Avant LLC, the online lending phenomenon which had previously been hailed as a “breakout financial success story,” has agreed to settle a lawsuit brought by the Federal Trade Commission (FTC) for $3.85 million. Although the lawsuit largely relied on a different federal statute, it shares much of the consumer financial protection zeal of the excessive overdraft fee lawsuits recently leveled against credit unions, banks, and payday lenders. But it also reveals shortcomings in federal consumer protection laws. Settlement over unfair and deceptive loan practices.
The lawsuit claimed that Avant, which had issued $4 billion in loans to more than 600,000 consumers since 2012, engaged in deceptive and unfair loan servicing practices. Settlement funds will be distributed among borrowers who were harmed by Avant’s mismanagement.