Avant settles FTC unfair loan servicing charges for $3.85m
Online lending company Avant has agreed to settle the Federal Trade Commission (FTC)’s charges for “deceptive or unfair loan servicing practices” and pay harmed consumers $3.85 million, reports Jane Connolly.
The FTC’s multiple charges against Avant included claims that the company would charge consumers duplicate payments without authorisation – one customer’s monthly payment was taken from his account 11 times in just one day.
Other charges included: the company falsely advertising that it would accept payments from credit or debit cards, before rejecting such payments; withdrawing money from consumers’ accounts or imposing charges without authorisation; failing to properly process cheque payments; and violating the Telemarketing Sales Rule and 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 unsecured instalment loan provider was also accused of providing inaccurate payoff quotes to borrowers and continuing to collect payments after the quoted amount had been paid off.
Behaviours concerning unauthorised charges continued, even after hundreds of consumers had complained.
“We have alleged that Avant gave the run-around to consumers trying to repay their loans, because of systemic issues with the company’s loan servicing platform,” says Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “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.”
Under the settlement order, Avant will be prohibited from taking unauthorised payments and collecting payments by means of remotely created cheque, as well as from misrepresenting several features of their services.