COVID-19 pandemic, the future of the financial market is uncertain. One age group that seems to take advantage of this web of uncertainties, however, are millennials. Even though it might sound redundant, Millennials become more and more proficient in dealing with uncertainty at their best. A well-known characteristic of Millennials is their desire for aspirations to be fulfilled rapidly, no time wasted. Be it the morning news, dinner plans, or instant gratifications from their physical achievements in their jogging app—all rest comfortably at their disposal through a simple swipe or click on their smartphone.

We observe similar strives in today's fintech domain, evolving at par with this generation. For instance, the fact of digital and branchless banks challenging traditional bank structures.

Cryptocurrency—the most popular digital asset

As some also refer to Millennials, Generation Y has a reputation for embracing all things digital, especially cryptocurrencies. So when it comes to investments, most prefer doing things online or over an app rather than filling up lengthy paperwork. Cryptocurrencies emerged a little over a decade ago, with the first taking the spotlight in 2009: bitcoin. These novel assets became a diverse basket of tokens and coins, thriving from blockchain technology—a prospective and growing alternative to our current legacy financial system. It basically means that cryptocurrencies can be purchased, sold, exchanged, or stored by anyone, digitally, online with the aid of the blockchain. It is a unique database that has so far proved to be virtually incorruptible, with a natural affinity for decentralisation and self-responsibility. Many of these blockchain projects releasing new cryptocurrencies every year yielded unfathomable results and growth. (Not all of them on merits of their innovation, of course, but rather because they were hyped into oblivion by clever marketing.)

These attributes might display why cryptocurrency as an asset class fits perfectly into the Millennial lifestyle. For anyone still wondering why Millennials would invest in cryptocurrencies, here are some excellent reasons

●      High and quick returns (Millennials are considered one of the most ambitious generations, historically speaking. They seek investments that benefit them with high returns in a shorter duration. While there are not many assets that generate high returns quickly, cryptocurrency can be an exception.)

●      A bonus to a decent retirement portfolio

Concerning the last point, it's even more severe. Unlike their parents (depending on the country they live in), most Millennials in Latin America, for instance, are a generation without access to a future pension assured by the state. Even those who hold good jobs now are not likely to receive a pension once retirement starts. This urge to take matters into one's own hands, making long-term investments, is driven by the possibility of reaching independence and financial freedom.

Cryptocurrency is highly volatile. The fact that sometimes its 30-day gains or losses can exceed 100% is a testament to that. Meaning, the risk and returns are relatively high. However, if played out wisely, they can make a great addition to a Millennial's retirement portfolio. In that sense, the statistics already show how Gen Y demographics often seek other incomes than just what their official jobs generate. That's why it is imperative to consider which platform gives the best conditions and security to avoid precarious situations. A service that can help them generate even more additional income on which they can rely.

Also, studies have shown that the pandemic has increased the risk appetite among Millennials significantly. Here is a paradox: They remain a relatively young generation that is not very worried about liabilities since, on the one hand, they don't have a whole lot to lose and starting over does not seem like that much of a tragedy. On the other hand, they`re used to sudden changes and have come to deal with these in a surprisingly determined and organised manner.

A suitable Alternative Investment

The term 'Alternative Investment' means performance is unrelated to traditional asset classes such as stocks and bonds. Cryptocurrency can make for an alternative investment for Millennials over the long term since they are likely to remain strong and pull through any financial crisis that may occur in the future—particularly if the fundamentals, use case, partnerships, and innovation of the blockchain project hold up.

So, how to invest safely? The first step is finding a reliable and trustworthy exchange for cryptocurrencies. Simplicity, security, and accessibility are three aspects that everyone should consider while choosing an exchange to invest in crypto. Before ever trying to buy any asset with your hard-earned money, make sure the platform is legit.

Many lost orientation and perspective due to the great crashes in the crypto market, like back in March 2020, or more recently, in May 2021. When the typical Elon Musk tweet hits home and provokes severe market fluctuations, some of the best platforms should be able and willing to give guidance and adapt to their customers' needs.

Reaches the double-digit user milestone in just over a year

CoinSwitch Kuber, India’s fastest growing and foremost crypto platform, today announced that it has hit 10 million registered users this week, to become India’s largest crypto platform. CoinSwitch Kuber has reached the milestone in just 15 months since starting operations in India in June 2020, a testament to the simplicity and convenience the platform provides its users. Out of this, 7 million are active users with a monthly transaction volume of INR 15,138 crores.qwa

The platform is witnessing high volumes from the millennial and GenZ population, with almost 75% of its user base being between the ages of 18 and 35 and the average age being 24. It reaches out to a diverse set of investors in 4000+ cities across the country. Over 55% users on the platform hail from tier 2 and 3 cities, while the remaining 45% are from tier 1 cities. CoinSwitch Kuber has been attracting investors from tier 2 cities such as Patna, Coimbatore, Karnal Dehradun, Ghaziabad, Faridabad, Agra, Amritsar, Bhopal, Ernakulum, etc., and tier 3 cities like Machhagan, Imphal, Mohali, Rohtak among others. This aligns with the company’s aim of making crypto investments as easy as ordering food online.

On CoinSwitch Kuber, the average crypto investment is about INR 9,000 per month per user, with investors in tier 1 cities making larger trades over smaller towns. In tier 1 cities, the average monthly ticket size is about INR 11,600, in tier 2 about INR 6,600 and in tier 3 about ₹3,500 per user.

Ashish Singhal, Co-founder & CEO, CoinSwitch Kuber, said, “In 2020, the crypto industry witnessed a whopping 200-300% month-on-month growth inspite of the raging pandemic. We launched CoinSwitch Kuber in India during the lockdown in June, and onboarded over 1 million users in just six months. The journey from 1 million to 10 million has taken us just 9 months. We aim to accelerate this growth by offering continued simplicity, security, the best rates and experience to our users.” 

“CoinSwitch Kuber is on a mission to bring financial freedom to all Indians by democratising crypto investments and eliminating all complexities from the process of crypto buying and selling. CoinSwitch Kuber has educational crypto content on the platform itself, ensuring that both novice and experienced investors make informed decisions. Reaching 10 million users to become the largest and the most preferred crypto platform in India indicates that we are on the right path towards building trust among Indians to achieve our inclusive goals. We want to bring the revolutionary technology of crypto and blockchain to billions in our nation,” he added.

CoinSwitch Kuber began global operations in 2017 and shifted focus to India in June 2020. It is backed by Tiger Global, Ribbit Capital, Sequoia Capital and Paradigm Capital. 

Karen Whiteley named Vice-President of Sales at Finical

Finical provides credit card processing services to thousands of businesses in North America. Finical markets its services through its relationships with Independent Sales partners, as well as strategic relationships with various vendors and Banks. Finical has over 2,200 sales agents throughout North America. 

Ms. Whiteley brings more than 20 years of industry experience to Finical. Her extensive experience includes senior management and executive positions for some of the top organizations in the payments industry, including Concord EFS (Fiserv), First National Bank of Omaha, and most recently, C&H Financial Services. 

Aaron Nasseh, Finical's CEO, commented: "I am absolutely thrilled to have Karen leading our sales and recruiting efforts, as we continue to expand our Agent channel, Bank relationships and strategic partnerships."

Karen Whiteley commented: "With Finical's reputation as a tenured and highly respected payments technology provider, I am honored to be asked to join the team. I intend to pair my experience with their 'best-of-breed' payment solutions to expand the sales channel and promote rapid financial growth for all current and future partners."

AutoRek, a leading software provider to global financial services firms, is pleased to have Superscript come on board as a new client.

Superscript is shaking up the traditional business insurance distribution model and is one of the insurtechs leading the industry, placing customers at the core of their business. Offering cover for over 1,000 business types, Superscript provides businesses with flexibility and customization.

Established in 2015, Superscript is a digital-first insurance platform automating the entire process of buying and managing insurance for small businesses. The company's platform uses a unique combination of proprietary technology and underwriting expertise alongside a flexible monthly subscription model suited to the fast-changing needs of today's small businesses. It enables customers to generate quotes, set-up their cover in minutes, pay, modify, or cancel their cover any time, easily.

AutoRek has been selected by Superscript as a key component within their digitally-driven architecture to deliver end-to-end automation and to enable the business to scale and meet its exciting growth plans.

Gordon McHarg, CEO at AutoRek, added, “We are delighted to have a client such as Superscript come on board. It is an exciting time for both Superscript and AutoRek in terms of growth plans and we look forward to collaborating on this project and building on our relationship.”

Piers Williams, Insurance Lead at AutoRek, added, “We are excited to work with the team at Superscript, particularly as they are strong players in the new wave of digitally driven Insurance firms. We have built our Bordereau solution based on the market need and are looking forward to working with the team at Superscript to implement our market leading solution to deliver end-to-end automation.”

Anil Sharma, Chief Financial Officer at Superscript, said: “Superscript has ambitious growth plans, and we are scaling quickly. As we are managing an increasing amount of policy transactions, the implementation of AutoRek’s technology will help increase efficiency for the finance team. Importantly, it can be incorporated seamlessly and will be a useful addition to our existing systems.”

Open source leader to provide technical and community-building expertise for OS-Climate Data Commons platform and burgeoning project coalition

Red Hat, Inc., the world's leading provider of open source solutions, today announced that it has joined OS-Climate (OS-C), a Linux Foundation-backed open source project that intends to build the breakthrough technology and data platforms needed to more fully integrate the impacts of climate change in global financial decision-making and risk management. As part of its membership, Red Hat will provide technical acumen and resources to help OS-C build a “Data Commons” that serves as an open data ingestion, processing and management platform for members to collaborate on standardizing and improving the accuracy of corporate climate and environmental, social and governance (ESG) metrics. The resulting curated library of public and private sources can then be used to help bankers, asset owners, asset managers and regulators assess climate risk and opportunity as elements of financial decision-making.

OS-C is a non-profit, non-competitive organization that seeks to use open source technology and collaboration to align the efforts of the financial community in addressing the challenge of global climate change while preserving the opportunity to innovate and compete in global capital markets. This approach is a crucial component for closing the $1.2 trillion annual gap in investment needed to achieve Paris Climate Accord goals. The organization’s members include Allianz, Amazon, BNP Paribas, Goldman Sachs, KPMG, Microsoft, the Net Zero Asset Owner Alliance and many more technology and financial leaders, with membership having tripled since the community’s launch in September 2020.

Red Hat brings a wealth of experience and expertise in building open source communities for other Linux Foundation projects, serving as a founding member of the Cloud Native Computing Foundation (CNCF), the Open Container Initiative (OCI) and many more. Beyond the technical skill to actively contribute code to these initiatives, Red Hat also provides the nuanced understanding of how to encourage collaboration between organizations that would otherwise be competitive in-market.

The open source model championed by Red Hat and selected by OS-C is intended to enable the creation of a complex, multi-layered ecosystem for OS-C members, including an open data platform that can be adopted by individual organizations for their own specific uses. This helps to provide a more level data playing field that meets a variety of regulatory requirements, providing global financial institutions with better, deeper views to evaluate climate change risk and opportunity as a core part of finance, banking and investment strategies.

OS-Climate Data Commons

To help adopt financial flows to the physical and economic market impacts of climate change, financial institutions and banks need a clearer view into an ever-growing tide of related data. To address this need, OS-C is working to build the OS-Climate Data Commons, an open platform that aggregates a variety of structured and unstructured data, from SEC filings and corporate PDFs to scientific and market research, into a single library of trusted data. OS-C’s goal is to make publicly available as much high quality data as possible, while also linking to public and commercial data and enabling its use in open source analytic tools.

Red Hat’s work around the Data Commons initiative is intended to help create a portable, enterprise-grade data platform that supports members in managing complex data ingestion and processing flows using the latest advances in machine learning. This helps to collate and sanitize public and proprietary data sources, while still supporting compliance requirements around regulatory disclosures. The platform is also intended to provide open, interoperable tooling that organizations can consume alongside their own workflows and internal processes.

As part of its membership, Red Hat will commit a team of eight solutions architects, data engineers and software engineers to the project, emphasizing the creation of OS-Climate Data Commons. The company will also provide community management resources to help OS-C establish the proper infrastructure and collaboration processes to effectively engage its growing membership.

Supporting Quotes

Chris Wright, senior vice president and CTO, Red Hat

“Developing a common way to understand and model the impact a business has on the climate is the kind of challenging endeavor best suited to broad-scale industry collaboration. By bringing our technical and community expertise to OS-Climate, we’re able to help bring open, collaborative standards to bear to help tackle one of the world’s most critical issues.”

Truman Semans, executive director, OS-Climate

“Building an open source community to address a challenge as wide-ranging as climate change requires more than just code; it requires a holistic approach that starts from the foundation upwards. Red Hat is a proven leader in open source, both at a technological and cultural level, and we’re pleased to be able to lean on their vast experience in helping us craft a truly collaborative and impactful ecosystem around OS-Climate and the OS-Climate Data Commons.”

Rim Tehraoui, chief data officer, BNP Paribas Group

"Having a single global ecosystem where investors, companies, policy-makers and other actors can collaborate with the same data and analytics tools creates opportunities to drive much needed industry convergence and acceleration on climate-related analysis. It is extremely encouraging to have an actor such as Red Hat bringing its wealth of experience in open source technology to help us build a fully portable open climate data platform.”

Kara Mangone, global head of Climate Strategy, Goldman Sachs

“The importance of climate data and analytics for our firm and clients has continued to grow against the backdrop of an increasingly complex set of sources, approaches and tools. OS-Climate’s one-stop shop for essential information and collaborative analytics will enable clients and other stakeholders to more effectively measure progress and accelerate climate investment.”

The partnership addresses new legislation for global e-invoicing while driving intercompany operational efficiencies

FourQ, the leading provider of intercompany financial management (IFM) software, has partnered with Pagero, compliant e-invoicing expert, to help  corporate finance teams manage e-invoicing on an international scale. This strategic partnership between FourQ and Pagero entails a go-to-market relationship in which the respective sales teams will work together, and an agreement between the two companies to integrate their solutions. Available in the coming months, FourQ and Pagero will offer an integrated, joint solution that delivers e-invoicing to comply with tax authorities around the globe while managing the complex nature of intercompany processes.

Intercompany is quickly becoming the next process that shared services organizations are seeking to automate. In the past, automation was difficult due to the complex nature of billing routes as well as tax and treasury treatments. As demand for compliant e-invoicing has increased significantly, more and more governments are using digital tools to facilitate compliance and track fraud. This partnership not only meets needs for e-invoicing mandates, but also aims to automate up to 80% of intercompany processes, including managing tax, treasury, receipt, and settlement.

While some ERP and finance systems are capable of managing the new processes for invoices sent to outside customers, most hit a wall when it comes to issuing compliant invoices to entities within the same multinational corporation due to siloed systems, teams, and processes. FourQ and Pagero’s partnership focuses on helping overcome these challenges by integrating e-invoicing directly with an organization’s intercompany financial management in conjunction with its third-party invoicing process. Such is critical in a world that is rapidly evolving towards government mandated e-invoicing adoption.

“We are very pleased to partner with Pagero, and together are committed to helping our customers increase operational productivity through an integrated solution,” said May Ma, Chief Transformation Officer at FourQ. “We’re working with Pagero to proactively address the growing need for world-class intercompany financial management as well as meeting the legislative requirements for e-invoicing, with many tax authorities around the world.”

“More and more of our customers raise intercompany accounting as a concern, that it doesn’t fit into their regular ERP billing process,” explained Alexander Jansson, VP Partner Development at Pagero. “We’re especially excited to team with FourQ for this purpose.”

To learn more about the FourQ-Pagero partnership, please contact partnerships@Four-Q.com.

Scallop, the world's first DeFi-powered banking app with integrated DeFi-powered accounts, is formalizing plans for launch in the EU and UK markets in late October 2021, with international expansion plans to follow. A one-stop solution for both banking services and crypto DeFi services, Scallop provides traditional banking services for busy users with a cryptocurrency core.

Scallop's ecosystem is focused on offering its users DeFi-powered banking solutions in an all-in-one account that enables them to manage their cryptoassets and fiat in a faster, more efficient, and secure manner, thereby making people's day-to-day lives more manageable, while also bringing crypto a step further into the mainstream.

"Scallop's mission is to accelerate the global transition to a more decentralized and equitable financial system. Therefore, there is a requirement for a banking infrastructure that bridges the crypto and fiat worlds. Scallop will allow its users to use their digital assets in the real world for the very first time. This is a major step for any foreseeable future of cryptocurrencies; without using crypto in the same way as fiat, the future is limited," said Raj Bagadi, CEO and Founder at Scallop.

With Scallop accounts, users will be able to pay for goods, set up direct debits, send or receive cross-border payments, and more. Scallop also comes with an in-built non-fungible tokens (NFT) marketplace where users can easily buy or sell their crypto-collectibles securely. And on top of that, Scallop users will also be able to earn the best interest rates from DeFi protocols like Compound and Aave.

Scallop has already secured a license to provide virtual currency exchange and wallet services from Estonia's MTR financial regulators, and the team is waiting on the UK's Financial Conduct Authority (FCA) Regulation as an EMD for Electronic Money Institution (EMI). Scallop's also shortlisted in Europe for regulation as an Electronic Money Intermediary. (Scallop services will not be immediately available in the United States)

Scallop will make further announcements as the EU and UK rollout, expected to go live in October 2021, begins. All application development has been completed, and security audits are taking place to ensure the product is technologically sound before the final launch.
 

• 08.09.2021 -- 05:11 pm

Amelia Ruiz Heras speaks about EPI, an initiative launched by 31 European banks/credit institutions and 2 third-party acquirers to create a unified, innovative pan-European payment solution and how it will effect the market participants. 

ACI Worldwide — the leader in real-time payments — delivers the mission-critical real-time payments software solutions that enable corporations to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. 

Website https://www.aciworldwide.com/