The Federal Trade Commission and Avant, LLC have reached a settlement that will see the online lender return $3.85 million back to consumers after it was accused of engaging in unfair and deceptive collection practices.
Avant was accused of withdrawing payments for loans from the bank accounts of customers or charged their credit cards without obtaining the proper permission to do so. In some cases, the company also withdrew monthly payments more than once — up to 11 times in one day for one customer.
Even after hundreds of consumers complained about the unauthorized charges and its own internal documents detailing the problem, the company continued to do nothing to stop the problem, according to the FTC.
The FTC also charged Avant with:
- Failing to properly and timely credit payments made by check;
- Providing inaccurate payoff quotes to consumers;
- Collecting additional amounts even after consumers paid the quoted payoff amount; and
- Violating the Telemarketing Sales Rule and the Electronic Fund Transfer Act by requiring borrowers to agree to recurring automatic debits of their bank account as a condition of obtaining a loan.
“We have alleged that Avant gave the run-around to consumers trying to repay their loans, because of systemic issues with the company’s loan servicing platform,” said Andrew Smith Director of the FTC’s Bureau of Consumer Protection, in a statement. “Online lenders need to understand that loan servicing is just as important to consumers as loan marketing and origination, and we will not hesitate to hold lenders liable for unfair or deceptive servicing practices.”
Along with returning $3.85 million to affected customers, Avant is now prohibited from:
- Taking unauthorized payments and from collecting payment by means of remotely created check (RCC)
- Misrepresenting:
- the methods of payment accepted for monthly payments, partial payments, payoffs, or any other purpose;
- the amount of payment that will be sufficient to pay off in its entirety the balance of an account;
- when payments will be applied or credited;
- or any material fact regarding payments, fees, or charges.
