The watchdog agency says the lender lied about loan refinancing savings in its advertisements
Online lender SoFi lied in advertisements about how much borrowers could save by refinancing their loans with the company, the Federal Trade Commission said.
According to the FTC, the online mortgage lender, which is also one of the nation’s largest student loan companies, “made prominent false statements about loan refinancing savings in television, print and internet advertisements” since at least April 2016. SoFi has settled with the agency, agreeing to stop misrepresenting the savings.
“Student loan debt is a huge problem facing students and graduates across the country,” said FTC Chairman Joe Simons. “Lenders who offer refinancing options must be upfront with students about savings. They cannot make deceptive claims and bury the truth in fine print.”
According to the FTC, SoFi claimed that refinancing student loans through the company would save borrowers an average of $22,359. The FTC alleged that SoFi inflated the actual average savings – in some cases even doubling it – by excluding large categories of borrowers.
“For example, when making lifetime savings claims, SoFi excluded borrowers whose loans have a longer term than the previous student loans those consumers refinanced,” the FTC said. “Those borrowers therefore would usually end up paying more money – thousands of dollars more, on average – over the lifetime of the loan.”
""We have always been committed to giving our current and prospective members clear and complete information with which to make smart financial choices, and are pleased to have this matter resolved," SoFi said in a statement.
The FTC is also notifying other lenders making similar claims that they need to review their advertising to ensure their claims are truthful.
“The FTC may take action to enforce and seek redress for any violations of the FTC Act as the public interest may require,” the agency warned in a letter sent to lenders.
The FTC settlement is the latest hit for the lender, which has dealt with numerous scandals and leadership changes over the last year. SoFi entered the mortgage sector in 2014, but was mired in scandal last year when multiple allegations surfaced that the company had a toxic culture of sexual harassment and misogyny. After initially claiming that the company would not tolerate sexual harassment, CEO Mike Cagney became entangled in the scandal when allegations about his own behavior surfaced. The controversy led to Cagney’s ouster and the departure of several other senior executives.
Anthony Noto, former COO of Twitter, took the reins as SoFi’s CEO earlier this year.
Editor's note: This story has been updated to add a statement from SoFi.
