The Consumer Financial Protection Bureau (CFPB) recently filed a lawsuit against Climb Credit, a student lender, 1/0 Capital, its largest shareholder, and 1/0 Holdco, its controlling investor, for misrepresenting the quality of the training programs at their partner schools and making false claims about graduates’ hiring rates and salaries.
The lawsuit alleges Climb Credit and 1/0 claimed to have vetted partner schools for “outcomes and value.” Climb Credit, the lawsuit alleges, offered loans for programs that had not analyzed or failed the return-on-investment analysis.
The lawsuit also alleges annual percentage rates were not properly disclosed in online marketing materials and loan origination fees were hidden in disclosures.
The CFPB seeks to order Climb Credit and 1/0 to stop their illegal practices, compensate borrowers, and pay a civil penalty to the CFPB’s victim relief fund.
“Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs,” CFPB Director Rohit Chopra said. “Tens of thousands of students may have been impacted by Climb’s actions, and the CFPB is suing Climb and its investor overlord to halt these activities and get relief for students.”
Climb Credit is a Delaware corporation headquartered in Las Vegas.
The lawsuit also names wholly owned subsidiaries Climb Investco and Climb GS Loan Fund.
The CFPB alleges that the defendants used a combination of tactics to entice potential customers into borrowing money, such as by hiding the true costs of its loans by not accurately disclosing finance charges on loan documents and failing to disclose the annual percentage rates in marketing materials.