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Companies illegally lured students in with false promises of quality education and job placement success stories
Source: Consumer Financial Protection Bureau
WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) took action against student lender Climb Credit and its investors, including 1/0 (“One Zero”), filing a proposed order, which if entered will require the companies to stop making representations in their advertising about the quality of the training programs at their partner schools and graduates’ hiring rates and salaries. The CFPB sued Climb Credit for offering loans for educational programs that often were not vetted for quality and job placement success or that failed the vetting, despite Climb Credit making representations to the contrary. If entered, the order will require the defendants to stop making certain representations about their educational offerings in their advertising and pay a $950,000 civil money penalty into the CFPB’s victims relief fund.
“Climb Credit and its investors lured people into loans under false pretenses,” said CFPB Director Rohit Chopra. “The order will put an end to Climb’s lies.”
Climb Credit, Inc. is a Delaware corporation headquartered in Las Vegas, Nevada that markets private student loans. Climb Credit was headquartered in New York until 2022 and it maintains significant operations there. The CFPB’s lawsuit also names wholly owned subsidiaries Climb Investco and Climb GS Loan Fund. The investigation also uncovered facts to take action against the company’s controlling investor 1/0 Holdco LLC and 1/0 Capital.
In its lawsuit, the CFPB alleges that the defendants violated federal law by:
- Deceiving borrowers about its partner schools: The defendants conveyed to students they had vetted partner schools’ programs for successful job placement outcomes and good salaries. In reality, the companies often did not vet programs for outcomes or value or used unreliable data in doing so.
- Failing to disclose finance charges and other loan costs: The defendants did not accurately disclose finance charges on loan documents or disclose the annual percentage rates when required to do so in marketing materials. The CFPB alleges that at least 15,000 consumers were provided with disclosures that did not include the origination fee in the finance charge, resulting in over $6 million in undisclosed finance charges.
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Enforcement Action
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts and practices. The CFPB also has the authority to enforce the Truth in Lending Act and its implementing Regulation Z.
If entered by the court, the order would require Climb Credit and its investors to:
- Tell students the truth: The defendants must disclose in all of their consumer-facing marketing materials that consumers should not rely on Climb Credit to identify quality educational schools and programs. The companies also can no longer make representations of student outcomes related to job placement or salary data in their advertising.
- Pay a $950,000 fine: The defendants will pay a $950,000 civil penalty to the CFPB’s victims relief fund.
Read today’s proposed stipulated final judgment and order.
Read consumer complaints against Climb.
Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.
