The CFPB has filed suit against student lender Climb Credit, Inc. and its largest shareholder 1/0 (one zero), alleging that the lender induced students to take out loans by misrepresenting the quality of the training programs at their partner schools and by making false claims about the salaries and employment rates of graduates.
The suit, filed in the U.S. District Court for the Southern District of New York, charges that the companies claimed to vet partner schools for “outcomes and values,” when in reality, in many cases they offered loans for attendance at programs that had failed their own return-on-investment analyses. In other cases, the companies failed to conduct such analyses at all, according to the suit.
The lawsuit also alleges that the defendants:
- Failed to properly disclose annual percentage rates in online marketing material and hid loan origination fees in disclosures.
- Maximized revenue by convincing consumers to take out loans for various vocational programs, including coding boot camps.
The CFPB’s lawsuit seeks to stop the alleged unlawful conduct and provide repayment for harmed borrowers. In addition, the suit seeks the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.
Climb Credit, Inc. is a Delaware corporation, headquartered in Las Vegas. 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 charge the company’s controlling investor 1/0 Holdco LLC, and 1/0 Capital.
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