The site claimed to be objective – but lenders that paid for placement received top rankings, the regulator says
A website that compares mortgages, student loans and other financial products has been slapped with a fine for allegedly misleading consumers to believe that it provided objective information.
Delaware-based LendEDU, along with its operators, Nathaniel Matherson, Matthew Lenhard and Alexander Coleman, were the subject of an administrative complaint by the Federal Trade Commission. The FTC said that LendEDU told consumers that it provided objective rankings of mortgages, student loans and other products, when in fact companies that paid for placement received higher ratings. The FTC also accused the site of faking positive reviews.
“LendEDU told consumers that its financial product rankings were based on objective and unbiased information about the quality of the product being offered, but in fact LendEDU sold its rankings to the highest bidder,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “These misrepresentations undermine consumer trust, and we will hold lead generators like LendEDU accountable for their false promises of objectivity.”
The FTC said that the operators of LendEDU falsely claimed that it provided “unbiased” information about consumer financial products, and that they claimed the information on its website was not affected by compensation from advertisers. The regulator also alleged that many reviews of LendEDU appearing on third-party websites like trustpilot.com were faked. Of the 126 reviews of LendEDU on trustpilot.com, 90% were by written LendEDU employees or their family and friends – and all of these manufactured reviews gave the company a five-star rating, the FTC said.
A proposed settlement order between the FTC and LendEDU would prohibit the company and its operators from making such misrepresentations in the future. The proposed order also slaps LendEDU with a $350,000 fine.
