P2P Lending / NFT Lending Forum

Lending Club Discussion => Investors - LC => Topic started by: Rob L on April 24, 2018, 11:00:00 PM

Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Rob L on April 24, 2018, 11:00:00 PM
See:

https://www.bloomberg.com/news/articles/2018-04-25/ftc-files-complaint-against-lendingclub-over-hidden-fees-loans

Stock is now at $3.02, down $0.24 or about 7%. At its low so far earlier today, it reached $2.92.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Tomp on April 24, 2018, 11:00:00 PM
Been saying these men are incompetent crooks since LC was at $25.....hmm why do think Larry just resigned from the Board.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 24, 2018, 11:00:00 PM
https://www.ftc.gov/system/files/documents/cases/lending_club_complaint.pdf

This is really damning....I'm in this space and this stuff is compliance 101. Institutional Investors have been calling LC out on it (noted in the complaint). Can't even fathom how egregious their actions were.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: bkcarp00 on April 24, 2018, 11:00:00 PM
Lendingclub Responds:

https://blog.lendingclub.com/lendingclub-responds-to-federal-trade-commission-complaint/
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Fred93 on April 24, 2018, 11:00:00 PM
I've read the complaint.  I don't find it "damning" at all.  I find it typical bureaucratic regulatory hooha.

The primary issue is that FTC says that the loan application fee is "hidden".  In other words, LC isn't clear ENOUGH about it.  They do mention it several places, so it isn't completely hidden.  This is about whether it is obvious ENOUGH.

A few other issues thrown in...

Second issue is that FTC is claiming violation of privacy regulations, because LC didn't deliver the "privacy notice" to customers well enough.  FTC admits that you can click on something and read the privacy notice, but that isn't good enough because LC didn't stick it in the customer's face.  You know, I get these damn privacy notices now required by law from a zillion financial companies, and I've stopped reading them.  They do nothing to improve my privacy.  Therefore it is difficult for me to have sympathy with the FTC on this one.

Third issue is that LC has occasionally made accidental double withdrawals from some borrower's bank accounts.  We knew this, because we've heard people discuss this on this forum.  However, what is not clear is how often this has happened.  The FTC complaint doesn't say.  It says "numerous instances".  Well, that could mean that FTC received three or four complaints out of over 1.5 million loans.  We just don't know. 

Fourth issue is that FTC claims that LC's language is not clear enough about the status of the application as it proceeds, and some people thought their loan was approved when it was not yet approved, so were surprised later to find they didn't get the loan.  I know that some people were surprised, but I wonder if there is a specific regulation about how obvious or in-your-face the language needs to be.

In my prior experiences with regulators in general, and FTC in particular, I find many of their actions petty and idiotic.  In the past, in my opinion, the FTC has often undertaken massive campaigns that were extralegal, ie without statutory authority or regulatory process.  (In other words, there needs to be a law passed by congress, and regulations written and subject to public review, and printed in the Federal Register.  Often the FTC has acted without this authority.)   That said, they certainly do have clear legal authority on the privacy notice issue, although the issue that the customer had to click a link does make it seem somewhat petty.  The FTC has the authority to be petty.

You will recall that Goldman Sachs Marcus doesn't have an up front fee.  I wouldn't be surprised if GS lobbyists planted the idea with the FTC that LC's up front fee was "hidden".

However, regulators have a big stick, so LC is in some serious legal trouble here, which will distract management and probably result in the payment of a substantial fine.  In addition, regulators have a "kick 'em while they're down" mentality, so expect extra scrutiny to be applied on all regulatory interfaces for the next year or two.

Some of these issues are clearly a failure of LC's compliance function.  I believe a lot of internal functions have gone downhill since Renaud left.  I see it in other areas.  Why should compliance be any different.  They don't have people who are on their toes any more.

Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 24, 2018, 11:00:00 PM
from: bkcarp00 on April 25, 2018, 01:58:31 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 24, 2018, 11:00:00 PM
from: Fred93 on April 25, 2018, 02:02:08 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: jd on April 24, 2018, 11:00:00 PM
Quote
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: toben88 on April 24, 2018, 11:00:00 PM
I bought a tiny bit of stock at $7.00 thinking the company is going to turn around as the investing side was working for me.
At $5 I bought a little bit more thinking we are getting cheap.
When it went below $4 I bought a whole bunch thinking all the bad news is behind them and all they need to do is not have a major screw up, they would easily become profitable this year and the stock to go back up.  So much for that idea...



Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 24, 2018, 11:00:00 PM
from: Fred93 on April 25, 2018, 02:02:08 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: MoMoney on April 24, 2018, 11:00:00 PM
from: toben88 on April 25, 2018, 04:52:23 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 24, 2018, 11:00:00 PM
Conflicting claims?
Guess consumers don't bother with the CFPB.

From the FTC:
"33. In fact, many consumers who apply for a loan from Defendant do not know that
Defendant will deduct an up-front fee from their loan proceeds. Indeed, consumers frequently
complain that they only discovered the fee after Defendant disbursed their loan proceeds, when
they noticed that the amounts disbursed were smaller than they were expecting. At least tens of
thousands of consumers contacted Defendant after their loan proceeds were disbursed to ask
about the up-front fee or to ask why they did not receive the full loan amount.
"

From LC's rebuttal:

We track all of our customer inquiries and complaints as part of our ongoing process of transparency and continuous improvement. The percentage of borrowers who complain about the origination fee is just a fraction of one percent. As we drive for more transparency, LendingClub voluntarily registered in the CFPB's public Consumer Complaint Database in 2015. Since then, with more than two million borrowers served, the CFPB has registered fewer than 15 complaints about LendingClub's origination fees.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 25, 2018, 11:00:00 PM
from: Rob L on April 25, 2018, 05:50:25 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 25, 2018, 11:00:00 PM
from: Rob L on April 25, 2018, 06:49:08 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 26, 2018, 11:00:00 PM
FWIW LC closed at an all time low today of $2.70 (-5.6%) on modest volume.
The low print of the day was $2.68, the high $2.93.
If there was any important news I missed it. Just the usual law firms soliciting shareholders with large losses to join a suit.
Sure wonder if Mr. Chen is a buyer here? IIRC his last average price was around $3.50. He started buying at $3.14 and stopped at $3.80.
Maybe we will find out Monday.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: MoMoney on April 27, 2018, 11:00:00 PM
Quote"> from: Rob L on April 27, 2018, 05:20:19 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: storm on April 27, 2018, 11:00:00 PM
As someone who's filed more than a few FTC complaints, it takes a lot of complaints to get the FTC to act.  It makes me think there is some basis to these charges.  The CFPB is toothless especially in the current political climate.  It goes to show LC has been suffering from a leadership vacuum the last couple of years, and management hasn't lifted a finger to improve things for borrowers or investors.  This action shouldn't have came as a complete surprise.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Fred93 on April 27, 2018, 11:00:00 PM
Quote"> from: Rob L on April 27, 2018, 05:20:19 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: jd on April 27, 2018, 11:00:00 PM
Quote
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Rob L on April 27, 2018, 11:00:00 PM
from: MoMoney on April 28, 2018, 12:01:08 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: bobeubanks on April 27, 2018, 11:00:00 PM
from: Rob L on April 28, 2018, 11:42:54 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 27, 2018, 11:00:00 PM
from: Rob L on April 28, 2018, 11:42:54 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 27, 2018, 11:00:00 PM
Well put but I disagree with much you have said. Time will tell.
With enough money software is a commodity that can be bought. It's not exclusively Bay area "magic" contrary to popular opinion.
I am neither long nor short LC stock. No dog in this fight.
I prefer LC to succeed rather than fail but am pessimistic. Money wise I am personally agnostic.
Any bank buys LC even at this level of $2.70 per share and I'm stunned; but I'm not a billionaire so what do I know.
I predict LC will continue to plod along as is.
Management continues to benefit from free stock incentives as long as they can keep the company going.
So, with $400M cash left from the IPO, if they keep a lid on things and don't take any chances they can keep it going for quite a while.
Tell me where this management that's getting free stock compensation could go and make more money?

Edit: Guess I'm on a roll but forgot to mention...
LC's underwriting or loan scoring model is designed to optimize originations not loan profitability. They seek to enhance share holder value, not to optimize lender returns. Certainly there is some give and take here. They must walk a fine line to retain enough lenders to provide the money to fund their loans yet maximize their originations (i.e fees). The bank model (Marcus and others) must seek loan profitability since they are funding the loans themselves and profit from their returns. The fundamental goal of the LC underwriting model would have to be revised to place loan profitability ahead of originations.

Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Tomp on April 28, 2018, 11:00:00 PM
from: MoMoney on April 28, 2018, 12:01:08 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 28, 2018, 11:00:00 PM
from: MoMoney on April 28, 2018, 01:36:36 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 29, 2018, 11:00:00 PM
from: Tomp on April 29, 2018, 12:01:03 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 29, 2018, 11:00:00 PM
from: Rob L on April 29, 2018, 01:29:24 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 29, 2018, 11:00:00 PM
from: MoMoney on April 30, 2018, 05:52:07 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 29, 2018, 11:00:00 PM
from: Rob L on April 28, 2018, 10:12:19 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 29, 2018, 11:00:00 PM
from: Fred93 on April 30, 2018, 06:16:32 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: MoMoney on April 29, 2018, 11:00:00 PM
Quote"> from: Rob L on April 29, 2018, 01:29:24 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 29, 2018, 11:00:00 PM
To give a counter argument about owning lending club stock:
Lending club is in a two sided market, the borrower side and the investor side. For them to effectively compete long term with likes of Marcus, they have to make at least one side or both sides cheaper. So either cheaper customer acquisition cost or cheaper cost of capital. Marcus has a cheaper capital cost because it doesn't have a middle man deducting origination fees. It also has the power to undercut lending club by reducing their margins. Lending club doesn't have that power because they are dependent on their investors giving them money.  I don't see Marcus squeezing them in the short term because the more players in the market, the bigger the consumer awareness is and better for all players. However, they could decide to go near 0 margin (amazon business model for a long time) and drive competitors out. This could be even worse if they buy a company like creditKarma and also reduce their cost on the consumer acquisition side as well. Lending club's CEO isn't a visionary. That's why I think the best path for them is to be acquired by a bank or by a company like Intuit (mint) to be able to compete long term.
It's unfortunate Renaud got ousted over something so minor. He was actually a visionary. There is a possibility that lending club ends up buying Upgrade and Renaud  returning as CEO but chances of that is pretty slim.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Rob L on April 30, 2018, 11:00:00 PM
May we live in interesting times.
The stock is presently at $2.64, only $0.02 above the all time low hit earlier today.
Very much looking forward to the 2018Q1 report coming out about a week from now.
 
BTW: Maybe I'm the last to know, but what are Club certificates?
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Tomp on April 30, 2018, 11:00:00 PM
from: MoMoney on April 30, 2018, 06:56:38 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Ran on April 30, 2018, 11:00:00 PM
Well said!
from: MoMoney on April 30, 2018, 10:43:39 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 30, 2018, 11:00:00 PM
from: Tomp on May 01, 2018, 10:49:46 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 30, 2018, 11:00:00 PM
from: Rob L on May 01, 2018, 10:17:40 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on April 30, 2018, 11:00:00 PM
from: MoMoney on May 01, 2018, 04:09:21 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Edward Reid on May 01, 2018, 11:00:00 PM
Quote"> from: Fred93 on April 26, 2018, 04:56:21 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 01, 2018, 11:00:00 PM
from: Edward Reid on May 02, 2018, 06:10:59 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 01, 2018, 11:00:00 PM
from: Rob L on May 01, 2018, 06:00:00 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 01, 2018, 11:00:00 PM
from: MoMoney on May 02, 2018, 09:02:23 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 01, 2018, 11:00:00 PM
from: Edward Reid on May 02, 2018, 09:26:57 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: storm on May 01, 2018, 11:00:00 PM
from: Edward Reid on May 02, 2018, 09:26:57 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 01, 2018, 11:00:00 PM
from: MoMoney on May 02, 2018, 09:45:22 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: MoMoney on May 02, 2018, 11:00:00 PM
Quote"> from: storm on May 02, 2018, 10:05:44 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 02, 2018, 11:00:00 PM
Quote"> from: Edward Reid on May 02, 2018, 10:10:22 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Fred93 on May 02, 2018, 11:00:00 PM
from: MoMoney on May 03, 2018, 12:26:30 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: storm on May 02, 2018, 11:00:00 PM
from: MoMoney on May 03, 2018, 12:07:10 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 02, 2018, 11:00:00 PM
from: storm on May 03, 2018, 03:38:16 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 02, 2018, 11:00:00 PM
If you scroll up, Peter says, "I should preface these statements by saying that I have had a long, close relationship with LendingClub. I have been an investor in the loans since 2009, an equity investor since their IPO in 2014 and LendingClub has been a sponsor of every LendIt conference since 2013. So, I am hardly impartial in this matter."

As of last week when the charges were announced, there were one Democrat and one Republican/chairperson running the FTC.  The Democrat resigned Saturday.  On Tuesday, four new commissioners were sworn in to fill the vacancies.  The current chair was nominated by the President and is waiting to be approved for a judgeship on the Federal Claims Court before giving up her current position which expires in September.

I will ask again...What proof do you have that the FTC charges are political?  What makes you think the charges are baseless?

sources:  https://www.politico.com/story/2018/04/26/ftc-commissioners-senate-approval-1108262
https://www.politico.com/story/2018/05/03/trump-federal-trade-commission-ohlhausen-511570
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 03, 2018, 11:00:00 PM
from: storm on May 03, 2018, 07:11:59 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Tomp on May 03, 2018, 11:00:00 PM
Is your primary source a Lending Club press release?
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: lascott on May 03, 2018, 11:00:00 PM
from: Tomp on May 04, 2018, 12:32:20 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 03, 2018, 11:00:00 PM
from: storm on May 03, 2018, 07:11:59 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 03, 2018, 11:00:00 PM
from: Fred93 on May 04, 2018, 06:14:15 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 03, 2018, 11:00:00 PM
from: Tomp on May 04, 2018, 12:32:20 PM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 03, 2018, 11:00:00 PM
I was genuinely curious why everyone formed the viewpoint they did.  At a time when alternative facts and fake news are all too common, it never hurts to think critically about the information we are given and where it originates before accepting it. 

I was expecting somebody would inform me that someone at the FTC has ties to a competitor or the banking industry and wants to see LC go down in flames.  A unanimous vote by the two FTC commissioners on opposite ends of the political spectrum hardly strikes me as political.

Reading between the lines of the FTC case and press releases, I believe the charges were brought on because of the lack of urgency by LC to address the complaints.  The case has screen shots showing how the origination fee was buried during the application process as of a few years ago.  It is hard to argue one way or another about the other charges without more specifics.  I was taught at a young age the customer is always right, and if they are going to the trouble of filing multiple FTC complaints, then things need to change.  Instead of refuting each charge, LC should have issued a blanket apology and said its working to improve its loan application process and servicing.  That is Public Relations 101.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on May 07, 2018, 11:00:00 PM
Lending club reported their earnings above their midpoint guidance and beating the expectations with a respectable revenue increase of 22% YoY and strong Adjusted EBIDTA of $15.3 million up from $0.2 million last year. Notable things from the conference call:
* The CLUB Certificates were the highlight of the earnings. They attracted over $160 million in new funding from several of the top names in asset management. They are planing on expanding the rollout.
* Lending club maintains that FTC claims are factually unwarranted and don't see any problems with their practices and expect to resolve the FTC issue.
* FTC complaint has not affected either investor side or borrower side. Scott pretty much said that investors are on the same page with lending club on the FTC issue, and see no problem going forward.
* They have expanded margins and also were able to lower marketing expenses partly because of their scale.
* Bank participation has gone up again following a decrease last quarter.

I think this was a great earnings report for lending club. I think this is a very attractive price point for the stock. It looks like the stock has barely budged after hours. I'm disappointed that there was no news of share repurchase given the depressed stock price.

Things I wish they had talked about:
* Product roadmap and why they are so slow in launching new products when they said they have new products in pipeline a while ago. I would expect a credit monitoring service by now. Upgrade got this done in a few months. I hope the new CTO is more competent.
* More information on Cross selling products in the pipeline if there is any
* More information on how the car loan refinance and business loans are doing
* What percentage of users are repeating users vs new users. They had promised to touch on this in the last earnings call.
* Why did they need to tap to their credit facility to finance loans when they have so much cash on hand which is also increasing with positive EBIDTA.
* Why no share repurchase plan when they believe "FTC claims are factually unwarranted" and share prices are at such a depressed level, and when they had previously launched one at much higher prices.



Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Reginald on June 13, 2018, 11:00:00 PM
The real deception is the underwriting of these loans. This is another sub-prime crisis in the making. They are simply not doing a good job of screening out fraud. Investors (of these notes) beware! Stock investors - thats another story. LC's  financial situation gets better and better with more defaults and chargeoffs. At least until the investor-sucker-well runs dry.

https://www.bloomberg.com/news/articles/2017-06-14/biggest-online-lenders-don-t-always-check-key-borrower-details
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: MoMoney on September 13, 2018, 11:00:00 PM
Some positive news regarding the lendingclub lawsuit. They had a hearing for motion to dismiss the lawsuit. They were not granted motion to dismiss; however motions to dismiss are rarely granted so that wasn't a suprise. The judge noted that lending club had already stopped making the no hidden fees advertisement. She encouraged the parties to settle and avoid wasting court resources.  She said, "If they agree not to do it anymore in an enforceable way, then why are we here? That is not a good use of court resources. To me, it's not rational, and it doesn't make sense. I can't conceive of why the case shouldn't be resolved."
The judge seemed to lean toward finding for LendingClub on the FTC's claims seeking injunctive relief, saying "the allegations are thin here."  Rather than offering money as payment for a wrong in a civil action, injunctive relief is a court order for the defendant to stop a specified act or behavior.

There were some negative comments that the judge made as well which were the basis to deny the motion to dismiss. She argued that lending club customers are "less sophisticated consumers than someone getting a jumbo mortgage" and that they might just scroll through the contract without reading it fully.

In summary, this case will probably go to settlement with no or little monetary settlement. The judge has already said the the "allegations are thin".

I actually hope lending club eliminates the origination fees from the borrower side all together and shift the fees to investors more like Marcus. That would encourage better borrower behavior, and would also attract more financial savvy borrowers and improve charge offs. It would also fit within lending club's new focus on consumer financial health, and would show that they are serious about that. If they do that within the settlement, that could also give a "win" to both sides as it would look really good for FTC that lending club will no longer charge origination fees from consumers moving forward altogether. In addition, lending club mentioned in the last earning call that moving forward, their bottle neck is on the investor side not the borrower side. However, since Laplanche's departure lending club has been slower and a lot more conservative especially on the tech side. They have talked about new products coming for quarters yet little to show for it. Even features such as direct payoffs and car loans are in their infancy after quarters of touting them. In the last earnings call they said that direct payoffs is still not implemented for the majority of borrowers when they have seen very positive results as a result of it. Elon musk changes the break distance with an on air software update. How long does it take to implement a direct payoff features for gods sake. I'm still waiting for new credit monitoring service they had hinted a few quarters ago. We'll have to see if the new CTO is any more competent.

I still maintain that lending club is worth at least $8 based on a very conservative DCF and am heavily long the stock.
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Fred93 on September 13, 2018, 11:00:00 PM
from: MoMoney on September 14, 2018, 05:31:15 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on September 13, 2018, 11:00:00 PM
from: Fred93 on September 14, 2018, 06:16:25 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: SLCPaladin on September 13, 2018, 11:00:00 PM
Quote
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on September 13, 2018, 11:00:00 PM
from: SLCPaladin on September 14, 2018, 11:06:56 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: TravelingPennies on September 13, 2018, 11:00:00 PM
from: MoMoney on September 14, 2018, 07:41:50 AM
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Rob L on September 14, 2018, 11:00:00 PM
LC would take a hit on a change from origination fees to higher APR.

IIRC most loans are paid off early. If LC were to eliminate origination fees and charge a higher monthly service fee then prepayments would hurt them. Rather than a fixed upfront fee LC would receive an indeterminate number of monthly payments. Fewer payments less fee. Prepayments already hurt investors as they are charged a service fee by LC on the final payment for the privilege of simply getting their money (principal) back. To mitigate the investor loss LC does not charge the full 1% on prepayments made within the first 12 months. Very nice they made that change. After 12 months though LC gets a tidy windfall for prepayments as they charge the investor a service fee for returning the remaining principal without actually having to service the remainder of the loan.

There's also the unsubstantiated "conspiracy theory" that LC re solicits its current borrowers that have made a year or more of prompt payments with an offer to refinance their current loan at a much lower interest rate. Marketingwise they are the perfect target. LC gets a new origination fee and the servicing windfall from the original loan described above. Only the current investor(s) get hurt. If true, a switch to higher APR would end this game.

Finally there's cash flow. Those nice up front fees would be spread over the life of the loan. Not a good thing.

Of course LC could up the APR enough to cover all this (they'd have to predict future prepayment rates to do so).
Whether or not the new APR would be competitive is an open question.
 
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: Johnwick88 on October 09, 2018, 11:00:00 PM
Hard to believe that this was "sudden" and Larry didn't know it was going done when he left the Board only 3 weeks ago. It is completely f*cked up that FTC currently only has 2 of the five directors positions filled and I guess one is leaving. Tough to deal with a gutted government, MAGA and whatnot

Gclub mobile
Title: FTC Files Complaint Against LC, Accuses of Deceptive Practices
Post by: hdsouza on October 21, 2018, 11:00:00 PM
The biggest deceptive practice that LC employs is their cash flow system.
If you notice they take 5 days from the time the client makes a payment till the time the payment is effective.
To the normal eye it makes little difference, although LC makes tons of money on it

Again this is my assumption and I apologize if I am incorrect but....
... I was recently researching companies to buy Stocks and I stumbled on m1finance.com. I was surprised when they do not charge any fees for stocks and have an amazing system. So how do they make their money See https://www.reddit.com/r/m1f/comments/7lj33z/how_does_m1_finance_makes_money/ as the owner mentions "They believe eventually every investment platform will be free".

So I would conclude LC is doing the same with the funds they hold for 5 days. Investing it.
Another way.. It should not take 5 days for money to be credited to your account. When i transfer money between banks it is 24 hours.  Transferring money to m1finance was 4 hours!!!!

The difference of 5 days may not make a huge difference to the small investor like us, but i am sure if I received the Borrower payments without the 5 day holdup, I would have invested 5 days earlier.

Dont get me wrong. I am not saying I do not like LC. Actually I love them . I have to.. I have thousands of dollars invested :)