Climb Credit Sued By CFPB For “False Promises And Outright Lies”

Climb Credit, a student lender, allegedly made false claims about graduate hiring rates and salaries at its partner schools and programmes, inducing students to take out loans.

The cases alleges Climb Credit and 1/0 claimed to vet partner schools for “outcomes and value” but offered loans for programmes that failed their own return-on-investment analysis, or which were not analysed at all. The CFPB alleges in over 700 Climb Credit told potential borrowers that a school had passed the return-on-investment analysis even when the defendants internally acknowledged they had low confidence in the school’s claimed job placement rate.

“Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs,” said Rohit Chopra, CFPB, director. “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.”

Additionally, the lawsuit alleges Climb Credit failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures.

In 2020, the Student Borrower Protection Center (SBPC) accused the fintech of engaging in misrepresentation of educational programmes and steering borrowers towards for-profit schools.

The CFPB stated their aim is to stop the unlawful conduct, redress for harmed borrowers, and a civil money penalty, which would be paid into the CFPB’s victim relief fund.

Climb Credit is headquartered in Las Vegas and its co-founder Vishal Garg is also CEO of Better.com. He was noted for firing 900 employees on a Zoom call in 2020.

Casey Powers, CEO of Climb Credit, told Finextra: “The CFPB does not have evidence that any of the statements or data points we shared pertaining to the outcomes of the programs we work with were misleading or harmful to borrowers—their own press release uses wobbly language such as ‘may have been impacted by Climb’s action.’

“We’re very disappointed in the fact that after 3+ years of complete cooperation with the CFPB, sending them thousands of documents and providing live testimonies—and showing a willingness to negotiate a settlement in good faith the CFPB abruptly ended our conversations and has chosen to move this matter to litigation rather than work with us.

“This lawsuit and the CFPB’s completely misguided narrative distract from the core issues that persist in the higher education system, and unfairly calls into question the positive outcomes that the overwhelming majority of students in these programs achieve.

“The reality is that skills-based and certificate programs which are alternatives to 4-year degrees are viable pathways to careers in fields where our economy needs more talent. Several policy-maker’s and private companies—including the Biden Harris administration—have acknowledged this fact, and are working to make these pathways more available options for students. Climb is one of those companies, and we look forward to continuing to deliver on that mission.”