LendEDU Misresprented Information To Favor Lenders That Paid, According to FTC
06 Feb 2020
Approx Reading time: 3 minutes
- The company has agreed to settle the charge by paying $350,000.
- This consent agreement would undergo public comments for 30 days before being finalized by the commission.
- As per the allegations, LendEDU took money from advertisers and offered them favored positions on its website. It also posted fake reviews for advertisers, prompting users to subscribe to their services.
LendEDU.com, a website offering information and advice pertaining to personal finance, has consented to make a payment of $350,000 as a settlement against allegations that it prompted users to prefer certain lenders by posting fake reviews and recommending lenders that paid them, according to an announcement made by the Federal Trade Commission in the US. The consent agreement has been signed with the key management personnel at LendEDU.com. The process dictates that this agreement be published in the Federal Registry, after which it would be open for public comment for a period of 30 days. After this, the commission will again deliberate whether to finalize the propositions made in the consent agreement. The administrative complaint that had been filed by the FTC had acknowledged that the information presented on the LendEDU.com website was objective, unbiased, as well as accurate when it came to various consumer finance products, such as credit cards or student loans. However, the service failed to make necessary disclosures that needed to highlight the compensations it received from various advertisers, which influenced the information presented on its website. As per the details contained in the complaint
, LendEDU.com effectively presented users with ratings and ranking for various financial products that prompted them to choose specific creditors who had paid the company to promote it. The company also posted fake reviews on both its own website as well as third-party review websites, promoting the lenders that paid it for the same. These reviews, as per the complaint, were written by the associates, friends, as well as employees of LendEDU.com. The statement read by Andrew Smith, FTC’s director for its bureau of consumer protection, also highlighted that the commission is committed to holding companies like LendEDU.com accountable for such misrepresentations, as they severely undermine the trust that consumers place on financial services. By presenting rankings bought by creditors, the company had gone against its claim that the information presented on its platform is unbiased and objective. The company behind the LendEDU.com website is called ShopTutors Inc., which was also launched by the same students at the University of Delaware back in 2014. This company aimed to bridge the gap between students and tutors. It then evolved into LendEDU. The website LendEDU.com has made a recent posting disclosing the fact that it does receive compensation from creditors every time a reader interacts with a creditor through its platform. It also declared that this compensation may also have an impact on the position certain information is placed on its website. However, it was clarified that the reviews posted on the LendEDU website are not published as per any advertiser’s directions.