CFPB: Proposed order against firm marketing private student loans seeks $950k penalty, would suspend $6.6M in redress

The federal consumer financial protection agency filed a proposed, stipulated final judgment and order against a firm that markets private student loans, as well as its investers, over alleged violations of federal consumer financial protection laws.

The Consumer Financial Protection Bureau (CFPB) said it sued Climb Credit, Inc., in October for offering loans for educational programs that often were not vetted for quality and job placement success or that failed the vetting, despite Climb Credit making representations to the contrary. If entered, the order will require the defendants to stop making certain representations about their educational offerings in their advertising and pay a $950,000 civil money penalty into the CFPB’s victims relief fund.

The CFPB filed its proposed, stipulated final judgment and order Thursday against Climb Credit and its investors, including 1/0 (“One Zero”). It said Climb Credit, Inc. is a Delaware corporation headquartered in Las Vegas, Nev., that markets private student loans. Clime was headquartered in New York until 2022 and maintains significant operations there, it said. The CFPB’s October lawsuit also names wholly owned subsidiaries Climb Investco and Climb GS Loan Fund. Additionally, the CFPB said an investigation also uncovered facts to take action against the company’s controlling investor 1/0 Holdco LLC and 1/0 Capital.

The CFPB alleges the firm violated the Consumer Financial Protection Act (CFPA), Truth in Lending Act (TILA) and TILA’s implementing Regulation Z. If entered by the court, the order would:

• impose a $6,618,000 judgment for redress (suspended based on a demonstrated inability) to pay;
• require defendants to pay $950,000 million in civil money penalties;
• prohibit the defendants from making representations in connection with consumer financial products about outcomes by graduates, or that defendants evaluate or vet the quality or outcomes, of educational programs;
• require the defendants to clearly and prominently disclose in all consumer-facing marketing materials that consumers should not rely on the defendants to identify quality educational schools and programs.

CFPB Takes Action Against Climb Credit and Investment Firm 1/0 for Deceiving Borrowers About Coding Bootcamps and Vocational Programs