LendUp

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LendUp
LendUp Corporate Logo.svg
Private
ISIN🆔
IndustryConsumer Finance
Founded 📆2012
Founders 👔
  • Sasha Orloff
  • Jake Rosenberg (CTO)
Headquarters 🏙️San Francisco, California
Area served 🗺️
Nationwide
Key people
  • Anu Shultes (CEO)
  • Bill Donnelly (CFO)
  • Vijesh Iyer (COO)
  • Nigel Morris (Board Chair)
Products 📟 payday loans; installment loans
Members
Number of employees
approx. 250 (Q3, 2018)
🌐 Websitewww.lendup.com
📇 Address
📞 telephone

LendUp is an American online direct lender. It offers payday loans, installment loans, and credit cards to consumers with low credit scores, using publicly available data to assess creditworthiness. [1][2] The company refers to it customers as “the emerging middle class.”[3] [4]

In 2016, LendUp paid $6.3 million in fines for deceptive practices [5]and widespread violations of payday and installment loan laws.[6][7] [8] In December 2020, it was sued by the Consumer Financial Protection Bureau for violating the Military Lending Act.[9]

History[edit]

LendUp was co-founded by in 2011 by stepbrothers Sasha Orloff and Jake Rosenberg. Prior to founding the company, Orloff worked in consumer credit and in venture capital at Grameen Bank, World Bank and Citi. [10] Rosenberg was an early Yahoo! employee and a platform CTO at Zynga.[2]

LendUp graduated from incubator Y Combinator in 2012. The company positioned itself as a "socially responsible lender" that would provide access to financial services for underbanked Americans, offering lower costs credit and credit-building opportunities. It received $325 million in equity and debt financing from PayPal, Kleiner Perkins Caufield & Byers, Google Ventures, Andreessen Horowitz, Alexis Ohanian, Y Combinator and QED Investors, among others. [11] In an article published shortly after the company's launch, Time Magazine wrote that LendUp "says it’s not like other payday lenders. Yet the fees it charges — a little over $30 to borrow $200 for two weeks — are similar to what its competitors charge."[2]

In September 2016, LendUp was fined by the Consumer Financial Protection Bureau for charging illegal fees, miscalculating interest rates and failing to report information to credit bureaus. The company paid $6.3 million in penalties and repayments to customers.[7][8]

In May 2017, LendUp reported that it had made more than 4 million loans totaling more than $1 billion [12] and had quadrupled the number of credit cards it made available to consumers. The cards featured longer-than-usual grace periods before late fees kicked in. Interest rates ranged from 21.74% to 31.74% percent on credit lines up to $2,000. The credit card business grew more quickly than the firm's lending product.[13]

In November, 2017, former Tesla executive William Donnelly joined as CFO.[14] Nigel Morris, co-founder of Capital One and QED Investors, was named chairman of the board in June 2018, joining board members including QED co-founder Frank Rotman, an early Capital One Financial Corp. executive and Blake Byers of GV and board advisors including Carrie Dolan and Ali Rowghani.[15][16]

Orloff was replaced in 2019 by Ana Shultes.[17]

In December 2020, The Consumer Financial Protection Bureau sued LendUp for originating more than 4,000 loans to members of the military at an effective rate above 36%, exceeding a federal cap. [18] A settlement was proposed in January 2021. It stipulated that LendUp pay fines of $1.25m in addition to enjoining the company from collecting on, selling, or assigning any debts arising from loans that violated the Military Lending Act and required that it correct or update the information on borrowers that it provided to consumer reporting agencies.[19]

References[edit]

  1. Kolodny, Lora (2013-11-12). "Google Ventures Backs LendUp to Rethink Payday Loans". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-04-20.
  2. 2.0 2.1 2.2 White, Martha C. (2012-11-16). "Can a Payday Lending Start-Up Use Facebook to Create a Modern Community Bank?". Time. ISSN 0040-781X. Retrieved 2021-04-20.
  3. "Exclusive: S.F. fintech raises $100 million for subprime lending". www.bizjournals.com. Retrieved 2018-04-22.
  4. Shubber, Kaddim (September 28, 2016). "LendUp: playing with people's lives". Financial Times. Retrieved April 29, 2021.
  5. "Google-funded loan startup to pay $6.3m for 'deceptive' practices". the Guardian. 2016-09-28. Retrieved 2021-04-21.
  6. Peterson, Andrea (September 28, 2016). "Regulators Crack Down on Alphabet-backed Payday Lender". The Washington Post.
  7. 7.0 7.1 Wall Street Journal (September 28, 2016). "Lender ordered to pay total $6.3 million over payday-loan and installment-lending violations".
  8. 8.0 8.1 Koren, James Rufus (2016-09-27). "Google-backed LendUp fined by regulators over payday lending practices". Los Angeles Times. Retrieved 2020-07-19.
  9. "LendUp overcharged military borrowers, CFPB says in lawsuit". American Banker. 2020-12-04. Retrieved 2021-04-21.
  10. "Tech's Hot New Market: The Poor". Wired. ISSN 1059-1028. Retrieved 2021-04-21.
  11. Demos, Peter Rudegeair and Telis (2016-08-23). "Silicon Valley Lender Raises Nearly $50 Million for Subprime Credit-Card Push". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-04-21.
  12. Thorpe, Devin. "Is It Ethical To Lend To Working People At A 200% Interest Rate?". Forbes. Retrieved 2021-04-21.
  13. Verhage, Julie and Surane, Jennifer (June 21, 2018). "Capital One Co-Founder Is Making a Bet on Risky Borrowers". Bloomberg Business Journal. Retrieved 2018-09-16.CS1 maint: Multiple names: authors list (link)
  14. Wack, Kevin (November 7, 2017). "Former Tesla VP joins consumer lending startup". American Banker. Retrieved 2018-04-22.
  15. Mark Calvey (June 21, 2018). "San Francisco fintech LendUp adds star power to boardroom". San Francisco Business Times.
  16. Mark Calvey (June 28, 2017). "LendUp picks up PayPal as investor, Carrie Dolan as adviser". San Francisco Business Times. Retrieved 2018-09-16.
  17. Stone, Todd. "LendUp Gets a Shake-up". deBanked. Retrieved 2020-07-21.
  18. "LendUp overcharged military borrowers, CFPB says in lawsuit". American Banker. 2020-12-04. Retrieved 2021-04-14.
  19. "Consumer Financial Protection Bureau Settles with LendUp Loans, LLC for Military Lending Act Violations". Consumer Financial Protection Bureau. Retrieved 2021-04-14.

External links[edit]


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