LendUp misled consumers by advertising certain loan products nationwide that weren't available at locations outside of California and hid the true cost of the loans -- which can come with annual interest rates in the triple digits -- the Consumer Financial Protection Bureau said in a news release.
The company also failed to give information about borrowers' loans to credit reporting companies from when it started offering loans in 2012 until “at least February 2014," the CFPB said. That meant that consumers’ credit ratings didn't actually get the boost the company said it could offer, according to the agency.
Under a consent order with the CFPB, more than 50,000 consumers will receive a total of about $1.8 million in refunds from LendUp, and the company will pay a $1.8 million civil penalty.
LendUp also agreed to pay the California Department of Business Oversight $2.7 million in a separate settlement over allegations it broke banking laws. LendUp did not admit wrongdoing in either agreement.
In a statement posted to its website Tuesday, LendUp said the regulators' actions "address legacy issues that mostly date back to" the company’s start-up phase. "In those days we didn't have a fully built out compliance department," the statement said. "We should have."
The company said it now has a 10-person compliance team and a six-person in-house legal team.
Google Ventures, or GV, the investing arm of Alphabet, started investing in LendUp before it even launched, according to the Wall Street Journal.
Google and GV declined to comment for this report.
That relationship was put under a spotlight earlier this year when Google announced it would no longer accept advertisements for payday lenders. LendUp’s loan products fell under Google’s definition of payday loans, LendUp chief executive Sasha Orloff said shortly after the decision to ban the ads were announced in May.
Google declined to specifically comment to The Washington Post on LendUp’s ability to advertise on Google under its new rules at the time.