The Federal Trade Commission (FTC) announced that LendEDU and its operators agreed to settle the administrative complaint filed against them for allegedly misleading consumers.
LendEDU is a student loan and other financial products comparison website based in Delaware. The company is also doing business as Shop Tutors Inc. Its individual operators are Nathaniel Matherson, Matthew Lenhard, and Alexander Coleman.
According to the FTC, the proposed settlement order requires the company to pay $350,000 and to stop engaging in similar types of misrepresentations (as alleged in the Commission’s lawsuit) to mislead consumers.
FTC allegations against LendEDU
In its complaint, the FTC alleged that LendEDU touted fake positive reviews on its website. The company allegedly falsely claimed that it is providing “accurate, objective, and unbiased” information about financial products including student loans, personal loans, and credit cards.
Additionally, the company allegedly misrepresented that the information on its website was not impacted by compensation from advertisers.
Furthermore, LendEDU and its operators allegedly misrepresented that the reviews from consumers and third-party reflect actual experiences. However, most of the reviews were written by its employees, their family or friends or other individuals whom the company has personal of professional relationships.
The FTC noted that there were 126 reviews about LendEDU on trustpilot.com, which allows consumers to select a star rating for a company. Out of that number, 90 percent of the reviews were written by LendEDU employees, families, friends or other associates.
In a statement, Andrew Smith, Director of the Bureau of Consumer Protection at the FTC, commented that LendEDU claimed that its financial product rankings were objective and unbiased. In reality, it “sold its rankings to the highest bidder.”
Smith added, “These misrepresentations undermine consumer trust, and we will hold lead generators like LendEDU accountable for their false promises of objectivity.”
On the other hand, FTC Commissioner Rebecca Kelly Slaughter, said, Rebecca Kelly Slaughter said, In this matter, our dedicated staff in the Division of Financial Practices assembled a powerful complaint that underscores how pay-to-play greed and deception have corrupted the ratings and rankings on which consumers increasingly rely to make informed purchasing choices online.” She added that she will vote to approve the consent agreement with LendEDU and its operators.