Online lending company used deceptive practices, must give back $3.85 million
Avant to pay $3.85 million for harming thousands of consumers
The Federal Trade Commission announced a settlement today that stopped an online lending company from taking advantage of unsuspecting customers with lies and illegal conduct.
Avant, LLC, an online lending company, has agreed to settle the FTC’s charges that it engaged in deceptive and unfair loan servicing practices, such as imposing unauthorized charges on consumers’ accounts and unlawfully requiring consumers to consent to automatic payments from their bank accounts.
“Online lenders need to understand that loan servicing is just as important to consumers as loan marketing and origination, and we will not hesitate to hold lenders liable for unfair or deceptive servicing practices,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.
According to the FTC’s complaint, Avant offers unsecured installment loans for consumers through its website. The FTC charged that in many cases, the company falsely advertised that it would accept payments by credit or debit cards, when in fact it rejected these forms of payments. The FTC also alleged that the company withdrew money from consumers’ accounts or charged their credit cards without authorization. In some instances, Avant charged consumers duplicate payments without authorization, improperly taking consumers’ monthly payments twice or more in one month. For example, one consumer’s monthly payment was debited from his account 11 times in a single day.
In many cases when consumers complained about the unauthorized charges, Avant allegedly insisted that the consumers authorized the charges and refused to provide a refund. Despite hundreds of consumer complaints about unauthorized charges and internal documents repeatedly acknowledging this problem, the company continued to charge consumers without authorization, according to the FTC.
The Commission has also charged the online lending company with the following law violations:
• failing to properly and timely credit payments made by check;
• providing inaccurate payoff quotes to consumers;
• collecting additional amounts even after consumers paid the quoted payoff amount; and
• violating the Telemarketing Sales Rule and the Electronic Fund Transfer Act by requiring borrowers to agree to recurring automatic debits of their bank account as a condition of obtaining a loan.
The stipulated final order imposes a judgment of $3.85 million, which will be returned to consumers who were harmed by Avant’s unlawful practices.
A WARNING TO CONSUMERS
If you need to borrow money to consolidate credit card debt, make home or auto repairs, or pay other unexpected bills, a personal installment loan may be an option.
Most personal loans are unsecured, meaning they don’t require collateral like a house or car, and typically have higher interest rates than secured loans.
Paying a higher interest rate is one thing, but when it came to one online lending company, customers were caught off guard by what the FTC says were lies and illegal conduct.
If you’re shopping for an online loan, do some research, especially if you’re not familiar with the company. Type the lender’s name into your favorite search engine with terms like “review,” “complaint” or “scam.” If you find bad reviews, you’ll have to decide if the offer is worth the risk. After all, it’s only a good deal if the loan and servicing experience lives up to the written promises.
If you think a company has violated the law, tell the FTC at ftc.gov/complaint or by calling 1-877-FTC-HELP (382-4357).
For more information, check out the FTC's Credit and Loans page.
You can learn more about consumer topics at: https://www.consumer.ftc.gov .
Information provided by the Federal Trade Commission.