On October 17, 2024, the CFPB sued student lender Climb Credit, and its largest shareholder 1/0 (“one zero”), for inducing students to take out loans by misrepresenting the quality of the training programs at their partner schools and making false claims about graduates’ hiring rates and salaries. The lawsuit also alleges that the defendants failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures.

From CFPB Director Rohit Chopra’s statement:

“Climb Credit used false promises and outright lies to lure borrowers into loans for vocational programs. Tens of thousands of students may have been impacted by Climb’s actions, and the CFPB is suing Climb and its investor overlord to halt these activities and get relief for students.”

Climb Credit, Inc. markets private student loans. The investigation also uncovered facts to charge the company’s controlling investor 1/0 Holdco LLC, and 1/0 Capital. According to the CFPB, the defendants maximized revenue by enticing potential customers into borrowing money for various vocational programs, including coding bootcamps. The lawsuit alleges that the defendants violated federal law, including by:

Deceiving borrowers about its partner schools. The defendants claimed they vetted partner schools for outcomes and value, promoting a “return-on-investment” analysis. Schools displayed “Quality Verified” badges and the defendants offered a program comparison tool making similar claims. In reality, they often failed to vet programs properly or relied on unreliable data.
Exploiting consumers' trust by holding itself out as a reliable intermediary. Climb led consumers to depend on it for identifying quality educational programs eligible for Climb loans. However, the defendants profited from this trust while failing to properly vet the programs.
Illegally ignoring red flags. In over 700 cases, the defendants told potential borrowers that a school had passed the return-on-investment analysis even when the defendants internally acknowledged they had low confidence in the school’s claimed job placement rate.
Hiding true costs of its loans. The defendants failed to accurately disclose finance charges on loan documents and failed to disclose the annual percentage rates when required to do so in marketing materials.

The CFPB's lawsuit aims to stop alleged unlawful conduct, provide redress for harmed borrowers, and impose a civil money penalty that would be directed into the CFPB's victims relief fund.

Read the CFPB’s press release here.

The complaint can be found here.